19 U.S.C. § 4454: Trade preferences for Nepal

Summary

The President can let certain goods from Nepal enter the United States without import taxes if Nepal meets U.S. eligibility rules and other trade conditions. Congress noted Nepal had a per-person income of $730 in 2014 and a deadly earthquake in April 2015 that killed more than 9,000 people and injured about 23,000. To get duty-free treatment, goods must come straight from Nepal, be made or grown there (simple packing or just diluting do not count), meet a 35% local-content rule (with no more than 15% of the value coming from U.S. inputs), and the President must, after asking the U.S. International Trade Commission, decide the goods are not import-sensitive. The duty-free list covers items identified by specific tariff numbers, including certain travel goods, floor coverings, textiles and apparel, and headgear. Customs officials must check on January 1, April 1, July 1, and October 1 each year to make sure Nepal textile and apparel imports are not being illegally routed through other countries, and must tell the President if they are. Within 180 days after February 24, 2016, the President must set up a program with Nepal to help exports, train banks on export finance, publish trade rules and forms online, and improve public-private trade planning. The President must report to Congress starting one year after February 24, 2016, and every year after on how the program is working and Nepal’s compliance. Any duty-free treatment ends after December 31, 2025. The rules take effect 30 days after February 24, 2016.

Title 19, §4454

Customs Duties, Source: USLM XML via OLRC

(a)Findings

Congress makes the following findings:

(1)Nepal is among the least developed countries in the world, with a per capita gross national income of $730 in 2014.

(2)Nepal suffered a devastating earthquake in April 2015, with subsequent aftershocks. More than 9,000 people died and approximately 23,000 people were injured.

(b)Eligibility requirements

(1)In general

The President may authorize the provision of preferential treatment under this section to articles that are imported directly from Nepal into the customs territory of the United States pursuant to subsection (c) if the President determines—

(A)that Nepal meets the requirements set forth in paragraphs (1), (2), and (3) of section 3703(a) of this title; and

(B)after taking into account the factors set forth in paragraphs (1) through (7) of subsection (c) of section 502 of the Trade Act of 1974 (19 U.S.C. 2462), that Nepal meets the eligibility requirements of such section 502.

(2)Withdrawal, suspension, or limitation of preferential treatment; mandatory graduation

The provisions of subsections (d) and (e) of section 502 of the Trade Act of 1974 (19 U.S.C. 2462) shall apply with respect to Nepal to the same extent and in the same manner as such provisions apply with respect to beneficiary developing countries under title V of that Act (19 U.S.C. 2461 et seq.).

(c)Eligible articles

(1)In general

An article described in paragraph (2) may enter the customs territory of the United States free of duty.

(2)Articles described

(A)In general

An article is described in this paragraph if—

(i)(I)the article is the growth, product, or manufacture of Nepal; and

(II)in the case of a textile or apparel article, Nepal is the country of origin of the article, as determined under section 102.21 of title 19, Code of Federal Regulations (as in effect on the day before February 24, 2016);

(ii)the article is imported directly from Nepal into the customs territory of the United States;

(iii)the article is classified under any of the following subheadings of the Harmonized Tariff Schedule of the United States (as in effect on the day before February 24, 2016):

| |

4202.11.00 | 4202.22.60 | 4202.92.08

4202.12.20 | 4202.22.70 | 4202.92.15

4202.12.40 | 4202.22.80 | 4202.92.20

4202.12.60 | 4202.29.50 | 4202.92.30

4202.12.80 | 4202.29.90 | 4202.92.45

4202.21.60 | 4202.31.60 | 4202.92.60

4202.21.90 | 4202.32.40 | 4202.92.90

4202.22.15 | 4202.32.80 | 4202.99.90

4202.22.40 | 4202.32.95 | 4203.29.50

4202.22.45 | 4202.91.00 |

| |

5701.10.90 | 5702.91.30 | 5703.10.80

5702.31.20 | 5702.91.40 | 5703.90.00

5702.49.20 | 5702.92.90 | 5705.00.20

5702.50.40 | 5702.99.15 |

5702.50.59 | 5703.10.20 |

| |

6117.10.60 | 6214.20.00 | 6217.10.85

6117.80.85 | 6214.40.00 | 6301.90.00

6214.10.10 | 6214.90.00 | 6308.00.00

6214.10.20 | 6216.00.80 |

| |

6504.00.90 | 6505.00.30 | 6505.00.90

6505.00.08 | 6505.00.40 | 6506.99.30

6505.00.15 | 6505.00.50 | 6506.99.60

6505.00.20 | 6505.00.60 |

6505.00.25 | 6505.00.80 |

(iv)the President determines, after receiving the advice of the United States International Trade Commission in accordance with section 503(e) of the Trade Act of 1974 (19 U.S.C. 2463(e)), that the article is not import-sensitive in the context of imports from Nepal; and

(v)subject to subparagraph (C), the sum of the cost or value of the materials produced in, and the direct costs of processing operations performed in, Nepal or the customs territory of the United States is not less than 35 percent of the appraised value of the article at the time it is entered.

(B)Exclusions

An article shall not be treated as the growth, product, or manufacture of Nepal for purposes of subparagraph (A)(i)(I) by virtue of having merely undergone—

(i)simple combining or packaging operations; or

(ii)mere dilution with water or mere dilution with another substance that does not materially alter the characteristics of the article.

(C)Limitation on United States cost

For purposes of subparagraph (A)(v), the cost or value of materials produced in, and the direct costs of processing operations performed in, the customs territory of the United States and attributed to the 35-percent requirement under that subparagraph may not exceed 15 percent of the appraised value of the article at the time it is entered.

(3)Verification with respect to transshipment for textile and apparel articles

(A)In general

Not later than January 1, April 1, July 1, and October 1 of each calendar year, the Commissioner shall verify that textile and apparel articles imported from Nepal to which preferential treatment is extended under this section are not being unlawfully transshipped into the United States.

(B)Report to President

If the Commissioner determines under subparagraph (A) that textile and apparel articles imported from Nepal to which preferential treatment is extended under this section are being unlawfully transshipped into the United States, the Commissioner shall report that determination to the President.

(d)Trade facilitation and capacity building

(1)Findings

Congress makes the following findings:

(A)As a land-locked least-developed country, Nepal has severe challenges reaching markets and developing capacity to export goods. As of 2015, exports from Nepal are approximately $800,000,000 per year, with India the major market at $450,000,000 annually. The United States imports about $80,000,000 worth of goods from Nepal, or 10 percent of the total goods exported from Nepal.

(B)The World Bank has found evidence that the overall export competitiveness of Nepal has been declining since 2005. Indices compiled by the World Bank and the Organization for Economic Co-operation and Development found that export costs in Nepal are high with respect to both air cargo and container shipments relative to other low-income countries. Such indices also identify particular weaknesses in Nepal with respect to automation of customs and other trade functions, involvement of local exporters and importers in preparing regulations and trade rules, and export finance.

(C)Implementation by Nepal of the Agreement on Trade Facilitation of the World Trade Organization could directly address some of the weaknesses described in subparagraph (B).

(2)Establishment of trade facilitation and capacity building program

Not later than 180 days after February 24, 2016, the President shall, in consultation with the Government of Nepal, establish a trade facilitation and capacity building program for Nepal—

(A)to enhance the central export promotion agency of Nepal to support successful exporters and to build awareness among potential exporters in Nepal about opportunities abroad and ways to manage trade documentation and regulations in the United States and other countries;

(B)to provide export finance training for financial institutions in Nepal and the Government of Nepal;

(C)to assist the Government of Nepal in maintaining publication on the Internet of all trade regulations, forms for exporters and importers, tax and tariff rates, and other documentation relating to exporting goods and developing a robust public-private dialogue, through its National Trade Facilitation Committee, for Nepal to identify timelines for implementation of key reforms and solutions, as provided for under the Agreement on Trade Facilitation of the World Trade Organization; and

(D)to increase access to guides for importers and exporters, through publication of such guides on the Internet, including rules and documentation for United States tariff preference programs.

(e)Reporting requirement

Not later than one year after February 24, 2016, and annually thereafter, the President shall monitor, review, and report to Congress on the implementation of this section, the compliance of Nepal with subsection (b)(1), and the trade and investment policy of the United States with respect to Nepal.

(f)Termination of preferential treatment

No preferential treatment extended under this section shall remain in effect after December 31, 2025.

(g)Effective date

The provisions of this section shall take effect on the date that is 30 days after February 24, 2016.

Notes & Related Subsidiaries

Editorial Notes

References in Text

section 3703(a) of this title, referred to in subsec. (b)(1)(A), was amended and the subsection (a) designation struck out by Pub. L. 114–27, title I, § 111, June 29, 2015, 129 Stat. 370. The Trade Act of 1974, referred to in subsec. (b)(2), is Pub. L. 93–618, Jan. 3, 1975, 88 Stat. 1978. Title V of the Act is classified generally to subchapter V (§ 2461 et seq.) of chapter 12 of this title. For complete classification of this Act to the Code, see section 2101 of this title and Tables. The Harmonized Tariff Schedule of the United States, referred to in subsec. (c)(2)(A)(iii), is not set out in the Code. See Publication of Harmonized Tariff Schedule note set out under section 1202 of this title.

Executive Documents

Delegation of Functions Functions of President under subsec. (d) of this section assigned to the Administrator of the United States Agency for International Development, in consultation with the Secretary of State and the United States Trade Representative, and under subsec. (e) of this section assigned to the United States Trade Representative, in consultation with the Secretary of State, see Ex. Ord. No. 13733, § 1(c), (d), July 22, 2016, 81 F.R. 49515, set out as a note under section 4421 of this title.

§4454 Trade Preferences for Nepal