Classification and Quota Status of Raw Cotton

Published CBP guidance; operative status and applicability must be assessed from the retained publisher edition.

What Every Member of the
Trade Community Should Know About:

Classification and
Quota Status of Raw
Cotton under the
HTSUS

AN INFORMED COMPLIANCE PUBLICATION
JUNE 2008

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NOTICE:

This publication is intended to provide guidance and information to the trade community.
It reflects the position on or interpretation of the applicable laws or regulations by U.S.
Customs and Border Protection (CBP) as of the date of publication, which is shown on
the front cover. It does not in any way replace or supersede those laws or regulations.
Only the latest official version of the laws or regulations is authoritative.

Publication History

First Issued May 1996
Revised August 2002
Revised January 2004
Revised May 2005
Revised July 2006
Revised June 2008

PRINTING NOTE:
This publication was designed for electronic distribution via the CBP website
(http://www.cbp.gov/) and is being distributed in a variety of formats. It was originally set
up in Microsoft Word97
®
. Pagination and margins in downloaded versions may vary
depending upon which word processor or printer you use. If you wish to maintain the
original settings, you may wish to download the .pdf version, which can then be printed
using the freely available Adobe Acrobat Reader
®
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PREFACE

On December 8, 1993, Title VI of the North American Free Trade Agreement Implementation
Act (Pub. L. 103-182, 107 Stat. 2057), also known as the Customs Modernization or “Mod” Act,
became effective. These provisions amended many sections of the Tariff Act of 1930 and
related laws.

Two new concepts that emerge from the Mod Act are “informed compliance” and “shared
responsibility,” which are premised on the idea that in order to maximize voluntary compliance
with laws and regulations of U.S. Customs and Border Protection, the trade community needs to
be clearly and completely informed of its legal obligations. Accordingly, the Mod Act imposes a
greater obligation on CBP to provide the public with improved information concerning the trade
community's rights and responsibilities under customs regulations and related laws. In addition,
both the trade and U.S. Customs and Border Protection share responsibility for carrying out
these requirements. For example, under Section 484 of the Tariff Act, as amended (19 U.S.C.
1484), the importer of record is responsible for using reasonable care to enter, classify and
determine the value of imported merchandise and to provide any other information necessary to
enable U.S. Customs and Border Protection to properly assess duties, collect accurate
statistics, and determine whether other applicable legal requirements, if any, have been met.
CBP is then responsible for fixing the final classification and value of the merchandise. An
importer of record’s failure to exercise reasonable care could delay release of the merchandise
and, in some cases, could result in the imposition of penalties.

Regulations and Rulings (RR) of the Office of International Trade has been given a major role in
meeting the informed compliance responsibilities of U.S. Customs and Border Protection. In
order to provide information to the public, CBP has issued a series of informed compliance
publications on new or revised requirements, regulations or procedures, and a variety of
classification and valuation issues.

This publication, prepared by the National Commodity Specialist Division of Regulations and
Rulings is entitled "Classification and Quota Status of Raw Cotton under the HTSUS.” It
provides guidance regarding the classification of these items. We sincerely hope that this
material, together with seminars and increased access to rulings of U.S. Customs and Border
Protection, will help the trade community to improve voluntary compliance with customs laws
and to understand the relevant administrative processes.

The material in this publication is provided for general information purposes only. Because
many complicated factors can be involved in customs issues, an importer may wish to obtain a
ruling under Regulations of U.S. Customs and Border Protection, 19 C.F.R. Part 177, or to
obtain advice from an expert who specializes in customs matters, for example, a licensed
customs broker, attorney or consultant.

Comments and suggestions are welcomed and should be addressed to the Executive Director,
Regulations and Rulings, Office of International Trade, U.S. Customs and Border Protection,
1300 Pennsylvania Avenue, NW, (Mint Annex), Washington, D.C. 20229.

Sandra L. Bell
Executive Director, Regulations and Rulings
Office of International Trade

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INTRODUCTION.......................................................................................... 7
GENERAL OVERVIEW............................................................................... 7
QUESTIONNAIRE: HOW TO ENTER RAW COTTON (NOT CARDED OR
COMBED, NOT WASTE)
............................................................................ 9
ADDITIONAL INFORMATION................................................................... 14
The Internet............................................................................................................................... 14
Customs Regulations................................................................................................................ 14
Customs Bulletin....................................................................................................................... 14
Importing into the United States............................................................................................... 15
Informed Compliance Publications........................................................................................... 15
Value Publications.................................................................................................................... 16
“Your Comments are Important”.............................................................................................. 17

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INTRODUCTION

Because of the complexity of tariff classifications for raw cotton, further complicated by
the several different types of tariff rate quotas that might apply in any given instance, we
have developed the following to help importers sort out the various quotas and
classifications:

• A general overview of the quotas, and

• A tabular questionnaire to assist in determining which quotas and tariff
classifications apply to any particular situation.

GENERAL OVERVIEW

THE FOLLOWING GENERAL INFORMATION IS BASED ON THE HARMONIZED
TARIFF SCHEDULE OF THE UNITED STATES ANNOTATED (HTSUSA). SEE
ATTACHED QUESTIONNAIRE AND THE HTSUSA FOR DETAILS.

• Under NAFTA, there are no longer textile quota restrictions for Mexico.

• Under the Uruguay Round Agreements Act, Section 22, absolute quotas were
replaced by tariff-rate quotas (TRQ’s) on January 1, 1995. TRQ’s are a two-tier tariff
system under which a specified "in-quota" quantity of an article enters at lower in-
quota tariff rates, and "over-quota" quantities enter at substantially higher over-quota
rates. The in-quota quantity excludes imports from Mexico and from countries that
are not members of the World Trade Organization (WTO), or that are not specifically
listed in the quota. The in-quota TRQ quantities for cotton are listed under
Additional U.S. Notes 5, 6, 7, and 8 of HTSUSA chapter 52.

• Under the Special Cotton Import Quota, a special quota on UPLAND cotton is
triggered when the price conditions set forth in section 103B(a)(5)(F) of the
Agricultural Act of 1949, as amended, are met, and the United States Department of
Agriculture (USDA) issues an announcement which specifies a quantity that may be
entered under HTSUSA 9903.52.01 - 9903.52.26 during a 180-day period following
the effective date of such determination and announcement. Announcements may
be made on a weekly basis. Imports must be accompanied by: (1) an original
certificate from a foreign government agency official of the country of origin attesting
that the cotton is of a variety of Gossypium Hirsutum (also known as Upland Cotton);
(2) an importer certification that the cotton was purchased not later than 90 days
after the quota was established; and (3) be entered under the terms and conditions
in US Note 6(a) of Subchapter III of Chapter 99 of the HTSUSA. See paragraph
below on General Note 15 of the HTSUSA.

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• Under the Special Limited Global Import Quota, a special quota on UPLAND
cotton is triggered when the price conditions set forth in section 103B(n) of the
Agricultural Act of 1949, as amended, are met, and USDA issues an announcement
which specifies that quantity that may be entered under HTSUSA 9903.52.00 during
a 90-day period following the effective date of such determination and
announcement. Imports must be accompanied by: (1) an original certificate from a
foreign government agency official of the country of origin attesting that the cotton is
of a variety of Gossypium Hirsutum (also known as Upland Cotton); (2) an importer
certification that the cotton was purchased not later than 90 days after the quota was
established; and (3) be entered under the terms and conditions in US Note 6(b) of
Subchapter III of Chapter 99 of the HTSUSA. See last paragraph below on General
Note 15 of the HTSUSA.

• General Note 15 of the HTSUSA states that whenever any agricultural product of
chapters 2 through 52, inclusive, is (1) subject to a TRQ, and (2) subject to the
provisions of subchapter IV of Chapter 99 HTSUSA, entries of such products
shall
not be counted against the quantities specified as the in-quota quantity. General
Note 15(e) specifically lists as an exclusion "cotton entered under the provisions of
US Note 6 to Subchapter III of Chapter 99 and subheadings 9903.52.00 through
9903.52.26 inclusive". Such imports count against the special quota quantity of
HTSUSA 9903.52.00 through 9903.52.26 that are in the USDA announcement(s).
Imports are dutiable at the tariff rates under 5201.00.12, 5201.00.22, 5201.00.55
depending on staple length.

• Under the Special Rates of Duty column of the HTSUSA, some classifications have
reduced or free rates of duty. Where Free Trade Agreements are indicated for
Australia (AU), Jordan (JO), Morocco (MA) and Singapore (SG), see indicated
HTSUSA chapter 99 classifications. Where special tariff treatment is allowed by
virtue of certain programs such as the Caribbean Basin Economic Recovery Act
(CBERA, indicated by E), Andean Trade Preference Act (J), NAFTA (CA or MX), or
Israel Free Trade Area (IL), see relevant HTSUSA general note. Some reduced
rates are also shown for Chile (CL).

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QUESTIONNAIRE: HOW TO ENTER RAW COTTON (NOT CARDED OR
COMBED, NOT WASTE)

(This questionnaire is based on the HTSUSA as of January 2008. Always refer to the
current version of the HTSUSA to ensure the accuracy of the information. In addition,
the symbols for the programs under which special tariff treatment may be provided, as
used below, are to be found in General Note 6(c) of the tariff.)

QUESTIONS IF ANSWER IS YES IF ANSWER IS NO
1. Is the cotton harsh or rough with a staple
length under 19.05 mm (3/4 inch)?
Enter under 5201.00.05
(Duty free).
Go to question 2.

2. Is the cotton upland cotton and is a
USDA Limited Global Upland Cotton
Quota in effect?
Go to question 2(a). Go to question 3.

a) Is it claimed by importer, certified,
and within the 90 day time limit
detailed in chapter 99 subchapter III?
a) Go to question 2(b). a) Go to question 3.

b) Is quota open? b) Enter under 9903.52.00
paired with 5201.00.12 or
5201.00.22 or 5201.00.55
(in-quota duty rate).
b) Go to question 3.

3. Is the cotton upland cotton and is a
USDA Special “Weekly” Upland Cotton
Quota in effect?
Go to question 3(a). Go to question 4.

a) Is it claimed by importer, certified,
and within the 90-day & 180-day time
limits detailed in chapter 99
subchapter III?
a) Go to question 3(b). a) Go to question 4.

b) Is quota identified by the
announcement number (and chosen
by the importer) open?
b) Enter under 9903.52.01-
9903.52.26 paired with
5201.00.12 or 5201.00.22
or 5201.00.55 (in-quota
duty rate).
b) Go to question 3(c).

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QUESTIONS IF ANSWER IS YES IF ANSWER IS NO
c) Is another “weekly” quota under a
different announcement number still
open and does importer wish to enter
under it?
c) Re-apply for entry under
another “weekly” quota that
is still open and enter under
9903.52.01 -9903.52.26
paired with 5201.00.12 or
5201.00.22 or 5201.00.55
(in-quota duty rate).
c) Go to question 4.

Go to question 4(a). Go to question 5.
4. Is the cotton of staple length under
28.575 mm (1-1/8 inch), as detailed in
Chapter 52 Additional US Note 5?

a) Does it originate in a country listed
in Note 5?
a) Go to question 4(b). a) Go to question 4(e).

b) Does country have a share of the
quota quantity and is that country's
allocation still open?
b) Enter under 5201.00.14
(duty free).
b) Go to question 4(c).

c) Does it originate in a listed country
that has a share of the quota quantity
and is the aggregate quota quantity
excess quota (the total quota amount
minus all the country allocations) still
open?
c) Enter under 5201.00.14
(duty free).
c) Go to question 4(d).

d) Does it originate in a country not
listed in this note and is it a WTO
country and is the total quota quantity
still open?
d) Enter under 5201.00.14
(duty free).
d) Enter under 9904.52.01 -
9904.52.09 depending on
value, paired with
5201.00.18 (over-quota
duty rate plus additional
duty).

e) Does it originate in Mexico? e) Enter under 5201.00.18
(duty-free).
e) Go to question 4(f).

f) Does it originate in Chile or a
beneficiary country under DR/
CAFTA?
f) Enter 5201.00.18 using
rate shown in “Special”
column.
f) Go to question 4(g).

g) Does it originate in Australia,
Bahrain, Jordan, Morocco, or
Singapore?
g) Enter 5201.00.18 paired
with the Ch.99
classifications found in
“Special” column.
g) Enter under 5201.00.18
using the rate of duty found
in the “General” column.

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Go to question 5(a). Go to question 6.
5. Is the cotton harsh or rough, with a
staple length 28.575 mm (1-1/8 inch) or
more but less than 34.925 mm (1-3/8
inch) and white in color (except perished
staple, grabbots, and cotton pickings)?

a) Is it as detailed in Chapter 52
Additional US Note 6?
a) Go to question 5(b). a) Go to question 5(d).

b) Does it originate in Bahrain,
Canada, Chile, Israel, Jordan,
Morocco, Singapore, or a beneficiary
country under the Andean Trade
Preference Act, DR/ CAFTA, or
CBERA?
b) Enter under 5201.00.24
(duty-free).
b) Go to question 5(c).

c) Does it originate in a WTO country
and is quota still open?
c) Enter under 5201.00.24
(in-quota duty rate).
c) Enter under 9904.52.10 -
9904.52.16 depending on
value, paired with
5201.00.28 (over-quota
duty rate plus additional
duty).

d) Does it originate in Mexico? d) Enter under 5201.00.28
(duty-free).
d) Go to question 5(e).

e) Does it originate in Chile or a
beneficiary country under DR/
CAFTA?
e) Enter under 5201.00.28
using rate shown in
“Special” column.
e) Go to question 5(f).

f) Does it originate in Australia,
Bahrain, Jordan, Morocco, or
Singapore?
f) Enter under 5201.00.28
paired with the Ch.99
classifications found in
“Special” column.
f) Enter under 5201.00.28
using the rate of duty found
in the “General” column.

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Go to question 6(a). Go to question 7.
6. Is the cotton of staple length 28.575 mm
(1-1/8 inch) or more but less than 34.925
mm (1-3/8 inch)?

a) Go to question 6(b). a) Go to question 6(d).
a) Is it as detailed in Chapter 52
Additional US Note 7?

b) Does it originate in Bahrain,
Canada, Chile, Israel, Jordan,
Morocco, Singapore, or a beneficiary
country under the Andean Trade
Preference Act, DR/ CAFTA, or
CBERA?
b) Enter under 5201.00.34
(duty-free).
b) Go to question 6(c).

c) Does it originate in a WTO country
and is quota still open?
c) Enter under 5201.00.34
(in-quota duty rate).
c) Enter under 9904.52.17 -
9904.52.23 depending on
value, paired with
5201.00.38 (over-quota
duty rate plus additional
duty).

d) Does it originate in Mexico? d) Enter under 5201.00.38
(duty-free).
d) Go to question 6(e).

e) Does it originate in Chile or a
beneficiary country under DR/
CAFTA?
e) Enter under 5201.00.38
using rate shown in
“Special” column.
e) Go to question 6(f).

f) Does it originate in Australia,
Bahrain, Jordan, Morocco, or
Singapore?
f) Enter under 5201.00.38
paired with the Ch.99
classifications found in
“Special” column.
f) Enter under 5201.00.38
using the rate of duty found
in the “General” column.

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7. If you have arrived at this question, the
cotton is of staple length 34.925 mm (1-
3/8 inch) or more.

a) Is it as detailed in Chapter 52
Additional US Note 8?
a) Go to question 7(b). a) Go to question 7(d).

b) Enter under 5201.00.60
(duty-free).
b) Does it originate in Bahrain,
Canada, Chile, Israel, Jordan,
Morocco, Singapore, or a beneficiary
country under the Andean Trade
Preference Act, DR/ CAFTA, or
CBERA?
b) Go to question 7(c).

c) Does it originate in a WTO country
and is quota still open?
c) Enter under 5201.00.60
(in-quota duty rate).
c) Enter under 9904.52.24 -
9904.52.34 depending on
value, paired with
5201.00.80 (over-quota
duty rate plus additional
duty).

d) Does it originate in Mexico? d) Enter under 5201.00.80
(duty-free).
d) Go to question 7(e).

e) Does it originate in Chile or a
beneficiary country under DR/
CAFTA?
e) Enter under 5201.00.80
using rate shown in
“Special” column.
e) Go to question 7(f).

f) Does it originate in Australia,
Bahrain, Jordan, Morocco, or
Singapore?
f) Enter under 5201.00.80
paired with the Ch.99
classifications found in
“Special” column.
f) Enter under 5201.00.80
using the rate of duty found
in the “General” column.

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ADDITIONAL INFORMATION

The Internet

The home page of U.S. Customs and Border Protection on the Internet’s World Wide
Web, provides the trade community with current, relevant information regarding CBP
operations and items of special interest. The site posts information -- which includes
proposed regulations, news releases, publications and notices, etc. -- that can be
searched, read on-line, printed or downloaded to your personal computer. The web site
was established as a trade-friendly mechanism to assist the importing and exporting
community. The web site also links to the home pages of many other agencies whose
importing or exporting regulations that U.S. Customs and Border Protection helps to
enforce. The web site also contains a wealth of information of interest to a broader
public than the trade community. For instance, the “Know Before You Go” publication
and traveler awareness campaign is designed to help educate international travelers.

The web address of U.S. Customs and Border Protection is http://www.cbp.gov

Customs Regulations

The current edition of Customs and Border Protection Regulations of the United States
is a loose-leaf, subscription publication available from the Superintendent of
Documents, U.S. Government Printing Office, Washington, DC 20402; telephone (202)
512-1800. A bound edition of Title 19, Code of Federal Regulations is also available for
sale from the same address. All proposed and final regulations are published in the
Federal Register, which is published daily by the Office of the Federal Register, National
Archives and Records Administration, and distributed by the Superintendent of
Documents. Information about on-line access to the Federal Register may be obtained
by calling (202) 512-1530 between 7 a.m. and 5 p.m. Eastern time. These notices are
also published in the weekly Customs Bulletin described below.

Customs Bulletin

The Customs Bulletin and Decisions (“Customs Bulletin”) is a weekly publication that
contains decisions, rulings, regulatory proposals, notices and other information of
interest to the trade community. It also contains decisions issued by the U.S. Court of
International Trade, as well as customs-related decisions of the U.S. Court of Appeals
for the Federal Circuit. Each year, the Government Printing Office publishes bound
volumes of the Customs Bulletin. Subscriptions may be purchased from the
Superintendent of Documents at the address and phone number listed above.

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Importing into the United States

This publication provides an overview of the importing process and contains general
information about import requirements. The current edition of Importing Into the United
States contains much new and revised material brought about pursuant to the Customs
Modernization Act (“Mod Act”). The Mod Act has fundamentally altered the relationship
between importers and U.S. Customs and Border Protection by shifting to the importer
the legal responsibility for declaring the value, classification, and rate of duty applicable
to entered merchandise.

The current edition contains a section entitled "Informed Compliance." A key component
of informed compliance is the shared responsibility between U.S. Customs and Border
Protection and the import community, wherein CBP communicates its requirements to
the importer, and the importer, in turn, uses reasonable care to assure that CBP is
provided accurate and timely data pertaining to his or her importation.

Single copies may be obtained from local offices of U.S. Customs and Border
Protection, or from the Office of Public Affairs, U.S. Customs and Border Protection,
1300 Pennsylvania Avenue NW, Washington, DC 20229. An on-line version is
available at the CBP web site. Importing into the United States is also available for
sale, in single copies or bulk orders, from the Superintendent of Documents by calling
(202) 512-1800, or by mail from the Superintendent of Documents, Government Printing
Office, P.O. Box 371954, Pittsburgh, PA 15250-7054.

Informed Compliance Publications

U.S. Customs and Border Protection has prepared a number of Informed Compliance
publications in the “What Every Member of the Trade Community Should Know
About:...” series. Check the Internet web site http://www.cbp.gov for current
publications.

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Value Publications

Customs Valuation under the Trade Agreements Act of 1979 is a 96-page book
containing a detailed narrative description of the customs valuation system, the customs
valuation title of the Trade Agreements Act (§402 of the Tariff Act of 1930, as amended
by the Trade Agreements Act of 1979 (19 U.S.C. §1401a)), the Statement of
Administrative Action which was sent to the U.S. Congress in conjunction with the TAA,
regulations (19 C.F.R. §§152.000-152.108) implementing the valuation system (a few
sections of the regulations have been amended subsequent to the publication of the
book) and questions and answers concerning the valuation system.

Customs Valuation Encyclopedia (with updates) is comprised of relevant statutory
provisions, CBP Regulations implementing the statute, portions of the Customs
Valuation Code, judicial precedent, and administrative rulings involving application of
valuation law. A copy may be purchased for a nominal charge from the Superintendent
of Documents, Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-
7054. This publication is also available on the Internet web site of U.S. Customs and
Border Protection.

The information provided in this publication is for general information
purposes only. Recognizing that many complicated factors may be
involved in customs issues, an importer may wish to obtain a ruling under
CBP Regulations, 19 C.F.R. Part 177, or obtain advice from an expert
(such as a licensed Customs Broker, attorney or consultant) who
specializes in customs matters. Reliance solely on the general
information in this pamphlet may not be considered reasonable care.

Additional information may also be obtained from U.S. Customs and Border Protection
ports of entry. Please consult your telephone directory for an office near you. The
listing will be found under U.S. Government, Department of Homeland Security.

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“Your Comments are Important”

The Small Business and Regulatory Enforcement Ombudsman and 10 regional
Fairness Boards were established to receive comments from small businesses about
Federal agency enforcement activities and rate each agency’s responsiveness to small
business. If you wish to comment on the enforcement actions of U.S. Customs and
Border Protection, call 1-888-REG-FAIR (1-888-734-3247).

REPORT SMUGGLING 1-800-BE-ALERT OR 1-800-NO-DROGA

Visit our Internet web site: http://www.cbp.gov

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