Home › Discussion › Trade Agreements › Trade Agreements – April 2002 Customs Broker License Exam Question 49
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Christopher is a ceramist in Costa Rica and wants to export a shipment of ceramic ware to the U.S. that is appraised at $15,000. The clay used in the production of the shipment is of Costa Rican origin and is valued at $700. The base coat paint applied to the ceramic ware is of Puerto Rican origin and is valued at $2,000. The colored paint used to decorate the ceramic ware is of English origin and is valued at $4,000. The glaze used to protect and make the ceramic ware dishwasher safe is of U.S. origin and is valued at $3,000. The direct costs of processing in Costa Rica is $1,050. The production of the ceramic ware in Costa Rica results in a substantial transformation of the imported components into a “product of” Costa Rica. You, as a Customs broker, are asked to determine if the ceramic ware meets the 35% value content requirement as stipulated in the Caribbean Basin Economic Recovery Act (CBERA). For the purposes of the 35% value content requirement for the ceramic ware under the CBERA, which ONE of the following amounts is the “sum of the cost or value of the materials produced in a beneficiary country or two or more beneficiary countries plus the direct costs of processing operations performed” in Costa Rica?
A. $6,750
B. $6,000
C. $10,750
D. $4,750
E. $1,750See HTS General Note 7(b) & 19 CFR 10.195.
Costa Rica is a beneficiary country under the Caribbean Basin Economic Recovery Act (CBERA) and the term “beneficiary country” includes the
Commonwealth of Puerto Rico, the United States Virgin Islands, and any former beneficiary country. If the cost or value of materials produced in the customs territory of the United States (other than the Commonwealth of Puerto Rico) is included with respect to an article to which this note applies, an amount not to exceed 15 per centum of the appraised value of the article at the time it is entered that is attributed to such United States cost or value may be applied toward determining the 35% value content requirement as stipulated in the Caribbean Basin Economic Recovery Act (CBERA).Here value addition in Costa Rica and Puerto Rico is $700 + $2,000 + $1,050 = $3,750
The glaze used to protect and make the ceramic ware dishwasher safe is of U.S. origin and is valued at $3,000 but only an amount not to exceed 15% of the appraised value of the article at the time it is entered that is attributed to such United States cost or value may be applied toward determining the 35% value content requirement.
15% of $15,000 = $2,250
Therefore the total value for the purposes of the 35% value content requirement for the ceramic ware under the CBERA = $3,750 + $2,250 = $6,000, which is answer choice B. -
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