CCS Trade Agreements and Programs 3 — Questions and Answers
Question 1: Under the Generalized System of Preferences (GSP), the 35% value-added requirement means:
- 35% of the product's weight must come from the beneficiary country
- At least 35% of the appraised customs value must consist of materials and direct processing costs in the beneficiary country (Correct answer)
- 35% of the product's components must be manufactured in the beneficiary country
- The beneficiary country must add 35% to the original export price
Correct answer: At least 35% of the appraised customs value must consist of materials and direct processing costs in the beneficiary country
GSP requires that at least 35% of the appraised customs value of the article consist of the cost or value of materials produced in the beneficiary country plus direct costs of processing.
Question 2: Under the African Growth and Opportunity Act (AGOA), eligible Sub-Saharan African countries that qualify under the 'Special Rule' for apparel may use third-country fabric and still receive duty-free treatment up to a cap of:
- 1% of total US apparel imports
- 3% of total US apparel imports (Correct answer)
- 5% of total US apparel imports
- 7% of total US apparel imports
Correct answer: 3% of total US apparel imports
The AGOA 'third-country fabric' provision (Special Rule) allows lesser-developed AGOA beneficiaries to use fabric from any country, subject to an annual cap of approximately 3.5% of total US apparel imports.
Question 3: Caribbean Basin Initiative (CBI) benefits do NOT extend to which of the following goods?
- Rum and tafia
- Fresh-cut flowers
- Canned tuna in oil (Correct answer)
- Handbags of leather
Correct answer: Canned tuna in oil
Canned tuna in oil (but not in water) is one of the categories specifically excluded from CBI duty-free treatment under the original Caribbean Basin Economic Recovery Act.
Question 4: Under GSP, a product loses eligibility through 'Competitive Need Limitations (CNL)' when a beneficiary country's exports of that product exceed:
- 10% of total US imports of that product OR $25 million
- 50% of total US imports of that product OR a dollar threshold set annually (Correct answer)
- 25% of total US imports of that product OR $50 million
- Any amount if the country has a trade surplus with the US
Correct answer: 50% of total US imports of that product OR a dollar threshold set annually
A GSP beneficiary country loses eligibility for a specific product if its exports exceed 50% of total US imports of that product or an annually-adjusted dollar threshold.
Question 5: The Andean Trade Preference Act (ATPA) was expanded and renamed in 2002. What is the current name of the program?
- Andean Trade Facilitation Act (ATFA)
- Andean Trade Promotion and Drug Eradication Act (ATPDEA) (Correct answer)
- Andean Free Trade Agreement (AFTA)
- Andean Cooperative Trade Act (ACTA)
Correct answer: Andean Trade Promotion and Drug Eradication Act (ATPDEA)
ATPA was expanded by the Andean Trade Promotion and Drug Eradication Act (ATPDEA) in 2002, adding new product categories including petroleum products.
Question 6: Under AGOA, which of the following is a prerequisite for a Sub-Saharan African country to maintain eligibility?
- The country must maintain a trade deficit with the United States
- The country must be making progress toward a market-based economy and rule of law (Correct answer)
- The country must have a per-capita GDP below $1,000
- The country must maintain a fixed exchange rate pegged to the US dollar
Correct answer: The country must be making progress toward a market-based economy and rule of law
AGOA eligibility requires countries to make progress toward market economies, rule of law, political pluralism, and meet other criteria reviewed annually by the US President.
Question 7: Under the Caribbean Basin Trade Partnership Act (CBTPA), qualifying apparel assembled from US-formed and cut fabric receives duty-free treatment subject to:
- No quantitative limit
- An annual tariff-rate quota (TRQ) (Correct answer)
- A per-shipment weight limit
- A value-based threshold reviewed quarterly
Correct answer: An annual tariff-rate quota (TRQ)
CBTPA apparel benefits for third-country fabric products are subject to a tariff-rate quota (TRQ) that caps the quantity eligible for duty-free treatment each year.
CCS Trade Agreements and Programs 3
Under the Generalized System of Preferences (GSP), the 35% value-added requirement means: