CSMS Message: 94-000840

NAFTA NET COST INDICATOR

NAFTA NET COST INDICATOR PROGRAM CHANGES HAVE BEEN MADE IN ACS.
EFFECTIVE AUGUST 22, 1994 THE NET COST INDICATOR WILL BE TRAMSMITTED AT
THE LINE ITEM LEVEL INSTEAD OF AT THE ENTRY SUMMARY HEADER LEVEL.

THIS INFORMATION WAS TRANSMITTED TO YOU ON MARCH 9, 1994 AS ADMIN
MESSAGE 94-0238 AND IS RETRANSMITTED BELOW.

SOME NAFTA RULES OF ORIGIN REQUIRE THAT AN ARTICLE HAVE A MINIMUM
REGIONAL VALUE CONTENT (RVC) TO QUALIFY FOR THE NAFTA RATE OF DUTY.
THERE ARE TWO METHODS FOR CALCULATING THE RVC: THE TRANSACTION VALUE
METHOD AND THE NET COST METHOD. CUSTOMS NEEDS TO IDENTIFY THOSE GOODS
WHOSE RVC WAS CALCULATED USING THE NET COST METHOD BECAUSE THERE IS A
RISK THAT THE RVC WILL CHANGE WHEN THE FINAL COST FIGURES ARE
CALCULATED AT THE END OF THE OF THE PRODUCER'S ACCOUNTING PERIOD.
ADMINISTRATIVE MESSAGE 93-1155, NAFTA FACT SHEET 10, INCONSISTENT
WITH THE INSTRUCTIONS CONTAINED BELOW IS MODIFIED ACCORDINGLY.

1) THE FILER WILL NOT TRANSMIT THE 'NET COST INDICATOR' AT THE ENTRY
SUMMARY HEADER LEVEL. HOWEVER, THE FILER WILL TRANSMIT THE 'NET COST
INDICATOR' AT THE LINE ITEM LEVEL. PLEASE NOTE, PRIOR TO JUNE 1, 1994,
ACS WILL ACCEPT THE INDICATOR AT THE HEADER LEVEL OR AT BOTH THE HEADER
AND LINE ITEM LEVEL. ON OR AFTER JUNE 1, 1994 THE FILER SHOULD TRANSMIT
THE INDICATOR ONLY AT THE LINE ITEM LEVEL.

2) THE NEW INDICATOR WILL BE LOCATED IN POSITION 79, OF THE 40 (INPUT)
RECORD OF THE EI (ENTRY SUMMARY) APPLICICATION.

3) THE ABI/ON-LINE SYSTEM EDITS THAT WILL BE PERFORMED ON THE 'NET COST
INDICATOR' ARE AS FOLLOWS:
- THE FILER WILL REPORT A 'Y' IN POSITION 79, OF THE EI 4O (INPUT)
RECORD WHEN A NAFTA NET COST CONDITION HAS BEEN IDENTIFIED FOR THE
RESPECTIVE LINE ITEM. OTHERWISE, THIS POSITION WILL BE SPACE-FILLED
IF A NON-NAFTA NET COST CONDITION IS PREVALENT ON THE LINE.
-IF A NAFTA NET COST CONDITION HAS BEEN IDENTIFIED, THEN A VALID SPI
OF 'CA', 'MX', 'B#' OR 'C#' MUST BE PROVIDED FOR THE RESPECTIVE LINE
ITEM.

4) IN ORDER FOR THE FILER TO REPORT A NET COST CONDITION AT THE LINE
ITEM LEVEL ON THE PRINTED CF7501, THE FOLLOWING RULES WILL APPLY. THE
WORD 'NET' WILL BE PRINTED ON THE CF7501 IN COLUMN 33, AFTER THE ENTERED
VALUE, CHARGES AND RELATIONSHIP IF THE NET COST METHOD WAS USED IN
CALCULATING THE REGIONAL VALUE CONTENT.

IF YOU HAVE ANY QUESTIONS ON THE ABOVE, PLEASE CONTACT IRV FISHER,
CHIEF, TARIFF COMPLIANCE BRANCH AT (202) 927-0241.