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33. United States-Korea Free Trade Agreement.

(a) Originating goods under the terms of the United States-Korea Free Trade Agreement (UKFTA) are subject to duty as provided herein. For the purposes of this note, goods of Korea, subject to subdivisions (b) through (o) of this note, that are imported into the customs territory of the United States and entered under a provision for which a rate of duty appears in the “Special” subcolumn of rate of duty column 1 followed by the symbol “KR” in parentheses are eligible for the tariff treatment, and any applicable quantitative limitations, set forth in the “Special” subcolumn, in accordance with sections 201 and 202 of the United States-Korea Free Trade Agreement Implementation Act (Pub.L. 112-41; 125 Stat. 428).

(b) For the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of a UKFTA country under the terms of this note if–

(i) the good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both;

(ii) the good is produced entirely in the territory of Korea or of the United States, or both, and--

(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or

(B) the good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o); and

satisfies all other applicable requirements of this note and of applicable regulations; or

(iii) the good is produced entirely in the territory of Korea or of the United States, or both, exclusively from materials described in subdivisions (i) or (ii), above.

For the purposes of this note, the term “UKFTA country” refers only to Korea or to the United States.

(c) (i) For purposes of subdivision (b)(i) of this note, the expression “wholly obtained or produced entirely in the territory of Korea or of the United States, or both” means any of the following–

(A) plants and plant products grown, and harvested or gathered, in the territory of Korea or of the United States, or both;

(B) live animals born and raised in the territory of Korea or of the United States, or both;

(C) goods obtained in the territory of Korea or of the United States, or both, from live animals;

(D) goods obtained from hunting, trapping, fishing or aquaculture conducted in the territory of Korea or of the United States, or both;

(E) minerals and other natural resources not included in subdivisions (A) through (D) that are extracted or taken from the territory of Korea or of the United States, or both;

(F) fish, shellfish and other marine life taken from the sea, seabed or subsoil outside the territory of Korea or of the United States, or both, by–

(i) a vessel that is registered or recorded with Korea and flying the flag of Korea, or

(ii) a vessel that is documented under the laws of the United States;

(G) goods produced on board a factory ship from goods referred to in subdivision (F), if such factory ship–

(i) is registered or recorded with Korea and flies the flag of Korea, or

(ii) is a vessel that is documented under the laws of the United States;
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   (H) (i) goods taken by Korea or a person of Korea from the seabed or beneath the seabed or subsoil outside the territory of Korea or of the United States, or both, if Korea has rights to exploit such seabed or subsoil, or

(ii) goods taken by the United States or a person of the United States from the seabed or beneath the seabed or subsoil outside the territory of the United States or of Korea, or both, if the United States has rights to exploit such seabed or subsoil;

(I) goods taken from outer space, if the goods are obtained by Korea or the United States or a person of Korea or the United States and not processed in the territory of a country other than Korea or the United States;

(J) waste and scrap derived from–

(1) manufacturing or production operations in the territory of Korea or of the United States, or both, or

(2) used goods collected in the territory of Korea or of the United States, or both, if such goods are fit only for the recovery of raw materials;

(K) recovered goods derived in the territory of Korea or of the United States, or both, from used goods; or

(L) goods, at any stage of production, produced in the territory of Korea or of the United States, or both, exclusively from–

(i) goods referred to in any of subdivisions (A) through (J) above, or

(ii) the derivatives of goods referred to in clause (L)(i).

(ii) (A) For the purposes of subdivision (i)(K), the term “recovered goods” means materials in the form of individual parts that are the result of:

(1) the disassembly of used goods into individual parts; and

(2) the cleaning, inspecting, testing or other processing that is necessary for improvement to sound working condition of such individual parts.

(B) The term “remanufactured good” for purposes of this note means a good that is classified under chapter 84, 85, 87 or 90 or heading 9402, and that--

(1) is entirely or partially comprised of recovered goods, and

(2) has a similar life expectancy and enjoys a factory warranty similar to such a good that is new.

(C) For the purposes of this note–

(1) the term “material” means a good that is used in the production of another good, including a part or an ingredient;

(2) the term “material that is self-produced” means an originating material that is produced by a producer of a good and used in the production of that good; and

(3) a “nonoriginating good or nonoriginating material” is a good or material, as the case may be, that does not qualify as originating under this note.

(D) For the purposes of this note, the term “production” means growing, mining, harvesting, fishing, breeding, raising, trapping, hunting, manufacturing, processing, assembling or disassembling a good; and the term “producer” means a person who engages in the production of a good in the territory of Korea or of the United States.

(iii) Transit and transshipment. A good that has undergone production necessary to qualify as an originating good under this note shall not be considered to be an originating good if, subsequent to that production, the good--
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    (A) undergoes further production or any other operation outside the territory of Korea or of the United States, other than unloading, reloading or any other process necessary to preserve the good in good condition or to transport the good to the territory of Korea or of the United States, or

(B) does not remain under the control of customs authorities in the territory of a country other than Korea or the United States.

(d) Textile and apparel articles.

(i) For purposes of this note, a textile or apparel good provided for in subheadings 4202.12, 4202.22, 4202.32 or 4202.92, chapters 50 through 63, heading 7019 or subheading 9404.90 of the tariff schedule is an originating good if:

(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note as a result of production occurring entirely in the territory of Korea or of the United States, or both, or the good otherwise satisfies the applicable requirements of this note where a change in tariff classification for each nonoriginating material is not required, and

(B) the good satisfies any other applicable requirements of this note.

The provisions of subdivision (o) of this note shall not apply in determining the country of origin of a textile or apparel good for nonpreferential purposes.

(ii) Notwithstanding the rules set forth in subdivision (o) of this note, textile or apparel goods classifiable under general rule of interpretation 3 of the tariff schedule as goods put up in sets for retail sale shall not be regarded as originating goods unless each of the goods in the set is an originating good or the total value of the nonoriginating goods in the set does not exceed 10 percent of the customs value of the set.

(iii) For purposes of this note, the expression “wholly formed and finished” means:

(A) when used in reference to fabrics, all production processes and finishing operations necessary to produce a finished fabric ready for use without further processing, and such processes and operations include formation processes, such as weaving, knitting, needling, tufting, felting, entangling or other such processes, and finishing operations, including bleaching, dyeing and printing; and

(B) when used in reference to yarns, all production processes and finishing operations, beginning with the extrusion of filaments, strips, film or sheets, and including drawing to fully orient a filament or slitting a film or sheet into strip, or the spinning of all fibers into yarn, or both, and ending with a finished yarn or plied yarn.

(iv) A textile or apparel good may be considered to be an originating good if--

(A) the total weight of all fibers and yarns that are used in the production of the component of the good that determines the tariff classification of the good and that do not undergo an applicable change in tariff classification is not more than 7 percent of the total weight of that component; or

(B) it is eligible for entry under applicable provisions of subchapter XX of chapter 99.

Notwithstanding the provisions of subdivision (d(iv)(A), a good containing elastomeric yarns in the component of the good that determines the tariff classification of the good shall be considered to be an originating good only if such yarns are wholly formed and finished in the territory of Korea or of the United States.

(v) For purposes of this note, in the case of a good that is a yarn, fabric or fiber, the term “component of the good that determines the tariff classification of the good” means all of the fibers in the good

(e) De minimis.

(i) Except as provided in subdivision (ii) below, a good (other than a textile or apparel good described in subdivision (d) above) that does not undergo a change in tariff classification pursuant to subdivision (o) of this note is an originating good if–
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   (A) the value of all nonoriginating materials that are used in the production of the good that do not undergo the applicable change in tariff classification does not exceed 10 percent of the adjusted value of the good;

(B) the value of such nonoriginating materials is included in the value of nonoriginating materials for any applicable regional value-content requirement for the good under this note; and

(C) the good meets all other applicable requirements of this note.

(ii) Subdivision (e)(i) does not apply to–

(A) a nonoriginating material provided for in chapter 3 of the tariff schedule that is used in the production of a good provided for in chapter 3;

(B) a nonoriginating material provided for in chapter 4, or a nonoriginating dairy preparation containing over 10 percent by weight of milk solids provided for in subheading 1901.90 or 2106.90 that is used in the production of a good provided for in chapter 4;

(C) a nonoriginating material provided for in chapter 4, or a nonoriginating dairy preparation containing over 10 percent by weight of milk solids provided for in subheading 1901.90, that is used in the production of any of the following goods:

(1) infant preparations containing over 10 percent by weight of milk solids, the foregoing provided for in subheading 1901.10;

(2) mixes and doughs, containing over 25 percent by weight of butterfat, not put up for retail sale, the foregoing provided for in subheading 1901.20;

(3) dairy preparations containing over 10 percent by weight of milk solids, the foregoing provided for in subheading 1901.90 or 2106.90;

(4) goods provided for in heading 2105;

(5) beverages containing milk, the foregoing provided for in subheading 2202.90; or

(6) animal feeds containing over 10 percent by weight of milk solids, the foregoing provided for in subheading 2309.90;

(D) a nonoriginating material provided for in chapter 7 that is used in the production of a good provided for in subheading 0703.10, 0703.20, 0709.59, 0709.60, 0711.90, 0712.20, 0714.20 or any of subheadings 0710.21 through 0710.80 or 0712.39 through 0713.10;

(E) a nonoriginating material provided for in heading 0805, or in any of subheadings 2009.11 through 2009.39, that is used in the production of a good provided for in any of subheadings 2009.11 through 2009.39, or in fruit or vegetable juice of any single fruit or vegetable, fortified with minerals or vitamins, concentrated or unconcentrated, provided for in subheading 2106.90 or 2202.90;

(F) nonoriginating peaches, pears or apricots provided for in chapter 8 or 20 that are used in the production of a good provided for in heading 2008;

(G) a nonoriginating material provided for in heading 1006, or a nonoriginating rice product provided for in chapter 11 that is used in the production of a good provided for in heading 1006, 1102, 1103, 1104 or subheading 1901.20 or 1901.90;

(H) a nonoriginating material provided for in chapter 15 that is used in the production of a good provided for in any of headings 1501 through 1508 or heading 1512, 1514 or 1515;

(I) a nonoriginating material provided for in heading 1701 that is used in the production of a good provided for in any of headings 1701 through 1703;

(J) a nonoriginating material provided for in chapter 17 that is used in the production of a good provided for in subheading 1806.10;
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    (K) except as provided in subdivisions (A) through (J) above and subdivision (o) of this note, a nonoriginating material used in the production of a good provided for in any of chapters 1 through 24, unless the nonoriginating material is provided for in a different subheading than the good for which origin is being determined under this note.

(iii) For the purposes of this note, the term “adjusted value” means the value determined in accordance with Articles 1 through 8, Article 15 and the corresponding interpretive notes of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 referred to in section 101(d)(8) of the Uruguay Round Agreements Act (19 U.S.C. 3511(d)(8)), adjusted, if necessary, to exclude any costs, charges or expenses incurred for transportation, insurance and related services incident to the international shipment of the merchandise from the country of exportation to the place of importation.

(f) Accumulation.

(i) For purposes of this note, originating materials from the territory of Korea or the United States that are used in the production of a good in the territory of the other country shall be considered to originate in the territory of such other country.

(ii) A good that is produced in the territory of Korea or of the United States, or both, by one or more producers, is an originating good if the good satisfies all of the applicable requirements of this note.

(g) Regional value content.

(i) For purposes of subdivision (b)(ii)(B) of this note, the regional value content for a good referred to in subdivision (o) of this note, except for goods to which subdivision (h) applies, shall be calculated by the importer, exporter or producer of the good, on the basis of the build-down method described in subdivision (g)(i)(A) or the build-up method described in (g)(i)(B) below.

(A) For the build-down method, the regional value content of a good may be calculated on the basis of the formula RVC = ((AV - VNM)/AV) x 100, where RVC is the regional value content, expressed as a percentage; AV is the adjusted value of the good; and VNM is the value of nonoriginating materials, other than indirect materials, acquired and used by the producer in the production of the good, but does not include the value of a material that is self-produced; or

(B) For the build-up method, the regional value content may be calculated on the basis of the formula RVC = (VOM /AV) x 100, where RVC is the regional value content, expressed as a percentage; AV is the adjusted value of the good; and VOM is the value of originating materials, other than indirect materials, that are acquired or self-produced, and used by the producer in the production of the good.

(ii) Value of materials.

(A) For the purpose of calculating the regional value content of a good under subdivision (g)(i) and for purposes of applying the de minimis provisions of subdivision (e) of this note, the value of a material is:

(1) in the case of a material that is imported by the producer of the good, the adjusted value of the material;

(2) in the case of a material acquired in the territory in which the good is produced, the value, determined in accordance with Articles 1 through 8, Article 15 and the corresponding interpretive notes, of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 referred to in section 101(d)(8) of the Uruguay Round Agreements Act (19 U.S.C. 3511(d)(8)), as set forth in regulations promulgated by the Secretary of the Treasury providing for the application of such Articles in the absence of an importation by the producer; or

(3) in the case of a material that is self-produced, the sum of–

(i) all expenses incurred in the production of the material, including general expenses, and

(ii) an amount for profit equivalent to the profit added in the normal course of trade.

(B) The value of materials may be further adjusted as follows:

(1) for originating materials, the following expenses, if not included in the value of an originating material calculated under subdivision (A) above, may be added to the value of the originating material: