• To : Automated Broker Interface
Subject: NAFTA DRAWBACK INFORMATION PACKAGE
TO : ALL ABI BROKERS.                                                     

FROM : JAMES HALPIN                                                       

SUBJECT : NAFTA DRAWBACK INFORMATION PACKAGE                              

DATE : 01/23/96                                                           

THE INFORMATION PROVIDED BELOW ON NAFTA DRAWBACK CLAIM SUBMISSIONS        
IS INTENDED TO GIVE CLARIFICATION AND INSTRUCTION FOR THE                 
PROPER SUBMISSION OF NAFTA DRAWBACK CLAIM DATA VIA ABI, DISKETTE          
SUBMISSION, AND HARD COPY.  THIS INFORMATION SHOULD BE USED IN            
CONJUNCTION WITH ADMINISTRATIVE MESSAGE 95-1087, DATED                    
NOVEMBER 11, 1995.  THAT MESSAGE PROVIDED THE ABI RECORD LAYOUTS          
FOR THE 'JJ' DRAWBACK APPLICATION, INCLUDING THE NEW 'D50' RECORD         
FOR THE SUBMISSION OF CANADIAN IMPORT ENTRY DATA IN SUPPORT OF            
NAFTA CLAIMS.                                                             

IN ADDITION TO THE INFORMATION BELOW, PLEASE NOTE THAT YOU WILL           
BE ADVISED SHORTLY AS TO WHEN YOU MAY BEGIN TO SUBMIT NAFTA CLAIM         
DATA VIA ABI OR DISKETTE.  WE ANTICIPATE THAT THIS WILL BE                
AVAILABLE WITHIN THE NEXT TWO WEEKS.                                      


THE FOLLOWING NAFTA DRAWBACK INSTRUCTIONS DOCUMENT CONTAINS               
REFERENCES TO ATTACHMENTS WHICH, UNFORTUNATELY, CANNOT BE                 
TRANSMITTED VIA ABI.  PLEASE NOTE THAT AN ENTIRE INFORMATION              
PACKAGE INCLUDING THIS DOCUMENT AND ANY REFERENCED ATTACHMENTS            
WILL BE MADE AVAILABLE FROM ANY OF THE EIGHT DRAWBACK FIELD               
OFFICES AND WILL ALSO BE DISTRIBUTED SHORTLY TO THOSE PARTIES             
CURRENTLY ON OUR DRAWBACK AUTOMATION MAILING LIST.                        

                   NAFTA DRAWBACK INSTRUCTIONS                            

I.  PURPOSE:                                                              

THIS DOCUMENT IS TO PROVIDE INFORMATION AND INSTRUCTIONS FOR              
IMPLEMENTING THE NAFTA DRAWBACK PROVISIONS.  IT IS TO BE USED IN          
CONJUNCTION WITH THE APPLICABLE SECTIONS OF PART 181 OF THE               
CUSTOMS REGULATIONS, AND WITH ACS ADMINISTRATIVE MESSAGE 95-1087          
(SEE ATTACHMENT B).                                                       

II.  BACKGROUND AND EFFECTIVE DATES:                                      

ARTICLE 303 OF NAFTA HAS A SIGNIFICANT IMPACT ON THE WAY DRAWBACK         
WILL BE ADMINISTERED ON GOODS EXPORTED TO CANADA AND MEXICO.  THE         
NAFTA DRAWBACK PROVISIONS ARE APPLICABLE TO GOODS EXPORTED TO             
CANADA ON OR AFTER JANUARY 1, 1996, AND TO GOODS EXPORTED TO              
MEXICO ON OR AFTER JANUARY 1, 2001.  THIS INFORMATION NOTICE WILL         
FOCUS ON DRAWBACK CLAIMS DESIGNATING EXPORTS TO CANADA BECAUSE OF         
THE JANUARY 1, 1996 EFFECTIVE DATE.                                       

III. CALCULATION OF DRAWBACK -                                            
     THE "LESSER OF THE TWO" RULE                                         

A.  DEFINITION                                                            

NAFTA PROVIDES THAT DRAWBACK MAY BE GRANTED ON THE LOWER AMOUNT           
OF:                                                                       

(1)  THE TOTAL DUTIES PAID OR OWED IN THE U.S.; OR                        

(2)  THE TOTAL DUTIES PAID ON THE GOOD UPON SUBSEQUENT                    
     IMPORTATION INTO CANADA.                                             

THIS IS KNOWN AS THE "LESSER OF THE TWO" RULE.  THE FOLLOWING             
EXAMPLES ILLUSTRATE THIS RULE:                                            

     EXAMPLE 1:                                                           

     UPON IMPORTATION OF PRODUCT X INTO THE UNITED STATES FROM            
     JAPAN, COMPANY "A" PAID $11.00 IN DUTIES.  COMPANY "A"               
     MANUFACTURED THE IMPORTED PRODUCT INTO PRODUCT Y AND                 
     EXPORTED IT TO CANADA.  CANADA ASSESSED THE EQUIVALENT OF            
     US$2.00 IN DUTIES UPON IMPORTATION OF PRODUCT Y.                     
     COMPANY "A" IS ENTITLED TO 99% OF $2.00 IN DRAWBACK FROM THE         
     U.S. BECAUSE $2.00 IS THE LESSER OF THE TWO DUTIES.                  

     EXAMPLE 2:                                                           

     UPON IMPORTATION OF PRODUCT X INTO THE UNITED STATES FROM            
     GERMANY, COMPANY "A" PAID $5.00 IN DUTIES.  COMPANY "A"              
     MANUFACTURED THE IMPORTED PRODUCT INTO PRODUCT Y AND                 
     EXPORTEDIT TO CANADA.  CANADA ASSESSED THE EQUIVALENT OF             
     US$6.00 IN DUTIES UPON IMPORTATION OF PRODUCT Y.  COMPANY            
     "A" IS ENTITLED TO 99% OF $5.00 IN DRAWBACK FROM THE U.S.            
     BECAUSE $5.00 IS THE LESSER OF THE TWO DUTY AMOUNTS.                 

     EXAMPLE 3:                                                           

     UPON IMPORTATION OF PRODUCT X INTO THE UNITED STATES FROM            
     JAPAN, COMPANY "A" PAID $5.00 IN DUTIES.  COMPANY "A"                
     MANUFACTURED THE IMPORTED PRODUCT INTO PRODUCT Y AND                 
     EXPORTED IT TO CANADA.  CANADA ASSESSED A FREE RATE OF DUTY          
     UPON IMPORTATION OF PRODUCT Y.  THERE IS NO ENTITLEMENT TO           
     DRAWBACK ON PRODUCT X BECAUSE ZERO IS THE LESSER OF THE TWO          
     DUTY AMOUNTS.                                                        

B.  HOW IS THE COMPARISON MADE?                                           

     IN MAKING THE "LESSER OF THE TWO" COMPARISON, THE FOLLOWING          
RULES APPLY:                                                              

     FOR CLAIMS DESIGNATING MULTIPLE IMPORTS AND A SINGLE EXPORT,         
THE DUTY PAID ON THE IMPORTS SHOULD BE AGGREGATED BEFORE MAKING           
THE COMPARISON WITH THE CANADIAN DUTY PAID ON THE IMPORTATION OF          
THE EXPORTED GOODS INTO CANADA.  THIS IS ILLUSTRATED IN THE               
FOLLOWING EXAMPLE:                                                        

     COMPANY "A" IMPORTS TWO ITEMS INTO THE UNITED STATES AND             
     PAYS DUTY ON BOTH OF THOSE ITEMS: 1 PUMP - $10 IN DUTIES;            
     AND 1 ENGINE - $20 IN DUTIES.  COMPANY "A" MANUFACTURES AN           
     AUTOMOBILE USING BOTH OF THESE ITEMS, AND EXPORTS THE                
     AUTOMOBILE TO CANADA PAYING THE EQUIVALENT OF US$25 IN               
     DUTIES.  COMPANY "A" IS ENTITLED TO 99% OF $25 IN DRAWBACK           
     FROM THE U.S.  THIS IS BECAUSE THE "LESSER OF THE TWO"               
     COMPARISON WAS MADE USING US$25 IN CANADIAN DUTIES AND $30           
     IN U.S. DUTIES, WHICH IS THE AGGREGATE OF THE DUTIES ON THE          
     PARTS IMPORTED INTO THE U.S.                                         

     ONCE A DRAWBACK CLAIM IS MADE BASED ON A DUTY COMPARISON             
BETWEEN THE AGGREGATE OF THE U.S. DUTIES PAID ON THE IMPORTED             
GOODS AND THE CANADIAN DUTIES PAID ON THE EXPORTED GOOD, NO OTHER         
CLAIMS SHOULD BE MADE DESIGNATING THAT EXPORTED GOOD.  THE ONLY           
EXCEPTIONS TO THIS ARE DRAWBACK CLAIMS THAT INVOLVE A COMBINATION         
OF GOODS THAT ARE SUBJECT TO THE "LESSER OF THE TWO" CALCULATION          
AND GOODS SUBJECT TO FULL DRAWBACK (SEE SECTION VII.E. OF THESE           
INSTRUCTIONS).                                                            

     FOR DRAWBACK CLAIMS DESIGNATING A SINGLE IMPORT AND MULTIPLE         
EXPORTS, A RELATIVE VALUE CALCULATION SHOULD BE MADE, AND THE             
"LESSER OF THE TWO" COMPARISON SHOULD BE MADE SEPARATELY, FOR             
EACH INDIVIDUAL EXPORTED GOOD.                                            

     THIS IS THE SAME RELATIVE VALUE CALCULATION THAT IS REQUIRED         
UNDER PART 191.22 OF THE REGULATIONS (PRIOR TO NAFTA).                    
SPECIFICALLY, THE VALUE OF THE EXPORTED PRODUCT DESIGNATED ON THE         
DRAWBACK CLAIM IS DIVIDED BY THE TOTAL VALUE OF ALL PRODUCTS              
PRODUCED.  THAT NUMBER IS MULTIPLIED BY THE DUTY WHICH RESULTS IN         
THE ALLOWABLE DUTY FOR THE EXPORTED PRODUCT.  THE RELATIVE VALUE          
SHOULD BE DETERMINED BEFORE THE "LESSER OF THE TWO" COMPARISON IS         
MADE.  THIS IS ILLUSTRATED IN THE FOLLOWING EXAMPLE:                      

     COMPANY "A" IMPORTS CHEMICAL X INTO THE UNITED STATES AND            
     PAYS $5.00 IN DUTIES.  COMPANY "A" PRODUCES FOUR DIFFERENT           
     PRODUCTS FROM CHEMICAL X.  THE VALUE OF THESE FOUR PRODUCTS          
     IS AS FOLLOWS:                                                       

                    PRODUCT        VALUE                                  

                    PRODUCT 1      $2.00                                  
                    PRODUCT 2      $3.00                                  
                    PRODUCT 3      $4.00                                  
                    PRODUCT 4      $1.00                                  

     TOTAL VALUE OF 4 PRODUCTS:   $10.00                                  

     THE VALUE OF EACH OF THE 4 PRODUCTS MUST BE DIVIDED BY THE           
     TOTAL VALUE ($10.00) TO CALCULATE A DRAWBACK FACTOR FOR EACH         
     PRODUCT.  THIS YIELDS THE FOLLOWING:                                 

                    PRODUCT        DRAWBACK FACTOR                        

                    PRODUCT 1           20%                               
                    PRODUCT 2           30%                               
                    PRODUCT 3           40%                               
                    PRODUCT 4           10%                               

     ONLY PRODUCT 1 IS EXPORTED WITH BENEFIT OF DRAWBACK.  THE            
     DUTY PAID ON PRODUCT 1 UPON IMPORTATION INTO CANADA IS THE           
     EQUIVALENT OF US$2.00.  COMPANY "A" MUST MULTIPLY THE                
     ORIGINAL AMOUNT OF DUTY PAID ON CHEMICAL X UPON IMPORTATION          
     INTO THE U.S. - ($5.00) TIMES THE DRAWBACK FACTOR FOR                
     PRODUCT 1 (20%) WHICH RESULTS IN $1.00 IN DUTY.  FOR NAFTA           
     PURPOSES, THE RESULTANT $1.00 IS COMPARED TO THE US$2.00 IN          
     DUTY PAID TO CANADA.  BECAUSE THE U.S. DUTY OF $1.00 IS THE          
     "LESSER OF THE TWO", COMPANY "A" IS ENTITLED TO 99 PERCENT           
     OF $1.00 IN DRAWBACK.                                                

C.  WHEN IS THE "LESSER OF THE TWO" RULE USED?                            

     THE LESSER OF THE TWO CALCULATION SHOULD BE USED FOR THE             
FOLLOWING TYPES OF CLAIMS:                                                

      1) MANUFACTURING DRAWBACK CLAIMS: (BOTH DIRECT                      
     IDENTIFICATION AND SUBSTITUTION) INVOLVING EXPORTS TO CANADA         
     MADE ON OR AFTER JANUARY 1, 1996, UNLESS THE CLAIM QUALIFIES         
     FOR ONE OF THE EXCEPTIONS DESCRIBED IN SECTION IV BELOW.             

      2) UNUSED MERCHANDISE NOT IN THE SAME CONDITION:  UNUSED            
     MERCHANDISE THAT IS ENTITLED TO DRAWBACK UNDER 19 U.S.C.             
     1313(J)(1), BUT IS NOT IN THE SAME CONDITION IS SUBJECT TO           
     THE "LESSER OF THE TWO" CALCULATION.  THIS APPLIES ONLY TO           
     CLAIMS DESIGNATING EXPORTS TO CANADA ON OR AFTER JANUARY 1,          
     1996.  THIS IS NOT A LARGE CATEGORY OF MERCHANDISE BECAUSE           
     MOST UNUSED MERCHANDISE CLAIMED UNDER 1313(J)(1) WILL BE IN          
     THE SAME CONDITION.  ONE EXAMPLE, HOWEVER, OF 1313(J)(1)             
     MERCHANDISE THAT IS NOT IN THE SAME CONDITION IS IMPORTED            
     MERCHANDISE THAT BECOMES DETERIORATED PRIOR TO EXPORTATION.          

IV.  EXCEPTIONS TO THE "LESSER OF THE TWO" RULE -                         
GOODS ELIGIBLE                                                            
     FOR FULL DRAWBACK                                                    

     ALL MERCHANDISE COVERED BY THE FOLLOWING EXEMPTIONS ARE              
ELIGIBLE FOR FULL DRAWBACK.  CLAIMS SUBMITTED UNDER THESE                 
PROVISIONS ARE NOT CONSIDERED NAFTA DRAWBACK CLAIMS, AND DO NOT           
REQUIRE THE DOCUMENTATION LISTED UNDER SECTION VI. ("SATISFACTORY         
EVIDENCE") AND SECTION VII. ("HOW ARE NAFTA DRAWBACK CLAIMS               
SUBMITTED?") OF THESE INSTRUCTIONS:                                       

A. GOODS CLAIMED UNDER 1313(J)(1) THAT ARE IN THE SAME                    
CONDITION.                                                                

     1) ALLOWABLE INCIDENTAL OPERATIONS: THE FOLLOWING OPERATIONS         
     ARE ALLOWED PROVIDED THAT SUCH OPERATIONS DO NOT MATERIALLY          
     ALTER THE CHARACTERISTICS OF THE GOOD:                               

      *   MERE DILUTION WITH WATER OR ANOTHER SUBSTANCE;                  

      *   CLEANING, INCLUDING REMOVAL OF RUST, GREASE, PAINT OR           
          OTHER COATINGS;                                                 

      *   APPLICATION OF PRESERVATIVE, INCLUDING LUBRICANTS,              
          PROTECTIVE ENCAPSULATION, OR PRESERVATION PAINT;                

      *   TRIMMING, FILING, SLITTING OR CUTTING;                          

      *   PUTTING UP IN MEASURED DOSES, OR PACKING, REPACKING,            
          PACKAGING OR REPACKAGING; OR                                    

      *   TESTING, MARKING, LABELLING, SORTING OR GRADING.                

     2)  COMMINGLED FUNGIBLE GOODS:  CLAIMANTS THAT HAVE                  
     COMMINGLED FUNGIBLE GOODS IN INVENTORY, SUCH AS PARTS, CAN           
     USE AN INVENTORY MANAGEMENT SYSTEM TO DETERMINE ORIGIN OF            
     GOODS FOR DRAWBACK PURPOSES.  THIS ALLOWS CLAIMANTS TO               
     OBTAIN FULL DRAWBACK UNDER 1313(J)(1).  THE ALLOWABLE                
     INVENTORY METHODS ARE SET FORTH IN SCHEDULE X, WHICH IS AN           
     APPENDIX TO PART 181 OF THE CUSTOMS REGULATIONS.  THESE              
     INVENTORY METHODS INCLUDE FIFO, LIFO, AND AVERAGING.  NO             
     OTHER INVENTORY METHODS HAVE BEEN APPROVED.                          

B.   GOODS CLAIMED UNDER 1313(C):  AS NOT CONFORMING TO                   
     SAMPLE OR SPECIFICATION OR SHIPPED WITHOUT CONSENT OF THE            
     CONSIGNEE.                                                           

C.   GOODS ORIGINATING IN CANADA OR MEXICO:                               

     1) DEFINITION:  THIS EXEMPTION IS FOR GOODS THAT ORIGINATE           
     IN CANADA OR MEXICO, AND ARE IMPORTED INTO THE U.S. AND              
     SUBSEQUENTLY EXPORTED TO CANADA ON OR AFTER JANUARY 1, 1996.         
     GOODS THAT ARE MERELY EXPORTED FROM CANADA OR MEXICO TO THE          
     UNITED STATES DO NOT NECESSARILY QUALIFY AS NAFTA                    
     ORIGINATING GOODS.  IN ORDER TO QUALIFY, THE GOODS MUST MEET         
     THE NAFTA RULES OF ORIGIN.  AN EXAMPLE OF HOW DRAWBACK IS            
     CLAIMED UNDER THIS EXEMPTION IS AS FOLLOWS:                          

          COMPANY "A" IMPORTS A MEXICAN ORIGINATING GOOD AND PAYS         
          $10 IN DUTIES.  DURING COMPANY "A'S" MANUFACTURING              
          PROCESS, COMPANY "A" SUBSTITUTES A GERMAN GOOD OF THE           
          SAME KIND AND QUALITY (ON WHICH $6.00 IN DUTIES WAS             
          PAID) IN THE PRODUCTION OF ANOTHER GOOD THAT IS                 
          SUBSEQUENTLY EXPORTED TO CANADA WHERE $5.00 IN DUTIES           
          ARE ASSESSED.  COMPANY "A" IS ENTITLED TO 99% OF $10.00         
          IN DRAWBACK BECAUSE OF THE ORIGINATING GOODS EXEMPTION.         

     2) HOW ARE ORIGINATING GOODS DOCUMENTED?:  IN ORDER TO USE           
     THIS EXEMPTION, CLAIMANTS MUST PROVIDE EVIDENCE THAT THE             
     DESIGNATED IMPORTED PRODUCT WAS ENTERED AS A CANADIAN OR             
     MEXICAN ORIGINATING GOOD.  THIS EVIDENCE SHOULD CONSIST OF A         
     COPY OF THE CF 7501 ON WHICH THE GOODS WERE ENTERED                  
     INDICATING A CA OR MX BESIDE THE TARIFF NUMBER.  ONCE THE            
     CUSTOMS DRAWBACK STAFF RECEIVES THIS INFORMATION, THEY WILL          
     QUERY ACS TO VERIFY THAT THE GOODS WERE LIQUIDATED AS                
     ENTERED (NO CHANGE).                                                 

          CLAIMANTS MUST SUBMIT THIS DOCUMENTATION ALONG WITH             
     THEIR CLAIMS INVOLVING NAFTA ORIGINATING GOODS.  WHEN THE            
     CUSTOMS DRAWBACK STAFF HANDLING THEIR CLAIMS IS SATISFIED            
     THAT THE CLAIMANT IS IN COMPLIANCE WITH THE ORIGINATING              
     GOODS PROVISION, THEY MAY INSTRUCT THE CLAIMANT TO KEEP THE          
     DOCUMENTATION IN THEIR FILES.                                        

D.  ADDITIONAL EXEMPTIONS TO THE "LESSER OF THE                           
    TWO" RULE:                                                            

     THE FOLLOWING EXEMPTIONS TO THE "LESSER OF THE TWO" RULE ARE         
INCLUDED IN ANNEX 303.6 OF THE NAFTA AGREEMENT:                           

     1)   A GOOD PROVIDED FOR IN TARIFF ITEM 1701.11.02 THAT IS           
     IMPORTED INTO THE TERRITORY OF THE UNITED STATES AND USED AS         
     A MATERIAL IN THE PRODUCTION OF, OR SUBSTITUTED BY AN                
     IDENTICAL OR SIMILAR GOOD USED AS A MATERIAL IN THE                  
     PRODUCTION OF, A GOOD PROVIDED FOR IN CANADIAN TARIFF ITEM           
     1701.99.00 OR MEXICAN TARIFF ITEMS 1701.99.01 AND 1701.99.99         
     (REFINED SUGAR).                                                     

     2)   FOR TRADE BETWEEN CANADA AND THE UNITED STATES:                 

          (A)  IMPORTED CITRUS PRODUCTS;                                  

          (B)  AN IMPORTED GOOD USED AS A MATERIAL IN THE                 
               PRODUCTION OF, OR SUBSTITUTED BY AN IDENTICAL OR           
               SIMILAR GOOD USED AS A MATERIAL IN THE PRODUCTION          
               OF, A GOOD PROVIDED FOR IN U.S. ITEMS 5811.00.20           
               (QUILTED COTTON PIECE GOODS), 5811.00.30 (QUILTED          
               MAN-MADE PIECE GOODS) OR 6307.90.99 (FURNITURE             
               MOVING PADS), OR CANADIAN ITEMS 5811.00.10                 
               (QUILTED COTTON PIECE GOODS) 5811.00.20 (QUILTED           
               MAN-MADE PIECE GOODS) OR 6307.90.30 (FURNITURE             
               MOVING PADS), THAT ARE SUBJECT TO THE MOST-FAVORED         
               NATION RATE OF DUTY WHEN EXPORTED TO THE TERRITORY         
               OF THE OTHER PARTY, AND                                    

          (C)  AN IMPORTED GOOD USED AS A MATERIAL IN THE                 
               PRODUCTION OF, OR SUBSTITUTED BY AN IDENTICAL OR           
               SIMILAR GOOD USED AS A MATERIAL IN THE PRODUCTION          
               OF, APPAREL THAT IS SUBJECT TO THE MOST-FAVORED-NATION     
               RATE OF DUTY WHEN EXPORTED TO THE TERRITORY OF THE         
               OTHER PARTY.                                               

V.   EXCEPTIONS TO THE "LESSER OF THE TWO" RULE -                         
     GOODS NOT ELIGIBLE FOR DRAWBACK                                      

     ALL GOODS COVERED BY 1313(J)(2) UNUSED MERCHANDISE                   
SUBSTITUTION DRAWBACK, ARE NOT ELIGIBLE FOR DRAWBACK IF THEY              
INVOLVE EXPORTS TO CANADA OR MEXICO.  THIS PROVISION HAS BEEN IN          
EFFECT SINCE JANUARY 1, 1994.                                             

VI.  SATISFACTORY EVIDENCE                                                

     SATISFACTORY EVIDENCE IS REQUIRED TO SUPPORT ALL NAFTA               
DRAWBACK CLAIMS.   THE PURPOSE OF "SATISFACTORY EVIDENCE" IS TO           
PROVIDE EVIDENCE OF DUTIES PAID ON THE DESIGNATED EXPORTED GOODS          
UPON IMPORTATION INTO CANADA WHEN A CLAIM INVOLVES THE "LESSER OF         
THE TWO" CALCULATION.                                                     

A.   DOCUMENTS REQUIRED                                                   

     THERE ARE SEVERAL DOCUMENTS THAT MAY BE USED AS SATISFACTORY         
EVIDENCE.  CLAIMANTS MUST PROVIDE ONE OF THE FOLLOWING                    
INCLUDING:                                                                

     1)   THE CANADIAN CUSTOMS INVOICE (FORM B3): THIS DOCUMENT           
          MUST INCLUDE EVIDENCE THAT IT HAS BEEN PROCESSED BY THE         
          CANADIAN GOVERNMENT SUCH AS A STAMP, OR A RECEIPT SUCH          
          AS THE K-84 STATEMENT OR THE DETAILED CODING STATEMENT;         
          OR                                                              

     2)   AN AFFIDAVIT FROM THE DRAWBACK CLAIMANT WHICH IS BASED          
          ON INFORMATION RECEIVED FROM THE IMPORTER OF THE GOODS          
          INTO CANADA.  THE INFORMATION TO BE INCLUDED IN THIS            
          AFFIDAVIT IS DESCRIBED BELOW IN SECTION VI.B ("5 DATA           
          ELEMENTS") OF THESE INSTRUCTIONS.                               

     THESE DOCUMENTS PROVIDING SATISFACTORY EVIDENCE MUST BE              
SUBMITTED ALONG WITH ALL NAFTA DRAWBACK CLAIMS.  WHEN THE CUSTOMS         
DRAWBACK STAFF IS SATISFIED THAT THE CLAIMANT IS IN COMPLIANCE            
WITH THE NAFTA DRAWBACK PROVISIONS, THEY MAY INSTRUCT THE                 
CLAIMANT TO KEEP THE DOCUMENTATION IN THEIR FILES.                        

B.   5 DATA ELEMENTS                                                      

     THE DOCUMENTS LISTED ABOVE MUST CONTAIN ALL OF THE FOLLOWING         
FIVE DATA ELEMENTS:                                                       

     1)   CANADIAN ENTRY NUMBER                                           

     2)   DATE OF IMPORTATION INTO CANADA.  THE DATE OF                   
          IMPORTATION IS DEFINED AS THE "DATE OF ACCOUNTING",             
          WHICH IS THE DATE THE DUTIES ARE PAID TO CANADA.                

     3)   CANADIAN HARMONIZED TARIFF SCHEDULE NUMBER(S)                   

     4)   CANADIAN RATE OF DUTY                                           

     5)   AMOUNT OF DUTIES PAID TO CANADA.   FOR THE PURPOSE OF           
          SATISFACTORY EVIDENCE, THIS AMOUNT MUST BE PROVIDED IN          
          CANADIAN DOLLARS.  IT SHOULD BE NOTED, HOWEVER, THAT            
          FOR THE PURPOSE OF MAKING THE "LESSER OF THE TWO"               
          CALCULATION, THIS AMOUNT MUST ALSO BE STATED IN U.S.            
          DOLLARS AS DESCRIBED IN SECTION VII.C. ("HOW ARE NAFTA          
          DRAWBACK CLAIMS SUBMITTED?") OF THESE INSTRUCTIONS.             

VII. HOW ARE "NAFTA DRAWBACK CLAIMS" SUBMITTED?                           

A.  DEFINITION OF "NAFTA DRAWBACK CLAIMS"                                 

      A "NAFTA DRAWBACK CLAIM" IS DEFINED AS A CLAIM INVOLVING A          
"LESSER OF THE TWO" CALCULATION.  CLAIMS INVOLVING EXPORTS TO             
CANADA OR MEXICO THAT DO NOT INVOLVE A "LESSER OF THE TWO"                
CALCULATION (INCLUDING THOSE CLAIMS SUBMITTED UNDER SECTION IV.           
"GOODS SUBJECT TO FULL DRAWBACK", AND UNDER SECTION V. "GOODS NOT         
ELIGIBLE FOR DRAWBACK" OF THESE INSTRUCTIONS) ARE NOT CONSIDERED          
"NAFTA DRAWBACK CLAIMS".  IT SHOULD BE NOTED THAT THERE WILL BE           
NO "NAFTA DRAWBACK CLAIMS" INVOLVING EXPORTS TO MEXICO UNTIL THE          
YEAR 2001.                                                                

     NAFTA DRAWBACK CLAIMS MUST BE SUBMITTED SEPARATELY FROM ALL          
OTHER TYPES OF CLAIMS.  ALSO, A SEPARATE NAFTA DRAWBACK CLAIM             
MUST BE SUBMITTED FOR EACH EXPORTED PRODUCT.  ONCE AN EXPORTED            
PRODUCT IS DESIGNATED IN A NAFTA DRAWBACK CLAIM, IT MAY NOT BE            
DESIGNATED AGAIN IN A SUBSEQUENT CLAIM.  THE ONLY EXCEPTION TO            
THIS IS DESCRIBED IN SECTION VII.E. ("EXPORTED PRODUCTS                   
INCORPORATING NAFTA DRAWBACK GOODS AND GOODS ELIGIBLE FOR FULL            
DRAWBACK") OF THESE INSTRUCTIONS.                                         

B.   "INDICATORS" REQUIRED                                                

       CLAIMANTS SUBMITTING DRAWBACK CLAIMS ON DISKETTES MUST USE         
A "Y" INDICATOR IF IT IS A NAFTA CLAIM, OR A "N" INDICATOR IF IT          
IS NOT A NAFTA CLAIM.  CLAIMANTS SUBMITTING DRAWBACK CLAIMS               
THROUGH ABI MUST USE A "1" INDICATOR IF IT IS A NAFTA CLAIM, OR A         
"0" INDICATOR IF IT IS NOT A NAFTA CLAIM.                                 

      FOR THOSE SUBMITTING DRAWBACK CLAIMS THROUGH ABI, SEE               
ADMINISTRATIVE MESSAGE 95-1087, DATED NOVEMBER 11, 1995,                  
(ATTACHMENT B) FOR SPECIFICATIONS ON SUBMISSION OF CLAIMS.                

     FOR THOSE SUBMITTING DRAWBACK CLAIMS ON DISKETTES,                   
SPECIFICATIONS FOR SUBMISSION OF NAFTA CLAIMS ON DISKETTES AND            
ADMINISTRATIVE MESSAGE 95-1087 (FOR ABI FILERS) WERE AVAILABLE            
THROUGH ABI; POSTED ON THE CUSTOMS ELECTRONIC BULLETIN BOARD;             
PROVIDED IN HARD COPY ALONG WITH REVISED DISKETTE REQUIREMENTS;           
INCLUDED IN THE ERROR DICTIONARY WHICH WAS MAILED ON NOVEMBER 15,         
1995; AND PROVIDED TO ALL FILERS ON THE AUTOMATED FILER MAILING           
LIST.                                                                     

     FOR THOSE SUBMITTING CLAIMS ON HARD COPY, THE CLAIM SHOULD           
BE MARKED WITH THE WORD "NAFTA" AT THE TOP OF THE FIRST PAGE IN           
CONSPICUOUS LETTERS.                                                      

C.   SUBMISSION OF "LESSER OF THE TWO" DUTY INFORMATION                   


     CLAIMANTS SUBMITTING NAFTA CLAIMS SHOULD NOT MAKE THE ACTUAL         
"LESSER OF THE TWO" CALCULATION.  INSTEAD, CLAIMANTS SHOULD               
SPECIFY THE FULL AMOUNT OF U.S. DUTY PAID ON THE IMPORTED GOODS           
DESIGNATED FOR DRAWBACK, AND THE FULL AMOUNT OF CANADIAN DUTY             
PAID ON THE EXPORTED GOODS CONVERTED TO U.S. DOLLARS, AND THE             
CUSTOMS COMPUTER SYSTEM (ACS) WILL MAKE THE ACTUAL "LESSER OF THE         
TWO" CALCULATION.  CLAIMANTS SUBMITTING DRAWBACK CLAIMS THROUGH           
ABI SHOULD REFER TO ADMINISTRATIVE MESSAGE 95-1087 (ATTACHMENT B)         
FOR SPECIFICATIONS.  CLAIMANTS SUBMITTING DRAWBACK CLAIMS ON              
DISKETTES SHOULD REFER TO THE SPECIFICATIONS THAT WERE                    
DISTRIBUTED AS DESCRIBED IN SECTION VII.B. OF THESE INSTRUCTIONS.         
CLAIMANTS SUBMITTING HARD COPY DRAWBACK CLAIMS MUST SUBMIT THIS           
DUTY INFORMATION, ALONG WITH THEIR CLAIMS, IN THE FORMAT PROVIDED         
ON THE ATTACHED CODING SHEET (SEE ATTACHMENT A).                          

     THE CURRENCY CONVERSION SHOULD BE BASED ON THE RATE OF               
EXCHANGE PUBLISHED BY CUSTOMS, WHICH IS BASED UPON THE FEDERAL            
RESERVE RATE.  THESE RATES OF EXCHANGE ARE AVAILABLE: ON-LINE IN          
ACS; THROUGH ABI; ON THE CUSTOMS ELECTRONIC BULLETIN BOARD; AND           
THROUGH THE CUSTOMS INFORMATION EXCHANGE (CIE) IN NEW YORK.  THE          
DATE OF CURRENCY CONVERSION THAT SHOULD BE USED IS THE                    
"ACCOUNTING DATE" WHICH IS THE DATE THAT THE DUTIES WERE PAID TO          
CANADA.                                                                   

D.   SUBMISSION OF 5 DATA ELEMENTS                                        

     CLAIMANTS SUBMITTING DRAWBACK CLAIMS THROUGH ABI SHOULD              
FOLLOW THE INSTRUCTIONS PROVIDED IN ADMINISTRATIVE MESSAGE 95-1087        
(ATTACHMENT B).  CLAIMANTS SUBMITTING DRAWBACK CLAIMS ON                  
DISKETTES SHOULD REFER TO THE SPECIFICATIONS THAT WERE                    
DISTRIBUTED AS DESCRIBED IN SECTION VII.B. OF THESE INSTRUCTIONS.         
CLAIMANTS SUBMITTING HARD COPY DRAWBACK CLAIMS MUST SUBMIT THIS           
INFORMATION USING THE FORMAT PROVIDED ON THE ATTACHED CODING              
SHEET (ATTACHMENT A).                                                     

E.   EXPORTED PRODUCTS INCORPORATING "NAFTA DRAWBACK"                     
     GOODS AND GOODS ELIGIBLE FOR FULL DRAWBACK                           

    IN CASES WHERE AN EXPORTED PRODUCT INCORPORATES BOTH GOODS            
SUBJECT TO THE "LESSER OF THE TWO" CALCULATION AND GOODS ELIGIBLE         
FOR FULL DRAWBACK, IN ORDER FOR CUSTOMS TO DETERMINE WHICH OF THE         
DESIGNATED IMPORTED GOODS ARE ENTITLED TO FULL DRAWBACK, TWO              
SEPARATE CLAIMS MUST BE FILED: ONE FOR THE GOODS SUBJECT TO THE           
"LESSER OF THE TWO", AND ONE FOR THE GOODS THAT ARE ELIGIBLE FOR          
FULL DRAWBACK.  BOTH OF THESE CLAIMS SHOULD DESIGNATE THE SAME            
EXPORTED PRODUCT.  THIS INSTRUCTION IS INTENDED PRIMARILY FOR             
MANUFACTURED ARTICLES THAT INCORPORATE BOTH ORIGINATING AND               
NON-ORIGINATING GOODS, BUT IT MAY ALSO APPLY TO GOODS EXEMPTED UNDER      
SECTION IV.D ("ADDITIONAL EXEMPTIONS TO THE "LESSER OF THE TWO"           
RULE) COMBINED WITH GOODS SUBJECT TO THE "LESSER OF THE TWO".             

VIII.  PREVENTION OF IMPROPER PAYMENT                                     

     IN ORDER TO IDENTIFY ANY POTENTIAL OVERPAYMENTS THAT COULD           
RESULT FROM A DRAWBACK REFUND AND A SUBSEQUENT REDUCTION IN DUTY          
DUE TO A LATE CLAIM FOR A NAFTA RATE, CLAIMANTS MUST SUBMIT A             
WRITTEN STATEMENT AS TO WHETHER THE CLAIMANT HAS PREPARED, OR HAS         
KNOWLEDGE THAT ANOTHER PERSON HAS PREPARED, A CERTIFICATE OF              
ORIGIN PERTAINING TO THE GOODS WHICH ARE COVERED BY THE DRAWBACK          
CLAIM.  THIS STATEMENT MUST BE SUBMITTED EITHER WITH THE CLAIM OR         
WITHIN 30 CALENDAR DAYS OF THE FILING OF THE DRAWBACK CLAIM.              
SUBMISSION OF THIS STATEMENT IS REQUIRED EVEN IF IT IS A NEGATIVE         
RESPONSE.                                                                 

     IF THE CLAIMANT LEARNS OF THE EXISTENCE OF A CERTIFICATE OF          
ORIGIN, THE CLAIMANT HAS 30 DAYS THEREAFTER TO DISCLOSE THIS              
INFORMATION TO CUSTOMS.                                                   

IX.  LIQUIDATION OF CLAIMS                                                

     DUE TO POTENTIAL CHANGES TO CANADIAN IMPORT ENTRIES THAT             
HAVE BEEN USED TO CALCULATE U.S. DRAWBACK CLAIMS, LIQUIDATION OF          
NAFTA DRAWBACK CLAIMS MAY NOT OCCUR UNTIL 3 YEARS FROM THE DATE           
OF IMPORTATION INTO CANADA.  IF CANADA NOTIFIES US OF A DECREASE          
IN THE CANADIAN IMPORT DUTY PAID, WE WILL ADJUST THE DRAWBACK             
CLAIM AND ISSUE A BILL FOR THE EXCESS DRAWBACK PAID.  THE 3-YEAR          
LIQUIDATION PERIOD IS TO ALLOW US TO MAKE THESE ADJUSTMENTS IF            
NECESSARY.  HOWEVER, ACCELERATED PAYMENT MAY BE PAID ON NAFTA             
DRAWBACK CLAIMS.                                                          


QUESTIONS REGARDING THESE INSTRUCTIONS MAY BE DIRECTED TO                 
TRACEY DENNING, FIELD OPERATIONS, AT 202-927-0197.  QUESTIONS             
REGARDING THE ABI OR DISKETTE PROCESSING MAY BE ADDRESSED TO              
ME AT 202-927-0299.                                                       

                                JIM HALPIN                                
                         DRAWBACK PROJECT LEADER                          
                   FIELD SYSTEMS DIVISION, HEADQUARTERS