(a) Definitions. In this section the following definitions apply:
(1) Lower duty rate. The term “lower duty rate” means the duty rate as codified in the 2014 HTS that would have been applicable to qualifying worsted wool fabric of the kind described in subheadings 9902.51.11, 9902.51.15, and 9902.51.16 of the 2014 HTS prior to the expiration of the Wool TRQ on December 31, 2014.
(2) Eligible person. The term “eligible person” means a manufacturer (or a successor-in-interest to the manufacturer) in the U.S. or in a Foreign Trade Zone authorized under the Foreign-Trade Zones Act of 1934 (19 U.S.C. 81a-81u) that, during the calendar year immediately preceding the payment, imported qualifying worsted wool fabric and used the imported qualifying worsted wool fabric as described in paragraph (a)(3) of this section.
(3) Qualifying worsted wool fabric. The term “qualifying worsted wool fabric” means imported worsted wool fabric containing at least 85% by weight worsted wool of the kind described in subheading 9902.51.11, 9902.51.15, or 9902.51.16 of the 2014 HTS that, during the calendar year immediately preceding the payment was:
(i) Imported by an eligible person in the U.S.; and
(ii) Used by the eligible person in the U.S.
(A) In the case of wool fabric of the kind described in subheading 9902.51.11 or 9902.51.15 of the HTS, the qualifying fabric shall be used to produce worsted wool suits, suit-type jackets, or trousers for men and boys; or
(B) In the case of wool fabric of the kind described in subheading 9902.51.16 of the HTS, the qualifying fabric shall be used in manufacturing.
(4) Successor-in-interest. The term “successor-in-interest” means a person that is eligible to claim a payment under this section as if the person were the original eligible person, without regard to section 3727, title 31, United States Code. A person may succeed to the status of the successor-in-interest to the eligible person and become eligible for the payment because of -
(i) An assignment of the claim;
(ii) An assignment of the original eligible person's right to manufacture under the same trade name; or
(iii) A reorganization of the eligible person.
(b) Purposes. The purposes of a TRQ monetization payment are to provide an eligible person -
(1) Compensation for termination of the TRQ for qualifying worsted wool fabric; and
(2) A payment that is equivalent to the amount the eligible person would have saved during the calendar year immediately preceding the payment for imports of qualifying worsted wool fabric if the lower duty rate under the applicable 2014 HTS subheading(s) of a qualifying worsted wool fabric were in effect.
(c) Calculation of monetized TRQ payment. A payment will be established by calculating the savings that would have been realized by the eligible person for imports of qualifying worsted wool fabric had the lower duty rate been in effect by -
(1) Establishing the reported dollar value of imported worsted wool fabric, for each of the 2014 HTS subheadings of worsted wool fabric, during the calendar year immediately preceding the payment;
(2) Subtracting the duty rate (converted to numeric value) for each applicable 2014 HTS subheading of worsted wool fabric that would have been paid in calendar year 2014 from the duty rate (converted to numeric value) that was actually paid in the calendar year immediately preceding the payment;
(3) For each applicable 2014 HTS subheading of worsted wool fabric, multiplying the numeric values described in paragraphs (c)(1) and (2) of this section; and
(4) Adding each product obtained in paragraph (c)(3) of this section.
(d) Annual affidavit -
(1) In general. An eligible person applying for a payment under this section shall comply with all applicable reporting requirements of this section and of § 1471.10.
(2) Specific business information -
(i) Imports and production. An eligible person shall, for the entire calendar year immediately preceding the payment, report the actual dollar value and the actual quantity (square meters) of their imports into the U.S. of qualifying worsted wool fabric and the amount of qualifying worsted wool fabric used by the eligible person in the U.S.
(ii) Direct and indirect importers. Eligible persons that directly import qualifying worsted wool fabric and pay the import duty for such wool are considered to be direct importers of the qualifying worsted wool fabric. Persons that import qualifying worsted wool fabric through a third party broker are considered to be indirect importers of the qualifying worsted wool fabric. Eligible persons must state in their annual affidavit whether, in the calendar year immediately preceding the payment, they were direct or indirect importers, and the dollar value of the imported qualifying worsted wool fabric. The reported dollar value of such imports by indirect importers will be subject to a 10% reduction.
(iii) Import documentation. Eligible persons must maintain supporting documentation for the amounts reported on their affidavits and shall provide copies of such supporting documentation upon the request of FAS.
(3) Production of garments or manufacturing of qualifying worsted wool fabric -
(i) Production of garments. When reporting the annual dollar value and quantity of imported qualifying worsted wool fabric of the kind described in subheadings 9902.51.11 and 9902.51.15 of the 2014 HTS, an eligible person may either have cut and sewn the wool on its own behalf or had another person cut and sew the wool on behalf of the eligible person, provided the eligible person owned the wool at the time it was cut and sewn.
(ii) Manufacturing of qualifying worsted wool fabric. When reporting the annual dollar value and quantity of imported qualifying worsted wool fabric of the kind described in subheading 9902.51.16 of the 2014 HTS, an eligible person may either have manufactured the wool on its own behalf or had another person manufacture the wool on behalf of the eligible person, provided the eligible person owned the wool at the time of manufacture.