Answered By: Peter Z McKay
Last Updated: Oct 29, 2014     Views: 2575

U.S.- CAFTA-DR Free Trade Agreement

Tariff Elimination Schedules

More than 80 percent of U.S. exports of consumer and industrial goods became duty-free in the Central American countries and the Dominican Republic on the day the CAFTA-DR entered into force, with remaining tariffs on consumer and industrial goods phased out within a ten-year period. Duties on more than half of U.S. agricultural exports were eliminated upon entry into force, with the remaining tariffs on nearly all agricultural products phased out within 15 years.

To determine when your product can enter the CAFTA-DR region duty-free:

1) It is first necessary to obtain the appropriate HS number for your product.

2) With this number it is then possible to check the country-specific tariff schedule (see links below) to find out at what rate the duties on your product will be reduced. Each line item of the country specific tariff schedules is assigned a letter code that indicates the staging by which the current tariff for each item is reduced and ultimately eliminated. The schedules also note the base rate of customs duty, which is used to determine the starting point and interim rate at each stage of reduction for an item. For importing goods from the CAFTA countries or the Dominican Republic to the United States, you would check the U.S. tariff schedule.

At USTR’s CAFTA-DR page, scroll down to find Tariff Schedules or see the country specific links below.

Costa Rica Tariff Schedule

Dominican Republic Tariff Schedule

El Salvador Tariff Schedule

Guatemala Tariff Schedule

Honduras Tariff Schedule

Nicaragua Tariff Schedule

3) After obtaining the staging category letter from the tariff elimination schedule, read the definitions for the category below to determine that product's tariff elimination schedule.

Staging Categories

Except as otherwise noted in the General Notes section to each tariff schedule, the codes are generally defined as follows:

Category A: Goods (there are unique rules for textile or apparel goods) will be duty-free immediately on the date that the Agreement enters into force.

Category B: Duties will be eliminated in five equal annual stages beginning on the date the Agreement enters into force, and shall be duty-free effective January 1 of year five.

Category C: Duties will be eliminated in ten equal annual stages beginning on the date the Agreement enters into force, and shall be duty-free effective January 1 of year ten.

Category D: Duties will be eliminated in fifteen equal annual stages beginning on the date the Agreement enters into force, and shall be duty-free effective January 1 of year fifteen.

Category E: Duties will remain at base rates for years one through six. Duties shall be reduced by 8.25 percent of the base rate on January 1 of year seven and by an additional 8.25 percent each year thereafter through year ten. Beginning January 1 of year 11, duties shall be reduced by an additional 13.4 percent annually through year fifteen, and such goods shall be duty-free effective January 1 of year fifteen.

Category F: Duties will remain at base rates for years one through ten. Beginning January 1 of year 11, duties shall be reduced in ten equal annual stages, and such goods shall be duty-free effective January 1 of year 20.

Category G: Goods already receiving duty-free treatment shall continue to receive duty-free treatment under the FTA.

Category H: Goods in this category will continue to receive most-favored-nation treatment.

Categories M through Y: In addition to the staging categories listed above, the Agreement has country-specific schedules that contain staging categories M through Y. These categories may be found in the General Notes of the country-specific tariff elimination schedule.

At USTR’s CAFTA-DR page, scroll down to find Tariff Schedules. There will be a General Notes and Schedules for each country, or see the country specific links below.

Costa Rica General Notes
Dominican Republic General Notes

El Salvador General Notes

Guatemala General Notes

Honduras General Notes

Nicaragua General Notes

4) Determine whether your product qualifies for preferential duty treatment.

Sample Calculations for Exports

The following examples are expressed in terms of the Customs Tariff Schedule of Honduras, which is similar to the Harmonized Tariff Schedule of the United States (HTSUS), but is not exactly identical.

Tomato Concentrate (HS 2002.90.10): According to the Honduran tariff schedule, this product has been designated Category A staging with a base rate of 5 percent. On the date the CAFTA-DR entered into force, this product, if qualifying as U.S. originating, became duty-free.

Footwear incorporating a protective metal toe-cap, (HS 6401.10.00): According to the Honduran tariff schedule, this product has been designated Category C with a base rate of 15 percent. Beginning on the date the Agreement entered into force, the duty will be reduced on a yearly basis in ten equal stages. Thus, in year one the duty is 13.5 percent, in year two 12 percent, in year three 10.5 percent etc., until the product becomes duty-free on January 1 of year 10.

The following example was taken from the Customs Tariff Schedule of Costa Rica:

Margarine (HS 1517.10.00): According to the Costa Rican tariff schedule, this product has been designated Category S with a base rate of 15 percent. The duty of the product will remain at 15 percent for years one through five. On January 1 of year six, the duty will be reduced by 8 percent of the base rate to 7 percent. On January 1 of year seven the duty will be reduced by an additional 8 percent, effectively reducing the duty amount to 0 percent.

Prepared by the International Trade Administration
Trade Information Center

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