E8-8095. Entry of Softwood Lumber Products From Canada

AGENCIES:

U.S. Customs and Border Protection, Department of Homeland Security; Department of the Treasury.

ACTION:

Final rule.

SUMMARY:

This document adopts as a final rule, with changes, the interim rule amending title 19 of the Code of Federal Regulations (19 CFR) that was published in the Federal Register (71 FR 61399) on October 18, 2006 as Customs and Border Protection (CBP) Dec. 06-25. The interim rule amended the CBP regulations by prescribing the collection of certain entry summary information for purposes of monitoring and enforcing the Softwood Lumber Agreement (SLA 2006) between the Governments of Canada and the United States, entered into on September 12, 2006. In an effort to better enable CBP to accurately and timely fulfill its data collection and reporting obligations under the SLA 2006, this document identifies an additional entry code option that designates softwood lumber products that are specifically identified as exempt from SLA 2006 export measures pursuant to Annex 1A of the Agreement, notwithstanding the fact that the exempt goods are classifiable in residual Harmonized Tariff Schedule of the United States provisions that are listed as covered by the SLA 2006. This document also amends the list of required entry records set forth in the Appendix to part 163 of title 19 of the Code of Federal Regulations (19 CFR part 163) to reflect the recordkeeping requirements prescribed in CBP Dec. 06-25. Lastly, this document conforms the bond provisions applicable to certain imports of Canadian softwood lumber to reflect the softwood lumber provisions set forth in § 12.140 of title 19 of the Code of Federal Regulations.

DATES:

Effective Date: April 17, 2008.

FOR FURTHER INFORMATION CONTACT:

Millie Gleason, Office of International Trade, Tel: [phone].

SUPPLEMENTARY INFORMATION:

Background

On September 12, 2006, the Governments of the United States and Canada (the “Parties”) signed a bilateral Softwood Lumber Agreement (“SLA 2006”) concerning trade in softwood lumber products.

On October 18, 2006, Customs and Border Protection (CBP) published in the Federal Register (71 FR 61399), as CBP Dec. 06-25, an interim rule amending § 12.140 of title 19 of the Code of Federal Regulations (19 CFR 12.140) to reflect the terms of the SLA 2006 by prescribing special entry requirements applicable to shipments of softwood lumber products from Canada. The interim amendments required importers to enter a letter code representing the softwood lumber product's Canadian Region of Origin in the data entry field entitled “Country of Origin” located on the CBP Form 7501. Importers were also required to enter a Canadian-issued 8-digit export permit number preceded by a letter code designating either: (1) The date of shipment; (2) a Canadian Region whose exports of softwood lumber products are exempt from the export measures contained in the SLA 2006; or (3) a company listed in Annex 10 of the SLA 2006 as exempt from the Agreement's export measures. Importers of softwood lumber products from the Maritimes were required to provide CBP with the original paper Certificate of Origin issued by the Maritime Lumber Bureau with the paper entry summary documentation. CBP Dec. 06-25 also amended, on an interim basis, the “List of Records Required for the Entry of Merchandise” set forth in the Appendix to part 163 of title 19 of the CFR (19 CFR part 163) to reflect the entry document requirements mandated by the SLA 2006.

Comments were solicited on the interim rule.

Discussion of Comments

Three comments were received in response to the solicitation of comments in CBP Dec. 06-25. One comment was retracted by the commenter. A description of the comments received, together with CBP's analyses, is set forth below.

Comment: One commenter offered support for the requirement set forth in CBP Dec. 06-25 that an original Certificate of Origin from the Maritime Lumber Bureau must accompany each entry of softwood lumber into the United States and requested that this requirement be retained in the final rule.

CBP Response: This entry requirement is retained in the final rule.

Comment: One commenter suggested that CBP adopt two additional data-input requirements for imports of Canadian softwood lumber products. The commenter recommended that CBP require importers to disclose the “Export Price” of the merchandise within the meaning of Article XXI.25 of the SLA 2006. As defined in the agreement, the Export Price is the taxable value for purposes of calculating SLA 2006 export fees that Canada is obligated to collect. The commenter also suggests that CBP require importers of all Canadian softwood lumber products to declare the merchandise's “Date of Shipment” within the meaning of Article XXI.16 of the SLA 2006. The commenter asserts that this date is important because, depending on volumes shipped during specific periods (as determined by Date of Shipment), shipments from the Maritimes, the Territories, or by companies listed as excluded from export measures in the SLA 2006, can be subject to export measures notwithstanding normally applicable exemptions. The commenter notes that, under the terms of the interim rule, CBP is collecting Date of Shipment data regarding imports of most Canadian softwood lumber, but not on lumber produced in the Maritime Provinces, the Territories, or by excluded Canadian lumber producers.

CBP Response: Pursuant to Article XV.B of the SLA 2006, the U.S. is obligated to provide Canada with the appraised value, as defined by CBP, for each entry of softwood lumber products filed during the preceding month. The U.S. does not collect export prices; exporters of softwood lumber to the U.S provide that data to Canada.

The commenter correctly notes that CBP collects Date of Shipment data for all imports of softwood lumber covered by the SLA 2006, except for entries of softwood lumber that claim an exemption from the Agreement's export measures. Although CBP does not require Date of Shipment data for imports claiming exemption from SLA 2006 export measures, CBP collects the export date for these imports and uses that date to assess the Date of Shipment and, consequently, whether an exempt status remains valid for a given month.

Other Comments: Additional comments were received after the close of the comment period proposing unilateral enforcement of the Softwood Lumber Agreement and the collection of additional information in order to determine if the correct amount of tax is actually collected by Canadian authorities.

CBP Response: Such proposals exceed the scope of CBP authority and the requirements of the Softwood Lumber Agreement and consequently are not adopted in this document.

Conclusion

After review of the comments and further consideration, CBP has decided to adopt as final the interim rule published in the Federal Register (71 FR 61399) on October 18, 2006, as CBP Dec. 06-25, with the additional modifications set forth below.

As noted above, CBP Dec. 06-25 identifies a series of letter codes that are to be used as prefixes for the export permit numbers entered on the CBP Form 7501. These codes designate either an exclusion from export measures based on a product's Region of Origin, or a company's exempt-status, or the date of shipment as defined in Article XXI.16 of the SLA 2006. These codes enable the United States to fulfill its information collection and exchange obligations under Article XV of the Agreement by being able to assess monthly volumes attributable to specific Regions and excluded companies. This document clarifies CBP Dec. 06-25 by providing importers with an additional entry code option, “P88888888”, which is used to designate entries of softwood lumber products that are specifically identified as exempt from SLA 2006 export measures pursuant to Annex 1A of the Agreement, notwithstanding the fact that the exempt goods are classifiable in residual Harmonized Tariff Schedule of the United States provisions that are otherwise listed as covered by the SLA 2006.

In addition, § 12.140(b) and (c) are amended to clarify that all entries of softwood lumber products must be submitted to CBP in an electronic format, except for entries of softwood lumber products whose region of origin is the Maritimes, which must be submitted to CBP in paper.

The “List of Records Required for the Entry of Merchandise” set forth in the Appendix to part 163 of title 19 of the CFR (19 CFR part 163) is also amended by this document to clarify that, in addition to the Certificate of Origin issued by Canada's Maritime Lumber Bureau, the Canadian-issued Export Permit is a required entry document as per the SLA 2006 and 19 CFR 12.140(d).

Lastly, this document conforms the bond provisions applicable to certain imports of Canadian softwood lumber, set forth in 19 CFR 113.62(k), to reflect the new organizational structure of the softwood lumber provisions set forth in 19 CFR 12.140. To that end, § 113.62(k) is amended by removing the reference to paragraph (a) within § 12.140, and the existing time period of 20 days within which a principal must establish to the satisfaction of CBP that the applicable export permit has been issued by the Government of Canada is changed to 10 days to reflect the fact that, pursuant to the SLA 2006, the export permit number must be submitted to CBP at the time of entry summary.

Inapplicability of Notice and Delayed Effective Date Requirements

Pursuant to 5 U.S.C. 553(a)(1), public notice and a delayed effective date are inapplicable to this regulation because it involves a foreign affairs function of the United States.

Executive Order 12866

Because this rule involves a foreign affairs function of the United States, it is not subject to Executive Order 12866 and has not been reviewed by the Office of Management and Budget.

Regulatory Flexibility Act

Because no notice of proposed rulemaking is required for this rule, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do not apply.

Paperwork Reduction Act

The collection of information referenced in this regulation, CBP Form 7501, has been previously reviewed and approved by the Office of Management and Budget in accordance with the requirements of the Paperwork Reduction Act (44 U.S.C. 3507) under OMB-assigned control number 1651-0022.

Signing Authority

This document is being issued in accordance with 19 CFR 0.1(a)(1).

List of Subjects

19 CFR Part 12

• Bonds
• Customs duties and inspection
• Entry of merchandise
• Imports
• Prohibited merchandise
• Reporting and recordkeeping requirements
• Restricted merchandise

19 CFR Part 113

• Bonds
• Customs duties and inspection
• Imports
• Reporting and recordkeeping requirements
• Surety bonds

19 CFR Part 163

• Customs duties and inspection
• Reporting and recordkeeping requirements

Amendment to the Regulations

For the reasons stated above, parts 12, 113 and 163 of title 19 of the Code of Federal Regulations are amended as set forth below.

PART 12—SPECIAL CLASSES OF MERCHANDISE

1. The authority citation for part 12 continues to read in part as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States (HTSUS)), 1624;

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2. Section 12.140 is revised to read as follows:

§ 12.140

Entry of softwood lumber products from Canada.

The requirements set forth in this section are applicable for as long as the Softwood Lumber Agreement (SLA 2006), entered into on September 12, 2006, by the Governments of the United States and Canada, remains in effect.

(a) Definitions. The following definitions apply for purposes of this section:

(1) British Columbia Coast. “British Columbia Coast” means the Coastal Forest Regions as defined by the existing Forest Regions and Districts Regulation, B.C. Reg. 123/2003.

(2) British Columbia Interior. “British Columbia Interior” means the Northern Interior Forest Region and the Southern Interior Forest Region as defined by the existing Forest Regions and Districts Regulation, B.C. Reg. 123/2003.

(3) Date of shipment. “Date of shipment” means, in the case of products exported by rail, the date when the railcar that contains the products is assembled to form part of a train for export; otherwise, the date when the products are loaded aboard a conveyance for export. If a shipment is transshipped through a Canadian reload center or other inventory location, the date of shipment is the date the merchandise leaves the reload center or other inventory location for final shipment to the United States.

(4) Maritimes. “Maritimes” means New Brunswick, Canada; Nova Scotia, Canada; Prince Edward Island, Canada; and Newfoundland and Labrador, Canada.

(5) Region. “Region” means British Columbia Coast or British Columbia Interior as defined in paragraphs (a)(1) and (2) of this section; Alberta, Canada; Manitoba, Canada; Maritimes, Canada; Northwest Territories, Canada; Nunavut Territory, Canada; Ontario, Canada; Saskatchewan, Canada; Quebec, Canada; or Yukon Territory, Canada.

(6) Region of Origin. “Region of Origin” means the Region where the facility at which the softwood lumber product was first produced into such a product is located, regardless of whether that product was further processed (for example, by planing or kiln drying) or was transformed from one softwood lumber product into another such product (for example, a remanufactured product) in another Region, with the following exceptions:

(i) The Region of Origin of softwood lumber products first produced in the Maritime Provinces from logs originating in a non-Maritime Region will be the Region, as defined above, where the logs originated; and

(ii) The Region of Origin of softwood lumber products first produced in the Yukon, Northwest Territories or Nunavut (the ‘Territories’) from logs originating outside the Territories will be the Region where the logs originated.

(7) SLA 2006. “SLA 2006” or “SLA” means the Softwood Lumber Agreement entered into between the Governments of Canada and the United States on September 12, 2006.

(8) Softwood lumber products. “Softwood lumber products” mean those products described as covered by the SLA 2006 in Annex 1A of the Agreement.

(b) Reporting requirements. In the case of softwood lumber products from Canada listed in Annex 1A of the SLA 2006 as covered by the scope of the Agreement, the following information must be included on the electronic entry summary documentation (CBP Form 7501) for each entry (except for entries of softwood lumber products whose Region of Origin is the Maritimes, in which case entry summary documentation must be submitted in paper as set forth in paragraph (c) of this section):

(1) Region of Origin. The letter code representing a softwood lumber product's Canadian Region of Origin, as posted on the Administrative Message Board in the Automated Commercial System. (For example, the letter code “XD” designates softwood lumber products whose Region of Origin is British Columbia Coast. The letter code “XE” designates softwood lumber products whose Region of Origin is British Columbia Interior.)

(2) Export Permit Number—(i) Export Permit Number issued by Canada at time of filing entry summary documentation. The 8-digit Canadian-issued Export Permit Number, preceded by one of the following letter codes:

(A) The letter code assigned to represent the date of shipment (i.e., “A” represents January, “B” represents February, “C” represents March, etc.), except for those softwood lumber products produced by a company listed in Annex 10 of the SLA 2006 or whose Region of Origin is the Maritimes, Yukon, Northwest Territories or Nunavut;

(B) The letter code “X”, which designates a company listed in Annex 10 of the SLA 2006; or

(C) The letter code assigned to represent the Maritimes (code M); Yukon (code Y); Northwest Territories (code W); or Nunavut (code N), for softwood lumber products originating in these regions.

(ii) No Export Permit Number required due to softwood lumber product's exempt status. Where an Export Permit Number is not required because the imported softwood lumber product is specifically identified as exempt from SLA 2006 export measures pursuant to Annex 1A of the Agreement, notwithstanding the fact that the exempt goods are classifiable in residual Harmonized Tariff Schedule of the United States provisions otherwise listed as covered by the SLA 2006, the alpha-numeric code “P88888888” must be used in the Export Permit Number data entry field on the CBP Form 7501.

(c) Original Maritime Certificate of Origin. Where a softwood lumber product's Region of Origin is the Maritimes, the original paper copy of the Certificate of Origin issued by the Maritime Lumber Bureau must be submitted to CBP and the entry summary documentation for each such entry must be in paper and not electronic. The Certificate of Origin must specifically state that the corresponding CBP entries are for softwood lumber products first produced in the Maritimes from logs originating in the Maritimes or State of Maine.

(d) Recordkeeping. Importers must retain copies of export permits, certificates of origin, and any other substantiating documentation issued by the Canadian Government pursuant to the recordkeeping requirements set forth in part 163 of title 19 to the CFR.

PART 113—CUSTOMS BONDS

3. The general authority citation for part 113 continues to read as follows:

Authority: 6 U.S.C. 101, et seq.; 19 U.S.C. 66, 1623, 1624.

* * * * *

§ 113.62

[Amended]

4. In § 113.62, paragraph (k) is amended by:

a. Removing the term “§ 12.140(a)” and adding in its place the term “§ 12.140”;

b. Removing the number “20” and adding in its place the number “10”; and

c. Removing the word “Customs” and adding in its place the term “CBP”.

PART 163—RECORDKEEPING

5. The authority citation for part 163 continues to read as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1484, 1508, 1509, 1510, 1624.

6. The Appendix to part 163 is amended by removing the listing for § 12.140(c) and adding in its place § 12.140(b) and (c) under section IV to read as follows:

Appendix to Part 163—Interim (a)(1)(A) List

* * * * *

IV. * * *

§ 12.140(b) and (c)

Canadian-issued Export Permit, Certificate of Origin issued by Canada's Maritime Lumber Bureau.

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W. Ralph Basham,

Commissioner, U.S. Customs and Border Protection.

Approved: April 10, 2008.

Timothy E. Skud,

Deputy Assistant Secretary of the Treasury.