E9-30737. ``Imported Directly'' Requirement Under the United States Bahrain Free Trade Agreement

AGENCIES:

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

ACTION:

Final rule.

SUMMARY:

This document adopts as a final rule, without change, interim amendments to the U.S. Customs and Border Protection (CBP) regulations in title 19 of the Code of Federal Regulations (19 CFR) which were published in the Federal Register on May 22, 2009, as CBP Dec. 09-17 to change certain provisions relating to the requirement under the United States-Bahrain Free Trade Agreement (BFTA) that a good must be “imported directly” from one BFTA Party to the other Party to qualify for preferential tariff treatment. The change involved removing the condition that a good passing through the territory of an intermediate country while en route from a Party to the other Party must remain under the control of the customs authority of the intermediate country. This change more closely conformed these regulatory provisions to the BFTA and the BFTA implementing statute.

DATES:

This final rule is effective January 28, 2010.

FOR FURTHER INFORMATION CONTACT:

Karen Greene, Regulations and Rulings, Office of International Trade, [phone].

SUPPLEMENTARY INFORMATION:

Background

On September 14, 2004, the United States and the Kingdom of Bahrain (the Parties) signed the U.S.-Bahrain Free Trade Agreement (BFTA). The provisions of the BFTA were adopted by the United States with the enactment on January 11, 2006, of the United States-Bahrain Free Trade Area Implementation Act (the Act), Public Law 109-169, 119 Stat. 3581 (19 U.S.C. 3805 note).

On October 16, 2007, CBP published CBP Dec. 07-81 in the Federal Register (72 FR 58511), setting forth interim amendments to implement the preferential tariff treatment and customs-related provisions of the BFTA. The majority of the BFTA implementing regulations were included within new subpart N in part 10 of the CBP regulations (19 CFR subpart N, part 10). In CBP Dec. 08-28, published in the Federal Register on July 23, 2008 (73 FR 42679), CBP adopted the interim regulations set forth in CBP Dec. 07-81 as a final rule with two technical corrections.

Section 10.817(a) of the CBP regulations implementing the BFTA sets forth the basic requirement, found in Article 4.1 of the BFTA, that a good must be “imported directly” from the territory of a Party into the territory of the other Party to qualify as an originating good under the BFTA. In circumstances in which a shipment passes through the territory of a non-Party, § 10.817(a)(2) provided (prior to the publication of the interim amendments set forth in CBP Dec. 09-17 on May 22, 2009) that a good will be considered to be “imported directly” only if the good: (i) Remained under the control of the customs authority of the non-Party; and (ii) did not undergo production, manufacturing, or any other operation outside the territories of the Parties, other than certain specified minor operations. Nearly identical language to that found in § 10.817(a) appeared in § 10.822(a), relating to the application of the “imported directly” requirement to certain non-originating textile and apparel goods that qualify for preferential tariff treatment under an applicable tariff preference level (TPL).

Article 4.9 of the BFTA provides that a good shall not be considered to be “imported directly” from the territory of the other Party if the good undergoes subsequent production, manufacturing, or any other operation outside the territories of the Parties, other than unloading, reloading, or any other operation necessary to preserve it in good condition or to transport the good to the territory of the other Party. Section 202(g) of the Act mirrors the language in Article 4.9 of the Agreement. Neither the BFTA nor the Act includes a requirement that a good must remain under the control of the customs authority of a non-Party to qualify as having met the “imported directly” requirement when the good passes through the territory of a non-Party.

To more closely conform paragraph (a)(2) of §§ 10.817 and 10.822, CBP regulations, to the Agreement and the Act, CBP amended these regulatory provisions on an interim basis in CBP Dec. 09-17, published in the Federal Register on May 22, 2009 (74 FR 23950), by removing the “customs control” requirement. Specifically, CBP Dec. 09-17 removed paragraph (a)(2)(i) of §§ 10.817 and 10.822 and incorporated the text of paragraph (a)(2)(ii) of §§ 10.817 and 10.822 into the paragraph (a)(2) introductory text of those sections.

Although the interim regulatory amendments were promulgated without prior public notice and comment procedures and took effect on May 22, 2009, CBP Dec. 09-17 provided for the submission of public comments that would be considered before adopting the interim regulations as a final rule. The prescribed public comment period closed on July 21, 2009. No comments were received.

Conclusion

Accordingly, CBP has decided to adopt the interim rule published on May 22, 2009, without change.

Executive Order 12866

CBP has determined that this document is not a regulation or rule subject to the provisions of Executive Order 12866 of September 30, 1993 (58 FR 51735, October 1993), because it pertains to a foreign affairs function of the United States and, therefore, is specifically exempted by section 3(d)(2) of Executive Order 12866.

Regulatory Flexibility Act

CBP Dec. 09-17 was published as an interim rule rather than as a notice of proposed rulemaking because, as noted above, the interim amendments involved a foreign affairs function of the United States. Because no notice of proposed rulemaking was required, the provisions of the Regulatory Flexibility Act, as amended (5 U.S.C. 601 et seq.), do not apply. Accordingly, this final rule is not subject to the regulatory analysis requirements or other requirements of 5 U.S.C. 603 and 604.

Signing Authority

This document is being issued in accordance with § 0.1(a)(1) of the CBP Regulations (19 CFR 0.1(a)(1)) pertaining to the authority of the Secretary of the Treasury (or his/her delegate) to approve regulations related to certain customs revenue functions.

List of Subjects in 19 CFR Part 10

• Customs duties and inspection
• Exports
• Imports
• Preference programs
• Trade agreements

Amendments to the CBP Regulations

Accordingly, the interim rule amending part 10 of the CBP regulations (19 CFR part 10), which was published at 74 FR 23950 on May 22, 2009, is adopted as a final rule without change.

Approved: December 22, 2009.

Jayson P. Ahern,

Acting Commissioner, U.S. Customs and Border Protection.

Timothy E. Skud,

Deputy Assistant Secretary of the Treasury.