[Federal Register Volume 64, Number 51 (Wednesday, March 17, 1999)]
[Proposed Rules]
[Pages 13142-13143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6467]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Part 146
RIN 1515-AC05
Weekly Entry Procedure for Foreign Trade Zones
AGENCY: Customs Service, Department of the Treasury.
ACTION: Proposed rule; withdrawal.
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SUMMARY: This document withdraws the proposed amendments to the Customs
Regulations that would have expanded the weekly entry procedure for
foreign trade zones to include merchandise involved in activities other
than exclusively assembly-line type production operations. Customs has
determined that the proposed expanded weekly entry procedure would
significantly reduce the collection of the merchandise processing fee
(MPF) that Customs needs to offset its administrative costs incurred in
processing imported merchandise that is formally entered or released.
DATE: The withdrawal is effective on March 17, 1999.
FOR FURTHER INFORMATION CONTACT: Linda Walfish, Office of Field
Operations, (202-927-0042).
SUPPLEMENTARY INFORMATION:
Background
The Foreign Trade Zones Act of 1934, as amended (19 U.S.C. 81a-u)
(the ``FTZA'') provides for the establishment and regulation of foreign
trade zones. Foreign trade zones are secured areas to which foreign and
domestic merchandise, except that prohibited by law, may be exempted
from the Customs laws of the United States for the purposes enumerated
in the FTZA. Foreign trade zones, by virtue of their potential to allow
exemption from the Customs laws, are intended to attract and promote
legitimate international trade and commerce.
Part 146, Customs Regulations (19 CFR part 146), sets forth the
documentation and recordkeeping requirements governing, among other
things, the admission of merchandise into a zone, its manipulation,
manufacture, storage, destruction or exhibition while in the zone, and
its entry and removal from the zone.
To this latter end, Customs has in place a weekly entry procedure
for foreign trade zones, as prescribed in Sec. 146.63(c)(1), Customs
Regulations (19 CFR 146.63(c)(1)). Under the procedure, instead of
requiring a separate entry for each removal of merchandise from a zone,
as would otherwise be the case, Customs accepts one entry from a zone
user covering all its anticipated removals fro an entire weekly period.
The use of this procedure, however, has been limited exclusively to
merchandise that is manufactured or changed into its final form just
shortly (within 24 hours) before physical transfer from the zone.
The weekly entry procedure is believed to be especially necessary
for assembly-line type manufacturing operations because, in these
circumstances, there would otherwise be little time for examination of
the merchandise and furnishing of entry documentation after the
merchandise was in its final form but before its physical removal from
the zone. Thus, under the weekly entry process, the assembly-line
operation would not have to be delayed pending acceptance of an entry
and Customs examination of the merchandise.
On March 14, 1997, Customs published in the Federal Register (62 FR
12129) a notice of proposed rulemaking that would have expanded the use
of weekly entry by adding a weekly entry procedure to cover merchandise
involved in activities other than manufacturing operations. It was
expected that the expanded weekly entry procedure would be available to
zones (including subzones) having large quantities of different types
of merchandise.
The principal purpose of the proposed expanded weekly entry
procedure, which would have required electronic entry filing, was to
reduce the number of paper entries from zones and further facilitate
the processing of zone entries, with resulting reductions in paperwork
and associated industry costs.
In order to test the expanded weekly entry procedure, a pilot
program had been authorized in September 1994 for a selected number of
zones/subzones.
Effect on Merchandise Processing Fee
Based upon further evaluation of the pilot program, and comments
made by zone operators and others on the proposed rule, it is clear
that the expanded procedure would significantly impact Customs
collection of the merchandise processing fee (MPF). This poses a
serious funding concern for the Government.
Under 19 U.S.C. 58c(a)(9)(A) and (B)(i), the MPF is the fee that
Customs assesses on importers in order to offset its administrative
costs (salaries and expenses) incurred in connection with the
processing of imported merchandise that is formally entered or
released. The fees collected are deposited in the
[[Page 13143]]
general fund of the Treasury in a separate account known as the
``Customs User Fee Account'' (19 U.S.C. 58c(f)).
Specifically, except as otherwise provided, merchandise that is
formally entered is subject to an ad valorem MPF of .21 percent (19 CFR
24.23(b)(1)(i)(A)); however, on any one such entry of merchandise, the
fee may not exceed $485, subject to certain provisions not here
relevant (19 CFR 24.23(b)(1)(i)(B)).
As a result, in those cases where a company must now make a
separate entry for each of its removals of merchandise from a zone, and
its total payment of the MPF for all entries so made during a week
greatly exceeds $485, the company would be able to lower this payment
substantially if it could instead make one entry covering all its
removals from the zone for the week, with the MPF thereby capped at
$485.
Clearly, Customs collection of the MPF would be significantly
reduced under an expanded weekly entry program. Indeed, some parties
expressing interest in the proposed rule even asserted that they would
apply for foreign trade zone status just to gain the benefit of the
reduced MPF through the use of a weekly entry.
Moreover, other industries, such as bonded warehouse associations,
stated that similar entry procedures should as well be available to
them, which also raised a fairness concern.
Withdrawal of Proposal
In view of the foregoing, and following further consideration of
the matter, Customs has determined to withdraw the notice of proposed
rulemaking that was published in the Federal Register (62 FR 12129) on
March 14, 1997. Customs, however, will continue to cooperate with the
trade in seeking mutually satisfactory ways in which to further
facilitate entry processing or imported merchandise, so as to reduce
associated paperwork and costs to industry, while at the same time
reasonably preserving the integrity of the MPF which is necessary to
offset merchandise processing costs incurred by the Government in this
regard.
Raymond W. Kelly,
Commissioner of Customs.
Approved: February 9, 1999.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 99-6467 Filed 3-16-99; 8:45 am]
BILLING CODE 4820-02-M
