[Federal Register Volume 59, Number 117 (Monday, June 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14868]
[[Page Unknown]]
[Federal Register: June 20, 1994]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Part 12
[T.D. 94-52]
RIN 1515-AB50
North American Free Trade Agreement--Submission of Certificates
of Eligibility for Textile and Apparel Goods Under the Tariff
Preference Level Provisions
AGENCY: U.S. Customs Service, Department of the Treasury.
ACTION: Interim rule; solicitation of comments.
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SUMMARY: This document amends the Customs Regulations to require
submission of a Certificate of Eligibility in connection with the entry
of non-originating textile and apparel goods from Canada or Mexico for
which preferential tariff treatment is claimed under the tariff
preference level provisions of the North American Free Trade Agreement
(NAFTA). Failure to submit the required Certificate of Eligibility will
result in a denial of the claim for preferential tariff treatment. This
regulatory action is intended to ensure that the NAFTA implementing
regulations reflect procedures agreed to by the United States, Canada
and Mexico.
DATES: Interim rule effective on June 20, 1994; comments must be
received on or before August 19, 1994.
ADDRESSES: Written comments (preferably in triplicate) may be addressed
to the Regulations Branch, Office of Regulations and Rulings, U.S.
Customs Service, 1301 Constitution Avenue, NW., Washington, D.C. 20229.
Comments submitted may be inspected at the Regulations Branch, Office
of Regulations and Rulings, Franklin Court, 1099 14th Street, NW.,
suite 4000, Washington, D.C.
FOR FURTHER INFORMATION CONTACT: Dick Crichton, Office of Trade
Operations (202-927-0162).
SUPPLEMENTARY INFORMATION:
Background
On December 17, 1992, the United States, Canada and Mexico entered
into the North American Free Trade Agreement (NAFTA), one of the
principal purposes of which is to eliminate tariff and other barriers
to trade in, and facilitate the cross-border movement of, goods and
services between the territories of the countries. The provisions of
the NAFTA were adopted by the United States with the enactment of the
North American Free Trade Agreement Implementation Act (the ``Act''),
Public Law 103-182, 107 Stat. 2057. On December 30, 1993, Customs
published in the Federal Register (58 FR 69460) T.D. 94-1 setting forth
interim amendments to the Customs Regulations to implement the Customs-
related aspects of the NAFTA. Those interim regulations took effect on
January 1, 1994, to coincide with the entry into force of the NAFTA.
The centerpiece of the NAFTA involves the granting of preferential
tariff (duty-free or reduced-duty) treatment on goods imported into a
NAFTA country from another NAFTA country. As a general rule, such
preferential tariff treatment may only be accorded to goods that
satisfy the rules of origin standards set forth in Chapter Four of the
NAFTA; such goods are referred to as ``originating'' goods for NAFTA
purposes. The NAFTA Chapter Four rules of origin are set forth in
section 202 of the Act which is codified at 19 U.S.C. 3332.
Under Chapter Three of the NAFTA, Appendix 6.B. to Annex 300-B
provides for an exception to the general rule regarding the granting of
NAFTA preferential tariff treatment only to originating goods. This
exception concerns specified textile and apparel goods which, because
of the origin of the materials used to produce the goods in a NAFTA
country and/or the nature of the processing used to produce the goods
in a NAFTA country, do not meet the Chapter Four rules of origin
standards and thus do not qualify as originating goods under the NAFTA.
For such non-originating goods, Appendix 6.B. to Annex 300-B provides
that they may nevertheless be granted preferential tariff treatment
(that is, the duty-free or reduced-duty treatment that would be
accorded to the same type of good when it qualifies as an originating
good) up to specified annual quantitative ``tariff preference levels''
(TPLs). Once a TPL applicable to a NAFTA country's exports to another
NAFTA country has been reached, any further exports of goods of that
TPL category to the same NAFTA country during that year may not be
accorded NAFTA preferential tariff treatment but rather will be subject
to duty at the most-favored-nation rate. The TPL quantitative limits
are set forth by category in Schedules 6.B.1. through 6.B.3. of Annex
300-B with reference to imports into each NAFTA country from each of
the other NAFTA countries. For U.S. import purposes, the TPL provisions
of Appendix 6.B. and Schedules 6.B.1. through 6.B.3. are also set forth
in Additional U.S. Notes 3 through 6 to Section XI, HTSUS.
The basic procedures for filing a claim for NAFTA preferential
tariff treatment, set forth in Sec. 181.21 of the NAFTA implementing
regulations (19 CFR 181.21), are generally applicable in the case of
goods for which preferential tariff treatment is sought under the TPL
provisions described above. However, there is one principal exception
to those procedures as regards goods to which Appendix 6.B. to Annex
300-B applies: as stated in paragraph (a) of that section, there is no
requirement that the written declaration (which constitutes the claim
for preferential tariff treatment) be based on a Certificate of Origin
in the possession of the importer. This exception is necessary because
a NAFTA Certificate of Origin has reference only to originating goods
(that is, goods which comply with the Chapter Four rules of origin
standards) and thus does not cover TPL goods which are, by definition,
not originating goods. In this regard, Sec. 181.21(a) also contains a
cross-reference to Sec. 12.132 (19 CFR 12.132) which was added by T.D.
94-1 to clarify the application of the already-existing Sec. 12.130(f)
(19 CFR 12.130(f)) country of origin declaration requirements in the
context of textile and apparel goods which are subject to the
provisions of Annex 300-B of the NAFTA.
Following the publication of T.D. 94-1 and the entry into force of
the NAFTA, representatives of the United States, Canada and Mexico
continued to have discussions regarding whether additional requirements
or procedures should be adopted for purposes of administering the
provisions of Annex 300-B of the NAFTA. As a result of those
discussions, Canada and Mexico have decided on, and implemented, use of
a Certificate of Eligibility as the means for monitoring and
identifying export shipments eligible for preferential tariff treatment
pursuant to the TPL provisions of Appendix 6.B. to Annex 300-B of the
NAFTA. The Certificate of Eligibility, signed by an authorized official
of the Canadian or Mexican government, is issued to the Canadian or
Mexican exporter for transmittal to the importer of the goods who then
would be able to make a claim for preferential tariff treatment based
on the Certificate of Eligibility. The United States, Canada and Mexico
have agreed that presentation of a properly completed and executed
Certificate of Eligibility for Canadian and Mexican exports is a
prerequisite to the granting of a claim for preferential tariff
treatment under the TPL provisions, and failure to present such a
Certificate of Eligibility will result in assessment of duty at the
most-favored-nation (that is, non-NAFTA) rate. No action has been taken
by the United States to institute use of a Certificate of Eligibility
for U.S. exports to Canada and Mexico.
In light of the adoption of the above procedures regarding use of
the Certificate of Eligibility for Canadian and Mexican exports,
Customs has been granting claims for preferential tariff treatment on
TPL goods imported from Canada or Mexico only if a properly completed
and executed Certificate of Eligibility pertaining to the goods is
presented to Customs when the claim is made. In order to ensure that
the NAFTA implementing regulations reflect the trilaterally-agreed
procedures and provide appropriate guidance to the public regarding
U.S. import requirements, this document amends Sec. 12.132 on an
interim basis to require submission of a Canadian or Mexican
Certificate of Eligibility in connection with a claim for preferential
tariff treatment on goods covered by the NAFTA TPL provisions. Customs
further believes that this interim amendment should take effect
immediately to ensure the greatest procedural benefit to the public,
and it is noted in this regard that the post-importation refund
procedure under the NAFTA applies only to ``originating'' goods and
thus is not an available administrative remedy in a TPL context for a
failure to make a claim at the time of importation (see Article 502(3)
of the NAFTA, 19 U.S.C. 1520(d) as added by section 206 of the Act, and
Subpart D of Part 181 of the NAFTA implementing regulations set forth
in T.D. 94-1).
Comments
Before adopting this interim regulation as a final rule,
consideration will be given to any written comments timely submitted to
Customs. Comments submitted will be available for public inspection in
accordance with the Freedom of Information Act (5 U.S.C. 552),
Sec. 1.4, Treasury Department Regulations (31 CFR 1.4), and
Sec. 103.11(b), Customs Regulations (19 CFR 103.11(b)), on regular
business days between the hours of 9 a.m. and 4:30 p.m. at the
Regulations Branch, Office of Regulations and Rulings, U.S. Customs
Service, Franklin Court, 1099 14th Street NW., suite 4000, Washington,
DC.
Inapplicability of Notice and Delayed Effective Date Requirements
Pursuant to the provisions of 5 U.S.C. 553(a), public notice is
inapplicable to this interim regulation because it is within the
foreign affairs function of the United States. A failure to have this
regulation in place at the earliest practicable date would provoke
undesirable international consequences. In addition, because this
regulation sets forth procedures which the public needs to know in
order to claim the benefit of a tariff preference under the NAFTA, it
is determined pursuant to 5 U.S.C. 553(b)(B), that notice and public
procedures are impracticable, unnecessary, and contrary to the public
interest. Furthermore, for the above reasons, it is determined that
good cause exists under the provisions of 5 U.S.C. 553(d)(1) and (d)(3)
for dispensing with a delayed effective date.
Executive Order 12866
Because this document involves a foreign affairs function of the
United States and implements an international agreement, it is not
subject to the provisions of E.O. 12866.
Regulatory Flexibility Act
Because no notice of proposed rulemaking is required for interim
regulations, the provisions of the Regulatory Flexibility Act (5 U.S.C.
601 et seq.) do not apply.
Drafting Information
The principal author of this document was Francis W. Foote, Office
of Regulations and Rulings, U.S. Customs Service. However, personnel
from other offices participated in its development.
List of Subjects in 19 CFR Part 12
Canada, Customs duties and inspection, Marking, Mexico, Reporting
and recordkeeping requirements, Textiles and textile products, Trade
agreements.
Amendment to the Regulations
Accordingly, for the reasons stated above, Part 12, Customs
Regulations (19 CFR part 12) is 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 17,
Harmonized Tariff Schedule of the United States (HTSUS)), 1624; * *
*
2. Section 12.132 is amended by redesignating paragraphs (a), (b),
and (c) as paragraphs (1), (2), and (3), designating the introductory
text of the section as paragraph (a) introductory text, adding a
heading to newly designated paragraph (a), and adding paragraph (b) to
read as follows:
Sec. 12.132 Textile and apparel goods under the North American Free
Trade Agreement.
(a) Country of origin declaration. * * *
* * * * *
(b) Certificate of Eligibility. In connection with a claim for
NAFTA preferential tariff treatment involving non-originating textile
and apparel goods subject to the tariff preference level provisions of
Appendix 6.B. to Annex 300-B of the NAFTA and Additional U.S. Notes 3
through 6 to Section XI, Harmonized Tariff Schedule of the United
States, the importer shall submit to Customs a Certificate of
Eligibility covering the goods. The Certificate of Eligibility shall be
properly completed and signed by an authorized official of the Canadian
or Mexican government and shall be presented to Customs at the time the
claim for preferential tariff treatment is filed under Sec. 181.21 of
this chapter. Failure to timely submit the required Certificate of
Eligibility will result in a denial of the claim.
Samuel H. Banks,
Acting Commissioner of Customs.
Approved: June 4, 1994.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 94-14868 Filed 6-17-94; 8:45 am]
BILLING CODE 4820-02-P
