[Federal Register Volume 61, Number 141 (Monday, July 22, 1996)]
[Proposed Rules]
[Pages 37845-37848]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18427]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
15 CFR Part 303
DEPARTMENT OF THE INTERIOR
Office of Territorial and International Affairs
[Docket No. 960508126-6126-01]
RIN 0625-AA46
Proposed Changes in Procedures for Insular Possessions Watch
Program
AGENCIES: Import Administration, International Trade Administration,
Department of Commerce; Office of Territorial and International
Affairs, Department of the Interior.
ACTION: Proposed rule and request for comments.
-----------------------------------------------------------------------
SUMMARY: This action invites public comment on a proposal to amend the
ITA regulations, which govern duty-exemption allocations and duty-
refund entitlements for watch producers in the United States' insular
possessions (the Virgin Islands, Guam and American Samoa) and the
Northern Mariana Islands. The proposed amendments would modify
procedures for completion and use of the ``Permit to Enter Watches and
Watch Movements into the Customs Territory of the United States'' (Form
ITA-340); make the technical changes required by the passage of the
Uruguay Round Agreements Act in 1994; eliminate the mid-year report
(Form ITA-321P); change the percentage creditable towards the duty-
refund of wages for non-9\1/5\ watch and watch movement repairs and
raise one of the percentages in the formula for calculating the duty-
refund; revise the total quantity and respective territorial shares of
insular watches and watch movements which would be allowed to enter the
United States free of duty; remove reference to watches and watch
movements which are only ineligible for duty-free
[[Page 37846]]
treatment due to value-limit reasons from the percentage of non-9\1/5\
wages creditable toward the duty-refund; raise the maximum value of
components for watches; and make other necessary changes to consolidate
and simplify the regulations.
DATES: Comments must be received on or before August 21, 1996.
ADDRESSES: Address written comments to Faye Robinson, Program Manager,
Statutory Import Programs Staff, Room 4211, U.S. Department of
Commerce, Washington, D.C. 20230.
FOR FURTHER INFORMATION CONTACT: Faye Robinson, (202) 482-3526, same
address as above.
SUPPLEMENTARY INFORMATION: The insular possessions watch industry
provision in Sec. 110 of Pub. L. No. 97-446 (96 Stat. 2331) (1983) as
amended by Sec. 602 of Pub. L. No. 103-465 (108 Stat. 4991) (1994)
additional U.S. Note 5 to chapter 91 of the HTS requires the Secretary
of Commerce and the Secretary of the Interior, acting jointly, to
establish a limit on the quantity of watches and watch movements which
may be entered free of duty during each calendar year. The law also
requires the Secretaries to establish the shares of this limited
quantity which may be entered from the Virgin Islands, Guam, American
Samoa and the Northern Mariana Islands. After the Departments have
verified the data submitted on application Form ITA-334P, the
producers' duty-exemption allocations are calculated from the
territorial share in accordance with Section 303.14 of the regulations
and each producer is issued a duty-exemption license. Section 303.7
paragraph (b) of the regulations states the procedures for the issuance
of the ``Permit to Enter Watches and Watch Movements into the Customs
Territory of the United States'' (``permit'' or ``shipment permit''),
Form ITA-340, against the producers' duty-exemption licenses.
Currently, an authorized official of the territorial government issues
each shipment permit (completed from data supplied by the licensee) and
certifies that the permit is issued against a valid license and that
the remaining balance of the license, as shown on the permit, has been
verified. Under the proposed amendment, the licensed companies would be
given revised permits for completion and the licensee would have
responsibility for self-certifying that the permit is issued against a
valid license and that the remaining balance of the license, as shown
on the permit, is correct according to company records. The licensee
would also continue to certify that the watches and watch movements to
be entered under the permit have been assembled in the U.S. insular
possessions in compliance with the regulations of the Departments of
Commerce and the Interior and the U.S. Customs Service, and that they
meet all U.S. Customs Service requirements for duty-free entry under
additional U.S. note 5 of chapter 91 of the Harmonized Tariff Schedule
of the United States. A copy of the signed permit would then be taken
or sent via facsimile, no later than the day of shipment, to the
appropriate territorial government officials for recording and
verification. The completed and signed permit would be filed along with
the other Customs Service entry paperwork requirements unless the
importer or its representative transmits the data through the Automated
Broker Interface (``ABI'') system of the Customs Service. Entries made
by electronic transmission would not require the submission of a permit
(Form ITA-340) to Customs, but the permit information would have to be
maintained by the importer or its authorized agent for the period
prescribed by Customs' recordkeeping regulations, currently five years.
The changes in permit procedures are being proposed to eliminate
paperwork, namely, the submission of Form ITA-340 to Customs with ABI
entries. Also, the proposed new procedures would allow required permit
information to pass between the territorial government and the watch
producers via facsimile, which would eliminate the burden of travel to
and from the territorial office.
The permit currently consists of five self-carboned pages with one
copy to be presented to the U.S. Customs officer at the port of entry
and then forwarded to the Department of Commerce after entry number,
date of entry, and port of entry have been added by the Customs
officer; one copy to be retained by the licensee's broker or agent; one
copy to be retained by the licensee; one copy to be retained by the
territorial office; and one copy to be forwarded by the territorial
office to the Department of Commerce. Under the proposed amendment, the
revised permit would be a single page document which could be produced
by the licensee in an approved computerized format or any other medium
or format approved by the Department of Commerce. On entries made
through ABI, the licensee would not need to make any copies of the
original permit if the permit is sent via facsimile or other data
communications system to the territorial government officials and the
importer or its authorized agent (otherwise, two copies needed). For
non-electronic transmission entries filed with Customs officials at the
port, the original permit would continue to be a required part of the
paperwork submitted to Customs to receive duty-free treatment. Customs
would still forward the permit to the Department of Commerce after
filling in the entry number and date of entry. The licensee, as with
ABI entries, would need to make a copy of the permit for the
territorial government and the importer or its authorized agent's
records only if the permit is not sent via facsimile or other data
communication system. The territorial government officials would
continue to send a copy of each permit to the Department of Commerce.
The proposed revision of the permit would not only reduce the paperwork
associated with the permit, but would also eliminate the need for
Customs to mail a copy of the permit to the Department of Commerce for
all ABI entries.
Section 602 of Public Law 103-465 enacted on December 8, 1994
amended Public Law 97-446. The proposed rule would make the necessary
technical changes to reflect the new authority for the duty-refund
entitlements for the insular watch program. Changes would be made to
Authority, Sec. 303.1(a), Sec 303.2((a)(1) and Sec. 303.12(c)(2).
We also propose eliminating the mid-year report (Form ITA-321P).
Sec. 303.11 (Mid-year reporting requirement) of the regulations and
Sec. 303.2(b)(4) (Form ITA-321P) would be removed. A major purpose of
the mid-year report was to establish whether companies required more
duty-exemption allocation or wished to relinquish duty-exemption that
had been allocated. These purposes can be satisfied less formally and
without paperwork. Even if the reporting requirement and the associated
form are eliminated, companies could still request supplemental duty-
free allocations or voluntarily relinquish units in accordance with
Sec. 303.6(c) and (f). We also propose amending Sec. 303.6(f) in order
to clarify the procedures for requesting annual supplemental
allocations and relinquishing units.
We propose increasing the percentage of wages for the repair of
non-9\1/5\ watches and watch movements creditable towards the duty-
refund to a maximum of fifty percent of the firm's total creditable
wages by amending Sec. 303.2(a)(13) and Sec. 303.14(c)(3). The increase
is being proposed to permit producers to further diversify their
operations.
Currently, the percentage of wages paid for the repair of non-9\1/
5\ watches and watch movements and for the assembly of non-9\1/5\
watches and watch
[[Page 37847]]
movements (ineligible only due to value-limit reasons) which is
creditable towards the duty-refund is twenty-five percent of the firm's
other 9\1/5\ creditable wages. No duty-refunds have ever been issued on
the basis of wages paid for the production of watches and watch
movements because they exceeded regulatory value limits. Accordingly,
we propose eliminating this exclusion by amending Sec. 303.2(a)(13).
Pub. L. 97-446, as amended by Pub. L. 103-465, requires the
Secretary of Commerce and the Secretary of the Interior, acting
jointly, to establish a limit on the quantity of watches and watch
movements which may be entered free of duty during each calendar year.
The law also requires the Secretaries to establish the shares of this
limited quantity which may be entered from the Virgin Islands, Guam,
American Samoa and the Northern Mariana Islands. Regulations on the
establishment of these quantities and shares are contained in Sec.
303.3 and 303.4 of title 15, Code of Federal Regulations (15 CFR 303.3
and 303.4). The Departments propose to establish for calendar year 1997
a total quantity and respective territorial shares as shown in the
following table:
Virgin Islands.............................................. 3,100,000
Guam........................................................ 500,000
American Samoa.............................................. 500,000
Northern Mariana Islands.................................... 500,000
Compared to the total quantity established for 1994 (59 FR 8847;
February 24, 1994), this amount would be a decrease of 500,000 units.
The proposed Virgin Islands territorial share would be reduced by
500,000 and the shares for Guam, American Samoa and the Northern
Mariana Islands would not change. The amount we propose for the Virgin
Islands is more than sufficient for the anticipated needs of all the
existing producers.
We also propose raising the maximum value of components for duty-
free treatment of watches from $175 to $200 by amending Sec.
303.14(b)(3). This change would relax the limitation on the value of
imported components that may be used in the assembly of duty-free
insular watches. The proposed value levels would also help offset the
effects of the declining dollar and allow the producers wider options
in the kinds of watches they assemble.
The proposed changes include amending Sec. 303.14(c)(1)(iv), which
sets the incremental percentage for calculating that part of the duty-
refund for producers who have shipped between 600,000 and 750,000 units
free of duty into the United States. Currently the value of the duty-
refund is based on the producer's average creditable wages per unit
shipped free of duty into the United States multiplied by a factor of
90% for the first 300,000 units and declining percentages in additional
increments of 85%, 80% and 65% up to a maximum of 750,000 units. The
amendment would raise the 65% increment to 75%. In recent years most
producers have shipped fewer than 600,000 units. This change would add
a further incentive for producers to increase shipments which would
help raise territorial employment.
The following amendments are being proposed to simplify and
consolidate the regulations and to eliminate redundancy:
Remove the concluding text of Sec. 303.6(f) which would
require the publication of notices in the Federal Register to invite
new entrants and would amend Sec. 303.8(c)(2), which also related to
new entrant invitations (the regulations contain a standing invitation
to new entrants in Sec. 303.14);
Eliminate Section 303.10 (Limitations, requirements,
restriction and prohibitions) and would consolidate non-duplicative
language in Sec. 303.14(b);
Amend Sec. 303.12(b)(3) by changing registered mail to
registered, certified or express carrier mail;
Amend Sec. 303.12(c)(1) by changing the reference from
Sec. 303.2(b)(6) to Sec. 303.2(b)(5), due to other proposed changes
affecting the numbering of provisions;
Amend Sec. 303.14(b) by removing references to Sec. 303.10
and incorporating the non-duplicative language in Sec. 303.14(b);
Amend Sec. 303.14(c)(2) by replacing a reference to Sec.
303.10(c)(2) with the correct reference (Sec. 303.5(c)) and by removing
Sec. 303.14(c)(3) as redundant; and
Eliminate Sections 303.10 and 303.11.
The proposed rule does not contain policies with Federalism
implications sufficient to warrant preparation of a Federalism
assessment under Executive Order 12612.
Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601 et
seq., the Assistant General Counsel for Legislation and Regulation has
certified to the Chief Counsel, Small Business Administration, that the
proposed rule will not have a significant economic impact on a
substantial number of small entities. This is because the rulemaking is
primarily to consolidate and simplify the regulations, make technical
changes and reduce paperwork.
Paperwork Reduction Act
This rulemaking involves information collection activities subject
to the Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq. which
are currently approved by the Office of Management and Budget under
control numbers 0625-0040 and 0625-0134. The proposed amendments reduce
the information burden on the public.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with a collection of information unless it
displays a currently valid OMB Control Number.
It has been determined that the proposed rulemaking is not
significant for purposes of Executive Order 12866.
List of Subjects in 15 CFR Part 303
Administrative practice and procedure, American Samoa, Customs
duties and inspection, Guam, Imports, Marketing quotas, Northern
Mariana Islands, Reporting and recordkeeping requirements, Virgin
Islands, Watches and jewelry.
For reasons set forth above, 15 CFR Part 303 is proposed to be
amended as follows:
PART 303--[AMENDED]
1. The authority citation for 15 CFR Part 303 is revised to read as
follows:
Authority: Pub. L. 94-241, 90 Stat. 263 (48 U.S.C. 1681, note);
Pub. L. 97-446, 96 Stat. 2331 (19 U.S.C. 1202, note); Pub. L. 103-
465, 108 Stat. 4991.
303.1 [Amended]
2. Section 303.1(a) is amended by removing the period at the end of
the first sentence and adding ``, and amended by Pub. L. 103-465,
enacted December 8, 1994.''.
Sec. 303.2 [Amended]
3. Section 303.2(a)(1) is amended by removing the period at the end
of the sentence and adding ``, as amended by Pub. L. 103-465, enacted
December 8, 1994, 108 Stat. 4991.''.
4. In Sec. 303.2, paragraphs (a)(13) and (b)(3) are revised to read
as follows:
Sec. 303.2 Definitions and forms.
(a) * * *
(13) Creditable wages means all wages--up to the amount per person
shown in Sec. 303.14(a)(1)(i)--paid to permanent residents of the
territories employed in a firm's 9\1/5\ watch and watch movement
assembly operations, plus any wages paid for the repair of
[[Page 37848]]
non-9\1/5\ watches up to an amount equal to 50 percent of the firm's
total creditable wages. Excluded, however, are wages paid for special
services rendered to the firm by accountants, lawyers, or other
professional personnel and for the repair of non-9\1/5\ watches and
movements to the extent that such wages exceed the foregoing ratio.
Wages paid to persons engaged in both creditable and non-creditable
assembly and repair activities may be credited proportionately provided
the firm maintains production and payroll records adequate for the
Departments' verification of the creditable portion.
* * * * *
(b) * * *
(3) ITA-340 ``Permit to Enter Watches and Watch Movements into the
Customs Territory of the United States.'' This form may be obtained, by
producers holding a valid license, from the territorial government or
may be produced by the licensee in an approved computerized format or
any other medium or format approved by the Departments of Commerce and
the Interior. The completed form authorizes duty-free entry of a
specified amount of watches or watch movements at a specified U.S.
Customs port.
* * * * *
5. In Section 303.2, paragraph (b)(4) is removed and paragraphs
(b)(5) and (b)(6) are redesignated as paragraphs (b)(4) and (b)(5).
Sec. 303.6 [Amended]
6. Section 303.6(f) introductory text is amended at the beginning
of the second sentence by removing ``The'' and adding ``At the request
of a producer, the''; and in the middle of the fourth sentence by
removing ``invited'' and adding ``considered''.
7. In Sec. 303.6, the concluding text of paragraph (f) is removed.
8. Section 303.7 is amended by revising paragraph (b) to read as
follows:
Sec. 303.7 Issuance of licenses and shipment permits.
* * * * *
(b) Shipment Permit Requirements (ITA-340). (1) Producers may
obtain shipment permits from the territorial government officials
designated by the Governor. Permits may also be produced in any
computerized or other format or medium approved by the Departments. The
permit is for use against a producer's valid duty-exemption license and
a permit must be completed for every duty-free shipment.
(2) Each permit must specify the license and permit number, the
number of watches and watch movements included in the shipment, the
unused balance remaining on the producer's license, pertinent shipping
information and must have the certification statement signed by an
official of the licensee's company. A copy of the completed permit must
be sent electronically or taken to the designated territorial
government officials, no later than the day of shipment, for
confirmation that the producer's duty exemption license has not been
exceeded and that the permit is properly completed.
(3) The permit (form ITA-340) shall be filed with Customs along
with the other required entry documents to receive duty-free treatment
unless the importer or its representative clears the documentation
through Customs' automated broker interface. Entries made
electronically do not require the submission of a permit to Customs,
but the shipment data must be maintained as part of a producer's
recordkeeping responsibilities for the period prescribed by Customs'
recordkeeping regulations. U.S. Customs Service Import Specialists may
request the documentation as they deem appropriate to substantiate
claims for duty-free treatment, allowing a reasonable amount of time
for the importer to produce the permit.
Sec. 303.8 [Amended]
9. In Sec. 303.8, paragraph (c)(2) is revised to read as follows:
Sec. 303.8 Maintenance of duty-exemption entitlements.
* * * * *
(c) * * *
(2) Reallocate the allocation or part thereof to new entrant
applicants; or
* * * * *
Sec. 303.10 [Removed and Reserved]
10. Section 303.10 is removed and reserved.
Sec. 303.11 [Removed and Reserved]
11. Section 303.11 is removed and reserved.
Sec. 303.12 [Amended]
12. Section 303.12(b)(3) introductory text is amended by adding,
after the word ``registered'', the words ``, certified or express
carrier mail''.
13. Section 303.12(c)(1) is amended by removing from the first
sentence ``Sec. 303.2(b)(6)'' and adding ``Sec. 303.2(b)(5)''.
14. Section 303.12(c)(2) is amended at the end of the first
sentence by removing the period and adding ``, as amended by Pub. L.
103-465.''.
15. In Sec. 303.14, the heading of paragraph (b) and paragraphs
(b)(1) and (b)(3) are revised and paragraph (b)(4) is added to read as
follows:
Sec. 303.14 Allocation factors and miscellaneous provisions.
* * * * *
(b) Minimum assembly requirements and prohibition of preferential
supply relationship. (1) No insular watch movement or watch may be
entered free of duty into the customs territory of the United States
unless the producer used 30 or more discrete parts and components to
assemble a mechanical watch movement and 33 or more discrete parts and
components to assemble a mechanical watch.
* * * * *
(3) Watch movements and watches assembled from components with a
value of more than the $35 for watch movements and $200 for watches
shall not be eligible for duty-exemption upon entry into the U.S.
Customs territory. Value means the value of the merchandise plus all
charges and costs incurred up to the last point of shipment (i.e.,
prior to entry of the parts and components into the territory).
(4) No producer shall accept from any watch parts and components
supplier advantages and preferences which might result in a more
favorable competitive position for itself vis-a-vis other territorial
producers relying on the same supplier. Disputes under this paragraph
may be resolved under the appeals procedures contained in
Sec. 303.13(b).
* * * * *
16. Section 303.14(c)(1)(iv) is amended by removing ``65%'' and
adding ``75%''.
17. Section 303.14(c)(2) is amended by removing
``Sec. 303.10(c)(2)'' and adding ``Sec. 303.5(c)''.
18. Section 303.14(c)(3) is removed.
19. Section 303.14(e) is amended by removing ``3,600,000'' and
adding ``3,100,000'' in its place.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration, International
Trade Administration, Department of Commerce.
Allen Stayman,
Director, Office of Insular Affairs, Department of the Interior.
[FR Doc. 96-18427 Filed 7-19-96; 8:45 am]
BILLING CODE 3510-DS-P and 4310-93-P
