[Federal Register Volume 60, Number 187 (Wednesday, September 27, 1995)]
[Notices]
[Pages 49858-49861]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23981]
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INTERNATIONAL TRADE COMMISSION
[Investigation No. 332-360]
International Harmonization of Customs Rules of Origin
AGENCY: United States International Trade Commission.
ACTION: Request for public comment on draft rules for Harmonized System
chapters 25, 26, and 27.
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EFFECTIVE DATE: September 15, 1995.
FOR FURTHER INFORMATION CONTACT: Eugene A. Rosengarden, Director,
Office of Tariff Affairs and Trade Agreements (O/TA&TA) (202-205-2595),
or Lawrence A. DiRicco (202-205-2606). Questions with regard to
specific chapters of the Harmonized Tariff Schedule of the United
States (HTS) should now be directed to the following coordinators in
view of product reassignments:
Chapters 1-24, 41-49--Ronald H. Heller (202-205-2596)
Chapters 25-40--Edward J. Matusik (202-205-3356)
Chapters 50-63--Janis L. Summers (202-205-2605)
Chapters 64-83, 86-89, 92-97--Lawrence A. DiRicco (202-205-2606)
Chapters 84-85, 90-91, 98-99--Craig M. Houser (202-205-2597)
Parties having an interest in particular products or HTS chapters
and desiring to be included on a mailing list to receive available
documents pertaining thereto should advise Diane Whitfield by phone
(202-205-2610) or by mail at the Commission, 500 E St SW, Room 404,
Washington, DC 20436. Hearing impaired persons are advised that
information on this matter can be obtained by contacting the
Commission's TDD terminal on 202-205-1810. The media should contact
Margaret O'Laughlin, Director, Office of Public Affairs (202-205-1819).
Background
Following receipt of a letter from the United States Trade
Representative (USTR) on January 25, 1995, the Commission instituted
Investigation No. 332-360, International Harmonization of Customs Rules
of Origin, under section 332(g) of the Tariff Act of 1930 (60 FR 19605,
April 19, 1995).
The investigation is intended to provide the basis for Commission
participation in work pertaining to the Agreement on Rules of Origin
(ARO), developed during the Uruguay Round of trade negotiations and
adopted along with the Agreement Establishing the World Trade
Organization (WTO), as part of the General Agreement on Tariffs and
Trade (GATT) 1994.
The ARO is designed to harmonize and clarify nonpreferential rules
of origin for goods in trade on the basis of the substantial
transformation test; achieve discipline in the rules' administration;
and provide a framework for notification, review, consultation, and
dispute settlement. These harmonized rules are intended to make
country-of-origin determinations impartial, predictable, transparent,
consistent, and neutral, and to avoid restrictive or distortive effects
on international trade. The ARO provides that technical work to those
ends will be undertaken by the Customs Cooperation Council (CCC) (now
informally known as the World Customs Organization or WCO), which must
report on specified matters relating to such rules for further action
by parties to the ARO. Eventually, the WTO Ministerial Conference is to
``establish the results of the harmonization work program in an annex
as an integral part'' of the ARO.
In order to carry out the work, the ARO calls for the establishment
of a Committee on Rules of Origin of the WTO and a Technical Committee
on Rules of Origin (TCRO) of the CCC. These Committees bear the primary
responsibility for developing rules that achieve the objectives of the
ARO.
A major component of the work program is the harmonization of
origin rules for the purpose of providing more certainty in the conduct
of world trade. To this end, the agreement contemplates a 3-year CCC
program, to be initiated as soon as possible after the entry into force
of the Agreement Establishing the WTO. Under the ARO, the TCRO is to
undertake (1) to develop harmonized definitions of goods considered
wholly obtained in one country, and of minimal processes or operations
deemed not to confer origin, (2) to consider the use of change in
Harmonized System classification as a means of reflecting substantial
transformation, and (3) for those products or sectors where a change of
tariff classification does not allow for the reflection of substantial
transformation, to develop supplementary or exclusive origin criteria
based on value, manufacturing or processing operations or on other
standards.
To assist in the Commission's participation in work under the
Agreement on Rules of Origin (ARO), the Commission is publishing for
public comment a draft of proposed rules for goods of chapters 25, 26,
and 27 of the Harmonized System that are not considered to be wholly
made in a single country. The rules rely largely on the change of
heading as a basis for ascribing origin.
These proposals, which have been reviewed by interested government
agencies, are intended to serve as the basis for the U.S. proposal to
the Technical Committee on Rules of Origin (TCRO) of the Customs
Cooperation Council (CCC) (now known as the World Customs Organization
or WCO). The proposals do not necessarily reflect or restate existing
Customs treatment with respect to country of origin applications for
all current non-preferential purposes. Based upon a decision of the
Trade Policy Staff Committee, the proposals are intended for future
harmonization for the nonpreferential purposes indicated in the ARO for
application on a global basis. They seek to take into account not only
U.S. Customs' current positions on substantial transformation but
additionally seek to consider the views of the business community and
practices of our major trading partners as well. As such they represent
an attempt at reaching a basis for agreement among the contracting
parties. The proposals may undergo change as proposals from other
administrations and the private sector are received and considered.
Under the circumstances, the proposals should not be cited as authority
for the application of current domestic law.
If eventually adopted by the TCRO for submission to the Committee
on Rules of Origin of the World Trade Organization, these proposals
would comprise an important element of the ARO work program to develop
harmonized, non-preferential country of origin rules, as discussed in
the Commission's earlier notice. Thus, in view of the importance of
these rules, the Commission seeks to ascertain the views of interested
parties concerning the extent to which the proposed rules reflect the
standard of substantial transformation provided in the Agreement. In
addition, comments are also invited on the format of the proposed rules
and whether it is preferable to another presentation, such as the
format for the presentation of the NAFTA origin or marking rules.
[[Page 49859]]
Forthcoming Commission notices will advise the public on the
progress of the TCRO's work and will contain any harmonized definitions
or rules that have been provisionally or finally adopted.
Written Submissions
Interested persons are invited to submit written statements
concerning this phase of the Commission's investigation. Written
statements should be submitted as quickly as possible, and follow-up
statements are permitted; but all statements must be received at the
Commission by the close of business on October 20, 1995, in order to be
considered in the drafting of the final U.S. proposal to the TCRO.
Information supplied to the Customs Service in statements filed
pursuant to notices of that agency has been given to us and need not be
separately provided to the Commission. Again, the Commission notes that
it is particularly interested in receiving input from the private
sector on the effects of the various proposed rules and definitions on
U.S. exports. Commercial or financial information which a submitter
desires the Commission to treat as confidential must be submitted on
separate sheets of paper, each marked ``Confidential Business
Information'' at the top. All submissions requesting confidential
treatment must conform with the requirements of Sec. 201.6 of the
Commission's Rules of Practice and Procedure (19 CFR 201.6). All
written submissions, except for confidential business information, will
be available for inspection by interested persons. All submissions
should be addressed to the Office of the Secretary, United States
International Trade Commission, 500 E Street SW., Washington, DC 20436.
Issued: September 18, 1995.
By order of the Commission.
Donna R. Koehnke,
Secretary.
Annex--Draft Proposal by The United States Harmonized Rules of
Origin
Chapter 25--Salt; Sulphur; Earths and Stone; Plastering Materials, Lime
and Cement
General Rule
Except as otherwise provided in the additional rules specified
below, goods of this chapter that are not wholly obtained in one
country are deemed to be goods of the last country where non-
originating materials have undergone a change of classification to a
heading of this chapter from any other heading, including another
heading within the chapter.
Additional Rules
1. Goods which have been subjected to the following processes or
have undergone a specified change of classification at the subheading
level are deemed to be goods of the last country where such processes
were performed or where the change of subheading occurred:
(a) Calcining of uncalcined materials of headings 25.11, 25.12,
25.18, 25.20, 25.28 or 25.30, provided the process results in a change
in the chemical structure of such goods;
(b) A change to subheading 2517.30 (tarred macadam) from any other
subheading;
(c) A change to tarred dolomite of subheading 2518.30 from
subheadings 2518.10 or 2518.20; and
(d) Fusing of materials of headings 25.18 or 25.19.
Explanation
Except where the context of the heading permits additional
processing (e.g., calcining, roasting, agglomeration, sintering, or
other heat-treatment), Chapter 25 covers only minerals in their crude
state. Goods of Chapter 25 that have been processed beyond that
permitted by Chapter Note 1 tend to fall within Chapter 28 or Chapter
68.
Consequently, most goods of this chapter are in or nearly in their
condition as extracted and many can be expected to be wholly obtained
in a single country. With the notable exceptions of macadam of slag,
dross or other industrial waste (subheading 2517.20), tarred macadam
(subheading 2517.30), and certain slag cements (heading 25.23), most
goods of the chapter cannot be derived from headings outside the
chapter and will not undergo a change to a heading of Chapter 25 from a
heading outside that chapter. Accordingly, the general rule of origin
for Chapter 25 has been drafted to reflect this situation.
Within Chapter 25, most headings cover a distinct category of goods
that are not derived from goods of other headings within the chapter.
Again, exceptions occur, such as under heading 25.17 which includes
crushed stone, chips, etc., of stone of other headings within the
chapter. In those cases change in heading occurs and in our opinion
reflects a substantial transformation (i.e., significant reduction in
size). In some cases, a substantial transformation occurs, but there is
no change in heading or only a change from one subheading to another
subheading. To account for those situations, Additional Rules to the
General Origin Rule have been provided:
Additional Rule 1(a) reflects the substantial transformation of
uncalcined minerals of specified headings by calcination (a process
that alters the chemical form of the mineral) where both uncalcined and
calcined forms of the minerals fall within the same heading. We note
here that the proposed rule would cover all the goods of the chapter
where calcined goods remain to be classified in the chapter, except in
the case of clays of headings 2507 and 2508. Calcining of clay serves
merely to drive off water of hydration, does not result in modifying
the chemical structure of the material, and does not result in
substantially transforming the clay.
Additional Rule 1(b) reflects the substantial transformation of
mineral products covered by other subheadings of Heading 2517 into
tarred macadam by mixing with bituminous products of other chapters.
Additional Rule 1(c) reflects the substantial transformation of
dolomite of subheadings 2518.10 or 2518.20 resulting from mixing with
bituminous products of other chapters.
Additional Rule 1(d) reflects the substantial transformation of
minerals of the specified headings by fusing where both the fused and
untreated minerals fall within the same heading.
Draft Proposal by the United States Harmonized Rules of Origin
Chapter 26--Ores, Slag and Ash
General Rule
Except as otherwise provided in the additional rules specified
below, goods of this chapter that are not wholly obtained in one
country are deemed to be goods of the last country where non-
originating materials have undergone a change of classification to a
heading of this chapter from any other heading, including another
heading within the chapter.
Additional Rules
1. Goods which have been subjected to the following processes or
have undergone a specified change of classification at the subheading
level are deemed to be goods of the last country where such processes
were performed or where the change of heading or subheading occurred:
(a) Conversion of ores of headings 26.01 through 26.17 to
concentrates of that group;
(b) Calcining or roasting of concentrates of headings 26.01 through
26.17, provided that the process results in a change in the chemical
structure of the material.
[[Page 49860]]
Explanation
Except where the headings permit additional processing (e.g.,
roasting, agglomeration), Chapter 26 covers only ores (i.e., certain
metalliferous minerals defined in Note 1 to the Chapter) in their crude
state, concentrates of such ores derived by processes that do not alter
the chemical composition of the basic material, ash and residues of a
kind used in industry either for the extraction of metals or as a basis
for the manufacture of chemical compounds, and all other ash and
residues.
Most goods classified in this chapter are in or nearly in their
condition as extracted, physically concentrated, or produced. In most
cases it is expected that these goods will be wholly obtained in a
single country.
With the exception of the ash and residues of headings 26.20 and
26.21, the goods of this chapter cannot be derived from goods
classified outside the chapter. In most cases, these goods are unlikely
to undergo a change of classification from one heading to another
within the chapter. It is recognized that there could be cases where
part of an ore may undergo a change of heading within the chapter
(e.g., crude copper ores of heading 26.03 containing lead, silver, and
gold, that are processed into copper concentrates of heading 26.03,
lead concentrates of heading 26.07 and precious metal concentrates of
heading 26.16).
Additional rule 1(a) reflects the substantial transformation
resulting from the concentration of crude ores, even though a change of
heading or subheading is unlikely to occur. Similarly, Additional rule
1(b) recognizes calcining or roasting of concentrates to be substantial
transformations that confer origin.
Draft Proposal by the United States Harmonized Rules of Origin
Chapter 27--Mineral Fuels, Mineral Oils and Products Of Their
Distillation; Bituminous Substances; Mineral Waxes
Chapter 27
General Rule
Except as otherwise provided in the additional rules specified
below, goods of this chapter that are not wholly obtained in one
country are deemed to be goods of the last country where non-
originating materials have undergone a change of classification to
headings of this chapter from any other heading, including another
heading within the chapter.
Additional Rules
1. Goods of any heading or subheading of this chapter (other than
heading 2709) which have undergone a chemical reaction, including
refinery processes such as cracking, catalytic reforming,
desulfurization (removal of bound sulfur) or dehydroalkylation, are
deemed to be goods of the country where the reaction occurred.
2. Goods of headings 27.07 or 27.10 which have been formulated by
blending are deemed to be goods of the country where blending occurred,
provided the following conditions are satisfied:
(a) The goods have been deliberately blended to conform to specific
predetermined physical specifications, such as boiling point range,
viscosity, solidification temperature, random or motor octane numbers,
or cetane number, which are different from the specifications of the
input materials, and
(b) In the case of motor fuels (other than diesel fuels) or motor
fuel blend stock, the good has undergone a minimum change of 10 octane
units, and
(c) In the case of other goods, the product is suitable for end use
without further processing and not more than 70 percent by weight of
the product is composed of materials originating from a country other
than the country where the blending occurred.
3. Goods of heading 27.11 which have undergone a deliberate process
of separation into individual gases of heading 27.11 and residual
components resulting from such separation are deemed to be goods of the
country where the separation occurred.
4. Calcining of petroleum coke of subheading 2713.12 from
uncalcined petroleum coke of subheading 2713.11 is deemed to have
origin in the country where such process was performed.
5. The following processes are not to be considered origin-
conferring:
(a) Cleaning, decanting, desalting, dewatering or dehydrating,
filtering, coloring, or marking, separately or in combination, of any
of the goods of chapter 27;
(b) Blending of materials of subheading 27.13.20 or heading 27.14
to produce goods of heading 27.15.
Explanation
Chapter 27 covers crude petroleum, bituminous materials, and crude
products from the cracking, fractional distillation, or heating of
these materials (such as coking). Chapter 27 also covers crude benzene,
toluene, xylene, and other coal tar products. These are distinguished
from the pure chemicals of chapter 29 by their purity levels. Crude
coal tar products will have a purity range from 50 to 95 percent by
weight, while products of chapter 29 tend to have a purity of 95
percent or higher.
Most goods of this chapter are the result of basic refinery
operations, including cracking and fractional distillation. The inputs
for these operations include coal, crude petroleum and petroleum gases,
which are classified in chapter 27, and the outputs may remain to be
classified in the same or other headings of this chapter or other
chapters.
Certain refinery and formulation processes, such as blending of
fuel components, are considered to result in substantial transformation
for the purposes of conferring origin because the result of the
operation is a product which possesses specific properties or
characteristics that render it different (and further finished), than
the starting material. The additional rules attempt to account for
instances of substantial transformation where a change of heading or
subheading does not occur, and these are detailed below.
In addition, there are several minor processes that would result in
a change of subheading, but substantial transformation is deemed not to
have occurred because the changes are either only changes in the
physical state (i.e., from gas to liquid), or they represent only minor
phases of refinery processing.
Additional Rule 1 reflects the processing of many materials that
undergo a chemical reaction resulting in a substantial transformation,
but without a change in classification necessarily occurring.
Additional Rule 2 reflects the transformation of raw materials to
finished goods as a result of blending operations for goods of headings
27.07 and 27.10 that are classified within the same heading or
subheading as the starting material. The rule requires discriminate
blending in order to conform the product to stated requirements, such
as those contained in ASTM standards, for origin to be conferred.
Additional Rule 2(c) recognizes that the blending of covered products
results in a substantial transformation in cases where no more than 70
percent by weight of the blending stock originates in a single country
other than the country where the blending occurs.
Additional Rule 3 concerns the substantial transformation resulting
from the physical separation of petroleum hydrocarbons into individual
[[Page 49861]]
gases and residual products. These processes do not include the
incidental separation of individual components of a gas during its
conveyance through a pipeline.
Additional Rule 4 reflects the substantial transformation of
uncalcined petroleum coke of subheading 2713.12 to calcined petroleum
coke of subheading 2713.11.
Additional Rule 5(a) enumerates preparatory operations involved in
refineries and processing plants that are not considered to be origin
conferring.
Additional rule 5(b) provides that blending of bituminous materials
of subheading 27.13.20 or heading 27.14 to produce bituminous mixtures
of heading 27.15 is not to be considered origin conferring.
[FR Doc. 95-23981 Filed 9-26-95; 8:45 am]
BILLING CODE 7020-02-P
