[Federal Register Volume 62, Number 120 (Monday, June 23, 1997)]
[Rules and Regulations]
[Pages 33756-33761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-16333]
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
49 CFR Part 583
[Docket No. 92-64; Notice 11]
RIN 2127-AG46
Motor Vehicle Content Labeling
AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).
ACTION: Final rule.
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SUMMARY: Under NHTSA's content labeling program, passenger motor
vehicles (passenger cars and other light vehicles) are required to be
labeled with information about their domestic and foreign parts
content. In this document, the agency extends for two years a
[[Page 33757]]
limited, temporary provision in its content calculation procedures to
provide vehicle manufacturers added flexibility in making content
determinations where outside suppliers have not responded to requests
for content information. This flexibility will be available for up to
10 percent, by value, of a carline's total parts content from outside
suppliers, and only for carlines offered for sale prior to January 1,
1999. It will also only be available where manufacturers or allied
suppliers have made a good faith effort to obtain the information. The
agency views this provision as providing extra flexibility during the
early years of the content labeling program, as the vehicle
manufacturers and suppliers continue to gain familiarity with the
program and develop appropriate procedures to ensure supplier
responsiveness to requests for content information.
DATES: Effective date: The amendments made by this rule are effective
July 23, 1997.
Petitions: Petitions for reconsideration must be received by August
7, 1997.
ADDRESSES: Petitions for reconsideration should refer to the docket and
notice number of this notice and be submitted to: Administrator,
National Highway Traffic Safety Administration, 400 Seventh Street,
SW., Washington, DC 20590.
FOR FURTHER INFORMATION CONTACT: For non-legal issues: Mr. Orron Kee,
Office of Planning and Consumer Programs, National Highway Traffic
Safety Administration, 400 Seventh Street, SW., Washington, DC 20590
(202-366-0846).
For legal issues: Mr. J. Edward Glancy, Office of Chief Counsel,
National Highway Traffic Safety Administration, 400 Seventh Street,
SW., Washington, DC 20590 (202-366-2992).
SUPPLEMENTARY INFORMATION:
Background
On July 21, 1994, NHTSA published in the Federal Register (59 FR
37294) a new regulation, 49 CFR part 583, Automobile Parts Content
Labeling, to implement the American Automobile Labeling Act (Labeling
Act). That Act, which is codified at 49 U.S.C. 32304, requires
passenger motor vehicles to be labeled with information about their
domestic and foreign parts content. Interested persons are encouraged
to read the July 1994 notice for a detailed explanation of this
program.
NHTSA received several petitions for reconsideration of the July
1994 final rule, and has subsequently published four notices addressing
issues raised in those or subsequent petitions.1
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\1\ 60 FR 14228, March 16, 1995; 60 FR 47878, September 15,
1995; 61 FR 17253, April 19, 1996; 61 FR 46385, September 3, 1996.
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One issue has been the subject of successive petitions from the
American Automobile Manufacturers Association (AAMA). That organization
has repeatedly objected to a provision in part 583 which specifies that
the U.S./Canadian content of components is defaulted to zero if
suppliers fail to respond to a manufacturer's or allied supplier's
request for content information. AAMA would like the agency to permit
vehicle manufacturers and allied suppliers to make ``best-efforts''
content determinations when their outside suppliers fail to do so.
The agency published two notices on this issue last year. On April
19, 1996, NHTSA published in the Federal Register (61 FR 17253) a
notice denying an AAMA petition on this subject. The agency explained
that it believes that the ability to obtain the necessary content
information from suppliers is within the control of the vehicle
manufacturers.
On September 3, 1996, however, in light of new information provided
by AAMA and General Motors (GM), NHTSA published in the Federal
Register (61 FR 46385) a very narrow, temporary final rule providing
vehicle manufacturers additional flexibility in this area. The
temporary final rule provided that, in limited situations where outside
suppliers had not responded to requests for content information, allied
suppliers and manufacturers could make those content determinations
from information available to them. This flexibility was only available
if the allied supplier or manufacturer had a good faith basis for
making the calculation. Moreover, this flexibility was only available
for up to 10 percent, by value, of a carline's total parts content from
outside suppliers. Finally, the flexibility was only available where
the manufacturer or allied supplier had made a good faith effort to
obtain the information from the outside supplier.
The amendment applied only to carlines offered for sale before
January 1, 1997. However, the agency requested comments on whether the
applicability of the amendment, or a similar one, should be extended
past that date. (The September 1996 temporary final rule was issued
without a prior notice of proposed rulemaking.)
In the September 1996 notice, NHTSA explained that it was issuing
the temporary amendment in light of several factors. The agency stated:
On the one hand, NHTSA believes that Chrysler's experience
(discussed in a letter cited in the September 1996 notice)
demonstrates that the ability to obtain the necessary content
information from suppliers is within the control of the vehicle
manufacturers. However, the agency also agrees that there are
differences between Chrysler and GM, related to number of suppliers
and degree of vertical integration, which make efforts by GM to
obtain content information from its suppliers considerably more
complex.
The agency has previously recognized that a certain amount of
confusion is likely during the time period when a new program, such
as content labeling, is implemented. The content labeling program is
still a relatively new program. Indeed, model year 1997 is the first
year for which the full content calculation procedures of part 583
are required, i.e., the temporary alternative procedures are not
available.
The agency believes that GM has demonstrated that it has been
making significant efforts in recent months to obtain content
information from non-responsive suppliers. Moreover, GM has shown
that, despite those efforts, it is having difficulty obtaining
information for the last portion of a carline's content.
Finally, NHTSA believes that, all other things being equal, a
good faith content determination by a vehicle manufacturer or allied
supplier of equipment it receives is likely to be more accurate than
simply applying a ``default-to-zero'' provision. Thus, adoption of
today's amendment should result in more accurate information for
consumers.
The agency recognizes, of course, that the most accurate
determinations are those provided by the outside suppliers
themselves, since they obviously have much more complete information
about the content of the equipment they manufacture than the
purchaser. Therefore, the agency must consider whether its actions
would have the effect of reducing the incentives for outside
suppliers to provide the required information, or for the vehicle
manufacturers to make efforts to obtain the information.
NHTSA has concluded that adoption of today's temporary amendment
will not reduce incentives for outside suppliers or vehicle
manufacturers for model year 1997. Given that the vehicle
manufacturers are already in the final stages of making content
calculations for these vehicles, today's amendment should not have
any effect on whether outside suppliers provide, or do not provide,
the required information for model year 1997. However, the agency
will consider this issue further in deciding whether to extend the
applicability of today's temporary amendment. NHTSA also emphasizes
that today's amendment does not excuse outside suppliers for failure
to comply with part 583. 61 FR 46387.
Comments
NHTSA received comments from AAMA, GM, and the Association of
International Automobile
[[Page 33758]]
Manufacturers, Inc. (AIAM). All of the commenters asked the agency to
issue a permanent amendment providing greater flexibility in making
content determinations when outside suppliers do not respond to
requests for information.
AAMA asked again that vehicle manufacturers be permitted to make
``best efforts'' content determinations when suppliers fail to respond
to requests for content information, as is permitted for outside
suppliers. That organization stated that over the past three years,
vehicle manufacturers have made attempts to standardize the forms used
for reporting content information, and developed programs to
familiarize the supplier community with the law and its requirements.
However, because supplier compliance has not been uniform, vehicle
manufacturers have been forced to make multiple requests of some
suppliers to gain accurate content information.
AAMA noted that Congress expressly contemplated rules that would
not be financially burdensome to vehicle manufacturers. That
organization argued that each manufacturer has used more resources than
ever contemplated to effect compliance with the law.
AAMA also stated that vehicle manufacturers believe that defaulting
content to zero U.S./Canadian content when a certificate is not
forthcoming is not required by the law. That organization stated that
there is no penalty against the supplier even though noncompliance
under the present rule could result in understatement of U.S./Canadian
content and false information being provided to the consumer. AAMA
argued that the best solution is for the rule to provide the same
flexibility for vehicle manufacturers and allied suppliers to provide
this content information as outside suppliers have in dealing with the
same issue.
GM noted that its allied supplier operations generally supply
products not only for GM-produced vehicles but also for vehicles
produced by others for the U.S. market. That company stated that as an
outside supplier, it is allowed to make best efforts estimates of
content to establish domestic content to the benefit of its non-allied
vehicle manufacturer customers. However, as an allied supplier, GM is
not allowed to use best efforts determinations on essentially the same
products. GM argued that this is particularly inequitable, and urged
that the agency allow the same flexibility for vehicle manufacturers
and allied suppliers as for outside suppliers.
AIAM stated that, despite its many objections to the Labeling Act,
it supports a permanent amendment to NHTSA's calculation procedures to
provide vehicle manufacturers with added flexibility in making content
determinations when outside suppliers have not provided content
information. That organization stated that such flexibility would
reflect an understanding of the difficulties manufacturers have in
obtaining necessary information from outside suppliers. AIAM stated
that without a permanent amendment, future labels will understate the
value of the ``domestic'' content because manufacturers using
``recalcitrant'' outside suppliers will have to default that supplier's
content to 0% ``domestic.''
According to AIAM, allowing manufacturers and allied suppliers to
make content determinations in these situations would provide
flexibility that recognizes the realities of the industry. That
organization stated that contrary to NHTSA's statement, some outside
suppliers cannot be forced into compliance with the labeling
requirements merely through contract provisions. AIAM stated that some
of these suppliers may be supplying components that have been designed
to the manufacturer's specifications, and punishing outside suppliers
who refuse to comply with the labeling requirements is not realistic
when it jeopardizes the manufacturer's own ability to meet its
production schedules.
AIAM also stated that allowing greater flexibility would relieve
slightly the regulatory burden associated with the Labeling Act. That
organization stated that pursuing and obtaining the documentation from
the suppliers who refuse to comply often requires extraordinary efforts
which increase administrative costs and often fail to obtain the
missing data.
Agency Decision
After considering the comments, NHTSA has decided to extend for two
years the applicability of the limited, temporary provision established
in the September 1996 final rule, to provide vehicle manufacturers
added flexibility in making content determinations where outside
suppliers have not responded to requests for content information. The
agency is extending the provision to apply to carlines offered for sale
prior to January 1, 1999, but is not making any other changes. The
agency views this provision as providing extra flexibility during the
early years of the content labeling program, as the vehicle
manufacturers and suppliers continue to gain familiarity with the
program and develop appropriate procedures to ensure supplier
responsiveness to requests for content information.
NHTSA notes that all of the commenters on the September 1996 notice
essentially re-raised issues which the agency has addressed at length
in responding to previous petitions on this subject. Since the
commenters did not provide any arguments significantly different from
ones previously offered by the vehicle manufacturers, the agency is not
changing its views with respect to those basic issues.
NHTSA is providing a two-year extension of the limited, temporary
provision established in the September 1996 final rule because it
believes that the problems encountered by GM and other vehicle
manufacturers for model year 1997 will not disappear immediately. At
the same time, the agency continues to believe that the vehicle
manufacturers can take steps to ensure that, in the future, they will
obtain the necessary content information from essentially all of their
suppliers, without costly efforts. The agency believes that a two-year
extension will enable manufacturers to take, or complete taking, such
steps.
NHTSA has considered the extent to which this action may reduce the
incentives for outside suppliers to provide the required information,
or for the vehicle manufacturers to make efforts to obtain the
information. The agency believes that any such effects will be very
small, given the limited scope and duration of the amendment. NHTSA
also emphasizes, as it did with respect to the September 1996 final
rule, that today's amendment does not excuse outside suppliers for
failure to comply with part 583. The agency also notes that, while AAMA
indicated that there are no penalties against suppliers for
noncompliance, suppliers are in fact subject to civil penalties for
failure to comply with part 583.
NHTSA will not attempt to repeat all of its prior analyses related
to the issues raised by the commenters in this notice, since it has
addressed the same issues on several prior occasions. The agency
specifically incorporates by reference its responses to these issues
set forth in the September 15, 1995, April 19, 1996, and September 3,
1996 notices cited above.
NHTSA notes that, in the September 1996 notice, it specifically
addressed the ``equity'' of providing different procedures for outside
and allied suppliers. The agency explained:
[T]he agency does not believe there is anything inequitable
about providing different procedures for outside and allied
suppliers. The Labeling Act establishes vastly
[[Page 33759]]
different procedures for outside and allied suppliers. For example,
in making domestic content calculations, outside suppliers need
determine only whether an item of equipment has at least 70 percent
U.S./Canadian content, while allied suppliers must make precise
calculations based on certificates from outside suppliers. The
differences in part 583's procedures for outside and allied
suppliers reflect the specific statutory differences for these two
groups and/or the agency's efforts to limit the regulatory burdens
associated with the content labeling program. For example, a
significant reason why the agency permits outside suppliers to make
good faith estimates of the U.S./Canadian content of the materials
they purchase is that, unlike the situation for allied suppliers,
suppliers to outside suppliers are not required, by statute or
regulation, to provide certificates of content. 61 FR 46388.
While GM re-raised the issue of the equity of different procedures
for outside and allied suppliers, it did not address the explanation
provided by the agency. NHTSA also notes that the ``default-to-zero''
provision of concern to GM only adversely affects vehicle manufacturers
and allied suppliers to the extent that outside suppliers do not
provide content information. For reasons discussed below and in other
Federal Register notices, the ability to obtain this information is
within the control of the vehicle manufacturers.
In the September 1996 notice, the agency addressed at some length
the issue of whether the provision providing greater flexibility, or a
similar provision, should be extended for a longer period of time.
NHTSA stated that it believes the guiding principle for making this
decision should be the statutory direction specifying that regulations
promulgated under the Labeling Act are to provide the ultimate
purchaser of a new passenger motor vehicle with the best and most
understandable information possible about the foreign and U.S./Canadian
origin of the equipment of the vehicles without imposing costly and
unnecessary burdens on the manufacturers. 49 U.S.C. 32304(e).
The agency explained:
There is no question that the ``best'' determinations of the
content of equipment provided by outside suppliers are those
provided by the suppliers themselves, since they obviously have much
more complete information about the content of the equipment they
manufacture than the purchaser. There is also no question that the
Labeling Act contemplates the vehicle manufacturers basing their
content calculations on certificates provided by the outside
suppliers, and that outside suppliers are statutorily required to
provide this information. See 49 U.S.C. 32304(e). Thus, the only
question is the extent, if any, to which the agency should provide
alternatives to address situations where outside suppliers fail to
provide the required information despite being asked to do so by the
vehicle manufacturers.
As indicated above, an important consideration is whether such
alternatives would have the effect of reducing the incentives for
outside suppliers to provide the required information, or for the
vehicle manufacturers to make efforts to obtain the information. It
is clear that the ``default-to-zero'' provision does provide
significant incentives in this regard. Therefore, the agency will
not simply drop that provision.
To the extent that the non-responsive supplier problem
experienced by GM is likely to continue, it could be argued that, at
some point, the costs of obtaining the last portion of outside
supplier content value for a particular carline become unreasonable.
This argument could be used to support extending the temporary
amendment. The length of such extension would depend on how long the
problem was likely to continue.
On the other hand, NHTSA is not convinced that the vehicle
manufacturers cannot ultimately obtain the necessary content
information from essentially 100 percent of their suppliers, without
costly efforts. 61 FR 46388.
NHTSA then cited the following discussion from its March 16, 1996
notice denying an earlier petition from AAMA on this subject:
NHTSA notes that AAMA's petition did not discuss whether its
member companies experienced difficulty in obtaining content
information from suppliers in the presence or absence of specific
contractual provisions intended to ensure the provision of content
information by suppliers. As stated in the September 1995 notice,
outside suppliers are dependent on the vehicle manufacturers for
their business. Therefore, the agency believed, and continues to
believe, that the ability to obtain the necessary content
information is within the control of the vehicle manufacturers.
The purpose of including any specific provision in a business
contract is to make observance of the terms of that provision a
required element of the business relationship. Just as such things
as meeting material specifications, strength requirements and
specified time of delivery are a necessary part of a supplier's
doing business with a vehicle manufacturer and are ensured by
provisions included in contractual agreements, the providing of
content information can also be made a necessary part of that
business relationship and be reflected in the purchase contract.
Moreover, just as liquidated damages clauses can be inserted in
a contract for failure to comply with any other part of the
contract, so can such a provision be included for failure to provide
timely content reports. If a supplier knows that it will be paid
less money if it fails to provide content information, it will have
a strong incentive to provide the information.
The agency also notes that the supplier industry is highly
competitive. If one supplier is unwilling to agree to provide
content information (an agreement to do no more than comply with
existing Federal law), other suppliers would step in to take
advantage of the opportunity for new business.
For the above reasons, including those presented in the
September 1995 notice, NHTSA continues to believe that the vehicle
manufacturers will be able to obtain the required content
information from their suppliers. 61 FR 17254-55.
In the September 1996 notice, the agency noted that AAMA and GM had
argued in their new petitions that even if a non-responsive supplier is
penalized under the contract, the penalty paid to the manufacturer is
not compensatory because the ``damages'' cannot offset the effects of
understating the U.S./Canadian content value for the manufacturer's
vehicles. NHTSA stated that it believes, in contrast, that the
contractual provisions would help ensure that outside suppliers provide
content information without the need to actually impose ``damages.''
The agency stated that it believes outside suppliers would not sign
contracts that they planned to violate and that, given that it is not
very costly to provide content information, it would be irrational for
outside suppliers to decide to pay damages instead of simply providing
the information (information that they are, in any event, required by
Federal law to provide).
The agency also pointed out that, in addition to providing an extra
incentive for outside suppliers, such contractual provisions would
provide an educational function. AAMA had stated in its petition that
``suppliers that deliberately do not respond cite the uncompensated
cost to establish the information on content in their parts, the
increased employees to calculate the data, and the burdens they already
face in generating multiple content reports such as for NAFTA, AALA,
CAFE and others each with its own rules.'' The agency noted that these
sorts of explanations by suppliers suggest that they were unaware of
the need to provide content information when they signed their
contracts. The agency added:
The inclusion of a specific contract provision concerning the
need to provide content information would make suppliers aware of
this obligation. While the costs of providing content information
may not be compensated directly, such costs are simply a necessary
part of doing business. Assuming that suppliers are aware of these
costs, they will presumably consider them in negotiating their
contracts, just as they consider other costs of doing business. 61
FR 46389.
[[Page 33760]]
While both AAMA and AIAM asserted in their comments on the
September 1996 notice that the problem of outside supplier
nonresponsiveness cannot be solved by contractual provisions, they did
not address the analysis presented by the agency. Further, they did not
respond in any detail to the question in the September 1996 notice
about what types of good faith actions should be specified in the
regulation. The agency notes that while AAMA stated that the vehicle
manufacturers have included specific provisions concerning content
labeling in their contracts, that organization did not provide specific
examples of such provisions or explain how they worked in practice. For
example, AAMA did not indicate what penalties, if any, were
incorporated in the contractual provisions or the degree to which the
vehicle manufacturers had actually attempted to enforce such
provisions. With respect to AIAM's argument that it is not
``realistic'' for a vehicle manufacturer to enforce contractual
provisions related to labeling, the agency does not see how such
enforcement would be any different than enforcing other contractual
provisions that are part of the business relationship between the
vehicle manufacturer and supplier.
Since the commenters have not provided any new arguments or
information indicating that the agency's previous determinations
concerning this subject are incorrect, the agency is not making any
changes other than providing a two-year extension of the limited,
temporary provision established in the September 1996 final rule. The
agency is not including a definition of ``good faith effort'' in
today's final rule, primarily because the vehicle manufacturers and
allied suppliers would likely not be able to, among other actions, add
such provisions to their contracts in time to take advantage of the
relief being provided. The agency notes, as it did in the September
1996 notice, that, in the absence of a definition, it intends the term
``good faith effort'' to mean at least some effort beyond the request
for information and certificates that is required by part 583, e.g.,
some kind of follow-up effort.
At this time, NHTSA does not contemplate the need to provide
further relief when this temporary provision expires. Should vehicle
manufacturers and allied suppliers conclude in the future that there is
a need to extend this provision again, they should be aware that any
future relief would likely be available only upon demonstration that
specific good faith actions have been taken. To this end, the agency
anticipates that it would specifically define what constitutes a ``good
faith effort'' by a vehicle manufacturer or allied supplier to obtain
content information. Such a definition of ``good faith effort'' might
include elements along the following lines: (1) An express contractual
provision between the vehicle manufacturer or allied supplier and the
outside supplier which cites 49 CFR part 583, requires the outside
supplier to provide content information in the time and manner required
by that regulation, and includes some contractual penalty for failure
to comply; (2) follow-up efforts (after the initial request for content
information) by the vehicle manufacturer or allied supplier to obtain
content information; and (3) in instances in which follow-up efforts
are unsuccessful, action by the vehicle manufacturer or allied supplier
to enforce the contractual penalty for failure to provide content
information.
NHTSA notes that the temporary final rule now being extended
expired as of the end of 1996, that is, it was only available for
carlines first offered for sale to ultimate purchasers prior to January
1, 1997. In extending the final rule at this time, the agency does not
wish to create a gap with respect to the procedures that applied to any
carlines offered for sale between January 1, 1997 and now. The agency
notes that this is not likely to be a very significant issue, since few
carlines are first offered for sale to ultimate purchasers in the early
months of a calendar year.
However, given the circumstances of today's final rule, the agency
will permit manufacturers to re-label any such vehicles.2 In
such an instance, however, NHTSA urges manufacturers to take steps to
prevent confusion when consumers compare the labels of vehicles within
the same carline manufactured at different times. For example,
manufacturers could take steps to re-label all of the vehicles within a
carline that have not yet been sold to a consumer. Alternatively, the
revised label could include a note indicating that the carline
percentages have been revised during the model year. NHTSA notes that
it took this same position in the September 1996 notice with respect to
model year 1997 carlines which had been introduced prior to issuance of
that final rule.
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\2\ While content percentages are ordinarily calculated only
once for a carline for a particular model year, NHTSA has previously
concluded that, under special circumstances, manufacturers may
revise the carline percentages. See interpretation letter to Diamond
Star Motors dated February 10, 1995.
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Rulemaking Analyses and Notices
A. Executive Order 12866 (Regulatory Planning and Review) and DOT
Regulatory Policies and Procedures
This rulemaking document was not reviewed under Executive Order
12866. NHTSA has considered the economic implications of this
regulation and determined that it is not significant within the meaning
of the DOT Regulatory Policies and Procedure. Today's amendment will
not affect manufacturer or supplier costs. It simply provides
additional flexibility to vehicle manufacturers and their allied
suppliers in making content calculations.
B. Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act, NHTSA has
evaluated the effects of this action on small entities. Based upon this
evaluation, I certify that the final rule will not have a significant
economic impact on a substantial number of small entities. Today's
amendments simply provide additional flexibility to vehicle
manufacturers and their allied suppliers in making content
calculations. Therefore, a regulatory flexibility analysis is not
required for this action.
C. Executive Order 12612 (Federalism)
This action has been analyzed in accordance with the principles and
criteria contained in Executive Order 12612, and it has been determined
that the final rule did not have sufficient Federalism implications to
warrant preparation of a Federalism Assessment. No state laws are
affected.
D. Executive Order 12778 (Civil Justice Reform)
This final rule does not have any retroactive effect. States are
preempted from promulgating laws and regulations contrary to the
provisions of this rule. The rule does not require submission of a
petition for reconsideration or other administrative proceedings before
parties may file suit in court.
E. National Environmental Policy Act
The agency has considered the environmental implications of this
rule in accordance with the National Environmental Policy Act of 1969
and determined that this rule will not significantly affect the human
environment.
List of Subjects in 49 CFR Part 583
Motor vehicles, Imports, Labeling, Reporting and recordkeeping
requirements.
[[Page 33761]]
In consideration of the foregoing, 49 CFR part 583 is amended as
follows:
PART 583--AUTOMOBILE PARTS CONTENT LABELING
1. The authority for part 583 continues to read as follows:
Authority: 49 U.S.C. 32304, 49 CFR 1.50, 501.2(f).
2. Section 583.6 is amended by revising paragraph (c)(6) to read as
follows:
Sec. 583.6 Procedure for determining U.S./Canadian parts content.
* * * * *
(c) * * *
(6) For carlines which are first offered for sale to ultimate
purchasers before January 1, 1999, if a manufacturer or allied supplier
requests information in a timely manner from one or more of its outside
suppliers concerning the U.S./Canadian content of particular equipment,
but does not receive that information despite a good faith effort to
obtain it, the manufacturer or allied supplier may make its own good
faith value added determinations, subject to the following provisions:
(i) The manufacturer or allied supplier shall make the same value
added determinations as would be made by the outside supplier, i.e.,
whether 70 percent or more of the value of equipment is added in the
United States and/or Canada;
(ii) The manufacturer or allied supplier shall consider the amount
of value added and the location in which the value was added for all of
the stages that the outside supplier would be required to consider;
(iii) The manufacturer or allied supplier may determine that the
value added in the United States and/or Canada is 70 percent or more
only if it has a good faith basis to make that determination;
(iv) A manufacturer and its allied suppliers may, on a combined
basis, make value added determinations for no more than 10 percent, by
value, of a carline's total parts content from outside suppliers;
(v) Value added determinations made by a manufacturer or allied
supplier under this paragraph shall have the same effect as if they
were made by the outside supplier;
(vi) This provision does not affect the obligation of outside
suppliers to provide the requested information.
Issued on: June 17, 1997.
Ricardo Martinez,
Administrator.
[FR Doc. 97-16333 Filed 6-18-97; 3:13 pm]
BILLING CODE 4910-59-P
