[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