[Federal Register Volume 60, Number 119 (Wednesday, June 21, 1995)]
[Notices]
[Pages 32339-32341]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15178]



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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.

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EFFECTIVE DATE: June 12, 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--Thomas W. Divers (202-205-2609)
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, D.C. 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 Uruguay Round Agreement on 
Rules of Origin (ARO), under the General Agreement on Tariffs and Trade 
(GATT) 1994 and adopted along with the Agreement Establishing the World 
Trade Organization (WTO).
    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 [[Page 32340]] 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 first phase of the Commission's participation in 
work under the Agreement on Rules of Origin (ARO), the Commission is 
publishing for public comment the following: (1) A proposed harmonized 
definition of the expression ``goods that are to be considered as being 
wholly obtained in one country'' and (2) a proposal on the definition 
of the expression ``minimal operations or processes that do not by 
themselves confer origin on a good,'' the foregoing as set forth in 
Article 9:2(c)(i) of the ARO.
    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).
    If eventually adopted by the TCRO for submission to the Committee 
on Rules of Origin of the World Trade Organization, these definitions 
would comprise the initial 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 definitions, the Commission seeks to ascertain the views of 
interested parties concerning (1) the extent to which additional 
categories of goods or processes should be enumerated in, or named 
goods or processes omitted from, the proposed text set forth above, and 
(2) the need for other specific changes in or additions to the proposed 
definitions. Forthcoming Commission notices will advise the public on 
the progress of the TCRO's work and 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 July 15, 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 section 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.

    By order of the Commission.

    Issued: June 13, 1995.
Donna R. Koehnke,
Secretary.
Annex--Proposed U.S. Note on the Definition of Goods Wholly Obtained in 
One Country

    At its first session, the Technical Committee on Rules of Origin 
(TCRO) undertook discussions on the definition of goods wholly 
obtained in one country. This work is part of the first phase of 
development of worldwide harmonization of non-preferential rules of 
origin, as envisaged by the World Trade Organization (WTO) in its 
Agreement on Rules of Origin.
    The TCRO invited comments on the draft definition of goods 
considered to be ``wholly obtained in a single country''. The United 
States Administration submits the following comments and proposals.
    The approach put forward by the Secretariat in the working 
document provides a useful basis for considering the definition of 
goods wholly obtained in one country. However, we are proposing a 
number of modifications which are intended to:

--provide greater certainty as to the product scope of individual 
provisions,
--present the rules for goods of similar materials together and to 
the extent practical in the order in which they occur in the 
Harmonized System, and
--clarify the presentation of the rules.

    Further, we endorse the decision by the TCRO to make use of 
explanatory notes to provide guidance, but without legal effect, in 
the interpretation of the rules of origin, thereby enhancing an 
understanding of the rules.
    Accordingly, the United States submits the following proposal:
    Goods obtained or produced wholly in a country shall be taken as 
originating in that country.
    The following are to be considered as being wholly obtained in 
one country:
    A. The following goods:
    (1) live animals born and raised in that country;
    (2) products obtained by hunting, trapping or fishing in that 
country;
    (3) products obtained from live animals in that country;
    (4) fish, shellfish and other marine life taken from the sea by 
vessels of that country;
    (5) goods produced on board factory ships of that country from 
the goods of paragraph (4) of that country;
    (6) plant and plant products harvested or gathered in that 
country;
    (7) mineral goods extracted from the territory, soil, subsoil, 
airspace, territorial waters, sea-bed or beneath the sea-bed of that 
country,
    (8) mineral goods extracted by that country from marine soil or 
subsoil outside that country's territorial waters, or from outer 
space, provided that country has rights to recover such goods,
    (9) waste and scrap and used goods of any material, collected in 
that country and fit only for the recovery of raw materials or for 
disposal.
    B. Goods produced in a country from materials of that country 
referred to in paragraph A, or derived therefrom, which do not 
contain constituents obtained from any other country and which have 
not undergone processing in any other country at any stage of 
production.

Proposed U.S. Note on the Definition of Minimal Processing Operations 
that do not Confer Origin [[Page 32341]] 

    At its first meeting, the Technical Committee on Rules of Origin 
(TCRO) invited comments on the subject of minimal processing 
operations that are considered not to confer origin. The United 
States administration accordingly submits the following comments and 
proposal.
    While there are numerous operations that, in specific instances, 
will not confer origin, there are only a few operations that never 
or almost never effect a substantial transformation. Consequently, 
only a limited number of minimal processing operations should be 
recognized in a general rule as not conferring origin. Although for 
any specific product certain processes ought not to confer origin, 
it is the view of the U.S. administration that such situations are 
best addressed by tariff shift rules that do not recognize 
particular processes as origin-conferring for a specific product.
    The rule should apply to negate only the operation of the tariff 
shift rules. The rule would operate to preclude conferring origin 
only when an origin-conferring change in tariff classification is 
accomplished solely by means of one or more of the listed processing 
operations. The rule would not operate to preclude conferring origin 
on goods if the change in tariff classification occurred as a result 
of other operations, even though one or more of the ``minimal 
processing'' operations occurred as well.
    The rule should not affect the definition of wholly obtained 
goods or apply to any supplementary rules, even when those goods 
undergo such listed operations. The U.S. administration believes the 
following ought to be included in this enumeration:
    Change in tariff classification resulting solely from a change 
in the use of the article;
    Simple packing or packaging for retail sale;
    Mere dilution with water or another substance that does not 
alter the essential character of the good; and
    Dismantling or disassembly in order to facilitate 
transportation.
    The U.S. administration wishes to emphasize that the appropriate 
content of this enumeration depends heavily on the nature and effect 
of the tariff shift rules yet to be considered. As a result, this 
issue should be reconsidered after the tariff shift rules have been 
completed.
[FR Doc. 95-15178 Filed 6-20-95; 8:45 am]
BILLING CODE 7020-02-P