[Federal Register Volume 61, Number 87 (Friday, May 3, 1996)]
[Rules and Regulations]
[Pages 19834-19835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11007]



=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR PART 10

[T.D. 96-35]
RIN 1515-AB93


Suspension of United States-Canada Free-Trade Agreement 
Implementing Regulations

AGENCY: Customs Service, Department of the Treasury.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document amends the Customs Regulations implementing the 
duty preference provisions of the United States-Canada Free-Trade 
Agreement (CFTA) to reflect that operation of the CFTA was suspended, 
by agreement of the Governments of the United States and Canada, as a 
result of the entry into force of the North American Free Trade 
Agreement (NAFTA) on January 1, 1994. The CFTA implementing regulations 
in question remain in effect only with regard to merchandise imported 
from Canada that was entered or withdrawn from warehouse for 
consumption prior to the entry into force of the NAFTA.

EFFECTIVE DATE: May 3, 1996.

FOR FURTHER INFORMATION CONTACT: Myles Harmon, Office of Regulations 
and Rulings (202-482-7000).

SUPPLEMENTARY INFORMATION:

Background

    On January 2, 1988, the United States and Canada entered into the 
United

[[Page 19835]]

States-Canada Free-Trade Agreement (CFTA), the objectives of which 
included the elimination of Customs duties and other barriers to trade 
in goods and services between the two countries. The provisions of the 
CFTA were adopted by the United States with the enactment of the United 
States-Canada Free-Trade Agreement Implementation Act of 1988, Pub. L. 
100-449, 102 Stat. 1851, and the CFTA went into effect on January 1, 
1989. Regulations setting forth the basic legal and procedural 
requirements for obtaining preferential duty treatment on imported 
merchandise under the CFTA are contained in Secs. 10.301 through 10.311 
of the Customs Regulations (19 CFR 10.301 through 10.311).
    On December 17, 1992, the United States, Canada and Mexico entered 
into the North American Free Trade Agreement (NAFTA). As in the case of 
the CFTA, the stated objectives of the NAFTA include the elimination of 
barriers to trade in goods and services between the territories of the 
three countries. The provisions of the NAFTA were adopted by the United 
States with the enactment of the North American Free Trade Agreement 
Implementation Act, Pub. L. 103-182, 107 Stat. 2057, and the NAFTA went 
into effect on January 1, 1994. Interim regulations implementing the 
Customs-related provisions of the NAFTA were published in the Federal 
Register as T.D. 94-1 on December 30, 1993 (58 FR 69460), and final 
NAFTA implementing regulations were published as T.D. 95-68 on 
September 6, 1995 (60 FR 46334); the majority of those NAFTA 
regulations are set forth in part 181 of the Customs Regulations (19 
CFR part 181).
    In view of the similarity between the objectives of the CFTA and 
those of the NAFTA, the United States and Canada recognized that, in 
principle, there would be no need to continue the operation of the CFTA 
upon accession to, and entry into force of, the NAFTA. Accordingly, by 
an exchange of letters dated December 30, 1993, the Governments of the 
United States and Canada formally agreed, subject to certain 
transitional arrangements not involving preferential duty treatment, to 
suspend the operation of the CFTA upon the entry into force of the 
NAFTA, with the suspension to remain in effect for such time as the two 
Governments are Parties to the NAFTA.
    Customs believes that the present CFTA implementing regulations are 
unclear as regards their applicability because they do not reflect the 
fact that the operation of the CFTA has been suspended as a result of 
the entry into force of the NAFTA. On the other hand, Customs notes 
that those regulations must be retained because they continue to have 
application to Customs transactions involving merchandise imported from 
Canada that was entered or withdrawn from warehouse for consumption 
during the period in which the CFTA was in effect (that is, from 
January 1, 1989, through December 31, 1993).
    In order to address the considerations mentioned above, this 
document revises Sec. 10.301 (Scope) to include references both to the 
suspension of the CFTA and to the circumstances in which the CFTA 
regulations continue to have application.

Inapplicability of Public Notice and Comment Procedures and Delayed 
Effective Date Requirements

    Pursuant to the provisions of 5 U.S.C. 553(a), public notice and 
comment procedures are inapplicable to this final rule because it is 
within the foreign affairs function of the United States. In addition, 
for the above reason and because this regulatory amendment involves no 
substantive change but rather merely conforms the regulations to 
present law, it is determined that good cause exists under the 
provisions of 5 U.S.C. 553(d)(3) for dispensing with a 30-day delayed 
effective date.

Executive Order 12866

    Because this document involves a foreign affairs function it is not 
subject to the provisions of E.O. 12866.

Regulatory Flexibility Act

    Since the amendment is not subject to the notice and public 
procedure requirements of 5 U.S.C. 553, it is not subject to the 
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

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 10

    Alterations, Bonds, Customs duties and inspection, Exports, 
Imports, Preference programs, Repairs, Reporting and recordkeeping 
requirements, Trade agreements.

Amendment to the Regulations

    For the reasons set out in the preamble, part 10 of the Customs 
Regulations (19 CFR part 10) is amended as set forth below.

PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, 
ETC.

    1. The authority citation for part 10 continues to read in part as 
follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized 
Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508, 
1623, 1624, 3314;
* * * * *
    2. Section 10.301 is revised to read as follows:


Sec. 10.301   Scope and applicability.

    The provisions of Secs. 10.302 through 10.311 of this part relate 
to the procedures for obtaining duty preferences on imported goods 
under the United States-Canada Free-Trade Agreement (the Agreement) 
entered into on January 2, 1988, and the United States-Canada Free-
Trade Agreement Implementation Act of 1988 (102 Stat. 1851). The United 
States and Canada agreed to suspend operation of the Agreement with 
effect from January 1, 1994, to coincide with the entry into force of 
the North American Free Trade Agreement (see part 181 of this chapter) 
and, accordingly, the provisions of Secs. 10.302 through 10.311 of this 
part apply only to goods imported from Canada that were entered for 
consumption, or withdrawn from warehouse for consumption, during the 
period January 1, 1989, through December 31, 1993. In situations 
involving goods subject to bilateral restrictions or prohibitions, or 
country of origin marking, other criteria for determining origin may be 
applicable pursuant to Article 407 of the Agreement.
Michael H. Lane,
Acting Commissioner of Customs.
    Approved: March 29, 1996.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 96-11007 Filed 5-02-96; 8:45 am]
BILLING CODE 4820-02-P