[Federal Register Volume 63, Number 15 (Friday, January 23, 1998)]
[Proposed Rules]
[Pages 3506-3507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1572]


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INTERNATIONAL DEVELOPMENT COOPERATION AGENCY

Agency for International Development

22 CFR Part 228

RIN 0412-AA37


Rules on Source, Origin and Nationality for Commodities and 
Services Financed by USAID: Miscellaneous Amendments

AGENCY: United States Agency for International Development (USAID), 
IDCA.

ACTION: Proposed rule.

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SUMMARY: USAID proposes to amend its regulation on source, origin and 
nationality for commodities and services financed by USAID by revising 
two rules, one on system determinations for commodities and one on 
ocean transportation eligibility, and clarifying waiver provisions.

    The proposal to amend the coverage on systems determinations would 
allow components of a commodity system to be shipped to a cooperating 
country without first being shipped to and assembled in an eligible 
country. This should reduce the cost of these transactions by reducing 
unnecessary shipments. The proposal to amend the rules on eligibility 
of transshipments would require that suppliers obtain a determination 
from USAID that direct service on a U.S. flag vessel is not available 
before transshipment from a U.S. flag to a non-U.S. flag vessel would 
be eligible for USAID financing. This will ensure compliance with Cargo 
Preference requirements that direct U.S. flag service be used when 
available.

DATES: Comments are due March 24, 1998.

FOR FURTHER INFORMATION CONTACT: Kathleen O'Hara, Office of 
Procurement, Policy Division (M/OP/P) USAID, Washington, DC 20523-1435. 
Telephone: (703) 875-1534, facsimile: (703) 875-1243, e-mail address: 
[email protected].

SUPPLEMENTARY INFORMATION: The regulation at 22 CFR part 228 was 
published as a final rule September 15, 1996 (61 FR 53615). After 
operating under the regulation for a year a few areas have been 
identified that need some additional coverage or clarification. In 
Section 228.11, USAID proposes to amend the current provision which 
allows some commodity transactions to be designated as systems and thus 
be considered a single commodity rather than a number of separate 
commodities (e.g., a computer system with CPU, monitor and keyboard). 
Under the current rule, a commodity must be produced in a country 
included in the authorized Geographic Code prior to shipment to the 
cooperating country in order to meet eligibility requirements, and the 
same rule currently applies to a system. It can add considerable 
expense to a transaction if some components of a system must be shipped 
to a country in the authorized Geographic Code to be assembled into a 
system prior to shipment to the cooperating country in order to meet 
USAID's origin requirement. In many cases where systems determinations 
are appropriate there is no practical need to assemble the system prior 
to final installation in the cooperating country. Thus, the proposed 
rule would allow a system to meet the origin requirement without prior 
assembly in a country included in the authorized Geographic Code 
provided the supplier is responsible for assembly in the cooperating 
country.
    The ocean transportation rule in 228.21 is being amended to ensure 
compliance with cargo preference requirements by limiting the use of 
transshipments which begin on U.S. flag vessels and move to non-U.S. 
flag vessels to only those cases where direct carriage on U.S. flag 
vessels is not available. The proposed rule will require the supplier 
to obtain a determination from USAID that direct service on a U.S. flag 
vessel to destination is not available before a U.S.-foreign flag 
transshipment will be eligible for USAID financing. In addition, 
section 228.21 is revised to specify where USAID'S policies 
implementing cargo preference are located.
    Editorial clarifications are being made to the waiver provisions in 
Sections 228.51 and 228.53.

List of Subjects in 22 CFR Part 228

    Administrative practice and procedure, Commodity procurement, Grant 
programs--foreign relations.

    Accordingly 22 CFR part 228 is proposed to be amended as follows:

PART 228--[AMENDED]

    1. The authority citation continues to read as follows:

    Authority: Sec. 621, Pub. L. 87-195, 75 Stat. 445 (22 U.S.C. 
2381), as amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; 3 CFR 
1979 Comp., p. 435.

    2. In Sec. 228.11, paragraph (e) is revised as follows:


Sec. 228.11  Source and origin of commodities.

* * * * *
    (e) Systems Determination. When a system consisting of more than 
one produced commodity is procured as a single, separately priced item, 
USAID may determine that the system itself shall be considered a 
produced commodity. When a determination is made to treat a system as a 
produced commodity, component commodities which originate from other 
than an authorized source country may be shipped directly to, and the 
system assembled in, the cooperating country, unless USAID specifically 
determines that assembly and shipment shall take place in an authorized 
source country. Transportation costs must still meet the requirements 
in subpart C of this part in order for them to be eligible for USAID 
financing. USAID, or the importer in the case of a Commodity Import 
Program, shall inform the supplier of any system determination.
* * * * *

[[Page 3507]]

    3. Section 228.21 is amended by adding a sentence at the end of 
paragraph (a) and revising paragraph (c)(4) as follows:


Sec. 228.21  Ocean transportation.

    (a) * * * USAID's policy on implementation of the Cargo Preference 
Act is in USAID's Automated Directives System, Chapter 315.
* * * * *
    (c) * * *
    (4) USAID will finance costs incurred on vessels under flag 
registry of any Geographic Code 935 country if the costs are part of 
the total cost on a through bill of lading that is paid to a carrier 
for initial carriage on a vessel which is eligible in accordance with 
paragraphs (c)(1), (2) or (3) of this section; provided that for 
shipments originating on a U.S. flag vessel with transshipment to a 
non-US. flag vessel, the supplier must obtain a determination that 
direct service on a U.S. flag vessel is not available from USAID's 
Office of Procurement, Transportation Division, 1300 Pennsylvania 
Avenue NW., Washington, DC 20523-7900.
    4. Section 228.51, paragraph (a) is amended by revising the 
introductory paragraph and paragraph (a)(1) as follows:


Sec. 228.51  Commodities.

    (a) Waiver criteria. Any waiver must be based upon one of the 
criteria listed in this section. Waivers to Geographic Code 899 or Code 
935 which are justified under paragraph (a) (2) or (3) of this section 
may only be authorized on a case-by-case basis. A waiver may be 
authorized when:
    (1) A commodity required for assistance is of a type that is not 
produced in or available for purchase in the United States; in 
addition, for waivers to any country or Geographic code beyond Code 941 
and the cooperating country, the commodity is of a type that is not 
produced in or available for purchase in any country in Code 941 or the 
cooperating country.
* * * * *
    5. Section 228.53 is amended by revising the introductory paragraph 
and paragraph (a) as follows:


Sec. 228.53  Suppliers of services--privately owned commercial 
suppliers and non-profit organizations.

    Waiver criteria. Any waiver must be based upon one of the criteria 
listed in this section. Waivers to Geographic Code 899 or Code 935 
which are justified under paragraph (b) or (c) of this section may only 
be authorized on a case-by-case basis. A waiver may be authorized when:
    (a) Services required for assistance are of a type that are not 
available for purchase in the United States; in addition, for waivers 
to any country or Geographic Code beyond Code 941 and the cooperating 
country, the services are of a type that are not available for purchase 
in any country in Code 941 or the cooperating country.
* * * * *
    Dated: January 5, 1998.
Marcus L. Stevenson,
Procurement Executive.
[FR Doc. 98-1572 Filed 1-22-98; 8:45 am]
BILLING CODE 6116-71-M