[Federal Register Volume 63, Number 24 (Thursday, February 5, 1998)]
[Rules and Regulations]
[Pages 5887-5888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-2893]


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DEPARTMENT OF COMMERCE

International Trade Administration

15 CFR Part 303

DEPARTMENT OF THE INTERIOR

Office of Insular Affairs
[Docket No. 971021249-8006-02]
RIN 0625-AA50


Limit on Duty-Free Insular Watches in Calendar Year 1998

AGENCIES: Import Administration, International Trade Administration, 
Department of Commerce; Office of Insular Affairs, Department of the 
Interior.

ACTION: Final rule.

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SUMMARY: This action amends the ITA regulations, which govern duty-
exemption allocations and duty-refund entitlements for watch producers 
in the United States' insular possessions (the Virgin Islands, Guam and 
American Samoa) and the Northern Mariana Islands. The amendments 
establish the total quantity and respective territorial shares of 
insular watches and watch movements which are allowed to enter the 
United States free of duty during calendar year 1998 and make a minor 
adjustment to the verification of shipments.

EFFECTIVE DATE: March 9, 1998.

FOR FURTHER INFORMATION CONTACT: Faye Robinson, (202) 482-3526.

SUPPLEMENTARY INFORMATION: We published proposed regulatory revisions 
on November 5, 1997 (62 FR 59829) and invited comments. We received 
comments from the U.S. Small Business Administration contending that we 
had not provided sufficient information for the public to evaluate the 
merits of the agencies' certification under the Regulatory Flexibility 
Act, and that the proposed reduction in the duty-free allocation 
exceeded the statutory limit of no more than 10% a year. We address 
these comments below.
    With respect to the comment concerning the Regulatory Flexibility 
Act, we have included a more detailed explanation, including the nature 
of the industry, the number of small firms involved, and the effect, if 
any, on those firms from the reduction in the annual duty-exemption 
watch allocation. See the ``Regulatory Flexibility Act'' section below.
    Regarding the contention that the proposed reduction exceeds the 
amount specified by the regulations, we agree and have made the 
necessary correction. The limit as to the maximum allowable reduction 
became a factor this year because of reductions that had been made in 
previous years, a factor which was inadvertently overlooked in the 
proposed allocation revisions for calendar year 1998. Section 
303.3(b)(2) of the Department Regulations (15 CFR 303.3(b)(2)) 
specifies that ``the total annual duty-exemption shall not be decreased 
by more than 10% of the quantity established for the preceding calendar 
year, * * *'' The regulations further stipulate that ``[n]o territorial 
share shall be less than 500,000 units.'' 15 CFR 303.4(b). The total 
annual duty-exemption for 1997 was 4,600,000 units of which 3,100,000 
units were allocated to the Virgin Islands, and 500,000 units to Guam, 
American Samoa and the Northern Mariana Islands respectively. See 
Changes in Procedures for the Insular Possessions Watch Program, 61 FR 
55883 (Oct. 30, 1996). The proposed total annual duty-exemption of 
4,100,000 units for calendar year 1998

[[Page 5888]]

would have resulted in a reduction of 10.87 percent from total units 
allocated for 1997. Accordingly, we have revised the 1998 duty-
exemption such that the total annual duty-exemption has been reduced by 
no more than 10 percent from the preceding year. Because all but the 
Virgin Islands have been allocated the minimum allowable units, we have 
revised the Virgin Islands annual duty-exemption upwards from the 
proposed limit of 2,600,000 units to 2,640,000 units. While this change 
for the Virgin Islands represents a decrease of 14.84 percent from the 
1997 allocation of 3,100,000 units, the total exemption for all of the 
insular possessions and the Northern Mariana Islands is within the 
governing 10 percent limit set out in the Departments' Regulation. 15 
CFR 303.3(b)(2). As we discuss further in the ``Regulatory Flexibility 
Act'' section, we believe these allocations are more than sufficient to 
meet the needs of the watch companies subject to these regulations.
    The insular possessions watch industry provision in Sec. 110 of 
Pub. L. No. 97-446 (96 Stat. 2331) (1983) as amended by Sec. 602 of 
Pub. L. No. 103-465 (108 Stat. 4991) (1994) additional U.S. Note 5 to 
chapter 91 of the Harmonized Tariff Schedule requires the Secretary of 
Commerce and the Secretary of the Interior, acting jointly, to 
establish a limit on the quantity of watches and watch movements which 
may be entered free of duty during each calendar year. The law also 
requires the Secretaries to establish the shares of this limited 
quantity which may be entered from the Virgin Islands, Guam, American 
Samoa, and the Northern Mariana Islands. Regulations on the 
establishment of these quantities and shares are contained in Sec. 
303.3 and 303.4 of title 15, Code of Federal Regulations (15 CFR 303.3 
and 303.4). The Departments establish for calendar year 1998 a total 
quantity of 4,140,000 units and respective territorial shares as shown 
in the following table:


Virgin Islands.............................................    2,640,000
Guam.......................................................      500,000
American Samoa.............................................      500,000
Northern Mariana Islands...................................      500,000
                                                                        

    The rule also modifies section 303.6(a) by allowing producers to 
provide other means of verification satisfactory to the Secretaries 
when we are unable to verify shipments through the U.S. Customs 
Service.
    This final rule does not contain policies with Federalism 
implications sufficient to warrant preparation of a Federalism 
assessment under Executive Order 12612.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601 et 
seq., the Assistant General Counsel for Legislation and Regulation has 
certified to the Chief Counsel, Small Business Administration, that the 
rule will not have a significant economic impact on a substantial 
number of small entities. This is because the rulemaking affects only 
the five watch companies currently participating in the insular 
possessions watch program, all of which are located in the Virgin 
Islands. In 1996 these companies used less than half of the territorial 
share of duty-exemption for the Virgin Islands. Production to date 
(according to monthly watch production reports received from the 
Government of the Virgin Islands) indicates that these same companies 
will again use less than half the territorial share allocated for 1997. 
Based on these facts, we conclude that the annual duty-exemption 
allocation of 2,640,000 units will more than adequately meet the 
aggregate requirements of these Virgin Islands companies for calendar 
year 1998. Accordingly, the 1998 annual duty-exemption established for 
the Virgin Islands should not impose any cost or have any economic 
effect on these small companies.
    This action establishes the respective amounts available for 
allocation. The allocation itself, based on verified data contained in 
the companies' annual applications due by January 31, 1998, will be 
published later in 1998, pursuant to 15 CFR 303.5 and 303.6.

Paperwork Reduction Act

    This rulemaking involves information collection activities subject 
to the Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq. which 
are currently approved by the Office of Management and Budget under 
control number 0625-0134. The amendments would have no effect on the 
information burden on the public.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with a collection of information unless it 
displays a currently valid OMB Control Number.
    It has been determined that this rule is not significant for 
purposes of Executive Order 12866.

List of Subjects in 15 CFR Part 303

    Administrative practice and procedure, American Samoa, Customs 
duties and inspection, Guam, Imports, Marketing quotas, Northern 
Mariana Islands, Reporting and recordkeeping requirements, Virgin 
Islands, Watches and jewelry.
    For reasons set forth above, we are amending 15 CFR Part 303 as 
follows:

PART 303--[AMENDED]

    1. The authority citation for 15 CFR Part 303 continues to read as 
follows:

    Authority: Pub. L. 94-241, 90 Stat. 263 (48 U.S.C. 1681, note); 
Pub. L. 97-446, 96 Stat. 2331 (19 U.S.C. 1202, note); Pub. L. 103-
465, 108 Stat. 4991.


Sec. 303.6  [Amended]

    2. Section 303.6(a) is amended by adding to the second to last 
sentence ``, or verified by other means satisfactory to the 
Secretaries,'' after the words U.S. Customs Service.


Sec. 303.14  [Amended]

    3. Section 303.14(e) is amended by removing ``3,100,000'' and 
adding ``2,640,000'' in its place.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
Allen Stayman,
Director, Office of Insular Affairs.
[FR Doc. 98-2893 Filed 2-4-98; 8:45 am]
BILLING CODE 3510-DS-P, 4310-93-P