[Federal Register Volume 64, Number 51 (Wednesday, March 17, 1999)] [Proposed Rules] [Pages 13142-13143] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 99-6467] ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Customs Service 19 CFR Part 146 RIN 1515-AC05 Weekly Entry Procedure for Foreign Trade Zones AGENCY: Customs Service, Department of the Treasury. ACTION: Proposed rule; withdrawal. ----------------------------------------------------------------------- SUMMARY: This document withdraws the proposed amendments to the Customs Regulations that would have expanded the weekly entry procedure for foreign trade zones to include merchandise involved in activities other than exclusively assembly-line type production operations. Customs has determined that the proposed expanded weekly entry procedure would significantly reduce the collection of the merchandise processing fee (MPF) that Customs needs to offset its administrative costs incurred in processing imported merchandise that is formally entered or released. DATE: The withdrawal is effective on March 17, 1999. FOR FURTHER INFORMATION CONTACT: Linda Walfish, Office of Field Operations, (202-927-0042). SUPPLEMENTARY INFORMATION: Background The Foreign Trade Zones Act of 1934, as amended (19 U.S.C. 81a-u) (the ``FTZA'') provides for the establishment and regulation of foreign trade zones. Foreign trade zones are secured areas to which foreign and domestic merchandise, except that prohibited by law, may be exempted from the Customs laws of the United States for the purposes enumerated in the FTZA. Foreign trade zones, by virtue of their potential to allow exemption from the Customs laws, are intended to attract and promote legitimate international trade and commerce. Part 146, Customs Regulations (19 CFR part 146), sets forth the documentation and recordkeeping requirements governing, among other things, the admission of merchandise into a zone, its manipulation, manufacture, storage, destruction or exhibition while in the zone, and its entry and removal from the zone. To this latter end, Customs has in place a weekly entry procedure for foreign trade zones, as prescribed in Sec. 146.63(c)(1), Customs Regulations (19 CFR 146.63(c)(1)). Under the procedure, instead of requiring a separate entry for each removal of merchandise from a zone, as would otherwise be the case, Customs accepts one entry from a zone user covering all its anticipated removals fro an entire weekly period. The use of this procedure, however, has been limited exclusively to merchandise that is manufactured or changed into its final form just shortly (within 24 hours) before physical transfer from the zone. The weekly entry procedure is believed to be especially necessary for assembly-line type manufacturing operations because, in these circumstances, there would otherwise be little time for examination of the merchandise and furnishing of entry documentation after the merchandise was in its final form but before its physical removal from the zone. Thus, under the weekly entry process, the assembly-line operation would not have to be delayed pending acceptance of an entry and Customs examination of the merchandise. On March 14, 1997, Customs published in the Federal Register (62 FR 12129) a notice of proposed rulemaking that would have expanded the use of weekly entry by adding a weekly entry procedure to cover merchandise involved in activities other than manufacturing operations. It was expected that the expanded weekly entry procedure would be available to zones (including subzones) having large quantities of different types of merchandise. The principal purpose of the proposed expanded weekly entry procedure, which would have required electronic entry filing, was to reduce the number of paper entries from zones and further facilitate the processing of zone entries, with resulting reductions in paperwork and associated industry costs. In order to test the expanded weekly entry procedure, a pilot program had been authorized in September 1994 for a selected number of zones/subzones. Effect on Merchandise Processing Fee Based upon further evaluation of the pilot program, and comments made by zone operators and others on the proposed rule, it is clear that the expanded procedure would significantly impact Customs collection of the merchandise processing fee (MPF). This poses a serious funding concern for the Government. Under 19 U.S.C. 58c(a)(9)(A) and (B)(i), the MPF is the fee that Customs assesses on importers in order to offset its administrative costs (salaries and expenses) incurred in connection with the processing of imported merchandise that is formally entered or released. The fees collected are deposited in the [[Page 13143]] general fund of the Treasury in a separate account known as the ``Customs User Fee Account'' (19 U.S.C. 58c(f)). Specifically, except as otherwise provided, merchandise that is formally entered is subject to an ad valorem MPF of .21 percent (19 CFR 24.23(b)(1)(i)(A)); however, on any one such entry of merchandise, the fee may not exceed $485, subject to certain provisions not here relevant (19 CFR 24.23(b)(1)(i)(B)). As a result, in those cases where a company must now make a separate entry for each of its removals of merchandise from a zone, and its total payment of the MPF for all entries so made during a week greatly exceeds $485, the company would be able to lower this payment substantially if it could instead make one entry covering all its removals from the zone for the week, with the MPF thereby capped at $485. Clearly, Customs collection of the MPF would be significantly reduced under an expanded weekly entry program. Indeed, some parties expressing interest in the proposed rule even asserted that they would apply for foreign trade zone status just to gain the benefit of the reduced MPF through the use of a weekly entry. Moreover, other industries, such as bonded warehouse associations, stated that similar entry procedures should as well be available to them, which also raised a fairness concern. Withdrawal of Proposal In view of the foregoing, and following further consideration of the matter, Customs has determined to withdraw the notice of proposed rulemaking that was published in the Federal Register (62 FR 12129) on March 14, 1997. Customs, however, will continue to cooperate with the trade in seeking mutually satisfactory ways in which to further facilitate entry processing or imported merchandise, so as to reduce associated paperwork and costs to industry, while at the same time reasonably preserving the integrity of the MPF which is necessary to offset merchandise processing costs incurred by the Government in this regard. Raymond W. Kelly, Commissioner of Customs. Approved: February 9, 1999. John P. Simpson, Deputy Assistant Secretary of the Treasury. [FR Doc. 99-6467 Filed 3-16-99; 8:45 am] BILLING CODE 4820-02-M