[Federal Register Volume 65, Number 4 (Thursday, January 6, 2000)]
[Proposed Rules]
[Pages 731-732]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-287]



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DEPARTMENT OF COMMERCE

International Trade Administration

DEPARTMENT OF THE INTERIOR

Office of Insular Affairs

15 CFR Part 303

[Docket No. 991228350-9350-01]
RIN 0625-AA55


Proposed Changes in Watch, Watch Movement and Jewelry Program for 
the U.S. Insular Possessions

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

ACTION: Notice of proposed rulemaking and request for comments.

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SUMMARY: The Departments invite public comment on a proposal to amend 
the regulations governing duty-exemption allocations for watch 
producers and duty-refund benefits for watch and jewelry producers in 
the United States insular possessions (the U.S. Virgin Islands, Guam, 
American Samoa and the Commonwealth of the Northern Mariana Islands 
(``CNMI''). The proposal would amend Subpart A of Title 15 CFR Part 303 
by establishing the total quantity and respective territorial shares of 
insular watches and watch movements which would be allowed to enter the 
United States free of duty during calendar year 2000 and by clarifying 
the definition of a new firm for watches. The proposal would also amend 
Subparts A and B of 15 CFR 303 by establishing a permanent formula for 
the creditable wage ceiling.

DATES: Written comments must be received on or before February 7, 2000.

ADDRESSES: Address written comments to Faye Robinson, Program Manager, 
Statutory Import Programs Staff, Room 4211, U.S. Department of 
Commerce, Washington, D.C. 20230.

FOR FURTHER INFORMATION CONTACT: Faye Robinson, (202) 482-3526, same 
address as above.

SUPPLEMENTARY INFORMATION: 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 
of the United States (``HTSUS''), as amended by Pub. L. 94-241 (90 Stat 
263) (1976) 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 watches and watch movements which may be entered from the 
Virgin Islands, Guam, American Samoa and the CNMI. 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 propose amending Sec. 303.14(e) to 
establish for calendar year 2000 a total quantity of 3,366,000 units 
and respective territorial shares as shown in the following table:

 
 
 
Virgin Islands.............................................    1,866,000
Guam.......................................................      500,000
American Samoa.............................................      500,000
CNMI.......................................................      500,000
 

    Compared to the total quantity established for 1999 (63 FR 49666; 
September 17, 1998), this amount would be a decrease of 374,000 units. 
The proposed Virgin Islands territorial share would be reduced by 
374,000 units and the shares for Guam, American Samoa and the CNMI 
would not change. The amount we propose for the Virgin Islands is more 
than sufficient for the anticipated needs of all the existing 
producers.
    The enactment of Pub. L. 106-36 amended additional U.S. notes to 
chapter 71 of the Harmonized Tariff Schedule of the United States to 
provide a duty-refund benefit for any article of jewelry within heading 
7113 which is a product of the Virgin Islands, Guam, American Samoa or 
the CNMI in accordance with the new provisions of the note in chapter 
71 and additional U.S. note 5 to chapter 91. The Departments published 
a final rule on December 1, 1999 (64 FR 67149) which amended the 
regulations by changing Title 15 CFR Part 303 to include jewelry and 
creating a Subpart A for the insular watch and watch movement 
regulations and a Subpart B for the new regulations pertaining to 
jewelry duty-refund benefits authorized by Pub. L. 106-36. When we 
requested comments on the proposed jewelry regulations, we received a 
comment regarding the requirement that a new firm be ``completely 
separate from and not associated with, by way of ownership or control'' 
with other jewelry program participants in the territory. In the final 
jewelry rule, we revised the language using new terminology borrowed 
from existing fair trade law to clarify the language. To ensure 
consistency and clarity, we propose amending Sec. 303.2(a)(5) to 
include the new terminology in Subpart A as well.
    We also propose establishing a permanent formula for the creditable 
wage ceiling for watches and jewelry by amending Sec. 303.2(a)(13), 
Sec. 303.14(a)(1)(i) and Sec. 303.16(a)(9), respectively. The 
creditable wage ceiling is used in the calculation of the value of the 
production incentive certificate (duty refund). We propose establishing 
an annual wage ceiling up to an amount equal to 65% of the contribution 
and benefit base for Social Security as defined in Sec. 230(c) of the 
Social Security Act, as amended (42 U.S.C. 430). Until 1976, the 
Departments credited wages up to the contribution and benefit base for 
Social Security. In that year, the Departments adopted an independent 
ceiling lower than the contribution and benefit base in order to 
increase the incentive for the employment and training of territorial 
residents in skilled jobs. (see 40 FR 54274 (1975)) Since 1983, the 
Departments have revised the ceiling upwards several times to keep pace 
with inflation. We now believe that establishing a new ceiling in the 
form of a fixed percentage of the contribution and benefit base for 
Social Security would serve the public interest. It would assist 
producers in better planning expenditures and calculating potential 
profits and benefits. This change would also eliminate the need for 
periodic rulemaking to adjust the ceiling, provide an annual 
incremental increase consistent with the Departments' past policy 
objectives, id., and create transparency in the calculation of the 
ceiling.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601 et 
seq., the Chief Counsel for Regulation at the Department of Commerce 
has certified to the Chief Counsel for Advocacy, Small Business 
Administration, that the proposed rule, if promulgated as final, will 
not have a significant economic impact on a substantial number of small 
entities. There are currently five watch companies, all of which are 
located in the Virgin Islands. Although a reduction of the 2000 Virgin 
Islands territorial share of duty-exemption is being proposed, the 
reduced amount would still represent more than twice the amount of 
duty-exemption used in 1998. The statute does not permit a lower amount 
in the year 2000. Similarly, clarifying new entrant affiliation 
language and updating the creditable wage ceiling with a permanent 
annual mechanism will not impose any cost or have any other

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adverse economic effect on the producers.

Paperwork Reduction Act

    This proposed rulemaking involves no new collection-of-information 
requirements subject to review and approval by the Office of Management 
and Budget (OMB) under the Paperwork Reduction Act of 1995. Collection 
activities are currently approved by the Office of Management and 
Budget under control numbers 0625-0040 and 0625-0134 and the amendments 
will not increase 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.

E.O. 12866.

    It has been determined that the proposed rulemaking 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 record keeping requirements, Virgin 
Islands, Watches and jewelry.
    For reasons set forth above, The Departments propose to amend 15 
CFR Part 303 as follows:

PART 303--WATCHES, WATCH MOVEMENTS AND JEWELRY PROGRAM

    1. The authority citation for 15 CFR Part 303 reads as follows:

    Authority: Pub. L. 97-446, 96 Stat. 2331 (19 U.S.C. 1202, note); 
Pub. L. 103-465, 108 Stat. 4991; Pub. L. 94-241, 90 Stat. 263 (48 
U.S.C. 1681, note); Pub. L. 106-36, 113 Stat. 127, 167.

    2. Section 303.2(a)(5) is revised to read as follows:


Sec. 303.2  Definitions and forms.

    (a) Definitions. Unless the context indicates otherwise:
* * * * *
    (5) New firm is a watch firm which may not be affiliated through 
ownership or control with any other watch duty-refund recipient. In 
assessing whether persons or parties are affiliated, the Secretaries 
will consider the following factors, among others: stock ownership; 
corporate or family groupings; franchise or joint venture agreements; 
debt financing; and close supplier relationships. The Secretaries may 
not find that control exists on the basis of these factors unless the 
relationship has the potential to affect decisions concerning 
production, pricing, or cost. Also, no watch duty-refund recipient may 
own or control more than one jewelry duty-refund recipient. A new 
entrant is a new watch firm which has received an allocation.
* * * * *
    3. The first sentence of Sec. 303.2(a)(13) is amended by removing 
``up to the amount per person shown in Sec. 303.14(a)(1)(i)'' and 
adding ``up to an amount equal to 65% of the contribution and benefit 
base for Social Security as defined in the Social Security Act for the 
year in which the wages were earned'' in its place.


Sec. 303.14  [Amended]

    4. Section 303.14(a)(1)(i) is amended by removing ``, up to a 
maximum of $38,650 per person,'' and adding ``, up to an amount equal 
to 65% of the contribution and benefit base for Social Security as 
defined in the Social Security Act for the year in which the wages were 
earned,'' in its place.
    5. Section 303.14(e) is amended by removing ``2,240,000'' and 
adding ``1,866,000'' in its place.


Sec. 303.16  [Amended]

    6. The first sentence of Sec. 303.16(a)(9) is amended by removing 
``up to the amount per person of $38,650'' and adding ``up to an amount 
equal to 65% of the contribution and benefit base for Social Security 
as defined in the Social Security Act for the year in which the wages 
were earned'' in its place.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration, Department of 
Commerce.
Sandra King,
Acting Director, Office of Insular Affairs, Department of the Interior.
[FR Doc. 00-287 Filed 1-5-00; 8:45 am]
BILLING CODE 3510-DS-P; 4310-93-P