[Federal Register Volume 65, Number 33 (Thursday, February 17, 2000)]
[Rules and Regulations]
[Pages 8048-8049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3846]


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

DEPARTMENT OF COMMERCE

International Trade Administration

DEPARTMENT OF THE INTERIOR

Office of Insular Affairs

15 CFR Part 303

[Docket No. 990813222-0035-03]
RIN 0625-AA55


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: Final rule.

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

SUMMARY: This action amends the Departments' 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 rule 
amends Subpart A of Title 15 CFR Part 303 by establishing 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 2000 and clarifies the definition of a new firm 
for watches. The rule also amends Subparts A and B of 15 CFR 303 by 
establishing a permanent formula for the creditable wage ceiling.

EFFECTIVE DATE: February 17, 2000.

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

SUPPLEMENTARY INFORMATION: We published proposed regulatory revisions 
on January 6, 2000 (65 FR 731) and invited comments. We received no 
comments.
    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. 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 Sections 
303.3 and 303.4 of Title 15, Code of Federal Regulations (15 CFR 303.3 
and 303.4). The Departments amend Sec. 303.14(e) by establishing 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
 

    The enactment of Public Law 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 amend Sec. 303.2(a)(5) to include the new 
terminology in Subpart A as well.
    The rule also establishes a permanent formula for the creditable 
wage ceiling for watches and jewelry by amending Secs. 303.2(a)(13), 
303.14(a)(1)(i) and 303.16(a)(9), respectively. The creditable wage 
ceiling is used in the calculation of the value of the production 
incentive certificate (duty refund). The annual creditable wage ceiling 
is up to an amount equal to 65% of the contribution and benefit base 
for Social Security as defined in section 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. This 
rule establishes a new ceiling in the form of a fixed percentage of the 
contribution and benefit base for Social Security which assists 
producers in better planning expenditures and calculating potential 
profits and benefits. This change also eliminates the need for periodic 
rulemaking to adjust the ceiling, provides an annual incremental 
increase consistent with the Departments' past policy objectives, id., 
and creates transparency in the calculation of the ceiling.
    Under the Administrative Procedure Act, 5 U.S.C. 553(d)(1), the 
effective date of this rule need not be delayed for 30 days because 
this rule relieves a restriction by creating an annual increase in the 
creditable wage ceiling used in the calculation of the duty refund.

[[Page 8049]]

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 rule 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 there is a reduction of the 2000 Virgin Islands territorial 
share of duty-exemption, the reduced amount still represents 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 adverse economic effect on the producers.

Paperwork Reduction Act

    This 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 do not increase the information burden on the public or 
change the information collection requirements.
    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 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 recordkeeping requirements, Virgin 
Islands, Watches and jewelry.
    For reasons set forth above, the Departments 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 Section 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.
    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.
    6. The first sentence of Section 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.

Robert S. LaRussa,
Assistant Secretary for Import Administration, Department of Commerce.
Ferdinand Aranza,
Director, Office of Insular Affairs, Department of the Interior.
[FR Doc. 00-3846 Filed 2-16-00; 8:45 am]
BILLING CODE 3510-DS-P; 4310-93-P