[Federal Register Volume 68, Number 84 (Thursday, May 1, 2003)]
[Proposed Rules]
[Pages 23230-23231]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-10752]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 68, No. 84 / Thursday, May 1, 2003 / Proposed 
Rules  

[[Page 23230]]



DEPARTMENT OF AGRICULTURE

Foreign Agricultural Service

7 CFR Part 1530

RIN 0551-AA65


Sugar Re-Export Program

AGENCY: Foreign Agricultural Service, USDA.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Foreign Agricultural Service (FAS) is soliciting comments 
and views on whether to amend and revise the regulation at 7 CFR 1530 
for the purpose of improving and streamlining administration of the 
sugar re-export program and increasing the effectiveness of the program 
by implementing changes that would affect its scope and coverage.

DATES: Comments should be received on or before June 2, 2003, to be 
assured of consideration.

ADDRESSES: Comments should be sent to: Import Policies and Programs 
Division, Room 5531--Stop 1021, Foreign Agricultural Service, U.S. 
Department of Agriculture, 1400 Independence Ave., SW., Washington, DC 
20250-1021. All written comments received will be available for public 
inspection at the above address during business hours from 8 a.m. to 5 
p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Richard J. Blabey, Director, Import 
Policies and Programs Division, Foreign Agricultural Service, U.S. 
Department of Agriculture, (202) 720-2916; fax (202) 720-0876.

SUPPLEMENTARY INFORMATION:

Background

    The current regulation, which became effective February 12, 1999, 
consolidated three previously separate programs--the Refined Sugar Re-
export Program, the Sugar Containing Products Re-export Program, and 
the Polyhydric Alcohol Program. FAS now has sufficient experience with 
the consolidated regulation to propose further enhancements to the 
program. Basically, the regulation permits sugar refiners in the United 
States, who have licenses under the regulation, to enter raw sugar 
unrestricted by the tariff-rate quota provided for in chapter 17 of the 
Harmonized Tariff Schedule of the United States (HTS) and exempt from 
the requirement that imports be accompanied by a Certificate for Quota 
Eligibility (CQE) issued to the foreign exporter in accordance with 15 
CFR part 2011. To be eligible for unrestricted entry, licensees must 
either export an equivalent quantity of refined sugar (as refined sugar 
or as an ingredient in sugar containing products), or use an equivalent 
quantity in the production of certain polyhydric alcohols under the 
terms and conditions of the regulation.

Issues for Public Comment

    I. With respect to proposed administrative changes, certain 
practices now routinely authorized under the waiver provision of 
section 1530.113 of the regulation are being reviewed to determine if 
they should be incorporated into the regulation. Specifically, the 
following changes are under consideration, and comments on these 
specific issues are being requested:
    (a) Allowing exports to be conducted by third parties who have been 
pre-registered on program participants' licenses. The current 
regulation requires licensees to hold title to goods at the time they 
leave the U.S. Customs Territory. This provision excludes unlicensed 
export brokers, consolidators, and trading companies from directly 
participating in the program and aggressively promoting exports.
    (b) Permitting sugar containing product license holders to contract 
with refiners to toll refine program sugar. The current regulation does 
not allow a licensed manufacturer of a sugar-containing product to 
privately source raw cane sugar on the world market and then pay a 
licensed refiner a fee to enter it into the United States and refine it 
to the specifications desired by the manufacturer.
    (c) Defining program sugar simply as sugar charged or credited to a 
license balance. The current regulation defines refined sugar as sugar 
refined from raw cane sugar. The proposed change would bring the 
regulation into compliance with the Farm Security and Rural Investment 
Act of 2002 which states that all refined sugars (whether derived from 
sugar beets or sugarcane) produced by cane sugar refineries and beet 
sugar processors shall be fully substitutable for the export of sugar 
and sugar-containing products under those programs.
    II. With respect to amending and revising the scope and coverage of 
the regulation, FAS is soliciting comments regarding the feasibility of 
the changes proposed below and views regarding how they might be 
implemented.
    (a) Prohibiting the use of stocks in the program that cannot be 
marketed domestically due to the imposition of domestic marketing 
allotments. The Department is concerned that the refined sugar re-
export program could be used to circumvent the purpose of marketing 
allotments by the device of exporting blocked stocks for program 
credits and then using those same credits to supply additional imports 
of raw cane sugar to the U.S. market.
    (b) Broadening the criteria for issuing refined sugar re-export 
licenses to allow beet sugar refiners to participate in the program. 
The number of refiners in the program has declined to just three at 
present because of industry consolidation. The Farm Security and Rural 
Investment Act of 2002 declared all refined sugars (whether derived 
from sugar beets or sugarcane) to be fully substitutable. Allowing beet 
processors to be licensed could extend the program's benefits to 
additional participants.
    (c) Allowing the transfer of program sugar between holders of 
refined sugar re-export licenses. The current regulation does not allow 
a refiner having excess credits to sell those credits to a refiner that 
is short of credits but in need of raw cane sugar.
    (d) Allowing polyhydric users to receive transfers of program sugar 
from refiners without regard to polarity. The current regulation only 
allows the transfer of fully refined sugar to a producer of a 
polyhydric alcohol. Because these alcohols can be produced from sugar 
of lower polarity, the current regulation results in needless costs for 
some polyhydric alcohol producers.
    (e) Allowing holders of refined sugar re-export licenses to hold 
sugar containing product licenses. The current

[[Page 23231]]

regulation does not take account of trends leading toward increased 
vertical integration in the sweeteners industry.
    (f) Expanding the license balance limits currently imposed on 
refiners. The current license limit of 50,000 metric tons was set when 
more refiners held licenses. With only three refiners currently in the 
program, an increase in the limit may be justified. On the other hand, 
large and rapid flows of program sugar into and out of the United 
States could make the administration of marketing allotments more 
difficult.
    III. With respect to Mexico, FAS is soliciting comments on re-
exports to Mexico and views for implementing the various options 
proposed below.
    (a) Terminating re-exports.
    (b) Restricting re-exports to manufacturers of specific products, 
such as retail goods.
    (c) Allowing re-exports to continue unrestricted as long as 
exporters comply with the North American Free Trade Agreement (NAFTA) 
Annex 703.2, paragraph 21 provision, which requires that Mexico be 
notified whenever re-export sugar is shipped to Mexico.
    (d) Establishing a separate program for importing raw cane sugar 
duty free from Mexico for refining and re-export duty free to Mexico, 
as provided for by NAFTA Annex 703.2, paragraph 22.
    IV. With respect to raw cane sugar, FAS is soliciting comments on 
the feasibility of new rules to implement chapter 17 of the HTS, 
additional U.S. note 6, which authorizes the entry of raw cane sugar 
under subheading 1701.11.20 to be substituted for domestically produced 
raw cane sugar that has been or will be exported, and whether this 
should apply exclusively to Hawaii or nationwide. Such a program might 
offer sugar mills more options for marketing their raw cane sugar. On 
the other hand, large and rapid flows of program sugar into and out of 
the United States could make the administration of marketing allotments 
more difficult.
    V. Furthermore, interested parties are also encouraged to comment 
on the costs and benefits of the above proposals, including effects on:
    (a) U.S. sugarcane growers and processors.
    (b) Domestic sugar refiners, users, and consumers.
    (c) Foreign sugar producers and exporters.
    (d) The Overall Allotment Quantity and marketing allotments.
    (e) Demand for U.S.-flag vessels and barges.
    (f) Sugar futures trading and markets.
    (g) NAFTA.
    VI. In addition, FAS requests comments on any other aspect of the 
program set forth at 7 CFR 1530 which commentors believe should be 
addressed in a subsequent rulemaking initiative.

    Dated: April 28, 2003.
A. Ellen Terpstra,
Administrator, Foreign Agricultural Service.
[FR Doc. 03-10752 Filed 4-30-03; 8:45 am]
BILLING CODE 3410-10-P