[Federal Register Volume 71, Number 163 (Wednesday, August 23, 2006)]
[Proposed Rules]
[Pages 49391-49393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-13947]


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DEPARTMENT OF HOMELAND SECURITY

DEPARTMENT OF THE TREASURY

Bureau of Customs and Border Protection

19 CFR Parts 103, 178, and 181

[USCBP-2006-0090]
RIN 1505-AB58


NAFTA: Merchandise Processing Fee Exemption and Technical 
Corrections

AGENCY: Customs and Border Protection, Department of Homeland Security; 
Department of the Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The current regulations in title 19 of the Code of Federal 
Regulations allow CBP to collect a merchandise processing fee (MPF) on 
imported shipments to recoup administrative expenses. However, 
``originating merchandise'' that qualifies to be marked as goods of 
Canada or of Mexico under the NAFTA are exempted from this fee. CBP is 
proposing to amend the regulations to clarify that an importer is 
subject to the same declaration requirement that is established for 
claiming NAFTA duty preference in order to claim the exemption of the 
MPF for goods that meet a NAFTA rule of origin even when the goods are 
unconditionally free.
    In addition, CBP is proposing to make several technical 
corrections. CBP is proposing to amend the regulations to clarify that 
a Certificate of Origin is not required for a commercial importation 
for which the total value of originating goods does not exceed $2,500. 
CBP is also proposing to remedy two incorrect addresses and an 
incorrect Code of Federal Regulations citation.

DATES: Comments must be received on or before October 23, 2006.

ADDRESSES: You may submit comments, identified by docket number, by one 
of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments via docket number 
USCBP-2006-0090.
     Mail: Trade and Commercial Regulations Branch, Office of 
Regulations and Rulings, Bureau of Customs and Border Protection, 1300 
Pennsylvania Avenue, NW., (Mint Annex), Washington, DC 20229.
    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking. All comments received will be 
posted without change to http://www.regulations.gov, including any 
personal information provided. For detailed instructions on submitting 
comments and additional information on the rulemaking process, see the 
``Public Participation'' heading of the SUPPLEMENTARY INFORMATION 
section of this document.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov. Submitted comments 
may also be inspected during regular business days between the hours of 
9 a.m. and 4:30 p.m. at the Office of Regulations and Rulings, Bureau 
of Customs and Border Protection, 799 9th Street, NW., 5th Floor, 
Washington, DC. Arrangements to inspect submitted comments should be 
made in advance by calling Joseph Clark at (202) 572-8768.

FOR FURTHER INFORMATION CONTACT: Seth Mazze, Trade Agreements Branch, 
Office of Field Operations, (202) 344-2634.

SUPPLEMENTARY INFORMATION:

Public Participation

    Interested persons are invited to participate in this rulemaking by 
submitting written data, views, or arguments on all aspects of the 
proposed rule. CBP also invites comments that relate to the economic, 
environmental, or federalism effects that might result from this 
proposed rule. Comments that will provide the most assistance to CBP in 
developing these procedures will reference a specific portion of the 
proposed rule, explain the reason for any recommended change, and 
include data, information, or authority that support such recommended 
change.

Background

    On December 17, 1992, the United States, Canada, and Mexico entered 
into the North American Free Trade Agreement (NAFTA). Among the stated 
objectives of the NAFTA is the elimination of barriers to trade in, and 
the facilitation of the cross-border movement of, goods and services 
between the territories of the countries. The provisions of the NAFTA 
were adopted by the United States with the enactment of the North 
American Free Trade Agreement Implementation Act (``the Act,'' 19 
U.S.C. 3301-3473). On September 6, 1995, Customs published Treasury 
Decision (T.D.) 95-68 (North American Free Trade Agreement) in the 
Federal Register (60 FR 46334), adopting amendments to the regulations 
in title 19 of the Code of Federal Regulations (CFR) to implement 
Customs-related aspects of the NAFTA. The final rule went into effect 
on October 1, 1995. Sections 403(1) and 411 of the Homeland Security 
Act of 2002 (Pub. L. 107-296) transferred the United States Customs 
Service and certain of its functions from the Department of the 
Treasury to the Department of Homeland Security; pursuant to section 
1502 of the Act, the President renamed the ``Customs Service'' as the 
``Bureau of Customs and Border Protection,'' also referred to as the 
``CBP.''

Merchandise Processing Fee (MPF) Exemption

    As a means of recouping administrative expenses for the processing 
of imported shipments, CBP charges a merchandise processing fee (MPF), 
as provided for in 19 U.S.C. 58c. However, under 19 U.S.C. 
58c(b)(10)(B), for goods qualifying under the rules of origin set out 
in 19 U.S.C. 3332, the fee may not be charged with respect to goods 
that qualify to be marked as goods of Canada or of Mexico (pursuant to 
Annex 311 of the NAFTA). In order to claim a NAFTA duty preference, an 
importer must make a declaration. The same declaration is used to claim 
the MPF exemption. That is, the importer must place the appropriate 
special program indicator (e.g., ``CA'' for goods of Canada and ``MX'' 
for goods of Mexico) opposite the good on the entry form. The proposal 
in this document addresses the situation in which an importer of an 
originating good has no duty preference incentive to make the required 
NAFTA declarations on the entry because the Normal Trade Relations rate 
of duty on the good is free (i.e., the good is unconditionally duty 
free). Accordingly, CBP is proposing to

[[Page 49392]]

amend 19 CFR 181.21(a) to clarify, consistent with existing law and CBP 
practice, that in order to claim the MPF exemption for unconditionally 
free goods from a NAFTA country, an importer of an originating good 
must place the appropriate special program indicator opposite the good 
on the entry form even though the importer is not claiming a NAFTA duty 
preference.

Technical Corrections

Exemption From Providing Certificate of Origin

    Section 181.22(b) of title 19, CFR (19 CFR 181.22(b)), requires an 
importer who claims preferential tariff treatment on a good under 19 
CFR 181.21 to provide, at the request of the port director, a copy of 
each Certificate of Origin pertaining to the good which is in the 
possession of the importer. Certain importations are exempted from this 
requirement under 19 CFR 181.22(d). One of these exemptions, set forth 
in section 181.22(d)(1)(iii) is for a commercial importation of a good 
whose value does not exceed $2,500 if a signed statement is attached to 
the invoice or other documents accompanying the shipment.
    CBP has determined that 19 CFR 181.22(d)(1)(iii) should be amended 
to clarify that the $2,500 value refers to the total value of a 
shipment and not to the value of the individual goods in a shipment. 
Accordingly, CBP is proposing to amend 19 CFR 181.22(d)(1)(iii) to 
clarify that a Certificate of Origin is not required for a commercial 
importation consisting of originating goods, the total value of which 
does not exceed $2,500, if the required statement is attached.

Other Technical Corrections

    CBP is also proposing to make several other technical corrections 
to the regulations. In CBP Dec. 05-32, an Interim Rule published in the 
Federal Register (70 FR 58009) on October 5, 2005, CBP redesignated 19 
CFR 12.132 as 102.25. However, there is a reference to Sec.  12.132 in 
Sec.  181.21(a). Accordingly, CBP is proposing to make a minor 
conforming amendment to update this reference. In addition, because CBP 
Dec. 05-32 removed the declaration requirement referenced in Sec. Sec.  
12.130(c) and 12.132, CBP is proposing to remove the entries for these 
sections in the list of OMB control numbers in Sec.  178.2. CBP is also 
proposing to amend an incorrect citation to 19 CFR 181.72(a)(2)(iii) in 
19 CFR 181.74(a). The correct citation is to Sec.  181.72(a)(3)(iii). 
In addition, CBP is proposing to amend the address in 19 CFR 181.74(e) 
for providing notification when the Canadian or Mexican customs 
administration intends to conduct a NAFTA verification visit in the 
U.S. in order to determine whether a good imported into the U.S. 
qualifies as an originating good. The correct address is: ``Bureau of 
Customs and Border Protection, Office of Field Operations, Special 
Enforcement Division, 1300 Pennsylvania Ave., NW., Washington, DC 
20229.'' CBP is also proposing to amend the National Commodity 
Specialist Division (NCSD) address in 19 CFR 181.93(a) for the 
submission of advance ruling requests under the NAFTA. The correct NCSD 
address is: ``National Commodity Specialist Division, Bureau of Customs 
and Border Protection, One Penn Plaza, 10th Floor, New York, NY 
10119.'' This address is also corrected in the list of public reading 
rooms in 19 CFR 103.1.

Signing Authority

    The signing authority for this document falls under 19 CFR 
0.1(a)(1).

Paperwork Reduction Act

    Because those changes with possible paperwork implications proposed 
in this document are merely clarifications of existing requirements, 
there is no need to amend the paperwork burden for the number 
previously approved by OMB for part 181 of title 19, CFR. The clearance 
number for part 181 is 1651-0098.

Regulatory Flexibility Act and Executive Order 12866

    Pursuant to the provisions of the Regulatory Flexibility Act (6 
U.S.C. 601 et seq.), it is certified that the proposed amendments will 
not have a significant economic impact on a substantial number of small 
entities. CBP is proposing to merely clarify, consistent with existing 
law and CBP practice, that an importer is subject to the same 
declaration requirement that is established for claiming NAFTA duty 
preference in order to claim the exemption of the MPF for goods that 
meet a NAFTA rule of origin even when the goods are unconditionally 
free. CBP is also proposing to merely clarify, consistent with current 
CBP practice, that a Certificate of Origin is not required for a 
commercial importation consisting of originating goods, the total value 
of which does not exceed $2,500, if the required statement is attached. 
Lastly, CBP is proposing to make other technical corrections to correct 
two incorrect addresses and an incorrect Code of Federal Regulations 
citation. For the same reasons, this document does not meet the 
criteria for a significant regulatory action under Executive Order 
12866.

List of Subjects

19 CFR Part 103

    Administrative practice and procedure, Freedom of information.

19 CFR Part 178

    Collections of information, Paperwork requirements, Reporting and 
recordkeeping requirements.

19 CFR Part 181

    Canada, Customs duties and inspection, Imports, Mexico, Trade 
agreements (North American Free Trade Agreement).

Proposed Amendments to the Regulations

    It is proposed to amend 19 CFR parts 103, 178, and 181 as set forth 
below.

PART 103--AVAILABILITY OF INFORMATION

    1. The authority citation for part 103 continues to read as 
follows:

    Authority: 5 U.S.C. 301, 552, 552a; 19 U.S.C. 66, 1624; 31 
U.S.C. 9701.

    2. Amend Sec.  103.1 by removing the address citation ``New York, 6 
World Trade Center, New York, New York 10048'' and adding in its place 
the address citation ``New York, One Penn Plaza, 10th Floor, New York, 
NY 10119''.

PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

    3. The authority citation for part 178 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.

    4. Amend Sec.  178.2 by removing the entries for 12.130(c) and 
12.132.

PART 181--NORTH AMERICAN FREE TRADE AGREEMENT

    5. The authority citation for part 181 continues to read as 
follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized 
Tariff Schedule of the United States), 1624, 3314.

    6. Revise Sec.  181.21(a) to read as follows:


Sec.  181.21  Filing of claim for preferential tariff treatment upon 
importation.

    (a) Declaration. In connection with a claim for preferential tariff 
treatment, or for the exemption from the merchandise processing fee, 
for a good under the NAFTA, the U.S. importer shall make a written 
declaration that the good

[[Page 49393]]

qualifies for such treatment. The written declaration may be made by 
including on the entry summary, or equivalent documentation, the symbol 
``CA'' for a good of Canada, or the symbol ``MX'' for a good of Mexico, 
as a prefix to the subheading of the HTSUS under which each qualifying 
good is classified. Except as otherwise provided in 19 CFR 181.22 and 
except in the case of a good to which Appendix 6.B to Annex 300-B of 
the NAFTA applies (see also 19 CFR 102.25), the declaration shall be 
based on a complete and properly executed original Certificate of 
Origin, or copy thereof, which is in the possession of the importer and 
which covers the good being imported.
* * * * *
    7. Amend Sec.  181.22(d)(1)(iii) by removing the phrase ``of a good 
whose value'', and adding in its place the phrase ``for which the total 
value of originating goods''.
    8. Amend Sec.  181.74 by:
    a. In paragraph (a), removing the citation ``181.72(a)(2)(iii)'' 
and adding in its place the citation ``181.72(a)(3)(iii)''; and
    b. In paragraph (e), removing the address citation ``Project North 
Star Coordination Center, P.O. Box 400, Buffalo, New York 14225-0400'' 
and adding in its place the address citation ``Bureau of Customs and 
Border Protection, Office of Field Operations, Special Enforcement 
Division, 1300 Pennsylvania Ave., NW., Washington, DC 20229''.
    9. Amend Sec.  181.93(a) by removing the address citation 
``National Commodity Specialist Division, United States Customs 
Service, 6 World Trade Center, New York, NY 10048'' and adding in its 
place the address citation ``National Commodity Specialist Division, 
Bureau of Customs and Border Protection, One Penn Plaza, 10th Floor, 
New York, NY 10119''.

    Dated: August 17, 2006.
Deborah J. Spero,
Acting Commissioner, Customs and Border Protection.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. E6-13947 Filed 8-22-06; 8:45 am]
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