[Federal Register Volume 80, Number 90 (Monday, May 11, 2015)]
[Rules and Regulations]
[Pages 26828-26830]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-11291]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

19 CFR Part 181

[CBP Dec. 15-07]
RIN 1515-AE04


Technical Corrections to the North American Free Trade Agreement 
Uniform Regulations

AGENCIES: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: Final rule.

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SUMMARY: This document sets forth amendments to the Customs and Border 
Protection regulations that implement the preferential tariff treatment 
and other customs-related provisions of the North American Free Trade 
Agreement (NAFTA) entered into by the United States, Canada, and 
Mexico. The amendments reflect technical rectifications to the NAFTA 
Uniform Regulations agreed upon by the three NAFTA Parties, as well as 
corrections necessitated by changes to the Harmonized Tariff Schedule 
of the United States. The conforming amendments are required to 
maintain the United States' obligations under the NAFTA and to ensure 
that NAFTA traders operate under a uniform tariff and rules of origin 
regime. The amendments set forth in this document involve no 
substantive interpretation of the NAFTA or change in policy.

DATES: The corrections are effective July 10, 2015.

FURTHER INFORMATION CONTACT: Craig T. Clark, Director, Textile and 
Trade Agreements Division, Office of International Trade, Customs and 
Border Protection, Tel. (202) 863-6657.

SUPPLEMENTARY INFORMATION:

Background

North American Free Trade Agreement

    On December 17, 1992, the United States, Canada, and Mexico entered 
into the North American Free Trade Agreement (NAFTA) which, among other 
things, provides for preferential duty treatment on goods of those 
three countries. The North American Free Trade Agreement Implementation 
Act, Public Law 103-182, 107 Stat. 2057, was signed into law by the 
United States on December 8, 1993. For purposes of administration of 
the NAFTA preferential duty provisions, the three countries agreed to 
the adoption of verbatim NAFTA Rules of Origin Regulations and 
additional uniform regulatory standards to be followed by each country 
in promulgating NAFTA implementing regulations under its national law.

NAFTA Rules of Origin Regulations

    The regulations implementing the NAFTA preferential duty and 
related provisions under United States law are set forth in part 181 of 
title 19 of the Code of Federal Regulations (19 CFR part 181) which 
incorporates, in the Appendix, the verbatim NAFTA Rules of Origin 
Regulations. The NAFTA rules of origin are structured primarily in 
terms of prescribed changes in tariff classification, with some goods 
also subject to a content requirement.

Technical Rectifications to the NAFTA Rule of Origin Regulations Agreed 
to by the United States, Canada, and Mexico

    On April 9, 2009, the United States Trade Representative, the 
Canadian

[[Page 26829]]

Minister of International Trade, and the Mexican Secretary of the 
Economy (Parties) agreed, in an Exchange of Letters, to make certain 
technical rectifications to the NAFTA Uniform Regulations for Chapter 
Four and Annex 403.1, subject to the completion of each Party's 
domestic legal procedures. These technical rectifications are set forth 
in Appendices 6 and 4, respectively, to the April 9, 2009 Exchange of 
Letters. The technical rectifications were necessitated by systemic 
revisions to the international Harmonized Commodity Description and 
Coding System (Harmonized System) and the implementation of these 
changes into each Party's national domestic tariff law, effective 2007. 
In Presidential Proclamation 8097 of December 29, 2006, the President 
proclaimed modifications to the Harmonized Tariff Schedule of the 
United States (HTSUS) to reflect the revisions to the Harmonized System 
(HS).
    The technical rectifications to the NAFTA Uniform Regulations for 
Chapter Four and Annex 403.1 do not constitute policy or substantive 
changes to the NAFTA and have the sole purpose of maintaining 
consistency between the NAFTA Annexes and each of the signatory 
countries' tariff laws. The conforming amendments set forth in this 
document implement these technical rectifications by updating the HTSUS 
tariff provisions in the Appendix to part 181 of 19 CFR and are 
necessary to maintain the United States' obligations under the NAFTA 
and to ensure that NAFTA traders operate under a uniform tariff and 
rules of origin regime.
    To effect the agreed upon numerical and text changes to the NAFTA 
Rules of Origin Regulations for the United States, technical 
rectifications are made to the following provisions within the Appendix 
to 19 CFR part 181:
     Part II, Section 5, subsection (4)(i), pertaining to 
exceptions to the de minimis rule for non-originating materials that do 
not undergo, subject to authorization, a required tariff change.
     Part III, Section 6, subsection (6)(d)(iv), pertaining to 
regional value content and application of the net cost method in 
certain circumstances.
     Part VI, Section 16, subsection (3), pertaining to 
exceptions to transshipment rules for certain goods.
     Schedule IV, pertaining to the list of tariff provisions 
for the purposes of section 9 of the Appendix.\1\
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    \1\ Schedule IV of the Appendix to part 181 of 19 CFR (``List of 
Tariff Provisions for the Purposes of Section 9 of the Appendix'' or 
commonly referred to as the ``Schedule IV Light-Duty Automotive 
Tracing List'') implements the NAFTA Annex 403.1 tariff provisions. 
Within Part V (``Automotive Goods'') of the Appendix to part 181, 
section 9 lists special NAFTA valuation rules for certain light-duty 
automotive goods. The section 9 rules are based on a regional value-
content (RVC) calculation that requires producers and exporters to 
determine whether non-originating materials used in the production 
of light-duty automotive goods are ``traced materials'' (i.e., those 
materials classifiable under specific HTSUS provisions listed in 
Annex 403.1 of the NAFTA).
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Additional Technical Corrections to the Schedule IV Light-Duty 
Automotive Tracing List Necessitated by Pre-2007 Revisions to the HTSUS

    In addition to the technical rectifications trilaterally agreed to 
by the NAFTA Parties in the 2009 Exchange of Letters, described above, 
this document makes additional technical corrections to the Schedule IV 
light-duty automotive tracing list within the Appendix to 19 CFR part 
181 to reflect pre-2007 modifications to the HTSUS. As noted above, the 
HTSUS is periodically updated to reflect systemic revisions to the HS. 
The periodic revisions to the HTSUS result in certain tariff provisions 
being added or removed, or certain goods being transferred to different 
or newly-created tariff provisions. As a result of pre-2007 systemic 
HTSUS revisions, the existing Schedule IV light-duty automotive tracing 
list in the Appendix to part 181 contains outdated tariff provisions 
that are no longer consistent with Annex 403.1 of the NAFTA. This 
document makes technical corrections to the numerical tariff references 
in the tracing list so as to conform to the current version of the 
HTSUS and maintain the United States' obligations under the NAFTA.

Inapplicability of the Administrative Procedure Act

    Under the Administrative Procedure Act (APA) (5 U.S.C. 553), 
agencies generally are required to publish a notice of proposed 
rulemaking in the Federal Register that solicits public comment on the 
proposed regulatory amendments, consider public comments in deciding on 
the content of the final amendments, and publish the final amendments 
at least 30 days prior to their effective date. Section 553(a)(1) of 
the APA provides that the standard prior notice and comment procedures 
do not apply to an agency rulemaking to the extent that it involves a 
foreign affairs function of the United States. CBP has determined that 
these technical corrections involve a foreign affairs function of the 
United States because they implement preferential tariff treatment and 
related provisions of the NAFTA. In addition, because the amendments 
set forth in this document are necessary to conform the NAFTA Rules of 
Origin Regulations within the Appendix to 19 CFR part 181 to the 
technical corrections to the NAFTA Uniform Regulations for Chapter Four 
and Annex 403.1 agreed to by the U.S., Canada, and Mexico, as well as 
to systemic revisions to the Harmonized System, pursuant to 5 U.S.C. 
553(b)(B), CBP finds that good cause exists for dispensing with notice 
and public procedure as unnecessary. For these reasons, pursuant to 5 
U.S.C. 553(a)(1) and (d)(3), CBP finds that good cause exists for 
dispensing with the requirement for a delayed effective date and the 
rulemaking requirements under the APA do not apply. It is further 
noted, that although the APA's delayed effective date requirement is 
inapplicable to this rulemaking, CBP has determined to delay the 
effective date of these technical rectifications for a period of 60 
days from the date of publication of this document in the Federal 
Register. In consideration of the fact that two of the amendments to 
the CBP regulations correct tariff listings that have been out of date 
since 1995, the delayed effective date is offered by CBP to allow the 
trade, if necessary, to make adjustments to their business practices.

Regulatory Flexibility Act

    Because this document is not subject to the notice and public 
procedure requirements of 5 U.S.C. 553, it is not subject to the 
provisions of the Regulatory Flexibility Act, as amended (5 U.S.C. 601 
et seq.).

Executive Order 12866

    As these amendments to the regulations reflect technical 
rectifications to the NAFTA agreed to by the United States, Canada, and 
Mexico, as well as revisions to the Harmonized Tariff Schedule of the 
United States, they do not meet the criteria for a ``significant 
regulatory action'' as specified in Executive Order 12866.

Signing Authority

    This document is being issued in accordance with Sec.  0.1(a)(1) of 
the CBP regulations (19 CFR 0.1(a)(1)) pertaining to the authority of 
the Secretary of the Treasury (or his/her delegate) to approve 
regulations related to certain customs revenue functions. Accordingly, 
it is being signed under the authority of 19 CFR 0.1(b)(1).

List of Subjects in 19 CFR Part 181

    Administrative practice and procedure, Canada, Customs duties and 
inspection, Imports, Mexico, Reporting

[[Page 26830]]

and recordkeeping requirements, Trade agreements (North American Free 
Trade Agreement).

Amendment to the Regulations

    For the reasons stated above, part 181 of title 19 of the Code of 
Federal Regulations (19 CFR part 181) is amended as set forth below.

PART 181--NORTH AMERICAN FREE TRADE AGREEMENT

0
1. The general and specific authority citations for part 181 continue 
to read as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized 
Tariff Schedule of the United States), 1624, 3314.
* * * * *
0
2. In the Appendix to part 181:
0
a. Part II, Section 5, under the heading ``Exceptions,'' subsection 
4(i) is revised;
0
b. Part III, Section 6, under the heading ``Net Cost Method Required in 
Certain Circumstances,'' subsection (6)(d)(iv) is amended by removing 
``subheading 8469.11'' and adding in its place ``heading 8469'';
0
c. Part VI, Section 16, under the heading ``Exceptions for Certain 
Goods,'' subsection (3) is revised;
0
d. In Schedule IV:
0
i. Remove the listing ``8407.34.05, 8407.34.15 and 8407.34.25'' and add 
in its place the listing ``8407.34.05, 8407.34.14, 8407.34.18 and 
8407.34.25'';
0
ii. Remove the listing ``8407.34.35, 8407.34.45 and 8407.34.55'' and 
add in its place the listing ``8407.34.35, 8407.34.44, 8407.34.48 and 
8407.34.55'';
0
iii. Remove the listing ``8519.93'' and add in its place the listing 
``ex 8519.81'';
0
iv. Remove the listing ``8708.29.10 '';
0
v. Remove the listing ``8708.29.20'' and add in its place the listing 
``8708.29.21 and 8708.29.25'';
0
vi. Remove the listing ``8708.39'' and add in its place the listing 
``8708.30'';
0
vii. Remove the listing ``8708.60'';
0
viii. Add in numerical order the listing ``8708.95'';
0
ix. Remove the listing ``8708.99.09, 8708.99.34 and 8708.99.61'';
0
x. Remove the listing ``8708.99.12, 8708.99.37 and 8708.99.64'';
0
xi. Remove the listing ``8708.99.15, 8708.99.40 and 8708.99.67'' and 
add in its place the listing ``8708.99.16, 8708.99.41 and 8708.99.68'';
0
xii. Remove the listing ``8708.99.18, 8708.99.43 and 8708.99.70'';
0
xiii. Remove the listing ``8708.99.21, 8708.99.46 and 8708.99.73'';
0
xiv. Remove the listing ``8708.99.24, 8708.99.49 and 8708.99.80; and
0
xv. Add in numerical order the listing ``8708.99.23, 8708.99.48 and 
8708.99.81''.
    The revisions read as follows:

Appendix to Part 181--Rules of Origin Regulations

* * * * *
PART II
* * * * *
SECTION 5. DE MINIMIS
* * * * *
Exceptions
    (4) * * *
    (i) a non-originating material that is used in the production of 
any non-portable gas stoves or ranges of subheading 7321.11 or 
7321.19, subheadings 8415.10, 8415.20 through 8415.83, 8418.10 
through 8418.21, household type refrigerators, other than electrical 
absorption type of subheading 8418.29, subheadings 8418.30 through 
8418.40, 8421.12, 8422.11, 8450.11 through 8450.20 and 8451.21 
through 8451.29 and tariff items 8479.89.55 (trash compactors) and 
8516.60.40 (electric stoves or ranges);
* * * * *
PART VI
SECTION 16. TRANSSHIPMENT
* * * * *
Exceptions for Certain Goods
    (3) Subsection (1) does not apply with respect to:
    (a) a ``smart card'' of subheading 8523.52, containing a single 
integrated circuit, where any further production or other operation 
that that good undergoes outside the territories of the NAFTA 
countries does not result in a change in the tariff classification 
of the good to any other subheading;
    (b) a good of any of subheadings 8541.10 through 8541.60 or 
subheadings 8542.31 through 8542.39, where any further production or 
other operation that that good undergoes outside the territories of 
the NAFTA countries does not result in a change in the tariff 
classification of the good to a subheading outside subheadings 
8541.10 through 8542.90;
    (c) an electronic microassembly of subheading 8543.70, where any 
further production or other operation that that good undergoes 
outside the territories of the NAFTA countries does not result in a 
change in the tariff classification of the good to any other 
subheading; or
    (d) an electronic microassembly of subheading 8548.90, where any 
further production or other operation that that good undergoes 
outside the territories of the NAFTA countries does not result in a 
change in the tariff classification of the good to any other 
subheading.
* * * * *

R. Gil Kerlikowske,
Commissioner.
    Approved: May 5, 2015.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 2015-11291 Filed 5-8-15; 8:45 am]
 BILLING CODE 9111-14-P