[Federal Register Volume 81, Number 231 (Thursday, December 1, 2016)]
[Rules and Regulations]
[Pages 86571-86573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28893]


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

DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 740

[160519443-6999-02]
RIN 0694-AG97


Temporary Exports to Mexico Under License Exception TMP

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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

SUMMARY: This final rule aligns the time limit of License Exception 
Temporary Imports, Exports, Reexports, and Transfers (in-country) 
(TMP), which authorizes, among other things, certain temporary exports 
to Mexico, with the time limit of Mexico's Decree for the Promotion of 
Manufacturing, Maquiladora and Export Services (IMMEX) program. 
Currently, TMP allows for the temporary export and reexport of various 
items subject to the Export Administration Regulations (EAR), as long 
as the items are returned no later than one year after export, 
reexport, or transfer if not consumed or destroyed during the period of 
authorized use. Other than a four-year period for certain personal 
protective equipment, the one-year limit extends to all items shipped 
under license exception TMP. However, the one-year period does not 
align with the time constraints of Mexico's IMMEX program, which allows 
imports of items for manufacturing operations on a time limit that may 
exceed 18 months. This rule amends TMP to complement the timeline of 
the IMMEX program. Under this amendment, items temporarily exported or 
reexported under license exception TMP and imported under the 
provisions of the IMMEX program would be authorized to remain in Mexico 
for up to four years from the date of export or reexport.

DATES: Effective: January 3, 2017.

FOR FURTHER INFORMATION CONTACT: Regulatory Policy Division, Office of 
Exporter Services, Bureau of Industry and Security, by telephone (202) 
482-2440 or email: [email protected].

SUPPLEMENTARY INFORMATION:

Overview

    Mexico's Decree for the Promotion of Manufacturing, Maquiladora and 
Export Services, known as IMMEX, is a platform used by U.S. and foreign 
manufacturers to lower production costs by temporarily importing 
production materials into Mexico. Created in 2006, IMMEX is the product 
of the merger of

[[Page 86572]]

two previous Mexican economic policies: The Maquiladora program, which 
was designed to attract foreign investment by exempting temporary 
imports from taxes, and the Temporary Import Program to Promote Exports 
(PITEX), which incentivized Mexican companies to grow and compete in 
foreign markets by providing temporary import benefits. Under IMMEX, 
companies located in Mexico are not subject to quotas and do not have 
to pay taxes on items temporarily imported and manufactured, 
transformed, or repaired before reexport.
    Under IMMEX, the length of time that imports may remain in Mexico 
is commodity dependent, with some items allowed to remain in-country 
for 18 months or more. These time allotments are greater than the time 
limits for License Exception Temporary Imports, Exports, Reexports, and 
Transfers (in-country) (TMP) allowed under Sec.  740.9(a)(14) of the 
EAR. With few exceptions, items exported under TMP, if not consumed or 
destroyed during the authorized use abroad, must be returned to the 
United States one year after the date of export. The discrepancy 
between the time periods of IMMEX and TMP reduces the efficacy of both 
policies, thereby hindering the shipment of items subject to the EAR to 
and from Mexico.
    U.S. companies that produce items subject to the EAR and ship those 
items to Mexico under IMMEX have notified the Bureau of Industry and 
Security of this discrepancy and have requested that BIS amend the EAR 
to increase compatibility with IMMEX. Considering the strength of 
Mexico's export control regime, as exemplified by its accession as a 
member to the Wassenaar Arrangement, the Australia Group, and the 
Nuclear Suppliers Group, BIS published the proposed rule 81 FR 57505 on 
August 23, 2016 (known hereafter as the August 23 rule) proposing to 
amend Sec.  740.9(a) to account for IMMEX's time limit. For the purpose 
of simplicity, BIS did not propose to match the various time periods 
instituted by IMMEX. Instead, the rule proposed to revise Sec.  
740.9(a)(8) to allow temporary exports and reexports to remain in 
Mexico for up to four years, which accommodates the maximum available 
time that temporarily imported items may remain in Mexico under IMMEX 
and is in parallel with the validity period of BIS's licenses. 
Additionally, the August 23 rule proposed to revise introductory 
paragraph Sec.  740.9(a)(14) to include a reference to Sec.  
740.9(a)(8) as an exception to the one-year time limit of TMP. BIS 
received only one comment regarding the rule, in which the user 
expressed support for the potential change in the regulations. Because 
BIS received only one comment, which was positive, regarding the August 
23 rule, this final rule implements the proposed rule without change.

Export Administration Act

    Although the Export Administration Act of 1979, as amended, expired 
on August 20, 2001, the President, through Executive Order 13222 of 
August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as amended by 
Executive Order 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013), 
and as extended by the Notice of August 4, 2016, 81 FR 52585 (August 4, 
2016), has continued the EAR in effect under the International 
Emergency Economic Powers Act. BIS continues to carry out the 
provisions of the Export Administration Act, as appropriate and to the 
extent permitted by law, pursuant to Executive Order 13222.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been determined to be not significant for 
the purposes of Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor is subject to a penalty for failure to 
comply with, a collection of information, subject to the requirements 
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), 
unless that collection of information displays a currently valid Office 
of Management and Budget (OMB) Control Number. This rule does not 
contain any collections of information.
    3. This rule does not contain policies with Federalism implications 
as that term is defined in Executive Order 13132.
    4. The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 
601 et seq., generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to the notice and comment 
rulemaking requirements under the Administrative Procedure Act (5 
U.S.C. 553) or any other statute. Under section 605(b) of the RFA, 
however, if the head of an agency certifies that a rule will not have a 
significant economic impact on a substantial number of small entities, 
the statute does not require the agency to prepare a regulatory 
flexibility analysis. Pursuant to section 605(b), the Chief Counsel for 
Regulation, Department of Commerce, certified to the Chief Counsel for 
Advocacy, Small Business Administration at the proposed rule stage that 
this rule would not have a significant economic impact on a substantial 
number of small entities.

Number of Small Entities

    The Bureau of Industry and Security (BIS) does not collect data on 
the size of entities that apply for and are issued export licenses. 
Although BIS is unable to estimate the exact number of small entities 
that would be affected by this rule, it acknowledges that this rule 
would affect some unknown number.

Economic Impact

    BIS believes that this final rule will not have a significant 
economic impact because exporters are already using other provisions of 
the EAR to participate in IMMEX. Currently, exporters participating in 
IMMEX are using TMP for exports of a one-year duration. If the item is 
to remain in Mexico longer than one year, exporters are required to 
either use another license exception or apply for a license that will 
address a specific time limit. This final rule merely extends the 
eligibility period for TMP to four years to complement the lengthy 
IMMEX time limit which could be 18 months or more, depending on 
circumstances. Extending the time limit of TMP to four years provides 
exporters flexibility in complying with the EAR and allows them to take 
fuller advantage of the privileges granted by IMMEX. While such a 
provision should reduce the paperwork burden to exporters, BIS does not 
believe increasing the time limit will lead to a significant increase 
in exports to Mexico. Rather, this final rule is consistent with the 
principle of the EAR in easing the unnecessary regulatory burden to 
exporters.

List of Subjects in 15 CFR Part 740

    Administrative practice and procedure, Exports, Reporting and 
recordkeeping requirements.

    Accordingly, 15 CFR part 740 of the EAR (15 CFR parts 730-774) is 
amended as follows:

[[Page 86573]]

PART 740--[AMENDED]

0
1. The authority citation for part 740 continues to read as follows:

    Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 
U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 
228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of 
August 4, 2016, 81 FR 52587 (August 8, 2016).


0
2. Section 740.9 is amended by revising paragraph (a)(8) and the 
introductory text of paragraph (a)(14) to read as follows:


Sec.  740.9   Temporary imports, exports, reexports, and transfers (in-
country) (TMP).

* * * * *
    (a) * * *
    (8) Assembly in Mexico. Commodities may be exported to Mexico under 
Customs entries that require return to the United States after 
processing, assembly, or incorporation into end products by companies, 
factories, or facilities participating in Mexico's in-bond 
industrialization program (IMMEX) under this paragraph (a)(8), provided 
that all resulting end-products (or the commodities themselves) are 
returned to the United States as soon as practicable but no later than 
four years after the date of export or reexport.
* * * * *
    (14) Return or disposal of items. With the exception of items 
described in paragraphs (a)(8) and (11) of this section, all items 
exported, reexported, or transferred (in-country) under this section 
must, if not consumed or destroyed in the normal course of authorized 
temporary use abroad, be returned to the United States or other country 
from which the items were so transferred as soon as practicable but no 
later than one year after the date of export, reexport, or transfer 
(in-country). Items not returned shall be disposed of or retained in 
one of the following ways:
* * * * *

Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2016-28893 Filed 11-30-16; 8:45 am]
BILLING CODE 3510-33-P