[Federal Register: August 5, 2008 (Volume 73, Number 151)]
[Rules and Regulations]
[Page 45351-45354]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05au08-6]
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DEPARTMENT OF HOMELAND SECURITY
Bureau of Customs and Border Protection
DEPARTMENT OF THE TREASURY
19 CFR Parts 10, 102, 162, 163, and 178
[Docket No. USCBP-2007-0056; CBP Dec. 08-29]
RIN 1505-AB76
United States-Morocco Free Trade Agreement
AGENCIES: Customs and Border Protection, Department of Homeland
Security; Department of the Treasury.
ACTION: Final rule.
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[[Page 45352]]
SUMMARY: This document adopts as a final rule, with some changes,
interim amendments to title 19 of the Code of Federal Regulations
(``CFR'') which were published in the Federal Register on June 29,
2007, as CBP Dec. 07-51 to implement the preferential tariff treatment
and other customs-related provisions of the United States-Morocco Free
Trade Agreement signed by the United States and the Kingdom of Morocco.
DATES: Final Rule effective September 4, 2008.
FOR FURTHER INFORMATION CONTACT:
Textile Operational Aspects: Robert Abels, Office of International
Trade, (202-863-6503).
Other Operational Aspects: Heather Sykes, Office of International
Trade, (202-863-6099).
Legal Aspects: Karen Greene, Office of International Trade, (202-
572-8838).
SUPPLEMENTARY INFORMATION:
Background
On June 15, 2004, the United States and the Kingdom of Morocco (the
``Parties'') signed the U.S.-Morocco Free Trade Agreement (``MFTA'' or
``Agreement''). The stated objectives of the MFTA are to: Encourage
expansion and diversification of trade between the Parties; eliminate
barriers to trade in, and facilitate the cross-border movement of,
goods and services between the territories of the Parties; promote
conditions of fair competition in the free trade area; substantially
increase investment opportunities in the territories of the Parties;
provide adequate and effective protection and enforcement of
intellectual property rights in each Party's territory; create
effective procedures for the implementation and application of the
MFTA, for its joint administration and for the resolution of disputes;
and establish a framework for further regional and multilateral
cooperation to expand and enhance the benefits of the MFTA.
The provisions of the MFTA were adopted by the United States with
the enactment of the United States-Morocco Free Trade Agreement
Implementation Act (the ``Act''), Public Law 108-302, 118 Stat. 1103
(19 U.S.C. 3805 note), on August 17, 2004. Section 205 of the Act
requires that regulations be prescribed as necessary to implement these
provisions of the MFTA.
On December 22, 2005, the President signed Proclamation 7971 to
implement the provisions of the MFTA. The proclamation, which was
published in the Federal Register on December 27, 2005 (70 FR 76649),
modified the Harmonized Tariff Schedule of the United States
(``HTSUS'') as set forth in Annexes I and II of Publication 3721 of the
U.S. International Trade Commission. The modifications to the HTSUS
included the addition of new General Note 27, incorporating the
relevant MFTA rules of origin as set forth in the Act, and the
insertion throughout the HTSUS of the preferential duty rates
applicable to individual products under the MFTA where the special
program indicator ``MA'' appears in parenthesis in the ``Special'' rate
of duty subcolumn. The modifications to the HTSUS also included a new
Subchapter XII to Chapter 99 to provide for temporary tariff rate
quotas and applicable safeguards implemented by the MFTA.
Those customs-related MFTA provisions that require implementation
through regulation include certain tariff and non-tariff provisions
within Chapter One (Initial Provisions and Definitions), Chapter Two
(National Treatment and Market Access for Goods), Chapter Four
(Textiles and Apparel), Chapter Five (Rules of Origin), and Chapter Six
(Customs Administration).
In Chapter One of the MFTA, certain general definitions in Article
1.3 have been incorporated into the MFTA implementing regulations. In
MFTA Chapter Two, Article 2.6 (Goods Re-entered after Repair or
Alteration) requires implementation by CBP.
Chapter Four of the MFTA sets forth the measures relating to trade
in textile and apparel goods between Morocco and the United States
under the MFTA. The provisions within Chapter Four that require
regulatory action by CBP are Article 4.3 (Rules of Origin and Related
Matters) and Article 4.5 (Definitions).
Chapter Five of the MFTA sets forth the rules for determining
whether an imported good qualifies as an originating good of the United
States or Morocco (MFTA Party) and, as such, is therefore eligible for
preferential tariff (duty-free or reduced duty) treatment as specified
in the Agreement. Under Article 5.1, originating goods may be grouped
in three broad categories: (1) Goods that are wholly the growth,
product, or manufacture of one or both of the Parties; (2) goods (other
than those covered by the product-specific rules set forth in Annex 4-A
or Annex 5-A) that are new or different articles of commerce that have
been grown, produced, or manufactured in the territory of one or both
of the Parties, and that have a minimum value-content, i.e., at least
35 percent of the good's appraised value must be attributed to the cost
or value of materials produced in one or both of the Parties plus the
direct costs of processing operations performed in one or both of the
Parties; and (3) goods that satisfy the product-specific rules set
forth in Annex 4-A (textile or apparel goods) or Annex 5-A (certain
non-textile or non-apparel goods).
Article 5.2 explains that the term ``new or different article of
commerce'' means a good that has been substantially transformed from a
good or material that is not wholly the growth, product, or manufacture
of one or both of the Parties and that has a new name, character, or
use distinct from the good or material from which it was transformed.
Article 5.3 provides that a good will not be considered to be a new or
different article of commerce as the result of undergoing simple
combining or packaging operations, or mere dilution with water or
another substance that does not materially alter the characteristics of
the good. CBP notes that, pursuant to letters of understanding
exchanged between the Parties on June 16, 2004, in determining whether
a good meets the definition of a `` new or different article of
commerce'' in Sec. 10.769(i), the United States should be guided by
the provisions of part 102 of the CBP regulations (19 CFR part 102).
Article 5.4 provides for the accumulation of production in the
territory of one or both of the Parties in determining whether a good
qualifies as originating under the MFTA. Articles 5.5 and 5.6 set forth
the rules for calculating the value of materials and the direct costs
of processing operations, respectively, for purposes of determining
whether a good satisfies the 35 percent value-content requirement.
Articles 5.7 through 5.9 consist of additional sub-rules applicable
to originating goods, involving retail packaging materials, packing
materials for shipment, indirect materials, and transit and
transshipment. In addition, Articles 5.10 and 5.11 set forth the
procedural requirements that apply under the MFTA, in particular with
regard to importer claims for preferential tariff treatment. Article
5.14 provides definitions of certain of the terms used in Chapter Five
of the MFTA. The basic rules of origin in Chapter Five of the MFTA are
set forth in General Note 27, HTSUS, and in part 102 of title 19 of the
Code of Federal Regulations.
Chapter Six sets forth the customs operational provisions related
to the implementation and administration of the MFTA.
Customs and Border Protection (``CBP'') is responsible for
administering the provisions of the MFTA and the Act
[[Page 45353]]
that relate to the importation of goods into the United States from
Morocco. On June 29, 2007, CBP published CBP Dec. 07-51 in the Federal
Register (72 FR 35647), setting forth interim amendments to implement
the preferential tariff treatment and customs-related provisions of the
MFTA. In order to provide transparency and facilitate their use, the
majority of the MFTA implementing regulations set forth in CBP Dec. 07-
51 were included within new subpart M in part 10 of title 19 of the
Code of Federal Regulations (19 CFR subpart M, part 10). However, in
those cases in which MFTA implementation was more appropriate in the
context of an existing regulatory provision, the MFTA regulatory text
was incorporated in an existing part within the CBP regulations.
Although the interim regulatory amendments were promulgated without
prior public notice and comment procedures and took effect on June 29,
2007, CBP Dec. 07-51 provided for the submission of public comments
that would be considered before adopting the interim regulations as a
final rule. The prescribed public comment period closed on August 28,
2007. No comments were received in response to the solicitation of
public comments in CBP Dec. 07-51.
Changes to the Regulations
The final rulemaking text set forth below incorporates certain
changes, as discussed below, which CBP believes are necessary based on
further internal review of the interim regulatory text.
Definition of ``New or Different Article of Commerce''
The words ``new or different article of commerce'' are defined in
Sec. 10.769(i) of the interim regulations as a good that has been
substantially transformed from a good or material that is not wholly
the growth, product, or manufacture of one or both of the Parties and
that has a new name, character, or use distinct from the good or
material from which it was transformed. This definition has been
revised in this final rule document to provide that such an article of
commerce ``exists when the country of origin of a good which is
produced in a Party from foreign materials is determined to be that
country under the provisions of Sec. Sec. 102.1 through 102.21 of''
the CBP regulations (19 CFR 102.1 through 102.21). CBP believes that
this revised definition is more transparent and is consistent with
letters of understanding exchanged between the Parties which provide
that, in determining whether a good meets the definition of a ``new or
different article of commerce,'' the United States and Morocco should
be guided by the provisions of Part 102 of the CBP regulations.
CBP also notes that this revised definition is identical to the
definition of the same term set forth in the interim regulations
implementing the United States-Bahrain Free Trade Agreement (``BFTA'')
(see Sec. 10.809(i), CBP regulations (19 CFR 10.809(i)). The rules of
origin set forth in the BFTA (including letters of understanding
exchanged between the Parties concerning the interpretation of ``new or
different article of commerce'') closely parallel those in the MFTA.
Other Changes
1. In Sec. 10.761, relating to the scope of Subpart M, the last
sentence has been revised to add Part 102 as one of the parts in the
CBP regulations that include amendments implementing the MFTA,
consistent with the revision to the definition of ``new or different
article of commerce'' in Sec. 10.769(i) discussed above;
2. In Sec. 10.769, the definition of ``substantially transformed''
(formerly paragraph (o)) has been removed as those words are no longer
used in Subpart M as a result of the revision of the definition of
``new or different article of commerce'' discussed above;
3. In Sec. 10.770, which sets forth the basic MFTA rules of
origin, paragraph (a)(2) has been revised to add the words ``, as
defined in Sec. 10.769(i) of this subpart,'' immediately following the
words ``new or different article of commerce'' for clarification
purposes;
4. Section 10.785, which concerns verifications conducted in
Morocco by Moroccan authorities (at the request of CBP) relating to
textile and apparel goods imported into the United States, has been
removed in its entirety. CBP believes that the provisions of Sec.
10.785 are unnecessary to the proper implementation of the MFTA as they
relate primarily to actions that the Government of Morocco and CBP may
take in connection with verifications performed in Morocco. As such,
these provisions impose no requirements on U.S. importers of textile or
apparel goods or other members of the trade. In addition, CBP notes
that the removal of Sec. 10.785 provides consistency between the MFTA
implementing regulations and the interim regulations implementing the
BFTA, which include no provisions regarding verifications in Bahrain of
U.S. imports of textile and apparel products. The verification
provisions in the MFTA closely parallel those in the BFTA;
5. As a result of the removal of Sec. 10.785, discussed above,
Sec. Sec. 10.786 through 10.788 of the interim regulatory text have
been re-designated as Sec. Sec. 10.785 through 10.787, respectively;
and
6. In Sec. 102.0, relating to the scope of part 102, the third
sentence has been revised by adding the words ``Sec. 10.769 of the
United States-Morocco Free Trade Agreement regulations and''
immediately following the words ``new or different article of commerce
under'', consistent with the revision of the definition of ``new or
different article of commerce'' discussed above.
Conclusion
Accordingly, based on the considerations discussed above, CBP
believes that the interim regulations published as CBP Dec. 07-51,
should be adopted as a final rule with certain changes as discussed
above and as set forth below.
Executive Order 12866
CBP has determined that this document is not a regulation or rule
subject to the provisions of Executive Order 12866 of September 30,
1993 (58 FR 51735, October 1993), because it pertains to a foreign
affairs function of the United States and implements an international
agreement and, therefore, is specifically exempted by section 3(d)(2)
of Executive Order 12866.
Regulatory Flexibility Act
CBP Dec. 07-51 was issued as an interim rule rather than a notice
of proposed rulemaking because CBP had determined that the interim
regulations involve a foreign affairs function of the United States
pursuant to Sec. 553(a)(1) of the Administrative Procedure Act.
Because no notice of proposed rulemaking was required, the provisions
of the Regulatory Flexibility Act, as amended (5 U.S.C. 601 et seq.),
do not apply. Accordingly, this final rule is not subject to the
regulatory analysis requirements or other requirements of 5 U.S.C. 603
and 604.
Paperwork Reduction Act
The collection of information in this final rule has previously
been reviewed and approved by the Office of Management and Budget in
accordance with the requirements of the Paperwork Reduction Act (44
U.S.C. 3507) under control number 1651-0117.
The collections of information in these regulations are in
Sec. Sec. 10.703 and 10.704. This information is required in
connection with claims for preferential tariff treatment and for the
purpose of the exercise of other rights under the
[[Page 45354]]
MFTA and the Act and will be used by CBP to determine eligibility for a
tariff preference or other rights or benefits under the MFTA and the
Act. The likely respondents are business organizations including
importers, exporters, and manufacturers.
The estimated average annual burden associated with the collection
of information in this final rule is 0.2 hours per respondent or record
keeper. Under the Paperwork Reduction Act, an agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a valid OMB control number.
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.
List of Subjects
19 CFR Part 10
Alterations, Bonds, Customs duties and inspection, Exports,
Imports, Preference programs, Repairs, Reporting and recordkeeping
requirements, Trade agreements.
19 CFR Part 102
Customs duties and inspections, Imports, Reporting and
recordkeeping requirements, Rules of origin, Trade agreements.
19 CFR Part 162
Administrative practice and procedure, Customs duties and
inspection, Penalties, Trade agreements.
19 CFR Part 163
Administrative practice and procedure, Customs duties and
inspection, Export, Import, Reporting and recordkeeping requirements,
Trade agreements.
19 CFR Part 178
Administrative practice and procedure, Exports, Imports, Reporting
and recordkeeping requirements.
Amendments to the CBP Regulations
0
Accordingly, the interim rule amending parts 10, 162, 163, and 178 of
the CBP regulations (19 CFR parts 10, 162, 163, and 178), which was
published at 72 FR 35647 on June 29, 2007, is adopted as a final rule
with certain changes as discussed above and as set forth below.
PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,
ETC.
0
1. The general authority citation for Part 10 and the specific
authority for Subpart M continue to read as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized
Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508,
1623, 1624, 3314;
* * * * *
Sections 10.761 through 10.787 also issued under Public Law 108-
302, 118 Stat. 1103 (19 U.S.C. 3805 note).
* * * * *
0
2. Section 10.761 is amended by revising the last sentence to read as
follows:
Sec. 10.761 Scope.
* * * Additional provisions implementing certain aspects of the
MFTA and the Act are contained in Parts 102, 162, and 163 of this
chapter.
0
3. Section 10.769 is amended by revising paragraph (i) and removing
paragraph (o). Revised paragraph (i) reads as follows:
Sec. 10.769 Definitions.
* * * * *
(i) New or different article of commerce. A ``new or different
article of commerce'' exists when the country of origin of a good which
is produced in a Party from foreign materials is determined to be that
country under the provisions of Sec. Sec. 102.1 through 102.21 of this
chapter;
* * * * *
Sec. 10.770 [Amended]
0
4. Section 10.770 is amended by adding the words ``, as defined in
Sec. 10.769(i) of this subpart,'' immediately following the words
``new or different article of commerce'' in paragraph (a)(2).
Sec. 10.785 [Removed]
0
5. Section 10.785 is removed.
Sec. Sec. 10.786 through 10.788 [Redesignated as Sec. Sec. 10.785
through 10.787]
0
6. Sections 10.786 through 10.788 are redesignated as Sec. Sec. 10.785
through 10.787, respectively.
PART 102--RULES OF ORIGIN
0
7. The authority citation for part 102 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, 3592.
0
8. Section 102.0 is amended by revising the third sentence to read as
follows:
Sec. 102.0 Scope.
* * * The rules set forth in Sec. Sec. 102.1 through 102.21 of
this part will also apply for purposes of determining whether an
imported good is a new or different article of commerce under Sec.
10.769 of the United States-Morocco Free Trade Agreement regulations
and Sec. 10.809 of the United States-Bahrain Free Trade Agreement
regulations.* * *
W. Ralph Basham,
Commissioner, U.S. Customs and Border Protection.
Approved: July 31, 2008.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. E8-17968 Filed 8-4-08; 8:45 am]
BILLING CODE 9111-14-P