United States-Chile Free Trade Agreement, 76127-76134 [06-9780]

Download as PDF Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations DEPARTMENT OF HOMELAND SECURITY Bureau of Customs and Border Protection DEPARTMENT OF THE TREASURY 19 CFR Parts 10 and 191 [CBP Dec. 06–39] RIN 1505–AB47 United States-Chile Free Trade Agreement Customs and Border Protection, Depart of Homeland Security; Department of the Treasury. ACTION: Final rule. AGENCIES: 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 March 7, 2005, as CBP Dec. 05–07 to implement the preferential tariff treatment and other customs-related provisions of the United States-Chile Free Trade Agreement signed by the United States and the Republic of Chile. DATES: Final rule effective January 19, 2007. FOR FURTHER INFORMATION CONTACT: rwilkins on PROD1PC63 with RULES Textile Operational Aspects: Robert Abels, Office of Field Operations, (202) 344–1959. Other Operational Aspects: Lori Whitehurst, Office of Field Operations, (202) 344–2722. Audit Aspects: Mark Hanson, Office of Regulatory Audit, (202) 344–2877. Legal Aspects: Edward Leigh, Office of International Trade, (202) 572–8827. SUPPLEMENTARY INFORMATION: Background On June 6, 2003, the United States and the Republic of Chile (the ‘‘Parties’’) signed the U.S.-Chile Free Trade Agreement (‘‘US–CFTA’’). The provisions of the US–CFTA were adopted by the United States with the enactment of the United States-Chile Free Trade Agreement Implementation Act (the ‘‘Act’’), Public Law 108–77, 117 Stat. 909 (19 U.S.C. 3805 note), on September 3, 2003. Section 210 of the Act requires that regulations be prescribed as necessary. Those customs-related US–CFTA provisions which require implementation through regulation include certain tariff and non-tariff provisions within Chapter Three (National Treatment and Market Access for Goods) and the provisions of Chapter Four (Rules of Origin and Origin VerDate Aug<31>2005 17:07 Dec 19, 2006 Jkt 211001 Procedures) and Chapter Five (Customs Administration). The tariff-related provisions within US–CFTA Chapter Three which require regulatory action by CBP are Article 3.7 (Temporary Admission of Goods), Article 3.9 (Goods Re-Entered after Repair or Alteration), and Article 3.20 (Rules of Origin and Related Matters). Chapter Four of the US–CFTA sets forth the rules for determining whether an imported good qualifies as an originating good of the United States or Chile (US–CFTA Party) and, as such, is therefore eligible for preferential tariff (duty-free or reduced duty) treatment as provided for under Article 4.1 and Annex 4.1 of the US–CFTA. Under Article 4.1 within that Chapter, originating goods may be grouped in three broad categories: (1) Goods which are wholly obtained or produced entirely in one or both of the Parties; (2) goods which are produced entirely in one or both of the Parties and which satisfy the specific rules of origin in US– CFTA Annex 4.1 (change in tariff classification requirement and/or regional value content requirement); and (3) goods which are produced entirely in one or both of the Parties exclusively from materials that originate in those countries. Article 4.2 sets forth the methods for calculating the regional value content of a good. Article 4.3 sets forth the rules for determining the value of materials for purposes of calculating the regional value content of a good and applying the de minimis rule. Article 4.4 sets forth the rules for determining whether accessories, spare parts, or tools delivered with a good qualify as material used in the production of such good. Article 4.6 provides for accumulation of production by two or more producers. Article 4.7 provides a de minimis criterion. The remaining Articles within Section A of Chapter Four consist of additional sub-rules, applicable to the originating good concept, involving fungible materials, packaging materials, packing materials, transshipment, and non-qualifying operations. The basic rules of origin in Chapter Four of the US–CFTA are set forth in General Note 26, Harmonized Tariff Schedule of the United States (HTSUS). In addition, Section B of Chapter Four sets forth the procedural requirements which apply under the US–CFTA, in particular with regard to claims for preferential tariff treatment. Chapter Five sets forth the customs operational provisions related to the implementation and continued administration of the US–CFTA. On March 7, 2005, Customs and Border Protection (‘‘CBP’’) published CBP Dec. 05–07 in the Federal Register PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 76127 (70 FR 10868) setting forth interim amendments to implement the preferential tariff treatment and other customs-related provisions of the US– CFTA. In order to provide transparency and facilitate their use, the majority of the US–CFTA implementing regulations set forth in CBP Dec. 05–07 were included within new Subpart H in Part 10 of title 19 of the Code of Federal Regulations (19 CFR Subpart H, Part 10). However, in those cases in which US– CFTA implementation was more appropriate in the context of an existing regulatory provision, the US–CFTA regulatory text was incorporated in an existing part within the CBP regulations. CBP Dec. 05–07 also set forth a number of cross-references and other consequential changes to existing regulatory provisions to clarify the relationship between those existing provisions and the new US–CFTA implementing regulations. Although the interim regulatory amendments were promulgated without prior public notice and comment procedures and took effect on March 7, 2005, CBP Dec. 05–07 provided for the submission of public comments which would be considered before adoption of the interim regulations as a final rule, and the prescribed public comment period closed on June 6, 2005. A discussion of the comments received by CBP is set forth below. Discussion of Comments A total of three commenters responded to the solicitation of comments on the interim regulations set forth in CBP Dec. 05–07. The comments are discussed below. Comment: One commenter stated that §§ 10.412 and 10.415, which concern importer obligations and maintenance of records, respectively, should make clear that importers are required to retain records and documents related to the production of goods for which preferential tariff treatment is claimed only to the extent that they possess such records in the normal course of business. The commenter explained that, in many cases involving unrelated parties, Chilean producers may be unwilling to share their production information and costs with the U.S. importer. CBP’s Response: CBP recognizes that, under certain circumstances, Chilean producers may be reluctant to provide production information and costs to U.S. importers due to business confidentiality concerns. In these cases, CBP has no objection to the direct submission to the port director of such information from E:\FR\FM\20DER1.SGM 20DER1 rwilkins on PROD1PC63 with RULES 76128 Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations the exporter or producer. To clarify this point, CBP is amending § 10.412 in this final rule by adding a sentence at the end of paragraph (a) stating that CBP will allow for the direct submission by the exporter or producer of business confidential or other sensitive information, including cost and sourcing information. Regarding § 10.415, CBP notes that paragraph (a) of that section provides, in pertinent part, that an importer claiming preferential tariff treatment must maintain for five years after the date of importation of the good ‘‘* * * any records and documents that the importer has relating to the origin of the good * * *.’’ [Emphasis added.] CBP submits that the current language of the regulation adequately addresses the commenters’s concerns. Comment: One commenter noted that §§ 10.441 and 10.442, concerning procedures for the filing and processing of postimportation duty-refund claims, set forth several references to the words ‘‘petition or request for reliquidation.’’ The commenter asks whether these references are necessary in view of the fact that 19 U.S.C. 1520(c) was repealed by section 2105 of the Miscellaneous Trade and Technical Corrections Act of 2004 (Pub. L. 108–429, 118 Stat. 2434). CBP’s Response: Section 1520(c), which authorized the reliquidation of an entry under certain circumstances, was repealed effective December 18, 2004 (see § 2108 of the Miscellaneous Trade and Technical Corrections Act of 2004). As a result, CBP agrees with the commenter that the references to ‘‘petition or request for reliquidation’’ in §§ 10.441(b)(4) and 10.442(b), (c)(2), and (d)(3) are no longer necessary. These references have been removed in this final rule document. Comment: One commenter stated that § 10.455(a)(3), concerning the value of materials, is too broad because ‘‘it would preclude transaction value as the value of a material where the material is provided to the producer at a price reflecting any discount or reduction in price,’’ including quantity discounts. [Emphasis by commenter.] The commenter suggested that the wording of this paragraph should parallel the definition of assists in § 152.102(a) of the CBP regulations; e.g., ‘‘In the case of a material provided to the producer free of charge or at reduced cost * * *.’’ CBP’s Response: First, CBP assumes that, by using the term ‘‘transaction value,’’ the commenter meant to refer to ‘‘adjusted value’’ or ‘‘the price actually paid or payable,’’ as those terms are used in VerDate Aug<31>2005 17:07 Dec 19, 2006 Jkt 211001 paragraphs (a)(1) and (a)(2) of § 10.455. Second, the language ‘‘* * * or at a price reflecting a discount or similar reduction * * *.’’ in § 10.455(a)(3) was taken verbatim from Article 4.3 of the US–CFTA and section 202(e) of the Act. CBP is bound by this statutory language and cannot make the substantive change suggested by the commenter. CBP notes that the effect of this provision is to prevent the value of originating materials from being understated for purposes of origin determination by the type of common discounts to which the commenter has referred. Comment: One commenter stated that § 10.483(c)(2), relating to voluntary corrections of declarations, should be revised to clarify that the affected import transactions should be identified ‘‘to the extent possible.’’ According to the commenter, in some cases, unrelated exporters will not have details (such as the date and port of importation) on the import transactions that were affected by the incorrect declaration. CBP’s Response: Section 10.410(b) states that it is the responsibility of the U.S. importer (not the exporter) to make a corrected declaration. The importer clearly should be able to identify from its records the import transactions affected by the incorrect declaration, including the port and approximate date of each importation. For this reason, CBP declines to make the change to § 10.483(c)(2) suggested by the commenter. Comment: Two commenters noted that CBP Dec. 05–07 amended the scope section(§ 191.0) in Part 191 of the CBP regulations, relating to drawback, to provide a cross-reference to the US– CFTA drawback provisions contained in new Subpart H of Part 10. However, the commenters stated that they were unable to find any provisions in Subpart H which discuss the subject of drawback. CBP’s Response: Although CBP originally intended to include regulations which address the subject of drawback in new Subpart H of Part 10, it was subsequently determined that no such regulations were necessary as the drawback provisions in Part 191 were sufficient for purposes of the US–CFTA. However, CBP neglected to delete the amendment to § 191.0 set forth in CBP Dec. 05–07, as noted by the commenter. That error has been corrected in this final rule document. PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 Additional Changes to the Regulations In addition to the regulatory changes identified and discussed above in connection with the discussion of public comments received in response to CBP Dec. 05–07, the final rulemaking text set forth below incorporates the following additional changes which CBP believes are necessary based on further internal review of the interim regulatory text: 1. In § 10.401, relating to the scope of Subpart H: a. The words ‘‘entered into’’ in the first sentence have been replaced by the word ‘‘signed’’ to avoid any potential confusion between the date that the US– CFTA was signed (June 6, 2003) and the date that it entered into force (January 1, 2004); and b. The reference to Part 191 in the third sentence has been removed consistent with the removal of the crossreference to Subpart H, Part 10 in § 191.0, as discussed in the comment discussion above; 2. In § 10.402, which sets forth general definitions: a. The definition of ‘‘claim for preferential tariff treatment’’ in paragraph (c) has been revised to add the words ‘‘and to an exemption from the merchandise processing fee’’ at the end of the definition to clarify that the term encompasses a claim that a good is entitled to an exemption from the merchandise processing fee (see § 24.23(c)(7) of the CBP regulations); b. The definition of ‘‘national’’ (formerly paragraph (o)) has been removed as that term is not used in Subpart H of Part 10; c. A definition of ‘‘identical goods’’ has been added as new paragraph (n). This definition was set forth in §§ 10.411(d)(2) and 10.422(d)(2) of the interim regulatory text but has been removed from those provisions and inserted into the general definitions section for the reason that the term also appears in § 10.474, and the definition is equally applicable to all three provisions. In addition, the definition has been modified slightly by replacing the word ‘‘production’’ with the words ‘‘particular rule of origin,’’ which CBP believes more accurately describe the means by which a good is determined to qualify as originating; d. As a result of the removal of the definition of ‘‘national’’ and the addition of a definition for ‘‘identical goods’’ discussed above, current paragraph (n), setting forth the definition of ‘‘indirect material,’’ has been re-designated as paragraph (o), and a conforming change has been made to § 10.460 to reflect the re-designation of this paragraph; and E:\FR\FM\20DER1.SGM 20DER1 rwilkins on PROD1PC63 with RULES Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations e. The definition of ‘‘preferential tariff treatment’’ in paragraph (s) has been revised to add the words ‘‘, and an exemption from the merchandise processing fee’’ at the end of the definition to clarify that the term includes an exemption from the merchandise processing fee. 3. In § 10.410, relating to the filing of a claim for preferential tariff treatment: a. Paragraph (a) has been revised to add the words ‘‘including an exemption from the merchandise processing fee,’’ immediately following the words ‘‘under the US–CFTA,’’ in the first sentence to clarify that a claim for preferential tariff treatment for an originating good under the US–CFTA includes a claim that the good is entitled to an exemption from the merchandise processing fee; b. Paragraph (b) has been revised to add the words ‘‘or other information’’ immediately following the word ‘‘certification’’, consistent with the wording in the corresponding provision in the US–CFTA (see Article 4.12.1(c)); and c. Paragraph (b) has been further revised to provide that a corrected declaration may be effected by submission of a statement ‘‘via an authorized electronic data interchange system,’’ as an alternative to submission of a written statement, consistent with CBP’s movement toward a paperless environment; 4. In § 10.411, relating to the certification of origin: a. The heading to § 10.411 and the paragraph (a) introductory text have been revised to add the words ‘‘or other information’’ after ‘‘certification’’ and ‘‘certification of origin’’ to conform to the wording in Articles 4.12.1(b) and 4.14.1 of the US–CFTA, which reference the importer’s obligation to submit a certificate of origin or other information demonstrating that the good qualifies as originating; b. Paragraph (a)(2)(iv) has been modified to add the words ‘‘for which preferential tariff treatment is claimed’’ immediately following the word ‘‘good’’ for clarification purposes; c. Paragraph (a)(2)(vii), relating to multiple shipments of identical goods, has been removed and incorporated (in slightly revised form) into re-designated paragraph (e)(2) (formerly paragraph (d)(2)) to clarify that this provision applies to certifications but not to ‘‘other information’’ submitted pursuant to § 10.411(a); d. Paragraph (a)(3), which sets forth the certifying statement to be included on the certification of origin, has been removed and re-designated as new paragraph (b) and a heading has been VerDate Aug<31>2005 17:07 Dec 19, 2006 Jkt 211001 added. This change clarifies that the statement is required on the certification but not when ‘‘other information’’ is submitted pursuant to § 10.411(a); e. As a result of the insertion of new paragraph (b), as discussed above, paragraphs (b) through (e) of the interim regulatory text have been re-designated as paragraphs (c) through (f), respectively; f. Re-designated paragraph (c) (formerly paragraph (b)), which concerns who may sign the certification, has been revised to require that the certification of origin include the legal name and address of the responsible official or authorized agent signing the certification, and also to ask for the telephone and e-mail address when available. This information is necessary in the event that the person signing the certification is not identified pursuant to paragraphs (a)(2)(i) through (a)(2)(iii) of § 10.411; and g. Re-designated paragraphs (d) and (f) (formerly paragraphs (c) and (e), respectively) have been revised to add the words ‘‘or other information’’ immediately following the word ‘‘certification,’’ consistent with the changes to paragraph (a) discussed above; 5. In § 10.412, relating to importer obligations: a. Paragraph (a) has been revised to add the words ‘‘or other information submitted to CBP under § 10.411(a) of this subpart’’ immediately following the word ‘‘certification’’, consistent with the change to the § 10.411(a) introductory text discussed above; b. The paragraph (b) introductory text and paragraph (b)(1) have been revised to add the word ‘‘tariff’’ between the words ‘‘preferential’’ and ‘‘treatment’’ each place they appear for clarification purposes and consistent with other references to these words throughout Subpart H. Paragraph (b)(1) has been further revised to add the words ‘‘or other information’’ immediately following the word ‘‘certification’’, consistent with the change to the § 10.411(a) introductory text discussed above; and c. Paragraph (d), which stated that ‘‘* * * importers are expected to establish and implement internal controls which provide for the periodic review of the accuracy of the certifications or other records referred to in paragraph (b)(1) of this section,’’ has been removed as there is no basis of authority for this provision in the US– CFTA or the Act; 6. In § 10.413, concerning the validity of the certification, the words ‘‘of this subpart’’ have been added immediately following the reference to ‘‘§ 10.411’’ PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 76129 each place it appears for clarification purposes; 7. In § 10.414, which sets forth the circumstances under which a certification is not required: a. The section heading, paragraph (a) introductory text, and paragraph (b) have been revised to add the words ‘‘or other information’’ immediately following the word ‘‘certification’’ each place it appears, consistent with the change to the § 10.411(a) introductory text discussed above; and b. The paragraph (a) introductory text has been further revised to replace the words ‘‘for preferential tariff treatment’’ with the words ‘‘as originating under § 10.411(a),’’ consistent with the wording in § 10.411(a); 8. In § 10.415, concerning maintenance of records, the paragraph (a) introductory text has been revised: a. To add the word ‘‘tariff’’ between the words ‘‘preferential’’ and treatment’’ for clarification purposes and consistent with other references to these words throughout Subpart H; b. To add the words ‘‘or other information’’ immediately following the word ‘‘certification’’, consistent with the change to the § 10.411(a) introductory text discussed above; and c. To remove the words ‘‘in the United States’’ to conform to the corresponding provision in the US– CFTA (see Article 4.14.3), which includes no restriction on where the records referenced in that provision must be maintained; 9. In § 10.416, relating to the consequences of failing to comply with the requirements of Subpart H: a. Paragraph (a) has been revised to add the words ‘‘or other information demonstrating that the good qualifies as originating’’ immediately following the word ‘‘certification’’, consistent with the change to the § 10.411(a) introductory text discussed above; and b. Paragraph (b) has been revised to add the words ‘‘of this subpart’’ immediately following the reference to ‘‘§ 10.463’’ for clarification purposes; 10. In § 10.420, relating to the filing of a tariff preference level (TPL) claim, the words ‘‘of this subpart’’ have been added immediately following each of the references to ‘‘§ 10.421’’, ‘‘§ 10.451’’, ‘‘§ 10.421(a) or (b)’’, and ‘‘§ 10.421(c)’’ for clarification purposes; 11. In § 10.421, concerning goods eligible for TPL claims: a. The words ‘‘of this subpart’’ have been added immediately following the reference to ‘‘§ 10.420’’ in the introductory text for clarification purposes; and b. The term ‘‘HTS’’ has been replaced each place it appears (including the E:\FR\FM\20DER1.SGM 20DER1 rwilkins on PROD1PC63 with RULES 76130 Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations footnote) with the correct term ‘‘HTSUS’’ (see § 10.402(m)); 12. In § 10.422, relating to the TPL certificate of eligibility: a. The paragraph (a) introductory text has been revised to add the words ‘‘of this subpart’’ immediately following the reference to ‘‘§ 10.421’’ for clarification purposes; b. Paragraph (a)(2), which sets forth the information to be included on the certificate of eligibility, has been modified to require (in new paragraph (a)(2)(ii)) that the certificate include the legal name and address of the responsible official or authorized agent of the importer signing the certificate (if different from the importer of record), and also to ask for the telephone and email address when available. Similar to the change to § 10.411(c) discussed above, this change is necessary in the event that the person signing the certificate of eligibility is not identified pursuant to § 10.422(a)(2)(i); c. As a result of the addition of new paragraph (a)(2)(ii), as discussed above, paragraphs (a)(2)(ii) through (a)(2)(vii) of the interim regulatory text have been redesignated as paragraphs (a)(2)(iii) through (a)(2)(viii), respectively; and d. The reference to ‘‘certification’’ in paragraph (d)(2) has been replaced with the correct word ‘‘certificate;’’ 13. In § 10.424, concerning the effect of noncompliance with applicable TPL requirements, the words ‘‘of this subpart’’ have been added immediately following the reference to ‘‘§ 10.422’’ in paragraph (a) and the reference to ‘‘§ 10.425’’ in paragraph (b) for clarification purposes; 14. In § 10.440, relating to the right to make post-importation duty refund claims, the word ‘‘part’’ has been replaced each place it appears with the correct word ‘‘subpart’’; 15. In § 10.441, relating to the procedures for filing post-importation claims: a. Paragraphs (a) and (b)(2) have been revised to replace the word ‘‘part’’ each place it appears with the correct word ‘‘subpart’’; and b. Paragraph (b)(2) has been further revised to add the words ‘‘or other information demonstrating’’ immediately following the word ‘‘certification’’, consistent with the change to the § 10.411(a) introductory text discussed above; 16. In § 10.442, relating to CBP processing procedures for postimportation claims: a. The word ‘‘part’’ in paragraphs (a) and (d)(1) has been replaced each place it appears with the correct word ‘‘subpart’’; VerDate Aug<31>2005 17:07 Dec 19, 2006 Jkt 211001 b. The words ‘‘for refund’’ have been added immediately following the word ‘‘claim’’ in the first and second sentences of paragraph (b) for clarification purposes; and c. Paragraphs (d)((2) and (d)(3) have been revised to provide that notice of a denial of a claim for a refund may be made ‘‘via an authorized electronic data interchange system,’’ as an alternative to the issuance of a written notice, consistent with CBP’s movement toward a paperless environment; 17. In § 10.450, which sets forth definitions regarding the rules of origin, the words ‘‘of this subpart’’ have been added immediately following the reference to ‘‘§§ 10.450 through 10.463’’ in the introductory text for clarification purposes: 18. In § 10.455, relating to the value of materials: a. Paragraph (a)(1) has been revised to add the words ‘‘with respect to that importation’’ at the end of the paragraph to conform to the wording in the corresponding statutory provision (see § 202(e)(1)(A) of the Act); b. The heading to paragraph (b) (‘‘Adjustments to value’’) has been changed to read ‘‘Permissible additions to, and deductions from, the value of materials’’ to avoid any potential confusion between the heading to this paragraph and the term ‘‘adjusted value;’’ c. Paragraphs (b)(1)(i) and (b)(2)(i) have been revised to delete the words ‘‘within or between the territory of Chile, the United States, or both’’ to conform these paragraphs to the wording in the corresponding statutory provisions (see § 202(e)(2)(A)(i) and (B)(i) of the Act), respectively; and d. Paragraph (c) has been modified to replace the term ‘‘country,’’ which is not defined in Subpart H, with the more appropriate term ‘‘Party,’’ which is defined in § 10.402(q); 19. In §§ 10.457(a) and 10.458(a), concerning fungible goods and materials, and accumulation, respectively, the term ‘‘country’’ has been replaced each place it appears with the more appropriate term ‘‘Party;’’ 20. In § 10.461, relating to indirect materials, Example 1 has been revised to add the words ‘‘of this subpart’’ at the end of the parenthetical phrase ‘‘see § 10.454(a)’’ in the third sentence; 21. In § 10.470, relating to verification of claims for preferential tariff treatment: a. The section heading has been revised to add the word ‘‘tariff’’ between the words ‘‘preferential’’ and ‘‘treatment’’; b. The heading to paragraph (a) has been revised to remove the words ‘‘by PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 CBP’’ to allow for the possibility that another U.S. Government agency may assist in a verification; and c. The first sentence of the paragraph (a) introductory text has been revised to add the word ‘‘tariff’’ between the words ‘‘preferential’’ and ‘‘treatment’’ and to add the words ‘‘of this subpart’’ immediately following the reference to ‘‘§ 10.410’’. d. The second sentence of the paragraph (a) introductory text has been revised to replace the words ‘‘for any reason is prevented from verifying’’ with the words ‘‘is provided with insufficient information to verify or substantiate’’, and to add the word ‘‘tariff’’ between the words ‘‘preferential’’ and ‘‘treatment’’. The former change recognizes that the words ‘‘for any reason’’ may be interpreted too broadly and result in the denial of a claim for reasons beyond the control of the parties to an import transaction. This new wording more accurately reflects the circumstances under which a verification may result in the denial of a claim—the failure to provide sufficient information to verify or substantiate the claim for preferential tariff treatment; 22. In § 10.473, concerning notice of a negative origin determination: a. The incorrect reference to ‘‘section’’‘ in the introductory text has been replaced with the correct word ‘‘subpart’’; b. The introductory text has been further revised to provide for the issuance of a negative origin determination ‘‘via an authorized electronic data interchange system,’’ as an alternative to the issuance of a written determination, consistent with CBP’s movement toward a paperless environment; and c. Paragraph (c) has been revised to replace the words ‘‘the ‘Rules of Origin’ heading under this subpart’’ with the words ‘‘§§ 10.450 through 10.463 of this subpart’’ to provide more clarity regarding the regulatory provisions to which this paragraph is referring; 23. In § 10.474, relating to repeated false or unsupported preference claims, the words ‘‘CBP finds’’ have been replaced with the words ‘‘verification or other information reveals’’ to more accurately reflect the wording in § 205(g) of the Act, which provides, in pertinent part, that ‘‘[i]f the Bureau of Customs and Border Protection or the Bureau of Immigration and Customs Enforcement finds indications of a pattern of conduct * * *.’’ [Emphasis added.]; 24. In § 10.483, concerning the framework for correcting declarations and certifications: E:\FR\FM\20DER1.SGM 20DER1 Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations a. The incorrect reference to ‘‘part’’ in paragraph (a)(2) has been replaced by the correct word ‘‘chapter’’; and b. Paragraph (c) has been revised to remove the word ‘‘Written’’ in the heading and by providing in the introductory text for the submission of a statement ‘‘via an authorized electronic data interchange system,’’ as an alternative to the submission of a written statement, consistent with the change described above in regard to § 10.410(b); Conclusion Accordingly, based on the comments received and the analysis of those comments as set forth above, and based on the additional considerations discussed above, CBP believes that the interim regulations published as CBP Dec. 05–07 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. rwilkins on PROD1PC63 with RULES Regulatory Flexibility Act The regulations to implement the preferential tariff treatment and other customs-related provisions of the US– CFTA were previously published in CBP Dec. 05–07 as interim regulations. CBP issued the regulations as an interim rule because it had determined that: (1) They involve the foreign affairs function of the United States pursuant to section 553(a)(1) of the Administrative Procedure Act (APA); and (2) prior public notice and comment procedures on these regulations were impracticable, unnecessary, and contrary to the public interest pursuant to section 553(b)(B) of the APA. 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 contained 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 VerDate Aug<31>2005 17:07 Dec 19, 2006 Jkt 211001 Reduction Act (44 U.S.C. 3507) under control number 1651–0117. The collection of information in these regulations is in §§ 10.410 and 10.411. This information is used by CBP to determine eligibility for a tariff preference or other rights or benefits under the US–CFTA 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 recordkeeper. Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be directed to the Office of Management and Budget, Attention: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503. A copy should also be sent to the Trade and Commercial Regulations Branch, Regulations and Rulings, Bureau of Customs and Border Protection, 1300 Pennsylvania Avenue, NW. (Mint Annex), Washington, DC 20229. Signing Authority This document is being issued in accordance with § 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 (United States-Chile Free Trade Agreement). 19 CFR Part 191 Commerce, Customs duties and inspection, Drawback, Reporting and recordkeeping requirements, Trade agreements. Amendments to the Regulations Accordingly, the interim rule amending parts 10, 24, 162, 163, 178, and 191 of the CBP regulations (19 CFR parts 10, 24, 162, 163, 178, and 191), which was published at 70 FR 10868 on March 7, 2005, is adopted as a final rule with certain changes as discussed above and set forth below. I PO 00000 PART 10—ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, ETC. 1. The general authority citation for part 10 and the specific authority for subpart H continue to read as follows: I 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; * Fmt 4700 Sfmt 4700 * * * * Sections 10.401 through 10.490 also issued under Pub. L. 108–77, 117 Stat. 909 (19 U.S.C. 3805 note). § 10.401 [Amended] 2. Section 10.401 is amended by removing the words ‘‘entered into’’ in the first sentence and adding, in their place, the word ‘‘signed’’, by adding the word ‘‘and’’ immediately prior to the number ‘‘163’’ in the third sentence, and by removing the words ‘‘and 191’’ in the third sentence; I 3. Section 10.402 is amended by revising paragraph (c), removing current paragraph (o), re-designating current paragraph (n) as paragraph (o), adding a new paragraph (n), and revising paragraph (s). The revisions and addition to § 10.402 read as follows: I § 10.402 General definitions. * * * * * (c) Claim for preferential tariff treatment. ‘‘Claim for preferential tariff treatment’’ means a claim that a good is entitled to the duty rate applicable under the US–CFTA and to an exemption from the merchandise processing fee; * * * * * (n) Identical goods. ‘‘Identical goods’’ means goods that are the same in all respects relevant to the particular rule of origin that qualifies the goods as originating; * * * * * (s) Preferential tariff treatment. ‘‘Preferential tariff treatment’’ means the duty rate applicable to an originating good under the US–CFTA, and an exemption from the merchandise processing fee. * * * * * I 4. Section 10.410 is amended by adding the words ‘‘including an exemption from the merchandise processing fee,’’ immediately following the words ‘‘under the US–CFTA,’’ in the first sentence of paragraph (a) and by revising paragraph (b). Revised paragraph (b) reads as follows: § 10.410 Filing of claim for preferential tariff treatment upon importation. * Frm 00021 76131 E:\FR\FM\20DER1.SGM * * 20DER1 * * 76132 Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations (b) Corrected declaration. If, after making the declaration required under paragraph (a) of this section, the U.S. importer has reason to believe that the declaration or the certification or other information on which the declaration was based contains information that is not correct, the importer must, within 30 calendar days after the date of discovery of the error, make a corrected declaration and pay any duties that may be due. A corrected declaration will be effected by submission of a letter or other statement either in writing or via an authorized electronic data interchange system to the CBP office where the original declaration was filed specifying the correction (see §§ 10.482 and 10.483 of this subpart); I 5. In § 10.411: I a. The section heading is revised; I b. Paragraph (a) is amended by revising the introductory text and paragraph (a)(2)(iv) and by removing paragraphs (a)(2)(vii) and (a)(3); I c. Current paragraphs (b), (c), (d), and (e) are re-designated as paragraphs (c), (d), (e), and (f), respectively; I d. A new paragraph (b) is added; I e. The introductory text of redesignated paragraph (c) is revised; I f. Re-designated paragraphs (d) and (e)(2) and the introductory text to redesignated paragraph (f) are revised. The additions and revisions to § 10.411 read as follows: rwilkins on PROD1PC63 with RULES § 10.411 Certification of origin or other information. (a) Contents. An importer who claims preferential tariff treatment on a good must submit, at the request of the port director, a certification of origin or other information demonstrating that the good qualifies as originating. A certification or other information submitted to CBP under this paragraph: * * * * * (2) * * * (iv) A description of the good for which preferential tariff treatment is claimed, which must be sufficiently detailed to relate it to the invoice and the HS nonmenclature; * * * * * (b) Statement. A certification submitted to CBP under paragraph (a) of this section must include a statement, in substantially the following form: ‘‘I Certify that: The information on this document is true and accurate and I assume the responsibility for proving such representations. I understand that I am liable for any false statements or material omissions made on or in connection with this document; I agree to maintain, and present upon request, documentation necessary to VerDate Aug<31>2005 17:07 Dec 19, 2006 Jkt 211001 support this certification, and to inform, in writing, all persons to whom the certification was given of any changes that could affect the accuracy or validity of this certification; and The goods originated in the territory of one or more of the parties, and comply with the origin requirements specified for those goods in the United States-Chile Free Trade Agreement; there has been no further production or any other operation outside the territories of the parties, other than unloading, reloading, or any other operation necessary to preserve it in good condition or to transport the good to the United States; and This document consists of ll pages, including all attachments.’’ (c) Responsible official or agent. A certification submitted under paragraph (a) of this section must be signed and dated by a responsible official of the importer; exporter; or producer; or by the importer’s, exporter’s, or producer’s authorized agent having knowledge of the relevant facts. The certification must include the legal name and address of the responsible official or authorized agent signing the certification, and should include that person’s telephone and e-mail address, if available. If the person making the certification is not the producer of the good, or the producer’s authorized agent, the person may sign the certification of origin based on: * * * * * (d) Language. The certification or other information submitted under paragraph (a) of this section must be completed either in the English or Spanish language. If the certification or other information is completed in Spanish, the importer must also provide to the port director, upon request, a written English translation of the certification or other information. (e) * * * (2) Multiple importations of identical goods into the United States that occur within a specified blanket period, not exceeding 12 months. In the case of multiple shipments of identical goods, the certification must specify the blanket period in ‘‘mm/dd/yyyy to mm/ dd/yyyy’’ format. (f) Preference criteria. The preference criterion to be included on the certification or other information as required in paragraph (a)(2)(vi) of this section is as follows: * * * * * I 6. Section 10.412 is amended by revising paragraphs (a) and (b)(1) and by removing paragraph (d). The revisions PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 to paragraphs (a) and (b)(1) read as follows: § 10.412 Importer obligations. (a) General. An importer who makes a declaration under § 10.410(a) of this subpart is responsible for the truthfulness of the declaration and of all the information and data contained in the certification or other information submitted to CBP under § 10.411(a) of this subpart, for submitting any supporting documents requested by CBP, and for the truthfulness of the information contained in those documents. CBP will allow for the direct submission by the exporter or producer of business confidential or other sensitive information, including cost and sourcing information. (b) * * * (1) Must have records that explain how the importer came to the conclusion that the good qualifies for preferential tariff treatment. Those records must include documents that support a claim that the article in question qualifies for preferential tariff treatment because it meets the applicable rules of origin set forth in General Note 26, HTSUS, and in this subpart. Those records may include a properly completed certification or other information as set forth in § 10.411 of this subpart; and * * * * * § 10.413 [Amended] 7. Section 10.413 is amended by adding the words ‘‘of this subpart’’ immediately following the reference to ‘‘§ 10.411’’ each place it appears; I 8. Section 10.414 is amended by revising the section heading, paragraph (a) introductory text, and paragraph (b) to read as follows: I § 10.414 Certification or other information not required. (a) General. Except as otherwise provided in paragraph (b) of this section, an importer will not be required to submit a certification or other information demonstrating that the good qualifies as originating under § 10.411(a) of this subpart for: * * * * * (b) Exception. If the port director determines that an importation described in paragraph (a) of this section may reasonably be considered to have been carried out or planned for the purpose of evading compliance with the rules and procedures governing claims for preference under the US-CFTA, the port director will notify the importer in writing that for that importation the importer must submit to CBP a valid certification or other information E:\FR\FM\20DER1.SGM 20DER1 Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations demonstrating that the good qualifies as originating. The importer must submit such a certification or other information within 30 calendar days from the date of the written notice. Failure to timely submit the certification or other information will result in denial of the claim for preferential tariff treatment. 9. Section 10.415 is amended by revising the paragraph (a) introductory text to read as follows: I § 10.415 Maintenance of records. (a) General. An importer claiming preferential tariff treatment for a good imported into the United States must maintain, for five years after the date of importation of the good, a certification (or a copy thereof) or other information demonstrating that the good qualifies as originating, and any records and documents that the importer has relating to the origin of the good, including records and documents associated with: * * * * * 10. Section 10.416 is amended by revising paragraph (a) and by adding the words ‘‘of this subpart’’ immediately following the reference to ‘‘§ 10.463’’ in paragraph (b). Revised paragraph (a) reads as follows: I § 10.416 Effect of noncompliance; failure to provide documentation regarding transshipment. (a) Effect of noncompliance. If the importer fails to comply with any requirement under this subpart, including submission of a certification of origin or other information demonstrating that the good qualifies as originating under § 10.411(a) of this subpart or submission of a corrected certification under § 10.413 of this subpart, the port director may deny preferential tariff treatment to the imported good. * * * * * § 10.420 [Amended] 11. Section 10.420 is amended by adding the words ‘‘of this subpart’’ immediately following each of the references in the section to ‘‘§ 10.421,’’ ‘‘§ 10.451,’’ ‘‘§ 10.421(a) or (b),’’ and ‘‘§ 10.421(c)’’; [Amended] 12. Section § 10.421 is amended by adding the words ‘‘of this subpart’’ immediately following the reference to ‘‘§ 10.420’’ in the introductory text and by removing the term ‘‘HTS’’ each place it appears in the section (and footnote) and adding, in its place, the term ‘‘HTSUS’’; rwilkins on PROD1PC63 with RULES I VerDate Aug<31>2005 17:07 Dec 19, 2006 § 10.422 Submission of certificate of eligibility. (a) * * * (2) * * * (ii) The legal name and address of the responsible official or authorized agent of the importer signing the certificate (if different from the importer of record), and that person’s telephone and e-mail address, if available; * * * * * (d) * * * (2) Multiple importations of identical goods into the United States that occur within a specified blanket period, not exceeding 12 months, set out in the certificate. § 10.424 [Amended] 14. Section 10.424 is amended by adding the words ‘‘of this subpart’’ immediately following the reference to ‘‘§ 10.422’’ in paragraph (a) and immediately following the reference to ‘‘§ 10.425’’ in paragraph (b); I § 10.440 [Amended] 15. Section 10.440 is amended by removing the word ‘‘part’’ each place it appears and adding, in its place, the word ‘‘subpart’’; I 16. Section 10.441 is amended by removing the word ‘‘part’’ in paragraph (a) and adding, in its place, the word ‘‘subpart’’, and by revising paragraphs (b)(2) and (b)(4) to read as follows: I § 10.441 Filing procedures. * I § 10.421 13. Section 10.422 is amended by adding the words ‘‘of this subpart’’ immediately following the reference to ‘‘§ 10.421’’ in the paragraph (a) introductory text, by re-designating current paragraphs (a)(2)(ii) through (a)(2)(vii) as paragraphs (a)(2)(iii) through (a)(2)(viii), respectively, by adding a new paragraph (a)(2)(ii), and by revising paragraph (d)(2). New paragraph (a)(2)(ii) and revised paragraph (d)(2) read as follows: I Jkt 211001 * * * * (b) * * * (2) Subject to § 10.413 of this subpart, a copy of a certification of origin or other information demonstrating that the good qualifies for preferential tariff treatment; * * * * * (4) A written statement indicating whether or not any person has filed a protest relating to the good under any provision of law; and if any such protest has been filed, the statement must identify the protest by number and date. I 17. Section 10.442 is amended by removing the word ‘‘part’’ each place it appears in paragraphs (a) and (d)(1) and PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 76133 adding, in its place, the word ‘‘subpart’’, and by revising the heading and text of paragraph (b), the second sentence of paragraph (c)(2), paragraph (d)(2), and the second and third sentences of paragraph (d)(3). The revisions to paragraphs (b), (c)(2), (d)(2) and (d)(3) read as follows: § 10.442 CBP processing procedures. * * * * * (b) Pending protest or judicial review. If the port director determines that any protest relating to the good has not been finally decided, the port director will suspend action on the claim for refund filed under this subpart until the decision on the protest becomes final. If a summons involving the tariff classification or dutiability of the good is filed in the Court of International Trade, the port director will suspend action on the claim for refund filed under this subpart until judicial review has been completed. (c) * * * (2) * * * If the entry is otherwise to be reliquidated based on administrative review of a protest or as a result of judicial review, the port director will reliquidate the entry taking into account the claim for refund under this subpart. (d) * * * (2) Unliquidated entry. If the port director determines that a claim for a refund filed under this subpart should be denied and the entry covering the good has not been liquidated, the port director will deny the claim in connection with the liquidation of the entry, and notice of the denial and the reason for the denial will be provided to the importer in writing or via an authorized electronic data interchange system. (3) * * * If the entry is otherwise to be reliquidated based on administrative review of a protest or as a result of judicial review, such reliquidation may include denial of the claim filed under this subpart. In either case, the port director will give the importer notice of the denial and the reason for the denial in writing or via an authorized electronic data interchange system. § 10.450 [Amended] 18. Section 10.450 is amended by adding the words ‘‘of this subpart’’ immediately following the reference to ‘‘§§ 10.450 through 10.463’’ in the introductory text. I 19. Section 10.455 is amended by revising paragraph (a)(1), the heading to paragraph (b), and paragraphs (b)(1)(i), (b)(2)(i), and (c) to read as follows: I § 10.455 Value of materials. (a) * * * E:\FR\FM\20DER1.SGM 20DER1 76134 Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations (1) In the case of a material imported by the producer of the good, the adjusted value of the material with respect to that importation; * * * * * (b) Permissible additions to, and deductions from, the value of materials. * * * * * (1) * * * (i) The costs of freight, insurance, packing and all other costs incurred in transporting the material to the location of the producer; * * * * * (2) * * * (i) The costs of freight, insurance, packing and all other costs incurred in transporting the material to the location of the producer; (c) Accounting method. Any cost or value referenced in General Note 26(n), HTSUS, and this subpart, must be recorded and maintained in accordance with the generally accepted accounting principles applicable in the territory of the Party in which the good is produced (whether Chile or the United States). § 10.457 [Amended] 20. In § 10.457, paragraph (a)(4) is amended by removing the word ‘‘country’’ each place it appears and adding, in its place, the word ‘‘Party’’. I § 10.458 27. In § 10.483, paragraph (a)(2) is amended by removing the word ‘‘part’’ and adding, in its place, the word ‘‘chapter,’’ and paragraph (c) introductory text is revised to read as follows: 22. Section 10.460 is amended by removing the term ‘‘§ 10.402(n)’’ and adding, in its place, the term ‘‘§ 10.402(o)’’. § 10.483 Framework for correcting declarations and certifications. [Amended] 23. Section 10.461 is amended by adding in Example 1 the words ‘‘of this subpart’’ at the end of the parenthetical phrase ‘‘see § 10.454(a)’’ in the third sentence. I 24. In § 10.470, paragraph (a) is amended by revising the heading and the first two sentences of the introductory text, to read as follows: I rwilkins on PROD1PC63 with RULES § 10.470 Verification and justification of claim for preferential tariff treatment. (a) Verification. A claim for preferential tariff treatment made under § 10.410 of this subpart, including any statements or other information submitted to CBP in support of the claim, will be subject to such verification as the port director deems necessary. In the event that the port director is provided with insufficient 17:07 Dec 19, 2006 [Amended] I I Jkt 211001 § 191.0 [Amended] 29. Section 191.0 is amended by removing the last sentence. I Deborah J. Spero, Acting Commissioner, Customs and Border Protection. Approved: December 15, 2006. Timothy E. Skud, Deputy Assistant Secretary of the Treasury. [FR Doc. 06–9780 Filed 12–19–06; 8:45 am] BILLING CODE 9111–14–P If CBP determines, as a result of an origin verification initiated under this subpart, that the good which is the subject of the verification does not qualify as an originating good, it will issue a determination in writing or via an authorized electronic data interchange system to the importer that sets forth the following: * * * * * (c) With specific reference to the rules applicable to originating goods as set forth in General Note 26, HTSUS, and in §§ 10.450 through 10.463 of this subpart, the legal basis for the determination; and * * * * * 26. Section 10.474 is amended by removing the words ‘‘CBP finds’’ and adding, in their place, the words ‘‘verification or other information reveals’’; [Amended] VerDate Aug<31>2005 § 10.473 Issuance of negative origin determinations. I [Amended] 21. In § 10.458, paragraph (a) is amended by removing the word ‘‘country’’ each it appears and adding, in its place, the word ‘‘Party’’. § 10.461 25. Section 10.473 is amended by revising the introductory text and paragraph (c) to read as follows: I § 10.474 I § 10.460 information to verify or substantiate the claim, the port director may deny the claim for preferential tariff treatment. * * * * * * * * * * * * * (c) Statement. For purposes of this subpart, each corrected declaration or notification of an incorrect certification must be accompanied by a statement, submitted in writing or via an authorized electronic data interchange system, which: * * * * * PART 191—DRAWBACK 28. The general authority citation for part 191 continues to read as follows: I Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States), 1313, 1624. * PO 00000 * * Frm 00024 * Fmt 4700 * Sfmt 4700 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9302] RIN 1545–BC34 Prohibited Allocations of Securities in an S Corporation Internal Revenue Service (IRS), Treasury. ACTION: Final regulations. AGENCY: SUMMARY: This document contains final regulations that provide guidance concerning requirements under section 409(p) of the Internal Revenue Code for employee stock ownership plans (ESOPs) holding stock of Subchapter S corporations. These final regulations generally affect plan sponsors of, and participants in, ESOPs holding stock of Subchapter S corporations. DATES: Effective Date: These regulations are effective December 20, 2006. Applicability Dates: These regulations are generally applicable with respect to plan years beginning on or after January 1, 2006. See the Effective Date section of the preamble for specific information. FOR FURTHER INFORMATION CONTACT: John T. Ricotta or Veronica A. Rouse at (202) 622–6090 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background This document contains final regulations (26 CFR Part 1) under section 409(p) of the Internal Revenue Code (Code). Section 409(p)(1) requires an ESOP holding employer securities consisting of stock in an S corporation to provide that, during an allocation year, no portion of the assets of the plan attributable to, or allocable in lieu of, the employer securities may accrue (or be allocated directly or indirectly under any plan of the employer meeting the E:\FR\FM\20DER1.SGM 20DER1

Agencies

[Federal Register Volume 71, Number 244 (Wednesday, December 20, 2006)]
[Rules and Regulations]
[Pages 76127-76134]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-9780]



[[Page 76127]]

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DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection

DEPARTMENT OF THE TREASURY

19 CFR Parts 10 and 191

[CBP Dec. 06-39]
RIN 1505-AB47


United States-Chile Free Trade Agreement

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

ACTION: Final rule.

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

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 March 7, 
2005, as CBP Dec. 05-07 to implement the preferential tariff treatment 
and other customs-related provisions of the United States-Chile Free 
Trade Agreement signed by the United States and the Republic of Chile.

DATES: Final rule effective January 19, 2007.

FOR FURTHER INFORMATION CONTACT: 
    Textile Operational Aspects: Robert Abels, Office of Field 
Operations, (202) 344-1959.
    Other Operational Aspects: Lori Whitehurst, Office of Field 
Operations, (202) 344-2722.
    Audit Aspects: Mark Hanson, Office of Regulatory Audit, (202) 344-
2877.
    Legal Aspects: Edward Leigh, Office of International Trade, (202) 
572-8827.

SUPPLEMENTARY INFORMATION:

Background

    On June 6, 2003, the United States and the Republic of Chile (the 
``Parties'') signed the U.S.-Chile Free Trade Agreement (``US-CFTA''). 
The provisions of the US-CFTA were adopted by the United States with 
the enactment of the United States-Chile Free Trade Agreement 
Implementation Act (the ``Act''), Public Law 108-77, 117 Stat. 909 (19 
U.S.C. 3805 note), on September 3, 2003. Section 210 of the Act 
requires that regulations be prescribed as necessary.
    Those customs-related US-CFTA provisions which require 
implementation through regulation include certain tariff and non-tariff 
provisions within Chapter Three (National Treatment and Market Access 
for Goods) and the provisions of Chapter Four (Rules of Origin and 
Origin Procedures) and Chapter Five (Customs Administration).
    The tariff-related provisions within US-CFTA Chapter Three which 
require regulatory action by CBP are Article 3.7 (Temporary Admission 
of Goods), Article 3.9 (Goods Re-Entered after Repair or Alteration), 
and Article 3.20 (Rules of Origin and Related Matters).
    Chapter Four of the US-CFTA sets forth the rules for determining 
whether an imported good qualifies as an originating good of the United 
States or Chile (US-CFTA Party) and, as such, is therefore eligible for 
preferential tariff (duty-free or reduced duty) treatment as provided 
for under Article 4.1 and Annex 4.1 of the US-CFTA. Under Article 4.1 
within that Chapter, originating goods may be grouped in three broad 
categories: (1) Goods which are wholly obtained or produced entirely in 
one or both of the Parties; (2) goods which are produced entirely in 
one or both of the Parties and which satisfy the specific rules of 
origin in US-CFTA Annex 4.1 (change in tariff classification 
requirement and/or regional value content requirement); and (3) goods 
which are produced entirely in one or both of the Parties exclusively 
from materials that originate in those countries. Article 4.2 sets 
forth the methods for calculating the regional value content of a good. 
Article 4.3 sets forth the rules for determining the value of materials 
for purposes of calculating the regional value content of a good and 
applying the de minimis rule. Article 4.4 sets forth the rules for 
determining whether accessories, spare parts, or tools delivered with a 
good qualify as material used in the production of such good. Article 
4.6 provides for accumulation of production by two or more producers. 
Article 4.7 provides a de minimis criterion. The remaining Articles 
within Section A of Chapter Four consist of additional sub-rules, 
applicable to the originating good concept, involving fungible 
materials, packaging materials, packing materials, transshipment, and 
non-qualifying operations. The basic rules of origin in Chapter Four of 
the US-CFTA are set forth in General Note 26, Harmonized Tariff 
Schedule of the United States (HTSUS). In addition, Section B of 
Chapter Four sets forth the procedural requirements which apply under 
the US-CFTA, in particular with regard to claims for preferential 
tariff treatment.
    Chapter Five sets forth the customs operational provisions related 
to the implementation and continued administration of the US-CFTA.
    On March 7, 2005, Customs and Border Protection (``CBP'') published 
CBP Dec. 05-07 in the Federal Register (70 FR 10868) setting forth 
interim amendments to implement the preferential tariff treatment and 
other customs-related provisions of the US-CFTA. In order to provide 
transparency and facilitate their use, the majority of the US-CFTA 
implementing regulations set forth in CBP Dec. 05-07 were included 
within new Subpart H in Part 10 of title 19 of the Code of Federal 
Regulations (19 CFR Subpart H, Part 10). However, in those cases in 
which US-CFTA implementation was more appropriate in the context of an 
existing regulatory provision, the US-CFTA regulatory text was 
incorporated in an existing part within the CBP regulations. CBP Dec. 
05-07 also set forth a number of cross-references and other 
consequential changes to existing regulatory provisions to clarify the 
relationship between those existing provisions and the new US-CFTA 
implementing regulations.
    Although the interim regulatory amendments were promulgated without 
prior public notice and comment procedures and took effect on March 7, 
2005, CBP Dec. 05-07 provided for the submission of public comments 
which would be considered before adoption of the interim regulations as 
a final rule, and the prescribed public comment period closed on June 
6, 2005. A discussion of the comments received by CBP is set forth 
below.

Discussion of Comments

    A total of three commenters responded to the solicitation of 
comments on the interim regulations set forth in CBP Dec. 05-07. The 
comments are discussed below.
    Comment:
    One commenter stated that Sec. Sec.  10.412 and 10.415, which 
concern importer obligations and maintenance of records, respectively, 
should make clear that importers are required to retain records and 
documents related to the production of goods for which preferential 
tariff treatment is claimed only to the extent that they possess such 
records in the normal course of business. The commenter explained that, 
in many cases involving unrelated parties, Chilean producers may be 
unwilling to share their production information and costs with the U.S. 
importer.
    CBP's Response:
    CBP recognizes that, under certain circumstances, Chilean producers 
may be reluctant to provide production information and costs to U.S. 
importers due to business confidentiality concerns. In these cases, CBP 
has no objection to the direct submission to the port director of such 
information from

[[Page 76128]]

the exporter or producer. To clarify this point, CBP is amending Sec.  
10.412 in this final rule by adding a sentence at the end of paragraph 
(a) stating that CBP will allow for the direct submission by the 
exporter or producer of business confidential or other sensitive 
information, including cost and sourcing information. Regarding Sec.  
10.415, CBP notes that paragraph (a) of that section provides, in 
pertinent part, that an importer claiming preferential tariff treatment 
must maintain for five years after the date of importation of the good 
``* * * any records and documents that the importer has relating to the 
origin of the good * * *.'' [Emphasis added.] CBP submits that the 
current language of the regulation adequately addresses the 
commenters's concerns.
    Comment:
    One commenter noted that Sec. Sec.  10.441 and 10.442, concerning 
procedures for the filing and processing of post-importation duty-
refund claims, set forth several references to the words ``petition or 
request for reliquidation.'' The commenter asks whether these 
references are necessary in view of the fact that 19 U.S.C. 1520(c) was 
repealed by section 2105 of the Miscellaneous Trade and Technical 
Corrections Act of 2004 (Pub. L. 108-429, 118 Stat. 2434).
    CBP's Response:
    Section 1520(c), which authorized the reliquidation of an entry 
under certain circumstances, was repealed effective December 18, 2004 
(see Sec.  2108 of the Miscellaneous Trade and Technical Corrections 
Act of 2004). As a result, CBP agrees with the commenter that the 
references to ``petition or request for reliquidation'' in Sec. Sec.  
10.441(b)(4) and 10.442(b), (c)(2), and (d)(3) are no longer necessary. 
These references have been removed in this final rule document.
    Comment:
    One commenter stated that Sec.  10.455(a)(3), concerning the value 
of materials, is too broad because ``it would preclude transaction 
value as the value of a material where the material is provided to the 
producer at a price reflecting any discount or reduction in price,'' 
including quantity discounts. [Emphasis by commenter.] The commenter 
suggested that the wording of this paragraph should parallel the 
definition of assists in Sec.  152.102(a) of the CBP regulations; e.g., 
``In the case of a material provided to the producer free of charge or 
at reduced cost * * *.''
    CBP's Response:
    First, CBP assumes that, by using the term ``transaction value,'' 
the commenter meant to refer to ``adjusted value'' or ``the price 
actually paid or payable,'' as those terms are used in paragraphs 
(a)(1) and (a)(2) of Sec.  10.455. Second, the language ``* * * or at a 
price reflecting a discount or similar reduction * * *.'' in Sec.  
10.455(a)(3) was taken verbatim from Article 4.3 of the US-CFTA and 
section 202(e) of the Act. CBP is bound by this statutory language and 
cannot make the substantive change suggested by the commenter. CBP 
notes that the effect of this provision is to prevent the value of 
originating materials from being understated for purposes of origin 
determination by the type of common discounts to which the commenter 
has referred.
    Comment:
    One commenter stated that Sec.  10.483(c)(2), relating to voluntary 
corrections of declarations, should be revised to clarify that the 
affected import transactions should be identified ``to the extent 
possible.'' According to the commenter, in some cases, unrelated 
exporters will not have details (such as the date and port of 
importation) on the import transactions that were affected by the 
incorrect declaration.
    CBP's Response:
    Section 10.410(b) states that it is the responsibility of the U.S. 
importer (not the exporter) to make a corrected declaration. The 
importer clearly should be able to identify from its records the import 
transactions affected by the incorrect declaration, including the port 
and approximate date of each importation. For this reason, CBP declines 
to make the change to Sec.  10.483(c)(2) suggested by the commenter.
    Comment:
    Two commenters noted that CBP Dec. 05-07 amended the scope 
section(Sec.  191.0) in Part 191 of the CBP regulations, relating to 
drawback, to provide a cross-reference to the US-CFTA drawback 
provisions contained in new Subpart H of Part 10. However, the 
commenters stated that they were unable to find any provisions in 
Subpart H which discuss the subject of drawback.
    CBP's Response:
    Although CBP originally intended to include regulations which 
address the subject of drawback in new Subpart H of Part 10, it was 
subsequently determined that no such regulations were necessary as the 
drawback provisions in Part 191 were sufficient for purposes of the US-
CFTA. However, CBP neglected to delete the amendment to Sec.  191.0 set 
forth in CBP Dec. 05-07, as noted by the commenter. That error has been 
corrected in this final rule document.

Additional Changes to the Regulations

    In addition to the regulatory changes identified and discussed 
above in connection with the discussion of public comments received in 
response to CBP Dec. 05-07, the final rulemaking text set forth below 
incorporates the following additional changes which CBP believes are 
necessary based on further internal review of the interim regulatory 
text:
    1. In Sec.  10.401, relating to the scope of Subpart H:
    a. The words ``entered into'' in the first sentence have been 
replaced by the word ``signed'' to avoid any potential confusion 
between the date that the US-CFTA was signed (June 6, 2003) and the 
date that it entered into force (January 1, 2004); and
    b. The reference to Part 191 in the third sentence has been removed 
consistent with the removal of the cross-reference to Subpart H, Part 
10 in Sec.  191.0, as discussed in the comment discussion above;
    2. In Sec.  10.402, which sets forth general definitions:
    a. The definition of ``claim for preferential tariff treatment'' in 
paragraph (c) has been revised to add the words ``and to an exemption 
from the merchandise processing fee'' at the end of the definition to 
clarify that the term encompasses a claim that a good is entitled to an 
exemption from the merchandise processing fee (see Sec.  24.23(c)(7) of 
the CBP regulations);
    b. The definition of ``national'' (formerly paragraph (o)) has been 
removed as that term is not used in Subpart H of Part 10;
    c. A definition of ``identical goods'' has been added as new 
paragraph (n). This definition was set forth in Sec. Sec.  10.411(d)(2) 
and 10.422(d)(2) of the interim regulatory text but has been removed 
from those provisions and inserted into the general definitions section 
for the reason that the term also appears in Sec.  10.474, and the 
definition is equally applicable to all three provisions. In addition, 
the definition has been modified slightly by replacing the word 
``production'' with the words ``particular rule of origin,'' which CBP 
believes more accurately describe the means by which a good is 
determined to qualify as originating;
    d. As a result of the removal of the definition of ``national'' and 
the addition of a definition for ``identical goods'' discussed above, 
current paragraph (n), setting forth the definition of ``indirect 
material,'' has been re-designated as paragraph (o), and a conforming 
change has been made to Sec.  10.460 to reflect the re-designation of 
this paragraph; and

[[Page 76129]]

    e. The definition of ``preferential tariff treatment'' in paragraph 
(s) has been revised to add the words ``, and an exemption from the 
merchandise processing fee'' at the end of the definition to clarify 
that the term includes an exemption from the merchandise processing 
fee.
    3. In Sec.  10.410, relating to the filing of a claim for 
preferential tariff treatment:
    a. Paragraph (a) has been revised to add the words ``including an 
exemption from the merchandise processing fee,'' immediately following 
the words ``under the US-CFTA,'' in the first sentence to clarify that 
a claim for preferential tariff treatment for an originating good under 
the US-CFTA includes a claim that the good is entitled to an exemption 
from the merchandise processing fee;
    b. Paragraph (b) has been revised to add the words ``or other 
information'' immediately following the word ``certification'', 
consistent with the wording in the corresponding provision in the US-
CFTA (see Article 4.12.1(c)); and
    c. Paragraph (b) has been further revised to provide that a 
corrected declaration may be effected by submission of a statement 
``via an authorized electronic data interchange system,'' as an 
alternative to submission of a written statement, consistent with CBP's 
movement toward a paperless environment;
    4. In Sec.  10.411, relating to the certification of origin:
    a. The heading to Sec.  10.411 and the paragraph (a) introductory 
text have been revised to add the words ``or other information'' after 
``certification'' and ``certification of origin'' to conform to the 
wording in Articles 4.12.1(b) and 4.14.1 of the US-CFTA, which 
reference the importer's obligation to submit a certificate of origin 
or other information demonstrating that the good qualifies as 
originating;
    b. Paragraph (a)(2)(iv) has been modified to add the words ``for 
which preferential tariff treatment is claimed'' immediately following 
the word ``good'' for clarification purposes;
    c. Paragraph (a)(2)(vii), relating to multiple shipments of 
identical goods, has been removed and incorporated (in slightly revised 
form) into re-designated paragraph (e)(2) (formerly paragraph (d)(2)) 
to clarify that this provision applies to certifications but not to 
``other information'' submitted pursuant to Sec.  10.411(a);
    d. Paragraph (a)(3), which sets forth the certifying statement to 
be included on the certification of origin, has been removed and re-
designated as new paragraph (b) and a heading has been added. This 
change clarifies that the statement is required on the certification 
but not when ``other information'' is submitted pursuant to Sec.  
10.411(a);
    e. As a result of the insertion of new paragraph (b), as discussed 
above, paragraphs (b) through (e) of the interim regulatory text have 
been re-designated as paragraphs (c) through (f), respectively;
    f. Re-designated paragraph (c) (formerly paragraph (b)), which 
concerns who may sign the certification, has been revised to require 
that the certification of origin include the legal name and address of 
the responsible official or authorized agent signing the certification, 
and also to ask for the telephone and e-mail address when available. 
This information is necessary in the event that the person signing the 
certification is not identified pursuant to paragraphs (a)(2)(i) 
through (a)(2)(iii) of Sec.  10.411; and
    g. Re-designated paragraphs (d) and (f) (formerly paragraphs (c) 
and (e), respectively) have been revised to add the words ``or other 
information'' immediately following the word ``certification,'' 
consistent with the changes to paragraph (a) discussed above;
    5. In Sec.  10.412, relating to importer obligations:
    a. Paragraph (a) has been revised to add the words ``or other 
information submitted to CBP under Sec.  10.411(a) of this subpart'' 
immediately following the word ``certification'', consistent with the 
change to the Sec.  10.411(a) introductory text discussed above;
    b. The paragraph (b) introductory text and paragraph (b)(1) have 
been revised to add the word ``tariff'' between the words 
``preferential'' and ``treatment'' each place they appear for 
clarification purposes and consistent with other references to these 
words throughout Subpart H. Paragraph (b)(1) has been further revised 
to add the words ``or other information'' immediately following the 
word ``certification'', consistent with the change to the Sec.  
10.411(a) introductory text discussed above; and
    c. Paragraph (d), which stated that ``* * * importers are expected 
to establish and implement internal controls which provide for the 
periodic review of the accuracy of the certifications or other records 
referred to in paragraph (b)(1) of this section,'' has been removed as 
there is no basis of authority for this provision in the US-CFTA or the 
Act;
    6. In Sec.  10.413, concerning the validity of the certification, 
the words ``of this subpart'' have been added immediately following the 
reference to ``Sec.  10.411'' each place it appears for clarification 
purposes;
    7. In Sec.  10.414, which sets forth the circumstances under which 
a certification is not required:
    a. The section heading, paragraph (a) introductory text, and 
paragraph (b) have been revised to add the words ``or other 
information'' immediately following the word ``certification'' each 
place it appears, consistent with the change to the Sec.  10.411(a) 
introductory text discussed above; and
    b. The paragraph (a) introductory text has been further revised to 
replace the words ``for preferential tariff treatment'' with the words 
``as originating under Sec.  10.411(a),'' consistent with the wording 
in Sec.  10.411(a);
    8. In Sec.  10.415, concerning maintenance of records, the 
paragraph (a) introductory text has been revised:
    a. To add the word ``tariff'' between the words ``preferential'' 
and treatment'' for clarification purposes and consistent with other 
references to these words throughout Subpart H;
    b. To add the words ``or other information'' immediately following 
the word ``certification'', consistent with the change to the Sec.  
10.411(a) introductory text discussed above; and
    c. To remove the words ``in the United States'' to conform to the 
corresponding provision in the US-CFTA (see Article 4.14.3), which 
includes no restriction on where the records referenced in that 
provision must be maintained;
    9. In Sec.  10.416, relating to the consequences of failing to 
comply with the requirements of Subpart H:
    a. Paragraph (a) has been revised to add the words ``or other 
information demonstrating that the good qualifies as originating'' 
immediately following the word ``certification'', consistent with the 
change to the Sec.  10.411(a) introductory text discussed above; and
    b. Paragraph (b) has been revised to add the words ``of this 
subpart'' immediately following the reference to ``Sec.  10.463'' for 
clarification purposes;
    10. In Sec.  10.420, relating to the filing of a tariff preference 
level (TPL) claim, the words ``of this subpart'' have been added 
immediately following each of the references to ``Sec.  10.421'', 
``Sec.  10.451'', ``Sec.  10.421(a) or (b)'', and ``Sec.  10.421(c)'' 
for clarification purposes;
    11. In Sec.  10.421, concerning goods eligible for TPL claims:
    a. The words ``of this subpart'' have been added immediately 
following the reference to ``Sec.  10.420'' in the introductory text 
for clarification purposes; and
    b. The term ``HTS'' has been replaced each place it appears 
(including the

[[Page 76130]]

footnote) with the correct term ``HTSUS'' (see Sec.  10.402(m));
    12. In Sec.  10.422, relating to the TPL certificate of 
eligibility:
    a. The paragraph (a) introductory text has been revised to add the 
words ``of this subpart'' immediately following the reference to 
``Sec.  10.421'' for clarification purposes;
    b. Paragraph (a)(2), which sets forth the information to be 
included on the certificate of eligibility, has been modified to 
require (in new paragraph (a)(2)(ii)) that the certificate include the 
legal name and address of the responsible official or authorized agent 
of the importer signing the certificate (if different from the importer 
of record), and also to ask for the telephone and e-mail address when 
available. Similar to the change to Sec.  10.411(c) discussed above, 
this change is necessary in the event that the person signing the 
certificate of eligibility is not identified pursuant to Sec.  
10.422(a)(2)(i);
    c. As a result of the addition of new paragraph (a)(2)(ii), as 
discussed above, paragraphs (a)(2)(ii) through (a)(2)(vii) of the 
interim regulatory text have been re-designated as paragraphs 
(a)(2)(iii) through (a)(2)(viii), respectively; and
    d. The reference to ``certification'' in paragraph (d)(2) has been 
replaced with the correct word ``certificate;''
    13. In Sec.  10.424, concerning the effect of noncompliance with 
applicable TPL requirements, the words ``of this subpart'' have been 
added immediately following the reference to ``Sec.  10.422'' in 
paragraph (a) and the reference to ``Sec.  10.425'' in paragraph (b) 
for clarification purposes;
    14. In Sec.  10.440, relating to the right to make post-importation 
duty refund claims, the word ``part'' has been replaced each place it 
appears with the correct word ``subpart'';
    15. In Sec.  10.441, relating to the procedures for filing post-
importation claims:
    a. Paragraphs (a) and (b)(2) have been revised to replace the word 
``part'' each place it appears with the correct word ``subpart''; and
    b. Paragraph (b)(2) has been further revised to add the words ``or 
other information demonstrating'' immediately following the word 
``certification'', consistent with the change to the Sec.  10.411(a) 
introductory text discussed above;
    16. In Sec.  10.442, relating to CBP processing procedures for 
post-importation claims:
    a. The word ``part'' in paragraphs (a) and (d)(1) has been replaced 
each place it appears with the correct word ``subpart'';
    b. The words ``for refund'' have been added immediately following 
the word ``claim'' in the first and second sentences of paragraph (b) 
for clarification purposes; and
    c. Paragraphs (d)((2) and (d)(3) have been revised to provide that 
notice of a denial of a claim for a refund may be made ``via an 
authorized electronic data interchange system,'' as an alternative to 
the issuance of a written notice, consistent with CBP's movement toward 
a paperless environment;
    17. In Sec.  10.450, which sets forth definitions regarding the 
rules of origin, the words ``of this subpart'' have been added 
immediately following the reference to ``Sec. Sec.  10.450 through 
10.463'' in the introductory text for clarification purposes:
    18. In Sec.  10.455, relating to the value of materials:
    a. Paragraph (a)(1) has been revised to add the words ``with 
respect to that importation'' at the end of the paragraph to conform to 
the wording in the corresponding statutory provision (see Sec.  
202(e)(1)(A) of the Act);
    b. The heading to paragraph (b) (``Adjustments to value'') has been 
changed to read ``Permissible additions to, and deductions from, the 
value of materials'' to avoid any potential confusion between the 
heading to this paragraph and the term ``adjusted value;''
    c. Paragraphs (b)(1)(i) and (b)(2)(i) have been revised to delete 
the words ``within or between the territory of Chile, the United 
States, or both'' to conform these paragraphs to the wording in the 
corresponding statutory provisions (see Sec.  202(e)(2)(A)(i) and 
(B)(i) of the Act), respectively; and
    d. Paragraph (c) has been modified to replace the term ``country,'' 
which is not defined in Subpart H, with the more appropriate term 
``Party,'' which is defined in Sec.  10.402(q);
    19. In Sec. Sec.  10.457(a) and 10.458(a), concerning fungible 
goods and materials, and accumulation, respectively, the term 
``country'' has been replaced each place it appears with the more 
appropriate term ``Party;''
    20. In Sec.  10.461, relating to indirect materials, Example 1 has 
been revised to add the words ``of this subpart'' at the end of the 
parenthetical phrase ``see Sec.  10.454(a)'' in the third sentence;
    21. In Sec.  10.470, relating to verification of claims for 
preferential tariff treatment:
    a. The section heading has been revised to add the word ``tariff'' 
between the words ``preferential'' and ``treatment'';
    b. The heading to paragraph (a) has been revised to remove the 
words ``by CBP'' to allow for the possibility that another U.S. 
Government agency may assist in a verification; and
    c. The first sentence of the paragraph (a) introductory text has 
been revised to add the word ``tariff'' between the words 
``preferential'' and ``treatment'' and to add the words ``of this 
subpart'' immediately following the reference to ``Sec.  10.410''.
    d. The second sentence of the paragraph (a) introductory text has 
been revised to replace the words ``for any reason is prevented from 
verifying'' with the words ``is provided with insufficient information 
to verify or substantiate'', and to add the word ``tariff'' between the 
words ``preferential'' and ``treatment''. The former change recognizes 
that the words ``for any reason'' may be interpreted too broadly and 
result in the denial of a claim for reasons beyond the control of the 
parties to an import transaction. This new wording more accurately 
reflects the circumstances under which a verification may result in the 
denial of a claim--the failure to provide sufficient information to 
verify or substantiate the claim for preferential tariff treatment;
    22. In Sec.  10.473, concerning notice of a negative origin 
determination:
    a. The incorrect reference to ``section''` in the introductory text 
has been replaced with the correct word ``subpart'';
    b. The introductory text has been further revised to provide for 
the issuance of a negative origin determination ``via an authorized 
electronic data interchange system,'' as an alternative to the issuance 
of a written determination, consistent with CBP's movement toward a 
paperless environment; and
    c. Paragraph (c) has been revised to replace the words ``the `Rules 
of Origin' heading under this subpart'' with the words ``Sec. Sec.  
10.450 through 10.463 of this subpart'' to provide more clarity 
regarding the regulatory provisions to which this paragraph is 
referring;
    23. In Sec.  10.474, relating to repeated false or unsupported 
preference claims, the words ``CBP finds'' have been replaced with the 
words ``verification or other information reveals'' to more accurately 
reflect the wording in Sec.  205(g) of the Act, which provides, in 
pertinent part, that ``[i]f the Bureau of Customs and Border Protection 
or the Bureau of Immigration and Customs Enforcement finds indications 
of a pattern of conduct * * *.'' [Emphasis added.];
    24. In Sec.  10.483, concerning the framework for correcting 
declarations and certifications:

[[Page 76131]]

    a. The incorrect reference to ``part'' in paragraph (a)(2) has been 
replaced by the correct word ``chapter''; and
    b. Paragraph (c) has been revised to remove the word ``Written'' in 
the heading and by providing in the introductory text for the 
submission of a statement ``via an authorized electronic data 
interchange system,'' as an alternative to the submission of a written 
statement, consistent with the change described above in regard to 
Sec.  10.410(b);

Conclusion

    Accordingly, based on the comments received and the analysis of 
those comments as set forth above, and based on the additional 
considerations discussed above, CBP believes that the interim 
regulations published as CBP Dec. 05-07 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

    The regulations to implement the preferential tariff treatment and 
other customs-related provisions of the US-CFTA were previously 
published in CBP Dec. 05-07 as interim regulations. CBP issued the 
regulations as an interim rule because it had determined that: (1) They 
involve the foreign affairs function of the United States pursuant to 
section 553(a)(1) of the Administrative Procedure Act (APA); and (2) 
prior public notice and comment procedures on these regulations were 
impracticable, unnecessary, and contrary to the public interest 
pursuant to section 553(b)(B) of the APA. 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 contained 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 collection of 
information in these regulations is in Sec. Sec.  10.410 and 10.411. 
This information is used by CBP to determine eligibility for a tariff 
preference or other rights or benefits under the US-CFTA 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 
recordkeeper. Comments concerning the accuracy of this burden estimate 
and suggestions for reducing this burden should be directed to the 
Office of Management and Budget, Attention: Desk Officer for the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503. A copy should also be sent to the Trade 
and Commercial Regulations Branch, Regulations and Rulings, Bureau of 
Customs and Border Protection, 1300 Pennsylvania Avenue, NW. (Mint 
Annex), Washington, DC 20229.

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 (United States-Chile Free Trade 
Agreement).

19 CFR Part 191

    Commerce, Customs duties and inspection, Drawback, Reporting and 
recordkeeping requirements, Trade agreements.

Amendments to the Regulations

0
Accordingly, the interim rule amending parts 10, 24, 162, 163, 178, and 
191 of the CBP regulations (19 CFR parts 10, 24, 162, 163, 178, and 
191), which was published at 70 FR 10868 on March 7, 2005, is adopted 
as a final rule with certain changes as discussed above and 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 H 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 10.401 through 10.490 also issued under Pub. L. 108-77, 
117 Stat. 909 (19 U.S.C. 3805 note).

Sec.  10.401  [Amended]

0
2. Section 10.401 is amended by removing the words ``entered into'' in 
the first sentence and adding, in their place, the word ``signed'', by 
adding the word ``and'' immediately prior to the number ``163'' in the 
third sentence, and by removing the words ``and 191'' in the third 
sentence;

0
3. Section 10.402 is amended by revising paragraph (c), removing 
current paragraph (o), re-designating current paragraph (n) as 
paragraph (o), adding a new paragraph (n), and revising paragraph (s). 
The revisions and addition to Sec.  10.402 read as follows:


Sec.  10.402  General definitions.

* * * * *
    (c) Claim for preferential tariff treatment. ``Claim for 
preferential tariff treatment'' means a claim that a good is entitled 
to the duty rate applicable under the US-CFTA and to an exemption from 
the merchandise processing fee;
* * * * *
    (n) Identical goods. ``Identical goods'' means goods that are the 
same in all respects relevant to the particular rule of origin that 
qualifies the goods as originating;
* * * * *
    (s) Preferential tariff treatment. ``Preferential tariff 
treatment'' means the duty rate applicable to an originating good under 
the US-CFTA, and an exemption from the merchandise processing fee.
* * * * *

0
4. Section 10.410 is amended by adding the words ``including an 
exemption from the merchandise processing fee,'' immediately following 
the words ``under the US-CFTA,'' in the first sentence of paragraph (a) 
and by revising paragraph (b). Revised paragraph (b) reads as follows:


Sec.  10.410  Filing of claim for preferential tariff treatment upon 
importation.

* * * * *

[[Page 76132]]

    (b) Corrected declaration. If, after making the declaration 
required under paragraph (a) of this section, the U.S. importer has 
reason to believe that the declaration or the certification or other 
information on which the declaration was based contains information 
that is not correct, the importer must, within 30 calendar days after 
the date of discovery of the error, make a corrected declaration and 
pay any duties that may be due. A corrected declaration will be 
effected by submission of a letter or other statement either in writing 
or via an authorized electronic data interchange system to the CBP 
office where the original declaration was filed specifying the 
correction (see Sec. Sec.  10.482 and 10.483 of this subpart);

0
5. In Sec.  10.411:
0
a. The section heading is revised;
0
b. Paragraph (a) is amended by revising the introductory text and 
paragraph (a)(2)(iv) and by removing paragraphs (a)(2)(vii) and (a)(3);
0
c. Current paragraphs (b), (c), (d), and (e) are re-designated as 
paragraphs (c), (d), (e), and (f), respectively;
0
d. A new paragraph (b) is added;
0
e. The introductory text of re-designated paragraph (c) is revised;
0
f. Re-designated paragraphs (d) and (e)(2) and the introductory text to 
re-designated paragraph (f) are revised.
    The additions and revisions to Sec.  10.411 read as follows:


Sec.  10.411  Certification of origin or other information.

    (a) Contents. An importer who claims preferential tariff treatment 
on a good must submit, at the request of the port director, a 
certification of origin or other information demonstrating that the 
good qualifies as originating. A certification or other information 
submitted to CBP under this paragraph:
* * * * *
    (2) * * *
    (iv) A description of the good for which preferential tariff 
treatment is claimed, which must be sufficiently detailed to relate it 
to the invoice and the HS nonmenclature;
* * * * *
    (b) Statement. A certification submitted to CBP under paragraph (a) 
of this section must include a statement, in substantially the 
following form:
    ``I Certify that:
    The information on this document is true and accurate and I assume 
the responsibility for proving such representations. I understand that 
I am liable for any false statements or material omissions made on or 
in connection with this document;
    I agree to maintain, and present upon request, documentation 
necessary to support this certification, and to inform, in writing, all 
persons to whom the certification was given of any changes that could 
affect the accuracy or validity of this certification; and
    The goods originated in the territory of one or more of the 
parties, and comply with the origin requirements specified for those 
goods in the United States-Chile Free Trade Agreement; there has been 
no further production or any other operation outside the territories of 
the parties, other than unloading, reloading, or any other operation 
necessary to preserve it in good condition or to transport the good to 
the United States; and
    This document consists of ---- pages, including all attachments.''
    (c) Responsible official or agent. A certification submitted under 
paragraph (a) of this section must be signed and dated by a responsible 
official of the importer; exporter; or producer; or by the importer's, 
exporter's, or producer's authorized agent having knowledge of the 
relevant facts. The certification must include the legal name and 
address of the responsible official or authorized agent signing the 
certification, and should include that person's telephone and e-mail 
address, if available. If the person making the certification is not 
the producer of the good, or the producer's authorized agent, the 
person may sign the certification of origin based on:
* * * * *
    (d) Language. The certification or other information submitted 
under paragraph
    (a) of this section must be completed either in the English or 
Spanish language. If the certification or other information is 
completed in Spanish, the importer must also provide to the port 
director, upon request, a written English translation of the 
certification or other information.
    (e) * * *
    (2) Multiple importations of identical goods into the United States 
that occur within a specified blanket period, not exceeding 12 months. 
In the case of multiple shipments of identical goods, the certification 
must specify the blanket period in ``mm/dd/yyyy to mm/dd/yyyy'' format.
    (f) Preference criteria. The preference criterion to be included on 
the certification or other information as required in paragraph 
(a)(2)(vi) of this section is as follows:
* * * * *

0
6. Section 10.412 is amended by revising paragraphs (a) and (b)(1) and 
by removing paragraph (d). The revisions to paragraphs (a) and (b)(1) 
read as follows:


Sec.  10.412  Importer obligations.

    (a) General. An importer who makes a declaration under Sec.  
10.410(a) of this subpart is responsible for the truthfulness of the 
declaration and of all the information and data contained in the 
certification or other information submitted to CBP under Sec.  
10.411(a) of this subpart, for submitting any supporting documents 
requested by CBP, and for the truthfulness of the information contained 
in those documents. CBP will allow for the direct submission by the 
exporter or producer of business confidential or other sensitive 
information, including cost and sourcing information.
    (b) * * *
    (1) Must have records that explain how the importer came to the 
conclusion that the good qualifies for preferential tariff treatment. 
Those records must include documents that support a claim that the 
article in question qualifies for preferential tariff treatment because 
it meets the applicable rules of origin set forth in General Note 26, 
HTSUS, and in this subpart. Those records may include a properly 
completed certification or other information as set forth in Sec.  
10.411 of this subpart; and
* * * * *


Sec.  10.413  [Amended]

0
7. Section 10.413 is amended by adding the words ``of this subpart'' 
immediately following the reference to ``Sec.  10.411'' each place it 
appears;

0
8. Section 10.414 is amended by revising the section heading, paragraph 
(a) introductory text, and paragraph (b) to read as follows:


Sec.  10.414  Certification or other information not required.

    (a) General. Except as otherwise provided in paragraph (b) of this 
section, an importer will not be required to submit a certification or 
other information demonstrating that the good qualifies as originating 
under Sec.  10.411(a) of this subpart for:
* * * * *
    (b) Exception. If the port director determines that an importation 
described in paragraph (a) of this section may reasonably be considered 
to have been carried out or planned for the purpose of evading 
compliance with the rules and procedures governing claims for 
preference under the US-CFTA, the port director will notify the 
importer in writing that for that importation the importer must submit 
to CBP a valid certification or other information

[[Page 76133]]

demonstrating that the good qualifies as originating. The importer must 
submit such a certification or other information within 30 calendar 
days from the date of the written notice. Failure to timely submit the 
certification or other information will result in denial of the claim 
for preferential tariff treatment.

0
9. Section 10.415 is amended by revising the paragraph (a) introductory 
text to read as follows:


Sec.  10.415  Maintenance of records.

    (a) General. An importer claiming preferential tariff treatment for 
a good imported into the United States must maintain, for five years 
after the date of importation of the good, a certification (or a copy 
thereof) or other information demonstrating that the good qualifies as 
originating, and any records and documents that the importer has 
relating to the origin of the good, including records and documents 
associated with:
* * * * *

0
10. Section 10.416 is amended by revising paragraph (a) and by adding 
the words ``of this subpart'' immediately following the reference to 
``Sec.  10.463'' in paragraph (b). Revised paragraph (a) reads as 
follows:


Sec.  10.416  Effect of noncompliance; failure to provide documentation 
regarding transshipment.

    (a) Effect of noncompliance. If the importer fails to comply with 
any requirement under this subpart, including submission of a 
certification of origin or other information demonstrating that the 
good qualifies as originating under Sec.  10.411(a) of this subpart or 
submission of a corrected certification under Sec.  10.413 of this 
subpart, the port director may deny preferential tariff treatment to 
the imported good.
* * * * *


Sec.  10.420  [Amended]

0
11. Section 10.420 is amended by adding the words ``of this subpart'' 
immediately following each of the references in the section to ``Sec.  
10.421,'' ``Sec.  10.451,'' ``Sec.  10.421(a) or (b),'' and ``Sec.  
10.421(c)'';


Sec.  10.421  [Amended]

0
12. Section Sec.  10.421 is amended by adding the words ``of this 
subpart'' immediately following the reference to ``Sec.  10.420'' in 
the introductory text and by removing the term ``HTS'' each place it 
appears in the section (and footnote) and adding, in its place, the 
term ``HTSUS'';

0
13. Section 10.422 is amended by adding the words ``of this subpart'' 
immediately following the reference to ``Sec.  10.421'' in the 
paragraph (a) introductory text, by re-designating current paragraphs 
(a)(2)(ii) through (a)(2)(vii) as paragraphs (a)(2)(iii) through 
(a)(2)(viii), respectively, by adding a new paragraph (a)(2)(ii), and 
by revising paragraph (d)(2). New paragraph (a)(2)(ii) and revised 
paragraph (d)(2) read as follows:


Sec.  10.422  Submission of certificate of eligibility.

    (a) * * *
    (2) * * *
    (ii) The legal name and address of the responsible official or 
authorized agent of the importer signing the certificate (if different 
from the importer of record), and that person's telephone and e-mail 
address, if available;
* * * * *
    (d) * * *
    (2) Multiple importations of identical goods into the United States 
that occur within a specified blanket period, not exceeding 12 months, 
set out in the certificate.


Sec.  10.424  [Amended]

0
14. Section 10.424 is amended by adding the words ``of this subpart'' 
immediately following the reference to ``Sec.  10.422'' in paragraph 
(a) and immediately following the reference to ``Sec.  10.425'' in 
paragraph (b);


Sec.  10.440  [Amended]

0
15. Section 10.440 is amended by removing the word ``part'' each place 
it appears and adding, in its place, the word ``subpart'';

0
16. Section 10.441 is amended by removing the word ``part'' in 
paragraph (a) and adding, in its place, the word ``subpart'', and by 
revising paragraphs (b)(2) and (b)(4) to read as follows:


Sec.  10.441  Filing procedures.

* * * * *
    (b) * * *
    (2) Subject to Sec.  10.413 of this subpart, a copy of a 
certification of origin or other information demonstrating that the 
good qualifies for preferential tariff treatment;
* * * * *
    (4) A written statement indicating whether or not any person has 
filed a protest relating to the good under any provision of law; and if 
any such protest has been filed, the statement must identify the 
protest by number and date.

0
17. Section 10.442 is amended by removing the word ``part'' each place 
it appears in paragraphs (a) and (d)(1) and adding, in its place, the 
word ``subpart'', and by revising the heading and text of paragraph 
(b), the second sentence of paragraph (c)(2), paragraph (d)(2), and the 
second and third sentences of paragraph (d)(3). The revisions to 
paragraphs (b), (c)(2), (d)(2) and (d)(3) read as follows:


Sec.  10.442  CBP processing procedures.

* * * * *
    (b) Pending protest or judicial review. If the port director 
determines that any protest relating to the good has not been finally 
decided, the port director will suspend action on the claim for refund 
filed under this subpart until the decision on the protest becomes 
final. If a summons involving the tariff classification or dutiability 
of the good is filed in the Court of International Trade, the port 
director will suspend action on the claim for refund filed under this 
subpart until judicial review has been completed.
    (c) * * *
    (2) * * * If the entry is otherwise to be reliquidated based on 
administrative review of a protest or as a result of judicial review, 
the port director will reliquidate the entry taking into account the 
claim for refund under this subpart.
    (d) * * *
    (2) Unliquidated entry. If the port director determines that a 
claim for a refund filed under this subpart should be denied and the 
entry covering the good has not been liquidated, the port director will 
deny the claim in connection with the liquidation of the entry, and 
notice of the denial and the reason for the denial will be provided to 
the importer in writing or via an authorized electronic data 
interchange system.
    (3) * * * If the entry is otherwise to be reliquidated based on 
administrative review of a protest or as a result of judicial review, 
such reliquidation may include denial of the claim filed under this 
subpart. In either case, the port director will give the importer 
notice of the denial and the reason for the denial in writing or via an 
authorized electronic data interchange system.


Sec.  10.450  [Amended]

0
18. Section 10.450 is amended by adding the words ``of this subpart'' 
immediately following the reference to ``Sec. Sec.  10.450 through 
10.463'' in the introductory text.

0
19. Section 10.455 is amended by revising paragraph (a)(1), the heading 
to paragraph (b), and paragraphs (b)(1)(i), (b)(2)(i), and (c) to read 
as follows:


Sec.  10.455  Value of materials.

    (a) * * *

[[Page 76134]]

    (1) In the case of a material imported by the producer of the good, 
the adjusted value of the material with respect to that importation;
* * * * *
    (b) Permissible additions to, and deductions from, the value of 
materials.
* * * * *
    (1) * * *
    (i) The costs of freight, insurance, packing and all other costs 
incurred in transporting the material to the location of the producer;
* * * * *
    (2) * * *
    (i) The costs of freight, insurance, packing and all other costs 
incurred in transporting the material to the location of the producer;
    (c) Accounting method. Any cost or value referenced in General Note 
26(n), HTSUS, and this subpart, must be recorded and maintained in 
accordance with the generally accepted accounting principles applicable 
in the territory of the Party in which the good is produced (whether 
Chile or the United States).


Sec.  10.457  [Amended]

0
20. In Sec.  10.457, paragraph (a)(4) is amended by removing the word 
``country'' each place it appears and adding, in its place, the word 
``Party''.


Sec.  10.458  [Amended]

0
21. In Sec.  10.458, paragraph (a) is amended by removing the word 
``country'' each it appears and adding, in its place, the word 
``Party''.


Sec.  10.460  [Amended]

0
22. Section 10.460 is amended by removing the term ``Sec.  10.402(n)'' 
and adding, in its place, the term ``Sec.  10.402(o)''.


Sec.  10.461  [Amended]

0
23. Section 10.461 is amended by adding in Example 1 the words ``of 
this subpart'' at the end of the parenthetical phrase ``see Sec.  
10.454(a)'' in the third sentence.

0
24. In Sec.  10.470, paragraph (a) is amended by revising the heading 
and the first two sentences of the introductory text, to read as 
follows:


Sec.  10.470  Verification and justification of claim for preferential 
tariff treatment.

    (a) Verification. A claim for preferential tariff treatment made 
under Sec.  10.410 of this subpart, including any statements or other 
information submitted to CBP in support of the claim, will be subject 
to such verification as the port director deems necessary. In the event 
that the port director is provided with insufficient information to 
verify or substantiate the claim, the port director may deny the claim 
for preferential tariff treatment. * * *
* * * * *

0
25. Section 10.473 is amended by revising the introductory text and 
paragraph (c) to read as follows:


Sec.  10.473  Issuance of negative origin determinations.

    If CBP determines, as a result of an origin verification initiated 
under this subpart, that the good which is the subject of the 
verification does not qualify as an originating good, it will issue a 
determination in writing or via an authorized electronic data 
interchange system to the importer that sets forth the following:
* * * * *
    (c) With specific reference to the rules applicable to originating 
goods as set forth in General Note 26, HTSUS, and in Sec. Sec.  10.450 
through 10.463 of this subpart, the legal basis for the determination; 
and
* * * * *


Sec.  10.474  [Amended]

0
26. Section 10.474 is amended by removing the words ``CBP finds'' and 
adding, in their place, the words ``verification or other information 
reveals'';

0
27. In Sec.  10.483, paragraph (a)(2) is amended by removing the word 
``part'' and adding, in its place, the word ``chapter,'' and paragraph 
(c) introductory text is revised to read as follows:


Sec.  10.483  Framework for correcting declarations and certifications.

* * * * *
    (c) Statement. For purposes of this subpart, each corrected 
declaration or notification of an incorrect certification must be 
accompanied by a statement, submitted in writing or via an authorized 
electronic data interchange system, which:
* * * * *

PART 191--DRAWBACK

0
28. The general authority citation for part 191 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i), 
Harmonized Tariff Schedule of the United States), 1313, 1624.
* * * * *


Sec.  191.0  [Amended]

0
29. Section 191.0 is amended by removing the last sentence.

Deborah J. Spero,
Acting Commissioner, Customs and Border Protection.
    Approved: December 15, 2006.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 06-9780 Filed 12-19-06; 8:45 am]
BILLING CODE 9111-14-P