NAFTA: Merchandise Processing Fee Exemption and Technical Corrections, 52780-52783 [07-4551]

Download as PDF 52780 Federal Register / Vol. 72, No. 179 / Monday, September 17, 2007 / Rules and Regulations telecommunications network. With access to the same advanced telecommunications networks of its urban counterparts, especially broadband networks designed to accommodate distance learning, telework and telemedicine, rural America will see improving educational opportunities, health care, economies, safety and security, and ultimately higher employment. Of particular concern to the Agency are communities where broadband service is not available and where population densities are such that the cost of deployment to them is high and buildout of infrastructure is unlikely. The Agency is committed to ensuring rural communities will have access to affordable, reliable, advanced communications services, comparable to those available throughout the rest of the United States, to provide a healthy, safe and prosperous place to live and work. The Community Connect Grant Program was started as a Pilot Program with the Fiscal Year 2002 budget and has been funded ever since through the appropriations process. After administering the program as a pilot program for two years, the Agency proposed rules for the program, and on July 28, 2004, the current rules were published, and the program was formally implemented. Since then more than 670 requests for grant funds totaling over $410 million were requested through Fiscal Year 2006. Of those requests, 129 were granted for $57 million to bring broadband service to 129 communities in 26 states and Puerto Rico. While the Agency is proud of the results achieved in the Community Connect Grant Program thus far, it believes that the overall effectiveness of the program can be improved by modifying the existing rules. Through these changes, the Agency is increasing eligibility criteria to include communities that clearly meet the intent of the program. Specifically, this rule will: (1) Add the Rand McNally Atlas as a community locator; (2) change the income measure for eligibility from a national comparison to a state comparison; and (3) clarify the items that are eligible to be considered as operating expenses. mstockstill on PROD1PC66 with RULES Confirmation of Effective Date This is to confirm the effective date of September 17, 2007, for the direct final rule 7 CFR 1739, Community Connect Grant Program, published in the Federal Register on August 3, 2007. VerDate Aug<31>2005 15:49 Sep 14, 2007 Jkt 211001 Dated: September 11, 2007. James M. Andrew, Administrator, Rural Utilities Service. [FR Doc. E7–18272 Filed 9–14–07; 8:45 am] BILLING CODE 3410–15–P DEPARTMENT OF HOMELAND SECURITY U.S. Customs and Border Protection DEPARTMENT OF THE TREASURY 19 CFR Parts 103, 178, and 181 [USCBP–2006–0090; CBP Dec. 07–76] RIN 1505–AB58 NAFTA: Merchandise Processing Fee Exemption and Technical Corrections AGENCIES: U.S. Customs and Border Protection, Department of Homeland Security; Department of the Treasury. ACTION: Final rule. SUMMARY: This document amends the U.S. Customs and Border Protection (CBP) regulations to clarify that, in order to claim the exemption from the merchandise processing fee (MPF) for merchandise that is considered ‘‘originating’’ and qualifies to be marked as products of Canada or Mexico under the provisions of the NAFTA, an importer is subject to the same declaration requirement that is established for obtaining NAFTA duty preference, even if the merchandise is unconditionally free. In addition, this document amends the regulations to clarify that a Certificate of Origin is not required for a commercial importation for which the total value of originating goods does not exceed $2,500. Lastly, this document remedies two incorrect addresses and an incorrect Code of Federal Regulations citation, and incorporates non-substantive amendments to certain sections in the regulations to reflect the nomenclature changes effected by the transfer of CBP to the Department of Homeland Security and the reorganization of certain offices in CBP pursuant to the ‘‘Security and Accountability for Every Port Act of 2006’’ (or the ‘‘Safe Port Act’’), as well as certain other minor editorial changes. DATES: Effective Date: The amendments set forth in this document are effective on October 17, 2007. FOR FURTHER INFORMATION CONTACT: Seth Mazze, Trade Agreements Branch, Office of International Trade, (202) 344– 2634. SUPPLEMENTARY INFORMATION: PO 00000 Frm 00028 Fmt 4700 Sfmt 4700 Background On December 17, 1992, the United States, Canada, and Mexico entered into the North American Free-Trade Agreement (NAFTA). The stated objectives of the NAFTA include the elimination of barriers to trade in, and the facilitation of the cross-border movement of, goods and services between the territories of the countries. The provisions of the NAFTA were adopted by the United States with the enactment of the North American Free Trade Agreement Implementation Act (the ‘‘Act’’, 19 U.S.C. 3301–3473). On September 6, 1995, U.S. Customs and Border Protection (CBP) published Treasury Decision (T.D.) 95–68 (North American Free Trade Agreement) in the Federal Register (60 FR 46333), adopting amendments to the regulations in title 19 of the Code of Federal Regulations (CFR) in order to implement customs-related aspects of the NAFTA. The final rule went into effect on October 1, 1995. Pursuant to sections 403(1) and 411 of the Homeland Security Act of 2002, Pub. L. 107–296 (the ‘‘HSA’’), the United States Customs Service and certain of its functions were transferred from the Department of the Treasury to the Department of Homeland Security effective March 1, 2003. In addition, pursuant to section 1502 of the HSA, the ‘‘Customs Service’’ was renamed as the ‘‘Bureau of Customs and Border Protection.’’ Subsequently, on April 23, 2007, a Notice was published in the Federal Register (72 FR 20131) to inform the public that the name of the Bureau of Customs and Border Protection had been changed by the Department of Homeland Security to ‘‘U.S. Customs and Border Protection (CBP)’’, effective March 31, 2007. On August 23, 2006, a Notice of Proposed Rulemaking was published in the Federal Register (71 FR 49391; the NPRM) by CBP that proposed to amend the regulations to clarify the requirements for claiming the merchandise processing fee (MPF) under the NAFTA and to effect several technical changes, as set forth below. Merchandise Processing Fee (MPF) Exemption As a means of recouping administrative expenses for the processing of imported shipments, CBP charges a MPF, as provided for in 19 U.S.C. 58c. However, under 19 U.S.C. 58c(b)(10)(B), for goods qualifying under the rules of origin set out in 19 U.S.C. 3332, the fee may not be charged with respect to goods that qualify to be marked as goods of Canada or of Mexico E:\FR\FM\17SER1.SGM 17SER1 Federal Register / Vol. 72, No. 179 / Monday, September 17, 2007 / Rules and Regulations mstockstill on PROD1PC66 with RULES (pursuant to Annex 311 of the NAFTA). In order to make a claim for NAFTA duty preference, an importer must make a declaration. The same declaration is also used for purposes of claiming the MPF exemption. That is, the importer must place the appropriate special program indicator (e.g., ‘‘CA’’ for goods of Canada and ‘‘MX’’ for goods of Mexico) opposite the good on the entry form, or in the appropriate location in an electronic filing. The NPRM addressed situations in which an importer of an originating good does not have a duty preference incentive to make the required NAFTA declaration upon entry because the Normal Trade Relations rate of duty on the good is free (i.e., the good is unconditionally duty free). Consistent with existing law and practice, the NPRM proposed to amend 19 CFR 181.21(a) to clarify that in order to claim the MPF exemption for unconditionally free goods from a NAFTA country, an importer of an originating good must place the appropriate special program indicator opposite the good on the entry form even if the importer is not actually claiming NAFTA preference for duty purposes. Exemption From Providing Certificate of Origin Section 181.22(b) of title 19, CFR (19 CFR 181.22(b)), requires an importer who claims preferential tariff treatment on a good under 19 CFR 181.21 to provide, at the request of the port director, a copy of each Certificate of Origin pertaining to the good which is in the possession of the importer. However, certain importations are exempted from this requirement under 19 CFR 181.22(d). One of these exemptions, set forth in § 181.22(d)(1)(iii), is for a commercial importation of a good whose value does not exceed $2,500, as long as a signed statement is attached to the invoice or other documents accompanying the shipment. In the NPRM, CBP proposed to amend the regulations to clarify that the $2,500 value refers to the total value of a shipment and not to the value of the individual goods in a shipment. In this regard, CBP specifically proposed to amend 19 CFR 181.22(d)(1)(iii) in order to clarify that a Certificate of Origin is not required for a commercial importation consisting of originating goods, the total value of which does not exceed $2,500, if the required statement is attached. Other Technical Corrections In the NPRM, CBP also proposed to make several other technical corrections VerDate Aug<31>2005 15:49 Sep 14, 2007 Jkt 211001 to the regulations. In CBP Dec. 05–32, an Interim Rule published in the Federal Register (70 FR 58009) on October 5, 2005, CBP redesignated 19 CFR 12.132 as § 102.25. However, there is a reference to § 12.132 in § 181.21(a). Accordingly, CBP proposed to make a minor conforming amendment to update this reference. In addition, because CBP Dec. 05–32 removed the declaration requirement referenced in §§ 12.130(c) and 12.132, CBP proposed to remove the entries for these sections in the list of OMB control numbers in § 178.2. CBP also proposed to amend an incorrect citation to 19 CFR 181.72(a)(2)(iii) in 19 CFR 181.74(a). The correct citation is to § 181.72(a)(3)(iii). In addition, CBP proposed to amend the address in 19 CFR 181.74(e) for providing notification when the Canadian or Mexican customs administrations intend to conduct a NAFTA verification visit in the United States in order to determine whether a good imported into the United States qualifies as an originating good. Since the publication of the NPRM on August 23, 2006, some divisions, functions, and personnel from the Office of Field Operations were transferred by the Commissioner of CBP into the Office of International Trade pursuant to the authority under section 402 of the Safe Port Act (Pub. L. 109–347) (October 13, 2006). The correct address is: ‘‘U.S. Customs and Border Protection, Office of International Trade, Commercial Targeting and Enforcement, 1300 Pennsylvania Ave. NW., Washington, DC 20229.’’ CBP also proposed to amend the National Commodity Specialist Division (NCSD) address in 19 CFR 181.93(a) for purposes of submitting advance ruling requests under the NAFTA. The correct address is: ‘‘National Commodity Specialist Division, U.S. Customs and Border Protection, One Penn Plaza, 10th Floor, New York, NY 10119.’’ This address is also corrected in the list of public reading rooms in 19 CFR 103.1. In addition, CBP is expanding the declaration and other documentation on a claim for preferential treatment in § 181.21 to include electronic versions of such documents in CBP’s continuing effort to modernize its procedures under the authority granted by Customs Modernization provisions in the North American Free Trade Agreement Implementation Act (commonly referred to as the ‘‘Customs Mod Act’’), Pub. L. 103–182, 107 Stat. 2057, 2170 (December 8, 1993). Comments were solicited on the Notice of Proposed Rulemaking. The comment period closed on October 23, 2006. PO 00000 Frm 00029 Fmt 4700 Sfmt 4700 52781 Discussion of Comments One comment was received in response to the solicitation and a description of the comment received and CBP’s analysis are set forth below. Comment The commenter, a Canadian manufacturer, stated that changing the MPF requirements would only increase the costs associated with importing goods into the United States and result in delays during importation. The commenter further noted that additional documentary requirements would increase administrative costs for CBP as well as for importers and brokers, and would ultimately result in less money being recouped. In addition, the commenter suggested that fees should be based strictly on the country of origin as declared and that routine audits and requests for information should be relied upon to monitor importers that do not follow the guidelines. CBP’s Response CBP is not changing the requirements for claiming the MPF exemption. Rather, consistent with existing law and practice, CBP is merely clarifying that an importer is subject to the same declaration requirement that is established for claiming NAFTA duty preference in order to claim the exemption of the MPF for goods that are eligible for preferential duty treatment under the NAFTA. As a clarification of existing law and practice, CBP believes that the amended regulation will serve to facilitate entry by providing certainty under the stated circumstances and will not result in either increased costs or delays during importation. With respect to the commenter’s suggestion that the MPF should be based strictly on the country of origin of imported merchandise, it is CBP’s position that this approach is not consistent with existing statutory law and is outside the scope of this rulemaking. No comments were received regarding the other amendments proposed in the NPRM. Conclusion After review of the comment and further consideration, CBP has decided to adopt the proposed rule published on August 23, 2006, without substantive changes, but with the additional modifications set forth below. Additional Changes to the Regulations The final regulations incorporate nonsubstantive amendments to §§ 181.21, 181.22, 181.74, and 181.93 of the CFR to reflect the nomenclature changes effected by the transfer of CBP to the E:\FR\FM\17SER1.SGM 17SER1 52782 Federal Register / Vol. 72, No. 179 / Monday, September 17, 2007 / Rules and Regulations Department of Homeland Security and the subsequent change of name in the Federal Register notice of April 23, 2007. As discussed above, the final regulation also reflects the reorganization of CBP by the Safe Port Act with the creation of the new Office of International Trade by updating the address and new office in 19 CFR 181.74(e). In addition, the language of § 181.21(a) has been edited to replace ‘‘shall’’ with ‘‘must.’’ In an effort to reflect the modernization of procedures under the Customs Mod Act, § 181.21(a) has also been edited by replacing the reference to ‘‘written declaration’’ with reference to ‘‘formal declaration’’ and a reference to ‘‘electronic submissions’’ has been added to the second sentence. Executive Order 12866 and Regulatory Flexibility Act This rule is not considered to be a significant regulatory action under Executive Order 12866. Accordingly, a regulatory assessment is not required. It is certified, pursuant to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), that the regulatory amendments set forth in this final rule will not have a significant economic impact on a substantial number of small entities. The rule merely clarifies that, consistent with existing law and CBP practice, an importer is subject to the same declaration requirement that is established for claiming NAFTA duty preference in order to claim the exemption of the MPF for goods that are eligible for preferential duty treatment under the NAFTA. CBP is also clarifying, consistent with current CBP practice, that a Certificate of Origin is not required for a commercial importation consisting of originating goods, the total value of which does not exceed $2,500, if the required statement is attached. Lastly, this document remedies two incorrect addresses and an incorrect Code of Federal Regulations citation, and incorporates nonsubstantive amendments to certain sections in the regulations to reflect the nomenclature changes effected by the transfer of CBP to the Department of Homeland Security and the reorganization of certain offices in CBP by the Safe Port Act as well as certain other minor editorial changes. mstockstill on PROD1PC66 with RULES Paperwork Reduction Act Because the changes with possible paperwork implications set forth in this document are merely clarifications of existing requirements, there is no need to amend the paperwork burden for the number previously approved by OMB VerDate Aug<31>2005 15:49 Sep 14, 2007 Jkt 211001 for part 181 of 19 CFR. The clearance number for part 181 is 1651–0098. PART 181—NORTH AMERICAN FREE TRADE AGREEMENT Signing Authority I 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. 5. The authority citation for part 181 continues to read as follows: Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States), 1624, 3314. 19 CFR Part 103 * * * * 6. In § 181.21: a. Paragraph (a) is revised. b. Paragraph (b) is amended by removing the word ‘‘Customs’’ and, in its place, adding the term ‘‘CBP’’. Administrative practice and procedure, Freedom of information. § 181.21 Filing of claim for preferential tariff treatment upon importation. List of Subjects 19 CFR Part 178 Collections of information, Paperwork requirements, Reporting and recordkeeping requirements. 19 CFR Part 181 Canada, Customs duties and inspection, Imports, Mexico, Trade agreements (North American Free-Trade Agreement). Amendments to the CBP Regulations For the reasons set forth above, parts 103, 178, and 181 of title 19 of the Code of Federal Regulations (19 CFR parts 103, 178, and 181) are amended as set forth below. I PART 103—AVAILABILITY OF INFORMATION 1. The authority citation for part 103 continues to read in part as follows: I Authority: 5 U.S.C. 301, 552, 552a; 19 U.S.C. 66, 1624; 31 U.S.C. 9701. * * § 103.1 * * * [Amended] 2. Amend § 103.1 by removing the address citation ‘‘New York, 6 World Trade Center, New York, New York 10048’’ and adding in its place the address citation ‘‘New York, One Penn Plaza, 10th Floor, New York, NY 10119.’’ PART 178—APPROVAL OF INFORMATION COLLECTION REQUIREMENTS 3. The authority citation for part 178 continues to read as follows: I Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq. [Amended] 4. Amend § 178.2 by removing the entries for §§ 12.130(c) and 12.132. I PO 00000 Frm 00030 Fmt 4700 Sfmt 4700 I I I (a) Declaration. In connection with a claim for preferential tariff treatment, or for the exemption from the merchandise processing fee, for a good under the NAFTA, the U.S. importer must make a formal declaration that the good qualifies for such treatment. The declaration may be made by including on the entry summary, or equivalent documentation, including electronic submissions, the symbol ‘‘CA’’ for a good of Canada, or the symbol ‘‘MX’’ for a good of Mexico, as a prefix to the subheading of the HTSUS under which each qualifying good is classified. Except as otherwise provided in 19 CFR 181.22 and except in the case of a good to which Appendix 6.B to Annex 300B of the NAFTA applies (see also 19 CFR 102.25), the declaration must be based on a complete and properly executed original Certificate of Origin, or copy thereof, which is in the possession of the importer and which covers the good being imported. * * * * * § 181.22 [Amended] 7. In § 181.22: a. Paragraph (b) introductory text is amended by removing the word ‘‘Customs’’ the first instance it appears and, in its place, adding the term ‘‘CBP’’. I b. In paragraph (b)(1), the three references to ‘‘Customs Form 434’’ are removed and references to ‘‘CBP Form 434’’ are added in their place; the reference to the ‘‘Office of Field Operations, U.S. Customs Service’’ is removed and the reference ‘‘Office of International Trade, U.S. Customs and Border Protection’’ is added in its place. I c. Paragraph (b)(4) is amended by removing the word ‘‘Customs’’ and, in its place, adding the term ‘‘CBP’’. I d. Paragraph (d)(1)(iii) is amended by removing the phrase ‘‘of a good whose value’’, and the phrase ‘‘for which the total value of originating goods’’ is added in its place. I I I § 178.2 * E:\FR\FM\17SER1.SGM 17SER1 Federal Register / Vol. 72, No. 179 / Monday, September 17, 2007 / Rules and Regulations § 181.74 [Amended] 8. In § 181.74: I a. Paragraph (a) is amended by removing the citation to ‘‘181.72(a)(2)(iii)’’ and adding in its place the citation to ‘‘181.72(a)(3)(iii)’’, and by removing the word ‘‘Customs’’ and, in its place, adding the term ‘‘CBP’’. I b. Paragraphs (b) and (c) are amended by removing the term ‘‘Customs’’ each place it appears and, in its place, adding the term ‘‘CBP’’. I c. In paragraph (d) introductory text, the reference to ‘‘Customs officer’’ is removed and the term ‘‘CBP officer’’ is added in its place; and the two references to ‘‘Customs’’ which follow are removed and in each instance the term ‘‘CBP’’ is added in its place. I d. Paragraph (e)(1) is amended, in the second sentence following the heading, by removing the word ‘‘Customs’’ and, in its place, adding the term ‘‘CBP’’, and by removing the address citation ‘‘Project North Star Coordination Center, P.O. Box 400, Buffalo, New York 14225– 0400’’, and, in its place, adding the address citation ‘‘U.S. Customs and Border Protection, Office of International Trade, Commercial Targeting and Enforcement, 1300 Pennsylvania Ave., NW., Washington, DC 20229’’. I e. Paragraph (e)(2) is amended by removing the phrase ‘‘Customs may’’, and adding in its place the phrase ‘‘CBP may’’. I § 181.93 [Amended] 9. In § 181.93: a. In paragraph (a), the two references to ‘‘Commissioner of Customs’’ are removed and in each instance references to ‘‘Commissioner of U.S. Customs and Border Protection’’ are added in its place, and the address citation ‘‘National Commodity Specialist Division, United States Customs Service, 6 World Trade Center, New York, NY 10048’’ is removed and the address citation ‘‘National Commodity Specialist Division, U.S. Customs and Border Protection, One Penn Plaza, 10th Floor, New York, NY 10119’’ is added in its place. I b. Paragraphs (b)(1)(i), (b)(1)(ii), (b)(3), (b)(4), (b)(5)(i)(A), and (d) are amended by removing the word ‘‘Customs’’ each I mstockstill on PROD1PC66 with RULES I VerDate Aug<31>2005 15:49 Sep 14, 2007 Jkt 211001 place it appears and, in its place, adding the term ‘‘CBP’’. Jayson P. Ahern, Acting Commissioner, U.S. Customs and Border Protection. Approved: September 10, 2007. Timothy E. Skud, Deputy Assistant Secretary of the Treasury. [FR Doc. 07–4551 Filed 9–14–07; 8:45 am] BILLING CODE 9111–14–P DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 101 [Docket No. 2006P–0487] Food Labeling; Health Claims; Dietary Noncariogenic Carbohydrate Sweeteners and Dental Caries AGENCY: Food and Drug Administration, HHS. ACTION: Interim final rule. SUMMARY: The Food and Drug Administration (FDA) is issuing this interim final rule to amend the regulation authorizing a health claim on noncariogenic carbohydrate sweeteners and dental caries, i.e., tooth decay, to include isomaltulose, a noncariogenic sugar. FDA is taking this action in response to a health claim petition submitted on behalf of Cargill, Inc. Based on the totality of publicly available scientific evidence, FDA now has determined that the nutritive sweetener isomaltulose, like other noncariogenic carbohydrate sweeteners listed in the dental caries health claim regulation, is not fermented by oral bacteria to an extent sufficient to lower dental plaque pH to levels that would contribute to the erosion of dental enamel. Therefore, FDA has concluded that isomaltulose does not promote dental caries, and it is amending the regulation authorizing a health claim relating certain noncariogenic sweeteners and the nonpromotion of dental caries to include isomaltulose as a substance eligible for the claim. DATES: This interim final rule is effective September 17, 2007. Submit written or electronic comments by December 3, 2007. ADDRESSES: You may submit comments, identified by Docket No. 2006P–0487, by any of the following methods: Electronic Submissions Submit electronic comments in the following ways: PO 00000 Frm 00031 Fmt 4700 Sfmt 4700 52783 • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. • Agency Web site: http:// www.fda.gov/dockets/ecomments. Follow the instructions for submitting comments on the agency Web site. Written Submissions Submit written submissions in the following ways: • FAX: 301–827–6870. • Mail/Hand delivery/Courier [For paper, disk, or CD–ROM submissions]: Division of Dockets Management (HFA– 305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. To ensure more timely processing of comments, FDA is no longer accepting comments submitted to the agency by email. FDA encourages you to continue to submit electronic comments by using the Federal eRulemaking Portal or the agency Web site, as described previously, in the ADDRESSES portion of this document under Electronic Submissions. Instructions: All submissions received must include the agency name and Docket No. 2006P–0487 for this rulemaking. All comments received may be posted without change to http:// www.fda.gov/ohrms/dockets/ default.htm, including any personal information provided. For additional information on submitting comments, see the ‘‘Comments’’ heading of the SUPPLEMENTARY INFORMATION section of this document. Docket: For access to the docket to read background documents or comments received, go to http:// www.fda.gov/ohrms/dockets/ default.htm and insert the docket number, found in brackets in the heading of this document, into the ‘‘Search’’ box and follow the prompts and/or go to the Division of Dockets Management, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. FOR FURTHER INFORMATION CONTACT: Jillonne Kevala, Center for Food Safety and Applied Nutrition (HFS–830), Food and Drug Administration, 5100 Paint Branch Pkwy., College Park, MD 20740– 3835, 301–436–1450. SUPPLEMENTARY INFORMATION: I. Background The Nutrition Labeling and Education Act of 1990 (the 1990 amendments) (Pub. L. 101–535) amended the Federal Food, Drug, and Cosmetic Act (the act) in a number of important respects. One aspect of the 1990 amendments was that they clarified FDA’s authority to regulate health claims on food labels and in food labeling. E:\FR\FM\17SER1.SGM 17SER1

Agencies

[Federal Register Volume 72, Number 179 (Monday, September 17, 2007)]
[Rules and Regulations]
[Pages 52780-52783]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-4551]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

DEPARTMENT OF THE TREASURY

19 CFR Parts 103, 178, and 181

[USCBP-2006-0090; CBP Dec. 07-76]
RIN 1505-AB58


NAFTA: Merchandise Processing Fee Exemption and Technical 
Corrections

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

ACTION: Final rule.

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

SUMMARY: This document amends the U.S. Customs and Border Protection 
(CBP) regulations to clarify that, in order to claim the exemption from 
the merchandise processing fee (MPF) for merchandise that is considered 
``originating'' and qualifies to be marked as products of Canada or 
Mexico under the provisions of the NAFTA, an importer is subject to the 
same declaration requirement that is established for obtaining NAFTA 
duty preference, even if the merchandise is unconditionally free. In 
addition, this document amends the regulations to clarify that a 
Certificate of Origin is not required for a commercial importation for 
which the total value of originating goods does not exceed $2,500. 
Lastly, this document remedies two incorrect addresses and an incorrect 
Code of Federal Regulations citation, and incorporates non-substantive 
amendments to certain sections in the regulations to reflect the 
nomenclature changes effected by the transfer of CBP to the Department 
of Homeland Security and the reorganization of certain offices in CBP 
pursuant to the ``Security and Accountability for Every Port Act of 
2006'' (or the ``Safe Port Act''), as well as certain other minor 
editorial changes.

DATES: Effective Date: The amendments set forth in this document are 
effective on October 17, 2007.

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

SUPPLEMENTARY INFORMATION: 

Background

    On December 17, 1992, the United States, Canada, and Mexico entered 
into the North American Free-Trade Agreement (NAFTA). The stated 
objectives of the NAFTA include the elimination of barriers to trade 
in, and the facilitation of the cross-border movement of, goods and 
services between the territories of the countries. The provisions of 
the NAFTA were adopted by the United States with the enactment of the 
North American Free Trade Agreement Implementation Act (the ``Act'', 19 
U.S.C. 3301-3473). On September 6, 1995, U.S. Customs and Border 
Protection (CBP) published Treasury Decision (T.D.) 95-68 (North 
American Free Trade Agreement) in the Federal Register (60 FR 46333), 
adopting amendments to the regulations in title 19 of the Code of 
Federal Regulations (CFR) in order to implement customs-related aspects 
of the NAFTA. The final rule went into effect on October 1, 1995.
    Pursuant to sections 403(1) and 411 of the Homeland Security Act of 
2002, Pub. L. 107-296 (the ``HSA''), the United States Customs Service 
and certain of its functions were transferred from the Department of 
the Treasury to the Department of Homeland Security effective March 1, 
2003. In addition, pursuant to section 1502 of the HSA, the ``Customs 
Service'' was renamed as the ``Bureau of Customs and Border 
Protection.'' Subsequently, on April 23, 2007, a Notice was published 
in the Federal Register (72 FR 20131) to inform the public that the 
name of the Bureau of Customs and Border Protection had been changed by 
the Department of Homeland Security to ``U.S. Customs and Border 
Protection (CBP)'', effective March 31, 2007.
    On August 23, 2006, a Notice of Proposed Rulemaking was published 
in the Federal Register (71 FR 49391; the NPRM) by CBP that proposed to 
amend the regulations to clarify the requirements for claiming the 
merchandise processing fee (MPF) under the NAFTA and to effect several 
technical changes, as set forth below.

Merchandise Processing Fee (MPF) Exemption

    As a means of recouping administrative expenses for the processing 
of imported shipments, CBP charges a MPF, as provided for in 19 U.S.C. 
58c. However, under 19 U.S.C. 58c(b)(10)(B), for goods qualifying under 
the rules of origin set out in 19 U.S.C. 3332, the fee may not be 
charged with respect to goods that qualify to be marked as goods of 
Canada or of Mexico

[[Page 52781]]

(pursuant to Annex 311 of the NAFTA). In order to make a claim for 
NAFTA duty preference, an importer must make a declaration. The same 
declaration is also used for purposes of claiming the MPF exemption. 
That is, the importer must place the appropriate special program 
indicator (e.g., ``CA'' for goods of Canada and ``MX'' for goods of 
Mexico) opposite the good on the entry form, or in the appropriate 
location in an electronic filing.
    The NPRM addressed situations in which an importer of an 
originating good does not have a duty preference incentive to make the 
required NAFTA declaration upon entry because the Normal Trade 
Relations rate of duty on the good is free (i.e., the good is 
unconditionally duty free). Consistent with existing law and practice, 
the NPRM proposed to amend 19 CFR 181.21(a) to clarify that in order to 
claim the MPF exemption for unconditionally free goods from a NAFTA 
country, an importer of an originating good must place the appropriate 
special program indicator opposite the good on the entry form even if 
the importer is not actually claiming NAFTA preference for duty 
purposes.

Exemption From Providing Certificate of Origin

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

Other Technical Corrections

    In the NPRM, CBP also proposed to make several other technical 
corrections to the regulations. In CBP Dec. 05-32, an Interim Rule 
published in the Federal Register (70 FR 58009) on October 5, 2005, CBP 
redesignated 19 CFR 12.132 as Sec.  102.25. However, there is a 
reference to Sec.  12.132 in Sec.  181.21(a). Accordingly, CBP proposed 
to make a minor conforming amendment to update this reference. In 
addition, because CBP Dec. 05-32 removed the declaration requirement 
referenced in Sec. Sec.  12.130(c) and 12.132, CBP proposed to remove 
the entries for these sections in the list of OMB control numbers in 
Sec.  178.2. CBP also proposed to amend an incorrect citation to 19 CFR 
181.72(a)(2)(iii) in 19 CFR 181.74(a). The correct citation is to Sec.  
181.72(a)(3)(iii). In addition, CBP proposed to amend the address in 19 
CFR 181.74(e) for providing notification when the Canadian or Mexican 
customs administrations intend to conduct a NAFTA verification visit in 
the United States in order to determine whether a good imported into 
the United States qualifies as an originating good. Since the 
publication of the NPRM on August 23, 2006, some divisions, functions, 
and personnel from the Office of Field Operations were transferred by 
the Commissioner of CBP into the Office of International Trade pursuant 
to the authority under section 402 of the Safe Port Act (Pub. L. 109-
347) (October 13, 2006). The correct address is: ``U.S. Customs and 
Border Protection, Office of International Trade, Commercial Targeting 
and Enforcement, 1300 Pennsylvania Ave. NW., Washington, DC 20229.'' 
CBP also proposed to amend the National Commodity Specialist Division 
(NCSD) address in 19 CFR 181.93(a) for purposes of submitting advance 
ruling requests under the NAFTA. The correct address is: ``National 
Commodity Specialist Division, U.S. Customs and Border Protection, One 
Penn Plaza, 10th Floor, New York, NY 10119.'' This address is also 
corrected in the list of public reading rooms in 19 CFR 103.1. In 
addition, CBP is expanding the declaration and other documentation on a 
claim for preferential treatment in Sec.  181.21 to include electronic 
versions of such documents in CBP's continuing effort to modernize its 
procedures under the authority granted by Customs Modernization 
provisions in the North American Free Trade Agreement Implementation 
Act (commonly referred to as the ``Customs Mod Act''), Pub. L. 103-182, 
107 Stat. 2057, 2170 (December 8, 1993).
    Comments were solicited on the Notice of Proposed Rulemaking. The 
comment period closed on October 23, 2006.

Discussion of Comments

    One comment was received in response to the solicitation and a 
description of the comment received and CBP's analysis are set forth 
below.

Comment

    The commenter, a Canadian manufacturer, stated that changing the 
MPF requirements would only increase the costs associated with 
importing goods into the United States and result in delays during 
importation. The commenter further noted that additional documentary 
requirements would increase administrative costs for CBP as well as for 
importers and brokers, and would ultimately result in less money being 
recouped. In addition, the commenter suggested that fees should be 
based strictly on the country of origin as declared and that routine 
audits and requests for information should be relied upon to monitor 
importers that do not follow the guidelines.

CBP's Response

    CBP is not changing the requirements for claiming the MPF 
exemption. Rather, consistent with existing law and practice, CBP is 
merely clarifying that an importer is subject to the same declaration 
requirement that is established for claiming NAFTA duty preference in 
order to claim the exemption of the MPF for goods that are eligible for 
preferential duty treatment under the NAFTA. As a clarification of 
existing law and practice, CBP believes that the amended regulation 
will serve to facilitate entry by providing certainty under the stated 
circumstances and will not result in either increased costs or delays 
during importation. With respect to the commenter's suggestion that the 
MPF should be based strictly on the country of origin of imported 
merchandise, it is CBP's position that this approach is not consistent 
with existing statutory law and is outside the scope of this 
rulemaking.
    No comments were received regarding the other amendments proposed 
in the NPRM.

Conclusion

    After review of the comment and further consideration, CBP has 
decided to adopt the proposed rule published on August 23, 2006, 
without substantive changes, but with the additional modifications set 
forth below.

Additional Changes to the Regulations

    The final regulations incorporate non-substantive amendments to 
Sec. Sec.  181.21, 181.22, 181.74, and 181.93 of the CFR to reflect the 
nomenclature changes effected by the transfer of CBP to the

[[Page 52782]]

Department of Homeland Security and the subsequent change of name in 
the Federal Register notice of April 23, 2007. As discussed above, the 
final regulation also reflects the reorganization of CBP by the Safe 
Port Act with the creation of the new Office of International Trade by 
updating the address and new office in 19 CFR 181.74(e). In addition, 
the language of Sec.  181.21(a) has been edited to replace ``shall'' 
with ``must.'' In an effort to reflect the modernization of procedures 
under the Customs Mod Act, Sec.  181.21(a) has also been edited by 
replacing the reference to ``written declaration'' with reference to 
``formal declaration'' and a reference to ``electronic submissions'' 
has been added to the second sentence.

Executive Order 12866 and Regulatory Flexibility Act

    This rule is not considered to be a significant regulatory action 
under Executive Order 12866. Accordingly, a regulatory assessment is 
not required.
    It is certified, pursuant to the provisions of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.), that the regulatory amendments 
set forth in this final rule will not have a significant economic 
impact on a substantial number of small entities. The rule merely 
clarifies that, consistent with existing law and CBP practice, an 
importer is subject to the same declaration requirement that is 
established for claiming NAFTA duty preference in order to claim the 
exemption of the MPF for goods that are eligible for preferential duty 
treatment under the NAFTA. CBP is also clarifying, consistent with 
current CBP practice, that a Certificate of Origin is not required for 
a commercial importation consisting of originating goods, the total 
value of which does not exceed $2,500, if the required statement is 
attached. Lastly, this document remedies two incorrect addresses and an 
incorrect Code of Federal Regulations citation, and incorporates non-
substantive amendments to certain sections in the regulations to 
reflect the nomenclature changes effected by the transfer of CBP to the 
Department of Homeland Security and the reorganization of certain 
offices in CBP by the Safe Port Act as well as certain other minor 
editorial changes.

Paperwork Reduction Act

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

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 103

    Administrative practice and procedure, Freedom of information.

19 CFR Part 178

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

19 CFR Part 181

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

Amendments to the CBP Regulations

0
For the reasons set forth above, parts 103, 178, and 181 of title 19 of 
the Code of Federal Regulations (19 CFR parts 103, 178, and 181) are 
amended as set forth below.

PART 103--AVAILABILITY OF INFORMATION

0
1. The authority citation for part 103 continues to read in part as 
follows:

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


Sec.  103.1  [Amended]

0
2. Amend Sec.  103.1 by removing the address citation ``New York, 6 
World Trade Center, New York, New York 10048'' and adding in its place 
the address citation ``New York, One Penn Plaza, 10th Floor, New York, 
NY 10119.''

PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

0
3. The authority citation for part 178 continues to read as follows:

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


Sec.  178.2  [Amended]

0
4. Amend Sec.  178.2 by removing the entries for Sec. Sec.  12.130(c) 
and 12.132.

PART 181--NORTH AMERICAN FREE TRADE AGREEMENT

0
5. The authority citation for part 181 continues to read as follows:

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

0
6. In Sec.  181.21:
0
a. Paragraph (a) is revised.
0
b. Paragraph (b) is amended by removing the word ``Customs'' and, in 
its place, adding the term ``CBP''.


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

    (a) Declaration. In connection with a claim for preferential tariff 
treatment, or for the exemption from the merchandise processing fee, 
for a good under the NAFTA, the U.S. importer must make a formal 
declaration that the good qualifies for such treatment. The declaration 
may be made by including on the entry summary, or equivalent 
documentation, including electronic submissions, the symbol ``CA'' for 
a good of Canada, or the symbol ``MX'' for a good of Mexico, as a 
prefix to the subheading of the HTSUS under which each qualifying good 
is classified. Except as otherwise provided in 19 CFR 181.22 and except 
in the case of a good to which Appendix 6.B to Annex 300-B of the NAFTA 
applies (see also 19 CFR 102.25), the declaration must be based on a 
complete and properly executed original Certificate of Origin, or copy 
thereof, which is in the possession of the importer and which covers 
the good being imported.
* * * * *


Sec.  181.22  [Amended]

0
7. In Sec.  181.22:
0
a. Paragraph (b) introductory text is amended by removing the word 
``Customs'' the first instance it appears and, in its place, adding the 
term ``CBP''.
0
b. In paragraph (b)(1), the three references to ``Customs Form 434'' 
are removed and references to ``CBP Form 434'' are added in their 
place; the reference to the ``Office of Field Operations, U.S. Customs 
Service'' is removed and the reference ``Office of International Trade, 
U.S. Customs and Border Protection'' is added in its place.
0
c. Paragraph (b)(4) is amended by removing the word ``Customs'' and, in 
its place, adding the term ``CBP''.
0
d. Paragraph (d)(1)(iii) is amended by removing the phrase ``of a good 
whose value'', and the phrase ``for which the total value of 
originating goods'' is added in its place.

[[Page 52783]]

Sec.  181.74  [Amended]

0
8. In Sec.  181.74:
0
a. Paragraph (a) is amended by removing the citation to 
``181.72(a)(2)(iii)'' and adding in its place the citation to 
``181.72(a)(3)(iii)'', and by removing the word ``Customs'' and, in its 
place, adding the term ``CBP''.
0
b. Paragraphs (b) and (c) are amended by removing the term ``Customs'' 
each place it appears and, in its place, adding the term ``CBP''.
0
c. In paragraph (d) introductory text, the reference to ``Customs 
officer'' is removed and the term ``CBP officer'' is added in its 
place; and the two references to ``Customs'' which follow are removed 
and in each instance the term ``CBP'' is added in its place.
0
d. Paragraph (e)(1) is amended, in the second sentence following the 
heading, by removing the word ``Customs'' and, in its place, adding the 
term ``CBP'', and by removing the address citation ``Project North Star 
Coordination Center, P.O. Box 400, Buffalo, New York 14225-0400'', and, 
in its place, adding the address citation ``U.S. Customs and Border 
Protection, Office of International Trade, Commercial Targeting and 
Enforcement, 1300 Pennsylvania Ave., NW., Washington, DC 20229''.
0
e. Paragraph (e)(2) is amended by removing the phrase ``Customs may'', 
and adding in its place the phrase ``CBP may''.


Sec.  181.93  [Amended]

0
9. In Sec.  181.93:
0
a. In paragraph (a), the two references to ``Commissioner of Customs'' 
are removed and in each instance references to ``Commissioner of U.S. 
Customs and Border Protection'' are added in its place, and the address 
citation ``National Commodity Specialist Division, United States 
Customs Service, 6 World Trade Center, New York, NY 10048'' is removed 
and the address citation ``National Commodity Specialist Division, U.S. 
Customs and Border Protection, One Penn Plaza, 10th Floor, New York, NY 
10119'' is added in its place.
0
b. Paragraphs (b)(1)(i), (b)(1)(ii), (b)(3), (b)(4), (b)(5)(i)(A), and 
(d) are amended by removing the word ``Customs'' each place it appears 
and, in its place, adding the term ``CBP''.

Jayson P. Ahern,
Acting Commissioner, U.S. Customs and Border Protection.
    Approved: September 10, 2007.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 07-4551 Filed 9-14-07; 8:45 am]
BILLING CODE 9111-14-P