Rules of Origin for Imported Merchandise, 54691-54697 [2011-22588]

Download as PDF Federal Register / Vol. 76, No. 171 / Friday, September 2, 2011 / Rules and Regulations Communications Privacy Act (ECPA), and the U.S. SAFE WEB Act (‘‘SAFE WEB’’). This procedure is intended to make the process for seeking such orders more administratively efficient. DATES: This final rule is effective September 2, 2011. FOR FURTHER INFORMATION CONTACT: Alex Tang, atang@ftc.gov, 202–326–2447; or W. Ashley Gum, wgum@ftc.gov, 202– 326–3006; Federal Trade Commission, Office of the General Counsel, 600 Pennsylvania Avenue NW., Washington, DC 20580. SUPPLEMENTARY INFORMATION: The RFPA and the ECPA require the FTC, in certain cases, to notify customers when seeking their records from financial institutions or service providers subject to those statutes in the Commission’s law enforcement investigations and proceedings. See 12 U.S.C. 3405 (RFPA); 18 U.S.C. 2703(b)(1)(B) (ECPA). These statutes, and SAFE WEB, also authorize the filing of an application seeking an order to delay such notification and to prohibit the recipient of the agency’s compulsory process from disclosing that the FTC has requested or received the records, where such notice or disclosure would jeopardize the FTC’s investigation. See 12 U.S.C. 3409 (RFPA); 18 U.S.C. 2705 (ECPA); see also 15 U.S.C. 57b–2a(b) (SAFE WEB). In cases where these statutes do not require customer notification, SAFE WEB separately authorizes the FTC to seek an order prohibiting the recipient of FTC compulsory process from disclosing the existence of such process to any person. See 15 U.S.C. 57b–2a(c). Under this final rule, delegating the Commission’s authority pursuant to Reorganization Plan No. 4 of 1961, 26 FR 6191, either an individual Commissioner or the General Counsel may authorize the staff to file actions seeking delay of notification and prohibition of disclosure under the statutes cited above. This delegation will facilitate the Commission’s exercise of this authority and, as solely a matter of internal agency administration, is not intended to confer any enforceable right, privilege, or benefit on behalf of any person. erowe on DSK5CLS3C1PROD with RULES Procedural Requirements A. Administrative Procedure Act The FTC has determined that publication of this rule without prior notice and the opportunity for public comment is warranted because this is a rule of agency procedure and practice and therefore is exempt from notice and comment rulemaking requirements of the Administrative Procedure Act, 5 U.S.C. 553(b)(A). Because it is a non- VerDate Mar<15>2010 13:31 Sep 01, 2011 Jkt 223001 54691 substantive rule, the Commission shall make the rule effective immediately upon publication. See 5 U.S.C. 553(d)(2). DEPARTMENT OF HOMELAND SECURITY B. Regulatory Flexibility Act DEPARTMENT OF THE TREASURY Because the Commission has determined that it may issue this rule without public comment, the Commission is also not required to publish any initial or final regulatory flexibility analysis under the Regulatory Flexibility Act as part of such action. See 5 U.S.C. 601(2), 604(a). C. Paperwork Reduction Act of 1995 The final rule is not subject to the Paperwork Reduction Act (44 U.S.C. 3501 et seq.) because it does not contain any new information collection requirements. List of Subjects in 16 CFR Part 2 Administrative practice and procedure. For the reasons set forth above, the Federal Trade Commission is amending Subpart A of part 2 of title 16, Code of Federal Regulations, as follows: PART 2—NONADJUDICATIVE PROCEDURES 1. The authority citation for part 2 continues to read as follows: ■ Authority: 15 U.S.C. 46, unless otherwise noted. Subpart A—Inquiries; Investigations; Compulsory Processes ■ 2. Add § 2.17 to read as follows: § 2.17 Statutory delays of notifications and prohibitions of disclosure. Upon authorization by the Commissioner who issues compulsory process pursuant to § 2.7(a) or, alternatively, upon authorization by the General Counsel, Commission attorneys may seek to delay notifications or prohibit disclosures pursuant to the Right to Financial Privacy Act (12 U.S.C. 3409), the Electronic Communications Privacy Act (18 U.S.C. 2705), or section 7 of the U.S. SAFE WEB Act (15 U.S.C. 57b–2a). By direction of the Commission. Donald S. Clark, Secretary. [FR Doc. 2011–22593 Filed 9–1–11; 8:45 am] BILLING CODE 6750–01–P PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 U.S. Customs and Border Protection 19 CFR Part 102 [USCBP–2007–0100; CBP Dec. 11–18] RIN 1515–AD53 (Formerly RIN 1505–AB49) Rules of Origin for Imported Merchandise Customs and Border Protection, Department of Homeland Security; Department of the Treasury. ACTION: Final rule. AGENCIES: This document adopts as a final rule that portion of a notice of proposed rulemaking, published in the Federal Register on July 25, 2008, that proposed amendments to the country of origin rules codified in part 102 of the Customs and Border Protection (CBP) regulations applicable to pipe fittings and flanges, greeting cards, glass optical fiber, rice preparations, and certain textile and apparel products. However, this document is not adopting as a final rule the portion of the notice that proposed amendments to the CBP regulations to establish uniform rules governing CBP determinations of the country of origin of imported merchandise. CBP is not adopting the uniform rules of origin proposal so as to permit further consideration of relevant issues involved in the proposal. DATES: This rule is effective October 3, 2011. FOR FURTHER INFORMATION CONTACT: Monika Brenner, Chief, Valuation and Special Programs Branch, Regulations and Rulings, Office of International Trade, (202) 325–0038. SUPPLEMENTARY INFORMATION: SUMMARY: Background Discussion of Proposals On July 25, 2008, Customs and Border Protection (CBP) published in the Federal Register (73 FR 43385) a notice of proposed rulemaking (NPRM) that proposed amendments to the CBP regulations relating to the application of the country of origin rules codified in part 102 of the CBP regulations (19 CFR part 102). Uniform Rules of Origin The notice of proposed rulemaking, in part, proposed amendments to the CBP regulations to extend application of the rules of origin codified in part 102 to all country of origin determinations made E:\FR\FM\02SER1.SGM 02SER1 54692 Federal Register / Vol. 76, No. 171 / Friday, September 2, 2011 / Rules and Regulations under the customs and related laws and the navigation laws of the United States, unless otherwise specified. CBP stated in the NPRM that it believed that the proposed extension of the part 102 country of origin rules to all trade would result in determinations that are more objective, transparent, and predictable, and would facilitate the exercise of reasonable care by U.S. importers with respect to their obligations regarding the identification of the proper country of origin of imported merchandise. Please refer to the July 25, 2008 (73 FR 43385), document for a more detailed discussion of this proposal. As stated later in this document, CBP is not proceeding with this proposal. Changes to Specific Rules of Origin The July 25, 2008, document also proposed amendments to the country of origin rules codified in part 102 in regard to five specific product areas: Pipe fittings and flanges, greeting cards, glass optical fiber, rice preparations, and certain textile and apparel products. A brief discussion of the proposed changes for these five product areas is set forth below. For a more detailed discussion of these proposed changes, please see the July 25, 2008, NPRM. erowe on DSK5CLS3C1PROD with RULES 1. Pipe Fittings and Flanges CBP proposed to amend the tariff shift rule in § 102.20(n), CBP regulations (19 CFR 102.20), for goods classified in headings 7301 through 7307, Harmonized Tariff Schedule of the United States (HTSUS), to provide for a change within heading 7307 from fitting forgings or flange forgings to fittings or flanges made ready for commercial use by certain processing, including beveling, bore threading, center or step boring, face machining, heat treating, recoining or resizing, taper boring, machining ends or surfaces other than a gasket face, drilling bolt holes, and burring or shot blasting. CBP stated in the NPRM that the proposed change is consistent with the decision in Midwood Industries, Inc. v. United States, 64 Cust. Ct. 499, C.D. 4026, 313 F. Supp. 951 (1970), appeal dismissed, 57 CCP 141 (1970), and that the change was being proposed following further consideration of the judicial guidance in Boltex Manufacturing Co. v. United States, 24 CIT 972, 140 F. Supp. 2d 1339 (2000), and comments received in response to a proposed modification/ revocation of rulings published in the Customs Bulletin and Decisions on November 21, 2001 (35 Cust. B. & Dec. 35 (2001)). VerDate Mar<15>2010 13:31 Sep 01, 2011 Jkt 223001 2. Greeting Cards CBP proposed to amend the tariff shift rule in § 102.20(j) for goods classified in headings 4901 through 4911, HTSUS, which includes printed greeting cards, by creating a specific rule for heading 4909, providing for a change to that heading from any other heading except from heading 4911 when the change is a result of adding text. CBP explained in the July 25, 2008, NPRM that the effect of this proposed change is to enable the country of origin of all printed greeting cards to be determined according to the country of initial printing of literary text, photographs, graphic designs, or illustrations. CBP further stated that this proposed change is consistent with CBP practice in applying the substantial transformation standard to printed materials, as reflected in CBP’s administrative rulings. 3. Glass Optical Fiber CBP proposed to amend the tariff shift rule in § 102.20(q) for subheading 9001.10, HTSUS, which encompasses optical fibers and optical fiber bundles and cables, by providing for a change to subheading 9001.10 from any other subheading, except from subheading 8544.70, HTSUS, or glass preforms of heading 7002, HTSUS. CBP stated in the NPRM that this proposed change would conform the tariff shift rule to the determination in CBP Headquarters Ruling Letter (HRL) 560660 dated April 9, 1999, that no substantial transformation (and thus no change in origin) results for purposes of the country of marking statute (19 U.S.C. 1304) from the drawing of a glass preform into optical fiber. 4. Rice Preparations CBP proposed to amend the tariff shift rule in § 102.20(d) for subheading 1904.90, HTSUS, which encompasses certain rice preparations, by providing for a change to subheading 1904.90 from any other heading, except from heading 1006, HTSUS, or wild rice of subheading 1008.90, HTSUS. CBP explained in the NPRM that this proposed change would eliminate the inconsistency between the tariff shift rule and HRL 967925 dated February 28, 2006, in which CBP held that no substantial transformation results for purposes of the country of origin marking statute when rice is processed with 2% water, 0.4% sunflower oil, 0.2% salt, and 0.4% soy lecithin, placed into cups and sealed, and thermally processed. 5. Certain Textile and Apparel Products In regard to the rules of origin for textile and apparel products set forth in PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 § 102.21, CBP regulations (19 CFR 102.21), CBP proposed two amendments to § 102.21 to properly align the rules with the language of the underlying statute, 19 U.S.C. 3592. First, CBP proposed to amend § 102.21(c)(3)(ii) by adding the words ‘‘fabrics of chapter 59 and’’ so that the amended text would read ‘‘Except for fabrics of chapter 59 and goods of heading * * *.’’ As explained in the NPRM, this change would have the effect of ensuring that fabrics of chapter 59, HTSUS, derive their country of origin from where the fabric is formed, consistent with 19 U.S.C. 3592(b)(1)(C). CBP also proposed to amend the tariff shift rule in § 102.21(e) for goods classified in headings 6210 through 6212, HTSUS, by creating a separate rule for heading 6212, which encompasses ‘‘brassieres, girdles, corsets, braces, suspenders, garters and similar articles and parts thereof, whether or not knitted or crocheted.’’ CBP noted in the NPRM that the existing tariff shift rule for headings 6210 through 6212 does not provide for the possibility of knit-to-shape goods, even though the body-supporting garments of heading 6212 may be knit to shape. CBP stated that this proposed change would ensure that a knit-toshape good of heading 6212 is found to derive its origin from where the good is knit to shape in accordance with 19 U.S.C. 3592(b)(2)(A)(ii). Comment Period The July 25, 2008, NPRM provided for a sixty-day period (until September 23, 2008) for the submission of public comments on the proposed regulatory changes. The comment period was extended an additional 30 days by a notice published in the Federal Register on September 8, 2008 (73 FR 51962). A subsequent notice published in the Federal Register on October 30, 2008 (73 FR 64575), re-opened the comment period until December 1, 2008, to afford interested parties an opportunity to provide meaningful comment in light of a final rule document also published on October 30, 2008 (73 FR 64518), which set forth technical corrections to §§ 102.20 and 102.21 to reflect modifications to the HTSUS that became effective in 2007. Discussion of Comments A total of 70 commenters responded to the solicitation of public comments, 14 of which provided multiple submissions. Forty-two of the commenters expressed opposition to the proposed uniform application of the country of origin rules set forth in part 102, while 16 commenters raised E:\FR\FM\02SER1.SGM 02SER1 Federal Register / Vol. 76, No. 171 / Friday, September 2, 2011 / Rules and Regulations specific concerns or questions regarding the uniform rules proposal without expressly supporting or opposing the proposal. Nine of the commenters generally expressed support for the proposal, although certain of these commenters recommended specific modifications to those rules. In regard to the proposed amendments to the part 102 rules of origin relating to the five specific product areas, six comments were received in regard to two of the product areas. Four commenters discussed the proposed change in the rules pertaining to pipe fittings and flanges, while two commenters addressed the proposed change in the rules regarding glass optical fiber. Set forth below is a discussion of the comments or portions of comments received that addressed the NPRM’s comment period, concerns of a general nature regarding the technical corrections to the part 102 tariff shift rules to reflect the 2007 modifications to the HTSUS, and the proposed amendments to the part 102 rules of origin relating to pipe fittings and flanges and glass optical fiber. It is noted that a number of comments recommended specific changes to the rules of origin in part 102 other than those that had been proposed. Although CBP considers these comments to be outside the scope of the July 25, 2008, NPRM, CBP nevertheless is reviewing these comments and if, as a result of that review, we determine that additional amendments to the part 102 tariff shift rules are warranted, these changes will be incorporated in a future notice of proposed rulemaking. Uniform Rules of Origin erowe on DSK5CLS3C1PROD with RULES Comment Forty-two commenters opposed implementation of the proposal to establish uniform rules governing CBP determinations of the country of origin of imported merchandise. CBP’s Response Based on the public comments received in regard to the uniform rules of origin proposal, CBP has determined not to proceed with this proposal. As a result, CBP believes that it is unnecessary to discuss the comments or portions of comments that addressed the proposed amendments relating to the uniform rules of origin proposal. Extension of Comment Period Comment Two commenters requested a 90-day extension of the public comment period beyond the original due date of VerDate Mar<15>2010 13:31 Sep 01, 2011 Jkt 223001 September 23, 2008, and two commenters requested an additional 60 days within which to submit comments beyond the extended due date of December 1, 2008. CBP’s Response As noted previously, the notice of proposed rulemaking was published on July 25, 2008, with comments due on or before September 23, 2008. The comment period was extended by a notice published in the Federal Register on September 8, 2008 (73 FR 51962), to October 23, 2008. Subsequently, a notice published in the Federal Register on October 30, 2008 (73 FR 64575), reopened the comment period and established a new due date of December 1, 2008. CBP believes that the over fourmonth comment period afforded to interested parties (with the two extensions) provided all parties with sufficient time to submit comments on the proposed rulemaking. 2007 HTSUS Modifications Comment Fifteen commenters maintained that the part 102 tariff shift rules are outdated as they fail to reflect the modifications to the HTSUS that became effective on February 3, 2007 (see Presidential Proclamation 8097, published in the Federal Register on January 4, 2007 (72 FR 453)). These commenters indicated that maintaining the part 102 tariff shift rules to assure consistency with the 2007 changes as well as future changes to the HTSUS is necessary to the proper evaluation and possible future implementation of the uniform rules of origin proposal. One of these commenters noted that the North American Free Trade Agreement (NAFTA) country of origin rules in part 102 are static in that they are the result of tripartite negotiations with other sovereigns. As a result, the commenter stated that CBP is without authority to make changes to any of the rules without obtaining agreement from Canada and Mexico. The commenter suggested that the uniform tariff shift rules should be placed elsewhere in the CBP regulations so as to more easily facilitate future changes to the rules. CBP’s Response As previously noted, a final rule document published in the Federal Register on October 30, 2008 (73 FR 64518), set forth technical corrections to the part 102 tariff-shift rules to reflect modifications to the HTSUS that became effective on February 3, 2007. The comment period with respect to the July 25, 2008, NPRM was re-opened on PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 54693 October 30, 2008, specifically to enable interested parties to evaluate the proposed rule in light of the technical corrections made to §§ 102.20 and 102.21 by the above-referenced final rule document. CBP will continue to update the part 102 rules as necessary to assure consistency with future modifications to the HTSUS. CBP disagrees with the contention by one commenter that the rules set forth in §§ 102.1 through 102.20 (referred to as the ‘‘NAFTA Marking Rules’’) are ‘‘static’’ as no changes may be made without obtaining agreement with Canada and Mexico. The NAFTA Marking Rules set forth in part 102 are used by the United States under Annex 311 of the NAFTA to determine the country of origin of goods imported into the United States from Canada and Mexico. The United States has full authority to amend those rules whenever it deems it necessary to do so. Of course, the United States engages in consultations with the governments of Canada and Mexico on a regular basis to discuss a number of issues arising under the NAFTA, which may include any amendments being made by each member Party to its NAFTA Marking Rules. Comment With respect to the October 30, 2008, technical corrections final rule document, two commenters contended that these updates appear to have been prepared without proper vetting by the trade as they contain numerous errors. A third commenter stated that the technical corrections ‘‘do not make logical sense across the board’’, while two additional commenters criticized the corrections as interjecting a ‘‘description-oriented origin determination process, rather than a tariff shift basis.’’ Two of these commenters maintained that the inclusion of ‘‘description-shifts’’ or the need to subjectively characterize devices within a subheading negates any supposed objective advantage regarding tariff-shift rules and is contrary to the spirit of the original NAFTA agreement regarding origin which was predicated on a clearlydefined shift from one tariff number to another. In addition, it was asserted that using descriptions rather than tariff numbers to determine if a rule has been met hinders or eliminates importers from applying automation to the process, resulting in increased costs to determine if foreign components meet the ‘‘description-shift’’. E:\FR\FM\02SER1.SGM 02SER1 54694 Federal Register / Vol. 76, No. 171 / Friday, September 2, 2011 / Rules and Regulations CBP’s Response CBP acknowledges that the tariff shift rules in § 102.20, as amended by the October 30, 2008, final rule document, contain more descriptions than the prior version but disagrees with the characterization that we are interjecting a description-oriented origin determination process into the tariffshift system. Our use of certain descriptions is necessitated by the substantial changes in 2007 to portions of the HTSUS, which involved moving a number of goods from various headings or subheadings and concentrating them into one heading or subheading, or vice versa, as well as deleting or adding headings and subheadings. In order to reflect the existing tariff shift rules for the affected goods in their new locations, it was necessary to name or describe goods so that there would be no doubt as to which rule applies to which good. With regard to the ‘‘logical sense’’ of the corrections, CBP notes that the rules were merely updated to reflect the HTSUS 2007 changes. The update required changes in product coverage and/or numbering of certain headings and subheadings and was not intended to have any other substantive effect. erowe on DSK5CLS3C1PROD with RULES Comment A commenter contended that the ‘‘technical corrections’’ to §§ 102.20 and 102.21 failed to comply with the requirements of the Administrative Procedure Act (APA) (19 U.S.C. 553) which renders the technical corrections invalid or subject to invalidation by the courts. According to the commenter, CBP should have adhered to the standard notice and comment procedures and delayed effective date requirement of the APA. The commenter stated that none of the exceptions to the APA notice and comment procedures apply in this case as the amendments to the part 102 rules are far more than ‘‘technical’’ amendments to rules previously existing; they are, in many cases, entirely new rules of origin which speak to entirely new tariff subheadings that did not previously exist. The commenter maintained that these are substantive rules which impose obligations on broad classes of persons in that they dictate the country of origin which must be applied to certain classes of imported merchandise. CBP’s Response CBP disagrees with the assertion by one commenter that the October 30, 2008, ‘‘technical corrections’’ final rule document that amended the part 102 VerDate Mar<15>2010 13:31 Sep 01, 2011 Jkt 223001 tariff shift rules failed to comply with the requirements of the APA because the amendments were far more than ‘‘technical’’ but were substantive in nature. As explained in the final rule document, the 2007 modifications to the HTSUS resulted in certain tariff provisions being added or removed and certain goods being transferred to different or newly-created tariff provisions. Therefore, to properly conform the tariff shift rules in §§ 102.20 and 102.21 to the current version of the HTSUS, it was necessary, depending on each particular HTSUS change, to create an additional rule, remove an existing rule or portion of a rule, or otherwise modify a rule. However, it is important to recognize that these changes to §§ 102.20 and 102.21 were made to ensure that the application of the rules would produce precisely the same country of origin result for every good as was the case before the 2007 HTSUS modifications were effected. For this reason, CBP believes that these amendments were not substantive in nature, but indeed qualified as ‘‘technical corrections.’’ The October 30, 2008, ‘‘technical corrections’’ are contrasted with the amendments made by this final rule document to the tariff shift rules in § 102.20 relating to pipe fittings and flanges, greeting cards, glass optical fiber, and rice preparations. The changes promulgated in this final rule are substantive in nature as they are designed to produce different country of origin results under the specific circumstances set forth in this document involving those product areas. Specifically in regard to the APA, CBP stated in the final rule document that, pursuant to 5 U.S.C. 553(b)(B) and (d)(3), it had determined that it would be impracticable and contrary to the public interest to delay publication of the rule in final form pending an opportunity for public comment and that there was good cause for the rule to become effective immediately upon publication. The document included as the reasons for this determination that the technical corrections merely conformed the tariff shift rules to the current HTSUS and that the amendments facilitated trade by ensuring that country of origin determinations made using the regulations were consistent with the HTSUS. In this regard, CBP wishes to emphasize that, prior to the technical corrections made by the October 30, 2008, final rule document, §§ 102.20 and 102.21 failed to provide accurate tariff shift rules for many of the goods affected by the 2007 modifications to PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 the HTSUS. It was necessary to make these technical corrections at the earliest possible time so that both the public and CBP could properly rely on these rules to accurately determine the country of origin of all goods imported from Canada and Mexico, as required by Annex 311 of the NAFTA, as well as all imported textile and apparel goods. Thus, CBP believes that it appropriately invoked the exceptions described above to the notice, comment, and delayed effective date requirements of the APA. It is noted that CBP published in the Federal Register on July 24, 2003 (68 FR 43630), a similar final rule document that set forth technical corrections to § 102.20 to reflect modifications to the HTSUS that were effective in 2002. CBP determined in that document that the notice and public procedure requirements were inapplicable for the same reasons cited in the October 30, 2008, final rulemaking. Pipe Fittings and Flanges Comment Three commenters expressed support for the proposed tariff shift change for pipe fittings and flanges of heading 7307, HTSUS, set forth in the July 25, 2008, NPRM that would allow a change within heading 7307 from fitting forgings or flange forgings to fittings or flanges made ready for commercial use by certain processing. The commenters stated that the proposed change, which is consistent with the result in Midwood Industries, Inc. v. United States, 64 Cust. Ct. 499 (1970), would provide stability to the domestic fittings and flanges industry and consistency with longstanding country of origin marking practices, and in addition would encourage further investment in this domestic industry. CBP’s Response CBP agrees with the commenters that the tariff shift change for pipe fittings and flanges of heading 7307, as proposed in the July 25, 2008, NPRM, is consistent with the court’s holding in Midwood. We believe that performing the operations set forth in the revised rule results in a fundamental change in the nature of the product. Thus, the country of origin of pipe fittings and flanges of heading 7307 is the country where the referenced operations are performed. Comment One commenter disagreed with the proposed change in the tariff shift rule for pipe fittings and flanges, arguing that the change would permit U.S. finishers of imported fittings and flanges to E:\FR\FM\02SER1.SGM 02SER1 Federal Register / Vol. 76, No. 171 / Friday, September 2, 2011 / Rules and Regulations erowe on DSK5CLS3C1PROD with RULES escape their responsibility to mark the finished product with its foreign origin, thus depriving end users of the ability to make an informed choice between U.S.-manufactured fittings and flanges and foreign articles that are merely subjected to finishing operations in the U.S. According to this commenter, the proposed change would benefit U.S. finishers that purchase inexpensive foreign fittings and flanges in an unfinished form, perform minor, largely superficial processing on the articles, and sell them to U.S. consumers at prices that undercut those for fittings and flanges produced entirely in the United States. The commenter recognized that the proposed change would actually only effect a change for imports of fitting and flange forgings from Mexico and Canada since imports of such forgings from all other countries are currently subject to CBP rulings reflecting the decision in Midwood. This commenter contended that the proposed change is contrary to the country of marking statute (19 U.S.C. 1304) as paragraph (c) of the statute prohibits the establishment of marking exemptions for certain imported pipes and fittings. In addition, the commenter stated that, if CBP truly wishes to codify the substantial transformation standard from Midwood, it must revise its proposed rule for heading 7307 to encompass the more complex processing steps that formed the basis for that decision. This would involve requiring that the forging be subjected to at least one of the following processes: (1) Heat-treating; or (2) recoining or resizing, and at least one of the following processes: (1) Beveling, machining the gasket face, or machining ends or surfaces other than a gasket face; (2) threading of the bore; or (3) center boring, step boring, taper boring, or drilling bolt holes. In the commenter’s opinion, either (or both) (1) heat-treating or (2) recoining or resizing are necessary because these processes can affect the physical character of the imported forging. CBP’s Response CBP disagrees with the commenter. As stated previously, the tariff shift rule is being revised to follow the holding of the court in Midwood. In Midwood, the court considered various processes that would change the country of origin of the imported fittings and flanges involved in that case. In one instance, for example, the court considered imported flange forgings, where excess material was removed from the rim, the forging was faced, bored, threaded or beveled, and drilled and spotfaced. In another instance, the forging was heated VerDate Mar<15>2010 13:31 Sep 01, 2011 Jkt 223001 54695 and one end was reduced in size and diameter by compression. The commenter contends that either (1) heat treating or (2) recoining or resizing is necessary, along with one other machining process. Regarding the second example above, a specific machining process was not required by the court to effect an origin change. Therefore, while we acknowledge that the other processing steps mentioned by the commenter may be sufficiently complex and significant to result in a change in the country of origin of forgings, we do not believe that they are the only processing steps that would result in a change in the country of origin of these products. CBP believes that the processing operations cited in the proposed rule are also significant enough to result in a change in the country of origin of the forgings and fairly represent the Midwood case. Further, the revised tariff shift rule will not change the statutory requirement set forth in 19 U.S.C. 1304(c) that imported pipes and pipe fittings of steel, stainless steel, chromemoly steel, or cast and malleable iron must be marked with the English name of the country of origin by means of die stamping, cast-in mold lettering, etching, engraving, or continuous paint stenciling. The revised rule also will not affect the statutory prohibition in section 1304(c) against applying any of the marking exceptions set forth in 1304(a)(3) to the above-described pipes and pipe fittings. The described pipes and pipe fittings will continue to be subject to the special country of origin marking requirements of 19 U.S.C. 1304(c). precedent for the classification of fiber preforms in heading 7002. In the view of this commenter, the suggested change to ‘‘glass preforms of chapter 70’’ is unusually broad and inconsistent with CBP’s goal of increasing certainty and objectivity for all parties. The commenter stated that tariff shift rules should be crafted using the most precise tariff classifications available as reflected in CBP’s own existing classification determinations. Glass Optical Fiber The portion of the notice of proposed rulemaking that proposed amendments to the country of origin rules codified in part 102 that apply to pipe fittings and flanges, greeting cards, glass optical fiber, rice preparations, and certain textile and apparel products is adopted as a final rule without change. Comment A commenter concurred with the proposed change to the part 102 tariff shift rule for glass optical fiber, as set forth in the July 25, 2008, NPRM. However, the commenter suggested that the reference in the proposed rule to ‘‘glass preforms of heading 7002’’ should be changed to ‘‘glass preforms of chapter 70’’ to take into account any possible change in the classification of glass preforms in the future. The commenter noted in this regard that CBP’s decision to classify the preforms in heading 7002 may be contested in court. Thus, the commenter explained that this suggested modification is made solely in the interest of administrative economy and prudence. Another commenter urged that CBP deny the requested modification to the rule for optical fiber described above for the reason that there is well-established PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 CBP’s Response While it is always conceivable that the tariff classification of an article may change for a variety of reasons, including decisions of the courts or CBP, the second commenter above is correct that the text of each tariff shift rule is crafted using the most precise classification available. If it becomes necessary to make a change to the rules as a result of a classification change, this would be done by means of a new rulemaking document. Conclusions After analysis of the comments and further consideration, CBP has determined to proceed as follows: Uniform Rules of Origin Proposal The portion of the notice of proposed rulemaking published on July 25, 2008, that proposed amendments to establish uniform rules governing CBP determinations of the country of origin of imported merchandise is withdrawn. Proposed Specific Changes to Rules of Origin Additional Specific Changes to Rules of Origin Recommended During Comment Period Although CBP considers comments received in response to the NPRM that suggested additional specific changes to the rules of origin codified in 19 CFR part 102 to be outside the scope of the NPRM, CBP is reviewing these comments. If, as a result of that review, it is determined that additional amendments to the part 102 rules are warranted, these changes will be incorporated in a future notice of proposed rulemaking. E:\FR\FM\02SER1.SGM 02SER1 54696 Federal Register / Vol. 76, No. 171 / Friday, September 2, 2011 / Rules and Regulations Executive Order 12866 The amendments set forth in this document do not meet the criteria for a ‘‘significant regulatory action’’ as specified in Executive Order 12866 because they will not result in the expenditure of over $100 million in any one year. The Office of Management and Budget (OMB) has not reviewed this rule under that Order. Regulatory Flexibility Act Pursuant to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), it is certified that the amendments in this document will not have a significant economic impact on a substantial number of small entities because the final rule more closely aligns the country of origin rules codified in 19 CFR part 102 relating to five specific product areas with CBP administrative rulings, judicial decisions, or the underlying applicable statute. Accordingly, the amendments set forth in this document are not subject to the regulatory analysis requirements or other requirements of 5 U.S.C. 603 and 604. 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 in 19 CFR Part 102 CBP duties and inspections, Imports, Reporting and recordkeeping requirements, Rules of origin, Trade agreements. Amendments to the CBP Regulations Accordingly, for the reasons stated above, part 102 of the CBP regulations (19 CFR part 102) is amended as set forth below. PART 102—RULES OF ORIGIN 2. In the table in § 102.20: a. Paragraph (d), titled ‘‘Section IV: Chapters 16 through 24,’’ is amended by revising the entry for 1904.90; ■ b. Paragraph (j), titled ‘‘Section X: Chapters 47 through 49,’’ is amended by removing the entry for 4901–4911, and by adding three new entries for 4901– 4908, 4909, and 4910–4911; ■ c. Paragraph (n), titled ‘‘Section XV: Chapters 72 through 83,’’ is amended by revising the entry for 7301–7307; and ■ d. Paragraph (q), titled ‘‘Section XVIII: Chapters 90 through 92,’’ is amended by revising the entry for 9001.10. The additions and revisions read as follows: ■ ■ § 102.20 Specific rules by tariff classification. 1. The authority citation for part 102 continues to read as follows: ■ HTSUS Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States), 1624, 3314, 3592. * * * * * Tariff shift and/or other requirements * * Section IV: Chapters 16 through 24. * 1904.90 ...................... * * * * * * A change to subheading 1904.90 from any other heading, except from heading 1006 or wild rice of subheading 1008.90. * (j) ................................ * * Section X: Chapters 47 through 49. * 4901–4908 ................. 4909 ........................... 4910–4911 ................. * * * * * * A change to heading 4901 through 4908 from any other heading, including another heading within that group. A change to heading 4909 from any other heading, except from heading 4911 when the change is a result of adding text. A change to heading 4910 through 4911 from any other heading, including another heading within that group. * (n) .............................. * * Section XV: Chapters 72 through 83. * 7301–7307 ................. erowe on DSK5CLS3C1PROD with RULES * (d) .............................. * * * * * * A change to heading 7301 through 7307 from any other heading, including another heading within that group, or a change within heading 7307 from fitting forgings or flange forgings to fittings or flanges made ready for commercial use by: (a) At least one of the following processes: (1) Beveling; (2) Threading of the bore; (3) Center or step boring; and (b) At least two of the following processes: (1) Heat treating; (2) Recoining or resizing; (3) Taper boring; (4) Machining ends or surfaces other than a gasket face; (5) Drilling bolt holes; or (6) Burring or shot blasting. * (q) .............................. 9001.10 ...................... * * * * * * Section XVIII: Chapters 90 through 92. A change to subheading 9001.10 from any other subheading, except from subheading 8544.70 or glass performs of heading 7002. * VerDate Mar<15>2010 * 13:31 Sep 01, 2011 * Jkt 223001 PO 00000 * * * * * Fmt 4700 * * * Frm 00008 * * * Sfmt 4700 E:\FR\FM\02SER1.SGM * 02SER1 * * * * 54697 Federal Register / Vol. 76, No. 171 / Friday, September 2, 2011 / Rules and Regulations 3. Section 102.21 is amended by revising paragraph (c)(3)(ii) and by removing the entry for 6210–6212 and adding new entries for 6210–6211 and 6212 in the table in paragraph (e)(1) to read as follows: ■ § 102.21 * Textile and apparel products. * * * * (c) * * * (3) * * * (ii) Except for fabrics of chapter 59 and goods of heading 5609, 5807, 5811, 6213, 6214, 6301 through 6306, and 6308, and subheadings 6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was not knit to shape and the good was wholly assembled in a single country, territory, or insular possession, the country of origin of the good is the country, territory, or insular possession in which the good was wholly assembled. * * * * * (e) * * * (1) * * * HTSUS Tariff shift and/or other requirements * 6210–6211 ................. * * * * * * (1) If the good consists of two or more component parts, a change to an assembled good of heading 6210 through 6211 from unassembled components, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession. (2) If the good does not consist of two or more component parts, a change to heading 6210 through 6211 from any heading outside that group, except from heading 5007, 5111 through 5113, 5208 through 5212, 5309 through 5311, 5407 through 5408, 5512 through 5516, 5602 through 5603, 5801 through 5806, 5809 through 5811, 5903, 5906 through 5907, 6001 through 6006, and 6217, and subheading 6307.90, and provided that the change is the result of a fabric-making process. (1) If the good is not knit to shape and consists of two or more component parts, a change to an assembled good of heading 6212 from unassembled components, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession. (2) If the good is not knit to shape and does not consist of two or more component parts, a change to heading 6212 from any other heading, except from heading 5007, 5111 through 5113, 5208 through 5212, 5309 through 5311, 5407 through 5408, 5512 through 5516, 5602 through 5603, 5801 through 5806, 5809 through 5811, 5903, 5906 through 5907, 6001 through 6006, and 6217, and subheading 6307.90, and provided that the change is the result of a fabricmaking process. (3) If the good is knit to shape, a change to heading 6212 from any other heading, provided that the knit to shape components are knit in a single country, territory, or insular possession. 6212 ........................... * * * Alan D. Bersin, Commissioner, U.S. Customs and Border Protection. Approved: August 30, 2011. Timothy E. Skud, Deputy Assistant Secretary of the Treasury. [FR Doc. 2011–22588 Filed 9–1–11; 8:45 am] BILLING CODE 9111–14–P DEPARTMENT OF COMMERCE International Trade Administration 19 CFR Part 351 [Docket No. 0612243022–1484–02] RIN 0625–AA66 Certification of Factual Information To Import Administration During Antidumping and Countervailing Duty Proceedings: Supplemental Interim Final Rule Import Administration, International Trade Administration, Department of Commerce. ACTION: Supplemental interim final rule and request for comments. erowe on DSK5CLS3C1PROD with RULES AGENCY: The Department of Commerce (‘‘the Department’’) is issuing this interim final rule to supplement an interim final rule published on February SUMMARY: VerDate Mar<15>2010 13:31 Sep 01, 2011 Jkt 223001 * * 10, 2011 (Interim Final Rule), which governs the certification of factual information submitted to the Department by a person or his or her representative during antidumping (‘‘AD’’) and countervailing duty (‘‘CVD’’) proceedings. This supplemental interim final rule concerns the certifications required of foreign governments. By this supplemental interim final rule, foreign governments will be allowed to submit certifications in either the format that was in use prior to the effective date of the Interim Final Rule or in the format provided in the Interim Final Rule. This supplemental interim final rule will remain in effect until such time as a final rule is published. All other aspects of the Interim Final Rule remain in effect and fully apply to all parties and their counsel. Companies should continue to use the company certification provided for in the Interim Final Rule. Representatives of companies or governments should continue to use the representative certification provided for in the Interim Final Rule. The Department is also requesting comments on the appropriateness of requiring foreign governments to submit the certification provided for in the Interim Final Rule, as discussed in more detail PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 * * below. The Department is not soliciting comments with respect to any other issues concerning the Interim Final Rule as the deadline for such comments has expired. DATES: Effective date: The effective date of this supplemental interim final rule is September 2, 2011. Applicability date: This supplemental interim final rule will apply to all investigations initiated on the basis of petitions filed on or after September 2, 2011, and other segments of AD/CVD proceedings initiated on or after September 2, 2011, as well as all ongoing investigations and ongoing segments of proceedings. Those foreign governments that submitted certifications between March 14, 2011, the effective date of the Interim Final Rule, and September 2, 2011 that did not conform with the certification formats required by the Interim Final Rule will have 30 days to submit certifications that conform with the formats provided for in this supplemental interim final rule. Request for public comment: The Department is requesting public comment on this supplemental interim final rule. To be assured of consideration, comments must be received no later than October 3, 2011. The Department is not soliciting rebuttal E:\FR\FM\02SER1.SGM 02SER1

Agencies

[Federal Register Volume 76, Number 171 (Friday, September 2, 2011)]
[Rules and Regulations]
[Pages 54691-54697]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-22588]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

DEPARTMENT OF THE TREASURY

19 CFR Part 102

[USCBP-2007-0100; CBP Dec. 11-18]
RIN 1515-AD53 (Formerly RIN 1505-AB49)


Rules of Origin for Imported Merchandise

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

ACTION: Final rule.

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SUMMARY: This document adopts as a final rule that portion of a notice 
of proposed rulemaking, published in the Federal Register on July 25, 
2008, that proposed amendments to the country of origin rules codified 
in part 102 of the Customs and Border Protection (CBP) regulations 
applicable to pipe fittings and flanges, greeting cards, glass optical 
fiber, rice preparations, and certain textile and apparel products. 
However, this document is not adopting as a final rule the portion of 
the notice that proposed amendments to the CBP regulations to establish 
uniform rules governing CBP determinations of the country of origin of 
imported merchandise. CBP is not adopting the uniform rules of origin 
proposal so as to permit further consideration of relevant issues 
involved in the proposal.

DATES: This rule is effective October 3, 2011.

FOR FURTHER INFORMATION CONTACT: Monika Brenner, Chief, Valuation and 
Special Programs Branch, Regulations and Rulings, Office of 
International Trade, (202) 325-0038.

SUPPLEMENTARY INFORMATION:

Background

Discussion of Proposals

    On July 25, 2008, Customs and Border Protection (CBP) published in 
the Federal Register (73 FR 43385) a notice of proposed rulemaking 
(NPRM) that proposed amendments to the CBP regulations relating to the 
application of the country of origin rules codified in part 102 of the 
CBP regulations (19 CFR part 102).

Uniform Rules of Origin

    The notice of proposed rulemaking, in part, proposed amendments to 
the CBP regulations to extend application of the rules of origin 
codified in part 102 to all country of origin determinations made

[[Page 54692]]

under the customs and related laws and the navigation laws of the 
United States, unless otherwise specified. CBP stated in the NPRM that 
it believed that the proposed extension of the part 102 country of 
origin rules to all trade would result in determinations that are more 
objective, transparent, and predictable, and would facilitate the 
exercise of reasonable care by U.S. importers with respect to their 
obligations regarding the identification of the proper country of 
origin of imported merchandise. Please refer to the July 25, 2008 (73 
FR 43385), document for a more detailed discussion of this proposal. As 
stated later in this document, CBP is not proceeding with this 
proposal.

Changes to Specific Rules of Origin

    The July 25, 2008, document also proposed amendments to the country 
of origin rules codified in part 102 in regard to five specific product 
areas: Pipe fittings and flanges, greeting cards, glass optical fiber, 
rice preparations, and certain textile and apparel products. A brief 
discussion of the proposed changes for these five product areas is set 
forth below. For a more detailed discussion of these proposed changes, 
please see the July 25, 2008, NPRM.
1. Pipe Fittings and Flanges
    CBP proposed to amend the tariff shift rule in Sec.  102.20(n), CBP 
regulations (19 CFR 102.20), for goods classified in headings 7301 
through 7307, Harmonized Tariff Schedule of the United States (HTSUS), 
to provide for a change within heading 7307 from fitting forgings or 
flange forgings to fittings or flanges made ready for commercial use by 
certain processing, including beveling, bore threading, center or step 
boring, face machining, heat treating, recoining or resizing, taper 
boring, machining ends or surfaces other than a gasket face, drilling 
bolt holes, and burring or shot blasting. CBP stated in the NPRM that 
the proposed change is consistent with the decision in Midwood 
Industries, Inc. v. United States, 64 Cust. Ct. 499, C.D. 4026, 313 F. 
Supp. 951 (1970), appeal dismissed, 57 CCP 141 (1970), and that the 
change was being proposed following further consideration of the 
judicial guidance in Boltex Manufacturing Co. v. United States, 24 CIT 
972, 140 F. Supp. 2d 1339 (2000), and comments received in response to 
a proposed modification/revocation of rulings published in the Customs 
Bulletin and Decisions on November 21, 2001 (35 Cust. B. & Dec. 35 
(2001)).
2. Greeting Cards
    CBP proposed to amend the tariff shift rule in Sec.  102.20(j) for 
goods classified in headings 4901 through 4911, HTSUS, which includes 
printed greeting cards, by creating a specific rule for heading 4909, 
providing for a change to that heading from any other heading except 
from heading 4911 when the change is a result of adding text. CBP 
explained in the July 25, 2008, NPRM that the effect of this proposed 
change is to enable the country of origin of all printed greeting cards 
to be determined according to the country of initial printing of 
literary text, photographs, graphic designs, or illustrations. CBP 
further stated that this proposed change is consistent with CBP 
practice in applying the substantial transformation standard to printed 
materials, as reflected in CBP's administrative rulings.
3. Glass Optical Fiber
    CBP proposed to amend the tariff shift rule in Sec.  102.20(q) for 
subheading 9001.10, HTSUS, which encompasses optical fibers and optical 
fiber bundles and cables, by providing for a change to subheading 
9001.10 from any other subheading, except from subheading 8544.70, 
HTSUS, or glass preforms of heading 7002, HTSUS. CBP stated in the NPRM 
that this proposed change would conform the tariff shift rule to the 
determination in CBP Headquarters Ruling Letter (HRL) 560660 dated 
April 9, 1999, that no substantial transformation (and thus no change 
in origin) results for purposes of the country of marking statute (19 
U.S.C. 1304) from the drawing of a glass preform into optical fiber.
4. Rice Preparations
    CBP proposed to amend the tariff shift rule in Sec.  102.20(d) for 
subheading 1904.90, HTSUS, which encompasses certain rice preparations, 
by providing for a change to subheading 1904.90 from any other heading, 
except from heading 1006, HTSUS, or wild rice of subheading 1008.90, 
HTSUS. CBP explained in the NPRM that this proposed change would 
eliminate the inconsistency between the tariff shift rule and HRL 
967925 dated February 28, 2006, in which CBP held that no substantial 
transformation results for purposes of the country of origin marking 
statute when rice is processed with 2% water, 0.4% sunflower oil, 0.2% 
salt, and 0.4% soy lecithin, placed into cups and sealed, and thermally 
processed.
5. Certain Textile and Apparel Products
    In regard to the rules of origin for textile and apparel products 
set forth in Sec.  102.21, CBP regulations (19 CFR 102.21), CBP 
proposed two amendments to Sec.  102.21 to properly align the rules 
with the language of the underlying statute, 19 U.S.C. 3592. First, CBP 
proposed to amend Sec.  102.21(c)(3)(ii) by adding the words ``fabrics 
of chapter 59 and'' so that the amended text would read ``Except for 
fabrics of chapter 59 and goods of heading * * *.'' As explained in the 
NPRM, this change would have the effect of ensuring that fabrics of 
chapter 59, HTSUS, derive their country of origin from where the fabric 
is formed, consistent with 19 U.S.C. 3592(b)(1)(C).
    CBP also proposed to amend the tariff shift rule in Sec.  102.21(e) 
for goods classified in headings 6210 through 6212, HTSUS, by creating 
a separate rule for heading 6212, which encompasses ``brassieres, 
girdles, corsets, braces, suspenders, garters and similar articles and 
parts thereof, whether or not knitted or crocheted.'' CBP noted in the 
NPRM that the existing tariff shift rule for headings 6210 through 6212 
does not provide for the possibility of knit-to-shape goods, even 
though the body-supporting garments of heading 6212 may be knit to 
shape. CBP stated that this proposed change would ensure that a knit-
to-shape good of heading 6212 is found to derive its origin from where 
the good is knit to shape in accordance with 19 U.S.C. 
3592(b)(2)(A)(ii).

Comment Period

    The July 25, 2008, NPRM provided for a sixty-day period (until 
September 23, 2008) for the submission of public comments on the 
proposed regulatory changes. The comment period was extended an 
additional 30 days by a notice published in the Federal Register on 
September 8, 2008 (73 FR 51962). A subsequent notice published in the 
Federal Register on October 30, 2008 (73 FR 64575), re-opened the 
comment period until December 1, 2008, to afford interested parties an 
opportunity to provide meaningful comment in light of a final rule 
document also published on October 30, 2008 (73 FR 64518), which set 
forth technical corrections to Sec. Sec.  102.20 and 102.21 to reflect 
modifications to the HTSUS that became effective in 2007.

Discussion of Comments

    A total of 70 commenters responded to the solicitation of public 
comments, 14 of which provided multiple submissions. Forty-two of the 
commenters expressed opposition to the proposed uniform application of 
the country of origin rules set forth in part 102, while 16 commenters 
raised

[[Page 54693]]

specific concerns or questions regarding the uniform rules proposal 
without expressly supporting or opposing the proposal. Nine of the 
commenters generally expressed support for the proposal, although 
certain of these commenters recommended specific modifications to those 
rules.
    In regard to the proposed amendments to the part 102 rules of 
origin relating to the five specific product areas, six comments were 
received in regard to two of the product areas. Four commenters 
discussed the proposed change in the rules pertaining to pipe fittings 
and flanges, while two commenters addressed the proposed change in the 
rules regarding glass optical fiber.
    Set forth below is a discussion of the comments or portions of 
comments received that addressed the NPRM's comment period, concerns of 
a general nature regarding the technical corrections to the part 102 
tariff shift rules to reflect the 2007 modifications to the HTSUS, and 
the proposed amendments to the part 102 rules of origin relating to 
pipe fittings and flanges and glass optical fiber.
    It is noted that a number of comments recommended specific changes 
to the rules of origin in part 102 other than those that had been 
proposed. Although CBP considers these comments to be outside the scope 
of the July 25, 2008, NPRM, CBP nevertheless is reviewing these 
comments and if, as a result of that review, we determine that 
additional amendments to the part 102 tariff shift rules are warranted, 
these changes will be incorporated in a future notice of proposed 
rulemaking.

Uniform Rules of Origin

Comment

    Forty-two commenters opposed implementation of the proposal to 
establish uniform rules governing CBP determinations of the country of 
origin of imported merchandise.

CBP's Response

    Based on the public comments received in regard to the uniform 
rules of origin proposal, CBP has determined not to proceed with this 
proposal. As a result, CBP believes that it is unnecessary to discuss 
the comments or portions of comments that addressed the proposed 
amendments relating to the uniform rules of origin proposal.

Extension of Comment Period

Comment

    Two commenters requested a 90-day extension of the public comment 
period beyond the original due date of September 23, 2008, and two 
commenters requested an additional 60 days within which to submit 
comments beyond the extended due date of December 1, 2008.

CBP's Response

    As noted previously, the notice of proposed rulemaking was 
published on July 25, 2008, with comments due on or before September 
23, 2008. The comment period was extended by a notice published in the 
Federal Register on September 8, 2008 (73 FR 51962), to October 23, 
2008. Subsequently, a notice published in the Federal Register on 
October 30, 2008 (73 FR 64575), re-opened the comment period and 
established a new due date of December 1, 2008. CBP believes that the 
over four-month comment period afforded to interested parties (with the 
two extensions) provided all parties with sufficient time to submit 
comments on the proposed rulemaking.

2007 HTSUS Modifications

Comment

    Fifteen commenters maintained that the part 102 tariff shift rules 
are outdated as they fail to reflect the modifications to the HTSUS 
that became effective on February 3, 2007 (see Presidential 
Proclamation 8097, published in the Federal Register on January 4, 2007 
(72 FR 453)). These commenters indicated that maintaining the part 102 
tariff shift rules to assure consistency with the 2007 changes as well 
as future changes to the HTSUS is necessary to the proper evaluation 
and possible future implementation of the uniform rules of origin 
proposal.
    One of these commenters noted that the North American Free Trade 
Agreement (NAFTA) country of origin rules in part 102 are static in 
that they are the result of tripartite negotiations with other 
sovereigns. As a result, the commenter stated that CBP is without 
authority to make changes to any of the rules without obtaining 
agreement from Canada and Mexico. The commenter suggested that the 
uniform tariff shift rules should be placed elsewhere in the CBP 
regulations so as to more easily facilitate future changes to the 
rules.

CBP's Response

    As previously noted, a final rule document published in the Federal 
Register on October 30, 2008 (73 FR 64518), set forth technical 
corrections to the part 102 tariff-shift rules to reflect modifications 
to the HTSUS that became effective on February 3, 2007. The comment 
period with respect to the July 25, 2008, NPRM was re-opened on October 
30, 2008, specifically to enable interested parties to evaluate the 
proposed rule in light of the technical corrections made to Sec. Sec.  
102.20 and 102.21 by the above-referenced final rule document. CBP will 
continue to update the part 102 rules as necessary to assure 
consistency with future modifications to the HTSUS.
    CBP disagrees with the contention by one commenter that the rules 
set forth in Sec. Sec.  102.1 through 102.20 (referred to as the 
``NAFTA Marking Rules'') are ``static'' as no changes may be made 
without obtaining agreement with Canada and Mexico. The NAFTA Marking 
Rules set forth in part 102 are used by the United States under Annex 
311 of the NAFTA to determine the country of origin of goods imported 
into the United States from Canada and Mexico. The United States has 
full authority to amend those rules whenever it deems it necessary to 
do so. Of course, the United States engages in consultations with the 
governments of Canada and Mexico on a regular basis to discuss a number 
of issues arising under the NAFTA, which may include any amendments 
being made by each member Party to its NAFTA Marking Rules.

Comment

    With respect to the October 30, 2008, technical corrections final 
rule document, two commenters contended that these updates appear to 
have been prepared without proper vetting by the trade as they contain 
numerous errors. A third commenter stated that the technical 
corrections ``do not make logical sense across the board'', while two 
additional commenters criticized the corrections as interjecting a 
``description-oriented origin determination process, rather than a 
tariff shift basis.'' Two of these commenters maintained that the 
inclusion of ``description-shifts'' or the need to subjectively 
characterize devices within a subheading negates any supposed objective 
advantage regarding tariff-shift rules and is contrary to the spirit of 
the original NAFTA agreement regarding origin which was predicated on a 
clearly-defined shift from one tariff number to another. In addition, 
it was asserted that using descriptions rather than tariff numbers to 
determine if a rule has been met hinders or eliminates importers from 
applying automation to the process, resulting in increased costs to 
determine if foreign components meet the ``description-shift''.

[[Page 54694]]

CBP's Response

    CBP acknowledges that the tariff shift rules in Sec.  102.20, as 
amended by the October 30, 2008, final rule document, contain more 
descriptions than the prior version but disagrees with the 
characterization that we are interjecting a description-oriented origin 
determination process into the tariff-shift system. Our use of certain 
descriptions is necessitated by the substantial changes in 2007 to 
portions of the HTSUS, which involved moving a number of goods from 
various headings or subheadings and concentrating them into one heading 
or subheading, or vice versa, as well as deleting or adding headings 
and subheadings. In order to reflect the existing tariff shift rules 
for the affected goods in their new locations, it was necessary to name 
or describe goods so that there would be no doubt as to which rule 
applies to which good.
    With regard to the ``logical sense'' of the corrections, CBP notes 
that the rules were merely updated to reflect the HTSUS 2007 changes. 
The update required changes in product coverage and/or numbering of 
certain headings and subheadings and was not intended to have any other 
substantive effect.

Comment

    A commenter contended that the ``technical corrections'' to 
Sec. Sec.  102.20 and 102.21 failed to comply with the requirements of 
the Administrative Procedure Act (APA) (19 U.S.C. 553) which renders 
the technical corrections invalid or subject to invalidation by the 
courts. According to the commenter, CBP should have adhered to the 
standard notice and comment procedures and delayed effective date 
requirement of the APA. The commenter stated that none of the 
exceptions to the APA notice and comment procedures apply in this case 
as the amendments to the part 102 rules are far more than ``technical'' 
amendments to rules previously existing; they are, in many cases, 
entirely new rules of origin which speak to entirely new tariff 
subheadings that did not previously exist. The commenter maintained 
that these are substantive rules which impose obligations on broad 
classes of persons in that they dictate the country of origin which 
must be applied to certain classes of imported merchandise.

CBP's Response

    CBP disagrees with the assertion by one commenter that the October 
30, 2008, ``technical corrections'' final rule document that amended 
the part 102 tariff shift rules failed to comply with the requirements 
of the APA because the amendments were far more than ``technical'' but 
were substantive in nature. As explained in the final rule document, 
the 2007 modifications to the HTSUS resulted in certain tariff 
provisions being added or removed and certain goods being transferred 
to different or newly-created tariff provisions. Therefore, to properly 
conform the tariff shift rules in Sec. Sec.  102.20 and 102.21 to the 
current version of the HTSUS, it was necessary, depending on each 
particular HTSUS change, to create an additional rule, remove an 
existing rule or portion of a rule, or otherwise modify a rule. 
However, it is important to recognize that these changes to Sec. Sec.  
102.20 and 102.21 were made to ensure that the application of the rules 
would produce precisely the same country of origin result for every 
good as was the case before the 2007 HTSUS modifications were effected. 
For this reason, CBP believes that these amendments were not 
substantive in nature, but indeed qualified as ``technical 
corrections.''
    The October 30, 2008, ``technical corrections'' are contrasted with 
the amendments made by this final rule document to the tariff shift 
rules in Sec.  102.20 relating to pipe fittings and flanges, greeting 
cards, glass optical fiber, and rice preparations. The changes 
promulgated in this final rule are substantive in nature as they are 
designed to produce different country of origin results under the 
specific circumstances set forth in this document involving those 
product areas.
    Specifically in regard to the APA, CBP stated in the final rule 
document that, pursuant to 5 U.S.C. 553(b)(B) and (d)(3), it had 
determined that it would be impracticable and contrary to the public 
interest to delay publication of the rule in final form pending an 
opportunity for public comment and that there was good cause for the 
rule to become effective immediately upon publication. The document 
included as the reasons for this determination that the technical 
corrections merely conformed the tariff shift rules to the current 
HTSUS and that the amendments facilitated trade by ensuring that 
country of origin determinations made using the regulations were 
consistent with the HTSUS. In this regard, CBP wishes to emphasize 
that, prior to the technical corrections made by the October 30, 2008, 
final rule document, Sec. Sec.  102.20 and 102.21 failed to provide 
accurate tariff shift rules for many of the goods affected by the 2007 
modifications to the HTSUS. It was necessary to make these technical 
corrections at the earliest possible time so that both the public and 
CBP could properly rely on these rules to accurately determine the 
country of origin of all goods imported from Canada and Mexico, as 
required by Annex 311 of the NAFTA, as well as all imported textile and 
apparel goods. Thus, CBP believes that it appropriately invoked the 
exceptions described above to the notice, comment, and delayed 
effective date requirements of the APA.
    It is noted that CBP published in the Federal Register on July 24, 
2003 (68 FR 43630), a similar final rule document that set forth 
technical corrections to Sec.  102.20 to reflect modifications to the 
HTSUS that were effective in 2002. CBP determined in that document that 
the notice and public procedure requirements were inapplicable for the 
same reasons cited in the October 30, 2008, final rulemaking.

Pipe Fittings and Flanges

Comment

    Three commenters expressed support for the proposed tariff shift 
change for pipe fittings and flanges of heading 7307, HTSUS, set forth 
in the July 25, 2008, NPRM that would allow a change within heading 
7307 from fitting forgings or flange forgings to fittings or flanges 
made ready for commercial use by certain processing. The commenters 
stated that the proposed change, which is consistent with the result in 
Midwood Industries, Inc. v. United States, 64 Cust. Ct. 499 (1970), 
would provide stability to the domestic fittings and flanges industry 
and consistency with longstanding country of origin marking practices, 
and in addition would encourage further investment in this domestic 
industry.

CBP's Response

    CBP agrees with the commenters that the tariff shift change for 
pipe fittings and flanges of heading 7307, as proposed in the July 25, 
2008, NPRM, is consistent with the court's holding in Midwood. We 
believe that performing the operations set forth in the revised rule 
results in a fundamental change in the nature of the product. Thus, the 
country of origin of pipe fittings and flanges of heading 7307 is the 
country where the referenced operations are performed.

Comment

    One commenter disagreed with the proposed change in the tariff 
shift rule for pipe fittings and flanges, arguing that the change would 
permit U.S. finishers of imported fittings and flanges to

[[Page 54695]]

escape their responsibility to mark the finished product with its 
foreign origin, thus depriving end users of the ability to make an 
informed choice between U.S.-manufactured fittings and flanges and 
foreign articles that are merely subjected to finishing operations in 
the U.S. According to this commenter, the proposed change would benefit 
U.S. finishers that purchase inexpensive foreign fittings and flanges 
in an unfinished form, perform minor, largely superficial processing on 
the articles, and sell them to U.S. consumers at prices that undercut 
those for fittings and flanges produced entirely in the United States. 
The commenter recognized that the proposed change would actually only 
effect a change for imports of fitting and flange forgings from Mexico 
and Canada since imports of such forgings from all other countries are 
currently subject to CBP rulings reflecting the decision in Midwood.
    This commenter contended that the proposed change is contrary to 
the country of marking statute (19 U.S.C. 1304) as paragraph (c) of the 
statute prohibits the establishment of marking exemptions for certain 
imported pipes and fittings. In addition, the commenter stated that, if 
CBP truly wishes to codify the substantial transformation standard from 
Midwood, it must revise its proposed rule for heading 7307 to encompass 
the more complex processing steps that formed the basis for that 
decision. This would involve requiring that the forging be subjected to 
at least one of the following processes: (1) Heat-treating; or (2) 
recoining or resizing, and at least one of the following processes: (1) 
Beveling, machining the gasket face, or machining ends or surfaces 
other than a gasket face; (2) threading of the bore; or (3) center 
boring, step boring, taper boring, or drilling bolt holes. In the 
commenter's opinion, either (or both) (1) heat-treating or (2) 
recoining or resizing are necessary because these processes can affect 
the physical character of the imported forging.

CBP's Response

    CBP disagrees with the commenter. As stated previously, the tariff 
shift rule is being revised to follow the holding of the court in 
Midwood. In Midwood, the court considered various processes that would 
change the country of origin of the imported fittings and flanges 
involved in that case. In one instance, for example, the court 
considered imported flange forgings, where excess material was removed 
from the rim, the forging was faced, bored, threaded or beveled, and 
drilled and spotfaced. In another instance, the forging was heated and 
one end was reduced in size and diameter by compression. The commenter 
contends that either (1) heat treating or (2) recoining or resizing is 
necessary, along with one other machining process. Regarding the second 
example above, a specific machining process was not required by the 
court to effect an origin change. Therefore, while we acknowledge that 
the other processing steps mentioned by the commenter may be 
sufficiently complex and significant to result in a change in the 
country of origin of forgings, we do not believe that they are the only 
processing steps that would result in a change in the country of origin 
of these products. CBP believes that the processing operations cited in 
the proposed rule are also significant enough to result in a change in 
the country of origin of the forgings and fairly represent the Midwood 
case.
    Further, the revised tariff shift rule will not change the 
statutory requirement set forth in 19 U.S.C. 1304(c) that imported 
pipes and pipe fittings of steel, stainless steel, chrome-moly steel, 
or cast and malleable iron must be marked with the English name of the 
country of origin by means of die stamping, cast-in mold lettering, 
etching, engraving, or continuous paint stenciling. The revised rule 
also will not affect the statutory prohibition in section 1304(c) 
against applying any of the marking exceptions set forth in 1304(a)(3) 
to the above-described pipes and pipe fittings. The described pipes and 
pipe fittings will continue to be subject to the special country of 
origin marking requirements of 19 U.S.C. 1304(c).

Glass Optical Fiber

Comment

    A commenter concurred with the proposed change to the part 102 
tariff shift rule for glass optical fiber, as set forth in the July 25, 
2008, NPRM. However, the commenter suggested that the reference in the 
proposed rule to ``glass preforms of heading 7002'' should be changed 
to ``glass preforms of chapter 70'' to take into account any possible 
change in the classification of glass preforms in the future. The 
commenter noted in this regard that CBP's decision to classify the 
preforms in heading 7002 may be contested in court. Thus, the commenter 
explained that this suggested modification is made solely in the 
interest of administrative economy and prudence.
    Another commenter urged that CBP deny the requested modification to 
the rule for optical fiber described above for the reason that there is 
well-established precedent for the classification of fiber preforms in 
heading 7002. In the view of this commenter, the suggested change to 
``glass preforms of chapter 70'' is unusually broad and inconsistent 
with CBP's goal of increasing certainty and objectivity for all 
parties. The commenter stated that tariff shift rules should be crafted 
using the most precise tariff classifications available as reflected in 
CBP's own existing classification determinations.

CBP's Response

    While it is always conceivable that the tariff classification of an 
article may change for a variety of reasons, including decisions of the 
courts or CBP, the second commenter above is correct that the text of 
each tariff shift rule is crafted using the most precise classification 
available. If it becomes necessary to make a change to the rules as a 
result of a classification change, this would be done by means of a new 
rulemaking document.

Conclusions

    After analysis of the comments and further consideration, CBP has 
determined to proceed as follows:

Uniform Rules of Origin Proposal

    The portion of the notice of proposed rulemaking published on July 
25, 2008, that proposed amendments to establish uniform rules governing 
CBP determinations of the country of origin of imported merchandise is 
withdrawn.

Proposed Specific Changes to Rules of Origin

    The portion of the notice of proposed rulemaking that proposed 
amendments to the country of origin rules codified in part 102 that 
apply to pipe fittings and flanges, greeting cards, glass optical 
fiber, rice preparations, and certain textile and apparel products is 
adopted as a final rule without change.

Additional Specific Changes to Rules of Origin Recommended During 
Comment Period

    Although CBP considers comments received in response to the NPRM 
that suggested additional specific changes to the rules of origin 
codified in 19 CFR part 102 to be outside the scope of the NPRM, CBP is 
reviewing these comments. If, as a result of that review, it is 
determined that additional amendments to the part 102 rules are 
warranted, these changes will be incorporated in a future notice of 
proposed rulemaking.

[[Page 54696]]

Executive Order 12866

    The amendments set forth in this document do not meet the criteria 
for a ``significant regulatory action'' as specified in Executive Order 
12866 because they will not result in the expenditure of over $100 
million in any one year. The Office of Management and Budget (OMB) has 
not reviewed this rule under that Order.

Regulatory Flexibility Act

    Pursuant to the provisions of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), it is certified that the amendments in this 
document will not have a significant economic impact on a substantial 
number of small entities because the final rule more closely aligns the 
country of origin rules codified in 19 CFR part 102 relating to five 
specific product areas with CBP administrative rulings, judicial 
decisions, or the underlying applicable statute. Accordingly, the 
amendments set forth in this document are not subject to the regulatory 
analysis requirements or other requirements of 5 U.S.C. 603 and 604.

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 in 19 CFR Part 102

    CBP duties and inspections, Imports, Reporting and recordkeeping 
requirements, Rules of origin, Trade agreements.

Amendments to the CBP Regulations

    Accordingly, for the reasons stated above, part 102 of the CBP 
regulations (19 CFR part 102) is amended as set forth below.

PART 102--RULES OF ORIGIN

0
1. The authority citation for part 102 continues to read as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized 
Tariff Schedule of the United States), 1624, 3314, 3592.


0
2. In the table in Sec.  102.20:
0
a. Paragraph (d), titled ``Section IV: Chapters 16 through 24,'' is 
amended by revising the entry for 1904.90;
0
b. Paragraph (j), titled ``Section X: Chapters 47 through 49,'' is 
amended by removing the entry for 4901-4911, and by adding three new 
entries for 4901-4908, 4909, and 4910-4911;
0
c. Paragraph (n), titled ``Section XV: Chapters 72 through 83,'' is 
amended by revising the entry for 7301-7307; and
0
d. Paragraph (q), titled ``Section XVIII: Chapters 90 through 92,'' is 
amended by revising the entry for 9001.10.
    The additions and revisions read as follows:


Sec.  102.20  Specific rules by tariff classification.

* * * * *

------------------------------------------------------------------------
                                            Tariff shift and/or other
                 HTSUS                            requirements
------------------------------------------------------------------------
 
                              * * * * * * *
(d)...................................  Section IV: Chapters 16 through
                                         24.
 
                              * * * * * * *
1904.90...............................  A change to subheading 1904.90
                                         from any other heading, except
                                         from heading 1006 or wild rice
                                         of subheading 1008.90.
 
                              * * * * * * *
(j)...................................  Section X: Chapters 47 through
                                         49.
 
                              * * * * * * *
4901-4908.............................  A change to heading 4901 through
                                         4908 from any other heading,
                                         including another heading
                                         within that group.
4909..................................  A change to heading 4909 from
                                         any other heading, except from
                                         heading 4911 when the change is
                                         a result of adding text.
4910-4911.............................  A change to heading 4910 through
                                         4911 from any other heading,
                                         including another heading
                                         within that group.
 
                              * * * * * * *
(n)...................................  Section XV: Chapters 72 through
                                         83.
 
                              * * * * * * *
7301-7307.............................  A change to heading 7301 through
                                         7307 from any other heading,
                                         including another heading
                                         within that group, or a change
                                         within heading 7307 from
                                         fitting forgings or flange
                                         forgings to fittings or flanges
                                         made ready for commercial use
                                         by:
                                           (a) At least one of the
                                            following processes:
                                           (1) Beveling;
                                           (2) Threading of the bore;
                                           (3) Center or step boring;
                                            and
                                           (b) At least two of the
                                            following processes:
                                           (1) Heat treating;
                                           (2) Recoining or resizing;
                                           (3) Taper boring;
                                           (4) Machining ends or
                                            surfaces other than a gasket
                                            face;
                                           (5) Drilling bolt holes; or
                                           (6) Burring or shot blasting.
 
                              * * * * * * *
(q)...................................  Section XVIII: Chapters 90
                                         through 92.
9001.10...............................  A change to subheading 9001.10
                                         from any other subheading,
                                         except from subheading 8544.70
                                         or glass performs of heading
                                         7002.
 
                              * * * * * * *
------------------------------------------------------------------------


[[Page 54697]]


0
3. Section 102.21 is amended by revising paragraph (c)(3)(ii) and by 
removing the entry for 6210-6212 and adding new entries for 6210-6211 
and 6212 in the table in paragraph (e)(1) to read as follows:


Sec.  102.21  Textile and apparel products.

* * * * *
    (c) * * *
    (3) * * *
    (ii) Except for fabrics of chapter 59 and goods of heading 5609, 
5807, 5811, 6213, 6214, 6301 through 6306, and 6308, and subheadings 
6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was not knit 
to shape and the good was wholly assembled in a single country, 
territory, or insular possession, the country of origin of the good is 
the country, territory, or insular possession in which the good was 
wholly assembled.
* * * * *
    (e) * * *
    (1) * * *

------------------------------------------------------------------------
                                            Tariff shift and/or other
                 HTSUS                            requirements
------------------------------------------------------------------------
 
                              * * * * * * *
6210-6211.............................  (1) If the good consists of two
                                         or more component parts, a
                                         change to an assembled good of
                                         heading 6210 through 6211 from
                                         unassembled components,
                                         provided that the change is the
                                         result of the good being wholly
                                         assembled in a single country,
                                         territory, or insular
                                         possession.
                                        (2) If the good does not consist
                                         of two or more component parts,
                                         a change to heading 6210
                                         through 6211 from any heading
                                         outside that group, except from
                                         heading 5007, 5111 through
                                         5113, 5208 through 5212, 5309
                                         through 5311, 5407 through
                                         5408, 5512 through 5516, 5602
                                         through 5603, 5801 through
                                         5806, 5809 through 5811, 5903,
                                         5906 through 5907, 6001 through
                                         6006, and 6217, and subheading
                                         6307.90, and provided that the
                                         change is the result of a
                                         fabric-making process.
6212..................................  (1) If the good is not knit to
                                         shape and consists of two or
                                         more component parts, a change
                                         to an assembled good of heading
                                         6212 from unassembled
                                         components, provided that the
                                         change is the result of the
                                         good being wholly assembled in
                                         a single country, territory, or
                                         insular possession.
                                        (2) If the good is not knit to
                                         shape and does not consist of
                                         two or more component parts, a
                                         change to heading 6212 from any
                                         other heading, except from
                                         heading 5007, 5111 through
                                         5113, 5208 through 5212, 5309
                                         through 5311, 5407 through
                                         5408, 5512 through 5516, 5602
                                         through 5603, 5801 through
                                         5806, 5809 through 5811, 5903,
                                         5906 through 5907, 6001 through
                                         6006, and 6217, and subheading
                                         6307.90, and provided that the
                                         change is the result of a
                                         fabric-making process.
                                        (3) If the good is knit to
                                         shape, a change to heading 6212
                                         from any other heading,
                                         provided that the knit to shape
                                         components are knit in a single
                                         country, territory, or insular
                                         possession.
 
                              * * * * * * *
------------------------------------------------------------------------


Alan D. Bersin,
Commissioner, U.S. Customs and Border Protection.
    Approved: August 30, 2011.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 2011-22588 Filed 9-1-11; 8:45 am]
BILLING CODE 9111-14-P