U.S. Customs and Border Protection, Department of Homeland Security; Department of the Treasury.
Final rule.
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.
Seth Mazze, Trade Agreements Branch, Office of International Trade, (202) 344–2634.
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
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
On August 23, 2006, a Notice of Proposed Rulemaking was published in the
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
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.
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.
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
Comments were solicited on the Notice of Proposed Rulemaking. The comment period closed on October 23, 2006.
One comment was received in response to the solicitation and a description of the comment received and CBP's analysis are set forth below.
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 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.
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.
The final regulations incorporate non-substantive 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
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
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.
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.
Administrative practice and procedure, Freedom of information.
Collections of information, Paperwork requirements, Reporting and recordkeeping requirements.
Canada, Customs duties and inspection, Imports, Mexico, Trade agreements (North American Free-Trade Agreement).
5 U.S.C. 301, 552, 552a; 19 U.S.C. 66, 1624; 31 U.S.C. 9701.
5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501
19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States), 1624, 3314.
(a)