[Federal Register: June 29, 2007 (Volume 72, Number 125)]
[Rules and Regulations]
[Page 35647-35658]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29jn07-6]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
DEPARTMENT OF THE TREASURY
19 CFR Parts 10, 162, 163, and 178
[USCBP-2007-0056; CBP Dec. 07-51]
RIN 1505-AB76
United States-Morocco Free Trade Agreement
AGENCIES: U.S. Customs and Border Protection, Department of Homeland
Security; Department of the Treasury.
ACTION: Interim regulations; solicitation of comments.
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SUMMARY: This document amends U.S. Customs and Border Protection
(``CBP'') regulations on an interim basis to implement the preferential
tariff treatment and other customs-related provisions of the United
States-Morocco Free Trade Agreement entered into by the United States
and the Kingdom of Morocco.
DATES: Interim rule effective June 29, 2007; comments must be received
by August 28, 2007.
ADDRESSES: You may submit comments, identified by docket number, by one
of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments via docket number
USCBP-2007-0056.
Mail: Trade and Commercial Regulations Branch, Regulations
and Rulings, U.S. Customs and Border Protection, 1300 Pennsylvania
Avenue, NW., (Mint Annex), Washington, DC 20229.
Instructions: All submissions received must include the agency name
and docket number for this rulemaking. All comments received will be
posted without change to http://www.regulations.gov, including any
personal information provided. For detailed instructions on submitting
comments and additional information on the rulemaking process, see the
``Public Participation'' heading of the SUPPLEMENTARY INFORMATION
section of this document.
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov. Submitted comments
may also be inspected during regular business days between the hours of
9 a.m. and 4:30 p.m. at the Trade and Commercial Regulations Branch,
Regulations and Rulings, U.S. Customs and Border Protection, 799 9th
Street, NW., (5th Floor), Washington, DC. Arrangements to inspect
submitted comments should be made in advance by calling Mr. Joseph
Clark at (202) 572-8768.
FOR FURTHER INFORMATION CONTACT: Textile Operational Aspects: Robert
Abels, Office of International Trade, (202) 344-1959.
Other Operational Aspects: Seth Mazze, Office of International
Trade, (202) 344-2634.
Audit Aspects: Mark Hanson, Regulatory Audit, Office of
International Trade, (202) 863-6035.
Legal Aspects: Daniel Cornette, Office of International Trade,
(202) 572-8731.
SUPPLEMENTARY INFORMATION:
Public Participation
Interested persons are invited to participate in this rulemaking by
submitting written data, views, or arguments on all aspects of the
interim rule. CBP also invites comments that relate to the economic,
environmental, or federalism effects that might result from this
interim rule. Comments that will provide the most assistance to CBP
will reference a specific portion of the interim rule, explain the
reason for any recommended change, and include data,
[[Page 35648]]
information, or authority that supports such recommended change. See
ADDRESSES above for information on how to submit comments.
Background
On June 15, 2004, the United States and the Kingdom of Morocco (the
``Parties'') signed the U.S.-Morocco Free Trade Agreement (``MFTA'' or
``Agreement''). The stated objectives of the MFTA are to: Encourage
expansion and diversification of trade between the Parties; eliminate
barriers to trade in, and facilitate the cross-border movement of,
goods and services between the territories of the Parties; promote
conditions of fair competition in the free trade area; substantially
increase investment opportunities in the territories of the Parties;
provide adequate and effective protection and enforcement of
intellectual property rights in each Party's territory; create
effective procedures for the implementation and application of the
MFTA, for its joint administration and for the resolution of disputes;
and establish a framework for further regional and multilateral
cooperation to expand and enhance the benefits of the MFTA.
The provisions of the MFTA were adopted by the United States with
the enactment of the United States-Morocco Free Trade Agreement
Implementation Act (the ``Act''), Pub. L. 108-302, 118 Stat. 1103 (19
U.S.C. 3805 note), on August 17, 2004. Section 205 of the Act requires
that regulations be prescribed as necessary to implement these
provisions of the MFTA.
On December 22, 2005, the President signed Proclamation 7971 to
implement the provisions of the MFTA. The proclamation, which was
published in the Federal Register on December 27, 2005 (70 FR 76649),
modified the Harmonized Tariff Schedule of the United States
(``HTSUS'') as set forth in Annexes I and II of Publication 3721 of the
U.S. International Trade Commission. The modifications to the HTSUS
included the addition of new General Note 27, incorporating the
relevant MFTA rules of origin as set forth in the Act, and the
insertion throughout the HTSUS of the preferential duty rates
applicable to individual products under the MFTA where the special
program indicator ``MA'' appears in parenthesis in the ``Special'' rate
of duty subcolumn. The modifications to the HTSUS also included a new
Subchapter XII to Chapter 99 to provide for temporary tariff rate
quotas and applicable safeguards implemented by the MFTA.
U.S. Customs and Border Protection (``CBP'') is responsible for
administering the provisions of the MFTA and the Act that relate to the
importation of goods into the United States from Morocco. Those
customs-related MFTA provisions that require implementation through
regulation include certain tariff and non-tariff provisions within
Chapter One (Initial Provisions and Definitions), Chapter Two (National
Treatment and Market Access for Goods), Chapter Four (Textiles and
Apparel), Chapter Five (Rules of Origin), and Chapter Six (Customs
Administration).
In Chapter One of the MFTA, certain general definitions in Article
1.3 have been incorporated into the MFTA implementing regulations.
These regulations also implement Article 2.6 (Goods Re-entered after
Repair or Alteration) of Chapter Two of the MFTA.
Chapter Four of the MFTA sets forth the measures relating to trade
in textile and apparel goods between Morocco and the United States
under the MFTA. The provisions within Chapter Four that require
regulatory action by CBP are Article 4.3 (Rules of Origin and Related
Matters), Article 4.4 (Customs and Administrative Cooperation), and
Article 4.5 (Definitions).
Chapter Five of the MFTA sets forth the rules for determining
whether an imported good qualifies as an originating good of the United
States or Morocco (MFTA Party) and, as such, is therefore eligible for
preferential tariff (duty-free or reduced duty) treatment as specified
in the Agreement. Under Article 5.1, originating goods may be grouped
in three broad categories: (1) Goods that are wholly the growth,
product, or manufacture of one or both of the Parties; (2) goods (other
than those covered by the product-specific rules set forth in Annex 4-A
or Annex 5-A) that are new or different articles of commerce that have
been grown, produced, or manufactured in the territory of one or both
of the Parties, and that have a minimum value-content, i.e., at least
35 percent of the good's appraised value must be attributed to the cost
or value of materials produced in one or both of the Parties plus the
direct costs of processing operations performed in one or both of the
Parties; and (3) goods that satisfy the product-specific rules set
forth in Annex 4-A (textile or apparel goods) or Annex 5-A (certain
non-textile or non-apparel goods).
Article 5.2 explains that the term ``new or different article of
commerce'' means a good that has been substantially transformed from a
good or material that is not wholly the growth, product, or manufacture
of one or both of the Parties and that has a new name, character, or
use distinct from the good or material from which it was transformed.
Article 5.3 provides that a good will not be considered to be a new or
different article of commerce as the result of undergoing simple
combining or packaging operations, or mere dilution with water or
another substance that does not materially alter the characteristics of
the good.
Article 5.4 provides for the accumulation of production in the
territory of one or both of the Parties in determining whether a good
qualifies as originating under the MFTA. Articles 5.5 and 5.6 set forth
the rules for calculating the value of materials and the direct costs
of processing operations, respectively, for purposes of determining
whether a good satisfies the 35 percent value-content requirement.
Articles 5.7 through 5.9 consist of additional sub-rules applicable
to originating goods, involving retail packaging materials, packing
materials for shipment, indirect materials, and transit and
transshipment. In addition, Articles 5.10 and 5.11 set forth the
procedural requirements that apply under the MFTA, in particular with
regard to importer claims for preferential tariff treatment. Article
5.14 provides definitions of certain of the terms used in Chapter Five
of the MFTA. The basic rules of origin in Chapter Five of the MFTA are
set forth in General Note 27, HTSUS.
Chapter Six sets forth the customs operational provisions related
to the implementation and administration of the MFTA.
In order to provide transparency and facilitate their use, the
majority of the MFTA implementing regulations set forth in this
document have been included within new Subpart M in Part 10 of the CBP
regulations (19 CFR Part 10). However, in those cases in which MFTA
implementation is more appropriate in the context of an existing
regulatory provision, the MFTA regulatory text has been incorporated in
an existing Part within the CBP regulations. In addition, this document
sets forth several cross-references and other consequential changes to
existing regulatory provisions to clarify the relationship between
those existing provisions and the new MFTA implementing regulations.
The regulatory changes are discussed below in the order in which they
appear in this document.
[[Page 35649]]
Discussion of Amendments
Part 10
Section 10.31(f) concerns temporary importations under bond. It is
amended by adding references to certain goods originating in Morocco
for which, like goods originating in Canada, Mexico, Singapore and
Chile, no bond or other security will be required when imported
temporarily for prescribed uses. The provisions of MFTA Article 2.5
(temporary admission of goods) are already reflected in existing
temporary importation bond or other provisions contained in Part 10 of
the CBP regulations and in Chapter 98 of the HTSUS.
Part 10, Subpart M
General Provisions
Section 10.761 outlines the scope of new Subpart M, Part 10. This
section also clarifies that, except where the context otherwise
requires, the requirements contained in Subpart M, Part 10 are in
addition to general administrative and enforcement provisions set forth
elsewhere in the CBP regulations. Thus, for example, the specific
merchandise entry requirements contained in Subpart M, Part 10 are in
addition to the basic entry requirements contained in Parts 141-143 of
the CBP regulations.
Section 10.762 sets forth definitions of common terms used in
multiple contexts or places within Subpart M, Part 10. Although the
majority of the definitions in this section are based on definitions
contained in Article 1.3 of the MFTA and Sec. 3 of the Act, other
definitions have also been included to clarify the application of the
regulatory texts. Additional definitions which apply in a more limited
Subpart M, Part 10 context are set forth elsewhere with the substantive
provisions to which they relate.
Import Requirements
Section 10.763 sets forth the procedure for claiming MFTA tariff
benefits at the time of entry.
Section 10.764, as provided in MFTA Article 5.10(b), requires a
U.S. importer, upon request, to submit a declaration setting forth all
pertinent information concerning the growth, production, or manufacture
of the good. Included in Sec. 10.764 is a provision that the
declaration may be used either for a single importation or for multiple
importations of identical goods.
Section 10.765 sets forth certain importer obligations regarding
the truthfulness of information and documents submitted in support of a
claim for preferential tariff treatment under the MFTA. As provided in
MFTA Article 5.10(a), this section states that a U.S. importer who
makes a claim for preferential tariff treatment for a good is deemed to
have certified that the good qualifies for such treatment.
Section 10.766 provides that the importer's declaration is not
required for certain non-commercial or low-value importations.
Section 10.767 implements the portion of MFTA Article 5.10
concerning the maintenance of records necessary for the preparation of
the declaration.
Section 10.768, which is based on MFTA Article 5.11.1, provides for
the denial of MFTA tariff benefits if the importer fails to comply with
any of the requirements of Subpart M, Part 10, CBP regulations.
Rules of Origin
Sections 10.769 through 10.777 provide the implementing regulations
regarding the rules of origin provisions of General Note 27, HTSUS,
Article 4.3 and Chapter Five of the MFTA, and Sec. 203 of the Act.
Definitions
Section 10.769 sets forth terms that are defined for purposes of
the rules of origin. CBP notes that, pursuant to letters of
understanding exchanged between the Parties on June 15, 2004, in
determining whether a good meets the definition of a ``new or different
article of commerce'' in paragraph (i) of Sec. 10.769, the United
States may be guided by the rules of origin set forth in Part 102, CBP
regulations (19 CFR Part 102).
General Rules of Origin
Section 10.770 includes the basic rules of origin established in
Article 5.1 of the MFTA, section 203(b) of the Act, and General Note
27(b), HTSUS.
Paragraph (a) of Sec. 10.770 sets forth the three basic categories
of goods that are considered originating goods under the MFTA.
Paragraph (a)(1) of Sec. 10.770 specifies those goods that are
considered originating goods because they are wholly the growth,
product, or manufacture of one or both of the Parties. Paragraph (a)(2)
provides that goods are considered originating goods if they: (1) Are
new or different articles of commerce that have been grown, produced,
or manufactured in the territory of one or both of the Parties; (2) are
classified in HTSUS provisions that are not covered by the product-
specific rules set forth in General Note 27(h), HTSUS; and (3) meet a
35 percent value-content requirement. Finally, paragraph (a)(3) states
that goods are considered originating goods if: (1) They are classified
in HTSUS provisions that are covered by the product-specific rules set
forth in General Note 27(h), HTSUS; (2) each non-originating material
used in the production of the good in the territory of one or both of
the Parties undergoes an applicable change in tariff classification or
otherwise satisfies the requirements specified in General Note 27(h),
HTSUS; and (3) the goods meet any other requirements specified in
General Note 27, HTSUS.
Paragraph (b) of Sec. 10.770 sets forth the basic rules that apply
for purposes of determining whether a good satisfies the 35 percent
value-content requirement referred to in Sec. 10.770(a)(2) .
Paragraph (c) of Sec. 10.770 implements Article 5.3 of the MFTA,
relating to the simple combining or packaging or mere dilution
exceptions to the ``new or different article of commerce'' requirement
of Sec. 10.770(a)(2). Since the language in Article 5.3 of the MFTA
(and Sec. 203(i)(7)(B) of the Act) is nearly identical to the language
found in Sec. 213(a)(2) of the Caribbean Basin Economic Recovery Act
(``CBERA'') (19 U.S.C. 2703(a)(2)), Sec. 10.770(c) incorporates by
reference the examples and principles set forth in Sec. 10.195(a)(2)
of CBP's implementing CBERA regulations.
Originating Textile or Apparel Goods
Section 10.771(a), as provided for in Article 4.3.7 of the MFTA,
sets forth a de minimis rule for certain textile or apparel goods that
may be considered to qualify as originating goods even though they fail
to satisfy the applicable change in tariff classification set out in
General Note 27(h). This paragraph also includes an exception to the de
minimis rule.
Section 10.771(b), which is based on Article 4.3.8 of the MFTA,
sets forth a special rule for textile or apparel goods classifiable
under General Rule of Interpretation 3, HTSUS, as goods put up in sets
for retail sale.
Accumulation
Section 10.772, which is derived from MFTA Article 5.4, sets forth
the rule by which originating goods or materials from the territory of
a Party that are used in the production of a good in the territory of
the other Party will be considered to originate in the territory of
such other Party. In addition, this section also establishes that a
good or material that is produced by one or more producers in the
territory of one or both of the Parties is an originating good or
material if the article satisfies all of
[[Page 35650]]
the applicable requirements of the rules of origin of the MFTA.
Value of Materials
Section 10.773 implements Article 5.5 of the MFTA, relating to the
calculation of the value of materials that may be applied toward
satisfaction of the 35 percent value-content requirement.
Direct Costs of Processing Operations
Section 10.774, which reflects Article 5.6 of the MFTA, sets forth
provisions regarding the calculation of direct costs of processing
operations for purposes of the 35 percent value-content requirement.
Packaging and Packing Materials and Containers for Retail Sale and for
Shipment
Section 10.775 is based on Article 5.7 of the MFTA and provides
that retail packaging materials and packing materials for shipment are
to be disregarded in determining whether a good qualifies as
originating under the MFTA, except to the extent that the value of such
packaging and packing materials may be included for purposes of meeting
the 35 percent value-content requirement.
Indirect Materials
Section 10.776, which is derived from Article 5.8 of the MFTA,
provides that indirect materials will be disregarded in determining
whether a good qualifies as an originating good under the MFTA, except
to the extent that the cost of such indirect materials may be included
toward satisfying the 35 percent value-content requirement.
Imported Directly
Section 10.777(a) sets forth the basic rule, found in Article 5.1
of the MFTA, that a good must be imported directly from the territory
of a Party into the territory of the other Party to qualify as an
originating good under the MFTA. This paragraph further provides that,
as set forth in Article 5.9 of the MFTA, a good will not be considered
to be imported directly if, after exportation from the territory of a
Party, the good undergoes production, manufacturing, or any other
operation outside the territories of the Parties, other than certain
minor operations.
Paragraph (b) of Sec. 10.777 provides that an importer making a
claim for preferential tariff treatment under the MFTA may be required
to demonstrate, through the submission of documentary evidence, that
the ``imported directly'' requirement was satisfied.
Tariff Preference Level
Section 10.778 sets forth the procedures for claiming MFTA tariff
benefits for non-originating fabric or apparel goods entitled to
preference under an applicable tariff preference level (``TPL'').
Section 10.779, which is based on Articles 4.3.9 and 4.3.10,
describes the non-originating fabric and apparel goods that are
eligible for TPL claims under the MFTA.
Section 10.780 provides for the denial of a TPL claim if the
importer fails to comply with any applicable requirement under Subpart
M, Part 10, CBP regulations, including the failure to provide
documentation, when requested by CBP, establishing that the good was
imported directly from the territory of a Party into the territory of
the other Party.
Section 10.781 establishes that non-originating fabric or apparel
goods are entitled to preferential tariff treatment under an applicable
TPL only if they are imported directly from the territory of a Party
into the territory of the other Party.
Origin Verifications and Determinations
Section 10.784 implements MFTA Article 5.11.2 by providing that a
claim for MFTA preferential tariff treatment, including any information
submitted in support of the claim, will be subject to such verification
as CBP deems necessary. This section further sets forth the
circumstances under which a claim may be denied based on the results of
the verification.
Section 10.785, which is based on Article 4.4 of the MFTA, concerns
verifications conducted in Morocco by Moroccan authorities (at the
request of CBP) relating to textile and apparel goods imported in the
United States, whether or not a claim is made for MFTA preferential
tariff treatment. U.S. officials may also assist in a verification in
Morocco under this section. Section 10.785 also provides for specific
actions to be taken by CBP during and after the verification, if
directed by the Committee for the Implementation of Textile Agreements
(CITA).
Section 10.786 implements MFTA Article 5.11.3 by providing that CBP
will issue a determination to the importer when CBP determines that a
claim for MFTA preferential tariff treatment should be denied based on
the results of a verification. This section also prescribes the
information required to be included in the determination.
Penalties
Section 10.787 concerns the general application of penalties to
MFTA transactions and is based on MFTA Article 6.9.
Goods Returned After Repair or Alteration
Section 10.788 implements MFTA Article 2.6 regarding duty treatment
on goods re-entered after repair or alteration in Morocco.
Part 162
Part 162 contains regulations regarding the inspection and
examination of, among other things, imported merchandise. A cross-
reference is added to Sec. 162.0, which is the scope section of the
part, to refer readers to the additional MFTA records maintenance and
examination provisions contained in new Subpart M, Part 10, CBP
regulations.
Part 163
A conforming amendment is made to Sec. 163.1 to include the
maintenance of any documentation that the importer may have in support
of a claim for preference under the MFTA as an activity for which
records must be maintained. Also, the list of records and information
required for the entry of merchandise appearing in the Appendix to Part
163 (commonly known as the (a)(1)(A) list) is also amended to add the
MFTA records that the importer may have in support of a MFTA claim for
preferential tariff treatment.
Part 178
Part 178 sets forth the control numbers assigned to information
collections of CBP by the Office of Management and Budget, pursuant to
the Paperwork Reduction Act of 1995, Public Law 104-13. The list
contained in Sec. 178.2 is amended to add the information collections
used by CBP to determine eligibility for a tariff preference or other
rights or benefits under the MFTA and the Act.
Inapplicability of Notice and Delayed Effective Date Requirements
Under section 553 of the Administrative Procedure Act (``APA'') (5
U.S.C. 553), agencies amending their regulations generally are required
to publish a notice of proposed rulemaking in the Federal Register that
solicits public comment on the proposed amendments, consider public
comments in deciding on the final content of the final amendments, and
publish the final amendments at least 30 days prior to their effective
date. However, section 553(a)(1) of the APA provides that the standard
prior notice and comment procedures and delayed effective date
provisions of 5 U.S.C. 553(d) do not
[[Page 35651]]
apply to agency rulemaking that involves a foreign affairs function of
the United States. CBP has determined that these interim regulations
involve the foreign affairs function of the United States, as they
implement preferential tariff treatment and related provisions of the
MFTA. Therefore, the rulemaking requirements under the APA do not apply
and this interim rule will be effective upon publication. However, CBP
is soliciting comments in this interim rule and will consider all
comments it receives before issuing a final rule.
Executive Order 12866 and Regulatory Flexibility Act
CBP has determined that this document is not a regulation or rule
subject to the provisions of Executive Order 12866 of September 30,
1993 (58 FR 51735, October 1993), because it pertains to a foreign
affairs function of the United States and implements an international
agreement, as described above, and therefore is specifically exempted
by section 3(d)(2) of Executive Order 12866. Because a notice of
proposed rulemaking is not required under section 553(b) of the APA for
the reasons described above, CBP notes that the provisions of the
Regulatory Flexibility Act, as amended (5 U.S.C. 601 et seq.), do not
apply to this rulemaking. Accordingly, CBP also notes that this interim
rule is not subject to the regulatory analysis requirements or other
requirements of 5 U.S.C. 603 and 604.
Paperwork Reduction Act
These regulations are being issued without prior notice and public
procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553).
For this reason, the collections of information contained in these
regulations have been reviewed and, pending receipt and evaluation of
public comments, approved by the Office of Management and Budget in
accordance with the requirements of the Paperwork Reduction Act (44
U.S.C. 3507) under control number 1651-0117.
The collections of information in these regulations are in
Sec. Sec. 10.763 and 10.764. This information is required in
connection with claims for preferential tariff treatment and for the
purpose of the exercise of other rights under the MFTA and the Act and
will be used by CBP to determine eligibility for a tariff preference or
other rights or benefits under the MFTA and the Act. The likely
respondents are business organizations including importers, exporters
and manufacturers.
Estimated total annual reporting burden: 800 hours.
Estimated average annual burden per respondent: 0.2 hours.
Estimated number of respondents: 4000.
Estimated annual frequency of responses: 1.
Comments concerning the collections of information and the accuracy
of the estimated annual burden, and suggestions for reducing that
burden, should be directed to the Office of Management and Budget,
Attention: Desk Officer for the Department of the Treasury, Office of
Information and Regulatory Affairs, Washington, DC 20503. A copy should
also be sent to the Trade and Commercial Regulations Branch,
Regulations and Rulings, U.S. Customs and Border Protection, 1300
Pennsylvania Avenue, NW. (Mint Annex), Washington, DC 20229.
Signing Authority
This document is being issued in accordance with Sec. 0.1(a)(1) of
the CBP regulations (19 CFR 0.1(a)(1)) pertaining to the authority of
the Secretary of the Treasury (or his/her delegate) to approve
regulations related to certain customs revenue functions.
List of Subjects
19 CFR Part 10
Alterations, Bonds, Customs duties and inspection, Exports,
Imports, Preference programs, Repairs, Reporting and recordkeeping
requirements, Trade agreements.
19 CFR Part 162
Administrative practice and procedure, Customs duties and
inspection, Penalties, Trade agreements.
19 CFR Part 163
Administrative practice and procedure, Customs duties and
inspection, Export, Import, Reporting and recordkeeping requirements,
Trade agreements.
19 CFR Part 178
Administrative practice and procedure, Exports, Imports, Reporting
and recordkeeping requirements.
Amendments to the CBP Regulations
0
Accordingly, chapter I of title 19, Code of Federal Regulations (19 CFR
chapter I), is amended as set forth below.
PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,
ETC.
0
1. The general authority citation for Part 10 continues to read, and
the specific authority for Subpart M is added to read as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized
Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508,
1623, 1624, 3314;
* * * * *
Sections 10.761 through 10.789 also issued under Pub. L. 108-
302, 118 Stat. 1103 (19 U.S.C. 3805 note).
0
2. In Sec. 10.31, paragraph (f), the last sentence is revised to read
as follows:
Sec. 10.31 Entry; bond.
* * * * *
(f) * * * In addition, notwithstanding any other provision of this
paragraph, in the case of professional equipment necessary for carrying
out the business activity, trade or profession of a business person,
equipment for the press or for sound or television broadcasting,
cinematographic equipment, articles imported for sports purposes and
articles intended for display or demonstration, if brought into the
United States by a resident of Canada, Mexico, Singapore, Chile, or
Morocco and entered under Chapter 98, Subchapter XIII, HTSUS, no bond
or other security will be required if the entered article is a good
originating, within the meaning of General Notes 12, 25, 26, or 27,
HTSUS, in the country in which the importer is a resident.
* * * * *
0
3. Part 10, CBP regulations, is amended by adding Subpart M to read as
follows:
Subpart M--United States-Morocco Free Trade Agreement
Sec.
General Provisions
10.761 Scope.
10.762 General definitions.
Import Requirements
10.763 Filing of claim for preferential tariff treatment upon
importation.
10.764 Declaration.
10.765 Importer obligations.
10.766 Declaration not required.
10.767 Maintenance of records.
10.768 Effect of noncompliance; failure to provide documentation
regarding transshipment.
Rules of Origin
10.769 Definitions.
10.770 Originating goods.
10.771 Textile or apparel goods.
10.772 Accumulation.
10.773 Value of materials.
10.774 Direct costs of processing operations.
10.775 Packaging and packing materials and containers for retail
sale and for shipment.
10.776 Indirect materials.
[[Page 35652]]
10.777 Imported directly.
Tariff Preference Level
10.778 Filing of claim for tariff preference level.
10.779 Goods eligible for tariff preference claims.
10.780 Transshipment of nonoriginating fabric or apparel goods.
10.781 Effect of noncompliance; failure to provide documentation
regarding transshipment of nonoriginating fabric or apparel goods.
Origin Verifications and Determinations
10.784 Verification and justification of claim for preferential
treatment.
10.785 Special rule for verifications in Morocco of U.S. imports of
textile and apparel products.
10.786 Issuance of negative origin determinations.
Penalties
10.787 Violations relating to the MFTA.
Goods Returned After Repair or Alteration
10.788 Goods re-entered after repair or alteration in Morocco.
Subpart M--United States-Morocco Free Trade Agreement
General Provisions
Sec. 10.761 Scope.
This subpart implements the duty preference and related customs
provisions applicable to imported goods under the United States-Morocco
Free Trade Agreement (the MFTA) signed on June 15, 2004, and under the
United States-Morocco Free Trade Agreement Implementation Act (the Act;
118 Stat. 1103). Except as otherwise specified in this subpart, the
procedures and other requirements set forth in this subpart are in
addition to the customs procedures and requirements of general
application contained elsewhere in this chapter. Additional provisions
implementing certain aspects of the MFTA and the Act are contained in
Parts 162 and 163 of this chapter.
Sec. 10.762 General definitions.
As used in this subpart, the following terms will have the meanings
indicated unless either the context in which they are used requires a
different meaning or a different definition is prescribed for a
particular section of this subpart:
(a) Claim of origin. ``Claim of origin'' means a claim that a good
is an originating good;
(b) Claim for preferential tariff treatment. ``Claim for
preferential tariff treatment'' means a claim that a good is entitled
to the duty rate applicable under the MFTA to an originating good;
(c) Customs Valuation Agreement. ``Customs Valuation Agreement''
means the Agreement on Implementation of Article VII of the General
Agreement on Tariffs and Trade 1994, which is part of the WTO
Agreement;
(d) Customs duty. ``Customs duty'' includes any customs or import
duty and a charge of any kind imposed in connection with the
importation of a good, including any form of surtax or surcharge in
connection with such importation, but does not include any:
(1) Charge equivalent to an internal tax imposed consistently with
Article III:2 of the GATT 1994 in respect of like, directly
competitive, or substitutable goods of the Party or in respect of goods
from which the imported good has been manufactured or produced in whole
or in part;
(2) Antidumping or countervailing duty; and
(3) Fee or other charge in connection with importation commensurate
with the cost of services rendered;
(e) Days. ``Days'' means calendar days.
(f) Enterprise. ``Enterprise'' means any entity constituted or
organized under applicable law, whether or not for profit, and whether
privately-owned or governmentally-owned, including any corporation,
trust, partnership, sole proprietorship, joint venture, or other
association;
(g) Foreign material. ``Foreign material'' means a material other
than a material produced in the territory of one or both of the
Parties;
(h) GATT 1994. ``GATT 1994'' means the General Agreement on Tariffs
and Trade 1994, which is part of the WTO Agreement;
(i) Good. ``Good'' means any merchandise, product, article, or
material;
(j) Harmonized System. ``Harmonized System (HS)'' means the
Harmonized Commodity Description and Coding System, including its
General Rules of Interpretation, Section Notes, and Chapter Notes, as
adopted and implemented by the Parties in their respective tariff laws;
(k) Heading. ``Heading'' means the first four digits in the tariff
classification number under the Harmonized System;
(l) HTSUS. ``HTSUS'' means the Harmonized Tariff Schedule of the
United States as promulgated by the U.S. International Trade
Commission;
(m) Originating. ``Originating'' means a good qualifying under the
rules of origin set forth in General Note 27, HTSUS, and MFTA Chapter
Four (Textiles and apparel) or Chapter Five (Rules of Origin);
(n) Party. ``Party'' means the United States or the Kingdom of
Morocco;
(o) Person. ``Person'' means a natural person or an enterprise;
(p) Preferential tariff treatment. ``Preferential tariff
treatment'' means the duty rate applicable under the MFTA to an
originating good;
(q) Subheading. ``Subheading'' means the first six digits in the
tariff classification number under the Harmonized System;
(r) Textile or apparel good. ``Textile or apparel good'' means a
good listed in the Annex to the Agreement on Textiles and Clothing
(commonly referred to as ATC), which is part of the WTO Agreement;
(s) Territory. ``Territory'' means:
(1) With respect to Morocco, the land, maritime and air space under
its sovereignty, and the exclusive economic zone and the continental
shelf within which it exercises sovereign rights and jurisdiction in
accordance with international law and its domestic law; and
(2) With respect to the United States,
(i) The customs territory of the United States, which includes the
50 states, the District of Columbia, and Puerto Rico,
(ii) The foreign trade zones located in the United States and
Puerto Rico, and
(iii) Any areas beyond the territorial seas of the United States
within which, in accordance with international law and its domestic
law, the United States may exercise rights with respect to the seabed
and subsoil and their natural resources;
(t) WTO Agreement. ``WTO Agreement'' means the Marrakesh Agreement
Establishing the World Trade Organization of April 15, 1994.
Import Requirements
Sec. 10.763 Filing of claim for preferential tariff treatment upon
importation.
An importer may make a claim for MFTA preferential tariff treatment
for an originating good by including on the entry summary, or
equivalent documentation, the symbol ``MA'' as a prefix to the
subheading of the HTSUS under which each qualifying good is classified,
or by the method specified for equivalent reporting via an authorized
electronic data interchange system.
Sec. 10.764 Declaration.
(a) Contents. An importer who claims preferential tariff treatment
for a good under the MFTA must submit to CBP, at the request of the
port director, a declaration setting forth all pertinent information
concerning the growth, production, or manufacture of the good. A
declaration submitted to CBP under this paragraph:
(1) Need not be in a prescribed format but must be in writing or
must be transmitted electronically pursuant to any electronic means
authorized by CBP for that purpose;
[[Page 35653]]
(2) Must include the following information:
(i) The legal name, address, telephone, and e-mail address (if any)
of the importer of record of the good;
(ii) The legal name, address, telephone, and e-mail address (if
any) of the responsible official or authorized agent of the importer
signing the declaration (if different from the information required by
paragraph (a)(2)(i) of this section);
(iii) The legal name, address, telephone, and e-mail address (if
any) of the exporter of the good (if different from the producer);
(iv) The legal name, address, telephone, and e-mail address (if
any) of the producer of the good (if known);
(v) A description of the good, which must be sufficiently detailed
to relate it to the invoice and HS nomenclature, including quantity,
numbers, invoice numbers, and bills of lading;
(vi) A description of the operations performed in the growth,
production, or manufacture of the good in the territory of one or both
of the Parties and, where applicable, identification of the direct
costs of processing operations;
(vii) A description of any materials used in the growth,
production, or manufacture of the good that are wholly the growth,
product, or manufacture of one or both of the Parties, and a statement
as to the value of such materials;
(viii) A description of the operations performed on, and a
statement as to the origin and value of, any materials used in the
article that are claimed to have been sufficiently processed in the
territory of one or both of the Parties so as to be materials produced
in one or both of the Parties, or are claimed to have undergone an
applicable change in tariff classification specified in General Note
27(h), HTSUS; and
(ix) A description of the origin and value of any foreign materials
used in the good that have not been substantially transformed in the
territory of one or both of the Parties, or have not undergone an
applicable change in tariff classification specified in General Note
27(h), HTSUS;
(3) Must include a statement, in substantially the following form:
``I certify that:
The information on this document is true and accurate and I
assume the responsibility for proving such representations. I
understand that I am liable for any false statements or material
omissions made on or in connection with this document;
I agree to maintain and present upon request, documentation
necessary to support these representations;
The goods comply with all the requirements for preferential
tariff treatment specified for those goods in the United States-
Morocco Free Trade Agreement; and
This document consists of ----pages, including all
attachments.''
(b) Responsible official or agent. The declaration must be signed
and dated by a responsible official of the importer or by the
importer's authorized agent having knowledge of the relevant facts.
(c) Language. The declaration must be completed in the English
language.
(d) Applicability of declaration. The declaration may be applicable
to:
(1) A single importation of a good into the United States,
including a single shipment that results in the filing of one or more
entries and a series of shipments that results in the filing of one
entry; or
(2) Multiple importations of identical goods into the United States
that occur within a specified blanket period, not exceeding 12 months,
set out in the declaration. For purposes of this paragraph, ``identical
goods'' means goods that are the same in all respects relevant to the
production that qualifies the goods for preferential tariff treatment.
Sec. 10.765 Importer obligations.
(a) General. An importer who makes a claim for preferential tariff
treatment under Sec. 10.763 of this subpart:
(1) Will be deemed to have certified that the good is eligible for
preferential tariff treatment under the MFTA;
(2) Is responsible for the truthfulness of the information and data
contained in the declaration provided for in Sec. 10.764 of this
subpart; and
(3) Is responsible for submitting any supporting documents
requested by CBP and for the truthfulness of the information contained
in those documents. CBP will allow for the direct submission by the
exporter or producer of business confidential or other sensitive
information, including cost and sourcing information.
(b) Information provided by exporter or producer. The fact that the
importer has made a claim for preferential tariff treatment or prepared
a declaration based on information provided by an exporter or producer
will not relieve the importer of the responsibility referred to in
paragraph (a) of this section.
Sec. 10.766 Declaration not required.
(a) General. Except as otherwise provided in paragraph (b) of this
section, an importer will not be required to submit a declaration under
Sec. 10.764 of this subpart for:
(1) A non-commercial importation of a good; or
(2) A commercial importation for which the value of the originating
goods does not exceed U.S. $2,500.
(b) Exception. If the port director determines that an importation
described in paragraph (a) of this section may reasonably be considered
to have been carried out or planned for the purpose of evading
compliance with the rules and procedures governing claims for
preference under the MFTA, the port director will notify the importer
that for that importation the importer must submit to CBP a
declaration. The importer must submit such a declaration within 30 days
from the date of the notice. Failure to timely submit the declaration
will result in denial of the claim for preferential tariff treatment.
Sec. 10.767 Maintenance of records.
(a) General. An importer claiming preferential tariff treatment for
a good under Sec. 10.763 of this subpart must maintain, for five years
after the date of the claim for preferential tariff treatment, all
records and documents necessary for the preparation of the declaration.
(b) Applicability of other recordkeeping requirements. The records
and documents referred to in paragraph (a) of this section are in
addition to any other records required to be made, kept, and made
available to CBP under Part 163 of this chapter.
(c) Method of maintenance. The records and documents referred to in
paragraph (a) of this section must be maintained by importers as
provided in Sec. 163.5 of this chapter.
Sec. 10.768 Effect of noncompliance; failure to provide documentation
regarding transshipment.
(a) General. If the importer fails to comply with any requirement
under this subpart, including submission of a complete declaration
under Sec. 10.764 of this subpart, when requested, the port director
may deny preferential tariff treatment to the imported good.
(b) Failure to provide documentation regarding transshipment. Where
the requirements for preferential tariff treatment set forth elsewhere
in this subpart are met, the port director nevertheless may deny
preferential treatment to a good if the good is shipped through or
transshipped in the territory of a country other than a Party, and the
importer of the good does not provide, at the request of the port
director, evidence demonstrating to the satisfaction of the port
director that the good was imported directly from the territory of a
Party into the territory of the other Party (see Sec. 10.777 of this
subpart).
[[Page 35654]]
Rules of Origin
Sec. 10.769 Definitions.
For purposes of Sec. Sec. 10.769 through 10.777:
(a) Exporter. ``Exporter'' means a person who exports goods from
the territory of a Party;
(b) Generally Accepted Accounting Principles. ``Generally Accepted
Accounting Principles'' means the recognized consensus or substantial
authoritative support in the territory of a Party, with respect to the
recording of revenues, expenses, costs, assets, and liabilities, the
disclosure of information, and the preparation of financial statements.
These standards may encompass broad guidelines of general application
as well as detailed standards, practices, and procedures;
(c) Good. ``Good'' means any merchandise, product, article, or
material;
(d) Goods wholly the growth, product, or manufacture of one or both
of the Parties. ``Goods wholly the growth, product, or manufacture of
one or both of the Parties'' means:
(1) Mineral goods extracted in the territory of one or both of the
Parties;
(2) Vegetable goods, as such goods are defined in the HTSUS,
harvested in the territory of one or both of the Parties;
(3) Live animals born and raised in the territory of one or both of
the Parties;
(4) Goods obtained from live animals raised in the territory of one
or both of the Parties;
(5) Goods obtained from hunting, trapping, or fishing in the
territory of one or both of the parties;
(6) Goods (fish, shellfish, and other marine life) taken from the
sea by vessels registered or recorded with a Party and flying its flag;
(7) Goods produced from goods referred to in paragraph (d)(5) on
board factory ships registered or recorded with that Party and flying
its flag;
(8) Goods taken by a Party or a person of a Party from the seabed
or beneath the seabed outside territorial waters, provided that a Party
has rights to exploit such seabed;
(9) Goods taken from outer space, provided they are obtained by a
Party or a person of a Party and not processed in the territory of a
non-Party;
(10) Waste and scrap derived from:
(i) Production or manufacture in the territory of one or both of
the Parties, or
(ii) Used goods collected in the territory of one or both of the
Parties, provided such goods are fit only for the recovery of raw
materials;
(11) Recovered goods derived in the territory of a Party from used
goods, and utilized in the territory of that Party in the production of
remanufactured goods; and
(12) Goods produced in the territory of one or both of the Parties
exclusively from goods referred to in paragraphs (d)(1) through (d)(10)
of this section, or from their derivatives, at any stage of production;
(e) Importer. Importer means a person who imports goods into the
territory of a Party;
(f) Indirect material. ``Indirect material'' means a good used in
the growth, production, manufacture, testing, or inspection of a good
but not physically incorporated into the good, or a good used in the
maintenance of buildings or the operation of equipment associated with
the growth, production, or manufacture of a good, including:
(1) Fuel and energy;
(2) Tools, dies, and molds;
(3) Spare parts and materials used in the maintenance of equipment
and buildings;
(4) Lubricants, greases, compounding materials, and other materials
used in the growth, production, or manufacture of a good or used to
operate equipment and buildings;
(5) Gloves, glasses, footwear, clothing, safety equipment, and
supplies;
(6) Equipment, devices, and supplies used for testing or inspecting
the good;
(7) Catalysts and solvents; and
(8) Any other goods that are not incorporated into the good but the
use of which in the growth, production, or manufacture of the good can
reasonably be demonstrated to be a part of that growth, production, or
manufacture;
(g) Material. ``Material'' means a good, including a part or
ingredient, that is used in the growth, production, or manufacture of
another good that is a new or different article of commerce that has
been grown, produced, or manufactured in one or both of the Parties;
(h) Material produced in the territory of one or both of the
Parties. ``Material produced in the territory of one or both of the
Parties'' means a good that is either wholly the growth, product, or
manufacture of one or both of the Parties, or a new or different
article of commerce that has been grown, produced, or manufactured in
the territory of one or both of the Parties;
(i) New or different article of commerce. The term ``new or
different article of commerce'' means, except as provided in Sec.
10.770(c) of this subpart, a good that:
(1) Has been substantially transformed from a good or material that
is not wholly the growth, product, of manufacture of one or both of the
Parties; and
(2) Has a new name, character, or use distinct from the good or
material from which it was transformed;
(j) Non-originating material. ``Non-originating material'' means a
material that does not qualify as originating under this subpart or
General Note 27, HTSUS;
(k) Packing materials and containers for shipment. ``Packing
materials and containers for shipment'' means the goods used to protect
a good during its transportation to the United States, and does not
include the packaging materials and containers in which a good is
packaged for retail sale;
(l) Recovered goods. ``Recovered goods'' means materials in the
form of individual parts that result from:
(1) The complete disassembly of used goods into individual parts;
and
(2) The cleaning, inspecting, testing, or other processing of those
parts as necessary for improvement to sound working condition;
(m) Remanufactured good. ``Remanufactured good'' means an
industrial good that is assembled in the territory of a Party and that:
(1) Is entirely or partially comprised of recovered goods;
(2) Has a similar life expectancy to, and meets the similar
performance standards as, a like good that is new; and
(3) Enjoys the factory warranty similar to that of a like good that
is new;
(n) Simple combining or packaging operations. ``Simple combining or
packaging operations'' means operations such as adding batteries to
electronic devices, fitting together a small number of components by
bolting, gluing, or soldering, or packing or repacking components
together;
(o) Substantially transformed. ``Substantially transformed'' means,
with respect to a good or material, changed as the result of a
manufacturing or processing operation so that the good loses its
separate identity in the manufacturing or processing operation and:
(1) The good or material is converted from a good that has multiple
uses into a good or material that has limited uses;
(2) The physical properties of the good or material are changed to
a significant extent; or
(3) The operation undergone by the good or material is complex by
reason of the number of processes and materials involved and the time
and level of skill required to perform those processes.
[[Page 35655]]
Sec. 10.770 Originating goods.
(a) General. A good will be considered an originating good under
the MFTA when imported directly from the territory of a Party into the
territory of the other Party only if:
(1) The good is wholly the growth, product, or manufacture of one
or both of the Parties;
(2) The good is a new or different article of commerce that has
been grown, produced, or manufactured in the territory of one or both
of the Parties, is provided for in a heading or subheading of the HTSUS
that is not covered by the product-specific rules set forth in General
Note 27(h), HTSUS, and meets the value-content requirement specified in
paragraph (b) of this section; or
(3) The good is provided for in a heading or subheading of the
HTSUS covered by the product-specific rules set forth in General Note
27(h), HTSUS, and:
(i)(A) Each of the non-originating materials used in the production
of the good undergoes an applicable change in tariff classification
specified in General Note 27(h), HTSUS, as a result of production
occurring entirely in the territory of one or both of the Parties; or
(B) The good otherwise satisfies the requirements specified in
General Note 27(h), HTSUS; and
(ii) The good meets any other requirements specified in General
Note 27, HTSUS.
(b) Value-content requirement. A good described in paragraph (a)(2)
of this section will be considered an originating good under the MFTA
only if the sum of the value of materials produced in one or both of
the Parties, plus the direct costs of processing operations (see Sec.
10.774 of this subpart) performed in one or both of the Parties, is not
less than 35 percent of the appraised value of the good at the time the
good is entered into the territory of the United States.
(c) Combining, packaging, and diluting operations. For purposes of
this subpart, a good will not be considered a new or different article
of commerce by virtue of having undergone simple combining or packaging
operations, or mere dilution with water or another substance that does
not materially alter the characteristics of the good. The principles
and examples set forth in Sec. 10.195(a)(2) of this part will apply
equally for purposes of this paragraph.
Sec. 10.771 Textile or apparel goods.
(a) De minimis. Except as provided in paragraph (a)(1) of this
section, a textile or apparel good that is not an originating good
under the MFTA because certain fibers or yarns used in the production
of the component of the good that determines the tariff classification
of the good do not undergo an applicable change in tariff
classification set out in General Note 27(h), HTSUS, will be considered
to be an originating good if the total weight of all such fibers is not
more than seven percent of the total weight of that component.
(1) Exception. A textile or apparel good containing elastomeric
yarns in the component of the good that determines the tariff
classification of the good will be considered to be an originating good
only if such yarns are wholly formed in the territory of a Party.
(2) Yarn, fabric, or group of fibers. For purposes of paragraph (a)
of this section, in the case of a textile or apparel good that is a
yarn, fabric, or group of fibers, the term ``component of the good that
determines the tariff classification of the good'' means all of the
fibers in the yarn, fabric, or group of fibers.
(b) Textile or apparel goods put up in sets. Notwithstanding the
specific rules specified in General Note 27(h), HTSUS, textile or
apparel goods classifiable as goods put up in sets for retail sale as
provided for in General Rule of Interpretation 3, HTSUS, will not be
considered to be originating goods under the MFTA unless each of the
goods in the set is an originating good or the total value of the non-
originating goods in the set does not exceed ten percent of the
appraised value of the set.
Sec. 10.772 Accumulation.
(a) An originating good or material produced in the territory of
one or both of the Parties that is incorporated into a good in the
territory of the other Party will be considered to originate in the
territory of the other Party.
(b) A good that is grown, produced, or manufactured in the
territory of one or both of the Parties by one or more producers is an
originating good if the good satisfies the requirements of Sec. 10.770
of this subpart and all other applicable requirements of General Note
27, HTSUS.
Sec. 10.773 Value of materials.
(a) General. For purposes of Sec. 10.770(b) of this subpart and,
except as provided in paragraph (b) of this section, the value of a
material produced in the territory of one or both of the Parties
includes the following:
(1) The price actually paid or payable for the material by the
producer of the good;
(2) The freight, insurance, packing and all other costs incurred in
transporting the material to the producer's plant, if such costs are
not included in the price referred to in paragraph (a)(1) of this
section;
(3) The cost of waste or spoilage resulting from the use of the
material in the growth, production, or manufacture of the good, less
the value of recoverable scrap; and
(4) Taxes or customs duties imposed on the material by one or both
of the Parties, if the taxes or customs duties are not remitted upon
exportation from the territory of a Party.
(b) Exception. If the relationship between the producer of a good
and the seller of a material influenced the price actually paid or
payable for the material, or if there is no price actually paid or
payable by the producer for the material, the value of the material
produced in the territory of one or both of the Parties, includes the
following:
(1) All expenses incurred in the growth, production, or manufacture
of the material, including general expenses;
(2) A reasonable amount for profit; and
(3) The freight, insurance, packing, and all other costs incurred
in transporting the material to the producer's plant.
Sec. 10.774 Direct costs of processing operations.
(a) Items included. For purposes of Sec. 10.770(b) of this
subpart, the words ``direct costs of processing operations'', with
respect to a good, mean those costs either directly incurred in, or
that can be reasonably allocated to, the growth, production, or
manufacture of the good in the territory of one or both of the Parties.
Such costs include, to the extent they are includable in the appraised
value of the good when imported into a Party, the following:
(1) All actual labor costs involved in the growth, production, or
manufacture of the specific good, including fringe benefits, on-the-job
training, and the costs of engineering, supervisory, quality control,
and similar personnel;
(2) Tools, dies, molds, and other indirect materials, and
depreciation on machinery and equipment that are allocable to the
specific good;
(3) Research, development, design, engineering, and blueprint
costs, to the extent that they are allocable to the specific good;
(4) Costs of inspecting and testing the specific good; and
(5) Costs of packaging the specific good for export to the
territory of the other Party.
(b) Items not included. For purposes of Sec. 10.770(b) of this
subpart, the words ``direct costs of processing operations''
[[Page 35656]]
do not include items that are not directly attributable to the good or
are not costs of growth, production, or manufacture of the good. These
include, but are not limited to:
(1) Profit; and
(2) General expenses of doing business that are either not
allocable to the good or are not related to the growth, production, or
manufacture of the good, such as administrative salaries, casualty and
liability insurance, advertising, and salesmen's salaries, commissions,
or expenses.
Sec. 10.775 Packaging and packing materials and containers for retail
sale and for shipment.
Packaging materials and containers in which a good is packaged for
retail sale and packing materials and containers for shipment are to be
disregarded in determining whether a good qualifies as an originating
good under Sec. 10.770 of this subpart and General Note 27, HTSUS,
except to the extent that the value of such packaging and packing
materials and containers may be included in meeting the value-content
requirement specified in Sec. 10.770(b) of this subpart.
Sec. 10.776 Indirect materials.
Indirect materials are to be disregarded in determining whether a
good qualifies as an originating good under Sec. 10.770 of this
subpart and General Note 27, HTSUS, except that the cost of such
indirect materials may be included in meeting the value-content
requirement specified in Sec. 10.770(b) of this subpart.
Sec. 10.777 Imported directly.
(a) General. To qualify as an originating good under the MFTA, a
good must be imported directly from the territory of a Party into the
territory of the other Party. For purposes of this subpart, the words
``imported directly'' mean:
(1) Direct shipment from the territory of a Party into the
territory of the other Party without passing through the territory of a
non-Party; or
(2) If the shipment passed through the territory of a non-Party,
the good, upon arrival in the territory of a Party, will be considered
to be ``imported directly'' only if the good did not undergo
production, manufacturing, or any other operation outside the
territories of the Parties, other than unloading, reloading, or any
other operation necessary to preserve the good in good condition or to
transport the good to the territory of a Party. Operations that may be
performed outside the territories of the Parties include inspection,
removal of dust that accumulates during shipment, ventilation,
spreading out or drying, chilling, replacing salt, sulfur dioxide, or
aqueous solutions, replacing damaged packing materials and containers,
and removal of units of the good that are spoiled or damaged and
present a danger to the remaining units of the good, or to transport
the good to the territory of a Party.
(b) Documentary evidence. An importer making a claim for
preferential tariff treatment under the MFTA for an originating good
may be required to demonstrate, to CBP's satisfaction, that the good
was ``imported directly'' from the territory of a Party into the
territory of the other Party, as that term is defined in paragraph (a)
of this section. An importer may demonstrate compliance with this
section by submitting documentary evidence. Such evidence may include,
but is not limited to, bills of lading, airway bills, packing lists,
commercial invoices, receiving and inventory records, and customs entry
and exit documents.
Tariff Preference Level
Sec. 10.778 Filing of claim for tariff preference level.
A fabric or apparel good described in Sec. 10.779 of this subpart
that does not qualify as an originating good under Sec. 10.770 of this
subpart may nevertheless be entitled to preferential tariff treatment
under the MFTA under an applicable tariff preference level (TPL). To
make a TPL claim, the importer must include on the entry summary, or
equivalent documentation, the applicable subheading in Chapter 99 of
the HTSUS (9912.99.20) immediately above the applicable subheading in
Chapters 51 through 62 of the HTSUS under which each non-originating
fabric or apparel good is classified.
Sec. 10.779 Goods eligible for tariff preference claims.
The following goods are eligible for a TPL claim filed under Sec.
10.778 of this subpart:
(a) Fabric goods. Fabric goods provided for in Chapters 51, 52, 54,
55, 58, and 60 of the HTSUS that are wholly formed in Morocco,
regardless of the origin of the fiber or yarn used to produce the
goods, provided that they meet the applicable conditions for
preferential tariff treatment under the MFTA, other than the condition
that they are originating; and
(b) Apparel goods. Apparel goods provided for in Chapters 61 and 62
of the HTSUS that are cut or knit to shape, or both, and sewn or
otherwise assembled in Morocco, regardless of the origin of the fabric
or yarn used to produce the goods, provided that they meet the
applicable conditions for preferential tariff treatment under the MFTA,
other than the condition that they are originating goods.
Sec. 10.780 Transshipment of non-originating fabric or apparel goods.
(a) General. To qualify for preferential tariff treatment under an
applicable TPL, a good must be imported directly from the territory of
a Party into the territory of the other Party. For purposes of this
subpart, the words ``imported directly'' mean:
(1) Direct shipment from the territory of a Party into the
territory of the other Party without passing through the territory of a
non-Party; or
(2) If the shipment passed through the territory of a non-Party,
the good, upon arrival in the territory of a Party, will be considered
to be ``imported directly'' only if the good did not undergo
production, manufacturing, or any other operation outside the
territories of the Parties, other than unloading, reloading, or any
other operation necessary to preserve it in good condition or to
transport the good to the territory of a Party. Operations that may be
performed outside the territories of the Parties include inspection,
removal of dust that accumulates during shipment, ventilation,
spreading out or drying, chilling, replacing salt, sulfur dioxide, or
other aqueous solutions, replacing damaged packing materials and
containers, and removal of units of the good that are spoiled or
damaged and present a danger to the remaining units of the good, or to
transport the good to the territory of a Party.
(b) Documentary evidence. An importer making a claim for
preferential tariff treatment under an applicable TPL may be required
to demonstrate, to CBP's satisfaction, that the good was ``imported
directly'' from the territory of a Party into the territory of the
other Party, as that term is defined in paragraph (a) of this section.
An importer may demonstrate compliance with this section by submitting
documentary evidence. Such evidence may include, but is not limited to,
bills of lading, airway bills, packing lists, commercial invoices,
receiving and inventory records, and customs entry and exit documents.
Sec. 10.781 Effect of noncompliance; failure to provide documentation
regarding transshipment of non-originating fabric or apparel goods.
(a) Effect of noncompliance. If an importer of a good for which a
TPL claim is made fails to comply with any applicable requirement under
this
[[Page 35657]]
subpart, the port director may deny preferential tariff treatment to
the imported good.
(b) Failure to provide documentation regarding transshipment. Where
the requirements for preferential tariff treatment set forth elsewhere
in this subpart are met, the port director nevertheless may deny
preferential tariff treatment to a good for which a TPL claim is made
if the good is shipped through or transshipped in a country other than
a Party, and the importer of the good does not provide, at the request
of the port director, evidence demonstrating to the satisfaction of the
port director that the requirements set forth in Sec. 10.780 of this
subpart were met.
Origin Verifications and Determinations
Sec. 10.784 Verification and justification of claim for preferential
treatment.
(a) Verification. A claim for preferential treatment made under
Sec. 10.763 of this subpart, including any declaration or other
information submitted to CBP in support of the claim, will be subject
to such verification as the port director deems necessary. In the event
that the port director is provided with insufficient information to
verify or substantiate the claim, the port director may deny the claim
for preferential treatment.
(b) Applicable accounting principles. When conducting a
verification of origin to which Generally Accepted Accounting
Principles may be relevant, CBP will apply and accept the Generally
Accepted Accounting Principles applicable in the country of production.
Sec. 10.785 Special rule for verifications in Morocco of U.S. imports
of textile and apparel products.
(a) Procedures to determine whether a claim of origin is accurate.
For the purpose of determining that a claim of origin for a textile or
apparel good is accurate, CBP may request that the government of
Morocco conduct a verification, regardless of whether a claim is made
for preferential tariff treatment. While a verification under this
paragraph is being conducted, CBP may take appropriate action, as
directed by The Committee for the Implementation of Textile Agreements
(CITA), which may include suspending the application of preferential
treatment to the textile or apparel good for which a claim of origin
has been made. If CBP is unable to make the determination described in
this paragraph within 12 months after a request for a verification, or
makes a negative determination, CBP may take appropriate action with
respect to the textile and apparel good subject to the verification,
and with respect to similar goods exported or produced by the entity
that exported or produced the good, if directed by CITA.
(b) Procedures to determine compliance with applicable customs laws
and regulations of the United States. For purposes of enabling CBP to
determine that an exporter or producer is complying with applicable
customs laws, regulations, and procedures in cases in which CBP has a
reasonable suspicion that a Moroccan exporter or producer is engaging
in unlawful activity relating to trade in textile and apparel goods,
CBP may request that the government of Morocco conduct a verification,
regardless of whether a claim is made for preferential tariff
treatment. A ``reasonable suspicion'' for the purpose of this paragraph
will be based on relevant factual information, including information of
the type set forth in Article 6.5.5 of the MFTA, that indicates
circumvention of applicable laws, regulations or procedures regarding
trade in textile and apparel goods. While a verification under this
paragraph is being conducted, CBP may take appropriate action, as
directed by CITA, which may include suspending the application of
preferential tariff treatment to the textile and apparel goods exported
or produced by the Moroccan entity where the reasonable suspicion of
unlawful activity relates to those goods. If CBP is unable to make the
determination described in this paragraph within 12 months after a
request for a verification, or makes a negative determination, CBP may
take appropriate action with respect to any textile or apparel goods
exported or produced by the entity subject to the verification, if
directed by CITA.
(c) Assistance by U.S. officials to Moroccan authorities. U.S.
officials may undertake or assist in a verification under this section
by conducting visits in Morocco, along with the competent authorities
of Morocco, to the premises of an exporter, producer or any other
enterprise involved in the movement of textile or apparel goods from
Morocco to the United States.
(d) Treatment of documents and information provided to CBP. Any
production, trade and transit documents and other information necessary
to conduct a verification under this section, provided to CBP by the
government of Morocco consistent with the laws, regulations, and
procedures of Morocco, will be treated in accordance with Article 6.6
of the MFTA.
(e) Notification to Morocco; continuation of appropriate action.
Prior to commencing appropriate action under paragraph (a) or (b) of
this section, CBP will notify the government of Morocco. CBP may
continue to take appropriate action under paragraph (a) or (b) of this
section until it receives information sufficient to enable it to make
the determination described in those paragraphs.
Sec. 10.786 Issuance of negative origin determinations.
If, as a result of an origin verification initiated under this
subpart, CBP determines that a claim for preferential tariff treatment
made under Sec. 10.763 of this subpart should be denied, it will issue
a determination in writing or via an authorized electronic data
interchange system to the importer that sets forth the following:
(a) A description of the good that was the subject of the
verification together with the identifying numbers and dates of the
export and import documents pertaining to the good;
(b) A statement setting forth the findings of fact made in
connection with the verification and upon which the determination is
based; and
(c) With specific reference to the rules applicable to originating
goods as set forth in General Note 27, HTSUS, and in Sec. Sec. 10.769
through 10.777 of this subpart, the legal basis for the determination.
Penalties
Sec. 10.787 Violations relating to the MFTA.
All criminal, civil, or administrative penalties which may be
imposed on U.S. importers for violations of the customs and related
laws and regulations will also apply to U.S. importers for violations
of the laws and regulations relating to the MFTA.
Goods Returned After Repair or Alteration
Sec. 10.788 Goods re-entered after repair or alteration in Morocco.
(a) General. This section sets forth the rules that apply for
purposes of obtaining duty-free treatment on goods returned after
repair or alteration in Morocco as provided for in subheadings
9802.00.40 and 9802.00.50, HTSUS. Goods returned after having been
repaired or altered in Morocco, whether or not pursuant to a warranty,
are eligible for duty-free treatment, provided that the requirements of
this section are met. For purposes of this section, ``repairs or
alterations'' means restoration, addition, renovation, re-dyeing,
cleaning, re-sterilizing, or other treatment which does not destroy the
essential characteristics of, or create a new or commercially different
good
[[Page 35658]]
from, the good exported from the United States.
(b) Goods not eligible for treatment. The duty-free treatment
referred to in paragraph (a) of this section will not apply to goods
which, in their condition as exported from the United States to
Morocco, are incomplete for their intended use and for which the
processing operation performed in Morocco constitutes an operation that
is performed as a matter of course in the preparation or manufacture of
finished goods.
(c) Documentation. The provisions of Sec. 10.8(a), (b), and (c) of
this part, relating to the documentary requirements for goods entered
under subheading 9802.00.40 or 9802.00.50, HTSUS, will apply in
connection with the entry of goods which are returned from Morocco
after having been exported for repairs or alterations and which are
claimed to be duty free.
PART 162--INSPECTION, SEARCH, AND SEIZURE
0
4. The authority citation for Part 162 continues to read in part as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1592, 1593a, 1624.
* * * * *
0
5. Section 162.0 is amended by revising the last sentence to read as
follows:
Sec. 162.0 Scope.
* * * Additional provisions concerning records maintenance and
examination applicable to U.S. importers, exporters and producers under
the U.S.-Chile Free Trade Agreement, the U.S.-Singapore Free Trade
Agreement, and the U.S.-Morocco Free Trade Agreement are contained in
Part 10, Subparts H, I, and M of this chapter, respectively.
PART 163--RECORDKEEPING
0
6. The authority citation for Part 163 continues to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1484, 1508, 1509, 1510,
1624.
* * * * *
0
7. Section 163.1(a)(2) is amended by re-designating paragraph
(a)(2)(ix) as (a)(2)(x) and adding a new paragraph (ix) to read as
follows:
Sec. 163.1 Definitions.
* * *
(a) Records--
* * *
(2) Activities * * *
(ix) The maintenance of any documentation that the importer may
have in support of a claim for preferential tariff treatment under the
United States-Morocco Free Trade Agreement (MFTA), including a MFTA
importer's declaration.
* * * * *
0
8. The Appendix to Part 163 is amended by adding a new listing under
section IV in numerical order to read as follows:
Appendix to Part 163--Interim (a)(1)(A) List
* * * * *
IV. * * *
Sec. 10.765 MFTA records that the importer may have in support of a
MFTA claim for preferential tariff treatment, including an
importer's declaration.
* * * * *
PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS
0
9. The authority citation for Part 178 continues to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.
0
10. Section 178.2 is amended by adding new listings ``Sec. Sec. 10.763
and 10.764'' to the table in numerical order to read as follows:
Sec. 178.2 Listing of OMB control numbers.
------------------------------------------------------------------------
19 CFR Section Description OMB control No.
------------------------------------------------------------------------
* * * * * * *
Sec. Sec. 10.763 and 10.764 Claim for 1651-0117
preferential tariff
treatment under the
U.S.-Morocco Free
Trade Agreement.
* * * * * * *
------------------------------------------------------------------------
* * * * *
Deborah J. Spero,
Acting Commissioner, U.S. Customs and Border Protection.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 07-3153 Filed 6-28-07; 8:45 am]
BILLING CODE 9111-14-P