Suspension of United States-Canada Free-Trade Agreement Implementing Regulations

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR PART 10

[T.D. 96-35]

RIN 1515-AB93

Suspension of United States-Canada Free-Trade Agreement

Implementing Regulations

AGENCY: Customs Service, Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This document amends the Customs Regulations implementing the

duty preference provisions of the United States-Canada Free-Trade

Agreement (CFTA) to reflect that operation of the CFTA was suspended,

by agreement of the Governments of the United States and Canada, as a

result of the entry into force of the North American Free Trade

Agreement (NAFTA) on January 1, 1994. The CFTA implementing regulations

in question remain in effect only with regard to merchandise imported

from Canada that was entered or withdrawn from warehouse for

consumption prior to the entry into force of the NAFTA.

EFFECTIVE DATE: May 3, 1996.

FOR FURTHER INFORMATION CONTACT: Myles Harmon, Office of Regulations

and Rulings (202-482-7000).

SUPPLEMENTARY INFORMATION:

Background

On January 2, 1988, the United States and Canada entered into the

United

[[Page 19835]]

States-Canada Free-Trade Agreement (CFTA), the objectives of which

included the elimination of Customs duties and other barriers to trade

in goods and services between the two countries. The provisions of the

CFTA were adopted by the United States with the enactment of the United

States-Canada Free-Trade Agreement Implementation Act of 1988, Pub. L.

100-449, 102 Stat. 1851, and the CFTA went into effect on January 1,

1989. Regulations setting forth the basic legal and procedural

requirements for obtaining preferential duty treatment on imported

merchandise under the CFTA are contained in Secs. 10.301 through 10.311

of the Customs Regulations (19 CFR 10.301 through 10.311).

On December 17, 1992, the United States, Canada and Mexico entered

into the North American Free Trade Agreement (NAFTA). As in the case of

the CFTA, the stated objectives of the NAFTA include the elimination of

barriers to trade in goods and services between the territories of the

three countries. The provisions of the NAFTA were adopted by the United

States with the enactment of the North American Free Trade Agreement

Implementation Act, Pub. L. 103-182, 107 Stat. 2057, and the NAFTA went

into effect on January 1, 1994. Interim regulations implementing the

Customs-related provisions of the NAFTA were published in the Federal

Register as T.D. 94-1 on December 30, 1993 (58 FR 69460), and final

NAFTA implementing regulations were published as T.D. 95-68 on

September 6, 1995 (60 FR 46334); the majority of those NAFTA

regulations are set forth in part 181 of the Customs Regulations (19

CFR part 181).

In view of the similarity between the objectives of the CFTA and

those of the NAFTA, the United States and Canada recognized that, in

principle, there would be no need to continue the operation of the CFTA

upon accession to, and entry into force of, the NAFTA. Accordingly, by

an exchange of letters dated December 30, 1993, the Governments of the

United States and Canada formally agreed, subject to certain

transitional arrangements not involving preferential duty treatment, to

suspend the operation of the CFTA upon the entry into force of the

NAFTA, with the suspension to remain in effect for such time as the two

Governments are Parties to the NAFTA.

Customs believes that the present CFTA implementing regulations are

unclear as regards their applicability because they do not reflect the

fact that the operation of the CFTA has been suspended as a result of

the entry into force of the NAFTA. On the other hand, Customs notes

that those regulations must be retained because they continue to have

application to Customs transactions involving merchandise imported from

Canada that was entered or withdrawn from warehouse for consumption

during the period in which the CFTA was in effect (that is, from

January 1, 1989, through December 31, 1993).

In order to address the considerations mentioned above, this

document revises Sec. 10.301 (Scope) to include references both to the

suspension of the CFTA and to the circumstances in which the CFTA

regulations continue to have application.

Inapplicability of Public Notice and Comment Procedures and Delayed

Effective Date Requirements

Pursuant to the provisions of 5 U.S.C. 553(a), public notice and

comment procedures are inapplicable to this final rule because it is

within the foreign affairs function of the United States. In addition,

for the above reason and because this regulatory amendment involves no

substantive change but rather merely conforms the regulations to

present law, it is determined that good cause exists under the

provisions of 5 U.S.C. 553(d)(3) for dispensing with a 30-day delayed

effective date.

Executive Order 12866

Because this document involves a foreign affairs function it is not

subject to the provisions of E.O. 12866.

Regulatory Flexibility Act

Since the amendment is not subject to the notice and public

procedure requirements of 5 U.S.C. 553, it is not subject to the

provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

Drafting Information

The principal author of this document was Francis W. Foote, Office

of Regulations and Rulings, U.S. Customs Service. However, personnel

from other offices participated in its development.

List of Subjects in 19 CFR Part 10

Alterations, Bonds, Customs duties and inspection, Exports,

Imports, Preference programs, Repairs, Reporting and recordkeeping

requirements, Trade agreements.

Amendment to the Regulations

For the reasons set out in the preamble, part 10 of the Customs

Regulations (19 CFR part 10) is amended as set forth below.

PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,

ETC.

1. The authority citation for part 10 continues to read in part as

follows:

Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized

Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508,

1623, 1624, 3314;

* * * * *

2. Section 10.301 is revised to read as follows:

Sec. 10.301 Scope and applicability.

The provisions of Secs. 10.302 through 10.311 of this part relate

to the procedures for obtaining duty preferences on imported goods

under the United States-Canada Free-Trade Agreement (the Agreement)

entered into on January 2, 1988, and the United States-Canada Free-

Trade Agreement Implementation Act of 1988 (102 Stat. 1851). The United

States and Canada agreed to suspend operation of the Agreement with

effect from January 1, 1994, to coincide with the entry into force of

the North American Free Trade Agreement (see part 181 of this chapter)

and, accordingly, the provisions of Secs. 10.302 through 10.311 of this

part apply only to goods imported from Canada that were entered for

consumption, or withdrawn from warehouse for consumption, during the

period January 1, 1989, through December 31, 1993. In situations

involving goods subject to bilateral restrictions or prohibitions, or

country of origin marking, other criteria for determining origin may be

applicable pursuant to Article 407 of the Agreement.

Michael H. Lane,

Acting Commissioner of Customs.

Approved: March 29, 1996.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 96-11007 Filed 5-02-96; 8:45 am]

BILLING CODE 4820-02-P