Administration of Tobacco Tariff-Rate Quota

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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

19 CFR Part 132

Administration of Tobacco Tariff-Rate Quota

AGENCY: Office of the United States Trade Representative.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Office of the United States Trade Representative (USTR) is

soliciting comments and views on the administration of the tariff-rate

quota on leaf tobacco, established on September 13, 1995, which is

currently operating on a first-come, first-served basis.

DATES: Public comments are due by noon May 20, 1996.

ADDRESSES: Comments may be sent to: Sybia Harrison, room 222, Office of

the U.S. Trade Representative, 600 17th Street NW., Washington, DC

20508, attention: Tobacco Tariff-Rate Quota.

FOR FURTHER INFORMATION CONTACT:

Tom Perkins, Senior Economist, Office of Agricultural Affairs, USTR,

(202) 395-6127; or Rachel Shub, Assistant General Counsel, USTR, (202)

395-7305.

SUPPLEMENTARY INFORMATION: Presidential Proclamation 6821 (60 FR 47663

(September 13, 1995)) established a tariff-rate quota (TRQ) on imports

of flue-cured, burley and other light air-cured tobaccos that are

imported for the manufacture of cigarettes. Under the TRQ, a tariff

equal to the concession rates negotiated in the Uruguay Round is

applied to tobacco imports until the in-quota quantity is filled, after

which a tariff rate of 350% ad valorem is applied. For the quota year

beginning on September 13, 1995, the in-quota quantity of the TRQ is

150,450 tons, which is subdivided into specific allocations for

Argentina, Brazil, Chile, the European Union, Guatemala, Malawi,

Philippines, Thailand, Zimbabwe, and a general allocation for countries

other than those allocated specific TRQ quantities. Presidential

authority to establish the TRQ is provided by section 125(c) of the

Trade Act of 1974 (19 U.S.C. 2135(c)), section 421 of the Uruguay Round

Agreements Act (19 U.S.C. 2135 note) and other provisions of law

referenced in Presidential Proclamation 6821. The proclamation also

provides that the quantitative limitations of the TRQ are subject to

regulations as may be issued by USTR or its designated agency.

The TRQ is currently operating on a first-come, first-served basis,

under the U.S. Customs Service's quota regulations at 19 CFR 132

(``Customs Quota regulations''). These regulations establish

requirements for determining priority and status for importers

presenting tobacco for importation and set forth specific procedures

for prorating a TRQ category (such as a country-specific allocation) in

the event the category is oversubscribed. Customs Quota regulations

currently are applied to U.S. TRQs on beef, peanuts, peanut butter,

certain sugar-containing products, certain cotton and cotton waste, and

certain dairy products, as well as TRQ's applicable to Mexico (under

the North American Free Trade Agreement) on orange juice, tomatoes and

other safeguard products commodities.

Some cigarette manufacturers have suggested that the TRQ should be

administered by means of import licenses issued to manufacturers in

order to permit the orderly marketing of tobacco in the U.S. market.

Accordingly, the Office of the United States Trade Representative

(USTR) is soliciting comments on the administration of the TRQ. If

comments reflect substantial problems or concerns regarding the current

operation of the TRQ, USTR will consider alternative approaches,

including an import licensing program. Any alternative method should

aim to facilitate reasonable, efficient and orderly access to the U.S.

tobacco market for those countries to which a quota allocation has been

made, and provide equitable and efficient access for U.S. importers,

manufacturers and other entities that import or use tobacco affected by

the TRQ.

To better assess the need for change and the significance of that

need, USTR invites public comment on the current operation of the TRQ.

Comments should address the extent to which the current system is

orderly, economically efficient and equitable. USTR is interested in

aspects of the current system such as (1) the costs and benefits to the

U.S. economy as a whole as well as firms, foreign and domestic, that

participate in the markets for imported tobacco and related markets;

(2) the distribution across firms of the TRQ, including market

competition and concentration; (3) market access for small businesses;

(4) the effect on the U.S. price support program; and (5) the impact on

timing and storage of imports, and related costs and benefits; (6) the

impact on exporters if other countries were to adopt similar practices

for TRQs on products from the U.S.; and (7) administrative costs.

With respect to any alternative approaches, USTR would appreciate

views on how such programs might be administered. For example, for

licensing, comments could address: (1) the reasons and legal basis for

adopting such an approach; (2) to whom and by what mechanism import

licenses should be issued; (3) on what basis licenses should be issued

(including eligibility criteria, license validity period and license

renewability); (4) how licenses could be issued in light of the

country-specific allocations and market demand for different types of

tobacco; (5) how to address failure of importers to utilize their

licenses; (6) the extent to which new importers should be issued

licenses, taking into account the desirability of issuing licenses in

sizes that are commercially viable; (7) whether licenses should be

transferable, and under what conditions; (8) the benefits, costs, and

administrative and distributional considerations associated with a

market in licenses, including secondary markets; (9) the effect of any

proposed alternative on the U.S. economy as a whole as well as firms,

foreign and domestic, that participate in the markets for imported

tobacco and related markets; (10) any effect on the U.S. price support

program for tobacco; (11) effect of any proposed alternatives on small

businesses; (12) effect of any proposed alternatives on market

competition and concentration; (13) administrative costs that might be

associated with a proposed alternative; (14) the impact of proposed

alternatives on timing and storage of imports, and related costs and

benefits; (15) the impact on exporters if other countries were to adopt

similar practices for TRQs on products from the U.S.; and (16) any

other issues arising in the context of a particular alternative to the

current operation of the TRQ.

Persons submitting written comments should provide a statement, in

ten copies, by noon, May 20, 1996 to Sybia Harrison, Office of the U.S.

Trade Representative, Room 222, 600 17th Street, NW., Washington, DC

20508, attention: Tobacco Tariff-Rate Quota. Non-confidential

information received will be available for public inspection by

appointment, in the USTR Reading Room, Room 101, Monday through Friday,

10:00 a.m. to 12:00 noon and 1:00 p.m. to 4:00 p.m. For an appointment

call Brenda Webb at (202) 395-6186. Business confidential information

will be subject to the requirements of 15 CFR 2003.6. Any business

confidential material must be clearly marked as such on the cover

letter or page and each succeeding page,

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and must be accompanied by a non-confidential summary thereof.

Michael Kantor,

United States Trade Representative.

[FR Doc. 96-3652 Filed 2-16-96; 8:45 am]

BILLING CODE 3190-01-M