Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 69511

manner of a domestic futures account, 

the appropriate ‘‘type of account’’ is 

ambiguous. One can distinguish 

between a ‘‘foreign future’’ which is 

characterized by the place in which it is 

executed, and a ‘‘foreign futures 

account’’ which may be characterized 

by the calculation of the applicable 

segregation requirements. A ‘‘futures 

account’’ is also characterized by the 

calculation of the applicable segregation 

requirement. If the Commission grants 

Section 4d relief to permit funds 

supporting foreign futures to be 

deposited in a ‘‘futures account’’

calculated pursuant to Section 4d and 

Commission Regulation 1.20, then it 

would appear apposite to treat claims 

on those funds as belonging to the 

futures account class of accounts. 

Second, where a customer account 

contains both foreign futures contracts 

and domestic futures contracts, with 

those positions margined on a portfolio 

basis, such that the same property 

margins, guarantees, or secures both 

types of contracts in one account, the 

appropriate allocation of claims on the 

collateral between ‘‘futures contracts’’

and ‘‘foreign futures contracts’’ is, again, 

ambiguous. 

As the Commission noted in the 

proposing release for Commission 

Regulation 190.01,

‘‘The allocation provisions are intended to 

prefer customers for which segregation is 

undertaken over * * * customers holding 

accounts of a class for which segregation is 

not required * * * The reason for identifying 

classes of customer accounts is to permit the 

implementation of the principle of pro rata 

distribution so that the differing segregation 

requirements with respect to different classes 

of accounts benefit customer claimants based 

on the class of account for which they were 

imposed.’’ 46 FR 57535, 57536 (November 

24, 1981).

Thus, the Commission intended the 

customers who contribute to a 

segregated pool to benefit from that 

pool. Later in that release the 

Commission explained that the 

distinction in treatment between 

account classes sprang from the contrast 

in segregation requirements:

all property segregated on behalf of a 

particular class would be allocated to the 

class on behalf of which it is segregated. This 

approach is consistent with the fact that 

differing segregation requirements exist for 

different classes of accounts. Obviously, 

much of the benefit of segregation would be 

lost if property segregated on behalf of a 

particular account class could be allocated to 

pay the claims of customers of a different 

account for which less stringent segregation 

provisions were in effect. 46 FR at 57554.

Again, the Commission contemplated 

that customers would benefit from the 

stringency of the segregation regime to 

which their funds were subject. To the 

extent that, subject to a Commission 

order, customer margin supporting nondomestic trades is subject to the full 

stringency of segregation under 

Commission Regulation 1.20 rather than 

the less stringent Commission 

Regulation 30.7 secured amount 

calculation, it is consistent with the 

Commission’s intentions in adopting the 

Part 190 scheme that the property in the 

accounts of these customers be treated 

as futures accounts. Conversely, it 

would be inconsistent with the 

Commission’s intentions to deny 

customers who had contributed 

property that was, in accordance with 

Commission Orders, deposited into 

accounts segregated pursuant to 

Commission Regulation 1.20, any 

participation in those accounts based on 

those contributions. 

Thus, the Commission intended that 

the customers who contribute to a 

segregated pool benefit from that pool. 

If customers do not contribute to a pool, 

they should not benefit from that pool. 

The Commission’s intent to tie 

distribution of funds to the contribution 

of those funds, and the ambiguity of 

how to allocate claims on collateral that 

supports both futures and foreign 

futures positions placed in domestic 

segregation, both support the 

interpretation that, in the event of an 

insolvency, collateral supporting foreign 

futures placed in domestic segregation 

pursuant to Commission Order should 

be treated as in a futures account, not 

a foreign futures account, for purposes 

of Part 190. Thus, in a situation where 

by Commission order or direction, 

customers are required or allowed to 

contribute to a Commission Regulation 

1.20 segregated account, those 

customers also should benefit from the 

distribution of that account 

proportionately to their contributions in 

the event of an insolvency. Such claims 

should be treated as encompassed 

within the futures account class as 

opposed to the foreign futures account 

class or an other account class.

* * * * *

Issued in Washington, DC, on October 21, 

2004, by the Commodity Futures Trading 

Commission. 

Jean A. Webb, 

Secretary of the Commission.

[FR Doc. 04–26386 Filed 11–29–04; 8:45 am] 

BILLING CODE 6351–01–M

DEPARTMENT OF HOMELAND 

SECURITY 

Bureau of Customs and Border 

Protection 

DEPARTMENT OF THE TREASURY 

19 CFR Parts 10 and 163 

[CBP Dec. 04–40] 

RIN 1505–AB42 

Preferential Treatment of Brassieres 

Under the Caribbean Basin Economic 

Recovery Act

AGENCY: Customs and Border Protection, 

Department of Homeland Security.

ACTION: Final rule.

SUMMARY: This document adopts as a 

final rule amendments to the Customs 

and Border Protection (CBP) Regulations 

to implement the standards for 

preferential treatment for brassieres 

imported from Caribbean Basin 

countries. This rule was initially 

published as an interim regulation in 

the Federal Register on October 4, 2001, 

as T.D. 01–74, and later amended by 

T.D. 03–29 published in the Federal 

Register on September 30, 2003. 

T.D. 01–74 set forth interim 

amendments to the CBP Regulations to 

implement those provisions within the 

United States-Caribbean Basin Trade 

Partnership Act (CBTPA) which 

established the standards for 

preferential treatment for brassieres 

imported from CBTPA beneficiary 

countries. T.D. 03–29 amended the 

brassieres provision set forth in T.D. 01–

74 to reflect the amendments to section 

213(b) of the Caribbean Basin Economic 

Recovery Act (the CBERA) that were 

made by section 3107 of the Trade Act 

of 2002. T.D. 03–29 also included a 

number of other changes to the CBERA 

implementing regulations for brassieres 

to clarify a number of issues that arose 

after their original publication.

EFFECTIVE DATES: Final rule effective on 

December 30, 2004.

FOR FURTHER INFORMATION CONTACT: 

Operational issues: Robert Abels, 

Office of Field Operations ((202) 344–

1959). 

Legal issues: Cynthia Reese, Office of 

Regulations and Rulings ((202) 572–

8790).

SUPPLEMENTARY INFORMATION:

Background 

Textile and Apparel Articles Under the 

Caribbean Basin Economic Recovery Act 

The Caribbean Basin Economic 

Recovery Act (the CBERA, also referred 

69512 Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 

to as the Caribbean Basin Initiative, or 

CBI, statute codified at 19 U.S.C. 2701–

2707) instituted a duty preference 

program that applies to exports of goods 

from those Caribbean Basin countries 

that have been designated by the 

President as program beneficiaries. On 

May 18, 2000, the President signed into 

law the Trade and Development Act of 

2000, Pub. L. 106–200, 114 Stat. 251, 

which included as Title II the United 

States-Caribbean Basin Trade 

Partnership Act, or CBTPA. The CBTPA 

provisions included section 211 which 

amended section 213(b) of the CBERA 

(19 U.S.C. 2703(b)) in order to, among 

other things, provide in new paragraph 

(2) for the preferential treatment of 

certain textile and apparel articles, 

specified in subparagraph (A), that had 

previously been excluded from the CBI 

duty-free program. The preferential 

treatment for those textile and apparel 

articles under paragraph (2)(A) of 

section 213(b) involves not only dutyfree treatment but also entry in the 

United States free of quantitative 

restrictions, limitations, or consultation 

levels for all qualifying goods. 

Paragraph (2)(A) of the statute includes, 

in clause (iv), a specific provision 

covering brassieres from designated 

CBTPA beneficiary countries. 

On October 2, 2000, the President 

signed Proclamation 7351 to implement 

the provisions of the CBTPA. This 

Proclamation, which was published in 

the Federal Register (65 FR 59329) on 

October 4, 2000, modified the 

Harmonized Tariff Schedule of the 

United States (HTSUS) by, among other 

things, the addition of a new Subchapter 

XX to Chapter 98 to address the majority 

of the textile and apparel provisions of 

the CBTPA. Within that Subchapter XX, 

the brassieres provision of paragraph 

(2)(A)(iv) of the CBTPA statute is dealt 

with in U.S. Note 2(d) and in 

subheading 9820.11.15. 

On October 5, 2000, the U.S. Customs 

Service (now U.S. Customs and Border 

Protection (CBP)) published in the 

Federal Register (65 FR 59650) T.D. 00–

68 to amend the Customs and Border 

Protection (CBP) Regulations on an 

interim basis in order to set forth basic 

legal requirements and procedures that 

apply for purposes of obtaining 

preferential treatment of textile and 

apparel articles pursuant to the 

provisions added to section 213(b) by 

the CBTPA. Those interim regulations, 

consisting of §§ 10.221 through 10.227 

of the CBP Regulations (19 CFR 10.221 

through 10.227), include, in paragraph 

(a) of § 10.223, a list of the various 

groups of articles that are eligible for 

preferential treatment under the statute. 

Paragraph (a)(6) of § 10.223 specifically 

addressed the basic CBTPA brassieres 

provision of subclause (I) of paragraph 

(2)(A)(iv) of the statute and subheading 

9820.11.15 of the HTSUS. The 

regulatory texts set forth in T.D. 00–68 

did not address subclauses (II) and (III) 

of paragraph (2)(A)(iv) of the statute and 

U.S. Note 2(d) of Subchapter XX, 

Chapter 98, HTSUS, because under the 

terms of the statute those provisions 

applied only to articles entered on or 

after October 1, 2001. 

On October 4, 2001, CBP (as legacy 

Customs) published in the Federal 

Register (66 FR 50534) T.D. 01–74 to 

amend the CBP Regulations on an 

interim basis in order to implement the 

terms of subclauses (II) and (III) of 

paragraph (2)(A)(iv) of the statute and 

U.S. Note 2(d) of Subchapter XX, 

Chapter 98, HTSUS. Those regulatory 

amendments involved primarily the 

addition of a new § 10.228 which set 

forth specific rules for the application of 

the minimum 75 and 85 percent U.S. 

fabric component content requirements 

under subclauses (II) and (III) that took 

effect for purposes of preferential 

treatment of brassieres described in 

subclause (I) starting on October 1, 

2001.

T.D. 01–74 also amended the 

introductory text in § 10.222 to account 

for the newly created § 10.228. In 

addition, T.D. 01–74 amended 

paragraph (a)(7) of § 10.223 to exclude 

brassieres from the apparel articles that 

are constructed of fabrics or yarns that 

are considered to be in ‘‘short supply’’

for purposes of Annex 401 of the 

NAFTA. We note that while T.D. 01–74 

amended paragraph (a)(6) of § 10.223 by 

adding a proviso at the end to indicate 

that the requirements of new § 10.228 

also must be satisfied, paragraph (a)(6) 

was later amended in its entirety by T.D. 

03–12, published in the Federal 

Register (68 FR 13827) on March 21, 

2003. 

T.D. 01–74 also amended the 

Appendix to Part 163 of the CBP 

Regulation (19 CFR 163), which sets 

forth a list of entry records (that is, 

records that are required by statute or 

regulation for the entry of 

merchandise—the ‘‘(a)(1)(A)’’ list), by 

adding a listing that covers the CBTPA 

declaration of compliance for brassieres. 

Trade Act of 2002 Amendments 

On August 6, 2002, the President 

signed into law the Trade Act of 2002 

(the ‘‘Act’’), Pub. L. 107–210, 116 Stat. 

933. Section 3107(a) of the Act made a 

number of changes to the textile and 

apparel provisions of paragraph (2)(A) 

of section 213(b) of the CBERA. The 

amendments made by section 3107(a) of 

the Act included a revision of the 

brassieres provisions of paragraph 

(2)(A)(iv) of the statute which involved 

the following textual changes: (1) 

Subclause (I) was amended by the 

addition of exception language 

regarding articles covered by certain 

other clauses under paragraph (2)(A); 

and (2) subclauses (II) and (III) were 

amended by replacing each reference to 

‘‘fabric components’’ with ‘‘fabrics,’’ by 

adding exclusion language regarding 

findings and trimmings after each 

reference to fabric(s), and by adding 

various references to articles that are 

‘‘entered’’ and that are ‘‘eligible’’ under 

clause (iv). The principal effects of the 

language changes within subclauses (II) 

and (III) were: (1) Adoption of a cost or 

value percentage standard based on a 

comparison between U.S. fabric and all 

fabric (rather than based on a 

comparison between U.S. fabric 

components and all fabric) contained in 

the articles; and (2) removal of the 

requirement that the articles must be 

both produced and entered in the same 

year. The amended paragraph (2)(A)(iv) 

text now reads as follows:

(iv) Certain Other Apparel Articles.—(I) 

General Rule.—Subject to subclause (II), any 

apparel article classifiable under subheading 

6212.10 of the HTS, except for articles 

entered under clause (i), (ii), (iii), (v), or (vi), 

if the article is both cut and sewn or 

otherwise assembled in the United States, or 

one or more CBTPA beneficiary countries, or 

both. 

(II) Limitation.—During the 1-year period 

beginning on October 1, 2001, and during 

each of the 6 succeeding 1-year periods, 

apparel articles described in subclause (I) of 

a producer or an entity controlling 

production shall be eligible for preferential 

treatment under subparagraph (B) only if the 

aggregate cost of fabrics (exclusive of all 

findings and trimmings) formed in the 

United States that are used in the production 

of all such articles of that producer or entity 

that are entered and eligible under this clause 

during the preceding 1-year period is at least 

75 percent of the aggregate declared customs 

value of the fabric (exclusive of all findings 

and trimmings) contained in all such articles 

of that producer or entity that are entered and 

eligible under this clause during the 

preceding 1-year period. 

(III) Development of Procedure to Ensure 

Compliance.—The United States Customs 

Service shall develop and implement 

methods and procedures to ensure ongoing 

compliance with the requirement set forth in 

subclause (II). If the Customs Service finds 

that a producer or an entity controlling 

production has not satisfied such 

requirement in a 1-year period, then apparel 

articles described in subclause (I) of that 

producer or entity shall be ineligible for 

preferential treatment under subparagraph 

(B) during any succeeding 1-year period until 

the aggregate cost of fabrics (exclusive of all 

findings and trimmings) formed in the 

United States that are used in the production 

of such articles of that producer or entity 

Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 69513

entered during the preceding 1-year period is 

at least 85 percent of the aggregate declared 

customs value of the fabric (exclusive of all 

findings and trimmings) contained in all 

such articles of that producer or entity that 

are entered and eligible under this clause 

during the preceding 1-year period.

On November 13, 2002, the President 

signed Proclamation 7626 (published in 

the Federal Register at 67 FR 69459 on 

November 18, 2002) which included, 

among other things, modifications to the 

HTSUS to implement the changes to 

section 213(b)(2)(A) of the CBERA made 

by section 3107(a) of the Act. Those 

modifications included an amendment 

of U.S. Note 2(d) to Subchapter XX, 

Chapter 98, HTSUS, to reflect the 

changes to subclauses (II) and (III) of 

paragraph (2)(A)(iv) of the statute 

discussed above. The Proclamation 

further provided that this amendment of 

U.S. Note 2(d) was effective with respect 

to goods entered, or withdrawn from 

warehouse for consumption, on or after 

October 1, 2002. 

Interim Regulatory Amendments in T.D. 

03–29 

As a consequence of the statutory 

amendments described above and as a 

result of the modifications to the 

HTSUS made by Proclamation 7626, the 

interim regulatory provisions published 

in T.D. 01–74 no longer fully reflected 

the current standards that apply for 

purposes of preferential treatment of 

brassieres under the CBERA. In this 

regard, the effect of the statutory 

changes required changes throughout 

the text of interim § 10.228. Moreover, 

following publication of T.D. 01–74, 

some other issues came to the attention 

of CBP that warranted additional 

changes to the interim § 10.228 text. 

Accordingly, in T.D. 03–29, CBP set 

forth an interim rule document revising 

interim § 10.228 in its entirety to reflect 

the amendments to the statute and to 

clarify or otherwise improve the 

previously published text. T.D. 03–29 

was limited to the text of interim 

§ 10.228 and therefore did not address 

the change that the Act made to 

paragraph (2)(A)(iv)(I) of the statute; that 

provision was reflected in § 10.223(a)(6) 

within the interim CBTPA regulations 

published in T.D. 00–68, and later 

amended by T.D. 03–12, published in 

the Federal Register on March 21, 2003. 

That change is discussed in a separate 

final rule document that addresses the 

other statutory changes to the CBERA 

made by the Act. 

The interim regulatory changes to 

§ 10.228 contained in T.D. 03–29 are 

restated below. 

Amendments To Reflect the Statutory 

Changes 

The changes to § 10.228 as set forth in 

T.D. 03–29 in response to the changes 

made to paragraph (2)(A)(iv) of the 

statute by section 3107(a) of the Act 

were as follows: 

1. The definition of ‘‘fabric 

components formed in the United 

States’’ in paragraph (a)(3) was replaced 

by a definition of ‘‘fabrics formed in the 

United States’’ to reflect the fact that 

subclauses (II) and (III) of the statute no 

longer refer to fabric ‘‘components.’’

Similarly, the definition of ‘‘cost’’ in 

paragraph (a)(4) and the definition of 

‘‘declared customs value’’ in paragraph 

(a)(5) were modified to refer simply to 

‘‘fabrics.’’

2. The following changes were made 

to paragraph (b) which concerns the 75/

85 percent U.S. fabric content 

requirements for preferential treatment 

in subclauses (II) and (III) of the statute: 

a. In the introductory text of 

paragraph (b)(1), reference was made to 

the year that begins on ‘‘October 1, 

2002’’ (rather than ‘‘October 1, 2001’’) to 

reflect the applicable effective date set 

forth in Proclamation 7626.

b. Throughout the paragraph (b) texts, 

all references to U.S.-formed ‘‘fabric 

components’’ were replaced by 

references to U.S.-formed ‘‘fabric,’’ the 

words ‘‘produced and’’ were removed 

from the expression ‘‘produced and 

entered,’’ and the parenthetical 

reference ‘‘(exclusive of all findings and 

trimmings)’’ has been added as 

appropriate after references to ‘‘fabrics’’

and ‘‘fabric.’’ These changes simply 

conform the regulatory text to the 

wording changes in the statute. 

c. Paragraph (b)(1)(i), which concerns 

the 75 percent requirement of subclause 

(II) of the statute, was changed to refer 

to articles that are ‘‘entered as articles 

described in § 10.223(a)(6),’’ and 

paragraph (b)(1)(ii), which concerns the 

85 percent requirement of subclause (III) 

of the statute, was changed to refer to 

articles that ‘‘conform to the production 

standards set forth in § 10.223(a)(6).’’

These wording changes are in response 

to the statutory wording changes 

regarding articles that are ‘‘entered’’ and 

that are ‘‘eligible’’ under clause (iv). The 

differences in wording in the two 

regulatory texts were necessary in order 

to enable the 85 percent standard to 

operate. As explained in T.D. 03–29, 

CBP notes that if the universe of articles 

that are looked at for purposes of 

assessing compliance with the 85 

percent standard is the same as that 

used for purposes of the 75 percent 

standard (that is, articles that were 

entered under the HTSUS subheading 

that applies to articles described in 

paragraph (2)(A)(iv)(I) of the statute and 

§ 10.223(a)(6)), it would be impossible 

in the first year following the statutory 

changes (that is, starting on October 1, 

2002) for a new producer or entity to 

enter the program, or for a producer or 

entity that failed to meet the 75 percent 

standard in the previous year to reenter 

the program. This is because application 

of the 85 percent standard presupposes 

a failure to have met the 75 percent 

standard in the preceding year. This 

would mean that there could not be any 

entries in the next year under the 

HTSUS subheading that applies to 

articles described in paragraph 

(2)(A)(iv)(I) of the statute and 

§ 10.223(a)(6) against which compliance 

with the 85 percent standard can be 

determined. The wording used in 

paragraph (b)(1)(ii) of the regulatory text 

(which is also reflected in the general 

statement of the paragraph (b)(1) 

introductory text and in the general rule 

in paragraph (b)(2)(i)(A)), by referring to 

articles that meet the U.S./Caribbean 

cutting and assembly production 

requirement (regardless of the HTSUS 

subheading under which they are 

entered), is intended to avoid this 

anomalous result. 

d. In the general rules of application 

set forth in paragraph (b)(2)(i), two new 

subparagraphs (C) and (D) were added 

to clarify the application of the different 

regulatory language for the 75 and 85 

percent standards discussed at point c. 

above, and former subparagraph (D) was 

removed because it concerned the year 

of production which is no longer 

relevant under the amended statutory 

text. 

e. Also in paragraph (b)(2)(i), former 

subparagraph (C) was redesignated as 

subparagraph (E) and the text was 

modified, and a new subparagraph (L) 

was added, primarily to reflect that the 

findings and trimmings referred to in 

the context of brassieres are not limited 

to foreign findings and trimmings. 

f. Also in paragraph (b)(2)(i), former 

subparagraph (E) was redesignated as 

subparagraph (G) and the text, which 

concerns a new producer or new entity 

controlling production, was revised to 

incorporate the new wording (‘‘entered 

as articles described in § 10.223(a)(6)’’) 

of paragraph (b)(1)(i) and to clarify what 

CBP believes is a necessary conclusion 

under the statutory text, that is, that in 

the described context the producer or 

entity must first meet the 85 (rather than 

the 75) percent standard. 

g. In paragraph (b)(2)(ii), a new 

Example 2 and a new Example 3 were 

added to cover new subparagraphs (C) 

and (D) of paragraph (b)(2)(i), and 

Examples 2 through 6 consequently 

69514 Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 

were redesignated as Examples 4 

through 8. 

h. Also in paragraph (b)(2)(ii), 

redesignated Example 6 was revised in 

order to replace the former ‘‘produced 

and entered’’ in the same year scenario 

with a factual pattern addressing the 75 

versus 85 percent standard and entry in 

different years. 

i. Also in paragraph (b)(2)(ii), 

redesignated Example 7 was revised in 

order to reflect that the 85 percent 

standard (rather than the 75 percent 

standard) applies to a new producer or 

entity controlling production, as stated 

in redesignated and revised 

subparagraph (G) of paragraph (b)(2)(i). 

3. In paragraph (c)(3)(i), the text of the 

declaration of compliance was modified 

by removing each reference to 

‘‘components’’ and by removing the 

words ‘‘produced and’’ before the word 

‘‘entered’’ in blocks 4 and 6, in each 

case to reflect changes in statutory 

language. 

4. Finally, in paragraph (d)(1)(v), the 

next to last sentence was modified to 

state that the inventory records must 

indicate that the required production 

occurred (rather than ‘‘identify the date 

of’’ production), and the last sentence 

was modified to refer to purchases made 

during the ‘‘accounting period’’ (rather 

than ‘‘year’’), because the year of 

production is not relevant under the 

amended statute.

Other Amendments 

In addition to the changes described 

above that result from the changes made 

to the statute by section 3107(a) of the 

Act, CBP also included a number of 

other changes in the revised text of 

§ 10.228 set forth in T.D. 03–29. These 

additional changes, which were 

intended to clarify or otherwise improve 

the previous interim regulatory texts, 

were as follows: 

1. The definition of ‘‘cost’’ in 

paragraph (a)(4) and the definition of 

‘‘declared customs value’’ in paragraph 

(a)(5) were revised for purposes of 

clarity, in particular in order to include 

rules covering cases in which there is no 

price based on an exportation to a 

CBTPA beneficiary country. 

2. The definition of ‘‘year’’ in 

paragraph (a)(6) was reworded for 

purposes of clarity. 

3. In Example 1 under paragraph 

(b)(2)(ii), the words ‘‘in the first year’’

were added to the scenario in the first 

sentence to clarify that the year in 

question is one during which the 75 

percent standard must be met. 

4. In Example 5 under paragraph 

(b)(2)(ii), the references to foreign origin 

straps were replaced by references to 

‘‘strips and labels’’ to ensure that the 

example is clearly directed to findings 

and trimmings and not to materials that 

are considered to be components of 

brassieres. 

5. In paragraph (c)(3)(i), the text of the 

declaration of compliance was modified 

by replacing the words ‘‘all articles’’

with ‘‘brassieres’’ in blocks 4 through 6 

and by simplifying the wording within 

block 6. 

6. Finally, in paragraph (c)(3)(ii), the 

subparagraph (E) instruction for 

completion of block 6 was removed in 

light of the simplification of the block 

6 text, and former subparagraph (F) 

consequently was redesignated as (E). 

CBP is now publishing one document 

that adopts, as a final rule, the § 10.228 

provisions contained in T.D. 03–29 and 

the other regulatory changes pertaining 

to brassieres under the CBTPA that were 

published in T.D. 01–74. This final rule 

document also summarizes and 

responds to the public comments 

previously submitted on the changes to 

§§ 10.222 and 10.223(a)(7) published in 

T.D. 01–74 and addresses the comments 

submitted on the revised § 10.228 text 

set forth in T.D. 03–29. Because CBP 

significantly modified § 10.228 in T.D. 

03–29, CBP did not consider or address 

any public comments previously 

submitted on the text of § 10.228 as 

published in T.D. 01–74 that were 

addressed by statutory changes. 

Discussion of Comments in Response to 

T.D. 01–74 

A total of 8 commenters responded to 

the solicitation of public comments in 

the October 4, 2001, interim rule 

document referred to above. The 

comments submitted are summarized 

and responded to below. To the extent 

that the comments received regarding 

§ 10.228 were not addressed by the 

changes made in T.D. 03–29, CBP has 

responded. 

We note that after T.D. 01–74 

amended § 10.223(a)(6), T.D. 03–12 

again amended § 10.223(a)(6). Therefore, 

the change to § 10.223(a)(6) and the 

comments submitted regarding that 

change are discussed in a separate final 

rule document that addresses the other 

statutory changes to the CBERA made 

by the Trade Act of 2002.

Exclusion of Brassieres From Short 

Supply Provision 

Six commenters disagree with the 

amendment to § 10.223(a)(7), which 

excludes brassieres conforming to the 

description set forth in § 10.223(a)(6) 

from receiving preferential treatment 

under the CBTPA short supply 

provision found in revised 

§ 213(b)(2)(A)(v)(I) of the CBERA (and 

§ 10.223(a)(7)). The specific points made 

by the commenters on this issue are set 

forth below. 

Comment: There is nothing in the 

CBTPA or its legislative history to 

support CBP’s interpretation in regard to 

this issue. While Congress did create a 

separate provision for brassieres in the 

CBTPA, with a minimum United States 

fabric content requirement, there is no 

evidence that Congress also meant to 

disqualify brassieres made of fabrics 

that have already been determined to be 

in short supply in the U.S., such as silk, 

from CBTPA eligibility. CBP’s 

interpretation has the absurd 

consequence of precluding a CBTPA 

producer or entity that make only silk 

brassieres from receiving CBTPA 

treatment even though no silk is made 

in the United States. Congress intended 

that the short supply provision be 

applied equally to all garments. 

CBP’s Response: As stated in the 

preamble of the interim regulations, 

§ 10.223(a)(7) provides for apparel 

articles constructed of fabrics or yarns 

which for purposes of Annex 401 of the 

NAFTA are deemed to be in ‘‘short 

supply.’’ There is no list of ‘‘short 

supply’’ fabrics or yarns for purposes of 

NAFTA. The determination of these 

‘‘short supply’’ fabrics or yarns is based 

upon the various provisions of NAFTA 

and whether, under NAFTA, for the 

particular apparel article at issue, 

certain fabrics or yarns are explicitly 

permitted to be sourced from outside 

the NAFTA parties for use in the 

production of an ‘‘originating’’ good by 

omission of the fabrics or yarns from the 

list of excluded materials in the rule of 

origin for the particular apparel article. 

If sourcing of certain fabrics or yarns 

outside the NAFTA parties is allowed, 

then those fabrics or yarns are deemed 

to be in ‘‘short supply’’ for that apparel 

article. 

In the case of brassieres under 

NAFTA, no restrictions or limitations 

apply regarding fabrics or yarns. Fabrics 

and yarns may be sourced from 

anywhere. The only requirement under 

Annex 401 is that articles classified in 

subheading 6212.10, HTSUS, must be 

‘‘both cut (or knit to shape) and sewn or 

otherwise assembled in the territory of 

one or more of the NAFTA parties.’’

CBP does not agree with the 

presumption that since no restrictions 

exist, then all fabrics or yarns must be 

in ‘‘short supply.’’ If that presumption 

were true, § 10.223(a)(6) would be 

rendered meaningless. Accordingly, 

CBP concludes that the amendment to 

§ 10.223(a)(7) of clarifying language to 

exclude articles described in 

§ 10.223(a)(6) is appropriate. 

Comment: If CBP insists that the 

CBTPA brassiere provision is sui 

Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 69515

generis, standing alone, and must be 

read divorced from the rest of the 

statute, CBP should make clear that the 

separate CBTPA provisions relating to 

‘‘findings and trimmings,’’ de minimis, 

and elastomeric yarn also do not apply 

to brassieres classified in subheading 

6212.10, HTSUS.

CBP’s Response: CBP disagrees with 

the assertion that the CBTPA provisions 

relating to ‘‘findings and trimmings,’’ de 

minimis, and elastomeric yarn do not 

apply to brassieres classified in 

subheading 6212.10, HTSUS. These 

provisions of the CBTPA clearly do 

apply to the provision of the CBTPA 

specific to brassieres, as well as the 

other various provisions described in 

paragraph (b)(2)(A) of amended section 

213. These special rules refer to 

eligibility for ‘‘preferential treatment 

under this paragraph.’’ The paragraph 

referred to in these contexts is 

paragraph (b)(2) of amended section 

213, and since the brassiere provision is 

part of paragraph (b)(2), there is no 

doubt these ‘‘special rules’’ are 

applicable to goods described in that 

provision. 

Comment: CBTPA provisions that 

exempt, exclude or deem products 

ineligible for preferential treatment do 

so by identifying the product by HTS 

[HTSUS] number. Had Congress wanted 

to exclude brassieres of subheading 

6212.10, HTSUS, from receiving dutyfree treatment under the short supply 

provision found in § 213(b)(2)(A)(v)(I) of 

the CBERA, they would have included 

a specific provision to that effect. An 

example of a specific limitation in a 

CBTPA provision is the ‘‘findings and 

trimmings’’ provision where by explicit 

reference it is stated that elastic strips 

are findings and trimmings if ‘‘less than 

one inch in width and used in the 

production of brassieres.’’ In fact, the 

reference to brassieres in the ‘‘findings 

and trimmings’’ provision confirms that 

Congress intended for brassieres to be 

entitled to preference through a variety 

of CBTPA provisions. 

CBP’s Response: This comment has 

been addressed, in part, in the above 

responses. In addition, however, it is 

CBP’s view that although the ‘‘current 

short supply’’ provision in the CBTPA 

does not encompass brassieres based 

upon the application of the ‘‘short 

supply’’ provisions in Annex 401 of the 

NAFTA, the language in 

§ 211(b)(2)(A)(v), as written, would 

allow for the designation of new or 

additional fabrics or yarns as in ‘‘short 

supply’’ for apparel articles including 

brassieres. If, as suggested by the 

commenter, Congress had included 

language in § 211(b)(2)(A)(v)(I) to 

exclude brassieres of subheading 

6212.10, HTSUS, then brassieres would 

be excluded from possible application 

of 211(b)(2)(A)(v)(II), thus precluding 

the designation of new or additional 

fabrics or yarns as in ‘‘short supply’’ for 

brassiereres. 

Comment: The CBTPA and the Africa 

Growth and Opportunity Act (AGOA) 

are both part of the Trade and 

Development Act of 2000. While the 

CBTPA includes both short supply and 

brassiere provisions, the AGOA contains 

short supply provisions but no separate 

brassiere provision. CBP’s instructions 

to the ports dated September 14, 2001 

(TBT–00–023–01) state that the AGOA 

short supply provisions do not apply to 

brassieres. This instruction seems to 

contradict CBP’s logic that the presence 

of the separate CBTPA brassiere 

provision confirms Congressional intent 

that the § 10.223(a)(7) short supply 

provision does not apply to brassieres of 

subheading 6212.10, HTSUS. CBP’s 

logic is also called into question by the 

exclusion of brassieres of subheading 

6212.10, HTSUS, only from the 

§ 10.223(a)(7) provision. If the presence 

of the specific brassiere provision in the 

CBTPA were construed to exclude 

brassieres from one CBTPA preference 

provision, it follows that brassieres 

should be excluded from the other 

CBTPA preference provisions (including 

the § 10.223(a)(8) short supply 

provision) as well. 

CBP’s Response: CBP’s rationale for 

clarifying that § 10.223(a)(7) does not 

include brassieres of subheading 

6212.10, HTSUS, is based upon the 

application of the current ‘‘short 

supply’’ provisions in Annex 401 of the 

NAFTA and the methodology necessary 

to determine fabrics and yarns deemed 

to be in ‘‘short supply’’ for purposes of 

NAFTA. In order to qualify for 

preferential treatment under NAFTA, 

brassieres need only be cut (or knit to 

shape) and sewn or otherwise 

assembled in the territory of one or 

more of the NAFTA parties. There is no 

requirement provided for the sourcing 

of fabrics or yarns used in the 

production of qualifying brassieres, thus 

allowing fabrics or yarns to be sourced 

from anywhere. As it would be 

nonsensical to view the rule as 

establishing all fabrics and yarns to be 

‘‘short supply’’ for brassieres under 

NAFTA, CBP interprets the rule as not 

designating any fabrics or yarns as 

‘‘short supply’’ for brassieres. Based on 

that rationale, the instructions to the 

ports dated September 14, 2001 (TBT–

00–023–01) stating that the AGOA 

‘‘short supply’’ provision did not apply 

to brassieres was appropriate. The 

reference by CBP in the interim 

regulations document to § 10.223(a)(6) 

as support for CBP’s view that 

§ 10.223(a)(7) does not include 

brassieres of subheading 6212.10, 

HTSUS, was simply, as stated, 

additional support for the view adopted 

by CBP. As a result of the amendments 

to the CBTPA brassiere provision in the 

Trade Act of 2002, reliance on 

§ 10.223(a)(6) as support for CBP’s view 

would now seem misplaced. However, 

it was not the basis for that view. 

The primary reason that CBP has 

concluded that the current ‘‘short 

supply’’ provision of the CBTPA does 

not include brassieres is based upon the 

manner in which ‘‘short supply’’ yarns 

and fabrics are determined under the 

NAFTA as has already been explained 

above. 

Comment: The fact that the short 

supply provision of § 213(b)(2)(A)(v)(I) 

comes directly after the CBTPA 

brassieres provision suggests that, 

contrary to CBP’s reasoning, Congress 

intended the short supply provision to 

apply to brassieres of subheading 

6212.10, HTSUS. 

CBP’s Response: CBP does not believe 

that the order of the statutory provisions 

in question is persuasive, and CBP 

disagrees with the conclusion of the 

commenter for the reasons set forth 

earlier in this comment discussion. 

Comment: In support of its 

interpretation regarding this issue, CBP 

notes that the NAFTA Annex 401 rule 

for subheading 6212.10, HTSUS, 

includes no designation of fabrics or 

yarns in short supply. This is a 

misreading of the application of Annex 

401 to the CBTPA short supply 

provision. Congress was using the 

Annex 401 language as the easiest way 

of capturing those fabrics and yarns that 

are already designated as short supply 

under NAFTA, and not as a re-creation 

of the basic rule of origin under NAFTA.

CBP’s Response: Annex 401 of the 

NAFTA does not contain a convenient 

list of ‘‘short supply’’ fabrics and yarns. 

Additionally, for certain apparel, annex 

401 specifies distinct fabrics by 

technical descriptions. The only means 

by which CBP is able to determine the 

‘‘short supply’’ fabrics and yarns 

currently allowed under the NAFTA 

and thus allowed under the CBTPA is 

by reviewing the specific rules 

contained in annex 401. 

Declaration of Compliance 

Comment: One commenter 

recommends that § 10.228(c)(1) provide 

that the declaration of compliance be 

submitted to CBP no later than 30 days 

prior to the beginning of the next year 

(October 1st) to afford CBP sufficient 

time to evaluate the declaration, assign 

a distinct and unique identifier, and 

69516 Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 

notify the ports of the identifier. The 10-

day time frame currently specified in 

this regulation is unrealistic. 

CBP’s Response: CBP does not agree 

that it is necessary to make any change 

in the specified time frame for filing the 

Declaration of Compliance. CBP notes 

that the requirement is for submission at 

least 10 calendar days prior to the date 

of the first shipment. The reference to 

the first shipment was intended to 

accommodate goods shipped after a year 

has already begun, and the change 

suggested by this commenter would 

remove this flexibility. CBP is still of the 

opinion that the 10-day period is the 

appropriate minimum period needed for 

processing the Declaration of 

Compliance and giving notice of the 

distinct and unique identifier to the 

producer or entity controlling 

production and to the importer. 

However, CBP would not object to 

submissions made well in advance of 

that 10-day period. It is noted that the 

regulatory text merely sets forth a 

minimum period and therefore does not 

preclude earlier submissions. 

Comment: Four commenters disagree 

with the general rule set forth in 

§ 10.228(b)(2)(i)(G), providing that a 

declaration of compliance prepared by a 

producer or by an entity must cover all 

production of that producer or all 

production that the entity controls. The 

commenters allege that requiring a 

declaration to cover all of a producer’s 

production presents confidentiality 

problems in situations such as 

presented in Example 6 under 

§ 10.228(b)(2)(ii) where an entity 

controls a portion of a producer’s 

production but the producer also 

operates independently by producing 

for several U.S. importers. The 

commenters maintain that the entity 

may be reluctant or may even refuse to 

provide the producer with the fabric 

cost and value information needed for 

the producer to file its declaration of 

compliance. According to these 

commenters, the statute does not require 

that production be reported twice, as it 

would be in this example. The 

commenters suggest that the regulations 

should provide some method through 

which confidentiality for cost 

information can be maintained by the 

producer or entity that has this 

information but still allow each party to 

file a declaration based only on that part 

of the information for which it is 

directly responsible. 

CBP’s Response: In the case of the 

producer, the Declaration of Compliance 

must include all the production of the 

producer that meets the description of 

19 CFR 10.223(a)(6) and is entered in 

the United States. In the case of an 

entity controlling production, the 

Declaration of Compliance must include 

all the production that meets the 

description of § 10.223(a)(6) and is 

entered in the United States. These 

requirements reflect the wording of the 

statute as regards who must bear the 

burden of meeting the 75 or 85 percent 

standard. The regulatory provisions are 

intended to encompass all possible 

production scenarios that could arise 

under the statutory framework and 

therefore include circumstances in 

which there is an overlap as regards 

information reported by an entity and 

information reported by a producer. 

Since the suggestion of these 

commenters would lead to a result that 

is incompatible with the wording of the 

statute, it cannot be adopted. 

With regard to the issue of 

confidentiality, CBP recognizes that 

there may be legitimate commercial 

concerns regarding the information that 

must be disclosed between producers 

and entities controlling production in 

order to demonstrate compliance with 

the statutory requirements. However, 

CBP believes that confidentiality issues 

in this context are a private commercial 

matter which must be addressed by the 

private parties directly affected, as part 

of the process of weighing the 

advantages and disadvantages of 

participating in this statutory 

preferential tariff program. CBP further 

believes that it would be inadvisable to 

address those concerns in the manner 

suggested by these commenters because 

it would result in a reporting 

requirement that would not allow CBP 

to effectively verify compliance with the 

statutory requirements.

Certificate of Origin 

Comment: Four commenters argue 

that a Certificate of Origin under 

§ 10.224 should not be required for 

brassieres entered duty-free under 

subheading 9820.11.15, HTSUS. The 

commenters state that, because CBTPA 

eligibility for brassieres is dictated only 

by the validity of the information on the 

Declaration of Compliance, a Certificate 

of Origin should be unnecessary when 

the declaration identifier number is on 

the entry. 

CBP’s Response: Paragraph (b)(4)(A)(i) 

of amended section 213 provides that 

‘‘[a]ny importer that claims preferential 

treatment under paragraph (2) or (3) 

shall comply with customs procedures 

similar in all material respects to the 

requirements of Article 502(1) of the 

NAFTA * * *.’’ Article 502(1)(a) of the 

NAFTA obligates each NAFTA Party to 

require an importer that claims 

preferential tariff treatment to make a 

written declaration based on a valid 

Certificate of Origin. Paragraph 

(b)(4)(A)(ii) of amended section 213 sets 

forth certain conditions that must be 

met in order for a CBTPA beneficiary 

country’s merchandise ‘‘to qualify for 

the preferential treatment under 

paragraph (2) or (3) and for a Certificate 

of Origin to be valid with respect to any 

article for which such treatment is 

claimed.’’ CBP interprets the references 

in paragraph (b)(4)(A)(i) to NAFTA 

Article 502(10) and in paragraph 

(b)(4)(A)(ii) to a Certificate of Origin to 

mean that Congress intended to require 

Certificates of Origin for claims of 

CBTPA preferential treatment, including 

for brassieres. The commenters seem to 

be suggesting that, for brassieres alone, 

the declaration of compliance should 

replace the Certificate of Origin. 

Furthermore, as a practical matter, the 

Declaration of Compliance cannot 

effectively replace the CBTPA Textile 

Certificate of Origin provided for under 

§ 10.224 because the latter document 

contains information elements that are 

not set forth on, or that are useful in 

verifying information provided on, the 

Declaration of Compliance. 

Recordkeeping and Verification 

Requirements 

Comment: Five commenters allege 

that the recordkeeping and verification 

requirements set forth in § 10.228(d) are 

too onerous, do not conform to the way 

most companies maintain their records 

and are not authorized by the CBTPA. 

The commenters contend that a 

company should not have to create new 

accounting records to satisfy this 

regulatory provision; they note in this 

regard that many companies do not keep 

cash disbursement, purchase journals or 

record the date of production. 

According to these commenters, so long 

as the producer or the entity is able to 

establish that the 75 or 85 percent 

standard is met in any given year using 

generally accepted accounting 

principles, the statutory requirement 

should be satisfied. 

CBP’s Response: With regard to the 

assertion that the § 10.228(d) 

recordkeeping requirements (such as the 

cash disbursement or purchase journal) 

do not conform to the way most 

companies keep their records, CBP 

notes that the regulatory text does not 

mandate the maintenance of specific 

types of records. Rather, the regulatory 

text states in this regard that the audit 

trail documents must consist of a cash 

disbursement or purchase journal ‘‘or 

equivalent records’’ to establish the 

purchase of the fabric or component. 

Therefore, if a company does not 

maintain a cash disbursement or 

purchase journal, alternative records 

Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 69517

that reflect the purchase of the fabric or 

component would be acceptable. 

The recordkeeping and verification 

requirements were included in § 10.228 

so that the trade community would 

know what CBP would expect to see 

when verifying a claim for preferential 

treatment of brassieres under the 

CBTPA. These requirements are 

implicitly authorized by the CBTPA 

because they are directed to the specific 

statutory standards that apply in the 

case of brassieres under the CBTPA and 

because they are promulgated by the 

government agency that is charged with 

responsibility for enforcing those 

statutory standards. The basic point to 

remember is that CBP must be able to 

verify that the requirements of the 

statute have been met, even if this 

means that a producer must create 

certain records that were not maintained 

prior to the CBTPA (such as records 

regarding the date of production, which 

are germane to the year-to-year standard 

established by the statute). There would 

be no objection to the use of generally 

accepted accounting principles (GAAP) 

to establish that the 75 or 85 percent 

standard is met, provided that the use 

of GAAP yields a result that is verifiable 

and that accurately reflects the 

applicable CBTPA statutory standards. 

Finally, as regards the complaint that 

the recordkeeping and verification 

requirements are too onerous, CBP 

would simply note that a decision 

whether to enter into transactions under 

a duty-preference program may require 

the consideration of a variety of factors, 

including whether the benefits outweigh 

the business costs that must be incurred 

in order to comply with the 

requirements of the program.

Comments in Response to T.D. 03–29 

One comment was received in 

response to the notice of solicitation of 

comments on the interim regulations 

implementing the Preferential 

Treatment of Brassieres Under the 

Caribbean Basin Economic Recovery Act 

(68 FR 56166) which appeared in the 

Federal Register on September 30, 2003. 

The comment addressed two concerns 

with regard to the implementing 

regulations. 

Comment: The first concern expressed 

by the commenter is with regard to the 

clarity of the regulations as to the entry 

requirement for brassieres entered into 

the United States in a prior year which 

are considered in the calculation to 

determine whether the U.S. fabric 

content requirement set forth by 

Congress has been met in order for 

imported brassieres to qualify for 

preferential treatment in a subsequent 

year. The commenter is concerned that 

the language of the regulations as 

drafted suggests that brassieres 

considered in the fabric content 

calculation must be produced in the 

same year in which they are entered. 

The regulations contain examples of the 

application of the provisions set forth in 

the regulations and the commenter 

acknowledges that Example 6, which 

illustrates that brassieres may be 

produced in one year and entered in a 

different year, is consistent with 

changes in the brassiere provision 

enacted by Congress in the Trade Act of 

2002. However, the commenter seeks 

further clarification and suggests the 

addition of the phrase ‘‘without regard 

to the year in which the articles were 

produced’’ after the phrase ‘‘within the 

same year’’ in § 10.228(b)(2)(i)(A). 

CBP’s Response: CBP disagrees with 

the need for further clarification as 

suggested by the commenter. The 

language at issue in § 10.228(b)(2)(i)(A) 

clearly addresses the manner of 

production of the brassieres in question 

and then specifies that the brassieres 

must all be entered in the same year. 

Example 6 serves to further clarify that 

the production of the brassieres under 

consideration need not occur in the 

same year as the entry of the brassieres. 

However, all brassieres considered in 

determining whether brassieres in a 

subsequent year will qualify for 

preferential treatment must be entered 

in the same program year. 

Comment: The commenter’s second 

concern is that the regulations need to 

be clarified as to the relationship 

between § 10.223(a)(6), the provision 

specific to brassieres, and other 

provisions of the CBTPA. Specifically, 

the commenter requests that CBP clarify 

the regulations to provide that brassieres 

entered under 19 U.S.C. 2703(b)(2)(A)(i), 

(ii), (iii), (v), or (vi), which are described 

in § 10.223(a)(1), (2), (3), (4), (7), (8) or 

(9) of the CBP Regulations, are not to be 

considered in the fabric content 

calculation to determine the eligibility 

of brassieres for preferential treatment 

in a subsequent year. The commenter 

suggests as an example that brassieres 

may be entered under the provision for 

apparel made of regionally produced 

knit fabric, § 10.223(a)(4), or under 

either short supply provision, 

§ 10.223(a)(7) or § 10.223(a)(8), and 

brassieres so entered would not be 

considered in calculating the fabric 

content to determine if the requisite 

percentage of U.S. fabric had been used 

to allow for subsequent year preferential 

treatment.

CBP’s Response: CBP disagrees with 

the commenter. First, CBP cannot agree 

with the commenter that brassieres 

entered under other provisions of the 

CBTPA will not be considered for 

determining eligibility for preferential 

treatment under § 10.223(a)(6). CBP 

agrees with this assertion of the 

commenter only to the extent that it 

applies to determining whether the 75 

percent threshold U.S. fabric content 

requirement has been met. With regard 

to cases when the 75 percent 

requirement has not been met and a 

producer or entity controlling 

production must meet the stricter 85 

percent U.S. fabric content requirement, 

or in the case of a new producer or 

entity controlling production which did 

not enter brassieres in the first year of 

the program and must therefore meet 

the stricter 85 percent U.S. fabric 

content requirement, if CBP does not 

consider brassieres entered under other 

provisions of the CBTPA, that is, 

provisions other than § 10.223(a)(6), a 

producer or entity controlling 

production would never be able to meet 

the 85 percent U.S. fabric content 

requirement. 

Secondly, CBP rejects the 

commenter’s suggestion that brassieres 

currently may be entered under all of 

the provisions associated with the 

statutory paragraphs identified in 19 

U.S.C. 2703(b)(2)(A)(i), (ii), (iii), (v), or 

(vi). Section 10.223(a)(9) of the CBP 

Regulations is associated with 19 U.S.C. 

2703(b)(2)(A)(vi) and provides for 

handloomed, hand-made and folklore 

articles. At this time, this provision does 

not include brassieres as eligible for 

entry under that provision. Therefore, 

brassieres may not be entered under 

§ 10.223(a)(9). Likewise, § 10.223(a)(7) 

and (8), the provisions which allow for 

apparel articles produced from fabrics 

or yarns determined to be in short 

supply, do not currently include 

brassieres as eligible for entry under 

those provisions. 

Additional Change to the Regulations 

While CBP has not adopted any 

changes identified and discussed above 

in connection with the public 

comments, CBP has amended blocks 4–

6 of the declaration of compliance for 

brassieres by adding exclusion language 

regarding findings and trimmings after 

each reference to fabric(s) as provided 

for in section 3107(a) of the Act. 

Additionally, wherever the term 

‘‘Customs’’ appears in the CBP 

Regulations affected by this final rule 

(i.e. 19 CFR 10.228), it is replaced with 

the term ‘‘CBP.’’

Conclusion 

After analysis of the comments and 

further review and consideration of the 

matter, CBP is adopting as a final rule 

the interim rule set forth in T.D. 01–74 

69518 Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 

amending § 10.222, paragraph (a)(7) of 

§ 10.223, and the Appendix to Part 163 

of the CBP Regulations which was 

published in the Federal Register at 66 

FR 50534 on October 4, 2001. CBP is 

also adopting as a final rule, with the 

changes discussed above, the interim 

rule set forth in T.D. 03–29 amending 

§ 10.228 of Part 10 of the CBP 

Regulations which was published in the 

Federal Register at 68 FR 56166 on 

September 30, 2003. 

It is noted that while T.D. 01–74 

amended § 10.223(a)(6), T.D. 03–12 

published in the Federal Register at 68 

FR 59649 on March 21, 2003, set forth 

additional changes to § 10.223(a)(6). 

Therefore, as the changes to 

§ 10.223(a)(6) set forth in T.D. 01–74 

were further amended, those changes 

will be finalized in a separate final rule 

document that addresses the other 

statutory changes to the CBERA made 

by the Act. 

Executive Order 12866 

This document does not meet the 

criteria for a ‘‘significant regulatory 

action’’ as specified in E.O. 12866. This 

rule is limited in scope and affects only 

a small segment of the trade community. 

Moreover, it sets forth the technical 

requirements for a statutorily mandated 

trade benefits program. 

Regulatory Flexibility Act 

As set forth in the preamble, the 

regulations to implement the standards 

for preferential treatment for brassieres 

imported from Caribbean Basin 

countries were previously published as 

interim regulations. Those interim 

regulations provided trade benefits to 

the importing public, implemented 

direct statutory mandates, and were 

necessary to carry out the preferential 

treatment and United States tariff 

changes proclaimed by the President 

under the Caribbean Basin Economic 

Recovery Act. Pursuant to the 

provisions of 5 U.S.C. 553(b)(B), CBP 

issued the regulations as interim rules 

because it had determined that prior 

public notice and comment procedures 

on these regulations were unnecessary 

and contrary to the public interest. For 

these reasons, pursuant to the 

provisions of 5 U.S.C. 553(d)(1) and (3), 

CBP also found that there was good 

cause for dispensing with a delayed 

effective date. Because no notice of 

proposed rulemaking was required, the 

provisions of the Regulatory Flexibility 

Act (5 U.S.C. 601 et seq.) do not apply. 

Accordingly, this final rule is not 

subject to the regulatory analysis or 

other requirements of 5 U.S.C. 603 and 

604.

Paperwork Reduction Act 

The collection of information 

contained in this interim rule has 

previously been reviewed and approved 

by the Office of Management and 

Budget (OMB) in accordance with the 

requirements of the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501 

et seq.) under OMB control number 

1651–0083. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless the collection of information 

displays a valid control number. 

Signing Authority 

This regulation is being issued in 

accordance with 19 CFR 0.1(a)(1).

List of Subjects 

19 CFR Part 10 

Assembly, Bonds, Caribbean Basin 

Initiative, Customs duties and 

inspection, Exports, Imports, Preference 

programs, Reporting and recordkeeping 

requirements, Trade agreements. 

19 CFR Part 163 

Administrative practice and 

procedure, Customs duties and 

inspection, Imports, Reporting and 

recordkeeping requirements.

Amendments to the Regulations

■ For the reasons stated in the preamble, 

Part 10 and Part 163 (19 CFR Part 10 and 

19 CFR Part 163) are amended to read as 

follows:

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 23, Harmonized Tariff Schedule of the 

United States (HTSUS)), 1321, 1481, 1484, 

1498, 1508, 1623, 1624, 3314;

* * * * *

Sections 10.221 through 10.228 and 

§§ 10.231 through 10.237 also issued 

under 19 U.S.C. 2701 et seq.

■ 2. The introductory text in § 10.222 is 

republished to read as follows:

§ 10.222 Definitions. 

When used in §§ 10.221 through 

10.228, the following terms have the 

meanings indicated:

* * * * *

■ 3. In § 10.223, paragraph (a)(7) is 

republished to read as follows:

§ 10.223 Articles eligible for preferential 

treatment

* * * * *

(a) * * * 

(7) Apparel articles, other than 

articles described in paragraph (a)(6) of 

this section, that are both cut (or knitto-shape) and sewn or otherwise 

assembled in one or more CBTPA 

beneficiary countries, from fabrics or 

yarn that is not formed in the United 

States or in one or more CBTPA 

beneficiary countries, to the extent that 

apparel articles of those fabrics or yarn 

would be eligible for preferential 

treatment, without regard to the source 

of the fabrics or yarn, under Annex 401 

of the NAFTA;

* * * * *

■ 4. Section 10.228 is revised to read as 

follows:

§ 10.228 Additional requirements for 

preferential treatment of brassieres. 

(a) Definitions. When used in this 

section, the following terms have the 

meanings indicated: 

(1) Producer. ‘‘Producer’’ means an 

individual, corporation, partnership, 

association, or other entity or group that 

exercises direct, daily operational 

control over the production process in 

a CBTPA beneficiary country. 

(2) Entity controlling production.

‘‘Entity controlling production’’ means 

an individual, corporation, partnership, 

association, or other entity or group that 

is not a producer and that controls the 

production process in a CBTPA 

beneficiary country through a 

contractual relationship or other 

indirect means. 

(3) Fabrics formed in the United 

States. ‘‘Fabrics formed in the United 

States’’ means fabrics that were 

produced by a weaving, knitting, 

needling, tufting, felting, entangling or 

other fabric-making process performed 

in the United States. 

(4) Cost. ‘‘Cost’’ when used with 

reference to fabrics formed in the United 

States means: 

(i) The price of the fabrics when last 

purchased, f.o.b. port of exportation, as 

set out in the invoice or other 

commercial documents, or, if the price 

is other than f.o.b. port of exportation:

(A) The price as set out in the invoice 

or other commercial documents 

adjusted to arrive at an f.o.b. port of 

exportation price; or 

(B) If no exportation to a CBTPA 

beneficiary country is involved, the 

price as set out in the invoice or other 

commercial documents, less the freight, 

insurance, packing, and other costs 

incurred in transporting the fabrics to 

the place of production if included in 

that price; or 

(ii) If the price cannot be determined 

under paragraph (a)(4)(i) of this section 

or if CBP finds that price to be 

Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 69519

unreasonable, all reasonable expenses 

incurred in the growth, production, 

manufacture, or other processing of the 

fabrics, including the cost or value of 

materials (which includes the cost of 

non-recoverable scrap generated in 

forming the fabrics) and general 

expenses, plus a reasonable amount for 

profit, and the freight, insurance, 

packing, and other costs, if any, 

incurred in transporting the fabrics to 

the port of exportation. 

(5) Declared customs value. ‘‘Declared 

customs value’’ when used with 

reference to fabric contained in an 

article means the sum of: 

(i) The cost of fabrics formed in the 

United States that the producer or entity 

controlling production can verify; and 

(ii) The cost of all other fabric 

contained in the article, exclusive of all 

findings and trimmings, determined as 

follows: 

(A) In the case of fabric purchased by 

the producer or entity controlling 

production, the f.o.b. port of exportation 

price of the fabric as set out in the 

invoice or other commercial documents, 

or, if the price is other than f.o.b. port 

of exportation: 

(1) The price as set out in the invoice 

or other commercial documents 

adjusted to arrive at an f.o.b. port of 

exportation price, plus expenses for 

embroidering and dyeing, printing, and 

finishing operations applied to the 

fabric if not included in that price; or 

(2) If no exportation to a CBTPA 

beneficiary country is involved, the 

price as set out in the invoice or other 

commercial documents, plus expenses 

for embroidering and dyeing, printing, 

and finishing operations applied to the 

fabric if not included in that price, but 

less the freight, insurance, packing, and 

other costs incurred in transporting the 

fabric to the place of production if 

included in that price; 

(B) In the case of fabric for which the 

cost cannot be determined under 

paragraph (a)(5)(ii)(A) of this section or 

if CBP finds that cost to be 

unreasonable, all reasonable expenses 

incurred in the growth, production, or 

manufacture of the fabric, including the 

cost or value of materials (which 

includes the cost of non-recoverable 

scrap generated in the growth, 

production, or manufacture of the 

fabric), general expenses and 

embroidering and dyeing, printing, and 

finishing expenses, plus a reasonable 

amount for profit, and the freight, 

insurance, packing, and other costs, if 

any, incurred in transporting the fabric 

to the port of exportation; 

(C) In the case of fabric components 

purchased by the producer or entity 

controlling production, the f.o.b. port of 

exportation price of those fabric 

components as set out in the invoice or 

other commercial documents, less the 

cost or value of any non-textile 

materials, and less expenses for cutting 

or other processing to create the fabric 

components other than knitting to 

shape, that the producer or entity 

controlling production can verify, or, if 

the price is other than f.o.b. port of 

exportation: 

(1) The price as set out in the invoice 

or other commercial documents 

adjusted to arrive at an f.o.b. port of 

exportation price, less the cost or value 

of any non-textile materials, and less 

expenses for cutting or other processing 

to create the fabric components other 

than knitting to shape, that the producer 

or entity controlling production can 

verify; or 

(2) If no exportation to a CBTPA 

beneficiary country is involved, the 

price as set out in the invoice or other 

commercial documents, less the cost or 

value of any non-textile materials, and 

less expenses for cutting or other 

processing to create the fabric 

components other than knitting to 

shape, that the producer or entity 

controlling production can verify, and 

less the freight, insurance, packing, and 

other costs incurred in transporting the 

fabric components to the place of 

production if included in that price; and 

(D) In the case of fabric components 

for which a fabric cost cannot be 

determined under paragraph (a)(5)(ii)(C) 

of this section or if CBP finds that cost 

to be unreasonable: all reasonable 

expenses incurred in the growth, 

production, or manufacture of the fabric 

components, including the cost or value 

of materials (which does not include the 

cost of recoverable scrap generated in 

the growth, production, or manufacture 

of the fabric components) and general 

expenses, but excluding the cost or 

value of any non-textile materials, and 

excluding expenses for cutting or other 

processing to create the fabric 

components other than knitting to 

shape, that the producer or entity 

controlling production can verify, plus 

a reasonable amount for profit, and the 

freight, insurance, packing, and other 

costs, if any, incurred in transporting 

the fabric components to the port of 

exportation. 

(6) Year. ‘‘Year’’ means a 12-month 

period beginning on October 1 and 

ending on September 30 but does not 

include any 12-month period that began 

prior to October 1, 2000. 

(7) Entered. ‘‘Entered’’ means entered, 

or withdrawn from warehouse for 

consumption, in the customs territory of 

the United States. 

(b) Limitations on preferential 

treatment—(1) General. During the year 

that begins on October 1, 2002, and 

during any subsequent year, articles of 

a producer or an entity controlling 

production that conform to the 

production standards set forth in 

§ 10.223(a)(6) will be eligible for 

preferential treatment only if: 

(i) The aggregate cost of fabrics 

(exclusive of all findings and trimmings) 

formed in the United States that were 

used in the production of all of those 

articles of that producer or that entity 

controlling production that are entered 

as articles described in § 10.223(a)(6) 

during the immediately preceding year 

was at least 75 percent of the aggregate 

declared customs value of the fabric 

(exclusive of all findings and trimmings) 

contained in all of those articles of that 

producer or that entity controlling 

production that are entered as articles 

described in § 10.223(a)(6) during that 

year; or

(ii) In a case in which the 75 percent 

requirement set forth in paragraph 

(b)(1)(i) of this section was not met 

during a year and therefore those 

articles of that producer or that entity 

controlling production were not eligible 

for preferential treatment during the 

following year, the aggregate cost of 

fabrics (exclusive of all findings and 

trimmings) formed in the United States 

that were used in the production of all 

of those articles of that producer or that 

entity controlling production that 

conform to the production standards set 

forth in § 10.223(a)(6) and that were 

entered during the immediately 

preceding year was at least 85 percent 

of the aggregate declared customs value 

of the fabric (exclusive of all findings 

and trimmings) contained in all of those 

articles of that producer or that entity 

controlling production that conform to 

the production standards set forth in 

§ 10.223(a)(6) and that were entered 

during that year; and 

(iii) In conjunction with the filing of 

the claim for preferential treatment 

under § 10.225, the importer records on 

the entry summary or warehouse 

withdrawal for consumption (CBP Form 

7501, column 34), or its electronic 

equivalent, the distinct and unique 

identifier assigned by CBP to the 

applicable documentation prescribed 

under paragraph (c) of this section. 

(2) Rules of application—(i) General.

For purposes of paragraphs (b)(1)(i) and 

(b)(1)(ii) of this section and for purposes 

of preparing and filing the 

documentation prescribed in paragraph 

(c) of this section, the following rules 

will apply: 

(A) The articles in question must have 

been produced in the manner specified 

69520 Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 

in § 10.223(a)(6) and the articles in 

question must be entered within the 

same year; 

(B) Articles that are exported to 

countries other than the United States 

and are never entered are not to be 

considered in determining compliance 

with the 75 or 85 percent standard 

specified in paragraph (b)(1)(i) or 

paragraph (b)(1)(ii) of this section; 

(C) Articles that are entered under an 

HTSUS subheading other than the 

HTSUS subheading which pertains to 

articles described in § 10.223(a)(6) are 

not to be considered in determining 

compliance with the 75 percent 

standard specified in paragraph (b)(1)(i) 

of this section; 

(D) For purposes of determining 

compliance with the 85 percent 

standard specified in paragraph (b)(1)(ii) 

of this section, all articles that conform 

to the production standards set forth in 

§ 10.223(a)(6) must be considered, 

regardless of the HTSUS subheading 

under which they were entered; 

(E) Fabric components and fabrics 

that constitute findings or trimmings are 

not to be considered in determining 

compliance with the 75 or 85 percent 

standard specified in paragraph (b)(1)(i) 

or paragraph (b)(1)(ii) of this section; 

(F) Beginning October 1, 2002, in 

order for articles to be eligible for 

preferential treatment in a given year, a 

producer of, or entity controlling 

production of, those articles must have 

met the 75 percent standard specified in 

paragraph (b)(1)(i) of this section during 

the immediately preceding year. If 

articles of a producer or entity 

controlling production fail to meet the 

75 percent standard specified in 

paragraph (b)(1)(i) of this section during 

a year, articles of that producer or entity 

controlling production: 

(1) Will not be eligible for preferential 

treatment during the following year; 

(2) Will remain ineligible for 

preferential treatment until the year that 

follows a year in which articles of that 

producer or entity controlling 

production met the 85 percent standard 

specified in paragraph (b)(1)(ii) of this 

section; and 

(3) After the 85 percent standard 

specified in paragraph (b)(1)(ii) of this 

section has been met, will again be 

subject to the 75 percent standard 

specified in paragraph (b)(1)(i) of this 

section during the following year for 

purposes of determining eligibility for 

preferential treatment in the next year. 

(G) A new producer or new entity 

controlling production, that is, a 

producer or entity controlling 

production which did not produce or 

control production of articles that were 

entered as articles described in 

§ 10.223(a)(6) during the immediately 

preceding year, must first establish 

compliance with the 85 percent 

standard specified in paragraph (b)(1)(ii) 

of this section as a prerequisite to 

preparation of the declaration of 

compliance referred to in paragraph (c) 

of this section; 

(H) A declaration of compliance 

prepared by a producer or by an entity 

controlling production must cover all 

production of that producer or all 

production that the entity controls for 

the year in question;

(I) A producer is not required to 

prepare a declaration of compliance if 

all of its production is covered by a 

declaration of compliance prepared by 

an entity controlling production; 

(J) In the case of a producer, the 75 or 

85 percent standard specified in 

paragraph (b)(1)(i) or paragraph (b)(1)(ii) 

of this section and the declaration of 

compliance procedure under paragraph 

(c) of this section apply to all articles of 

that producer for the year in question, 

even if some but not all of that 

production is also covered by a 

declaration of compliance prepared by 

an entity controlling production; 

(K) The U.S. importer does not have 

to be the producer or the entity 

controlling production who prepared 

the declaration of compliance; and 

(L) The exclusion references regarding 

findings and trimmings in paragraph 

(b)(1)(i) and paragraph (b)(1)(ii) of this 

section apply to all findings and 

trimmings, whether or not they are of 

foreign origin. 

(ii) Examples. The following 

examples will illustrate application of 

the principles set forth in paragraph 

(b)(2)(i) of this section.

Example 1. A CBTPA beneficiary country 

producer of articles that meet the production 

standards specified in § 10.223(a)(6) in the 

first year sends 50 percent of that production 

to CBTPA region markets and the other 50 

percent to the U.S. market; the cost of the 

fabrics formed in the United States equals 

100 percent of the value of all of the fabric 

in the articles sent to the CBTPA region and 

60 percent of the value of all of the fabric in 

the articles sent to the United States. 

Although the cost of fabrics formed in the 

United States is more than 75 percent of the 

value of all of the fabric used in all of the 

articles produced, this producer could not 

prepare a valid declaration of compliance 

because the articles sent to the United States 

did not meet the minimum 75 percent 

standard.

Example 2. A producer sends to the United 

States in the first year three shipments of 

articles that meet the description in 

§ 10.223(a)(6); one of those shipments is 

entered under the HTSUS subheading that 

covers articles described in § 10.223(a)(6), the 

second shipment is entered under the 

HTSUS subheading that covers articles 

described in § 10.223(a)(12), and the third 

shipment is entered under subheading 

9802.00.80, HTSUS. In determining whether 

the minimum 75 percent standard has been 

met in the first year for purposes of entry of 

articles under the HTSUS subheading that 

covers articles described in § 10.223(a)(6) 

during the following (that is, second) year, 

consideration must be restricted to the 

articles in the first shipment and therefore 

must not include the articles in the second 

and third shipments.

Example 3. A producer in the second year 

begins production of articles that conform to 

the production standards specified in 

§ 10.223(a)(6); some of those articles are 

entered in that year under HTSUS 

subheading 6212.10 and others under HTSUS 

subheading 9802.00.80 but none are entered 

in that year under the HTSUS subheading 

which pertains to articles described in 

§ 10.223(a)(6) because the 75 percent 

standard had not been met in the preceding 

(that is, first) year. In this case the 85 percent 

standard applies, and all of the articles that 

were entered under the various HTSUS 

provisions in the second year must be taken 

into account in determining whether that 85 

percent standard has been met. If the 85 

percent was met in the aggregate for all of the 

articles entered in the second year, in the 

next (that is, third) year articles of that 

producer may receive preferential treatment 

under the HTSUS subheading which pertains 

to articles described in § 10.223(a)(6).

Example 4. An entity controlling 

production of articles that meet the 

description in § 10.223(a)(6) buys for the 

U.S., Canadian and Mexican markets; the 

articles in each case are first sent to the 

United States where they are entered for 

consumption and then placed in a 

commercial warehouse from which they are 

shipped to various stores in the United 

States, Canada and Mexico. Notwithstanding 

the fact that some of the articles ultimately 

ended up in Canada or Mexico, a declaration 

of compliance prepared by the entity 

controlling production must cover all of the 

articles rather than only those that remained 

in the United States because all of those 

articles had been entered for consumption.

Example 5. Fabric is cut and sewn in the 

United States with other U.S. materials to 

form cups which are joined together to form 

brassiere front subassemblies in the United 

States, and those front subassemblies are 

then placed in a warehouse in the United 

States where they are held until the following 

year; during that following year all of the 

front subassemblies are shipped to a CBTPA 

beneficiary country where they are 

assembled with elastic strips and labels 

produced in an Asian country and other 

fabrics, components or materials produced in 

the CBTPA beneficiary country to form 

articles that meet the production standards 

specified in § 10.223(a)(6) and that are then 

shipped to the United States and entered 

during that same year. In determining 

whether the entered articles meet the 

minimum 75 or 85 percent standard, the 

fabric in the elastic strips and labels is to be 

disregarded entirely because the strips and 

labels constitute findings or trimmings for 

purposes of this section, and all of the fabric 

Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 69521

in the front subassemblies is countable 

because it was all formed in the United States 

and used in the production of articles that 

were entered in the same year.

Example 6. A CBTPA beneficiary country 

producer’s entire production of articles that 

meet the description in § 10.223(a)(6) is sent 

to a U.S. importer in two separate shipments, 

one in February and the other in June of the 

same calendar year; the articles shipped in 

February do not meet the minimum 75 

percent standard, the articles shipped in June 

exceed the 85 percent standard, and the 

articles in the two shipments, taken together, 

do meet the 75 percent standard; the articles 

covered by the February shipment are 

entered for consumption on March 1 of that 

calendar year, and the articles covered by the 

June shipment are placed in a CBP bonded 

warehouse upon arrival and are subsequently 

withdrawn from warehouse for consumption 

on November 1 of that calendar year. The 

CBTPA beneficiary country producer may 

not prepare a valid declaration of compliance 

covering the articles in the first shipment 

because those articles did not meet the 

minimum 75 percent standard and because 

those articles cannot be included with the 

articles of the second shipment on the same 

declaration of compliance since they were 

entered in a different year. However, the 

CBTPA beneficiary country producer may 

prepare a valid declaration of compliance 

covering the articles in the second shipment 

because those articles did meet the requisite 

85 percent standard which would apply for 

purposes of entry of articles in the following 

year.

Example 7. A producer in the second year 

begins production of articles exclusively for 

the U.S. market that meet the production 

standards specified in § 10.223(a)(6), but the 

entered articles do not meet the requisite 85 

percent standard until the third year; the 

entered articles fail to meet the 75 percent 

standard in the fourth year; and the entered 

articles do not attain the 85 percent standard 

until the sixth year. The producer’s articles 

may not receive preferential treatment during 

the second year because there was no 

production (and thus there were no entered 

articles) in the immediately preceding (that 

is, first) year on which to assess compliance 

with the 75 percent standard. The producer’s 

articles also may not receive preferential 

treatment during the third year because the 

85 percent standard was not met in the 

immediately preceding (that is, second) year. 

However, the producer’s articles are eligible 

for preferential treatment during the fourth 

year based on compliance with the 85 

percent standard in the immediately 

preceding (that is, third) year. The producer’s 

articles may not receive preferential 

treatment during the fifth year because the 75 

percent standard was not met in the 

immediately preceding (that is, fourth) year. 

The producer’s articles may not receive 

preferential treatment during the sixth year 

because the 85 percent standard has become 

applicable and was not met in the 

immediately preceding (that is, fifth) year. 

The producer’s articles are eligible for 

preferential treatment during the seventh 

year because the 85 percent standard was met 

in the immediately preceding (that is, sixth) 

year, and during that seventh year the 75 

percent standard is applicable for purposes of 

determining whether the producer’s articles 

are eligible for preferential treatment in the 

following (that is, eighth) year.

Example 8. An entity controlling 

production (Entity A) uses five CBTPA 

beneficiary country producers (Producers 1–

5), all of which produce only articles that 

meet the description in § 10.223(a)(6); 

Producers 1–4 send all of their production to 

the United States and Producer 5 sends 10 

percent of its production to the United States 

and the rest to Europe; Producers 1–3 and 

Producer 5 produce only pursuant to 

contracts with Entity A, but Producer 4 also 

operates independently of Entity A by 

producing for several U.S. importers, one of 

which is an entity controlling production 

(Entity B) that also controls all of the 

production of articles of one other producer 

(Producer 6) which sends all of its 

production to the United States. A 

declaration of compliance prepared by Entity 

A must cover all of the articles of Producers 

1–3 and the 10 percent of articles of Producer 

5 that are sent to the United States and that 

portion of the articles of Producer 4 that are 

produced pursuant to the contract with 

Entity A, because Entity A controls the 

production of those articles. There is no need 

for Producers 1–3 and Producer 5 to prepare 

a declaration of compliance because they 

have no production that is not covered by a 

declaration of compliance prepared by an 

entity controlling production. A declaration 

of compliance prepared by Producer 4 would 

cover all of its production, that is, articles 

produced for Entity A, articles produced for 

Entity B, and articles produced 

independently for other U.S. importers; a 

declaration of compliance prepared by Entity 

B must cover that portion of the production 

of Producer 4 that it controls as well as all 

of the production of Producer 6 because 

Entity B also controls all of the production 

of Producer 6. Producer 6 would not prepare 

a declaration of compliance because all of its 

production is covered by the declaration of 

compliance prepared by Entity B.

(c) Documentation—(1) Initial 

declaration of compliance. In order for 

an importer to comply with the 

requirement set forth in paragraph 

(b)(1)(iii) of this section, the producer or 

the entity controlling production must 

have filed with CBP, in accordance with 

paragraph (c)(4) of this section, a 

declaration of compliance with the 

applicable 75 or 85 percent requirement 

prescribed in paragraph (b)(1)(i) or 

(b)(1)(ii) of this section. After filing of 

the declaration of compliance has been 

completed, CBP will advise the 

producer or the entity controlling 

production of the distinct and unique 

identifier assigned to that declaration. 

The producer or the entity controlling 

production will then be responsible for 

advising each appropriate U.S. importer 

of that distinct and unique identifier for 

purposes of recording that identifier on 

the entry summary or warehouse 

withdrawal. In order to provide 

sufficient time for advising the U.S. 

importer of that distinct and unique 

identifier prior to the arrival of the 

articles in the United States, the 

producer or the entity controlling 

production should file the declaration of 

compliance with CBP at least 10 

calendar days prior to the date of the 

first shipment of the articles to the 

United States. 

(2) Amended declaration of 

compliance. If the information on the 

declaration of compliance referred to in 

paragraph (c)(1) of this section is based 

on an estimate because final year-end 

information was not available at that 

time and the final data differs from the 

estimate, or if the producer or the entity 

controlling production has reason to 

believe for any other reason that the 

declaration of compliance that was filed 

contained erroneous information, 

within 30 calendar days after the final 

year-end information becomes available 

or within 30 calendar days after the date 

of discovery of the error: 

(i) The producer or the entity 

controlling production must file with 

the CBP office identified in paragraph 

(c)(4) of this section an amended 

declaration of compliance containing 

that final year-end information or other 

corrected information; or 

(ii) If that final year-end information 

or other corrected information 

demonstrates noncompliance with the 

applicable 75 or 85 percent requirement, 

the producer or the entity controlling 

production must in writing advise both 

the CBP office identified in paragraph 

(c)(4) of this section and each 

appropriate U.S. importer of that fact. 

(3) Form and preparation of 

declaration of compliance—(i) Form.

The declaration of compliance referred 

to in paragraph (c)(1) of this section may 

be printed and reproduced locally and 

must be in the following format:

69522 Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 

CARIBBEAN BASIN TRADE PARTNERSHIP ACT DECLARATION OF COMPLIANCE FOR BRASSIERES

[19 CFR 10.223(a)(6) and 10.228] 

1. Year beginning date: October 1, ll. Official U.S. Customs and Border 

Year ending date: September 30, ll. Protection Use Only 

Assigned number: llll

Assignment date: llll

2. Identity of preparer (producer or entity controlling production): 

Full name and address: Telephone number: llll

Facsimile number: llll

Importer identification number: llll

3. If the preparer is an entity controlling production, provide the following for each producer: 

Full name and address: Telephone number: llll

Facsimile number: llll

4. Aggregate cost of fabrics (exclusive of all findings and trimmings) formed in the United States that were used in the production of brassieres 

that were entered during the year: llll

5. Aggregate declared customs value of the fabric (exclusive of all findings and trimmings) contained in brassieres that were entered during the 

year: llll

6. I declare that the aggregate cost of fabric (exclusive of all findings and trimmings) formed in the United States was at least 75 percent (or 85 

percent, if applicable under 19 CFR 10.228(b)(1)(ii)) of the aggregate declared customs value of the fabric contained in brassieres entered 

during the year. 

7. Authorized signature: 8. Name and title (print or type): 

llllllll

Date: 

(ii) Preparation. The following rules 

will apply for purposes of completing 

the declaration of compliance set forth 

in paragraph (c)(3)(i) of this section: 

(A) In block 1, fill in the year 

commencing October 1 and ending 

September 30 of the calendar year 

during which the applicable 75 or 85 

percent standard specified in paragraph 

(b)(1)(i) or paragraph (b)(1)(ii) of this 

section was met; 

(B) Block 2 should state the legal 

name and address (including country) of 

the preparer and should also include the 

preparer’s importer identification 

number (see § 24.5 of this chapter), if 

the preparer has one; 

(C) Block 3 should state the legal 

name and address (including country) of 

the CBTPA beneficiary country 

producer if that producer is not already 

identified in block 2. If there is more 

than one producer, attach a list stating 

the legal name and address (including 

country) of all additional producers; 

(D) Blocks 4 and 5 apply only to 

articles that were entered during the 

year identified in block 1; and 

(E) In block 7, the signature must be 

that of an authorized officer, employee, 

agent or other person having knowledge 

of the relevant facts and the date must 

be the date on which the declaration of 

compliance was completed and signed. 

(4) Filing of declaration of 

compliance. The declaration of 

compliance referred to in paragraph 

(c)(1) of this section: 

(i) Must be completed either in the 

English language or in the language of 

the country in which the articles 

covered by the declaration were 

produced. If the declaration is 

completed in a language other than 

English, the producer or the entity 

controlling production must provide to 

CBP upon request a written English 

translation of the declaration; and

(ii) Must be filed with the New York 

Strategic Trade Center, Customs and 

Border Protection, 1 Penn Plaza, New 

York, New York 10119. 

(d) Verification of declaration of 

compliance—(1) Verification procedure. 

A declaration of compliance filed under 

this section will be subject to whatever 

verification CBP deems necessary. In the 

event that CBP for any reason is 

prevented from verifying the statements 

made on a declaration of compliance, 

CBP may deny any claim for preferential 

treatment made under § 10.225 that is 

based on that declaration. A verification 

of a declaration of compliance may 

involve, but need not be limited to, a 

review of: 

(i) All records required to be made, 

kept, and made available to CBP by the 

importer, the producer, the entity 

controlling production, or any other 

person under part 163 of this chapter; 

(ii) Documentation and other 

information regarding all articles that 

meet the production standards specified 

in § 10.223(a)(6) that were exported to 

the United States and that were entered 

during the year in question, whether or 

not a claim for preferential treatment 

was made under § 10.225. Those records 

and other information include, but are 

not limited to, work orders and other 

production records, purchase orders, 

invoices, bills of lading and other 

shipping documents; 

(iii) Evidence to document the cost of 

fabrics formed in the United States that 

were used in the production of the 

articles in question, such as purchase 

orders, invoices, bills of lading and 

other shipping documents, and customs 

import and clearance documents, work 

orders and other production records, 

and inventory control records; 

(iv) Evidence to document the cost or 

value of all fabric other than fabrics 

formed in the United States that were 

used in the production of the articles in 

question, such as purchase orders, 

invoices, bills of lading and other 

shipping documents, and customs 

import and clearance documents, work 

orders and other production records, 

and inventory control records; and 

(v) Accounting books and documents 

to verify the records and information 

referred to in paragraphs (d)(1)(ii) 

through (d)(1)(iv) of this section. The 

verification of purchase orders, invoices 

and bills of lading will be accomplished 

through the review of a distinct audit 

trail. The audit trail documents must 

consist of a cash disbursement or 

purchase journal or equivalent records 

to establish the purchase of the fabric. 

The headings in each of these journals 

or other records must contain the date, 

vendor name, and amount paid for the 

fabric. The verification of production 

records and work orders will be 

accomplished through analysis of the 

inventory records of the producer or 

entity controlling production. The 

inventory records must reflect the 

production of the finished article which 

must be referenced to the original 

purchase order or lot number covering 

the fabric used in production. In the 

inventory production records, the 

inventory should show the opening 

balance of the inventory plus the 

purchases made during the accounting 

Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 69523

period and the inventory closing 

balance. 

(2) Notice of determination. If, based 

on a verification of a declaration of 

compliance filed under this section, 

CBP determines that the applicable 75 

or 85 percent standard specified in 

paragraph (b)(1)(i) or paragraph (b)(1)(ii) 

of this section was not met, CBP will 

publish a notice of that determination in 

the Federal Register.

PART 163—RECORDKEEPING

■ 5. 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.

■ 6. In the Appendix to Part 163 the 

listing under section IV of ‘‘§ 10.228 

CBTPA Declaration of Compliance for 

brassieres’’ is republished.

* * * * *

Approved: November 23, 2004. 

Robert C. Bonner, 

Commissioner of Customs and Border 

Protection. 

Timothy E. Skud, 

Deputy Assistant Secretary of the Treasury.

[FR Doc. 04–26359 Filed 11–29–04; 8:45 am] 

BILLING CODE 4820–02–P

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 520 and 522

New Animal Drugs; Meloxicam

AGENCY: Food and Drug Administration, 

HHS.

ACTION: Final rule.

SUMMARY: The Food and Drug 

Administration (FDA) is amending the 

animal drug regulations to reflect 

approval of two supplemental new 

animal drug applications (NADAs) filed 

by Boehringer Ingelheim Vetmedica, 

Inc. The first supplemental NADA 

provides for use of meloxicam injectable 

solution in cats for control of 

postoperative pain and inflammation 

associated with orthopedic surgery, 

ovariohysterectomy, and castration 

when administered prior to surgery. It 

also provides revised dosage labeling for 

this product in dogs. The other 

supplemental NADA provides revised 

dosage labeling for use of meloxicam 

oral suspension in dogs.

DATES: This rule is effective November 

30, 2004.

FOR FURTHER INFORMATION CONTACT:

Melanie R. Berson, Center for Veterinary 

Medicine (HFV–110), Food and Drug 

Administration, 7500 Standish Pl., 

Rockville, MD 20855, 301–827–7540, email: melanie.berson@fda.gov.

SUPPLEMENTARY INFORMATION:

Boehringer Ingelheim Vetmedica, Inc., 

2621 North Belt Hwy., St. Joseph, MO 

64506–2002, filed a supplement to 

NADA 141–219 that provides for use of 

METACAM (meloxicam) Solution for 

Injection in cats for control of 

postoperative pain and inflammation 

associated with orthopedic surgery, 

ovariohysterectomy, and castration 

when administered prior to surgery, and 

also revises dosage information for use 

of this product in dogs. Boehringer 

Ingelheim Vetmedica, Inc., also filed a 

supplement to NADA 141–213 that 

provides revised dosage information for 

use of METACAM (meloxicam) Oral 

Suspension in dogs. The supplemental 

NADAs are approved as of October 28, 

2004, and the regulations are amended 

in 21 CFR 520.1350 and 522.1367 to 

reflect the approval. The basis of 

approval is discussed in the freedom of 

information summaries.

In accordance with the freedom of 

information provisions of 21 CFR part 

20 and 21 CFR 514.11(e)(2)(ii), 

summaries of safety and effectiveness 

data and information submitted to 

support approval of these applications 

may be seen in the Division of Dockets 

Management (HFA–305), Food and Drug 

Administration, 5630 Fishers Lane, rm. 

1061, Rockville, MD 20852, between 9 

a.m. and 4 p.m., Monday through 

Friday.

Under section 512(c)(2)(F)(iii) of the 

Federal Food, Drug, and Cosmetic Act 

(the act) (21 U.S.C. 360b(c)(2)(F)(iii)), 

the supplemental approval of 

meloxicam injectable solution for use in 

cats qualifies for 3 years of marketing 

exclusivity beginning October 28, 2004.

The agency has determined under 21 

CFR 25.33(d)(5) that these actions are of 

a type that do not individually or 

cumulatively have a significant effect on 

the human environment. Therefore, 

neither an environmental assessment 

nor an environmental impact statement 

is required.

This rule does not meet the definition 

of ‘‘rule’’ in 5 U.S.C. 804(3)(A) because 

it is a rule of ‘‘particular applicability.’’

Therefore, it is not subject to the 

congressional review requirements in 5 

U.S.C. 801–808.

List of Subjects in 21 CFR Parts 520 and 

522

Animal drugs.

■ Therefore, under the Federal Food, 

Drug, and Cosmetic Act and under 

authority delegated to the Commissioner 

of Food and Drugs and redelegated to the 

Center for Veterinary Medicine, 21 CFR 

parts 520 and 522 are amended as 

follows:

PART 520—ORAL DOSAGE FORM 

NEW ANIMAL DRUGS

■ 1. The authority citation for 21 CFR 

part 520 continues to read as follows:

Authority: 21 U.S.C. 360b.

■ 2. Section 520.1350 is amended by 

revising paragraph (c)(1) to read as 

follows:

§ 520.1350 Meloxicam.

* * * * *

(c) * * *

(1) Amount. Administer orally as a 

single dose at 0.09 mg per pound (mg/

lb) body weight (0.2 mg per kilogram 

(mg/kg)) on the first day of treatment. 

For all treatment after day 1, administer 

0.045 mg/lb (0.1 mg/kg) body weight 

once daily.

* * * * *

PART 522—IMPLANTATION OR 

INJECTABLE DOSAGE FORM NEW 

ANIMAL DRUGS

■ 3. The authority citation for 21 CFR 

part 522 continues to read as follows:

Authority: 21 U.S.C. 360b.

■ 4. Section 522.1367 is amended by 

revising paragraph (c) to read as follows:

§ 522.1367 Meloxicam.

* * * * *

(c) Conditions of use—(1) Dogs—(i) 

Amount. Administer 0.09 mg per pound 

(mg/lb) body weight (0.2 mg per 

kilogram (mg/kg)) by intravenous or 

subcutaneous injection on the first day 

of treatment. For treatment after day 1, 

administer meloxicam suspension orally 

at 0.045 mg/lb (0.1 mg/kg) body weight 

once daily as in § 520.1350(c) of this 

chapter.

(ii) Indications for use. For the control 

of pain and inflammation associated 

with osteoarthritis.

(iii) Limitations. Federal law restricts 

this drug to use by or on the order of 

a licensed veterinarian.

(2) Cats—(i) Amount. Administer 0.14 

mg/lb (0.3 mg/kg) body weight as a 

single, one-time subcutaneous injection.

(ii) Indications for use. For the control 

of postoperative pain and inflammation 

associated with orthopedic surgery, 

ovariohysterectomy, and castration 

when administered prior to surgery.

(iii) Limitations. Federal law restricts 

this drug to use by or on the order of 

a licensed veterinarian.