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[Federal Register Volume 65, Number 100 (Tuesday, May 23, 2000)]
[Rules and Regulations]
[Pages 33251-33253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-12921]

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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 12

[T.D. 00-36]
RIN 1515-AC62

Entry of Softwood Lumber Shipments From Canada

AGENCY: Customs Service, Treasury.

ACTION: Interim regulations; solicitation of comments.

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SUMMARY: This document adopts on an interim basis an amendment to the 
provision within the Customs Regulations that sets forth entry 
requirements for shipments of softwood lumber from Canada under the 
agreement between the Governments of the United States and Canada 
regarding trade in softwood lumber. This interim amendment implements 
an amendment to the softwood lumber agreement involving the addition of 
two export fee payment status categories (permit type codes) covering 
softwood lumber from the Canadian province of British Columbia.

DATES:   

    Effective Date: Interim rule effective May 23, 2000.
    Comments: Comments must be submitted by July 24, 2000.

ADDRESSES: Written comments may be addressed to, and inspected at, the 
Regulations Branch, U.S. Customs Service, 1300 Pennsylvania Avenue, 
NW., 3rd Floor, Washington, DC 20229.

FOR FURTHER INFORMATION CONTACT: Dixie Staple, Office of Field 
Operations (202-927-1131).

SUPPLEMENTARY INFORMATION:

Background

    This document amends the Customs Regulations on an interim basis to 
reflect an amendment of the agreement between the Governments of the 
United States and Canada regarding trade in softwood lumber. The 
amendment involves the addition of two export fee payment status 
categories (permit type codes) covering softwood lumber from the 
Canadian province of British Columbia.

Adoption of the Softwood Lumber Agreement

    On May 29, 1996, the United States entered into the Softwood Lumber 
Agreement (the Agreement) with Canada under the authority of section 
301(c)(1)(D) of the Trade Act of 1974, as amended (19 U.S.C. 
2411(c)(1)(D)), which authorizes the United States

[[Page 33252]]

Trade Representative (the USTR) to ``enter into binding agreements'' 
with a foreign country that commit the foreign country to, among other 
things, eliminate any burden or restriction on U.S. commerce resulting 
from an act, policy or practice of the foreign country. The Agreement, 
which went into effect on April 1, 1996, was specifically intended to 
provide a satisfactory resolution to certain acts, policies and 
practices of the Government of Canada affecting exports to the United 
States of softwood lumber which had been the subject of an 
investigation initiated by the USTR under section 302(b)(1)(A) of the 
Trade Act of 1974, as amended (19 U.S.C. 2412(b)(1)(A)), and which on 
October 4, 1991, pursuant to section 304(a) of the Trade Act of 1974, 
as amended (19 U.S.C. 2414(a)), had been found by the USTR to be 
unreasonable and to burden or restrict U.S. commerce. The Agreement was 
the product of a consultative process established by the United States 
and Canada and involving the participation of the U.S. Government, 
Canadian federal and provincial governments and, where appropriate, 
industries and other interested parties in both countries.
    The Agreement refers specifically to softwood lumber mill products 
classified in subheadings 4407.10.00, 4409.10.10, 4409.10.20, and 
4409.10.90 of the Harmonized Tariff Schedule of the United States 
(HTSUS) that were ``first manufactured'' into a product of one of those 
HTSUS subheadings in the Canadian provinces of Ontario, Quebec, British 
Columbia or Alberta. The Agreement requires that Canada assess fees on 
exports of that softwood lumber in each of the five years following 
April 1, 1996, based on the following schedule: (1) For total shipments 
up to 14.7 billion board feet, free (no fee); (2) for any amount 
shipped in excess of 14.7 billion board feet but not in excess of 15.35 
billion board feet, US$50 per thousand board feet in the first year and 
with annual adjustments for inflation in subsequent years; and (3) for 
any amount shipped in excess of 15.35 billion board feet, US$100 per 
thousand board feet and with annual adjustments for inflation in 
subsequent years. The Agreement also allows an additional amount of 
exports of such softwood lumber in excess of 14.7 billion board feet 
without the payment of a fee if the average price of a benchmark 
softwood lumber price exceeds a prescribed ``trigger price'' during any 
quarterly period. In order to control and monitor exports of softwood 
lumber first manufactured in Ontario, Quebec, British Columbia and 
Alberta, the Agreement provides that Canada will issue an export permit 
for each shipment of such softwood lumber and that Canada will collect 
any required fee for amounts of lumber exported in excess of 14.7 
billion board feet upon issuance of the export permit.
    The Agreement requires the collection of information by Canada in 
connection with the issuance of export permits for softwood lumber 
first manufactured in Ontario, Quebec, British Columbia and Alberta and 
the collection of information by the United States in connection with 
import transactions involving that lumber.
    With regard to the import end, the Agreement obligates the United 
States to require that the U.S. importer provide specific information 
in connection with the entry of the lumber under section 484 of the 
Tariff Act of 1930, as amended (19 U.S.C. 1484). The information 
required to be collected under the Agreement includes the following 
three specific data elements which were not previously required under 
the Customs laws and regulations, the last two of which were required 
by the Agreement to be collected as soon as practicable after the entry 
into force of the Agreement: (1) The province of first manufacture of 
the lumber; (2) the export permit number issued in Canada for the 
shipment; and (3) the fee status of the lumber for which the export 
permit was issued (whether the lumber in the shipment was attributed to 
a quantity to which no fee applies or to a quantity that is subject to 
the US$50 fee or to a quantity that is subject to the US$100 fee or to 
a quantity that is covered by the trigger price mechanism).

Implementing Regulations

    On February 26, 1997, Customs published in the Federal Register (62 
FR 8620) T.D. 97-6 which set forth interim amendments to the Customs 
Regulations to provide an appropriate regulatory context for the new 
requirements resulting from the Agreement as described above. Those 
amendments included the adoption of a new Sec. 12.140 (19 CFR 12.140) 
which specifically addresses the entry requirements for softwood lumber 
under the agreement. Paragraph (b) of Sec. 12.140 prescribes the 
information to be included on the entry summary and requires, under 
subparagraph (b)(2)(ii), an indication of the export fee payment status 
of the product for which the permit was issued according to one of four 
categories, Category A through Category D.

Amendment of the Agreement

    On June 1, 1998, the British Columbia Forest Ministry reduced 
stumpage (timber harvesting) fees charged on all timber grown on 
provincially-owned lands, which accounts for the overwhelming majority 
of timber harvested in the province. The United States considered this 
reduction to be a violation of the Agreement and therefore invoked the 
dispute settlement provisions of the Agreement. When consultations 
failed to resolve the dispute, an Arbitration Panel was formed, Canada 
and the United States made submissions to the Arbitration Panel, and 
oral hearings were held. The dispute was ultimately settled, without 
issuance of a decision by the Arbitration Panel, on August 26, 1999, by 
an exchange of letters between the Governments of Canada and the United 
States which amended the Agreement and terminated the dispute.
    The August 26, 1999, settlement and amendment of the Agreement 
applies only to softwood lumber first manufactured in British Columbia 
and applies only in the fourth and fifth years of the Agreement. The 
effect of the settlement and amended Agreement is to require Canada: 
(1) To impose the higher of the two basic export fee levels called for 
under the Agreement ($100 per thousand board feet with annual 
adjustments for inflation after the first year) at lower lumber export 
levels for the province than previously was the case and (2) to impose 
a new, higher fee on lumber exports when they exceed recent average 
annual shipments to the United States from the province. Specifically, 
under the terms of the settlement and amended Agreement:
    1. In the fourth year (April 1, 1999-March 31, 2000):
    a. Ninety million board feet of the 362.3 million board feet lower 
fee base (LFB) allocation to British Columbia companies in that year 
will be re-priced at the current upper fee base (UFB) fee level (that 
is, US$105.86 per thousand board feet which represents the adjusted 
$100 fee applicable during the fourth year), and Canada will collect a 
fee equivalent to that UFB fee level on the issuance of a permit for 
export of the softwood lumber to the United States (``re-priced LFB''); 
and
    b. Canada will collect a fee on the issuance of a permit for export 
to the United States of quantities of UFB by British Columbia companies 
(which includes re-priced LFB described in paragraph 1.a. above) in 
excess of 110 million board feet (the average of the UFB shipments for 
the first and second years of the Agreement) at the fee level

[[Page 33253]]

of US$146.25 per thousand board feet (US$105.86 per thousand board feet 
plus US$40.39 per thousand board feet) (``re-priced UFB'');
    2. In the fifth year (April 1, 2000-March 31, 2001):
    a. Either 90 million board feet, or any amount in excess of 272 
million board feet, whichever is greater, of LFB allocations to British 
Columbia companies in that year will be re-priced at the current UFB 
level, and Canada will collect a fee equivalent to that UFB fee level 
on the issuance of a permit for export of the softwood lumber to the 
United States (``re-priced LFB''); and
    b. Canada will collect a fee on the issuance of a permit for export 
to the United States of quantities of UFB by British Columbia companies 
(which includes re-priced LFB described in paragraph 2.a. above) in 
excess of 110 million board feet (the average of the UFB shipments for 
the first and second years of the Agreement) at the fee level of 
US$40.39 above the current UFB rate (``re-priced UFB''); and
    3. If any portion of LFB lumber allocated to a British Columbia 
company which has been re-priced pursuant to paragraph 1.a. or 
paragraph 2.a. above is transferred to a company in another Canadian 
province or is returned for temporary reallocation, Canada will collect 
a fee equivalent to the current UFB level on the issuance of a permit 
for export of the softwood lumber to the United States.
    Customs has determined that the portion of Sec. 12.140 that sets 
forth the various export fee payment statuses to be included on entry 
summaries must be amended in order to accommodate the new statuses that 
apply to softwood lumber first manufactured in British Columbia under 
the settlement and amended Agreement discussed above. In this regard, 
Customs has been advised by the Government of Canada that the new fee 
payment status categories (permit type codes) that Canada will assign 
to the subject British Columbia exports are ``R'' for re-priced LFB 
(that is, the products described in paragraphs 1.a. and 2.a. above) and 
``S'' for re-priced UFB (that is, the products described in paragraphs 
1.b. and 2.b. above).
    Accordingly, this document amends the reporting requirement 
provisions within Sec. 12.140(b) on an interim basis by adding two new 
subparagraphs (b)(2)(ii)(E) and (b)(2)(ii)(F) to cover the new ``R'' 
and ``S'' fee payment status categories applicable to British Columbia 
exports. It should be noted that no reference is made in the new 
regulatory text to transfers or reallocations (paragraph 3. above) 
because exports involving transfers and reallocations would be reported 
as having the category C export fee payment status (that is, UFB) 
already specified in subparagraph (b)(2)(ii)(C).

Comments

    Before adopting this interim regulation as a final rule, 
consideration will be given to any written comments timely submitted to 
Customs, including comments on the clarity of this interim rule and how 
it may be made easier to understand. Comments submitted will be 
available for public inspection in accordance with the Freedom of 
Information Act (5 U.S.C. 552), Sec. 1.4, Treasury Department 
Regulations (31 CFR 1.4), and Sec. 103.11(b), Customs Regulations (19 
CFR 103.11(b)), on regular business days between the hours of 9 a.m. 
and 4:30 p.m. at the Regulations Branch, Office of Regulations and 
Rulings, U.S. Customs Service, 1300 Pennsylvania Avenue, NW., 3rd 
Floor, Washington, DC.

Inapplicability of Notice and Delayed Effective Date Requirements, 
the Regulatory Flexibility Act, and Executive Order 12866

    Pursuant to the provisions of 5 U.S.C. 553(a), public notice is 
inapplicable to this interim regulation because it is within the 
foreign affairs function of the United States. The collection of 
information provided for in this interim regulation is required under 
the terms of the amended Softwood Lumber Agreement with Canada and is 
necessary to ensure effective monitoring of the operation of that 
Agreement. Furthermore, for the same reasons and because the collection 
of this information must begin as soon as practicable, it is determined 
that good cause exists under the provisions of 5 U.S.C. 553(d)(3) for 
dispensing with a delayed effective date. Because no notice of proposed 
rulemaking is required for interim regulations, the provisions of the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do not apply; and 
because this document involves a foreign affairs function of the United 
States and implements an international agreement, it is not subject to 
the provisions of Executive Order 12866.

Paperwork Reduction Act

    The collections of information in the current regulations have 
already been approved by the Office of Management and Budget (OMB) in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) 
and assigned OMB control number 1515-0065 (Entry summary and 
continuation sheet). This rule does not involve any material change to 
the existing approved information collection.
    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 assigned by OMB.

List of Subjects in 19 CFR Part 12

    Bonds, Canada, Customs duties and inspection, Entry of merchandise, 
Imports, Prohibited merchandise, Reporting and recordkeeping 
requirements, Restricted merchandise, Trade agreements.

Amendment to the Regulations

    For the reasons set forth in the preamble, Part 12, Customs 
Regulations (19 CFR Part 12), is amended as set forth below.

PART 12--SPECIAL CLASSES OF MERCHANDISE

    1. The authority citation for Part 12 continues to read in part as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 20, 
Harmonized Tariff Schedule of the United States (HTSUS)), 1624;
* * * * *

    Section 12.140 also issued under 19 U.S.C. 1484, 2416(a), 2171;

* * * * *

    2. In Sec. 12.140:
    a. Paragraph (b)(2)(ii)(C) is amended by removing the word ``or'' 
at the end;
    b. Paragraph (b)(2)(ii)(D) is amended by removing the period at the 
end and adding, in its place, a semicolon; and
    c. New paragraphs (b)(2)(ii)(E) and (b)(2)(ii)(F) are added to read 
as follows:

Sec. 12.140  Entry of softwood lumber from Canada.

* * * * *
    (b) * * *
    (2) * * *
    (ii) * * *
    (E) Category R: Payment of the re-priced lower fee base export fee 
applicable to certain products first manufactured in British Columbia; 
or
    (F) Category S: Payment of the re-priced upper fee base export fee 
applicable to certain products first manufactured in British Columbia.
* * * * *

    Approved: April 18, 2000.
Raymond W. Kelly,
Commissioner of Customs,
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 00-12921 Filed 5-22-00; 8:45 am]
BILLING CODE 4820-02-P
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