Federal Register / Vol. 77, No. 53 / Monday, March 19, 2012 / Rules and Regulations 15943 

operating under part 121 of 14 CFR, you have 

met the requirements of this AD when you 

modify your continuous airworthiness air 

carrier maintenance program as specified in 

paragraph (f) of this AD. You do not need to 

record each piece-part inspection as 

compliance to this AD, but you must 

maintain records of those inspections 

according to the regulations governing your 

operation. For air carriers operating under 

part 121, you may use either the system 

established to comply with section 121.369 

or an alternative accepted by your principal 

maintenance inspector if that alternative: 

(i) Includes a method for preserving and 

retrieving the records of the inspections 

resulting from this AD; 

(ii) Meets the requirements of section 

121.369(c); and 

(iii) Maintains the records either 

indefinitely or until the work is repeated. 

(2) These record keeping requirements 

apply only to the records used to document 

the mandatory inspections required as a 

result of revising the ALS of the 

manufacturer’s ICA as specified in paragraph 

(f) of this AD. These record keeping 

requirements do not alter or amend the 

record keeping requirements for any other 

AD or regulatory requirement. 

(j) Related Information 

For more information about this AD, 

contact Ian Dargin, Aerospace Engineer, 

Engine & Propeller Directorate, FAA, 12 New 

England Executive Park, Burlington, MA 

01803; phone: 781–238–7178; fax: 781–238– 

7199; email: ian.dargin@faa.gov. 

(k) Material Incorporated by Reference 

None. 

Issued in Burlington, Massachusetts, on 

February 22, 2012. 

Peter A. White, 

Manager, Engine & Propeller Directorate, 

Aircraft Certification Service. 

[FR Doc. 2012–6504 Filed 3–16–12; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF HOMELAND 

SECURITY 

U.S. Customs and Border Protection 

DEPARTMENT OF THE TREASURY 

19 CFR Parts 10, 24, 162, 163, and 178 

[USCBP–2012–0007; CBP Dec. 12–03] 

RIN 1515–AD86 

United States-Korea Free Trade 

Agreement 

AGENCY: U.S. Customs and Border 

Protection, Department of Homeland 

Security; Department of the Treasury. 

ACTION: Interim regulations; solicitation 

of comments. 

SUMMARY: This rule amends the Customs 

and Border Protection (CBP) regulations 

on an interim basis to implement the 

preferential tariff treatment and other 

customs-related provisions of the 

United States-Korea Free Trade 

Agreement. 

DATES: Effective March 15, 2012; 

comments must be received by May 18, 

2012. 

ADDRESSES: You may submit comments, 

identified by docket number, by one of 

the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments 

via docket number USCBP–2012–007. 

• Mail: Trade and Commercial 

Regulations Branch, Regulations and 

Rulings, Office of International Trade, 

U.S. Customs and Border Protection, 

799 9th Street NW., 5th Floor, 

Washington, DC 20229–1179. 

Instructions: All submissions received 

must include the agency name and 

docket number for this rulemaking. All 

comments received will be posted 

without change to http:// 

www.regulations.gov, including any 

personal information provided. For 

detailed instructions on submitting 

comments and additional information 

on the rulemaking process, see the 

‘‘Public Participation’’ heading of the 

SUPPLEMENTARY INFORMATION section of 

this document. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http:// 

www.regulations.gov. Submitted 

comments may also be inspected during 

regular business days between the hours 

of 9 a.m. and 4:30 p.m. at the Trade and 

Commercial Regulations Branch, 

Regulations and Rulings, Office of 

International Trade, U.S. Customs and 

Border Protection, 799 9th Street NW., 

5th Floor, Washington, DC. 

Arrangements to inspect submitted 

comments should be made in advance 

by calling Mr. Joseph Clark at (202) 325– 

0118. 

FOR FURTHER INFORMATION CONTACT: 

Textile Operational Aspects: Nancy 

Mondich, Trade Policy and Programs, 

Office of International Trade, (202) 863– 

6524. 

Other Operational Aspects: Katrina 

Chang, Trade Policy and Programs, 

Office of International Trade, (202) 863– 

6532. 

Legal Aspects: Yuliya A. Gulis, 

Regulations and Rulings, Office of 

International Trade, (202) 325–0042. 

SUPPLEMENTARY INFORMATION: 

Public Participation 

Interested persons are invited to 

participate in this rulemaking by 

submitting written data, views, or 

arguments on all aspects of the interim 

rule. U.S. Customs and Border 

Protection (CBP) also invites comments 

that relate to the economic, 

environmental, or federalism effects that 

might result from this interim rule. 

Comments that will provide the most 

assistance to CBP in developing these 

regulations will reference a specific 

portion of the interim rule, explain the 

reason for any recommended change, 

and include data, information, or 

authority that support such 

recommended change. See ADDRESSES

above for information on how to submit 

comments. 

Background 

On June 30, 2007, the United States 

and the Republic of Korea (hereinafter 

‘‘Korea’’) signed the United States-Korea 

Free Trade Agreement (hereinafter 

‘‘UKFTA’’ or the ‘‘Agreement’’). On 

December 3, 2010, the United States and 

Korea concluded new agreements, 

reflected in letters signed on February 

10, 2011 that provide new market access 

and level the playing field for U.S. auto 

manufacturers and workers. The stated 

objectives of the UKFTA include: 

Strengthening close economic relations 

between the United States and Korea; 

creating an expanded and secure market 

for goods and services in the United 

States and Korea and a stable and 

predictable environment for investment, 

thus enhancing the competitiveness of 

U.S. and Korean firms in global markets; 

raising living standards, promoting 

economic growth and stability; creating 

new employment opportunities, and 

improving the general welfare by 

liberalizing and expanding trade and 

investment between the United States 

and Korea; establishing clear and 

mutually advantageous rules governing 

the two countries’ trade and investment 

and reducing or eliminating the barriers 

to trade and investment between the 

United States and Korea; not according 

foreign investors greater substantive 

rights with respect to investment 

protections than domestic investors 

under domestic law where, as in the 

United States, protections of investor 

rights under domestic law equal or 

exceed those set forth in this 

Agreement; contributing to the 

harmonious development and 

expansion of world trade by removing 

obstacles to trade through the creation 

of a free trade area and avoiding new 

barriers to trade or investment between 

the territories of the United States and 

Korea that could reduce the benefits of 

this Agreement; strengthening the 

development and enforcement of labor 

and environmental laws and policies, 

promoting basic workers’ rights and 


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15944 Federal Register / Vol. 77, No. 53 / Monday, March 19, 2012 / Rules and Regulations 

sustainable development, and 

implementing this Agreement in a 

manner consistent with environmental 

protection and conservation; observing 

the Parties’ respective rights and 

obligations under the Marrakesh 

Agreement Establishing the World Trade 

Organization and other multilateral, 

regional, and bilateral agreements and 

arrangements to which they are both 

parties; and furthering the economic 

leadership of the United States and 

Korea in the Asia Pacific region, in 

particular by seeking to reduce barriers 

to trade and investment in the region. 

The provisions of the FTA were 

approved by the United States with the 

enactment on October 21, 2011, of the 

United States-Korea Free Trade 

Agreement Implementation Act (the 

‘‘Act’’), Public Law 112–41, 125 Stat. 

428 (19 U.S.C. 3805, note). Sections 

103(b) and 208 of the Act require that 

regulations be prescribed as necessary to 

implement the provisions of the 

UKFTA. 

On March 6, 2012, the President 

signed Proclamation 8783 to implement 

the provisions of the UKFTA for the 

United States. The Proclamation, which 

was published in the Federal Register 

on March 9, 2012 (77 FR 14265) 

modified the Harmonized Tariff 

Schedule of the United States 

(‘‘HTSUS’’) as set forth in Annexes I and 

II of Publication No. 4308 of the U.S. 

International Trade Commission 

entitled ‘‘Modifications to the 

Harmonized Tariff Schedule of the 

United States to Implement the United 

States-Korea Free Trade Agreement’’. 

The modifications to the HTSUS 

included the addition of new General 

Note 33, incorporating the relevant 

UKFTA rules of origin as set forth in the 

Act, and the insertion throughout the 

HTSUS of the preferential duty rates 

applicable to individual products under 

the UKFTA where the special program 

indicator ‘‘KR’’ appears in parenthesis 

in the ‘‘Special’’ rate of duty subcolumn. 

The modifications to the HTSUS also 

included a new Subchapter XX to 

Chapter 99 to provide for temporary 

tariff-rate quotas and applicable 

safeguards implemented by the UKFTA. 

U.S. Customs and Border Protection 

(‘‘CBP’’) is responsible for administering 

the provisions of the UKFTA and the 

Act that relate to the importation of 

goods into the United States from Korea. 

Customs-Related UKFTA Provisions 

Those customs-related UKFTA 

provisions which require 

implementation through regulation as 

called for in § 208 of the Act include 

certain tariff and non-tariff provisions 

within Chapter One (Initial Provisions 

and Definitions), Chapter Two (National 

Treatment and Market Access for 

Goods), Chapter Four (Textiles and 

Apparel), Chapter Six (Rules of Origin 

and Origin Procedures), and Chapter 

Seven (Customs Administration and 

Trade Facilitation). 

Certain general definitions set forth in 

Chapter One of the UKFTA and §§ 3 and 

202(n) of the Act have been 

incorporated into the UKFTA 

implementing regulations. These 

regulations also implement Article 2.6 

(Goods Re-entered after Repair or 

Alteration) of the UKFTA. 

Chapter Four of the FTA sets forth 

provisions relating to trade in textile 

and apparel goods between Korea and 

the United States. The provisions within 

Chapter Four that require regulatory 

action by CBP include Article 4.2 (Rules 

of Origin and Related Matters), Article 

4.3 (Customs Cooperation for Textile or 

Apparel Goods), and Article 4.5 

(Definitions). 

Chapter Six of the UKFTA sets forth 

the rules for determining whether an 

imported good is an originating good of 

the United States or Korea and, as such, 

is therefore eligible for preferential tariff 

(duty-free or reduced duty) treatment 

under the UKFTA as specified in the 

Agreement and the HTSUS. The basic 

rules of origin in Section A of Chapter 

Six are set forth in General Note 33, 

HTSUS. 

Under Article 6.1 of Chapter Six and 

§ 202(b) of the Act, originating goods 

may be grouped in three broad 

categories: (1) Goods that are wholly 

obtained or produced entirely in the 

territory of one or both of the Parties; (2) 

goods that are produced entirely in the 

territory of one or both of the Parties 

and that satisfy the product-specific 

rules of origin in UKFTA Annex 6–A 

(Specific Rules of Origin; change in 

tariff classification requirement and/or 

regional value content requirement) or 

Annex 4–A (Specific Rules of Origin for 

Textile or Apparel Goods) and all other 

applicable requirements of Chapter Six; 

and (3) goods that are produced entirely 

in the territory of one or both of the 

Parties exclusively from originating 

materials. Article 6.2 and § 202(c) of the 

Act set forth the methods for calculating 

the regional value content of a good. 

Articles 6.3 and 6.4 as well as § 202(d) 

of the Act set forth the rules for 

determining the value of materials for 

purposes of calculating the regional 

value content of a good. Article 6.5 and 

§ 202(e) of the Act provide that 

production that takes place in the 

territory of one or both of the Parties 

may be accumulated such that, provided 

other requirements are met, the 

resulting good is considered originating. 

Article 6.6 and § 202(f) of the Act 

provide the de minimis criterion. The 

remaining Articles within Section A of 

Chapter Six consist of additional subrules, applicable to the originating good 

concept, involving fungible goods and 

materials, accessories, spare parts, and 

tools, sets of goods, packaging materials 

and containers for retail sale, packing 

materials and containers for shipment, 

indirect materials, transit and 

transshipment, and consultation and 

modifications. All Articles within 

Section A are reflected in the UKFTA 

implementing regulations, except for 

Article 6.14 (Consultation and 

Modifications). 

Section B of Chapter Six sets forth 

procedures that apply under the UKFTA 

in regard to claims for preferential tariff 

treatment. Specifically, Section B 

includes provisions concerning claims 

for preferential tariff treatment, waiver 

of certification or other information, 

recordkeeping requirements, 

verification of preference claims, 

obligations relating to importations and 

exportations, common guidelines, and 

definitions of terms used within the 

context of the rules of origin. All 

Articles within Section B, except for 

Article 6.21 (Common Guidelines) are 

reflected in these implementing 

regulations. 

Chapter Seven sets forth operational 

provisions related to customs 

administration and trade facilitation 

under the UKFTA. Article 7.9, 

concerning the general application of 

penalties to UKFTA transactions, is the 

only provision within Chapter Seven 

that is reflected in the UKFTA 

implementing regulations. 

Placement of CBP Implementing 

Regulations 

In order to provide transparency and 

facilitate their use, the majority of the 

UKFTA implementing regulations set 

forth in this document have been 

included within Subpart R in Part 10 of 

the CBP regulations (19 CFR part 10). 

However, in those cases in which 

UKFTA implementation is more 

appropriate in the context of an existing 

regulatory provision, the UKFTA 

regulatory text has been incorporated in 

an existing Part within the CBP 

regulations. In addition, this document 

sets forth several cross-references and 

other consequential changes to existing 

regulatory provisions to clarify the 

relationship between those existing 

provisions and the new UKFTA 

implementing regulations. The 

regulatory changes are discussed below 

in the order in which they appear in this 

document. 


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Federal Register / Vol. 77, No. 53 / Monday, March 19, 2012 / Rules and Regulations 15945 

Discussion of Amendments 

Part 10 

Section 10.31(f) concerns temporary 

importations under bond. It is amended 

by adding references to certain goods 

originating in Korea for which, like 

goods originating in Canada, Mexico, 

Singapore, Chile, Morocco, El Salvador, 

Guatemala, Honduras, Nicaragua, the 

Dominican Republic, Costa Rica, 

Bahrain, Oman, or Peru, no bond or 

other security will be required when 

imported temporarily for prescribed 

uses. The provisions of UKFTA Article 

2.5 (Temporary Admission of Goods) are 

already reflected in existing temporary 

importation bond or other provisions 

contained in Part 10 of the CBP 

regulations and in Chapter 98 of the 

HTSUS. 

Part 10, Subpart R 

General Provisions 

Section 10.1001 outlines the scope of 

Subpart R, Part 10 of the CBP 

regulations. This section also clarifies 

that, except where the context otherwise 

requires, the requirements contained in 

Subpart R, Part 10 are in addition to 

general administrative and enforcement 

provisions set forth elsewhere in the 

CBP regulations. Thus, for example, the 

specific merchandise entry 

requirements contained in Subpart R, 

Part 10 are in addition to the basic entry 

requirements contained in Parts 141– 

143 of the CBP regulations. 

Section 10.1002 sets forth definitions 

of common terms used in multiple 

contexts or places within Subpart R, 

Part 10. Although the majority of the 

definitions in this section are based on 

definitions contained in Articles 1.4 and 

6.22 as well as Annexes 4–A and 6–A 

of the UKFTA, and § 3 of the Act, other 

definitions have also been included to 

clarify the application of the regulatory 

texts. Additional definitions that apply 

in a more limited Subpart R, Part 10 

context are set forth elsewhere with the 

substantive provisions to which they 

relate. 

Import Requirements 

Section 10.1003 sets forth the 

procedure for claiming UKFTA 

preferential tariff treatment at the time 

of entry and, as provided in UKFTA 

Article 6.15.1, states that an importer 

may make a claim for UKFTA 

preferential tariff treatment based on a 

certification by the importer, exporter, 

or producer or the importer’s knowledge 

that the good is an originating good. 

Section 10.1003 also provides, 

consistent with UKFTA Article 

6.19.4(e), that when an importer has 

reason to believe that a claim is based 

on inaccurate information, the importer 

must correct the claim and pay any 

duties that may be due. 

Section 10.1004, which is based on 

UKFTA Articles 6.15 and 6.19.4, 

requires a U.S. importer, upon request, 

to submit a copy of the certification of 

the importer, exporter, or producer if 

the certification forms the basis for the 

claim. Section 10.1004 specifies the 

information that must be included on 

the certification, sets forth the 

circumstances under which the 

certification may be prepared by the 

exporter or producer of the good, and 

provides that the certification may be 

used either for a single importation or 

for multiple importations of identical 

goods. 

Section 10.1005 sets forth certain 

importer obligations regarding the 

truthfulness of information and 

documents submitted in support of a 

claim for preferential tariff treatment. 

Section 10.1006, which is based on 

UKFTA Article 6.16, provides that the 

certification is not required for certain 

non-commercial or low-value 

importations. 

Section 10.1007 implements UKFTA 

Article 6.17 and § 206 of the Act 

concerning the maintenance of relevant 

records regarding the imported good. 

Section 10.1008, which reflects 

UKFTA Article 6.19.2 and § 204(b) of 

the Act, authorizes the denial of UKFTA 

tariff benefits if the importer fails to 

comply with any of the requirements 

under Subpart R, Part 10, CBP 

regulations. 

Export Requirements 

Section 10.1009, which implements 

UKFTA Articles 6.20.1 and 6.17.1, sets 

forth certain obligations of a person who 

completes and issues a certification for 

a good exported from the United States 

to Korea. Paragraphs (a) and (b) of 

§ 10.1009, reflecting UKFTA Article 

6.20.1, require a person who completes 

such a certification to provide a copy of 

the certification to CBP upon request 

and to give prompt notification of any 

errors in the certification to every 

person to whom the certification was 

given. Paragraph (c) of § 10.1009 reflects 

Article 6.17.1, concerning the 

recordkeeping requirements that apply 

to a person who completes and issues a 

certification for a good exported from 

the United States to Korea. 

Post-Importation Duty Refund Claims 

Sections 10.1010 through 10.1012 

implement UKFTA Article 6.19.5 and 

section 205 of the Act, which allow an 

importer who did not claim UKFTA 

tariff benefits on a qualifying good at the 

time of importation to apply for a refund 

of any excess duties at any time within 

one year after the date of importation. 

Such a claim may be made even if 

liquidation of the entry would otherwise 

be considered final under other 

provisions of law. 

Rules of Origin 

Sections 10.1013 through 10.1025 

provide the implementing regulations 

regarding the rules of origin provisions 

of General Note 33, HTSUS, Article 4.2 

and Chapter Six of the UKFTA, and 

§ 202 of the Act. 

Definitions 

Section 10.1013 sets forth terms that 

are defined for purposes of the rules of 

origin as found in § 202(n) of the Act. 

General Rules of Origin 

Section 10.1014 sets forth the basic 

rules of origin established in Article 6.1 

of the UKFTA, § 202(b) of the Act, and 

General Note 33(b), HTSUS. The 

provisions of § 10.1014 apply both to 

the determination of the status of an 

imported good as an originating good for 

purposes of preferential tariff treatment 

and to the determination of the status of 

a material as an originating material 

used in a good which is subject to a 

determination under General Note 33, 

HTSUS. Section 10.1014(a)(1), reflecting 

§ 202(b)(1) of the Act, specifies those 

goods that are originating goods because 

they are wholly obtained or produced 

entirely in the territory of one or both 

of the Parties. 

Section 10.1014(a)(2), reflecting 

§ 202(b)(2) of the Act, provides that 

goods that have been produced entirely 

in the territory of one or both of the 

Parties from non-originating materials 

each of which undergoes an applicable 

change in tariff classification and 

satisfies any applicable regional value 

content or other requirement set forth in 

General Note 33, HTSUS, are originating 

goods. Essential to the rules in 

§ 10.1014(a)(2) are the specific rules of 

General Note 33(o), HTSUS, which are 

incorporated by reference. 

Section 10.1014(a)(3), reflecting 

§ 202(b)(3) of the Act, provides that 

goods that have been produced entirely 

in the territory of one or both of the 

Parties exclusively from originating 

materials are originating goods. 

Value Content 

Section 10.1015 reflects UKFTA 

Article 6.2 and § 202(c) of the Act 

concerning the basic rules that apply for 

purposes of determining whether an 

imported good satisfies a minimum 

regional value content (‘‘RVC’’) 

requirement. Section 10.1016, reflecting 


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15946 Federal Register / Vol. 77, No. 53 / Monday, March 19, 2012 / Rules and Regulations 

UKFTA Articles 6.3 and 6.4 as well as 

§ 202(d) of the Act, sets forth the rules 

for determining the value of a material 

for purposes of calculating the regional 

value content of a good as well as for 

purposes of applying the de minimis 

rules. 

Accumulation 

Section 10.1017, which is derived 

from UKFTA Article 6.5 and § 202(e) of 

the Act, sets forth the rule by which 

originating materials from the territory 

of a Party that are used in the 

production of a good in the territory of 

the other Party will be considered to 

originate in the territory of that other 

country. In addition, this section also 

establishes that a good that is produced 

by one or more producers in the 

territory of one or both of the Parties is 

an originating good if the good satisfies 

all of the applicable requirements of the 

rules of origin of the UKFTA. 

De Minimis 

Section 10.1018, as provided for in 

UKFTA Article 6.6 and § 202(f) of the 

Act, sets forth de minimis rules for 

goods that may be considered to qualify 

as originating goods even though they 

fail to qualify as originating goods under 

the rules specified in § 10.1014. There 

are a number of exceptions to the de 

minimis rule set forth in UKFTA Annex 

6–B (Exceptions to Article 6.6) as well 

as a separate rule for textile and apparel 

goods. 

Fungible Goods and Materials 

Section 10.1019, as provided for in 

UKFTA Article 6.7 and § 202(g) of the 

Act, sets forth the rules by which 

‘‘fungible’’ goods or materials may be 

claimed as originating. 

Accessories, Spare Parts, or Tools 

Section 10.1020, as set forth in 

UKFTA Article 6.8 and § 202(h) of the 

Act, specifies the conditions under 

which a good’s standard accessories, 

spare parts, or tools are: (1) Treated as 

originating goods; and (2) disregarded in 

determining whether all non-originating 

materials undergo an applicable change 

in tariff classification under General 

Note 33(o), HTSUS. 

Goods Classifiable as Goods Put Up in 

Sets 

Section 10.1021, which is based on 

UKFTA Articles 4.2.8 and 6.9 as well as 

§ 202(m) of the Act, provides that, 

notwithstanding the specific rules of 

General Note 33(o), HTSUS, goods 

classifiable as goods put up in sets for 

retail sale as provided for in General 

Rule of Interpretation 3, HTSUS, will 

not qualify as originating goods unless: 

(1) Each of the goods in the set is an 

originating good; or (2) the total value of 

the non-originating goods in the set does 

not exceed 15 percent of the adjusted 

value of the set, or 10 percent of the 

adjusted value of the set in the case of 

textile or apparel goods. 

Packaging Materials and Packing 

Materials 

Sections 10.1022 and 10.1023, which 

are derived from UKFTA Articles 6.10 

and 6.11, as well as §§ 202(i) and (j) of 

the Act, respectively, provide that retail 

packaging materials and packing 

materials for shipment are to be 

disregarded with respect to their actual 

origin in determining whether nonoriginating materials undergo an 

applicable change in tariff classification 

under General Note 33(o), HTSUS. 

These sections also set forth the 

treatment of packaging and packing 

materials for purposes of the regional 

value content requirement of the note. 

Indirect Materials 

Section 10.1024, as set forth in 

UKFTA Article 6.12 and § 202(k) of the 

Act, provides that indirect materials, as 

defined in § 10.1002(n) (General 

definitions), are disregarded for the 

purpose of determining whether a good 

is originating. 

Transit and Transshipment 

Section 10.1025, which is derived 

from UKFTA Article 6.13 and § 202(l) of 

the Act, sets forth the rule that an 

originating good loses its originating 

status and is treated as a non-originating 

good if, subsequent to production in the 

territory of one or both of the Parties 

that qualifies the good as originating, 

the good: (1) Undergoes production 

outside the territories of the Parties, 

other than certain specified minor 

operations; or (2) does not remain under 

the control of customs authorities in the 

territory of a non-Party. 

Origin Verifications and Determinations 

Section 10.1026 implements UKFTA 

Article 6.18 which concerns the conduct 

of verifications to determine whether 

imported goods are originating goods 

entitled to UKFTA preferential tariff 

treatment. This section also governs the 

conduct of verifications directed to 

producers of materials that are used in 

the production of a good for which 

UKFTA preferential duty treatment is 

claimed. 

Section 10.1027, which reflects 

UKFTA Article 4.3, sets forth the 

verification and enforcement procedures 

specifically relating to trade in textile 

and apparel goods. 

Section 10.1028 provides the 

procedures that apply when preferential 

tariff treatment is denied on the basis of 

an origin verification conducted under 

Subpart R of Part 10. 

Section 10.1029 implements UKFTA 

Article 6.18.6 and § 204(b) of the Act, 

concerning the denial of preferential 

tariff treatment in situations in which 

there is a pattern of conduct by an 

importer, exporter, or producer of false 

or unsupported FTA preference claims. 

Penalties 

Section 10.1030 concerns the general 

application of penalties to UKFTA 

transactions and is based on UKFTA 

Article 7.9. 

Section 10.1031 reflects UKFTA 

Article 6.19.3 and § 204(a)(1) of the Act 

with regard to an exception to the 

application of penalties in the case of an 

importer who promptly and voluntarily 

makes a corrected claim and pays any 

duties owing. 

Section 10.1032 implements UKFTA 

Article 6.20.2 and § 204(a)(2) of the Act, 

concerning an exception to the 

application of penalties in the case of a 

U.S. exporter or producer who promptly 

and voluntarily provides notification of 

the making of an incorrect certification 

with respect to a good exported to 

Korea. 

Section 10.1033 sets forth the 

circumstances under which the making 

of a corrected claim or certification by 

an importer or the providing of 

notification of an incorrect certification 

by a U.S. exporter or producer will be 

considered to have been done 

‘‘promptly and voluntarily.’’ Corrected 

claims or certifications that fail to meet 

these requirements are not excepted 

from penalties, although the U.S. 

importer, exporter, or producer making 

the corrected claim or certification may, 

depending on the circumstances, qualify 

for a reduced penalty as a prior 

disclosure under 19 U.S.C. 1592(c)(4). 

Section 10.1033 also specifies the 

content of the statement that must 

accompany each corrected claim or 

certification, including any 

certifications and records demonstrating 

that a good is an originating good. 

Goods Returned After Repair or 

Alteration 

Section 10.1034 implements UKFTA 

Article 2.6 regarding duty-free treatment 

for goods re-entered after repair or 

alteration in Korea. 

Other Amendments 

Part 24 

An amendment is made to § 24.23(c), 

which concerns the merchandise 


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Federal Register / Vol. 77, No. 53 / Monday, March 19, 2012 / Rules and Regulations 15947 

processing fee, to implement § 203 of 

the Act, providing that the merchandise 

processing fee is not applicable to goods 

that qualify as originating goods under 

the UKFTA. 

Part 162 

Part 162 contains regulations 

regarding the inspection and 

examination of, among other things, 

imported merchandise. A crossreference is added to § 162.0, which is 

the scope section of the part, to refer 

readers to the additional UKFTA 

records maintenance and examination 

provisions contained in Subpart R, Part 

10, CBP regulations. 

Part 163 

A conforming amendment is made to 

§ 163.1 to include the maintenance of 

any documentation, as required by § 206 

of the Act, that the importer may have 

in support of a claim for preference 

under the UKFTA as an activity for 

which records must be maintained. 

Also, the list of records and information 

required for the entry of merchandise 

appearing in the Appendix to Part 163 

(commonly known as the (a)(1)(A) list) 

is also amended to add the records that 

the importer may have in support of a 

UKFTA claim for preferential tariff 

treatment. 

Part 178 

Part 178 sets forth the control 

numbers assigned to information 

collections of CBP by the Office of 

Management and Budget, pursuant to 

the Paperwork Reduction Act of 1995, 

Public Law 104–13. The list contained 

in § 178.2 is amended to add the 

information collections used by CBP to 

determine eligibility for preferential 

tariff treatment under the UKFTA and 

the Act. 

Inapplicability of Notice and Delayed 

Effective Date Requirements 

Under the Administrative Procedure 

Act (‘‘APA’’) (5 U.S.C. 553), agencies 

generally are required to publish a 

notice of proposed rulemaking in the 

Federal Register that solicits public 

comment on the proposed regulatory 

amendments, consider public comments 

in deciding on the content of the final 

amendments, and publish the final 

amendments at least 30 days prior to 

their effective date. However, section 

553(a)(1) of the APA provides that the 

standard prior notice and comment 

procedures do not apply to an agency 

rulemaking to the extent that it involves 

a foreign affairs function of the United 

States. CBP has determined that these 

interim regulations involve a foreign 

affairs function of the United States 

because they implement preferential 

tariff treatment and related provisions of 

the FTA. Therefore, the rulemaking 

requirements under the APA do not 

apply and this interim rule will be 

effective upon publication. However, 

CBP is soliciting comments in this 

interim rule and will consider all 

comments received before issuing a 

final rule. 

Executive Order 12866 and Regulatory 

Flexibility Act 

This document is not subject to the 

provisions of Executive Order 12866 of 

September 30, 1993 (58 FR 51735, 

October 4, 1993), because it pertains to 

a foreign affairs function of the United 

States and implements an international 

agreement, as described above, and 

therefore is specifically exempted by 

section 3(d)(2) of Executive Order 

12866. Because a notice of proposed 

rulemaking is not required under 

section 553(b) of the APA for the 

reasons described above, the provisions 

of the Regulatory Flexibility Act, as 

amended (5 U.S.C. 601 et seq.), do not 

apply to this rulemaking. Accordingly, 

this interim rule is not subject to the 

regulatory analysis requirements or 

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

604. 

Paperwork Reduction Act 

The collections of information 

contained in these regulations are under 

the review of the Office of Management 

and Budget in accordance with the 

requirements of the Paperwork 

Reduction Act (44 U.S.C. 3507) under 

control number 1651–0117, which 

covers many of the free trade 

agreements requirements that CBP 

administers. The addition of the UKFTA 

requirements will result in an increase 

in the number of respondents and 

burden hours for this information 

collection. Under the Paperwork 

Reduction Act, an agency may not 

conduct or sponsor, and an individual 

is not required to respond to, a 

collection of information unless it 

displays a valid OMB control number. 

The collections of information in 

these regulations are in §§ 10.1003 and 

10.1004. This information is required in 

connection with claims for preferential 

tariff treatment under the UKFTA and 

the Act and will be used by CBP to 

determine eligibility for tariff preference 

under the UKFTA and the Act. The 

likely respondents are business 

organizations including importers, 

exporters and manufacturers. 

Estimated total annual reporting 

burden: 40,000 hours. 

Estimated number of respondents: 

200,000. 

Estimated annual frequency of 

responses per respondent: 1. 

Estimated average annual burden per 

response: .2 hours. 

Comments concerning the collections 

of information and the accuracy of the 

estimated annual burden, and 

suggestions for reducing that burden, 

should be directed to the Office of 

Management and Budget, Attention: 

Desk Officer for the Department of the 

Treasury, Office of Information and 

Regulatory Affairs, Washington, DC 

20503. A copy should also be sent to the 

Trade and Commercial Regulations 

Branch, Regulations and Rulings, Office 

of International Trade, U.S. Customs 

and Border Protection, 799 9th Street 

NW., 5th Floor, Washington, DC 20229– 

1179. 

Signing Authority 

This document is being issued in 

accordance with § 0.1(a)(1) of the CBP 

regulations (19 CFR 0.1(a)(1)) pertaining 

to the authority of the Secretary of the 

Treasury (or his/her delegate) to 

approve regulations related to certain 

customs revenue functions. 

List of Subjects 

19 CFR Part 10 

Alterations, Bonds, Customs duties 

and inspection, Exports, Imports, 

Preference programs, Repairs, Reporting 

and recordkeeping requirements, Trade 

agreements. 

19 CFR Part 24 

Accounting, Customs duties and 

inspection, Financial and accounting 

procedures, Reporting and 

recordkeeping requirements, Trade 

agreements, User fees. 

19 CFR Part 162 

Administrative practice and 

procedure, Customs duties and 

inspection, Penalties, Trade agreements. 

19 CFR Part 163 

Administrative practice and 

procedure, Customs duties and 

inspection, Exports, Imports, Reporting 

and recordkeeping requirements, Trade 

agreements. 

19 CFR Part 178 

Administrative practice and 

procedure, Exports, Imports, Reporting 

and recordkeeping requirements. 

Amendments to the Regulations 

Accordingly, Chapter I of Title 19, 

Code of Federal Regulations (19 CFR 

chapter I), is amended as set forth 

below. 


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PART 10—ARTICLES CONDITIONALLY 

FREE, SUBJECT TO A REDUCED 

RATE, ETC. 

■ 1. The general authority citation for 

Part 10 continues to read, and the 

specific authority for Subpart R is 

added, to read as follows: 

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

Note 3(i), Harmonized Tariff Schedule of the 

United States), 1321, 1481, 1484, 1498, 1508, 

1623, 1624, 3314; 

* * * * * 

Sections 10.1001 through 10.1034 also 

issued under 19 U.S.C. 1202 (General Note 

33, HTSUS), 19 U.S.C. 1520(d), and Pub. L. 

112–41, 125 Stat. 428 (19 U.S.C. 3805 note). 

■ 2. In § 10.31, paragraph (f), the last 

sentence is revised to read as follows: 

§ 10.31 Entry; bond. 

* * * * * 

(f) * * * In addition, notwithstanding 

any other provision of this paragraph, in 

the case of professional equipment 

necessary for carrying out the business 

activity, trade or profession of a 

business person, equipment for the 

press or for sound or television 

broadcasting, cinematographic 

equipment, articles imported for sports 

purposes and articles intended for 

display or demonstration, if brought 

into the United States by a resident of 

Canada, Mexico, Singapore, Chile, 

Morocco, El Salvador, Guatemala, 

Honduras, Nicaragua, the Dominican 

Republic, Costa Rica, Bahrain, Oman, 

Peru, or the Republic of Korea and 

entered under Chapter 98, Subchapter 

XIII, HTSUS, no bond or other security 

will be required if the entered article is 

a good originating, within the meaning 

of General Note 12, 25, 26, 27, 29, 30, 

31, 32, and 33, HTSUS, in the country 

of which the importer is a resident. 

■ 3. Add subpart R to read as follows: 

Subpart R—United States-Korea Free 

Trade Agreement 

Sec. 

General Provisions 

10.1001 Scope. 

10.1002 General definitions. 

Import Requirements 

10.1003 Filing of claim for preferential 

tariff treatment upon importation. 

10.1004 Certification. 

10.1005 Importer obligations. 

10.1006 Certification not required. 

10.1007 Maintenance of records. 

10.1008 Effect of noncompliance; failure to 

provide documentation regarding 

transshipment. 

Export Requirements 

10.1009 Certification for goods exported to 

Korea. 

Post-Importation Duty Refund Claims 

10.1010 Right to make post-importation 

claim and refund duties. 

10.1011 Filing procedures. 

10.1012 CBP processing procedures. 

Rules of Origin 

10.1013 Definitions. 

10.1014 Originating goods. 

10.1015 Regional value content. 

10.1016 Value of materials. 

10.1017 Accumulation. 

10.1018 De minimis. 

10.1019 Fungible goods and materials. 

10.1020 Accessories, spare parts, or tools. 

10.1021 Goods classifiable as goods put up 

in sets. 

10.1022 Retail packaging materials and 

containers. 

10.1023 Packing materials and containers 

for shipment. 

10.1024 Indirect materials. 

10.1025 Transit and transshipment. 

Origin Verifications and Determinations 

10.1026 Verification and justification of 

claim for preferential tariff treatment. 

10.1027 Special rule for verifications in 

Korea of U.S. imports of textile and 

apparel goods. 

10.1028 Issuance of negative origin 

determinations. 

10.1029 Repeated false or unsupported 

preference claims. 

Penalties 

10.1030 General. 

10.1031 Corrected claim or certification by 

importers. 

10.1032 Corrected certification by U.S. 

exporters or producers. 

10.1033 Framework for correcting claims 

or certifications. 

Goods Returned After Repair or Alteration 

10.1034 Goods re-entered after repair or 

alteration in Korea. 

Subpart R—United States-Korea Free 

Trade Agreement 

General Provisions 

§ 10.1001 Scope. 

This subpart implements the duty 

preference and related customs 

provisions applicable to imported and 

exported goods under the United StatesKorea Free Trade Agreement (the 

UKFTA) signed on June 30, 2007, and 

under the United States-Korea Free 

Trade Agreement Implementation Act 

(the Act; Pub. L. 112–41, 125 Stat. 428 

(19 U.S.C. 3805 note)). Except as 

otherwise specified in this subpart, the 

procedures and other requirements set 

forth in this subpart are in addition to 

the customs procedures and 

requirements of general application 

contained elsewhere in this chapter. 

Additional provisions implementing 

certain aspects of the UKFTA and the 

Act are contained in parts 24, 162, and 

163 of this chapter. 

§ 10.1002 General definitions. 

As used in this subpart, the following 

terms will have the meanings indicated 

unless either the context in which they 

are used requires a different meaning or 

a different definition is prescribed for a 

particular section of this subpart: 

(a) Claim for preferential tariff 

treatment. ‘‘Claim for preferential tariff 

treatment’’ means a claim that a good is 

entitled to the duty rate applicable 

under the UKFTA to an originating good 

and to an exemption from the 

merchandise processing fee; 

(b) Claim of origin. ‘‘Claim of origin’’ 

means a claim that a textile or apparel 

good is an originating good or satisfies 

the non-preferential rules of origin of a 

Party; 

(c) Customs duty. ‘‘Customs duty’’ 

includes any customs or import duty 

and a charge of any kind imposed in 

connection with the importation of a 

good, including any form of surtax or 

surcharge in connection with such 

importation, such as an adjustment tariff 

imposed pursuant to Article 69 of 

Korea’s Customs Act, but does not 

include any: 

(1) Charge equivalent to an internal 

tax imposed consistently with Article 

III:2 of GATT 1994, in respect of like, 

directly competitive, or substitutable 

goods of the Party, or in respect of goods 

from which the imported good has been 

manufactured or produced in whole or 

in part; 

(2) Antidumping or countervailing 

duty that is applied pursuant to a 

Party’s law; or 

(3) Fee or other charge in connection 

with importation commensurate with 

the cost of services rendered. 

(d) Customs Valuation Agreement. 

‘‘Customs Valuation Agreement’’ means 

the Agreement on Implementation of 

Article VII of the General Agreement on 

Tariffs and Trade 1994, contained in 

Annex 1A to the WTO Agreement; 

(e) Days. ‘‘Days’’ means calendar 

days; 

(f) Enterprise. ‘‘Enterprise’’ means any 

entity constituted or organized under 

applicable law, whether or not for 

profit, and whether privately or 

governmentally-owned or controlled, 

including any corporation, trust, 

partnership, sole proprietorship, joint 

venture, association, or similar 

organization; 

(g) Enterprise of a Party. ‘‘Enterprise 

of a Party’’ means an enterprise 

constituted or organized under a Party’s 

law; 

(h) GATT 1994. ‘‘GATT 1994’’ means 

the General Agreement on Tariffs and 

Trade 1994, contained in Annex 1A to 

the WTO Agreement; 


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(i) Goods of a Party. ‘‘Goods of a 

Party’’ means domestic products as 

these are understood in GATT 1994 or 

such goods as the Parties may agree, and 

includes originating goods of that Party; 

(j) Harmonized System. ‘‘Harmonized 

System’’ means the Harmonized 

Commodity Description and Coding 

System, including its General Rules of 

Interpretation, Section Notes, and 

Chapter Notes, as adopted and 

implemented by the Parties in their 

respective tariff laws; 

(k) Heading. ‘‘Heading’’ means the 

first four digits in the tariff classification 

number under the Harmonized System; 

(l) HTSUS. ‘‘HTSUS’’ means the 

Harmonized Tariff Schedule of the 

United States as promulgated by the 

U.S. International Trade Commission; 

(m) Identical goods. ‘‘Identical goods’’ 

means goods that are the same in all 

respects relevant to the rule of origin 

that qualifies the goods as originating; 

(n) Indirect material. ‘‘Indirect 

material’’ means a good used in the 

production, testing, or inspection of a 

good but not physically incorporated 

into the good, or a good used in the 

maintenance of buildings or the 

operation of equipment associated with 

the production of a good, including: 

(1) Fuel and energy; 

(2) Tools, dies, and molds; 

(3) Spare parts and materials used in 

the maintenance of equipment or 

buildings; 

(4) Lubricants, greases, compounding 

materials, and other materials used in 

production or used to operate 

equipment or buildings; 

(5) Gloves, glasses, footwear, clothing, 

safety equipment, and supplies; 

(6) Equipment, devices, and supplies 

used for testing or inspecting the good; 

(7) Catalysts and solvents; and 

(8) Any other goods that are not 

incorporated into the other good but the 

use of which in the production of the 

other good can reasonably be 

demonstrated to be a part of that 

production; 

(o) Korea. ‘‘Korea’’ means the 

Republic of Korea. 

(p) Originating. ‘‘Originating’’ means 

qualifying for preferential tariff 

treatment under the rules of origin set 

out in Chapter Four (Textiles and 

Apparel) or Chapter Six (Rules of Origin 

and Origin Procedures) of the UKFTA 

and General Note 33, HTSUS; 

(q) Party. ‘‘Party’’ means the United 

States or the Republic of Korea; 

(r) Person. ‘‘Person’’ means a natural 

person or an enterprise; 

(s) Person of a Party. ‘‘Person of a 

Party’’ means a national or an enterprise 

of a Party; 

(t) Preferential tariff treatment. 

‘‘Preferential tariff treatment’’ means the 

duty rate applicable under the UKFTA 

to an originating good, and an 

exemption from the merchandise 

processing fee; 

(u) Subheading. ‘‘Subheading’’ means 

the first six digits in the tariff 

classification number under the 

Harmonized System; 

(v) Textile or apparel good. ‘‘Textile 

or apparel good’’ means a good listed in 

the Annex to the Agreement on Textiles 

and Clothing (commonly referred to as 

‘‘the ATC’’); 

(w) Territory. ‘‘Territory’’ means: 

(1) With respect to Korea, the land, 

maritime, and air space over which 

Korea exercises sovereignty, and those 

maritime areas, including the seabed 

and subsoil adjacent to and beyond the 

outer limit of the territorial seas over 

which it may exercise sovereign rights 

or jurisdiction in accordance with 

international law and its domestic law; 

and 

(2) With respect to the United States, 

(i) The customs territory of the United 

States, which includes the 50 states, the 

District of Columbia, and Puerto Rico; 

(ii) The foreign trade zones located in 

the United States and Puerto Rico; and 

(iii) Any areas beyond the territorial 

seas of the United States within which, 

in accordance with international law 

and its domestic law, the United States 

may exercise sovereign rights with 

respect to the seabed and subsoil and 

their natural resources; 

(x) WTO. ‘‘WTO’’ means the World 

Trade Organization; and 

(y) WTO Agreement. ‘‘WTO 

Agreement’’ means the Marrakesh 

Agreement Establishing the World Trade 

Organization of April 15, 1994. 

Import Requirements 

§ 10.1003 Filing of claim for preferential 

tariff treatment upon importation. 

(a) Basis of claim. An importer may 

make a claim for UKFTA preferential 

tariff treatment, including an exemption 

from the merchandise processing fee, 

based on either: 

(1) A written or electronic 

certification, as specified in § 10.1004 of 

this subpart, that is prepared by the 

importer, exporter, or producer of the 

good; or 

(2) The importer’s knowledge that the 

good is an originating good, including 

reasonable reliance on information in 

the importer’s possession that the good 

is an originating good. 

(b) Making a claim. The claim is made 

by including on the entry summary, or 

equivalent documentation, the letters 

‘‘KR’’ as a prefix to the subheading of 

the HTSUS under which each qualifying 

good is classified, or by the method 

specified for equivalent reporting via an 

authorized electronic data interchange 

system. 

(c) Corrected claim. If, after making 

the claim specified in paragraph (b) of 

this section, the importer has reason to 

believe that the claim is based on 

inaccurate information or is otherwise 

invalid, the importer must, within 30 

calendar days after the date of discovery 

of the error, correct the claim and pay 

any duties that may be due. The 

importer must submit a statement either 

in writing or via an authorized 

electronic data interchange system to 

the CBP office where the original claim 

was filed specifying the correction (see 

§§ 10.1031 and 10.1033 of this subpart). 

§ 10.1004 Certification. 

(a) General. An importer who makes 

a claim pursuant to § 10.1003(b) of this 

subpart based on a certification by the 

importer, exporter, or producer that the 

good is originating must submit, at the 

request of the port director, a copy of 

the certification. The certification: 

(1) Need not be in a prescribed format 

but must be in writing or must be 

transmitted electronically pursuant to 

any electronic means authorized by CBP 

for that purpose; 

(2) Must be in the possession of the 

importer at the time the claim for 

preferential tariff treatment is made if 

the certification forms the basis for the 

claim; 

(3) Must include the following 

information: 

(i) The legal name, address, 

telephone, and email address (if any) of 

the importer of record of the good (if 

known), the exporter of the good (if 

different from the producer), and the 

producer of the good (if known); 

(ii) The legal name, address, 

telephone, and email address (if any) of 

the responsible official or authorized 

agent of the importer, exporter, or 

producer signing the certification (if 

different from the information required 

by paragraph (a)(3)(i) of this section); 

(iii) A description of the good for 

which preferential tariff treatment is 

claimed, which must be sufficiently 

detailed to relate it to the invoice and 

the HS nomenclature; 

(iv) The HTSUS tariff classification, to 

six or more digits, as necessary for the 

specific change in tariff classification 

rule for the good set forth in General 

Note 33(o), HTSUS; and 

(v) The applicable rule of origin set 

forth in General Note 33, HTSUS, under 

which the good qualifies as an 

originating good; 

(vi) Date of certification; 

(vii) In case of a blanket certification 

issued with respect to the multiple 


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shipments of identical goods within any 

period specified in the written or 

electronic certification, not exceeding 

12 months from the date of certification, 

the period that the certification covers; 

and 

(4) Must include a statement, in 

substantially the following form: 

‘‘I certify that: 

The information on this document is true and 

accurate and I assume the responsibility for 

proving such representations. I understand 

that I am liable for any false statements or 

material omissions made on or in connection 

with this document; 

I agree to maintain and present upon request, 

documentation necessary to support these 

representations; 

The goods comply with all requirements for 

preferential tariff treatment specified for 

those goods in the United States-Korea Free 

Trade Agreement; and 

This document consists of ll pages, 

including all attachments.’’ 

(b) Responsible official or agent. The 

certification provided for in paragraph 

(a) of this section must be signed and 

dated by a responsible official of the 

importer, exporter, or producer, or by 

the importer’s, exporter’s, or producer’s 

authorized agent having knowledge of 

the relevant facts. 

(c) Language. The certification 

provided for in paragraph (a) of this 

section must be completed in either the 

English or Korean language. In the latter 

case, the port director may require the 

importer to submit an English 

translation of the certification. 

(d) Certification by the exporter or 

producer. (1) A certification may be 

prepared by the exporter or producer of 

the good on the basis of: 

(i) The exporter’s or producer’s 

knowledge that the good is originating; 

or 

(ii) In the case of an exporter, 

reasonable reliance on the producer’s 

written or electronic certification that 

the good is originating. 

(2) The port director may not require 

an exporter or producer to provide a 

written or electronic certification to 

another person. 

(e) Applicability of certification. The 

certification provided for in paragraph 

(a) of this section may be applicable to: 

(1) A single shipment of a good into 

the United States; or 

(2) Multiple shipments of identical 

goods into the United States that occur 

within a specified blanket period, not 

exceeding 12 months, set out in the 

certification. 

(f) Validity of certification. A 

certification that is properly completed, 

signed, and dated in accordance with 

the requirements of this section will be 

accepted as valid for four years 

following the date on which it was 

issued. 

§ 10.1005 Importer obligations. 

(a) General. An importer who makes 

a claim for preferential tariff treatment 

under § 10.1003(b) of this subpart: 

(1) Will be deemed to have certified 

that the good is eligible for preferential 

tariff treatment under the UKFTA; 

(2) Is responsible for the truthfulness 

of the claim and of all the information 

and data contained in the certification 

provided for in § 10.1004 of this 

subpart; and 

(3) Is responsible for submitting any 

supporting documents requested by 

CBP, and for the truthfulness of the 

information contained in those 

documents. When a certification 

prepared by an exporter or producer 

forms the basis of a claim for 

preferential tariff treatment, and CBP 

requests the submission of supporting 

documents, the importer will provide to 

CBP, or arrange for the direct 

submission by the exporter or producer 

of, all information relied on by the 

exporter or producer in preparing the 

certification. 

(b) Information provided by exporter 

or producer. The fact that the importer 

has made a claim or submitted a 

certification based on information 

provided by an exporter or producer 

will not relieve the importer of the 

responsibility referred to in paragraph 

(a) of this section. 

(c) Exemption from penalties. An 

importer will not be subject to civil or 

administrative penalties under 19 U.S.C. 

1592 for making an incorrect claim for 

preferential tariff treatment or 

submitting an incorrect certification, 

provided that the importer promptly 

and voluntarily corrects the claim or 

certification and pays any duty owing 

(see §§ 10.1031 and 10.1033 of this 

subpart). 

§ 10.1006 Certification not required. 

(a) General. Except as otherwise 

provided in paragraph (b) of this 

section, an importer will not be required 

to submit a copy of a certification under 

§ 10.1004 of this subpart for: 

(1) A non-commercial importation of 

a good; or 

(2) A commercial importation for 

which the value of the originating goods 

does not exceed U.S. $2,500. 

(b) Exception. If the port director 

determines that an importation 

described in paragraph (a) of this 

section is part of a series of importations 

carried out or planned for the purpose 

of evading compliance with the 

certification requirements of § 10.1004 

of this subpart, the port director will 

notify the importer that for that 

importation the importer must submit to 

CBP a copy of the certification. The 

importer must submit such a copy 

within 30 days from the date of the 

notice. Failure to timely submit a copy 

of the certification will result in denial 

of the claim for preferential tariff 

treatment. 

§ 10.1007 Maintenance of records. 

(a) General. An importer claiming 

preferential tariff treatment for a good 

(based on either the importer’s 

certification or its knowledge, or on the 

certification issued by the exporter or 

producer) imported into the United 

States under § 10.1003(b) of this subpart 

must maintain for a minimum of five 

years from the date of importation of the 

good, all records and documents that 

the importer has demonstrating that the 

good qualifies for preferential tariff 

treatment under the UKFTA. These 

records are in addition to any other 

records that the importer is required to 

prepare, maintain, or make available to 

CBP under part 163 of this chapter. 

(b) Method of maintenance. The 

records and documents referred to in 

paragraph (a) of this section must be 

maintained by importers as provided in 

§ 163.5 of this chapter. 

§ 10.1008 Effect of noncompliance; failure 

to provide documentation regarding 

transshipment. 

(a) General. If the importer fails to 

comply with any requirement under this 

subpart, including submission of a 

complete certification prepared in 

accordance with § 10. 1004 of this 

subpart, when requested, the port 

director may deny preferential tariff 

treatment to the imported good. 

(b) Failure to provide documentation 

regarding transshipment. Where the 

requirements for preferential tariff 

treatment set forth elsewhere in this 

subpart are met, the port director 

nevertheless may deny preferential tariff 

treatment to an originating good if the 

good is shipped through or transshipped 

in a country other than a Party to the 

UKFTA, and the importer of the good 

does not provide, at the request of the 

port director, evidence demonstrating to 

the satisfaction of the port director that 

the conditions set forth in § 10.1025(a) 

of this subpart were met. 

Export Requirements 

§ 10.1009 Certification for goods exported 

to Korea. 

(a) Submission of certification to CBP. 

Any person who completes and issues 

a certification for a good exported from 

the United States to Korea must provide 


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Federal Register / Vol. 77, No. 53 / Monday, March 19, 2012 / Rules and Regulations 15951 

a copy of the certification (written or 

electronic) to CBP upon request. 

(b) Notification of errors in 

certification. Any person who completes 

and issues a certification for a good 

exported from the United States to 

Korea and who has reason to believe 

that the certification contains or is based 

on incorrect information must promptly 

notify every person to whom the 

certification was provided of any change 

that could affect the accuracy or validity 

of the certification. Notification of an 

incorrect certification must also be 

given either in writing or via an 

authorized electronic data interchange 

system to CBP specifying the correction 

(see §§ 10.1032 and 10.1033 of this 

subpart). 

(c) Maintenance of records—(1) 

General. Any person who completes 

and issues a certification for a good 

exported from the United States to 

Korea must maintain, for a period of at 

least five years after the date the 

certification was issued, all records and 

supporting documents relating to the 

origin of a good for which the 

certification was issued, including the 

certification or copies thereof and 

records and documents associated with: 

(i) The purchase, cost, and value of, 

and payment for, the good; 

(ii) The purchase, cost, and value of, 

and payment for, all materials, 

including indirect materials, used in the 

production of the good; and 

(iii) The production of the good in the 

form in which the good was exported. 

(2) Method of maintenance. The 

records referred to in paragraph (c) of 

this section must be maintained as 

provided in § 163.5 of this chapter. 

(3) Availability of records. For 

purposes of determining compliance 

with the provisions of this part, the 

records required to be maintained under 

this section must be stored and made 

available for examination and 

inspection by the port director or other 

appropriate CBP officer in the same 

manner as provided in Part 163 of this 

chapter. 

Post-Importation Duty Refund Claims 

§ 10.1010 Right to make post-importation 

claim and refund duties. 

Notwithstanding any other available 

remedy, where a good would have 

qualified as an originating good when it 

was imported into the United States but 

no claim for preferential tariff treatment 

was made, the importer of that good 

may file a claim for a refund of any 

excess duties at any time within one 

year after the date of importation of the 

good in accordance with the procedures 

set forth in § 10.1011 of this subpart. 

Subject to the provisions of § 10.1008 of 

this subpart, CBP may refund any excess 

duties by liquidation or reliquidation of 

the entry covering the good in 

accordance with § 10.1012(c) of this 

subpart. 

§ 10.1011 Filing procedures. 

(a) Place of filing. A post-importation 

claim for a refund must be filed with the 

director of the port at which the entry 

covering the good was filed. 

(b) Contents of claim. A postimportation claim for a refund must be 

filed by presentation of the following: 

(1) A written or electronic declaration 

or statement stating that the good was 

an originating good at the time of 

importation and setting forth the 

number and date of the entry or entries 

covering the good; 

(2) A copy of a written or electronic 

certification prepared in accordance 

with § 10.1004 of this subpart if a 

certification forms the basis for the 

claim, or other information 

demonstrating that the good qualifies for 

preferential tariff treatment; 

(3) A written statement indicating 

whether the importer of the good 

provided a copy of the entry summary 

or equivalent documentation to any 

other person. If such documentation 

was so provided, the statement must 

identify each recipient by name, CBP 

identification number, and address and 

must specify the date on which the 

documentation was provided; and 

(4) A written statement indicating 

whether or not any person has filed a 

protest relating to the good under any 

provision of law; and if any such protest 

has been filed, the statement must 

identify the protest by number and date. 

§ 10.1012 CBP processing procedures. 

(a) Status determination. After receipt 

of a post-importation claim made 

pursuant to § 10.1011 of this subpart, 

the port director will determine whether 

the entry covering the good has been 

liquidated and, if liquidation has taken 

place, whether the liquidation has 

become final. 

(b) Pending protest or judicial review. 

If the port director determines that any 

protest relating to the good has not been 

finally decided, the port director will 

suspend action on the claim filed under 

§ 10.1011 of this subpart until the 

decision on the protest becomes final. If 

a summons involving the tariff 

classification or dutiability of the good 

is filed in the Court of International 

Trade, the port director will suspend 

action on the claim filed under 

§ 10.1011 of this subpart until judicial 

review has been completed. 

(c) Allowance of claim. (1) 

Unliquidated entry. If the port director 

determines that a claim for a refund 

filed under § 10.1011 of this subpart 

should be allowed and the entry 

covering the good has not been 

liquidated, the port director will take 

into account the claim for refund in 

connection with the liquidation of the 

entry. 

(2) Liquidated entry. If the port 

director determines that a claim for a 

refund filed under § 10.1011 of this 

subpart should be allowed and the entry 

covering the good has been liquidated, 

whether or not the liquidation has 

become final, the entry must be 

reliquidated in order to effect a refund 

of duties under this section. If the entry 

is otherwise to be reliquidated based on 

administrative review of a protest or as 

a result of judicial review, the port 

director will reliquidate the entry taking 

into account the claim for refund under 

§ 10.1011 of this subpart. 

(d) Denial of claim. (1) General. The 

port director may deny a claim for a 

refund filed under § 10.1011 of this 

subpart if the claim was not filed timely, 

if the importer has not complied with 

the requirements of § 10.1008 and 

10.1011 of this subpart, or if, following 

an origin verification under § 10.1026 of 

this subpart, the port director 

determines either that the imported 

good was not an originating good at the 

time of importation or that a basis exists 

upon which preferential tariff treatment 

may be denied under § 10.1026 of this 

subpart. 

(2) Unliquidated entry. If the port 

director determines that a claim for a 

refund filed under this subpart should 

be denied and the entry covering the 

good has not been liquidated, the port 

director will deny the claim in 

connection with the liquidation of the 

entry, and notice of the denial and the 

reason for the denial will be provided to 

the importer in writing or via an 

authorized electronic data interchange 

system. 

(3) Liquidated entry. If the port 

director determines that a claim for a 

refund filed under this subpart should 

be denied and the entry covering the 

good has been liquidated, whether or 

not the liquidation has become final, the 

claim may be denied without 

reliquidation of the entry. If the entry is 

otherwise to be reliquidated based on 

administrative review of a protest or as 

a result of judicial review, such 

reliquidation may include denial of the 

claim filed under this subpart. In either 

case, the port director will provide 

notice of the denial and the reason for 

the denial to the importer in writing or 


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via an authorized electronic data 

interchange system. 

Rules of Origin 

§ 10.1013 Definitions. 

For purposes of §§ 10.1013 through 

10.1025: 

(a) Adjusted value. ‘‘Adjusted value’’ 

means the value determined in 

accordance with Articles 1 through 8, 

Article 15, and the corresponding 

interpretative notes of the Customs 

Valuation Agreement, adjusted, if 

necessary, to exclude: 

(1) Any costs, charges, or expenses 

incurred for transportation, insurance 

and related services incident to the 

international shipment of the good from 

the country of exportation to the place 

of importation; and 

(2) The value of packing materials and 

containers for shipment as defined in 

paragraph (m) of this section; 

(b) Class of motor vehicles. ‘‘Class of 

motor vehicles’’ means any one of the 

following categories of motor vehicles: 

(1) Motor vehicles classified under 

subheading 8701.20, HTSUS, motor 

vehicles for the transport of 16 or more 

persons classified under subheading 

8702.10 or 8702.90, HTSUS, and motor 

vehicles classified under subheading 

8704.10, 8704.22, 8704.23, 8704.32, or 

8704.90, or heading 87.05 or 87.06, 

HTSUS; 

(2) Motor vehicles classified under 

subheading 8701.10 or subheading 

8701.30 through 8701.90, HTSUS; 

(3) Motor vehicles for the transport of 

15 or fewer persons classified under 

subheading 8702.10 or 8702.90, HTSUS 

and motor vehicles classified under 

subheading 8704.21 or 8704.31, HTSUS; 

or 

(4) Motor vehicles classified under 

subheading 8703.21 through 8703.90, 

HTSUS; 

(c) Exporter. ‘‘Exporter’’ means a 

person who exports goods from the 

territory of a Party; 

(d) Fungible goods or materials. 

‘‘Fungible goods or materials’’ means 

goods or materials that are 

interchangeable with another good or 

material for commercial purposes and 

the properties of which are essentially 

identical to such other good or material; 

(e) Generally Accepted Accounting 

Principles. ‘‘Generally Accepted 

Accounting Principles’’ means the 

recognized consensus or substantial 

authoritative support in the territory of 

a Party, with respect to the recording of 

revenues, expenses, costs, assets, and 

liabilities, the disclosure of information, 

and the preparation of financial 

statements. These principles may 

encompass broad guidelines of general 

application as well as detailed 

standards, practices, and procedures; 

(f) Good. ‘‘Good’’ means any 

merchandise, product, article, or 

material; 

(g) Goods wholly obtained or 

produced entirely in the territory of one 

or more of the Parties. ‘‘Goods wholly 

obtained or produced entirely in the 

territory of one or both of the Parties’’ 

means: 

(1) Plants and plant products grown, 

and harvested or gathered, in the 

territory of one or both of the Parties; 

(2) Live animals born and raised in 

the territory of one or both of the 

Parties; 

(3) Goods obtained in the territory of 

one or both of the Parties from live 

animals; 

(4) Goods obtained from hunting, 

trapping, fishing, or aquaculture 

conducted in the territory of one or both 

of the Parties; 

(5) Minerals and other natural 

resources not included in paragraphs 

(g)(1) through (g)(4) extracted or taken 

from the territory of one or both of the 

Parties; 

(6) Fish, shellfish, and other marine 

life taken from the sea, seabed, or 

subsoil outside the territory of the 

Parties by: 

(i) A vessel that is registered or 

recorded with Korea and flying the flag 

of Korea; or 

(ii) A vessel that is documented under 

the laws of the United States; 

(7) Goods produced on board factory 

ships from the goods referred to in 

paragraph (g)(6), if such factory ship: 

(i) Is registered or recorded with 

Korea and flies the flag of Korea; or 

(ii) Is a vessel that is documented 

under the laws of the United States; 

(8) Goods taken by a Party or a person 

of a Party from the seabed or subsoil 

outside the territory of one or both of 

the Parties, provided that Party has 

rights to exploit such seabed or subsoil; 

(9) Goods taken from outer space, 

provided they are obtained by a Party or 

a person of a Party and not processed in 

the territory of a non-Party; 

(10) Waste and scrap derived from: 

(i) Manufacturing or processing 

operations in the territory of one or both 

of the Parties; or 

(ii) Used goods collected in the 

territory of one or both of the Parties, 

provided such goods are fit only for the 

recovery of raw materials; 

(11) Recovered goods derived in the 

territory of one or both of the Parties 

from used goods, and used in the 

territory of one or both of the Parties in 

the production of remanufactured 

goods; and 

(12) Goods produced in the territory 

of one or both of the Parties exclusively 

from goods referred to in paragraphs 

(g)(1) through (g)(10) of this section, or 

from their derivatives, at any stage of 

production; 

(h) Material. ‘‘Material’’ means a good 

that is used in the production of another 

good, including a part or an ingredient; 

(i) Model line. ‘‘Model line’’ means a 

group of motor vehicles having the same 

platform or model name; 

(j) Net cost. ‘‘Net cost’’ means total 

cost minus sales promotion, marketing, 

and after-sales service costs, royalties, 

shipping and packing costs, and nonallowable interest costs that are 

included in the total cost; 

(k) Non-allowable interest costs. 

‘‘Non-allowable interest costs’’ means 

interest costs incurred by a producer 

that exceed 700 basis points above the 

applicable official interest rate on debt 

obligations of comparable maturities 

issued by the central level of 

government of the Party in which the 

producer is located; 

(l) Non-originating good or nonoriginating material. ‘‘Non-originating 

good’’ or ‘‘non-originating material’’ 

means a good or material, as the case 

may be, that does not qualify as 

originating under General Note 33, 

HTSUS, or this subpart; 

(m) Packing materials and containers 

for shipment. ‘‘Packing materials and 

containers for shipment’’ means the 

goods used to protect a good during its 

transportation to the United States and 

does not include the packaging 

materials and containers in which a 

good is packaged for retail sale; 

(n) Producer. ‘‘Producer’’ means a 

person who engages in the production 

of a good in the territory of a Party; 

(o) Production. ‘‘Production’’ means 

growing, mining, harvesting, fishing, 

breeding, raising, trapping, hunting, 

manufacturing, processing, assembling, 

or disassembling a good; 

(p) Reasonably allocate. ‘‘Reasonably 

allocate’’ means to apportion in a 

manner that would be appropriate 

under Generally Accepted Accounting 

Principles; 

(q) Reasonable suspicion of unlawful 

activity. ‘‘Reasonable suspicion of 

unlawful activity’’ means a suspicion 

based on relevant factual information 

obtained from public or private sources 

comprising one or more of the 

following: 

(1) Historical evidence of noncompliance with laws or regulations 

governing importations by an importer 

or exporter; 

(2) Historical evidence of noncompliance with laws or regulations 

governing importations by a 

manufacturer, producer, or other person 

involved in the movement of goods from 


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the territory of one Party to the territory 

of the other Party; 

(3) Historical evidence that some or 

all of the persons involved in the 

movement from the territory of one 

Party to the territory of the other Party 

of goods within a specific product sector 

have not complied with a Party’s laws 

and regulations governing importations; 

or 

(4) Other information that the 

requesting Party and the Party from 

whom the information is requested 

agree is sufficient in the context of a 

particular request; 

(r) Recovered goods. ‘‘Recovered 

goods’’ means materials in the form of 

individual parts that are the result of: 

(1) The disassembly of used goods 

into individual parts; and 

(2) The cleaning, inspecting, testing, 

or other processing that is necessary to 

improve such individual parts to sound 

working condition; 

(s) Remanufactured goods. 

‘‘Remanufactured goods’’ means goods 

classified in Chapter 84, 85, 87, or 90, 

or under heading 9402, HTSUS, that: 

(1) Are entirely or partially comprised 

of recovered goods as defined in 

§ 10.1013(r) and, 

(2) Have a similar life expectancy and 

enjoy a factory warranty similar to such 

new goods; 

(t) Royalties. ‘‘Royalties’’ means 

payments of any kind, including 

payments under technical assistance 

agreements or similar agreements, made 

as consideration for the use of, or right 

to use, any copyright, literary, artistic, 

or scientific work, patent, trademark, 

design, model, plan, secret formula or 

process, excluding those payments 

under technical assistance agreements 

or similar agreements that can be related 

to specific services such as: 

(1) Personnel training, without regard 

to where performed; and 

(2) If performed in the territory of one 

or both of the Parties, engineering, 

tooling, die-setting, software design and 

similar computer services; 

(u) Sales promotion, marketing, and 

after-sales service costs. ‘‘Sales 

promotion, marketing, and after-sales 

service costs’’ means the following costs 

related to sales promotion, marketing, 

and after-sales service: 

(1) Sales and marketing promotion; 

media advertising; advertising and 

market research; promotional and 

demonstration materials; exhibits; sales 

conferences, trade shows and 

conventions; banners; marketing 

displays; free samples; sales, marketing, 

and after-sales service literature 

(product brochures, catalogs, technical 

literature, price lists, service manuals, 

sales aid information); establishment 

and protection of logos and trademarks; 

sponsorships; wholesale and retail 

restocking charges; entertainment; 

(2) Sales and marketing incentives; 

consumer, retailer or wholesaler rebates; 

merchandise incentives; 

(3) Salaries and wages, sales 

commissions, bonuses, benefits (for 

example, medical, insurance, pension), 

traveling and living expenses, 

membership and professional fees, for 

sales promotion, marketing, and aftersales service personnel; 

(4) Recruiting and training of sales 

promotion, marketing, and after-sales 

service personnel, and after-sales 

training of customers’ employees, where 

such costs are identified separately for 

sales promotion, marketing, and aftersales service of goods on the financial 

statements or cost accounts of the 

producer; 

(5) Product liability insurance; 

(6) Office supplies for sales 

promotion, marketing, and after-sales 

service of goods, where such costs are 

identified separately for sales 

promotion, marketing, and after-sales 

service of goods on the financial 

statements or cost accounts of the 

producer; 

(7) Telephone, mail and other 

communications, where such costs are 

identified separately for sales 

promotion, marketing, and after-sales 

service of goods on the financial 

statements or cost accounts of the 

producer; 

(8) Rent and depreciation of sales 

promotion, marketing, and after-sales 

service offices and distribution centers; 

(9) Property insurance premiums, 

taxes, cost of utilities, and repair and 

maintenance of sales promotion, 

marketing, and after-sales service offices 

and distribution centers, where such 

costs are identified separately for sales 

promotion, marketing, and after-sales 

service of goods on the financial 

statements or cost accounts of the 

producer; and 

(10) Payments by the producer to 

other persons for warranty repairs; 

(v) Self-produced material. ‘‘Selfproduced material’’ means an 

originating material that is produced by 

a producer of a good and used in the 

production of that good; 

(w) Shipping and packing costs. 

‘‘Shipping and packing costs’’ means 

the costs incurred in packing a good for 

shipment and shipping the good from 

the point of direct shipment to the 

buyer, excluding the costs of preparing 

and packaging the good for retail sale; 

(x) Total cost. ‘‘Total cost’’ means all 

product costs, period costs, and other 

costs for a good incurred in the territory 

of one or both of the Parties. Product 

costs are costs that are associated with 

the production of a good and include 

the value of materials, direct labor costs, 

and direct overhead. Period costs are 

costs, other than product costs, that are 

expensed in the period in which they 

are incurred, such as selling expenses 

and general and administrative 

expenses. Other costs are all costs 

recorded on the books of the producer 

that are not product costs or period 

costs, such as interest. Total cost does 

not include profits that are earned by 

the producer, regardless of whether they 

are retained by the producer or paid out 

to other persons as dividends, or taxes 

paid on those profits, including capital 

gains taxes; 

(y) Used. ‘‘Used’’ means utilized or 

consumed in the production of goods; 

and 

(z) Value. ‘‘Value’’ means the value of 

a good or material for purposes of 

calculating customs duties or for 

purposes of applying this subpart. 

§ 10.1014 Originating goods. 

Except as otherwise provided in this 

subpart and General Note 33(n), HTSUS, 

a good imported into the customs 

territory of the United States will be 

considered an originating good under 

the UKFTA only if: 

(a) The good is wholly obtained or 

produced entirely in the territory of one 

or both of the Parties; 

(b) The good is produced entirely in 

the territory of one or both of the Parties 

and: 

(1) Each non-originating material used 

in the production of the good undergoes 

an applicable change in tariff 

classification specified in General Note 

33(o), HTSUS, and the good satisfies all 

other applicable requirements of 

General Note 33, HTSUS; or 

(2) The good otherwise satisfies any 

applicable regional value content or 

other requirements specified in General 

Note 33(o), HTSUS, and satisfies all 

other applicable requirements of 

General Note 33, HTSUS; or 

(c) The good is produced entirely in 

the territory of one or both of the Parties 

exclusively from originating materials. 

§ 10.1015 Regional value content. 

(a) General. Except for goods to which 

paragraph (d) of this section applies, 

where General Note 33, HTSUS, sets 

forth a rule that specifies a regional 

value content test for a good, the 

regional value content of such good 

must be calculated by the importer, 

exporter, or producer of the good on the 

basis of the build-down method 

described in paragraph (b) of this 

section or the build-up method 


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15954 Federal Register / Vol. 77, No. 53 / Monday, March 19, 2012 / Rules and Regulations 

described in paragraph (c) of this 

section. 

(b) Build-down method. Under the 

build-down method, the regional value 

content must be calculated on the basis 

of the formula RVC = ((AV ¥ VNM)/ 

AV) × 100, where RVC is the regional 

value content, expressed as a 

percentage; AV is the adjusted value of 

the good; and VNM is the value of nonoriginating materials, other than indirect 

materials, that are acquired and used by 

the producer in the production of the 

good, but does not include the value of 

a material that is self-produced. 

(c) Build-up method. Under the buildup method, the regional value content 

must be calculated on the basis of the 

formula RVC = (VOM/AV) × 100, where 

RVC is the regional value content, 

expressed as a percentage; AV is the 

adjusted value of the good; and VOM is 

the value of originating materials, other 

than indirect materials, that are 

acquired or self-produced and used by 

the producer in the production of the 

good. 

(d) Special rule for certain automotive 

goods. (1) General. Where General Note 

33, HTSUS, sets forth a rule that 

specifies a regional value content test 

for an automotive good provided for in 

any of subheadings 8407.31 through 

8407.34 (engines), subheading 8408.20 

(diesel engine for vehicles), heading 

8409 (parts of engines), headings 8701 

through 8705 (motor vehicles), and 

headings 8706 (chassis), 8707 (bodies), 

and 8708 (motor vehicle parts), HTSUS, 

the regional value content of such good 

may be calculated by the importer, 

exporter, or producer of the good on the 

basis of the net cost method described 

in paragraph (d)(2) of this section. 

(2) Net cost method. Under the net 

cost method, the regional value content 

is calculated on the basis of the formula 

RVC = ((NC ¥ VNM)/NC) × 100, where 

RVC is the regional value content, 

expressed as a percentage; NC is the net 

cost of the good; and VNM is the value 

of non-originating materials, other than 

indirect materials, that are acquired and 

used by the producer in the production 

of the good, but does not include the 

value of a material that is self-produced. 

Consistent with the provisions set out in 

Generally Accepted Accounting 

Principles, applicable in the territory of 

the Party where the good is produced, 

the net cost of the good must be 

determined by: 

(i) Calculating the total cost incurred 

with respect to all goods produced by 

the producer of the automotive good, 

subtracting any sales promotion, 

marketing, and after-sales service costs, 

royalties, shipping and packing costs, 

and non-allowable interest costs that are 

included in the total cost of all such 

goods, and then reasonably allocating 

the resulting net cost of those goods to 

the automotive good; 

(ii) Calculating the total cost incurred 

with respect to all goods produced by 

the producer of the automotive good, 

reasonably allocating the total cost to 

the automotive good, and then 

subtracting any sales promotion, 

marketing, and after-sales service costs, 

royalties, shipping and packing costs, 

and non-allowable interest costs that are 

included in the portion of the total cost 

allocated to the automotive good; or 

(iii) Reasonably allocating each cost 

that forms part of the total costs 

incurred with respect to the automotive 

good so that the aggregate of these costs 

does not include any sales promotion, 

marketing, and after-sales service costs, 

royalties, shipping and packing costs, or 

non-allowable interest costs. 

(3) Motor vehicles. (i) General. For 

purposes of calculating the regional 

value content under the net cost method 

for an automotive good that is a motor 

vehicle provided for in any of headings 

8701 through 8705, an importer, 

exporter, or producer may average the 

amounts calculated under the formula 

set forth in paragraph (d)(2) of this 

section over the producer’s fiscal year 

using any one of the categories 

described in paragraph (d)(3)(ii) of this 

section either on the basis of all motor 

vehicles in the category or those motor 

vehicles in the category that are 

exported to the territory of one or both 

Parties. 

(ii) Categories. The categories referred 

to in paragraph (d)(3)(i) of this section 

are as follows: 

(A) The same model line of motor 

vehicles, in the same class of vehicles, 

produced in the same plant in the 

territory of a Party, as the motor vehicle 

for which the regional value content is 

being calculated; 

(B) The same class of motor vehicles, 

and produced in the same plant in the 

territory of a Party, as the motor vehicle 

for which the regional value content is 

being calculated; and 

(C) The same model line of motor 

vehicles produced in the territory of a 

Party as the motor vehicle for which the 

regional value content is being 

calculated. 

(4) Other automotive goods. (i) 

General. For purposes of calculating the 

regional value content under the net 

cost method for automotive goods 

provided for in any of subheadings 

8407.31 through 8407.34, subheading 

8408.20, heading 8409, 8706, 8707, or 

8708, HTSUS, that are produced in the 

same plant, an importer, exporter, or 

producer may: 

(A) Average the amounts calculated 

under the formula set forth in paragraph 

(d)(2) of this section over any of the 

following: the fiscal year, or any quarter 

or month, of the motor vehicle producer 

to whom the automotive good is sold, or 

the fiscal year, or any quarter or month, 

of the producer of the automotive good, 

provided the goods were produced 

during the fiscal year, quarter, or month 

that is the basis for the calculation; 

(B) Determine the average referred to 

in paragraph (d)(4)(i)(A) of this section 

separately for such goods sold to one or 

more motor vehicle producers; or 

(C) Make a separate determination 

under paragraph (d)(4)(i)(A) or (B) of 

this section for automotive goods that 

are exported to the territory of Korea or 

the United States. 

(ii) Duration of use. A person 

selecting an averaging period of one 

month or quarter under paragraph 

(d)(4)(i)(A) of this section must continue 

to use that method for that category of 

automotive goods throughout the fiscal 

year. 

§ 10.1016 Value of materials. 

(a) Calculating the value of materials. 

Except as provided in § 10.1024 of this 

subpart, for purposes of calculating the 

regional value content of a good under 

General Note 33 HTSUS, and for 

purposes of applying the de minimis 

(see § 10.1018 of this subpart) 

provisions of General Note 33, HTSUS, 

the value of a material is: 

(1) In the case of a material imported 

by the producer of the good, the 

adjusted value of the material; 

(2) In the case of a material acquired 

by the producer in the territory where 

the good is produced, the value, 

determined in accordance with Articles 

1 through 8, Article 15, and the 

corresponding interpretative notes of 

the Customs Valuation Agreement, of 

the material, i.e., in the same manner as 

for imported goods, with reasonable 

modifications to the provisions of the 

Customs Valuation Agreement as may 

be required due to the absence of an 

importation by the producer (including, 

but not limited to, treating a domestic 

purchase by the producer as if it were 

a sale for export to the country of 

importation); or 

(3) In the case of a self-produced 

material, the sum of: 

(i) All the costs incurred in the 

production of the material, including 

general expenses; and 

(ii) An amount for profit equivalent to 

the profit added in the normal course of 

trade. 

(b) Examples. The following examples 

illustrate application of the principles 


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Federal Register / Vol. 77, No. 53 / Monday, March 19, 2012 / Rules and Regulations 15955 

set forth in paragraph (a)(2) of this 

section: 

Example 1. A producer in Korea purchases 

material x from an unrelated seller in Korea 

for $100. Under the provisions of Article 1 

of the Customs Valuation Agreement, 

transaction value is the price actually paid or 

payable for the goods when sold for export 

to the country of importation adjusted in 

accordance with the provisions of Article 8. 

In order to apply Article 1 to this domestic 

purchase by the producer, such purchase is 

treated as if it were a sale for export to the 

country of importation. Therefore, for 

purposes of determining the adjusted value 

of material x, Article 1 transaction value is 

the price actually paid or payable for the 

goods when sold to the producer in Korea 

($100), adjusted in accordance with the 

provisions of Article 8. In this example, it is 

irrelevant whether material x was initially 

imported into Korea by the seller (or by 

anyone else). So long as the producer 

acquired material x in Korea, it is intended 

that the value of material x will be 

determined on the basis of the price actually 

paid or payable by the producer adjusted in 

accordance with the provisions of Article 8. 

Example 2. Same facts as in Example 1, 

except that the sale between the seller and 

the producer is subject to certain restrictions 

that preclude the application of Article 1. 

Under Article 2 of the Customs Valuation 

Agreement, the value is the transaction value 

of identical goods sold for export to the same 

country of importation and exported at or 

about the same time as the goods being 

valued. In order to permit the application of 

Article 2 to the domestic acquisition by the 

producer, it should be modified so that the 

value is the transaction value of identical 

goods sold within Korea at or about the same 

time the goods were sold to the producer in 

Korea. Thus, if the seller of material x also 

sold an identical material to another buyer in 

Korea without restrictions, that other sale 

would be used to determine the adjusted 

value of material x. 

(c) Permissible additions to, and 

deductions from, the value of materials. 

(1) Additions to originating materials. 

For originating materials, the following 

expenses, if not included under 

paragraph (a) of this section, may be 

added to the value of the originating 

material: 

(i) The costs of freight (‘‘cost of 

freight’’ includes the costs of all types 

of freight, including in-land freight 

incurred within a Party’s territory, 

regardless of the mode of 

transportation), insurance, packing, and 

all other costs incurred in transporting 

the material within a Party’s territory or 

between the Parties to the location of 

the producer; 

(ii) Duties, taxes, and customs 

brokerage fees on the material paid in 

the territory of one or both of the 

Parties, other than duties and taxes that 

are waived, refunded, refundable, or 

otherwise recoverable, including credit 

against duty or tax paid or payable; and 

(iii) The cost of waste and spoilage 

resulting from the use of the material in 

the production of the good, less the 

value of renewable scrap or byproducts. 

(2) Deductions from non-originating 

materials. For non-originating materials, 

if included under paragraph (a) of this 

section, the following expenses may be 

deducted from the value of the nonoriginating material: 

(i) The costs of freight (‘‘cost of 

freight’’ includes the costs of all types 

of freight, including in-land freight 

incurred within a Party’s territory, 

regardless of the mode of 

transportation), insurance, packing, and 

all other costs incurred in transporting 

the material within a Party’s territory or 

between the territories of the Parties to 

the location of the producer; 

(ii) Duties, taxes, and customs 

brokerage fees on the material paid in 

the territory of one or both of the 

Parties, other than duties and taxes that 

are waived, refunded, refundable, or 

otherwise recoverable, including credit 

against duty or tax paid or payable; 

(iii) The cost of waste and spoilage 

resulting from the use of the material in 

the production of the good, less the 

value of renewable scrap or by-products; 

and 

(iv) The cost of originating materials 

used in the production of the nonoriginating material in the territory of a 

Party. 

(d) Accounting method. Any cost or 

value referenced in General Note 33, 

HTSUS, and this subpart, must be 

recorded and maintained in accordance 

with the Generally Accepted 

Accounting Principles applicable in the 

territory of the Party in which the good 

is produced. 

§ 10.1017 Accumulation. 

(a) Originating goods or materials 

from the territory of one Party, 

incorporated into a good in the territory 

of the other Party will be considered to 

originate in the territory of that other 

Party. 

(b) A good that is produced in the 

territory of one or both of the Parties by 

one or more producers is an originating 

good if the good satisfies the 

requirements of § 10.1014 of this 

subpart and all other applicable 

requirements of General Note 33, 

HTSUS. 

§ 10.1018 De minimis. 

(a) General. Except as provided in 

paragraphs (b) and (c) of this section, a 

good that does not undergo a change in 

tariff classification pursuant to General 

Note 33, HTSUS, is an originating good 

if: 

(1) The value of all non-originating 

materials used in the production of the 

good that do not undergo the applicable 

change in tariff classification does not 

exceed 10 percent of the adjusted value 

of the good; 

(2) The value of the non-originating 

materials described in paragraph (a)(1) 

of this section is included in the value 

of non-originating materials for any 

applicable regional value content 

requirement for the good under General 

Note 33, HTSUS; and 

(3) The good meets all other 

applicable requirements of General Note 

33, HTSUS. 

(b) Exceptions. Paragraph (a) of this 

section does not apply to: 

(1) A non-originating material 

provided for in Chapter 3, HTSUS, that 

is used in the production of a good 

classified in that Chapter; 

(2) A non-originating material 

provided for in Chapter 4, HTSUS, or a 

non-originating dairy preparation 

containing over 10 percent by weight of 

milk solids classified under 

subheadings 1901.90 or 2106.90, 

HTSUS, that is used in the production 

of a good provided for in Chapter 4, 

HTSUS; 

(3) A non-originating material 

provided for in Chapter 4, HTSUS, or a 

non-originating dairy preparation 

containing over 10 percent by weight of 

milk solids provided for in subheading 

1901.90, HTSUS, which is used in the 

production of the following goods: 

(i) Infant preparations containing over 

10 percent by weight of milk solids 

provided for in subheading 1901.10, 

HTSUS; 

(ii) Mixes and doughs, containing 

over 25 percent by weight of butterfat, 

not put up for retail sale, provided for 

in subheading 1901.20, HTSUS; 

(iii) Dairy preparations containing 

over 10 percent by weight of milk solids 

provided for in subheading 1901.90 or 

2106.90, HTSUS; 

(iv) Goods provided for in heading 

2105, HTSUS; 

(v) Beverages containing milk 

provided for in subheading 2202.90, 

HTSUS; or 

(vi) Animal feeds containing over 10 

percent by weight of milk solids 

provided for in subheading 2309.90, 

HTSUS; 

(4) A non-originating material 

provided for in Chapter 7, HTSUS that 

is used in the production of a good 

classified under the following 

subheadings: 0703.10, 0703.20, 0709.59, 

0709.60, 0710.21 through 0710.80, 

0711.90, 0712.20, 0712.39 through 

0713.10 or 0714.20, HTSUS; 

(5) A non-originating material 

provided for in heading 1006, HTSUS, 


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or a non-originating rice product 

classified in Chapter 11, HTSUS that is 

used in the production of a good 

provided for under the headings 1006, 

1102, 1103, 1104, HTSUS, or 

subheadings 1901.20 or 1901.90, 

HTSUS; 

(6) A non-originating material 

provided for in heading 0805, HTSUS or 

subheadings 2009.11 through 2009.39, 

HTSUS, that is used in the production 

of a good provided for under 

subheadings 2009.11 through 2009.39, 

HTSUS, or in fruit or vegetable juice of 

any single fruit or vegetable, fortified 

with minerals or vitamins, concentrated 

or unconcentrated, provided for under 

subheadings 2106.90 or 2202.90, 

HTSUS; 

(7) Non-originating peaches, pears, or 

apricots provided for in Chapters 8 or 

20, HTSUS, that are used in the 

production of a good classified under 

heading 2008, HTSUS; 

(8) A non-originating material 

provided for in Chapter 15, HTSUS, that 

is used in the production of a good 

classified under headings 1501 through 

1508, 1512, 1514, or 1515, HTSUS; 

(9) A non-originating material 

provided for in heading 1701, HTSUS, 

that is used in the production of a good 

provided for in any of headings 1701 

through 1703, HTSUS; 

(10) A non-originating material 

provided for in Chapter 17, HTSUS, that 

is used in the production of a good 

provided for in subheading 1806.10, 

HTSUS; or 

(11) Except as provided in paragraphs 

(b)(1) through (10) of this section and 

General Note 33, HTSUS, a nonoriginating material used in the 

production of a good provided for in 

any of Chapters 1 through 24, HTSUS, 

unless the non-originating material is 

provided for in a different subheading 

than the good for which origin is being 

determined under this subpart. 

(c) Textile and apparel goods. (1) 

General. Except as provided in 

paragraph (c)(2) of this section, a textile 

or apparel good that is not an 

originating good because certain fibers 

or yarns used in the production of the 

component of the good that determines 

the tariff classification of the good do 

not undergo an applicable change in 

tariff classification set out in General 

Note 33, HTSUS, will nevertheless be 

considered to be an originating good if 

the total weight of all such fibers or 

yarns in that component is not more 

than 7 percent of the total weight of that 

component. 

(2) Exception for goods containing 

elastomeric yarns. A textile or apparel 

good containing elastomeric yarns in the 

component of the good that determines 

the tariff classification of the good will 

be considered an originating good only 

if such yarns are wholly formed and 

finished in the territory of a Party. 

(3) For purposes of this section, 

‘‘wholly formed or finished’’ means 

when used in reference to fabrics, all 

production processes and finishing 

operations necessary to produce a 

finished fabric ready for use without 

further processing. These processes and 

operations include formation processes, 

such as weaving, knitting, needling, 

tufting, felting, entangling, or other such 

processes, and finishing operations, 

including bleaching, dyeing, and 

printing. When used in reference to 

yarns, ‘‘wholly formed or finished’’ 

means all production processes and 

finishing operations, beginning with the 

extrusion of filaments, strips, film, or 

sheet, and including drawing to fully 

orient a filament or slitting a film or 

sheer into strip, or the spinning of all 

fibers into yarn, or both, and ending 

with a finished yarn or plied yarn. 

§ 10.1019 Fungible goods and materials. 

(a) General. A person claiming that a 

fungible good or material is an 

originating good may base the claim 

either on the physical segregation of 

each fungible good or material or by 

using an inventory management method 

with respect to the fungible good or 

material. For purposes of this section, 

the term ‘‘inventory management 

method’’ means: 

(1) Averaging; 

(2) ‘‘Last-in, first-out;’’ 

(3) ‘‘First-in, first-out;’’ or 

(4) Any other method that is 

recognized in the Generally Accepted 

Accounting Principles of the Party in 

which the production is performed or 

otherwise accepted by that country. 

(b) Duration of use. A person selecting 

an inventory management method 

under paragraph (a) of this section for a 

particular fungible good or material 

must continue to use that method for 

that fungible good or material 

throughout the fiscal year of that person. 

§ 10.1020 Accessories, spare parts, or 

tools. 

(a) General. Accessories, spare parts, 

or tools that are delivered with a good 

and that form part of the good’s 

standard accessories, spare parts, or 

tools will be treated as originating goods 

if the good is an originating good, and 

will be disregarded in determining 

whether all the non-originating 

materials used in the production of the 

good undergo an applicable change in 

tariff classification specified in General 

Note 33, HTSUS, provided that: 

(1) The accessories, spare parts, or 

tools are classified with, and not 

invoiced separately from, the good; and 

(2) The quantities and value of the 

accessories, spare parts, or tools are 

customary for the good. 

(b) Regional value content. If the good 

is subject to a regional value content 

requirement, the value of the 

accessories, spare parts, or tools is taken 

into account as originating or nonoriginating materials, as the case may 

be, in calculating the regional value 

content of the good under § 10.1015 of 

this subpart. 

§ 10.1021 Goods classifiable as goods put 

up in sets. 

Notwithstanding the specific rules set 

forth in General Note 33, HTSUS, goods 

classifiable as goods put up in sets for 

retail sale as provided for in General 

Rule of Interpretation 3, HTSUS, will 

not be considered to be originating 

goods unless: 

(a) Each of the goods in the set is an 

originating good; or 

(b) The total value of the nonoriginating goods in the set does not 

exceed: 

(1) In the case of textile or apparel 

goods, 10 percent of the adjusted value 

of the set; or 

(2) In the case of a good other than a 

textile or apparel good, 15 percent of the 

adjusted value of the set. 

§ 10.1022 Retail packaging materials and 

containers. 

(a) Effect on tariff shift rule. Packaging 

materials and containers in which a 

good is packaged for retail sale, if 

classified with the good for which 

preferential tariff treatment under the 

UKFTA is claimed, will be disregarded 

in determining whether all nonoriginating materials used in the 

production of the good undergo the 

applicable change in tariff classification 

set out in General Note 33, HTSUS. 

(b) Effect on regional value content 

calculation. If the good is subject to a 

regional value content requirement, the 

value of such packaging materials and 

containers will be taken into account as 

originating or non-originating materials, 

as the case may be, in calculating the 

regional value content of the good. 

Example 1. Korean Producer A of good C 

imports 100 non-originating blister packages 

to be used as retail packaging for good C. As 

provided in § 10.1016(a)(1) of this subpart, 

the value of the blister packages is their 

adjusted value, which in this case is $10. 

Good C has a regional value content 

requirement. The United States importer of 

good C decides to use the build-down 

method, RVC = ((AV ¥ VNM)/AV) × 100 (see 

§ 10.1015(b) of this subpart), in determining 

whether good C satisfies the regional value 


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content requirement. In applying this 

method, the non-originating blister packages 

are taken into account as non-originating. As 

such, their $10 adjusted value is included in 

the VNM, value of non-originating materials, 

of good C. 

Example 2. Same facts as in Example 1, 

except that the blister packages are 

originating. In this case, the adjusted value of 

the originating blister packages would not be 

included as part of the VNM of good C under 

the build-down method. However, if the U.S. 

importer had used the build-up method, RVC 

= (VOM/AV) × 100 (see § 10.1015(c) of this 

subpart), the adjusted value of the blister 

packaging would be included as part of the 

VOM, value of originating materials. 

§ 10.1023 Packing materials and 

containers for shipment. 

(a) Effect on tariff shift rule. Packing 

materials and containers for shipment, 

as defined in § 10.1013(m) of this 

subpart, are to be disregarded in 

determining whether the nonoriginating materials used in the 

production of the good undergo an 

applicable change in tariff classification 

set out in General Note 33, HTSUS. 

Accordingly, such materials and 

containers are not required to undergo 

the applicable change in tariff 

classification even if they are nonoriginating. 

(b) Effect on regional value content 

calculation. Packing materials and 

containers for shipment, as defined in 

§ 10.1013(m) of this subpart, are to be 

disregarded in determining the regional 

value content of a good imported into 

the United States. Accordingly, in 

applying the build-down, build-up, or 

net cost method for determining the 

regional value content of a good 

imported into the United States, the 

value of such packing materials and 

containers for shipment (whether 

originating or non-originating) is 

disregarded and not included in AV, 

adjusted value, VNM, value of nonoriginating materials, VOM, value of 

originating materials, or NC, net cost of 

a good. 

Example. Korean producer A produces 

good C. Producer A ships good C to the 

United States in a shipping container that it 

purchased from Company B in Korea. The 

shipping container is originating. The value 

of the shipping container determined under 

§ 10.1016(a)(2) of this subpart is $3. Good C 

is subject to a regional value content 

requirement. The transaction value of good C 

is $100, which includes the $3 shipping 

container. The U.S. importer decides to use 

the build-up method, RVC = (VOM/AV) × 

100 (see § 10.1015(c) of this subpart), in 

determining whether good C satisfies the 

regional value content requirement. In 

determining the AV, adjusted value, of good 

C imported into the U.S., paragraph (b) of 

this section and the definition of AV require 

a $3 deduction for the value of the shipping 

container. Therefore, the AV is $97 

($100¥$3). In addition, the value of the 

shipping container is disregarded and not 

included in the VOM, value of originating 

materials. 

§ 10.1024 Indirect materials. 

An indirect material, as defined in 

§ 10.1002(n) of this subpart, will be 

disregarded for the purpose of 

determining whether a good is 

originating. 

Example. Korean Producer A produces 

good C using non-originating material B. 

Producer A imports non-originating rubber 

gloves for use by workers in the production 

of good C. Good C is subject to a tariff shift 

requirement. As provided in § 10.1014(b)(1) 

of this subpart and General Note 33, each of 

the non-originating materials in good C must 

undergo the specified change in tariff 

classification in order for good C to be 

considered originating. Although nonoriginating material B must undergo the 

applicable tariff shift in order for good C to 

be considered originating, the rubber gloves 

do not because they are indirect materials 

and are disregarded for purposes of 

determining whether the good is originating. 

§ 10.1025 Transit and transshipment. 

(a) General. A good that has 

undergone production necessary to 

qualify as an originating good under 

§ 10.1014 of this subpart will not be 

considered an originating good if, 

subsequent to that production, the good: 

(1) Undergoes further production or 

any other operation outside the 

territories of the Parties, other than 

unloading, reloading, or any other 

operation necessary to preserve the good 

in good condition or to transport the 

good to the territory of a Party; or 

(2) Does not remain under the control 

of customs authorities in the territory of 

a non-Party. 

(b) Documentary evidence. An 

importer making a claim that a good is 

originating may be required to 

demonstrate, to CBP’s satisfaction, that 

the conditions and requirements set 

forth in paragraph (a) of this section 

were met. An importer may demonstrate 

compliance with this section by 

submitting documentary evidence. Such 

evidence may include, but is not limited 

to, bills of lading, airway bills, packing 

lists, commercial invoices, receiving 

and inventory records, and customs 

entry and exit documents. 

Origin Verifications and 

Determinations 

§ 10.1026 Verification and justification of 

claim for preferential tariff treatment. 

(a) Verification. A claim for 

preferential tariff treatment made under 

§ 10.1003(b) or § 10.1011 of this subpart, 

including any statements or other 

information submitted to CBP in 

support of the claim, will be subject to 

such verification as the port director 

deems necessary. In the event that the 

port director is provided with 

insufficient information to verify or 

substantiate the claim, the port director 

finds a pattern of conduct, indicating 

that an importer, exporter, or producer 

has provided false or unsupported 

declarations or certifications, or the 

exporter or producer fails to consent to 

a verification visit, the port director may 

deny the claim for preferential 

treatment. A verification of a claim for 

preferential tariff treatment under 

UKFTA for goods imported into the 

United States may be conducted by 

means of one or more of the following: 

(1) Written requests for information 

from the importer, exporter, or 

producer; 

(2) Written questionnaires to the 

importer, exporter, or producer; 

(3) Visits to the premises of the 

exporter or producer in the territory of 

Korea, to review the records of the type 

referred to in § 10.1009(c)(1) of this 

subpart or to observe the facilities used 

in the production of the good, in 

accordance with the framework that the 

Parties develop for conducting 

verifications; and 

(4) Such other procedures to which 

the Parties may agree. 

(b) Applicable accounting principles. 

When conducting a verification of origin 

to which Generally Accepted 

Accounting Principles may be relevant, 

CBP will apply and accept the Generally 

Accepted Accounting Principles 

applicable in the country of production. 

§ 10.1027 Special rule for verifications in 

Korea of U.S. imports of textile and apparel 

goods. 

(a) Procedures to determine whether a 

claim of origin is accurate. (1) General. 

For the purpose of determining that a 

claim of origin for a textile or apparel 

good is accurate, CBP may request that 

the government of the Republic of Korea 

conduct a verification, regardless of 

whether a claim is made for preferential 

tariff treatment. 

(2) Actions during a verification. 

While a verification under this 

paragraph is being conducted, CBP, if 

directed by the President, may take 

appropriate action, which may include 

suspending the liquidation of the entry 

of the textile or apparel good for which 

a claim for preferential tariff treatment 

or a claim of origin has been made. 

(3) Actions following a verification. If 

on completion of a verification under 

this paragraph, CBP makes a negative 

determination, or if CBP is unable to 

determine that a claim of origin for a 

textile or apparel good is accurate 


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within 12 months after its request for a 

verification, CBP, if directed by the 

President, may take appropriate action, 

which may include: 

(i) Denying the application of 

preferential tariff treatment to the textile 

or apparel good for which a claim for 

preferential tariff treatment has been 

made that is the subject of a verification 

if CBP determines that the enterprise 

has provided insufficient or incorrect 

information to support the claim; and 

(ii) Denying entry to the textile or 

apparel good for which a claim for 

preferential tariff treatment or a claim of 

origin has been made that is the subject 

of a verification, if CBP determines that 

the enterprise has provided insufficient 

or incorrect information to support the 

claim. 

(b) Procedures to determine 

compliance with applicable customs 

laws and regulations of the United 

States. (1) General. For purposes of 

enabling CBP to determine that an 

exporter or producer is complying with 

applicable customs laws, regulations, 

and procedures regarding trade in 

textile and apparel goods, CBP may 

request that the government of the 

Republic of Korea conduct a 

verification, if CBP has a reasonable 

suspicion of unlawful activity relating 

to trade in textile or apparel goods by 

a person of Korea. 

(2) Actions during a verification. 

While a verification under this 

paragraph is being conducted, CBP, if 

directed by the President, may take 

appropriate action, which may include 

suspending the liquidation of the entry 

of any textile or apparel good exported 

or produced by the enterprise subject to 

the verification. 

(3) Actions following a verification. If 

on completion of a verification under 

this paragraph, CBP makes a negative 

determination, or if CBP is unable to 

determine that the person is complying 

with applicable customs measures 

affecting trade in textile or apparel 

goods within 12 months after its request 

for a verification, CBP, if directed by the 

President, may take appropriate action, 

which may include: 

(i) Denying the application of 

preferential tariff treatment to any 

textile or apparel good exported or 

produced by the enterprise subject to 

the verification if CBP determines that 

the enterprise has provided insufficient 

or incorrect information with respect to 

its obligations under the applicable 

customs laws, regulations, and 

procedures regarding trade in textile 

and apparel goods; and 

(ii) Denying entry to any textile or 

apparel good exported or produced by 

the enterprise subject to the verification, 

if CBP determines that the enterprise 

has provided insufficient or incorrect 

information with respect to its 

obligations under the applicable 

customs laws, regulations, and 

procedures regarding trade in textile 

and apparel goods. 

(c) Denial of permission to conduct a 

verification. If an enterprise does not 

consent to a verification under this 

section, CBP may deny preferential tariff 

treatment or deny entry to similar goods 

exported or produced by the enterprise 

that would have been the subject of the 

verification. 

(d) Action by U.S. officials in 

conducting a verification abroad. U.S. 

officials may undertake or assist in a 

verification under this section by 

conducting visits in the territory of 

Korea, along with the competent 

authorities of Korea, to the premises of 

an exporter, producer, or any other 

enterprise involved in the movement of 

textile or apparel goods from Korea to 

the United States. 

(e) Continuation of appropriate 

action. Before taking any action under 

paragraph (a) or (b), CBP will notify the 

government of the Republic of Korea. 

CBP may continue to take appropriate 

action under paragraph (a) or (b) of this 

section until it receives information 

sufficient to enable it to make the 

determination described in paragraphs 

(a) and (b) of this section. CBP may 

make public the identity of a person that 

CBP has determined to be engaged in 

circumvention as provided under this 

section or that has failed to demonstrate 

that it produces, or is capable of 

producing, textile or apparel goods. 

§ 10.1028 Issuance of negative origin 

determinations. 

If, as a result of an origin verification 

initiated under this subpart, CBP 

determines that a claim for preferential 

tariff treatment under this subpart 

should be denied, it will issue a 

determination in writing or via an 

authorized electronic data interchange 

system to the importer that sets forth the 

following: 

(a) A description of the good that was 

the subject of the verification together 

with the identifying numbers and dates 

of the import documents pertaining to 

the good; 

(b) A statement setting forth the 

findings of fact made in connection with 

the verification and upon which the 

determination is based; and 

(c) With specific reference to the rules 

applicable to originating goods as set 

forth in General Note 33, HTSUS, and 

in §§ 10.1013 through 10.1025 of this 

subpart, the legal basis for the 

determination. 

§ 10.1029 Repeated false or unsupported 

preference claims. 

Where verification or other 

information reveals a pattern of conduct 

by an importer, exporter, or producer of 

false or unsupported representations 

that goods qualify under the UKFTA 

rules of origin set forth in General Note 

33, HTSUS, CBP may suspend 

preferential tariff treatment under the 

UKFTA to entries of identical goods 

covered by subsequent statements, 

declarations, or certifications by that 

importer, exporter, or producer until 

CBP determines that representations of 

that person are in conformity with 

General Note 33, HTSUS. 

Penalties 

§ 10.1030 General. 

Except as otherwise provided in this 

subpart, all criminal, civil, or 

administrative penalties which may be 

imposed on U.S. importers, exporters, 

and producers for violations of the 

customs and related U.S. laws and 

regulations will also apply to U.S. 

importers, exporters, and producers for 

violations of the U.S. laws and 

regulations relating to the UKFTA. 

§ 10.1031 Corrected claim or certification 

by importers. 

An importer who makes a corrected 

claim under § 10.1003(c) of this subpart 

will not be subject to civil or 

administrative penalties under 19 U.S.C. 

1592 for having made an incorrect claim 

or having submitted an incorrect 

certification, provided that the corrected 

claim is promptly and voluntarily made. 

§ 10.1032 Corrected certification by U.S. 

exporters or producers. 

Civil or administrative penalties 

provided for under 19 U.S.C. 1592 will 

not be imposed on an exporter or 

producer in the United States who 

promptly and voluntarily provides 

written notification pursuant to 

§ 10.1009(b) with respect to the making 

of an incorrect certification. 

§ 10.1033 Framework for correcting claims 

or certifications. 

(a) ‘‘Promptly and voluntarily’’ 

defined. Except as provided for in 

paragraph (b) of this section, for 

purposes of this subpart, the making of 

a corrected claim or certification by an 

importer or the providing of written 

notification of an incorrect certification 

by an exporter or producer in the United 

States will be deemed to have been done 

promptly and voluntarily if: 

(1)(i) Done before the commencement 

of a formal investigation, within the 

meaning of § 162.74(g) of this chapter; 

or 


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(ii) Done before any of the events 

specified in § 162.74(i) of this chapter 

have occurred; or 

(iii) Done within 30 days after the 

importer, exporter, or producer initially 

becomes aware that the claim or 

certification is incorrect; and 

(2) Accompanied by a statement 

setting forth the information specified in 

paragraph (c) of this section; and 

(3) In the case of a corrected claim or 

certification by an importer, 

accompanied or followed by a tender of 

any actual loss of duties and 

merchandise processing fees, if 

applicable, in accordance with 

paragraph (d) of this section. 

(b) Exception in cases involving fraud 

or subsequent incorrect claims. (1) 

Fraud. Notwithstanding paragraph (a) of 

this section, a person who acted 

fraudulently in making an incorrect 

claim or certification may not make a 

voluntary correction of that claim or 

certification. For purposes of this 

paragraph, the term ‘‘fraud’’ will have 

the meaning set forth in paragraph (C)(3) 

of appendix B to part 171 of this 

chapter. 

(2) Subsequent incorrect claims. An 

importer who makes one or more 

incorrect claims after becoming aware 

that a claim involving the same 

merchandise and circumstances is 

invalid may not make a voluntary 

correction of the subsequent claims 

pursuant to paragraph (a) of this section. 

(c) Statement. For purposes of this 

subpart, each corrected claim or 

certification must be accompanied by a 

statement, submitted in writing or via 

an authorized electronic data 

interchange system, which: 

(1) Identifies the class or kind of good 

to which the incorrect claim or 

certification relates; 

(2) In the case of a corrected claim or 

certification by an importer, identifies 

each affected import transaction, 

including each port of importation and 

the approximate date of each 

importation; 

(3) Specifies the nature of the 

incorrect statements or omissions 

regarding the claim or certification; and 

(4) Sets forth, to the best of the 

person’s knowledge, the true and 

accurate information or data which 

should have been covered by or 

provided in the claim or certification, 

and states that the person will provide 

any additional information or data 

which is unknown at the time of making 

the corrected claim or certification 

within 30 days or within any extension 

of that 30-day period as CBP may permit 

in order for the person to obtain the 

information or data. 

(d) Tender of actual loss of duties. A 

U.S. importer who makes a corrected 

claim must tender any actual loss of 

duties at the time of making the 

corrected claim, or within 30 days 

thereafter, or within any extension of 

that 30-day period as CBP may allow in 

order for the importer to obtain the 

information or data necessary to 

calculate the duties owed. 

Goods Returned After Repair or 

Alteration 

§ 10.1034 Goods re-entered after repair or 

alteration in Korea. 

(a) General. This section sets forth the 

rules which apply for purposes of 

obtaining duty-free treatment on goods 

returned after repair or alteration in 

Korea as provided for in subheadings 

9802.00.40 and 9802.00.50, HTSUS. 

Goods returned after having been 

repaired or altered in Korea, regardless 

of whether the repair or alteration could 

be performed in the United States or has 

increased the value of the good and 

regardless of their origin, are eligible for 

duty-free treatment, provided that the 

requirements of this section are met. For 

purposes of this section, ‘‘repairs or 

alterations’’ means restoration, addition, 

renovation, re-dyeing, cleaning, resterilizing, or other treatment that does 

not destroy the essential characteristics 

of, or create a new or commercially 

different good from, the good exported 

from the United States. 

(b) Goods not eligible for duty-free 

treatment after repair or alteration. The 

duty-free treatment referred to in 

paragraph (a) of this section will not 

apply to goods which, in their condition 

as exported from the United States to 

Korea, are incomplete for their intended 

use and for which the processing 

operation performed in Korea 

constitutes an operation that is 

performed as a matter of course in the 

preparation or manufacture of finished 

goods. 

(c) Documentation. The provisions of 

§ 10.8(a), (b), and (c) of this part, relating 

to the documentary requirements for 

goods entered under subheading 

9802.00.40 or 9802.00.50, HTSUS, will 

apply in connection with the entry of 

goods which are returned from Korea 

after having been exported for repairs or 

alterations and which are claimed to be 

duty free. 

PART 24—CUSTOMS FINANCIAL AND 

ACCOUNTING PROCEDURE 

■ 4. The general authority citation for 

part 24 and specific authority for § 24.23 

continue to read as follows: 

Authority: 5 U.S.C. 301; 19 U.S.C. 58a– 

58c, 66, 1202 (General Note 3(i), Harmonized 

Tariff Schedule of the United States), 1505, 

1520, 1624; 26 U.S.C. 4461, 4462; 31 U.S.C. 

9701; Public Law 107–296, 116 Stat. 2135 (6 

U.S.C. 1 et seq.). 

* * * * * 

Section 24.23 also issued under 19 U.S.C. 

3332; 

* * * * * 

■ 5. Section 24.23 is amended by adding 

paragraph (c)(12) to read as follows: 

§ 24.23 Fees for processing merchandise. 

* * * * * 

(c) * * * 

(12) The ad valorem fee, surcharge, 

and specific fees provided under 

paragraphs (b)(1) and (b)(2)(i) of this 

section will not apply to goods that 

qualify as originating goods under § 203 

of the United States-Korea Free Trade 

Agreement (see also General Note 33, 

HTSUS) that are entered, or withdrawn 

from warehouse for consumption, on or 

after March 15, 2012. 

PART 162—INSPECTION, SEARCH, 

AND SEIZURE 

■ 6. The authority citation for part 162 

continues to read in part as follows: 

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 

1592, 1593a, 1624. 

* * * * * 

■ 7. Section 162.0 is amended by 

revising the last sentence to read as 

follows: 

§ 162.0 Scope. 

* * * Additional provisions 

concerning records maintenance and 

examination applicable to U.S. 

importers, exporters and producers 

under the U.S.-Chile Free Trade 

Agreement, the U.S.-Singapore Free 

Trade Agreement, the Dominican 

Republic-Central America-U.S. Free 

Trade Agreement, the U.S.-Morocco 

Free Trade Agreement, the U.S.- Peru 

Trade Promotion Agreement, and the 

U.S.-Korea Free Trade Agreement are 

contained in Part 10, Subparts H, I, J, M, 

Q, and R of this chapter, respectively. 

PART 163—RECORDKEEPING 

■ 8. 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. 

■ 9. Section 163.1 is amended by 

redesignating paragraph (a)(2)(xiv) as 

(a)(2)(xv) and adding a new paragraph 

(a)(2)(xiv) to read as follows: 

§ 163.1 Definitions. 

* * * * * 

(a) * * * 

(2) * * * 

(xiv) The maintenance of any 

documentation that the importer may 


emcdonald on DSK29S0YB1PROD with RULES
15960 Federal Register / Vol. 77, No. 53 / Monday, March 19, 2012 / Rules and Regulations 

have in support of a claim for 

preferential tariff treatment under the 

United States-Korea Free Trade 

Agreement (UKFTA), including a 

UKFTA importer’s certification. 

* * * * * 

■ 10. The appendix to part 163 is 

amended by adding a new listing under 

section IV in numerical order to read as 

follows: 

Appendix to Part 163—Interim (a)(1)(A) 

List 

* * * * * 

IV. * * * 

§ 10.1005 UKFTA records that the importer 

may have in support of a UKFTA claim for 

preferential tariff treatment, including an 

importer’s certification. 

* * * * * 

PART 178—APPROVAL OF 

INFORMATION COLLECTION 

REQUIREMENTS 

■ 11. The authority citation for part 178 

continues to read as follows: 

Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 

U.S.C. 3501 et seq. 

■ 12. Section 178.2 is amended by 

adding new listings for ‘‘§§ 10.1003 and 

10.1004’’ to the table in numerical order 

to read as follows: 

§ 178.2 Listing of OMB control numbers. 

19 CFR Section Description OMB Control No. 

*******

§§ 10.1003 and 10.1004 ................ Claim for preferential tariff treatment under the US-Korea Free 

Trade Agreement.

1651–0117 

* * * * * * * 

* * * * * 

David V. Aguilar, 

Acting Commissioner, U.S. Customs and 

Border Protection. 

Approved: March 14, 2012. 

Timothy E. Skud, 

Deputy Assistant Secretary of the Treasury. 

[FR Doc. 2012–6554 Filed 3–15–12; 8:45 am] 

BILLING CODE 9111–14–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Food and Drug Administration 

21 CFR Part 520 

[Docket No. FDA–2011–N–0003] 

Oral Dosage Form New Animal Drugs; 

Pergolide 

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 an original new animal drug 

application (NADA) filed by Boehringer 

Ingelheim Vetmedica, Inc. The NADA 

provides for the veterinary prescription 

use of pergolide mesylate tablets in 

horses for the control of clinical signs 

associated with Pituitary Pars 

Intermedia Dysfunction (Equine 

Cushing’s Disease). 

DATES: This rule is effective March 19, 

2012. 

FOR FURTHER INFORMATION CONTACT: 

Amy L. Omer, Center for Veterinary 

Medicine (HFV–114), Food and Drug 

Administration, 7500 Standish Pl., 

Rockville, MD 20855, 240–276–8336, 

email: amy.omer@fda.hhs.gov. 

SUPPLEMENTARY INFORMATION: 

Boehringer Ingelheim Vetmedica, Inc., 

2621 North Belt Highway, St. Joseph, 

MO 64506–2002, filed NADA 141–331 

for the veterinary prescription use in 

horses of PRASCEND (pergolide 

mesylate) Tablets for the control of 

clinical signs associated with Pituitary 

Pars Intermedia Dysfunction (Equine 

Cushing’s Disease). The NADA is 

approved as of September 7, 2011, and 

21 CFR part 520 is amended to reflect 

the approval. 

In accordance with the freedom of 

information provisions of 21 CFR part 

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

summary of safety and effectiveness 

data and information submitted to 

support approval of this application 

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)(i) of the 

Federal Food, Drug, and Cosmetic Act 

(21 U.S.C. 360b(c)(2)(F)(i)), this 

approval qualifies for 5 years of 

marketing exclusivity beginning on the 

date of approval. 

The Agency has determined under 

21 CFR 25.33 that this action is of a type 

that does 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 Part 520 

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 part 520 is 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. Add § 520.1705 to read as follows: 

§ 520.1705 Pergolide. 

(a) Specifications. Each tablet 

contains 1 milligram (mg) pergolide 

mesylate. 

(b) Sponsor. See No. 000010 in 

§ 510.600(c) of this chapter. 

(c) Conditions of use in horses—(1) 

Amount. Administer orally at a starting 

dose of 2 micrograms/kilograms (m/kg) 

once daily. Dosage may be adjusted to 

effect, not to exceed 4 mg/kg daily. 

(2) Indications for use. For the control 

of clinical signs associated with 

Pituitary Pars Intermedia Dysfunction 

(Equine Cushing’s Disease). 

(3) Limitations. Federal law restricts 

this drug to use by or on the order of 

a licensed veterinarian. 


emcdonald on DSK29S0YB1PROD with RULES