[Federal Register Volume 73, Number 151 (Tuesday, August 5, 2008)]
[Rules and Regulations]
[Pages 45351-45354]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-17968]


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DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection

DEPARTMENT OF THE TREASURY

19 CFR Parts 10, 102, 162, 163, and 178

[Docket No. USCBP-2007-0056; CBP Dec. 08-29]
RIN 1505-AB76


United States-Morocco Free Trade Agreement

AGENCIES: Customs and Border Protection, Department of Homeland 
Security; Department of the Treasury.

ACTION: Final rule.

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[[Page 45352]]

SUMMARY: This document adopts as a final rule, with some changes, 
interim amendments to title 19 of the Code of Federal Regulations 
(``CFR'') which were published in the Federal Register on June 29, 
2007, as CBP Dec. 07-51 to implement the preferential tariff treatment 
and other customs-related provisions of the United States-Morocco Free 
Trade Agreement signed by the United States and the Kingdom of Morocco.

DATES: Final Rule effective September 4, 2008.

FOR FURTHER INFORMATION CONTACT:
    Textile Operational Aspects: Robert Abels, Office of International 
Trade, (202-863-6503).
    Other Operational Aspects: Heather Sykes, Office of International 
Trade, (202-863-6099).
    Legal Aspects: Karen Greene, Office of International Trade, (202-
572-8838).

SUPPLEMENTARY INFORMATION:

Background

    On June 15, 2004, the United States and the Kingdom of Morocco (the 
``Parties'') signed the U.S.-Morocco Free Trade Agreement (``MFTA'' or 
``Agreement''). The stated objectives of the MFTA are to: Encourage 
expansion and diversification of trade between the Parties; eliminate 
barriers to trade in, and facilitate the cross-border movement of, 
goods and services between the territories of the Parties; promote 
conditions of fair competition in the free trade area; substantially 
increase investment opportunities in the territories of the Parties; 
provide adequate and effective protection and enforcement of 
intellectual property rights in each Party's territory; create 
effective procedures for the implementation and application of the 
MFTA, for its joint administration and for the resolution of disputes; 
and establish a framework for further regional and multilateral 
cooperation to expand and enhance the benefits of the MFTA.
    The provisions of the MFTA were adopted by the United States with 
the enactment of the United States-Morocco Free Trade Agreement 
Implementation Act (the ``Act''), Public Law 108-302, 118 Stat. 1103 
(19 U.S.C. 3805 note), on August 17, 2004. Section 205 of the Act 
requires that regulations be prescribed as necessary to implement these 
provisions of the MFTA.
    On December 22, 2005, the President signed Proclamation 7971 to 
implement the provisions of the MFTA. The proclamation, which was 
published in the Federal Register on December 27, 2005 (70 FR 76649), 
modified the Harmonized Tariff Schedule of the United States 
(``HTSUS'') as set forth in Annexes I and II of Publication 3721 of the 
U.S. International Trade Commission. The modifications to the HTSUS 
included the addition of new General Note 27, incorporating the 
relevant MFTA 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 MFTA where the special 
program indicator ``MA'' appears in parenthesis in the ``Special'' rate 
of duty subcolumn. The modifications to the HTSUS also included a new 
Subchapter XII to Chapter 99 to provide for temporary tariff rate 
quotas and applicable safeguards implemented by the MFTA.
    Those customs-related MFTA provisions that require implementation 
through regulation 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 Five (Rules of Origin), and Chapter Six 
(Customs Administration).
    In Chapter One of the MFTA, certain general definitions in Article 
1.3 have been incorporated into the MFTA implementing regulations. In 
MFTA Chapter Two, Article 2.6 (Goods Re-entered after Repair or 
Alteration) requires implementation by CBP.
    Chapter Four of the MFTA sets forth the measures relating to trade 
in textile and apparel goods between Morocco and the United States 
under the MFTA. The provisions within Chapter Four that require 
regulatory action by CBP are Article 4.3 (Rules of Origin and Related 
Matters) and Article 4.5 (Definitions).
    Chapter Five of the MFTA sets forth the rules for determining 
whether an imported good qualifies as an originating good of the United 
States or Morocco (MFTA Party) and, as such, is therefore eligible for 
preferential tariff (duty-free or reduced duty) treatment as specified 
in the Agreement. Under Article 5.1, originating goods may be grouped 
in three broad categories: (1) Goods that are wholly the growth, 
product, or manufacture of one or both of the Parties; (2) goods (other 
than those covered by the product-specific rules set forth in Annex 4-A 
or Annex 5-A) that are new or different articles of commerce that have 
been grown, produced, or manufactured in the territory of one or both 
of the Parties, and that have a minimum value-content, i.e., at least 
35 percent of the good's appraised value must be attributed to the cost 
or value of materials produced in one or both of the Parties plus the 
direct costs of processing operations performed in one or both of the 
Parties; and (3) goods that satisfy the product-specific rules set 
forth in Annex 4-A (textile or apparel goods) or Annex 5-A (certain 
non-textile or non-apparel goods).
    Article 5.2 explains that the term ``new or different article of 
commerce'' means a good that has been substantially transformed from a 
good or material that is not wholly the growth, product, or manufacture 
of one or both of the Parties and that has a new name, character, or 
use distinct from the good or material from which it was transformed. 
Article 5.3 provides that a good will not be considered to be a new or 
different article of commerce as the result of undergoing simple 
combining or packaging operations, or mere dilution with water or 
another substance that does not materially alter the characteristics of 
the good. CBP notes that, pursuant to letters of understanding 
exchanged between the Parties on June 16, 2004, in determining whether 
a good meets the definition of a `` new or different article of 
commerce'' in Sec.  10.769(i), the United States should be guided by 
the provisions of part 102 of the CBP regulations (19 CFR part 102).
    Article 5.4 provides for the accumulation of production in the 
territory of one or both of the Parties in determining whether a good 
qualifies as originating under the MFTA. Articles 5.5 and 5.6 set forth 
the rules for calculating the value of materials and the direct costs 
of processing operations, respectively, for purposes of determining 
whether a good satisfies the 35 percent value-content requirement.
    Articles 5.7 through 5.9 consist of additional sub-rules applicable 
to originating goods, involving retail packaging materials, packing 
materials for shipment, indirect materials, and transit and 
transshipment. In addition, Articles 5.10 and 5.11 set forth the 
procedural requirements that apply under the MFTA, in particular with 
regard to importer claims for preferential tariff treatment. Article 
5.14 provides definitions of certain of the terms used in Chapter Five 
of the MFTA. The basic rules of origin in Chapter Five of the MFTA are 
set forth in General Note 27, HTSUS, and in part 102 of title 19 of the 
Code of Federal Regulations.
    Chapter Six sets forth the customs operational provisions related 
to the implementation and administration of the MFTA.
    Customs and Border Protection (``CBP'') is responsible for 
administering the provisions of the MFTA and the Act

[[Page 45353]]

that relate to the importation of goods into the United States from 
Morocco. On June 29, 2007, CBP published CBP Dec. 07-51 in the Federal 
Register (72 FR 35647), setting forth interim amendments to implement 
the preferential tariff treatment and customs-related provisions of the 
MFTA. In order to provide transparency and facilitate their use, the 
majority of the MFTA implementing regulations set forth in CBP Dec. 07-
51 were included within new subpart M in part 10 of title 19 of the 
Code of Federal Regulations (19 CFR subpart M, part 10). However, in 
those cases in which MFTA implementation was more appropriate in the 
context of an existing regulatory provision, the MFTA regulatory text 
was incorporated in an existing part within the CBP regulations.
    Although the interim regulatory amendments were promulgated without 
prior public notice and comment procedures and took effect on June 29, 
2007, CBP Dec. 07-51 provided for the submission of public comments 
that would be considered before adopting the interim regulations as a 
final rule. The prescribed public comment period closed on August 28, 
2007. No comments were received in response to the solicitation of 
public comments in CBP Dec. 07-51.

Changes to the Regulations

    The final rulemaking text set forth below incorporates certain 
changes, as discussed below, which CBP believes are necessary based on 
further internal review of the interim regulatory text.

Definition of ``New or Different Article of Commerce''

    The words ``new or different article of commerce'' are defined in 
Sec.  10.769(i) of the interim regulations as a good that has been 
substantially transformed from a good or material that is not wholly 
the growth, product, or manufacture of one or both of the Parties and 
that has a new name, character, or use distinct from the good or 
material from which it was transformed. This definition has been 
revised in this final rule document to provide that such an article of 
commerce ``exists when the country of origin of a good which is 
produced in a Party from foreign materials is determined to be that 
country under the provisions of Sec. Sec.  102.1 through 102.21 of'' 
the CBP regulations (19 CFR 102.1 through 102.21). CBP believes that 
this revised definition is more transparent and is consistent with 
letters of understanding exchanged between the Parties which provide 
that, in determining whether a good meets the definition of a ``new or 
different article of commerce,'' the United States and Morocco should 
be guided by the provisions of Part 102 of the CBP regulations.
    CBP also notes that this revised definition is identical to the 
definition of the same term set forth in the interim regulations 
implementing the United States-Bahrain Free Trade Agreement (``BFTA'') 
(see Sec.  10.809(i), CBP regulations (19 CFR 10.809(i)). The rules of 
origin set forth in the BFTA (including letters of understanding 
exchanged between the Parties concerning the interpretation of ``new or 
different article of commerce'') closely parallel those in the MFTA.

Other Changes

    1. In Sec.  10.761, relating to the scope of Subpart M, the last 
sentence has been revised to add Part 102 as one of the parts in the 
CBP regulations that include amendments implementing the MFTA, 
consistent with the revision to the definition of ``new or different 
article of commerce'' in Sec.  10.769(i) discussed above;
    2. In Sec.  10.769, the definition of ``substantially transformed'' 
(formerly paragraph (o)) has been removed as those words are no longer 
used in Subpart M as a result of the revision of the definition of 
``new or different article of commerce'' discussed above;
    3. In Sec.  10.770, which sets forth the basic MFTA rules of 
origin, paragraph (a)(2) has been revised to add the words ``, as 
defined in Sec.  10.769(i) of this subpart,'' immediately following the 
words ``new or different article of commerce'' for clarification 
purposes;
    4. Section 10.785, which concerns verifications conducted in 
Morocco by Moroccan authorities (at the request of CBP) relating to 
textile and apparel goods imported into the United States, has been 
removed in its entirety. CBP believes that the provisions of Sec.  
10.785 are unnecessary to the proper implementation of the MFTA as they 
relate primarily to actions that the Government of Morocco and CBP may 
take in connection with verifications performed in Morocco. As such, 
these provisions impose no requirements on U.S. importers of textile or 
apparel goods or other members of the trade. In addition, CBP notes 
that the removal of Sec.  10.785 provides consistency between the MFTA 
implementing regulations and the interim regulations implementing the 
BFTA, which include no provisions regarding verifications in Bahrain of 
U.S. imports of textile and apparel products. The verification 
provisions in the MFTA closely parallel those in the BFTA;
    5. As a result of the removal of Sec.  10.785, discussed above, 
Sec. Sec.  10.786 through 10.788 of the interim regulatory text have 
been re-designated as Sec. Sec.  10.785 through 10.787, respectively; 
and
    6. In Sec.  102.0, relating to the scope of part 102, the third 
sentence has been revised by adding the words ``Sec.  10.769 of the 
United States-Morocco Free Trade Agreement regulations and'' 
immediately following the words ``new or different article of commerce 
under'', consistent with the revision of the definition of ``new or 
different article of commerce'' discussed above.

Conclusion

    Accordingly, based on the considerations discussed above, CBP 
believes that the interim regulations published as CBP Dec. 07-51, 
should be adopted as a final rule with certain changes as discussed 
above and as set forth below.

Executive Order 12866

    CBP has determined that this document is not a regulation or rule 
subject to the provisions of Executive Order 12866 of September 30, 
1993 (58 FR 51735, October 1993), because it pertains to a foreign 
affairs function of the United States and implements an international 
agreement and, therefore, is specifically exempted by section 3(d)(2) 
of Executive Order 12866.

Regulatory Flexibility Act

    CBP Dec. 07-51 was issued as an interim rule rather than a notice 
of proposed rulemaking because CBP had determined that the interim 
regulations involve a foreign affairs function of the United States 
pursuant to Sec.  553(a)(1) of the Administrative Procedure Act. 
Because no notice of proposed rulemaking was required, the provisions 
of the Regulatory Flexibility Act, as amended (5 U.S.C. 601 et seq.), 
do not apply. Accordingly, this final rule is not subject to the 
regulatory analysis requirements or other requirements of 5 U.S.C. 603 
and 604.

Paperwork Reduction Act

    The collection of information in this final rule has previously 
been reviewed and approved by 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.
    The collections of information in these regulations are in 
Sec. Sec.  10.703 and 10.704. This information is required in 
connection with claims for preferential tariff treatment and for the 
purpose of the exercise of other rights under the

[[Page 45354]]

MFTA and the Act and will be used by CBP to determine eligibility for a 
tariff preference or other rights or benefits under the MFTA and the 
Act. The likely respondents are business organizations including 
importers, exporters, and manufacturers.
    The estimated average annual burden associated with the collection 
of information in this final rule is 0.2 hours per respondent or record 
keeper. Under the Paperwork Reduction Act, an agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a valid OMB control number.

Signing Authority

    This document is being issued in accordance with Sec.  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 102

    Customs duties and inspections, Imports, Reporting and 
recordkeeping requirements, Rules of origin, Trade agreements.

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, Export, Import, Reporting and recordkeeping requirements, 
Trade agreements.

19 CFR Part 178

    Administrative practice and procedure, Exports, Imports, Reporting 
and recordkeeping requirements.

Amendments to the CBP Regulations

0
Accordingly, the interim rule amending parts 10, 162, 163, and 178 of 
the CBP regulations (19 CFR parts 10, 162, 163, and 178), which was 
published at 72 FR 35647 on June 29, 2007, is adopted as a final rule 
with certain changes as discussed above and as set forth below.

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

0
1. The general authority citation for Part 10 and the specific 
authority for Subpart M continue 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 10.761 through 10.787 also issued under Public Law 108-
302, 118 Stat. 1103 (19 U.S.C. 3805 note).
* * * * *

0
2. Section 10.761 is amended by revising the last sentence to read as 
follows:


Sec.  10.761  Scope.

    * * * Additional provisions implementing certain aspects of the 
MFTA and the Act are contained in Parts 102, 162, and 163 of this 
chapter.

0
3. Section 10.769 is amended by revising paragraph (i) and removing 
paragraph (o). Revised paragraph (i) reads as follows:


Sec.  10.769  Definitions.

* * * * *
    (i) New or different article of commerce. A ``new or different 
article of commerce'' exists when the country of origin of a good which 
is produced in a Party from foreign materials is determined to be that 
country under the provisions of Sec. Sec.  102.1 through 102.21 of this 
chapter;
* * * * *


Sec.  10.770  [Amended]

0
4. Section 10.770 is amended by adding the words ``, as defined in 
Sec.  10.769(i) of this subpart,'' immediately following the words 
``new or different article of commerce'' in paragraph (a)(2).


Sec.  10.785  [Removed]

0
5. Section 10.785 is removed.


Sec. Sec.  10.786 through 10.788  [Redesignated as Sec. Sec.  10.785 
through 10.787]

0
6. Sections 10.786 through 10.788 are redesignated as Sec. Sec.  10.785 
through 10.787, respectively.

PART 102--RULES OF ORIGIN

0
7. The authority citation for part 102 continues to read as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized 
Tariff Schedule of the United States), 1624, 3314, 3592.


0
8. Section 102.0 is amended by revising the third sentence to read as 
follows:


Sec.  102.0  Scope.

    * * * The rules set forth in Sec. Sec.  102.1 through 102.21 of 
this part will also apply for purposes of determining whether an 
imported good is a new or different article of commerce under Sec.  
10.769 of the United States-Morocco Free Trade Agreement regulations 
and Sec.  10.809 of the United States-Bahrain Free Trade Agreement 
regulations.* * *

W. Ralph Basham,
Commissioner, U.S. Customs and Border Protection.
    Approved: July 31, 2008.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. E8-17968 Filed 8-4-08; 8:45 am]
BILLING CODE 9111-14-P