Document ID: BIS-2016-0023-0001
Agency: bis
Document Type: Proposed Rule
Title: License Exceptions: Temporary Exports to Mexico
Posted Date: 2016-08-23T04:00Z

[Federal Register Volume 81, Number 163 (Tuesday, August 23, 2016)]
[Proposed Rules]
[Pages 57505-57506]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19670]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 740

[160519443-6443-01]
RIN 0694-AG97

Temporary Exports to Mexico Under License Exception TMP

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would align the time limit of License 
Exception Temporary Imports, Exports, Reexports, and Transfers (in-
country) (TMP), which authorizes, among other things, certain temporary 
exports to Mexico, with the time limit of Mexico's Decree for the 
Promotion of Manufacturing, Maquiladora and Export Services (IMMEX) 
program. Currently, TMP allows for the temporary export and reexport of 
various items subject to the Export Administration Regulations (EAR), 
as long as the items are returned no later than one year after export, 
reexport, or transfer if not consumed or destroyed during the period of 
authorized use. Other than a four-year period for certain personal 
protective equipment, the one-year limit extends to all items shipped 
under license exception TMP. However, the one-year period does not 
align with the time constraints of Mexico's IMMEX program, which allows 
imports of items for manufacturing operations on a time limit that may 
exceed 18 months. This rule proposes to amend TMP to complement the 
timeline of the IMMEX program. Under this proposed amendment, items 
temporarily exported or reexported under license exception TMP and 
imported under the provisions of the IMMEX program would be authorized 
to remain in Mexico for up to four years from the date of export or 
reexport.

DATES: Comments must be received by October 24, 2016.

ADDRESSES: You may submit comments by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
The identification number for this rulemaking is BIS-2016-0023.
     By email directly to publiccomments@bis.doc.gov. Include 
RIN 0694-AG97 in the subject line.
     By mail or delivery to Regulatory Policy Division, Bureau 
of Industry and Security, U.S. Department of Commerce, Room 2099B, 14th 
Street and Pennsylvania Avenue NW., Washington, DC 20230. Refer to RIN 
0694-AG97.

FOR FURTHER INFORMATION CONTACT: Regulatory Policy Division, Office of 
Exporter Services, Bureau of Industry and Security, by telephone (202) 
482-2440 or email: RPD2@bis.doc.gov.

SUPPLEMENTARY INFORMATION: 

Overview

    Mexico's Decree for the Promotion of Manufacturing, Maquiladora and 
Export Services, known as IMMEX, is a platform used by U.S. and foreign 
manufacturers to lower production costs by temporarily importing 
production materials into Mexico. Created in 2006, IMMEX is the product 
of the merger of two previous Mexican economic policies: The 
Maquiladora program, which was designed to attract foreign investment 
by exempting temporary imports from taxes, and the Temporary Import 
Program to Promote Exports (PITEX), which incentivized Mexican 
companies to grow and compete in foreign markets by providing temporary 
import benefits. Under IMMEX, companies located in Mexico are not 
subject to quotas and do not have to pay taxes on items temporarily 
imported and manufactured, transformed, or repaired before reexport.
    Under IMMEX, the length of time that imports may remain in Mexico 
is commodity dependent, with some items allowed to remain in-country 
for 18 months or more. These time allotments are greater than the time 
limits for License Exception Temporary Imports, Exports, Reexports, and 
Transfers (in-country) (TMP) allowed under Sec.  740.9(a)(14) of the 
EAR. With few exceptions, items exported under TMP, if not consumed or 
destroyed during the authorized use abroad, must be returned to the 
United States one year after the date of export. The discrepancy 
between the time periods of IMMEX and TMP reduces the efficacy of both 
policies, thereby hindering the shipment of items subject to the EAR to 
and from Mexico.
    U.S. companies that produce items subject to the EAR and ship those 
items to Mexico under IMMEX have notified the Bureau of Industry and 
Security of this discrepancy and have requested that BIS amend the EAR 
to increase compatibility with IMMEX. Considering the strength of 
Mexico's export control regimen, as exemplified by its accession as a 
member to the Wassenaar Arrangement, the Australia Group, and the 
Nuclear Suppliers Group, BIS proposes to amend Sec.  740.9(a) to 
account for IMMEX's time limit. For the purpose of simplicity, BIS does 
not propose to match the various time periods instituted by IMMEX. 
Instead, this rule proposes to revise Sec.  740.9(a)(8) to allow 
temporary exports and reexports to remain in Mexico for up to four 
years, which accommodates the maximum available time that temporarily 
imported items may remain in Mexico under IMMEX and is in parallel with 
the validity period of BIS's licenses. Additionally, this rule proposes 
to revise introductory paragraph Sec.  740.9(a)(14) to include a 
reference to Sec.  740.9(a)(8) as an exception to the one-year time 
limit of TMP.

Export Administration Act

    Since August 21, 2001, the Export Administration Act of 1979, as 
amended, has been in lapse. However, the President, through Executive 
Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as 
amended by Executive Order 13637 of March 8, 2013, 78 FR 16129 (March 
13, 2013), and as extended by the Notice of August 7, 2015, 80 FR 48233 
(August 11, 2015) has continued the EAR in effect under the 
International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.). 
BIS continues to carry out the provisions of the Export Administration 
Act, as appropriate and to the extent permitted by law, pursuant to 
Executive Order 13222 as amended by Executive Order 13637.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and

[[Page 57506]]

benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. 
This rule has been determined to be not significant for the purposes of 
Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor is subject to a penalty for failure to 
comply with, a collection of information, subject to the requirements 
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), 
unless that collection of information displays a currently valid Office 
of Management and Budget (OMB) Control Number. This rule does not 
contain any collections of information.
    3. This rule does not contain policies with Federalism implications 
as that term is defined in Executive Order 13132.
    4. The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 
601 et seq., generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to the notice and comment 
rulemaking requirements under the Administrative Procedure Act (5 
U.S.C. 553) or any other statute. Under section 605(b) of the RFA, 
however, if the head of an agency certifies that a rule will not have a 
significant economic impact on a substantial number of small entities, 
the statute does not require the agency to prepare a regulatory 
flexibility analysis. Pursuant to section 605(b), the Chief Counsel for 
Regulation, Department of Commerce, certified to the Chief Counsel for 
Advocacy, Small Business Administration that this proposed rule, if 
promulgated, will not have a significant economic impact on a 
substantial number of small entities.

Number of Small Entities

    The Bureau of Industry and Security (BIS) does not collect data on 
the size of entities that apply for and are issued export licenses. 
Although BIS is unable to estimate the exact number of small entities 
that would be affected by this rule, it acknowledges that this rule 
would affect some unknown number.

Economic Impact

    BIS believes that this proposed rule will not have a significant 
economic impact because exporters are already using other provisions of 
the EAR to participate in IMMEX. Currently, exporters participating in 
IMMEX are using TMP for exports of a one-year duration. If the item is 
to remain in Mexico longer than one year, exporters are required to 
either use another license exception or apply for a license that will 
address a specific time limit. This proposed rule merely extends the 
eligibility period for TMP to four years to complement the lengthy 
IMMEX time limit which could be 18 months or more, depending on 
circumstances. Extending the time limit of TMP to four years provides 
exporters flexibility in complying with the EAR and allows them to take 
fuller advantage of the privileges granted by IMMEX. While such a 
provision should reduce the paperwork burden to exporters, BIS does not 
believe increasing the time limit will lead to a significant increase 
in exports to Mexico. Rather, this proposed rule is consistent with the 
principle of the EAR in easing the unnecessary regulatory burden to 
exporters.

List of Subjects in 15 CFR Parts 740

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

    Accordingly, 15 CFR part 740 of the EAR (15 CFR parts 730-774) is 
proposed to be amended as follows:

PART 740--[AMENDED]

0
1. The authority citation for part 740 continues to read as follows:

    Authority: Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et 
seq.; 22 U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 
Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; 
Notice of August 7, 2015, 80 FR 48233 (August 11, 2015).

0
2. Section 740.9 is amended by revising paragraphs (a)(8) and 
introductory paragraph (a)(14) to read as follows:

Sec.  740.9  Temporary imports, exports, reexports, and transfers (in-
country) (TMP).

    (a) * * *
    (8) Assembly in Mexico. Commodities may be exported to Mexico under 
Customs entries that require return to the United States after 
processing, assembly, or incorporation into end products by companies, 
factories, or facilities participating in Mexico's in-bond 
industrialization program (IMMEX) under this paragraph (a)(8), provided 
that all resulting end-products (or the commodities themselves) are 
returned to the United States as soon as practicable but no later than 
four years after the date of export or reexport.
* * * * *
    (14) Return or disposal of items. With the exception of items 
described in paragraphs (a)(8) and (11) of this section, all items 
exported, reexported, or transferred (in-country) under this section 
must, if not consumed or destroyed in the normal course of authorized 
temporary use abroad, be returned to the United States or other country 
from which the items were so transferred as soon as practicable but no 
later than one year after the date of export, reexport, or transfer 
(in-country). Items not returned shall be disposed of or retained in 
one of the following ways:
* * * * *

Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2016-19670 Filed 8-22-16; 8:45 am]
 BILLING CODE 3510-33-P