[Federal Register Volume 78, Number 104 (Thursday, May 30, 2013)]
[Rules and Regulations]
[Pages 32356-32358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-12849]



U.S. Customs and Border Protection


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

[USCBP-2012-0007; CBP Dec. 13-08]
RIN 1515-AD86

United States-Korea Free Trade Agreement

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

ACTION: Final rule.


SUMMARY: This document adopts as a final rule, with two changes, 
interim amendments to the U.S. Customs and Border Protection (``CBP'') 
regulations which were published in the Federal Register on March 19, 
2012, as CBP Dec. 12-03, to implement the preferential tariff treatment 
and other customs-related provisions of the United States-Korea Free 
Trade Agreement entered into by the United States and the Republic of 

DATES: Effective July 1, 2013.

    Textile Operational Aspects: Jackie Sprungle, Trade Policy and 
Programs, Office of International Trade, (202) 863-6517.
    Other Operational Aspects: Katrina Chang, Trade Policy and 

[[Page 32357]]

Office of International Trade, (202) 863-6532.
    Legal Aspects: Yuliya A. Gulis, Regulations and Rulings, Office of 
International Trade, (202) 325-0042.



    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 provisions of the FTA were adopted by the United States with the 
enactment 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), on October 21, 2011. Sections 103(b) and 208 of the 
Act require that regulations be prescribed as necessary to implement 
the provisions of the UKFTA.
    Following Presidential Proclamation 8783, CBP published on March 
19, 2012, CBP Dec. 12-03 in the Federal Register (77 FR 15943), setting 
forth interim amendments to implement the preferential tariff treatment 
and customs-related provisions of the UKFTA. In order to provide 
transparency and facilitate their use, the majority of the UKFTA 
implementing regulations set forth in CBP Dec. 12-03 were included 
within new subpart R in part 10 of the CBP regulations (19 CFR part 
10). However, in those cases in which UKFTA implementation was more 
appropriate in the context of an existing regulatory provision, the 
UKFTA regulatory text was incorporated in an existing part within the 
CBP regulations. For a detailed description of the pertinent provisions 
of the Agreement and of the UKFTA implementing regulations, please see 
CBP Dec. 12-03.
    Although the interim regulatory amendments were promulgated without 
prior public notice and comment procedures and took effect on March 15, 
2012, CBP Dec. 12-03 provided for the submission of public comments 
that would be considered before the adoption of the interim regulations 
as a final rule. The prescribed public comment period closed on May 18, 

Discussion of Comments

    Two responses were received to the solicitation of comments on the 
interim rule set forth in CBP Dec. 12-03. The comments are discussed 

A. Certification

    A commenter cited four subjects of CBP's interim regulations which 
it found favorable, namely: (1) The flexibility for certifications to 
be issued by the producer, exporter, or importer who possesses the 
required origin information; (2) the consistent application of the 
rules of origin to UKFTA; (3) clear regulatory procedures regarding 
actions that CBP will take with respect to inquiries, audits, and 
enforcement actions; and (4) the exemption from the ad valorem 
merchandise processing fees for goods that qualify as originating under 
the UKFTA. In addition, the commenter praised the implementation 
instructions issued by CBP on March 12, 2012.
    The commenter, however, requested clarification concerning the 
period of validity for blanket certification issued for a twelve-month 
period for multiple shipments of identical goods from a manufacturer 
under 19 CFR 10.1004(a)(3)(vii) with respect to the four-year period of 
a properly executed certificate provided for in 19 CFR 10.1004(f)). For 
example, a U.S. importer receives a blanket certificate from a Korean 
supplier (producer) for a one-year period (1/1/2013 through 12/31/
2013). Based on the validity of the four-year period for the 
certificate (1/1/2013 through 12/31/2016) as permitted under 19 CFR 
10.1004(f), the commenter asks whether the certificate is valid for use 
to make a duty free claim after the expiration of the one-year period 
from the supplier (producer), that is, whether the one-year blanket for 
multiple shipments of identical goods could be extended for another 
three years.
CBP Response
    Section 10.1004 of the CBP regulations concerning certification 
implements, among other provisions, Article 6.15.5 of the UKFTA and 
requires that a certification be valid for four years after the date it 
was issued. CBP will not accept a certification that is more than four 
years old. The time period that a blanket certification may cover is 
limited to a one-year period. In the example above, the blanket 
certification issued on 1/1/2013 applies to the one-year period of time 
during which the identical goods were produced (1/1/2013-12/31/2013). 
The producer would need to have a new blanket certification for another 
year's production. Please note that the four-year certification period 
(through 12/31/2016) would continue to cover only the goods that were 
produced during the blanket one-year period from 1/1/2013 to 12/31/2013 
if these goods were imported into the United States three years after 
they were produced. The producer would need an amended blanket 
certification to cover further production of identical goods beyond the 
initial one-year period, such as 1/1/2014 to 12/31/2014.

B. Verification

    A commenter stated that the use of denial of entry under 19 CFR 
10.1027 could be a disproportionate measure and that any action against 
textile or apparel goods under the UKFTA should be limited to denial of 
preferential treatment. The commenter requested that CBP consider 
revising section 10.1027 of part 10 to either (1) remove references to 
``denial of entry'' to textile or apparel goods, or, (2) to further 
specify the conditions that would trigger a denial of entry requiring a 
CBP finding of either (a) repeated unlawful activity or (b) willful 
presentation of inaccurate origin information.
CBP Response
    CBP believes the language in section 10.1027 of the interim 
regulations accurately reflects the text of the UKFTA and the Act. 
Article 4.3.10 of the UKFTA specifies that if the importing party is 
unable to make the determination described in either Article 4.3.3 
(verification to determine that a claim of origin for a textile or 
apparel good is accurate) or Article 4.3.5 (verification to determine 
that a person is complying with applicable customs measures affecting 
trade in textile or apparel goods when the importing party has a 
reasonable suspicion that the person is engaging in unlawful activity 
relating to trade in textile and apparel goods) within 12 months after 
its request for a verification, or makes a negative determination, it 
may, consistent with its law, take appropriate action. Section 
207(d)(2) of the Act specifically defines ``appropriate action'' to 
include denial of entry into the United States for goods subject to a 
verification under section 207(a)(1), namely textile or apparel goods.
    With regard to country of origin determinations of textile or 
apparel goods in general, if the CBP port director is unable to 
determine the country of origin of a textile or apparel product, the 
importer must submit additional information as requested by the port 
director. Release of the product from CBP custody will be denied until

[[Page 32358]]

a determination of the country of origin is made based upon the 
information provided or the best information available. See 19 CFR 


    CBP is making two technical corrections to the interim regulatory 
text as a result of its further review. The first is to correct a 
cross-reference in section 10.1009(c)(2) to paragraph (c)(1). The 
second is to the regulatory text of section 10.1027 to improve 
readability and logical flow by changing the order of paragraphs (c) 
and (d) concerning verifications of U.S. imports of textile and apparel 
goods in Korea. This change will move the provision on action by U.S. 
officials in conducting a verification abroad to appear before the 
provision on denial of permission to conduct a verification. 
Accordingly, after further review of the comments and further 
consideration, CBP has determined that the interim regulations 
published as CBP Dec. 12-03 should be adopted as a final rule with two 
technical corrections to 19 CFR 10.1009 and 10.1027 as discussed above.

Executive Order 12866

    This document is not a regulation or a rule 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.

Regulatory Flexibility Act

    CBP Dec. 12-03 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 section 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 to this rulemaking. 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 collections of information contained in these regulations have 
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, which covers many 
of the free trade agreements requirements that CBP administers. The 
collections of information in these regulations are in Sec. Sec.  
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.
    The estimated average annual burden associated with the collection 
of information in this final rule is 0.2 hours per respondent or 
recordkeeper. Comments concerning the accuracy of this burden estimate 
and suggestions for reducing this burden should be directed to the 
Office of Management and Budget, Attention: Desk Officer for the 
Department of Homeland Security, 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. 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.

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 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 CBP Regulations

    Accordingly, the interim rule amending parts 10, 24, 162, 163, and 
178 of the CBP regulations (19 CFR parts 10, 24, 162, 163, and 178), 
which was published at 77 FR 15943 on March 19, 2012, is adopted as 
final with the following changes:


    1. The general authority citation for Part 10 and the specific 
authority citations for subpart R 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 10.1001 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).

Sec.  10.1009  [Amended]

2. Paragraph (c)(2) of section 10.1009 is amended by removing the 
words, ``paragraph (c)'' and adding in its place the words, ``paragraph 

Sec.  10.1027  [Amended]

3. Section 10.1027 is amended by redesignating paragraph (c) as 
paragraph (d) and paragraph (d) as paragraph (c), respectively.

Thomas S. Winkowski,
Deputy Commissioner of CBP, Performing Duties of the Commissioner of 
U.S. Customs and Border Protection.
    Approved: May 24, 2013.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 2013-12849 Filed 5-29-13; 8:45 am]