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Federal Register / Vol. 86, No. 126 / Tuesday, July 6, 2021 / Proposed Rules
DEPARTMENT OF HOMELAND
SECURITY
U.S. Customs and Border Protection DEPARTMENT OF THE TREASURY
19 CFR Parts 102 and 177
USCBP20210025
RIN 1515AE63

Non-Preferential Origin Determinations for Merchandise Imported From Canada or Mexico for Implementation of the Agreement Between the United States of America, the United Mexican States, and Canada USMCA
U.S. Customs and Border Protection, Department of Homeland Security; Department of the Treasury.
ACTION: Notice of proposed rulemaking;
request for comments.
AGENCY:

This document proposes to amend the U.S. Customs and Border Protection CBP regulations regarding non-preferential origin determinations for merchandise imported from Canada or Mexico. Specifically, this document proposes that CBP will apply certain tariff-based rules of origin in the CBP
regulations for all non-preferential determinations made by CBP, specifically, to determine when a good imported from Canada or Mexico has been substantially transformed resulting in an article with a new name, character, or use. For consistency, this document also proposes to modify the CBP regulations for certain country of origin determinations for government procurement. Collectively, the proposed amendments in this notice of proposed rulemaking NPRM are intended to reduce administrative burdens and inconsistency for non-preferential origin determinations for merchandise imported from Canada or Mexico for purposes of the implementation of the Agreement Between the United States of America, the United Mexican States, and Canada USMCA. Elsewhere in this issue of the Federal Register, CBP is publishing an interim final rule to amend various regulations to implement the USMCA for preferential tariff treatment claims. The interim final rule amends the CBP regulations, inter alia, to apply certain tariff-based rules of origin for determining the country of origin for the marking of goods imported from Canada or Mexico.
DATES: Comments must be received by August 5, 2021.
ADDRESSES: You may submit comments, identified by docket number USCBP

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SUMMARY:

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202100X25 by one of the following methods:
Federal eRulemaking Portal at http www.regulations.gov. Follow the instructions for submitting comments.
Mail: Due to COVID19-related restrictions, CBP has temporarily suspended its ability to receive public comments by mail.
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. Due to the relevant COVID19-related restrictions, CBP has temporarily suspended on-site public inspection of the public comments.
FOR FURTHER INFORMATION CONTACT:

Operational Aspects: Queena Fan, Director, USMCA Center, Office of Trade, U.S. Customs and Border Protection, 202 7388946 or usmca@
cbp.dhs.gov.
Legal Aspects: Craig T. Clark, Director, Commercial and Trade Facilitation Division, Regulations and Rulings, Office of Trade, U.S. Customs and Border Protection, 202 3250276
or craig.t.clark@cbp.dhs.gov.
SUPPLEMENTARY INFORMATION:
I. Public Participation Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on all aspects of this notice of proposed rulemaking NPRM. U.S.
Customs and Border Protection CBP
also invites comments that relate to the economic, environmental, or federalism effects that might result from this proposed rule. Comments that will provide the most assistance to CBP will reference a specific portion of the NPRM, explain the reason for any recommended change, and include data, information or authority that support such recommended change.
II. Background The country of origin of merchandise imported into the customs territory of the United States the fifty states, the District of Columbia, and Puerto Rico is important for several reasons. The
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country of origin of merchandise determines the rate of duty, admissibility, quota, eligibility for procurement by government agencies, and marking requirements. There are various rules of origin for goods imported into the customs territory of the United States, generally referred to as preferential and non-preferential rules of origin. Preferential rules are those that apply to merchandise to determine eligibility for special treatment, including reduced or zero tariff rates, under various trade agreements or duty preference legislation, e.g., Generalized System of Preferences. Non-preferential rules are those that generally apply for all other purposes.1 CBP uses the substantial transformation standard to determine the country of origin of goods for non-preferential purposes. For a substantial transformation to occur, a new and different article must emerge, having a distinctive name, character or use. Anheuser-Busch Brewing Assn v.
United States, 207 U.S. 556, 562 1908
quoting Hartranft v. Wiegmann, 121
U.S. 609, 615 1887.
CBP applies two different methods for determining if merchandise has been substantially transformed. One method involves case-by-case adjudication, relying primarily on tests articulated in judicial precedent and past administrative rulings. The other method consists of codified rules in part 102 of title 19 of the Code of Federal Regulations 19 CFR part 102 referred to as the part 102 rules, which are primarily expressed through specified differences in the Harmonized Tariff Schedule of the United States HTSUS
classification of the good and its materials. This method is often referred to as the change in tariff classification 1 The term non-preferential purposes generally refers to purposes set forth in laws, regulations, and administrative determinations of general application applied to determine the country of origin of goods not related to the granting of tariff preferences pursuant to a trade agreement or a trade preference program such as the Generalized System of Preferences. Non-preferential purposes include antidumping and countervailing duties; safeguard measures; origin marking requirements; and any discriminatory quantitative restrictions or tariff quotas. They also include rules of origin used for trade statistics and for determining eligibility for government procurement. See, e.g., Art. I, Uruguay Round Agreement on Rules of Origin. They do not include the rules of origin used to determine eligibility for preferential tariff treatment under trade agreements unless otherwise explicitly specified in those agreements. Notwithstanding the above, under Title VII of the Tariff Act of 1930, as amended, merchandise within the scope of the Department of Commerces antidumping and/or countervailing duty proceedings may be associated with a country of origin for purposes of the scope of antidumping/countervailing duties that is different from the country of origin determined by CBP for other purposes.

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