Licensing for Certain Sugar-Containing Products Under Tariff-Rate Quota

AGENCY:

Office of the Secretary, USDA.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule provides for licensing of imports of sugar-containing products which enter under the tariff-rate quota (TRQ) provided for in Additional U.S. Note 8 to chapter 17 of the Harmonized Tariff Schedule of the United States (HTS).

DATES:

Comments should be received on or before April 17, 2000 to be assured of consideration.

ADDRESSES:

Comments should be mailed or delivered to Diana Wanamaker, Import Policies and Programs Division, Foreign Agricultural Service, 1400 Independence Avenue SW, STOP 1021, U.S. Department of Agriculture, Washington, DC 20250-1021. Comments received may be inspected between 10 a.m. and 4 p.m. at room 5541-S, 1400 Independence Avenue SW, Washington, DC 20250-1021.

FOR FURTHER INFORMATION CONTACT:

Diana Wanamaker at the address above, or telephone at 202-720-2916, or e-mail at Wanamaker@fas.usda.gov.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This proposed rule has been classified as “not significant.” In conformity with this designation, except for requirements under the Paperwork Reduction Act of 1995, the rule has not been reviewed by the Office of Management (OMB). The provisions of this proposed rule would not: (1) Result in an annual effect on the economy of $100 million or more; (2) adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; or (3) regulate issues of human health, human safety, or the environment.

Furthermore, the proposed rule would not: (1) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (2) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients; or (3) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in Executive Order 12866.

Regulatory Flexibility Act

The Regulatory Flexibility Act ensures that regulatory and information requirements are tailored to the size and nature of small businesses, small organizations, and small governmental jurisdictions. This proposed rule will not have a significant economic impact on a substantial number of small entities. Participation in the programs is voluntary. Direct and indirect costs are likely to be very small as a percentage of revenue and in terms of absolute costs. The minimal regulatory requirements impact large and small businesses equally, and the licensing program should improve small businesses' cash flow and liquidity.

Paperwork Reduction Act

The paperwork and record keeping requirements must be approved by the Office of Management and Budget (OMB) pursuant to the Paperwork Reduction Act of 1995. A Paperwork Reduction Act submission has been prepared for the proposed rule and copies of the information collection may be obtained from Kimberly Chisley, the Agency Information Collection Coordinator, at (202) 720-2568 or e-mail at Chisley@fas.usda.gov.

The information collection is necessary to enable FAS to implement and administer the licensing system that will be established by the proposed rule. The proposed rule will require eligible applicants for historical or nonhistorical licenses to submit a letter of application to the Department for each TRQ year that a license is being requested. All applicants shall provide the standard business information set forth in § 6.53 (e.g., address, fax number). For applicants for historical licenses, § 6.53(c)(8) also requires that: (1) Importers of sugar-containing products entered in retail size containers, submit either U.S. Customs Service Forms 7501 to document entries during the representative period, or submit a summary listing of such import entries; and (2) buyers of imports in bulk form which were packaged or processed in the United States by or for the account of an applicant, submit supporting documentation (e.g., purchase orders) that provides a record of the quantities of bulk imports that were entered during the representative period for processing or packaging in the United States. In addition, all applicants for historical licenses shall submit a notarized certification statement that the information submitted is true and accurate.

The estimated public reporting burden for the information collection for the three years period for which OMB approval is being requested is indicated in following table:

The estimated burden hours in the first TRQ year is higher than in the second and third TRQ years because the supporting documentation required to establish eligibility for a historical license will be compiled and submitted in that TRQ year. Once eligibility for a historical license is established, applicants will be required only to submit the standard business information and certification statement.

During the first TRQ year, it is estimated that: (1) Five applicants will apply for a historical license to import from Canada, and 10 applicant will apply for a historical license to import from other countries, and the information collection will take an estimated 6 hours per applicant (total 90 hours); (2) five applicants will apply for a nonhistorical license and the information collection will take an estimated 15 minutes per applicant (total 1.25 hours). During the second and third TRQ years, it is estimated that 20 applicants will apply for either renewal of a historical licenses or issuance of a nonhistorical license. The information collection will take an estimated 15 minutes per applicant (total 5 hours).

The total average hourly burden for the three TRQ years will be 33.75 hours. The total estimated average cost associated with the information collection, based on costs of preparing similar information collections, for the three TRQ years will be $1,012.50.

The Department requests comments on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information; (c) ways to enhance the quality, utility and clarity of the information to be collected; and (d) ways to minimize the burden of collection of information to those who are to respond, including through use of appropriate automated, electronic, mechanical or other technological collection techniques or other form of information technology. Comments on the information collection should be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10202, New Executive Office Building, Washington, DC 20503. Attention: Desk Officer for USDA/FAS. Comments on the issues covered by the Paperwork Reduction Act should be submitted no later than 60 days from the date of publication to be assured of consideration.

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988. The provisions of this proposed rule would not have preemptive effect with respect to any state or local laws, regulations, or policies which conflict with such provision or which otherwise impede their full implementation. The proposed rule would not have retroactive effect. Administrative proceedings are not required before parties may seek judicial review.

National Environmental Policy Act

The Secretary of Agriculture has determined that this action will not have a significant affect on the quality of the human environment. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is necessary for this proposed rule.

Executive Orders 12372 and 12875, and the Unfunded Mandates Reform Act (Pub. L. 104-4)

These Executive Orders and Public Law 104-4 require intergovernmental review of programs. This proposed rule does not impose an unfunded mandate or any other requirement on state, local or tribal governments. Further, the program is national in scope and involves a power delegated to the United States by the Constitution to regulate international trade. Accordingly, these programs are not subject to the provisions of Executive Order 12372, Executive Order 12875, or the Unfunded Mandates Reform Act.

Executive Order 12612

Executive Order 12612 requires implications of “federalism” be considered in the development of regulations. The Secretary of Agriculture certifies that this proposed rule has been reviewed in light of Executive Order 12612 and that it is consistent with the principles, criteria and requirements stated in sections 2 through 5 of this Executive Order. The Secretary of Agriculture further certifies that this proposed rule would impose no additional cost or burden on the states, nor affect the state's abilities to discharge traditional State governmental functions.

Executive Order 12606

Executive Order 12606 requires that government action include consideration of maintaining stability and strengthening the family. The Secretary of Agriculture has determined, under the principles and criteria established in Executive Order 12606, that this proposed rule will have no effect on the family.

Executive Order 12630

This Order requires careful evaluation of governmental actions that interfere with constitutionally protected property rights. This proposed rule would not interfere with any property rights and, therefore, does not need to be evaluated on the basis of the criteria outlined in Executive Order 12630.

Background

Previous Quotas

Presidential Proclamation 5294 of June 28, 1985 imposed absolute quotas on imports of certain sugar-containing products pursuant to the provisions of section 22 of the Agricultural Adjustment Act of 1933, as amended (7 U.S.C. 624). Action was taken to restrict imports which were entering the United States in circumvention of the absolute quota on imports of raw sugar and were entering under such conditions and in such quantities as to cause or threaten to cause material interference with the price support program for sugar beets and sugar cane. Presidential Proclamation 5340 of May 17, 1985, modified these section 22 quotas to limit their scope to imports containing over 10 percent by dry weight of sugar, and to exclude “articles not principally of crystalline structure or not in dry amorphous form that are prepared for marketing to the retail consumers in the identical form and package in which imported.”

Uruguay Round Commitment on TRQs

On April 15, 1994, the President entered into trade agreements resulting from the Uruguay Round of multilateral trade negotiations (“Uruguay Round Agreements”). As part of those agreements, countries agreed that all systems of absolute quotas for all agricultural products would be eliminated and converted to TRQs, including imports of certain sugar-containing products containing over 10 percent dry weight of sugar. In section 101(a) of the Uruguay Round Agreements Act (the URAA) (Pub. L. 103-65; 108 Stat. 4809), Congress approved the Uruguay Round Agreements, including the General Agreement on Tariffs and Trade 1994. Presidential Proclamation 6763 of December 23, 1994, implemented the Uruguay Round Agreements (URAA). The Proclamation terminated section 22 quotas; proclaimed TRQs for such articles; and modified the HTS accordingly. Under the HTS, Additional U.S. Note 3 to chapter 17 defines the term sugar-containing products containing over 10 percent by dry weight of sugar. Additional U.S. Note 8 to chapter 17 provides that the aggregate quantity of articles described in Additional U.S. Note 3 which are entered under 10 specific HTS numbers are subject to a TRQ which limits imports entered from October 1 through September 30 to 64,709 metric tons. Imports from Mexico are not permitted entry under this TRQ.

Bilateral Agreement

Subsequent to the Uruguay Round, the United States and Canada entered into a bilateral agreement (September 4, 1997). As a result of that agreement, the United States Trade Representative announced on September 16, 1998, (effective October 1, 1998) an allocation of 59,250 metric tons to Canada for certain sugar-containing products entered under the TRQ set forth in U.S. Additional Note 8 of chapter 17 of the HTS. This allocation was based on Canada's historical exports to the United States. In addition, an allocation to other countries (excluding Canada) of 5,459 metric tons became effective on October 1, 1998.

The United States and Canada also signed a Record of Understanding Regarding Areas of Agricultural Trade (December 4, 1998) which requires export permits issued by the Canadian Government to accompany imports of articles containing more than 10 percent by dry weight of sugar as a condition of entry under this TRQ, effective February 4, 2000. On June 11, 1999, the Canadian Government issued the Notice to Exporters No. 117 pursuant to the Export and Import Permits Act which governs the issuance of export permits for each shipment of sugar-containing products covered by the U.S. TRQ. For each of three years beginning in 1999/2000, six percent of each licensee's bulk shipment allocation will be converted to a retail packaged allocation or moved to a retail packaged allocation pool. This proposed rule is intended to establish a U.S. import licensing system to ensure that the opportunity to fill this TRQ continues to be based on customer requirements.

Implementation of TRQs

Section 404(a) of the URAA, 19 U.S.C. 3601(a), directs the President to take such action as may be necessary in implementing Uruguay Round TRQs (set forth in Schedule XX—United States of America, annexed to the Marrakesh Protocol to the General Agreement on Tariffs and Trade 1994) to ensure that imports of agricultural products do not disrupt the orderly marketing of commodities in the United States.

Presidential Proclamation 6763 delegated authority under the statutes cited in the proclamation, including section 404(a), to the Secretary of Agriculture, the Secretary of the Treasury, and the United States Trade Representative, as necessary to perform functions assigned to them to implement the proclamation.

Presidential Proclamation 7235 of October 7, 1999, delegated authority under section 404(a) to administer the TRQs relating to agricultural products to the United States Trade Representative and delegated authority to the Secretary of Agriculture to issue licenses governing the importation of such products under the applicable TRQs. The Secretary of Agriculture exercises such licensing authority in consultation with the United States Trade Representative.

Proposed Rule

This proposed rule specifies which sugar-containing products may be entered only by or for the account of a person to whom a license has been issued. Licenses issued pursuant to the provisions of this subpart will permit a license holder to import quantities of the subject articles into the United States at the applicable TRQ rate of duty. Imports may enter without an import license (with certain exceptions) at the applicable high-tier rate of duty.

License Eligibility—Eligibility for either a historical or nonhistorical license requires that a person have a business office in the United States, be doing business in the United States, and have an agent for service of process. Eligibility for a historical license also requires that an applicant, during the representative base period, must have imported sugar-containing products under the TRQ and have been either: (1) An importer of sugar-containing products in retail size packages; or (2) a buyer of sugar-containing products entered in bulk form for processing or packaging in the United States by, or for, the account of such person.

License Applications—The annual period begins on May 1 of each TRQ year. Applicants will be requested to submit applications by August 30 in order for licenses to be issued by October 1. An application for a nonhistorical license must provide the standard business information required in § 6.53(b). An application for a historical license must provide the standard business information required in § 6.53(c), and the supporting documentation and certification statement required in § 6.53(c)(8) with respect to transactions during the representative base period. In subsequent TRQ years, historical licenses may be renewed for the same quantity from the same country without re-submission of supporting documentation. An applicant issued a historical license is not eligible for a nonhistorical license.

License Issuance—Of the total TRQ quantity of 64,709 metric tons, 59,250 metric tons will be issued for licenses to import from Canada and 5,459 metric tons will be issued to import from other countries. All licenses will specify a quantity and the country of origin. Historical license quantities will be based on an applicant's supporting documentation submitted under § 6.53(c)(8). Nonhistorical license quantities will be based on the TRQ quantities not allocated to historical licenses and the number of applicants for nonhistorical licenses. Once licenses are issued, licensees will be responsible for maintaining records on license usage.

The Secretary of Agriculture has determined that this subpart will, to the fullest extent practicable, result in fair and equitable allocation of the right to import articles subject to such TRQ. The subpart will also maximize utilization of the TRQ for such articles, taking due account of any special factors which may have affected or may be affecting the trade in the articles concerned.

The Department invites comments on all aspects of the proposed rule including the: eligibility and performance requirements for historical licenses; representative historical period; percentage of the total TRQ that should be set aside for new entrants to establish themselves in the sugar-containing products business; minimum license sizes for nonhistorical licenses for imports in bulk and retail size packages; costs and unintended market consequences of the licensing requirement to importers, buyers and consumers; and less restrictive alternatives to licensing that would address concerns that Canada's export permit system does not alter trade flows (e.g., continuing not to require the submission to the U.S. Customs Service of export permits from the Government of Canada).

List of Subjects in 7 CFR Part 6

• Agricultural commodities
• Agricultural trade
• Exports
• Imports
• Sugar

Accordingly, the regulations at 7 CFR part 6 are proposed to be amended by adding a new subpart, Licensing for Certain Sugar-Containing Products Under Tariff-Rate Quota, to read as follows:

Subpart —Licensing for Certain Sugar-Containing Products Under Tariff-Rate Quota

Authority: Proc. 7235 of October 7, 1999, 64 FR 55609; Additional U.S. Note 8 to chapter 17 of the Harmonized Tariff Schedule of the United States and General Note 15 of the Harmonized Tariff Schedule of the United States (19 U.S.C. 1202), Pub. L. 97-258, 96 Stat. 1051, as amended (31 U.S.C. 9701); Pub. L. 103-465, secs. 103, 104, 108 Stat. 4819 (19 U.S.C. 3513, 3601).