CSMS Message: 94-001311

TO : ALL ABI BROKERS.

FROM : MARCUS ZZ-SIRCUS

SUBJECT : TRA-VEHICLES-NAFTA/APTA/9801

DATE : 12/21/94

5349071
DECEMBER 15, 1994

CATEGORY: FTZ CO:TO:TF MS

TO : REGIONAL DIRECTORS FOR COMMERCIAL OPERATIONS, DISTRICT
AND PORT DIRECTORS

FROM : DIRECTOR, OFFICE OF TRADE OPERATIONS

SUBJECT : CONSUMPTION ENTRIES FOR AUTOMOTIVE VEHICLES EXPORTED
FROM CANADA AS U.S. GOODS RETURNED, OR ENTERED UNDER
THE NORTH AMERICAN FREE TRADE AGREEMENT OR AUTOMOTIVE
PRODUCTS TRADE ACT

PASS TO : IMPORT SPECIALISTS, NATIONAL IMPORT SPECIALISTS, ENTRY
OFFICERS, INSPECTORS, OTHER INTERESTED CUSTOMS
PERSONNEL, BROKERS AND IMPORTERS

PURPOSE:

THIS NOTICE RESTATES THE ENTRY REQUIREMENT FOR GOODS
PRODUCED WITHIN A FOREIGN TRADE ZONE (FTZ), EXPORTED
THEREFROM AND SUBSEQUENTLY IMPORTED AND ENTERED INTO THE
CUSTOMS TERRITORY OF THE UNITED STATES.

BACKGROUND:

NORTHERN BORDER CUSTOMS PORTS HAVE RECENTLY NOTED THAT
NUMEROUS INSTANCES OF VEHICLES MANUFACTURED IN U.S. FOREIGN
TRADE ZONES (FTZ'S), EXPORTED TO THE CANADIAN MARKET, ARE
BEING SUBSEQUENTLY IMPROPERLY ENTERED INTO THE UNITED STATES
AS U.S. GOODS RETURNED (UNDER CHAPTER 98 OF THE HARMONIZED
TARIFF SCHEDULE OF THE UNITED STATES, ANNOTATED), OR AS
NAFTA APTA ORIGINATING GOODS ELIGIBLE FOR DUTY FREE
TREATMENT.

THE FOREIGN TRADE ZONE ACT, TITLE 19, PART 81C, ESTABLISHED
UNDER THE SIXTH PROVISO, STATES THE FOLLOWING:

"PROVIDED FURTHER, THAT ARTICLES PRODUCED OR
MANUFACTURED IN A ZONE AND EXPORTED THEREFROM SHALL ON
SUBSEQUENT IMPORTATION INTO THE CUSTOMS TERRITORY OF
THE UNITED STATES BE SUBJECT TO THE IMPORT LAWS
APPLICABLE TO LIKE ARTICLES MANUFACTURED IN A FOREIGN
COUNTRY, EXCEPT THAT ARTICLES PRODUCED OR MANUFACTURED
IN A ZONE EXCLUSIVELY WITH THE USE OF DOMESTIC
MERCHANDISE, THE IDENTITY OF WHICH HAS BEEN MAINTAINED
IN ACCORDANCE WITH THE SECOND PROVISO OF THIS SECTION
MAY, ON SUCH IMPORTATION, BE ENTERED AS AMERICAN GOODS
RETURNED."
- 2 -

TITLE 19, CODE OF FEDERAL REGULATIONS, PART 146, STATES IN
SECTION 146.67(E) THE FOLLOWING:

"(E) MERCHANDISE PRODUCED OR MANUFACTURED IN A ZONE AND
RETURNED TO CUSTOMS TERRITORY AFTER EXPORTATION.
MERCHANDISE PRODUCED OR MANUFACTURED IN A ZONE AND
EXPORTED WITHOUT HAVING BEEN TRANSFERRED TO CUSTOMS
TERRITORY OTHER THAN FOR EXPORTATION OR FOR
TRANSPORTATION AND EXPORTATION WILL BE SUBJECT, ON ITS
RETURN TO CUSTOMS TERRITORY, TO THE DUTIES AND TAXES
APPLICABLE TO LIKE ARTICLES OF WHOLLY FOREIGN ORIGIN,
UNLESS IT IS CONCLUSIVELY ESTABLISHED THAT IT WAS
PRODUCED OR MANUFACTURED EXCLUSIVELY WITH THE USE OF
DOMESTIC MERCHANDISE. THE IDENTITY OF THE DOMESTIC
MERCHANDISE MUST HAVE BEEN MAINTAINED IN ACCORDANCE
WITH THE PROVISIONS OF THIS PART, IN WHICH CASE THAT
MERCHANDISE WILL BE SUBJECT TO THE PROVISIONS OF
CHAPTER 98, SUBCHAPTER I, HARMONIZED TARIFF SCHEDULE OF
THE UNITED STATES (19 U.S.C. 1202)."

PUBLIC LAW 103-182, NORTH AMERICAN FREE TRADE AGREEMENT
IMPLEMENTATION ACT, TITLE II, SECTION 202(A)(2)(A) FOREIGN-TRADE
ZONES, STATES IN PART THAT THE RULE ALLOWING NON-ORIGINATING
MATERIAL(S) USED IN THE PRODUCTION OF A GOOD MEETING THE RULES OF
ORIGIN UNDER SECTION 202(A)(1)(B),

"SHALL NOT APPLY TO A GOOD PRODUCED IN A FOREIGN-TRADE
ZONE OR SUBZONE (ESTABLISHED PURSUANT TO THE ACT OF
JUNE 18, 1934, COMMONLY KNOW AS THE FOREIGN TRADE ZONES
ACT) THAT IS ENTERED FOR CONSUMPTION IN THE CUSTOMS
TERRITORY OF THE UNITED STATES."

NORMALLY, WHERE VEHICLES ARE MANUFACTURED IN AN FTZ AND SHIPPED
IN BOND TO CANADA FOR CANADIAN CONSUMPTION, SOME OR MOST OF THE
MATERIALS USED IN THESE VEHICLES ARE OF FOREIGN ORIGIN.

ACTION:

A. VEHICLES PRODUCED IN FOREIGN TRADE ZONES WITH THE USE
OF FOREIGN MATERIAL AND EXPORTED DIRECTLY FROM THE ZONE
TO ANOTHER COUNTRY ARE NOT ELIGIBLE FOR DUTY FREE
TREATMENT UPON ENTRY INTO THE COMMERCE OF THE UNITED
STATES.

B. VEHICLES SPECIFIED UNDER "A." ABOVE WILL BE CONSIDERED
FOREIGN ARTICLES AND WILL BE ACCORDED THE APPROPRIATE
COLUMN 1 RATES OF DUTY FOR ENTRY PURPOSES IN ADDITION
TO THE APPLICABLE MERCHANDISE PROCESSING FEES.

- 3 -

C. ENTRIES OF VEHICLES THAT WERE INCORRECTLY ENTERED FOR
CONSUMPTION AS U.S. GOODS RETURNED OR AS NAFTA APTA
ELIGIBLE WILL BE RATE ADVANCED AND SUBJECT TO THE
MERCHANDISE PROCESSING FEE.

RESPONSIBILITIES:

A. IMPORT SPECIALISTS SHALL ENSURE THAT ARTICLES PRODUCED
IN FOREIGN TRADE ZONES AND SUBZONES WITH THE USE OF
FOREIGN MATERIALS, AND IMMEDIATELY EXPORTED ARE ENTERED
AS FOREIGN GOODS AND ARE NOT AFFORDED U.S. GOODS
RETURNED, NAFTA APTA TREATMENT.

B. REGIONAL COMMISSIONERS, DISTRICT, AREA AND PORT
DIRECTORS WILL ENSURE THAT THE PROCEDURES IN THIS
NOTICE ARE FOLLOWED. IT IS THE AREA DISTRICT
DIRECTORS' RESPONSIBILITY TO DISTRIBUTE THIS NOTICE TO
PEOPLE DOING BUSINESS WITH CUSTOMS.

PHILIP METZGER