Instruments of International Traffic; 19 U.S.C. § 1322

HQ 115711 July 15, 2002 BOR-4-04-RR:IT:EC 115711 GEV CATEGORY: Carriers J. Perry Turner Bridge Terminal Transport Canada Inc. 1 Maritime-Ontario Blvd. Brampton, Ontario, Canada L6S 6G4 RE: Instruments of International Traffic; 19 U.S.C. § 1322 Dear Mr. Turner: This is in response to your fax of June 20, 2002, requesting a ruling regarding the regulations administered by the U.S. Customs Service pertaining to truck cabotage. Our ruling is set forth below. FACTS: Your company is a Canadian intermodal trucking company operating between Canada and various seaports in New Jersey and Philadelphia. Your normal activity is to transport full shipping line containers for export from Canada to the U.S. seaports and to return to Canada with import containers from overseas which have been discharged in the U.S. ports. Recently, your company was offered the opportunity to transport U.S. export containers which were to be picked up in Rochester, NY and delivered to a U.S. seaport in New Jersey for export to South America. You were then to pick up an import container which was destined for Toronto, Canada. ISSUES: Whether the use of a Canadian-based truck to transport containers from Rochester to New Jersey as described above is local traffic in accordance with 19 CFR § 123.14(c)(1). - 2 - 2. Whether the use of a Canadian-based truck to transport a container from its U.S. point of origin to a U.S. port where it is to be loaded on a ship for export is international traffic within the meaning of 19 CFR § 123.14(a). LAW AND ANALYSIS: Section 141.4, Customs Regulations (19 CFR § 141.4), provides that entry as required by title 19, United States Code, § 1484(a) (19 U.S.C. § 1484(a)), shall be made of every importation whether free or dutiable and regardless of value, except for intangibles and articles specifically exempted by law or regulations from the requirements for entry. Since the Canadian-based trucks in question are not within the definition of intangibles as shown in General Note 4, Harmonized Tariff Schedule of the United States (HTSUS; 19 U.S.C. § 1202, as amended), they are subject to entry and payment of any applicable duty if not specifically exempted by law and regulations. Instruments of international traffic may be entered without entry and payment of duty under the provisions of 19 U.S.C. § 1322. To qualify as instruments of international traffic, trucks having their principal base of operations in a foreign country must be arriving in the United States with merchandise destined for points in the United States, or arriving empty or loaded for the purpose of taking merchandise out of the United States (see 19 CFR § 123.14(a)). Furthermore, certain foreign-based trucks engaged, in whole or in part, in the domestic carriage of merchandise that either originates from a location outside the United States or will be subsequently moved to a destination outside the United States, or such vehicles moving without a payload between two points in the same country, shall be considered as engaged in international traffic. (See Customs Bulletin of October 1, 1997, Vol. 31, No. 40, at pp. 7-13.) Section 123.14(c), Customs Regulations, states that with one exception, a foreign-based truck, admitted as an instrument of international traffic under § 123.14, shall not engage in local traffic in the United States. The exception, set out in § 123.14(c)(1), states that such a vehicle “may carry merchandise…between points in the United States if such carriage is incidental to the immediately prior or subsequent engagement of that vehicle in international traffic.” This regulatory provision further provides that, “[a]ny such carriage by the vehicle in the general direction of an export move or as part of the return of the vehicle to its base country shall be considered incidental to its engagement in international traffic.” - 3 - Section 10.41(d), Customs Regulations provides, in part, that any foreign-owned vehicle brought into the United States for the purpose of carrying merchandise between points in the United States for hire or as an element of a commercial transaction, except as provided for in § 123.14(c), is subject to treatment as an importation of merchandise from a foreign country and a regular Customs entry therefore shall be made. Section 123.14(d), Customs Regulations provides that any vehicle used in violation of § 123.14, is subject to forfeiture under § 592, Tariff Act of 1930, as amended (19 U.S.C. § 1592). With respect to the first issue presented for our consideration, our analysis is as follows. At the outset we reiterate that whether the movement of foreign-based trucks is considered to be international or domestic for purposes of the administration of § 123.14 is dependent upon the origin and destination of the merchandise carried. Such vehicles engaged, in whole or in part, in the carriage of merchandise originating in one country and terminating in another country shall be considered to be engaged in international traffic. In the first itinerary described herein, your truck(s) would be engaged in the carriage of merchandise originating in one country (USA - Rochester) and terminating at another location in the same country (a seaport in New Jersey) where your truck(s) would subsequently pick up a different container which was imported and is destined for Toronto. The “local traffic” involved (i.e., Rochester – New Jersey) is immediately prior to the engagement of the vehicle in international traffic (New Jersey – Toronto) and would therefore be in accordance with 19 CFR § 123.14(c)(1). We note, however, that pursuant to that regulatory provision, a Canadian driver will not be permitted to operate a vehicle thereunder unless the driver is in compliance with the applicable regulations of the Immigration and Naturalization Service. We suggest you contact that agency regarding this matter. In regard to the second issue presented for our consideration, our analysis is as follows. The transportation by a foreign-based truck of a container from its U.S. point of origin to a U.S. seaport as you describe would not be considered international traffic within the meaning of § 123.14(a). While this scenario does involve the carriage of merchandise originating in one country (USA) and terminating in another (via vessel transport), it is the position of the Customs Service that the above- - 4 - discussed interpretation of the term “international traffic” is limited to truck traffic and does not contemplate intermodal (e.g., truck/rail or truck/vessel) movements of merchandise. (Customs ruling letter 114398, dated July 31, 1998) Consequently, absent the water-borne movement of the container in this scenario, the U.S. – U.S. transportation in question constitutes local traffic in violation of § 123.14(c)(1). HOLDINGS: The use of a Canadian-based truck to transport containers from Rochester to New Jersey as described above is local traffic in accordance with 19 CFR § 123.14(c)(1). 2. The use of a Canadian-based truck to transport a container from its U.S. point of origin to a U.S. port where it is to be loaded on a ship for export is not international traffic within the meaning of 19 CFR § 123.14(a) but rather constitutes local traffic in violation of 19 CFR § 123.14(c)(1). Sincerely, Jeremy Baskin Acting Chief Entry Procedures and Carriers Branch