USMCA Verification of the Labor Value Content’s Wage Components
Section 810.500 Scope and Purpose of This Subpart
This provision details the authority of the Secretary to participate in verifications of compliance with the USMCA’s LVC requirements as well as the scope of the Secretary’s role in those verifications. The Act gives the Secretary of the Treasury, in conjunction with the Secretary, authority to verify whether a covered vehicle complied with the LVC requirements set forth in the USMCA. See 19 U.S.C. 4532(e)(1). The purpose of the regulations in this subpart is to define the Secretary’s role in conducting these verifications and the process by which the Secretary will conduct these verifications. Specifically, the Secretary, through the Administrator, will verify compliance with the high-wage components of the LVC requirements. Verifications of other components of the LVC requirements are outside of the Secretary’s purview and are described in the Uniform Regulations and regulations and guidance issued by CBP and/or the Department of the Treasury.
Section 810.505 Scope of Verification
Subsection 810.505(a) permits the Administrator, or the Administrator’s designee, to verify, through investigation, whether a producer complied with the high-wage components of any part of the LVC requirements. The regulation explains that the producer is responsible for all aspects of compliance with the high-wage components of the LVC requirements at its plants and facilities as well as the plants and facilities of the suppliers and contractors listed in its certification. For example, notwithstanding any agreement between the producer and a supplier or contractor, as discussed in § 810.600(d), it is ultimately the responsibility of the producer to ensure that records are properly maintained and provided to the Department upon request. For the wage component of the high-wage material and manufacturing expenditures provision of the LVC requirements, the Administrator may verify whether the average hourly base wage rate in any plant or facility relied on by the producer in its certification meets the US$16 per hour requirement. If the producer’s certification claims transportation or related costs for shipping as part of its high-wage material and manufacturing expenditures calculation, as detailed in § 810.405(a)(6), the Administrator may verify whether any transportation, logistics, or material handling provider relied on by the producer in its certification meets the US$16 per hour requirement. Verifications of other components of the material and manufacturing expenditures provision of the LVC requirements are conducted by CBP. The Administrator may also verify that the producer properly claimed a credit for high-wage technology expenditures, as explained in § 810.200. For verifications of the high-wage assembly expenditures provision of the LVC requirements, the Administrator may also verify whether an engine, transmission, or advanced battery assembly facility that a producer relied on in its certification has an average hourly base wage rate of at least US$16 per hour. Verifications of any other component of the high-wage assembly expenditures credit are conducted by CBP.
Subsection 810.505(b) provides the investigation methods the Administrator may use in the course of a verification. The Act grants the Secretary authority, which has been delegated to the Administrator, to examine, or cause to be examined, upon reasonable notice, any record (including any statement, declaration, document, or electronically generated or machine-readable data) described in the Administrator’s notice with reasonable specificity. See 19 U.S.C. 4532(e)(4)(A)(i). The Act states that the Secretary shall assist the Secretary of the Treasury to carry out these actions. 19 U.S.C. 4532(e)(4)(A). The Department interprets this provision to mean that the Secretary of the Treasury, through CBP, has the primary role of conducting verifications of the LVC requirements, and that the Secretary will assist CBP by using these methods to verify whether the production of covered vehicles meets the high-wage components of the LVC requirements.
The Administrator may examine these records in person as part of a verification visit, or may request the producer to provide them electronically or by mail. Article 5.9, paragraph 7 of the USMCA explains that for verifications, each USMCA Country must provide producers at least 30 days to respond to written requests for information and 30 days to respond to requests to open facilities for a verification visit. Accordingly, the Department interprets the term “reasonable notice” as used in the Act to mean 30 days’ notice. The Act grants the Secretary authority to request information from any officer, employee, or agent of a producer of automotive goods, as necessary, that may be relevant with respect to whether the production of covered vehicles meets the high-wage components of the LVC requirements. See 19 U.S.C. 4532(e)(4)(A)(ii). As the statute gives the Secretary broad authority to request information that may be relevant, the Department interprets the term “employee” in this context to include any worker at a plant or facility relied on in the producer’s certification, regardless of the worker’s employment relationship with the producer. This encompasses, for example, workers Start Printed Page 39794employed by a staffing agency. To help ensure receipt of accurate information, the information may be obtained under oath, at the discretion of the Administrator.
Subsection 810.505(c) describes the specific content of the records the Administrator is authorized to request and examine. As the Administrator’s role in verifications is to verify the high-wage components of the LVC requirements, the Administrator may request and examine records relating to wages, hours, job responsibilities, or any other information related to the producer’s certification that it meets the high-wage components of the LVC requirements. The specific types of records that the Administrator may request are those that producers are required to maintain under this rule’s recordkeeping requirements, see § 810.600, and will often include worker time records, payroll records, and information that the producer is required (under 19 U.S.C. 1508(b)(4)) to keep on record to support its certification calculations. The Administrator will review the provided records to verify that the high-wage components of the producer’s LVC calculations are correct.
Subsection 810.505(d) explains that the Administrator will conduct its verification consistent with the timelines in Article 5.9 of the USMCA. Article 5.9 details the requirements for verification of all the rules of origin, of which the LVC requirements make up just one. It provides timelines for requesting verification visits or information from producers, producers’ responses to those requests, completion of the verification, and issuance of a written determination. Most of the timelines apply to actions within the purview of CBP, e.g., issuance of a written determination. However, the Administrator will conduct verifications consistent with these timelines to the extent they are applicable to the Administrator’s verification. For example, paragraph 10 of Article 5.9 pertains to requests from producers for postponement of a verification visit. Consistent with paragraph 10, the Administrator (acting through, and subject to approval by, CBP) will allow a producer, on a single occasion, within 15 days of receipt of a notification requesting a verification visit, to request the postponement of the proposed verification visit for a period not exceeding 30 days from the proposed date of the visit.
Section 810.510 Notice to a Producer That a Verification of Compliance With Labor Value Content Requirements Has Been Initiated
This section provides that CBP will notify a producer that a verification of LVC compliance has been initiated, regardless of which component(s) of the LVC requirements are the subject of that verification. CBP makes determinations regarding grants or denials of preferential tariff treatment and thus is responsible for notifying producers if a verification of LVC compliance that may implicate such preferential tariff treatment has been initiated.
CBP is responsible for notifying a producer that a verification of LVC compliance has been initiated, both for verifications that CBP initiates, and for verifications the Administrator has initiated with CBP. The Administrator’s role in initiating verifications with CBP is limited to verifications concerning all aspects of the high-wage components of a producer’s LVC certification and supporting records and calculations. CBP may initiate and conduct verifications of the components of a producer’s LVC certification and may ask the Administrator to conduct a verification of the high-wage components. Regardless of how the verification is initiated, CBP will provide notice to the producer.
Section 810.515 Conduct of Verifications
This section explains how the Administrator will conduct verification visits, where appropriate. Article 5.9 of the USMCA authorizes an importing USMCA Country to use a variety of techniques to conduct verifications, including verification visits to the premises of the producer of the good in order to request documents and other information, and observe the production process and the related facilities. As the Administrator is authorized to conduct verifications, the Administrator may conduct verification visits. During these visits, the Administrator may request and inspect documents, interview workers or others on the premises, inspect the facility, and gather any other information as the Administrator deems necessary to the verification. As the Administrator can verify compliance only with a portion of the LVC requirements, the Administrator will coordinate with CBP and other federal agencies in the course of conducting any verifications, as appropriate. The Administrator also retains discretion to involve other federal agencies, as well as agencies within the Department such as the Bureau of International Labor Affairs, in its verifications, as appropriate.
Section 810.520 Confidentiality
This section provides that the Administrator will protect the confidentiality of any person who provides information to the Department in confidence in the course of a verification under this subpart to the full extent possible under existing law. This includes, for example, invoking the government informant’s privilege where appropriate. The intent of this section is to provide assurances of confidentiality, to the extent possible, to any person who provides information to the Department, in the hope that such assurances encourage those with information relevant to the Department’s investigations or verifications to provide information to, or speak openly with, the Department. Retaliation against any person who provides such information is prohibited under the Act’s whistleblower provisions, as implemented in § 810.800.
Section 810.525 Notice Provided to CBP Regarding the Administrator’s Findings
This section provides that upon completion of a verification, the Administrator will provide CBP with the verification findings and a written analysis explaining the basis for those findings. Article 5.9, paragraph 14, of the USMCA requires the importing USMCA Country to provide the producer subject to a verification with a written determination of whether the goods at issue qualify for preferential tariff treatment, including the findings of facts and legal basis for that determination. As discussed supra, CBP makes all determinations regarding grants or denials of preferential tariff treatment. Accordingly, CBP will provide this written determination to the producer at the conclusion of a verification. If, however, the Administrator participated in a verification because it involved the verification of one or more of the high-wage components of the LVC requirements, the Administrator will provide CBP with the verification findings and an analysis explaining the basis of those findings so that CBP can include relevant information in the written determination ultimately provided to the producer.Start Printed Page 39795
Section 810.530 Verification of Labor Value Content Compliance for Producers Subject to Alternative Staging Regime
Verification procedures outlined in this subpart apply to producers as soon as the USMCA enters into force, whether or not the producers are subject to the alternative staging regime. The Act provides that the Administrator may conduct verifications of compliance with the LVC requirements, regardless of whether the producer is subject to the alternative stage regime. See 19 U.S.C. 4532(d)-(e). The Administrator’s role in administering the LVC requirements does not change if a producer is subject to the alternative staging regime. Accordingly, verifications conducted by the Administrator are conducted in the same manner when a producer is subject to the alternative staging regime.
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