Toshiba-Kongsberg Sanctions; Contract or Binding Agreement Exception (19 CFR 12.142(b)(2))

HQ 222852 February 14, 1991 ENT-1-07-CO:R:C:E 222852 CATEGORY: Entry Evelyn M. Suarez, Esq. Akin, Gump, Strauss, Hauer & Feld 1333 New Hampshire Avenue, NW. Washington, D.C. 20036 RE: Toshiba-Kongsberg Sanctions; Contract or Binding Agreement Exception (19 CFR 12.142(b)(2)) Dear Ms. Suarez: In your letters of November 27, 1990, and January 10 and 18, 1991, you requested a binding ruling on the applicability of the contract exception, provided for in 19 CFR 12.141(a), to the Toshiba-Kongsberg Sanctions for certain injection molding machines manufactured by Toshiba Machine Company. Our decision follows. FACTS: In 1985, two injection molding machines manufactured by Toshiba Machine Company were purchased for a Canadian automotive parts plant and imported into Canada. With your letter you included copies of purchase orders for two Toshiba reciprocating screw injection molding machines, one with a capacity of 40.9 ounce shot and the other with a capacity of 125.9 ounce shot, and invoices, dated August and June of 1985, for the shipment of two Toshiba injection molding machines of the same model to the Canadian automotive parts plant. The Canadian automotive parts plant has now been closed and the owner of the plant wishes to transfer the Toshiba injection molding machines to its automotive parts plant in Tennessee. You request a ruling on the applicability of the Toshiba-Kongsberg Sanctions to the importation into the United States of the injection molding machines. ISSUE: Are the Toshiba-Kongsberg Sanctions applicable in this case? LAW AND ANALYSIS: Under section 2443 of the Omnibus Trade and Competitiveness Act of 1988 (Public Law 100-418; 102 Stat. 1365; note following 50 U.S.C. App. 2410a) ("the Act"), "The President shall impose, for a period of 3 years ... a prohibition on the importation into the United States of all products produced by Toshiba Machine Company ...." Under paragraph (c) of this provision, "The Presi- dent shall not apply sanctions under this section ... (2) to ... products or services provided under contracts or other binding agreements (as such terms are defined by the President in regulations) entered into before June 30, 1987 ...." In Executive Order 12661, dated December 27, 1988, the President ordered that importation into the United States of products produced by Toshiba Machine Company is prohibited for 3 years from the date of the Executive Order. The Secretary of the Treasury was directed to make determinations with respect to exceptions under section 2443(c)(2) (see above) of the Act. Interim regulations were issued under the authority of the Act and Executive Order by Treasury Decision 89-20 (published in the Federal Register on January 31, 1989 (54 FR 4780)). Final Regulations were issued by Treasury Decision 90-72 (published in the Federal Register on September 13, 1990 (55 FR 37704)). The Customs Regulations pertaining to the Toshiba-Kongsberg Sanctions are found in 19 CFR 12.140-12.143. Under section 12.141(a), the prohibition on the importation into the United States of products produced by Toshiba Machine Company does not apply to "[p]roducts provided under contracts or other binding agreements entered into before June 30, 1987." Under section 12.142(b)(2), the term "contracts or other binding agreements entered into before June 30, 1987" means: With respect to used products imported by or for the primary user, written obligations performed before June 30, 1987, whether or not they provide for delivery in the United States .... In this case, there were written obligations performed before June 30, 1987, assuming, as we do for purposes of this ruling, that the purchase orders and invoices were for the same Toshiba injection molding machines. The machines would be imported into the United States by the owner of the Canadian plant for use in its Tennessee plant. Therefore, the importation of the machines as described in this ruling and your letters is exempt from the Toshiba-Kongsberg Sanctions pursuant to 19 CFR 12.142(b)(2)). HOLDING: The Toshiba-Kongsberg Sanctions are not applicable in this case (19 CFR 12.142(b)(2)). Sincerely, Harvey B. Fox Director, Office of Regulations and Rulings