Interpretation ID: nht90-1.73

TYPE: INTERPRETATION-NHTSA

DATE: MARCH 16, 1990

FROM: D. H. BURNEY -- AMBASSADOR, CANADIAN EMBASSY

TO: JERRY R. CURRY -- ADMINISTRATOR, NHTSA

TITLE: NONE

ATTACHMT: ATTACHED TO LETTER DATED 4-24-90 TO D. H. BURNEY FROM JERRY RALPH CURRY; (A35; PARTS 591, 592, 593 AND 594) TEXT:

I am writing with regard to your Final Rule on the Importation of Vehicles and Equipment Subject to Federal Motor Vehicle Safety Standards on and after January 31, 1990 (Federal Register, Volume 54, No. 188, September 29, 1989).

The Final Rule and the enabling legislation -- the Imported Vehicle Safety Compliance Act of 1988 (P.L. 100-562) -- were drafted to address and correct the enforcement difficulties associated with the previous regulations governing the importation of veh icles which did not comply with the DOT Federal Motor Vehicle Safety Standards (FMVSS). These difficulties arose largely from the export to the United States of vehicles originally manufactured for the European marketplace, in particular luxury and spor t automobiles. Canada is concerned that in seeking to address problems related to these vehicles, the NHTSA will be imposing serious and apparently unintended burdens on Canadian exporters of vehicles certified to Canadian safety standards.

"Canadian market vehicles" are those subject to the Canadian Motor Vehicle Safety Standards (CMVSS) established by Transport Canada. Canadian standards are virtually identical to the FMVSS, and where there are differences these differences are well docum ented. As a practical matter, for most Canadian market vehicles the only relevant difference is the metric instrumentation for speedometers and odometers. Most Canadian market vehicles sold in Canada are produced in the United States to meet both Canad ian and U.S. standards because of the rationalization of North American production. Consequently, a Canadian market vehicle would require only minor modification to bring it into compliance with U.S. standards, in contrast to noncomplying imports from o ther countries, which could require significant modification.

Under the Final Rule, a Canadian market vehicle would be deemed to be a non-complying vehicle if it does not bear the original manufacturer's declaration that it meets all U.S. safety standards. In addition:

a) importation of Canadian market vehicles is restricted to importers registered with NHTSA;

b) registered importers must be U.S. residents;

c) each registered importer is required to pay an annual registration fee of $255;

d) for each make, model and year of non-conforming vehicle, a petition fee of $1560 or $2150, depending on whether the petition concerns a vehicle which is "substantially similar" or "capable or being

modified", is required for filing for a determination of eligibility for importation;

e) the registered importer is required to pay a bond processing fee of $125 for each vehicle imported;

f) the registered importer is required to post a bond, not less than the dutiable value of each vehicle imported, for the production of a statement, after conformance, certifying that the conformance work has been accomplished, and

g) conformance work must be done in the United States.

The Final Rule will not have a direct impact on vehicle manufacturers (e.g., the "Big Three") or secondary manufacturers (e.g., truck-body builders), as these original manufacturers are exempted from the Final Rule requirements if they certify their vehi cles as meeting U.S. standards and are able to provide appropriate documentation.

However, given the cost, complexity and delays that the new procedures would entail, Canadian vehicle brokers, dealers and private citizens, acting independently of original manufacturers, would not, for all practical purposes, be able to export new or u sed Canadian market vehicles to the United States. Further, Canadian individuals and firms would be precluded from providing conformance goods and services for vehicles exported to the United States.

Canadian regulations are being changed to give effect to Article 1003 of the Canada-U.S. Free Trade Agreement. These provisions are designed to maintain the integrity of Canadian safety and emission standards while recognizing that Canadian and U.S. sta ndards are virtually identical. U.S. market vehicles exported from the United States are allowed entry into Canada upon demonstration of a U.S. Department of Transport compliance certificate for U.S. standards and a declaration of intent that the vehicle will be modified as required to conform with Canadian safety requirements (currently the required modification for most U.S. market vehicles involves only meeting the metric and bilingual labelling requirements, for which stickers can be purchased from the Canadian Automobile Association for $2.95). Imports of U.S. market vehicles are subject only to the actual costs of modifications and do not face any fees paid to government. U.S. individuals and firms are able to provide conformance goods and serv ices.

In Canada's view, the Final Rule is inconsistent with U.S. obligations under the Canada-U.S. Free trade Agreement and will unduly restrict trade between the two countries. Canada accordingly requests that NHTSA modify the Final Rule with respect to Cana dian market vehicles, recognizing near-compliance with the FMVSS and accommodating their entry in the least costly and burdensome manner. To this end, Canada requests that NHTSA: a) recognize canadian market vehicles as a special class of non- comp lying vehicles requiring only minor changes to meet the FMVSS;

b) exempt such vehicles from the fees;

c) exempt them from the bonding requirement;

d) exempt them from the requirement that they be imported by registered importers, who must be U.s. citizens, and

e) allow modifications to be done in either the United States or Canada.

I would propose that Canadian and U.S officials meet to discuss the technical details of this request.