Interpretation ID: nht95-1.48

TYPE: INTERPRETATION-NHTSA

DATE: February 3, 1995

FROM: Philip R. Recht -- Chief Counsel, NHTSA

TO: Earl L. Hartley, Jr. -- Ryan Freight Services, Inc.

TITLE: NONE

ATTACHMT: Attached to 8/23/94 letter from Earl L. Hartley, Jr. to John Womack (OCC 10290)

TEXT: This responds to your letter concerning 49 CFR Part 583, Automobile Parts Content Labeling. I apologize for the delay in our response. You stated that you need to provide country of origin information to the auto manufacturers you sell to, and would li ke confirmation that you are properly interpreting the regulations. We understand that you are an "outside supplier," i.e., your company is not owned by an auto manufacturer. (Requirements differ for outside suppliers and allied suppliers.) Your questi ons, and our responses, are set forth below.

Question 1. 583.6(c) We interpret this to mean that if the U.S./Canada value added is 70% or more we are to report the U.S./Canada percentage to be 100%. If the U.S./Canada value added is less than 70% we are to report the U.S./Canada percentage to be -0-% Is this correct?

Response. You are partially correct. It is true that, under 583.6(c), equipment supplied by an outside supplier is considered 100 percent U.S./Canadian if 70 percent or more of its value is added in the U.S./Canada, and 0 percent if less than 70 per cent is added in the U.S./Canada. However, the specific information which outside suppliers must provide to auto manufacturers is set forth in 583.10. (Outside suppliers of engines and transmissions must also provide the information specified in 583.12 . I will assume for the balance of this letter that you are not a supplier of engines or transmissions.) Rather than requiring outside suppliers to report the 100 percent or 0 percent figure, section 583.10 instead specifies that outside suppliers are t o provide a statement that the equipment has, or does not have, at least 70 percent of its value added in the United States and Canada.

Question 2. 583.7(a), (e), (f) If the U.S./Canadian percentage of the value is -0-% then we should report the two largest "Major Foreign Sources" which are over 15% each. Is this correct?

Response. No. This question suggests a misunderstanding of the differing requirements for auto manufacturers and suppliers. Auto manufacturers are required to calculate, on a carline basis, "U.S./Canadian parts content" and "Major sources of foreig n parts content." Suppliers are required to provide specified information about the equipment they supply to enable the auto manufacturers to make these calculations. As indicated above, the information that outside suppliers must provide is set forth i n 583.10. Suppliers are not required to provide the two largest "Major Foreign Sources" of their equipment.

Question 3. 583.7(c)(1) This requirement is completely independent from the determination of the percentage of the value determination. Therefore it is possible for a part to be of U.S.A. origin and have -0-% U.S./Canadian percentage of value. Are we correct in this assumption?

Response. The answer is yes. It is true that a part could be of U.S./Canada origin under 583.7(c)(1), for purposes of determining major foreign sources of passenger motor vehicle equipment, even though it has less than 70 percent U.S./Canadian conte nt and is hence considered to have 0 percent U.S./Canadian content under 583.6. This reflects the different purposes of 583.6 and 583.7. Section 583.6 sets forth the procedure for determining the U.S./Canadian content of carlines. Under the American Au tomobile Labeling Act, equipment supplied by an outside supplier is considered 100 percent U.S./Canadian if 70 percent or more of its value is added in the U.S./Canada, and 0 percent if less than 70 percent is added in the U.S./Canada. Section 583.7 spe cifies the procedure for determining major foreign sources of passenger motor vehicle equipment. The only effect of a determination under 583.7(c)(1) that a part is of U.S./Canadian origin is that it will not be considered to have been contributed by a foreign source.

Question 4a. 583.10(a)-(c) From these parts we assume the following requirements:

Our certificate must show:

1. The name and address of the supplier, 2. The part number and description of the part or assembly, 3. The selling price to our customer, 4. Whether the part has or does not have 70% of its value from the United States/Canada as determined under 583.6(c), 5. If the United States/Canada percentage is less than 70% the country of origin determined under 583.7 (c), 6. For equipment that may be used in an engine or transmission, the country of origin of the equipment, determined under 583.8(c), 7. A certification for the information, pursuant to 583.13 and the date of the certification, and, 8. One certificate can cover multiple parts and assemblies.

Response. Your eight stated understandings are correct. With respect to the second, I note that while 583.10 (a) does not specifically mention "part number," we assume that would be the customary way of identifying unique equipment.

Question 4b. If the United States/Canada percentage of the value added is -0- percent, should we show the two largest "Major Foreign Sources" which are over 15% on our certificate? This information does not seem to be required by 583.10(a).

Response. As discussed in our answer to Question 2, suppliers are not required to provide the two largest "Major Foreign Sources" of their equipment.

Question 5. 583.13 This section requires us to certify the information provided on our certificate to be in accordance with DOT regulations. Please provide us with a copy of these DOT regulations or advise where we can secure a copy of these regulation s so we can know the regulations to which we are subscribing.

Response. The Department of Transportation (DOT) regulations concerning automobile parts content labeling are simply those set forth in 49 CFR Part 583.

Question 6. 583.10(c) (1) - (2) We can issue our certificate for the calendar year from January 1 through December 31 of each year.

Response. Section 583.10 (c) (1) provides that, except as provided in (c) (2), the information provided in the certificate is to be for equipment expected to be supplied during the 12-month period beginning on the first July 1 after receipt of the re quest from the auto manufacturer or allied supplier. Paragraph (c) (2) provides that the 12-month period specified in (c) (1) "may be varied in time and length by the manufacturer or allied supplier if it determines that the alteration is not likely to result in less accurate information being provided to consumers."

Therefore, your certificate can only be issued for the calendar year if the auto manufacturer or allied supplier to which you supply equipment makes such a determination.

I hope this information is helpful. If you have further questions, please feel free to contact Edward Glancy of my staff at this address or by telephone at (202) 366-2992.

Sincerely