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HQ 111556

April 16, 1991

BOR-7-04-CO:R:IT:C 111556 GEV


K. Wayne McIntosh
Pacific Northwest Carriers, Inc.
#210 - 13060 - 80th Ave.
Surrey, B.C., Canada V3W 3B2

RE: Canadian-based Trucks; Instruments of International Traffic; 19 U.S.C. 1322

Dear Mr. McIntosh:

This is in response to your letter dated February 20, 1991, requesting a ruling regarding certain movements of your company's tractor-trailer units. Our ruling on this matter is set forth below.


Pacific Northwest Carriers, Inc., ("Pacific") a trucking firm located in Surrey, British Columbia, Canada, provides a service of transporting freight between Vancouver, British Columbia, and Los Angeles, California. After the southbound freight is unloaded, the empty trailers are taken to a terminal where they are reloaded and then subsequently hauled back to Burnaby, B.C., a suburb of Vancouver. Approximately 6-10 trailer loads are transported from Los Angeles to Burnaby every Friday.

Due to various factors, including changing market conditions, free trade, and an unstable economy, Pacific is now running as high as five empty southbound trucks per week to Los Angeles. During the month of January, 1991, the total empty trailers were as follows: Vancouver to Los Angeles, 9 empty trailers, 1242 empty miles each; Portland, Oregon, to Los Angeles, 9 empty trailers, 922 empty miles; San Francisco to Los Angeles, 3 empty trailers, 380 empty miles. In order to offset lost revenues, and in view of the fact that its trailers are sent loaded or empty on a scheduled service, Pacific requests a ruling permitting their trailers to be loaded in the U.S. on the southbound direct route, or within 35 miles thereof, for the transportation of freight to other U.S. points on that route.


Whether there is a movement in "local traffic" not within the permitted exceptions of 19 CFR 123.14(c)(1) when, during the course of a regularly scheduled international trip, a Canadian- based tractor-trailer unit transports merchandise loaded at one U.S. point either on the direct southbound route, or within 35 miles thereof, to another U.S. point on that route.


Section 141.4, Customs Regulations (19 CFR 141.4), provides that entry as required by title 19, United States Code, section 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 foreign- based vehicles 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 passengers and/or merchandise destined for points in the United States, or arriving empty or loaded for the purpose of taking passengers and/or merchandise out of the United States (see 19 CFR 123.14(a)).

A foreign truck tractor which arrives in the United States in international traffic towing a foreign trailer, either empty or loaded, constitutes a foreign "truck" as that term is used in sections 123.14(a), (b), and (c)(1), Customs Regulations.

Section 123.14(c), Customs Regulations, states that with one exception, a foreign-based truck, admitted as an instrument of international traffic under section 123.14, shall not engage in local traffic in the United States. The exception, set out in section 123.14(c)(1), states that such a vehicle, while in use in a regularly scheduled trip, may be used in local traffic that is directly incidental to the international schedule.

A carrier may be considered as engaged in regularly scheduled service whether trips are scheduled hourly, daily, weekly, etc., provided the trips are regular, not varied, and are over an established route. Trips made if and when a load is available do not qualify.

Section 123.14(c)(2), Customs Regulations provides that a foreign-based truck trailer admitted as an instrument of international traffic may carry merchandise between points in the United States on the return trip provided by section 123.12(a)(2) which allows use for such transportation as is directly incidental to its economical and prompt return to the country from which it entered the United States. Section 123.14(c)(2) applies to trailers and not to tractor-trailer units which, as was stated earlier, are considered trucks as that term is used in the Customs Regulations.

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 section 123.14(c), is subject to treatment as an importation of merchandise from a foreign country and a regular Customs entry therefor shall be made. Section 123.14(d), Customs Regulations provides that any vehicle used in violation of section 123.14, is subject to forfeiture under section 592, Tariff Act of 1930, as amended (19 U.S.C. 1592).

Whether the use of an instrument of international traffic constitutes a diversion from international traffic is based on the facts in each case. The transportation of merchandise in international traffic is the key; the domestic movement of merchandise must be secondary to the international movement and meet other criteria. There must be a regular international schedule and the domestic movement must follow the same basic route as the merchandise moving in international traffic.

In regard to the facts under consideration, it is apparent that Pacific's Vancouver-Los Angeles service is regularly scheduled within the meaning of section 123.14(c)(1). Accordingly, Pacific trailers will be permitted to load on the direct southbound route for the purpose of transporting merchandise to other U.S. points on that route. (emphasis added) The loading of these trailers at points not on the direct route (e.g., at a point within 35 miles of the direct route as suggested by Pacific) and their subsequent transportation to other U.S. points constitutes local traffic not within the permitted exceptions set forth in sections 123.14(c)(1) and (2).


There is a movement in "local traffic" within the permitted exception of 19 CFR 123.14(c)(1) when, during the course of a regularly scheduled international trip, a Canadian-based tractor- trailer unit transports merchandise loaded at a U.S. point on the direct southbound route to another U.S. point on that route. - 4 -

The loading of merchandise at other than a point directly on the route of the regularly scheduled international trip and subsequent transportation to a different U.S. point constitutes a violation of 19 CFR 123.14(c)(1).


B. James Fritz

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