SUPPLEMENTARY INFORMATION:

I. Background

DoD, GSA, and NASA published a proposed rule at 86 FR 70808 on December 13, 2021, to implement the United States-Mexico-Canada Agreement Implementation Act (Pub. L. 116-113). On June 12, 2017, the President announced his intention to commence negotiations with Canada and Mexico to modernize the North American Free Trade Agreement (NAFTA). On November 30, 2018, the Governments of the United States, Mexico, and Canada (the Parties) signed the protocol replacing NAFTA with the United States-Mexico-Canada Agreement (USMCA). On December 10, 2019, the Parties signed the protocol of amendment to the USMCA. On January 29, 2020, the President signed into law the United States-Mexico-Canada Agreement Implementation Act, through which Congress approved the USMCA. On July 1, 2020, the USMCA entered into full force. (See U.S. Trade Representative Determination published June 29, 2020, 85 FR 39037.) Although Canada is still a designated country under the World Trade Organization Government Procurement Agreement, Canada is no longer a Free Trade Agreement country, because chapter 13 of the USMCA (government procurement) applies only to the United States and Mexico. Therefore, references to Canada as a Free Trade Agreement country are deleted, including the $25,000 threshold. Mexico thresholds remain unchanged.

There were no comments submitted on the proposed rule.

II. Discussion and Analysis

There were no public comments for the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) to review. Therefore, there are no changes in the final rule from the proposed, except for baseline updates. The baseline updates include changes made in FAC 2022-03, FAR case 2022-001, Trade Agreements Thresholds, to incorporate the revised thresholds for application of the World Trade Organization Government Procurement Agreement and the Free Trade Agreements, as determined by the United States Trade Representative, effective on January 1, 2022. The final rule also includes baseline updates published in FAC 2022-05 for FAR case 2021-008, effective on October 25, 2022. ( printed page 73891)

III. Applicability to Contracts at or Below the Simplified Acquisition Threshold (SAT) and for Commercial Products (Including Commercially Available Off-the-Shelf (COTS) Items) or for Commercial Services

This final rule does not create any new provisions or clauses, nor does it change the applicability of any existing provisions or clauses included in solicitations and contracts valued at or below the SAT, or for commercial products (including COTS items) and commercial services.

IV. Executive Orders 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.

V. Congressional Review Act

As required by the Congressional Review Act (5 U.S.C. 801-808) before an interim or final rule takes effect, DoD, GSA, and NASA will send the rule and the “Submission of Federal Rules Under the Congressional Review Act” form to each House of the Congress and to the Comptroller General of the United States. A major rule cannot take effect until 60 days after it is published in the Federal Register . The Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget has determined that this is not a major rule under 5 U.S.C. 804.

VI. Regulatory Flexibility Act

DoD, GSA, and NASA have prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 U.S.C. 601-612. The FRFA is summarized as follows:

The objective of this rule is to implement the USMCA Implementation Act. The rule makes changes in the FAR to conform to Chapter 13 of the USMCA, which sets forth certain obligations between the United States and Mexico with respect to Government procurement of goods and services, as specified in Annex 13-A of the USMCA. Chapter 13 of the USMCA applies only between Mexico and the United States and does not cover Canada. Although Canada is still a designated country under the World Trade Organization Government Procurement Agreement, Canada is no longer a Free Trade Agreement country, because chapter 13 of the USMCA (government procurement) applies only to the United States and Mexico. Therefore, references to Canada as a Free Trade Agreement country in the FAR are deleted, including the $25,000 threshold.

Canadian end products will still receive nondiscriminatory treatment with respect to the Buy American statute but starting at $183,000, rather than $25,000. Mexico thresholds remain unchanged.

The legal basis for these changes is Public Law 116-113.

There were no public comments submitted in response to the initial regulatory flexibility analysis.

DoD, GSA, and NASA do not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612, because, although the rule removes Canada as a Free Trade Agreement designated country and deletes the associated $25,000 threshold, Canada remains a World Trade Organization Government Procurement Agreement designated country, at $183,000. The Mexico thresholds remain unchanged.

Based on fiscal year 2019 data from the Federal Procurement Data System, 129,308 small businesses were awarded Government contracts. Impacts to small businesses are anticipated to be negligible based on the data analysis approved under Office of Management and Budget (OMB) Control Number 9000-0024, Buy American, Trade Agreements, and Duty-Free Entry. Alternate I of the clause, FAR 52.225-3, Buy American—Free Trade Agreements—Israeli Trade Act, and Alternate I of the provision, FAR 52.225-4, Buy American—Free Trade Agreements—Israeli Trade Act Certificate, are deleted. The Trade Agreements clause at FAR 52.225-5, the Buy American—Construction Materials under Trade Agreements clause at FAR 52.225-11, and the FAR 52.225-23 equivalent for the Recovery Act are revised to delete references to Canada as a Free Trade Agreement country. In regard to FAR 52.225-23, additional construction awards are not anticipated using Recovery Act funds.

This final rule does not include any new reporting, recordkeeping, or other compliance requirements for small businesses. The rule does not impose additional information collection requirements to the paperwork burden previously approved by OMB under the Paperwork Reduction Act (44 U.S.C. 3501-3521), Control Number 9000-0024, Buy American, Trade Agreements, and Duty-Free Entry.

There are no known significant alternative approaches to the final rule.

Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat Division. The Regulatory Secretariat Division has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

VII. Paperwork Reduction Act

The Paperwork Reduction Act (44 U.S.C. 3501-3521) does apply. However, these changes to the FAR do not impose additional information collection requirements to the paperwork burden previously approved by the Office of Management and Budget Control Number 9000-0024, Buy American, Trade Agreements, and Duty-Free Entry.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 4, 13, 18, 22, 25, 27, and 52 as set forth below:

1. The authority citation for 48 CFR parts 4, 13, 18, 22, 25, 27, and 52 continues to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 20113.

2. Amend section 4.1202 by removing from paragraph (a)(28) the phrase “Alternates I, II, and III” and adding “Alternates II and III” in its place.

3. Amend section 13.302-5, in paragraph (d)(3)(i) by removing the word “FAR” twice.

4. Remove and reserve section 18.120.

5. Amend section 22.1503 by—

a. Removing paragraph (b)(1);

b. Redesignating paragraphs (b)(2) through (4) as paragraphs (b)(1) through (3); and

c. Adding “Canada,” in newly redesignated paragraph (b)(3) between the words “Bulgaria” and “Croatia”.

6. Amend section 22.1505 in paragraph (a) by removing “$25,000” and adding “$50,000” in its place.

7. Amend section 25.003 by removing “Canada,” from paragraph (2) of the definition of “Designated country” and from the definition of “Free Trade Agreement country”.

8. Amend section 25.400 by revising paragraph (a)(2)(i) to read as follows:

9. Amend section 25.401 by—

a. Removing “and” from the end of paragraph (a)(4);

b. Removing “13.501(a).” from paragraph (a)(5) and adding “13.501(a); and” in its place;

c. Adding paragraph (a)(6); and

d. In the table of paragraph (b), revising the heading of the third column.

The addition and revision read as follows:

10. Amend section 25.402 by revising table 1 to paragraph (b) to read as follows:

11. Amend section 25.504-1 by removing “$25,000” from paragraphs (a)(2) and (c)(2) and adding “$50,000” in its place.

12. Amend section 25.1101 by—

a. Removing “$25,000” from paragraphs (a)(1) introductory text and (b)(1)(i)(A) and adding “$50,000” in its place, wherever it appears;

b. Removing paragraph (b)(1)(ii);

c. Redesignating paragraphs (b)(1)(iii) through (v) as paragraphs (b)(1)(ii) through (iv);

d. Removing from the newly redesignated paragraph (b)(1)(ii) the phrase “ Alternate II” and adding the phrase “Alternate II” in its place;

e. Removing paragraph (b)(2)(ii);

f. Redesignating paragraphs (b)(2)(iii) and (iv) as paragraphs (b)(2)(ii) and (iii); and

g. Removing from the newly redesignated paragraph (b)(2)(ii) the phrase “ Alternate II” and adding the phrase “Alternate II” in its place.

13. Revise section 27.204-1 to read as follows:

14. Amend section 27.204-2 by adding a sentence to the end of the paragraph to read as follows:

15. Amend section 52.204-8 by revising the date of the provision and paragraph (c)(1)(xxi) to read as follows:

16. Amend section 52.212-3 by—

a. Revising the date of the provision;

b. Removing paragraph (g)(2);

c. Redesignating paragraphs (g)(3) through (5) as paragraphs (g)(2) through (4); and

d. Revising the newly redesignated paragraph (g)(2).

The revisions read as follows:

17. Amend section 52.212-5 by—

a. Revising the date of the clause;

b. Removing from paragraph (b)(28) the date “(JAN 2022)” and adding “(DEC 2022)” in its place;

c. Revising paragraphs (b)(49)(i) and (ii);

d. Removing from paragraph (b)(49)(iii) the date “(JAN 2021)” and adding “(DEC 2022)” in its place; and

e. Removing from paragraph (b)(50) the date “(OCT 2019)” and adding “(DEC 2022)” in its place.

The revisions read as follows:

18. Amend section 52.213-4 by—

a. Revising the date of the clause;

b. In paragraph (b)(1)(ii)—

i. Removing the date “(JAN 2022)” and adding “(DEC 2022)” in its place; and

ii. Removing the phrase “FAR”;

c. In paragraph (b)(1)(xvii)(A) introductory text removing the phrase “FAR”; and

d. Removing “$25,000” from paragraph (b)(1)(xvii)(A)( 2) and adding “$50,000” in its place.

The revision reads as follows:

19. Amend section 52.222-19 by—

a. Revising the date of the clause;

b. Removing paragraph (a)(1);

c. Redesignating paragraphs (a)(2) through (4) as paragraphs (a)(1) through (3); and

d. Adding “Canada,” in newly redesignated paragraph (a)(3) between “Bulgaria,” and “Croatia”.

The revision reads as follows:

20. Amend section 52.225-3 by—

a. Revising the date of the clause;

b. In paragraph (a), in the definition of “Free Trade Agreement country” removing “Canada,”;

c. Removing and reserving Alternate I;

d. Revising Alternate II;

e. Removing from the introductory text of Alternate III “25.1101(b)(1)(iv)” and adding “25.1101(b)(1)(iii)” in its place; and

f. Removing from the introductory text of Alternate IV “25.1101(b)(1)(v)” and adding “25.1101(b)(1)(iv)” in its place.

The revisions read as follows:

21. Amend section 52.225-4 by—

a. Removing and reserving Alternate I;

b. Revising Alternate II; and

c. In Alternate III removing from the introductory text “25.1101(b)(2)(iv)” and adding “25.1101(b)(2)(iii)” in its place.

The revisions read as follows:

22. Amend section 52.225-5 by—

a. Revising the date of the clause; and

b. In paragraph (a), in the definition “Designated country” removing “Canada,” from paragraph (2).

The revision reads as follows:

23. Amend section 52.225-11 by—

a. Revising the date of the clause;

b. In paragraph (a), in the definition of “Designated country”, removing “Canada,” from paragraph (2);

c. Revising the date of Alternate I; and

d. In paragraph (b)(1) of Alternate I:

i. Removing the phrase “FAR”; and

ii. Removing the phrase “NAFTA” and adding “United States-Mexico-Canada Agreement” in its place.

The revisions read as follows:

24. Amend section 52.225-23 by—

a. Revising the date of the clause; and

b. In paragraph (a), in the definitions of “Designated country” and “Recovery Act designated country”, removing “Canada,” from paragraphs (2).

The revisions read as follows:

87 FR 73890