[Federal Register Volume 60, Number 171 (Tuesday, September 5, 1995)]
[Rules and Regulations]
[Pages 46188-46204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21905]
[[Page 46187]]
_______________________________________________________________________
Part V
Department of the Treasury
_______________________________________________________________________
Customs Service
_______________________________________________________________________
19 CFR Parts 10, 12, 102 and 178
Rules of Origin for Textile and Apparel Products; Final Rule
Federal Register / Vol. 60, No. 171 / Tuesday, September 5, 1995 /
Rules and Regulations
[[Page 46188]]
DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Parts 10, 12, 102 and 178
[T.D. 95-69]
RIN 1515-AB71
Rules of Origin for Textile and Apparel Products
AGENCY: U.S. Customs Service, Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This document sets forth final amendments to the Customs
Regulations to implement the provisions of section 334 of the Uruguay
Round Agreements Act (``the Act'') regarding the country of origin of
textile and apparel products. Except for the purpose of identifying
products of Israel, the regulations will govern the determination of
the country of origin of imported textile and apparel products for
purposes of laws enforced by the Customs Service. The regulations also
implement the provisions of section 334 of the Act regarding the
treatment of components that are cut to shape in the United States from
foreign fabric, exported for assembly, and returned to the United
States. This document also sets forth regulations implementing
previously-enacted provisions regarding the treatment of articles
assembled or produced in a Caribbean Basin Initiative beneficiary
country wholly from U.S.-produced components, materials or ingredients.
EFFECTIVE DATE: Final rule effective October 5, 1995.
FOR FURTHER INFORMATION CONTACT: Phil Robins, Office of Regulations and
Rulings (202-482-7029).
SUPPLEMENTARY INFORMATION:
Background
On December 8, 1994, President Clinton signed into law the Uruguay
Round Agreements Act (``the Act''), Public Law 103-465, 108 Stat. 4809.
Subtitle D of Title III of the Act deals with textiles and includes
section 334 (codified at 19 U.S.C. 3592) which concerns rules of origin
for textile and apparel products.
Paragraph (a) of section 334 provides that the Secretary of the
Treasury shall prescribe rules implementing the principles contained in
paragraph (b) for determining the origin of ``textiles and apparel
products''.
Paragraph (b) of section 334 incorporates the following provisions:
(1) for purposes of the customs laws and the administration of
quantitative restrictions and except as otherwise provided for by
statute, general rules for determining when a ``textile or apparel
product'' originates in a country, territory, or insular possession,
and is the growth, product, or manufacture of that country, territory,
or insular possession; (2) special origin rules for goods classifiable
under certain specified tariff headings and subheadings; (3) a
``multicountry rule'' for determining origin when the origin of a good
cannot be determined under the preceding provisions of paragraph (b);
(4) special rules governing the treatment of components that are cut to
shape in the United States from foreign fabric, exported for assembly,
and returned to the United States; and (5) an exception to the
application of section 334 that specifically provides for the continued
application of the administrative practices that were applied
immediately before the enactment of the Act to determine the origin of
textile and apparel products from Israel, unless such practices are
modified by the mutual consent of the United States and Israel.
Paragraph (c) of section 334 provides that section 334 shall apply
to goods entered, or withdrawn from warehouse, for consumption on or
after July 1, 1996. Paragraph (c) further provides that section 334
shall not apply to goods entered or withdrawn from warehouse on or
before January 1, 1998, that are covered by contracts of sale which
were entered into, with all material terms fixed, before July 20, 1994,
and which are filed, with an accompanying certification, with the
Commissioner of Customs within 60 days after the date of the enactment
of the Act. On January 27, 1995, Customs published in the Federal
Register (60 FR 5457) a notice setting forth the procedures for filing
such contracts and certifications.
On May 23, 1995, Customs published in the Federal Register (60 FR
27378) a notice of proposed rulemaking setting forth proposed
amendments to the Customs Regulations to implement the rules of origin
principles of section 334(b) of the Act. In that document Customs
proposed to implement those provisions of section 334(b) of the Act
that have broad application under the terms of the statute by amending
Part 102 of the Customs Regulations (19 CFR Part 102) and by amending
other regulatory provisions as necessary to conform to those Part 102
changes. With regard to the remaining provisions of section 334(b)
(that is, the special rules governing the treatment of components that
are cut to shape in the United States from foreign fabric, exported for
assembly, and returned to the United States), Customs proposed to
implement those provisions through amendments to Part 10 of the Customs
Regulations (19 CFR Part 10). In addition, Customs proposed to make a
number of amendments to existing regulatory provisions to ensure that
those existing provisions will be consistent with the new regulatory
proposals implementing section 334(b) of the Act. Finally, Customs
included in the proposed Part 10 amendments a text to implement U.S.
Note 2(b), Subchapter II, Chapter 98, Harmonized Tariff Schedule of the
United States (HTSUS), which had not been previously treated in the
regulations and which is similar in operation and effect to the cut-to-
shape components provision of section 334(b)(4)(B) of the Act.
The May 23, 1995, notice of proposed rulemaking invited the public
to submit comments on the proposed regulatory amendments for
consideration by Customs before adoption of the proposals as a final
rule. The public comment period closed on June 22, 1995.
Discussion of Comments
A total of 43 commenters responded to the solicitation of public
comments in the May 23, 1995, notice of proposed rulemaking. The
comments submitted, and the Customs responses thereto, are set forth
below.
Effective date
Comment: Five commenters were concerned about the effective date of
Sec. 334 and the regulations implementing that statute. They stated
that sometimes it is not possible to know the exact date goods will
arrive in the United States. As a result, goods will be arriving after
July 1, 1996, with the wrong visa. In order to avoid this problem, four
commenters requested that Customs establish a grace period delaying the
application of Sec. 334 for such goods. One commenter suggested that
the new regulations should only be applicable to goods shipped after
July 1, 1996.
Customs Response: The effective date of Sec. 334 is expressly set
out in that statute. Section 334(c) provides that the provisions of
Sec. 334 ``shall apply to goods entered, or withdrawn for warehouse,
for consumption on or after July 1, 1996.'' Section 334(c) contains an
exception to that effective date only for goods contracted for prior to
July 20, 1994, if a copy of the contract containing all material terms
of sale was filed with Customs within 60 days after enactment of
Sec. 334 and the goods are entered, or withdrawn from warehouse, for
consumption on or before January 1, 1998.
[[Page 46189]]
While Customs recognizes the potential problem faced by importers
receiving land or sea shipments, the statute is clear as regards the
effective date of its provisions, and Customs has no authority to
deviate from the express terms of the statute. As regards the
suggestion for a grace period to allow the entry of goods imported with
incorrect visas, that issue falls within the jurisdiction of, and thus
should be more properly addressed to, the Committee for the
Implementation of Textile Agreements (CITA).
Scope of ``textile or apparel product''
Comment: Several commenters stated that the Customs decision to
utilize the Agreement on Textiles and Clothing of the Agreement
Establishing the World Trade Organization (the WTO Agreement) to
determine the scope of section 334 of the Act constitutes an
unauthorized broadening of that legislation. These commenters believe
there is nothing to indicate that Congress meant to enlarge the scope
of textiles and apparel products. The commenters noted the present
position of Customs that the textile and apparel rules of origin
contained in Sec. 12.130 of the Customs Regulations (19 CFR 12.130)
cover all goods classifiable in Section XI (Chapters 50 though 63),
HTSUS, and any headings or subheadings outside Section XI for which a
textile and apparel category number has been designated. On the other
hand, these commenters noted that the Agreement on Textiles and
Clothing of the WTO Agreement lists several HTSUS headings and
subheadings outside Section XI which do not have a textile and apparel
category number designation and which have not traditionally been
considered within the class of goods known as textiles and apparel.
Customs response: Customs disagrees with the position advocated by
these commenters. As noted in our discussion of this point in the May
23, 1995, notice of proposed rulemaking, the United States is a
signatory to both the WTO Agreement and the Agreement on Textiles and
Clothing annexed thereto. The latter agreement specifically defines the
scope of ``textiles and clothing'' by a listing of headings and
subheadings in the international Harmonized System. Customs also
pointed out in the May 23, 1995, notice that three provisions of the
Act outside section 334 specifically refer to the Agreement on Textiles
and Clothing of the WTO Agreement. One of those provisions is section
332 which amended section 204 of the Agricultural Act of 1956 (7 U.S.C.
1854) to specifically cite the Agreement on Textiles and Clothing of
the WTO Agreement as a multilateral agreement concluded under the
authority of section 204. Section 204, as amended, refers to world
trade in ``the articles with respect to which the agreement [that is,
any multilateral agreement concluded under the authority of section
204] was concluded'' and authorizes the President to issue regulations
governing the entry or withdrawal from warehouse of ``the same
articles'' which are products of countries not parties to the agreement
or countries to which the United States does not apply the agreement.
Thus, the product coverage of section 204 and of the regulations issued
thereunder is a function of the agreements concluded under section 204,
including the Agreement on Textiles and Clothing of the WTO Agreement.
Since section 12.130 of the Customs Regulations was promulgated under
the authority of section 204, the product coverage of Sec. 12.130 must
be the same as that of section 204.
Customs believes that it would be inappropriate to conclude that
Congress, in drafting section 334 of the Act, was unmindful of the
adoption of the Agreement on Textiles and Clothing of the WTO Agreement
and the changes to section 204 made by section 332 of the Act, with the
result that the regulations mandated by section 334 of the Act could be
promulgated without regard to the product coverage of the Agreement on
Textiles and Clothing of the WTO Agreement. In light of the context in
which section 334 of the Act was enacted, Customs believes it is more
proper to conclude that Congress intended that the regulations
implementing section 334 of the Act include the products covered by the
Agreement on Textiles and Clothing of the WTO Agreement for the
specific and limited purpose of section 334 of the Act, that is, the
determination of the country of origin of textile and apparel products,
while recognizing that such products would also be covered by any
regulations governing entry or withdrawal from warehouse that may be
separately issued under the authority of section 204. Therefore,
Customs does not believe that the scope of the regulations implementing
section 334 of the Act should be controlled by the traditional scope of
Sec. 12.130 of the Customs Regulations. On the contrary, it seems clear
that the product coverage of Sec. 12.130 has been effectively expanded
by the adoption of the Agreement on Textiles and Clothing of the WTO
Agreement and by the amendment of section 204 effected by section 332
of the Act. Accordingly, Customs believes that the May 23, 1995, notice
of proposed rulemaking reflects the correct position on this issue.
Section 102.21(b)(3)--Definition of ``knit to shape''
Comment: Section 334(b)(2)(B) of the Act provides that,
notwithstanding the assembly rule contained in section 334(b)(1)(D),
``a textile or apparel product which is knit to shape shall be
considered to originate in, and be the growth, product, or manufacture
of, the country, territory, or possession in which it is knit.'' A
number of comments were submitted regarding the proposed definition of
``knit to shape'' in Sec. 102.21(b)(3). That definition would require a
good to have its entire exterior surface area, except for trimming
around the neck and on the front opening, to be comprised of fabrics
that have been knit or crocheted directly to the shape used in the
good.
Two commenters suggested that Customs should maintain its present
position, that is, that a good is knit to shape if any single major
part has been knit to shape.
One commenter suggested that the term ``components'' be substituted
for the term ``fabrics''.
Two commenters thought that the proposed definition was too rigid
in that the incorporation into a garment of added components such as
trim or pockets would disqualify a good from being considered ``knit to
shape''. These commenters suggested that the definition be amended by
adding the words ``or in principal part'' so that the definition would
read ``. . . with an exterior surface area wholly or in principal part
comprised of one or more fabrics knitted or crocheted directly to the
shape used in the good . . .''
Three commenters noted that socks, pantyhose, tights, and other
hosiery articles are knit to shape and their country of origin should
be determined by where they were knit with no account taken of minor
operations such as closing toes. One commenter specifically referred to
gussets and top elastics in pantyhose, saying that the addition of
those components should not change the country of origin from the
country of knitting. One commenter wanted to ensure that tube-type T-
shirts (T-shirts without side seams) were not considered to be knit to
shape.
Customs response: Customs cannot agree to the suggestion to
maintain the present position, because that position does not
accurately reflect the language of section 334(b)(2)(B) of the Act.
Customs does not believe that it was the intent of Congress, in
providing a
[[Page 46190]]
special rule for knit to shape products, that a good should qualify as
being knit to shape where that good contains only one panel knit or
crocheted to shape.
Customs agrees that the word ``fabrics'' may be confusing and thus
should not be used in the definition. However, Customs believes that
``parts'' would be preferable to ``components''.
Customs agrees that the proposed definition of ``knit to shape'' is
too tightly drawn and thus unnecessarily restricts application of
section 334(b)(2)(B) of the Act. However, Customs believes that the
suggested additional language is imprecise and overly broad and thus
would create uncertainty in the application of the definition.
Customs agrees that socks, pantyhose, tights, and other knitted
hosiery goods should be covered by the definition of ``knit to shape''
without regard to minor finishing operations such as closing toes or
adding gussets or top elastics. Whether a good such as a T-shirt is
knit to shape depends on that particular good; however, Customs would
not normally consider the knitting of a tube with no definitive
contours to constitute the creation of a knit-to-shape good within the
meaning of these origin rules.
In order to address the points made in the above comments on which
Customs is in substantial agreement, the definition of ``knit to
shape'' in Sec. 102.21(b)(3) has been modified as set forth below to
cover a good of which ``50 percent or more'' of the exterior surface
area is formed by ``major parts'' knitted or crocheted directly to the
shape as used in the good. The modified definition specifically
excludes from consideration certain exterior features (that is, patch
pockets, appliques, or the like) but includes ``sewing'' as one of the
specified permisible minor operations. In addition, a new paragraph
(b)(4) has been included in Sec. 102.21 as set forth below to define
``major parts''; this definition is essentially the same as the
definition of ``major parts'' set forth in Note (1)b in the Section XI
rules under Sec. 102.20 of the Customs Regulations (19 CFR 102.20).
Under these definitions, there should be no uncertainty concerning the
treatment of hosiery and similar goods that include features such as
gussets and top elastics or that have been subjected to a toe closing
operation.
Section 102.21(c)(2)--Goods Consisting of Materials That Meet the
Sec. 102.21(e) Tariff Shift and Other Requirements
Comment: Under proposed Sec. 102.21(c)(2), where a good is not
wholly the product of a single country, territory, or insular
possession, the country of origin of the good is the single country,
territory, or insular possession in which ``each foreign material'' in
the good underwent an applicable change in tariff classification, and/
or met any other requirement, specified in Sec. 102.21(e). One
commenter noted that this is inconsistent with the Secs. 102.21 (b)(3)
and (b)(5) definitions of ``knit to shape'' and ``wholly assembled'',
which do not require that all of the materials in the good be knit to
shape or wholly assembled in a single country, territory, or insular
possession. This commenter suggested that only the portion of the good
which imparts the essential character to that good should be required
to comply with the applicable Sec. 102.21(e) requirements.
Customs response: Customs does not agree. This comment appears to
reflect a misunderstanding of the operation of the general rule in
paragraph (c)(2) and the tariff shift and other requirements under
paragraph (e). In this regard Customs notes that the definitions of
``knit to shape'' (as modified as discussed above) and ``wholly
assembled'' make allowances (or exceptions) for some materials so that
the presence of such materials will not affect the status of the good
as ``knit to shape'' or ``wholly assembled''. Those exceptions are
solely for the purpose of applying any Sec. 102.21 general rule, tariff
shift rule or other requirement in which the defined terms are used;
they do not affect the question of whether a requisite tariff shift
rule under paragraph (e) has been met. In other words, if a good in
fact consists of ``knit to shape'' or ``wholly assembled'' components
and those components meet the requisite tariff shift rule, any foreign
materials (as defined in Sec. 102.1(e)) incorporated in the good at
issue that are excepted from the definitions in question would also
undergo the requisite tariff shift.
Section 102.21(d)--Treatment of Sets
Comment: One commenter stated that since it is necessary to
determine the origin of each textile and apparel component in a set,
there is little point in referring to the origin of the entire set in
Sec. 102.21(d).
Customs response: Customs believes the wording of Sec. 102.21(d) is
correct. Section 102.21(d) covers situations in which two or more of
the components in the set were produced in different countries. If all
the components in a set are produced in a single country, there would
be no need for separate determination of the origin of any textile or
apparel components of the set.
Assembly
Comment: With regard to the definition of ``wholly assembled'' in
Sec. 102.21(b)(5), one commenter argued that Customs should be more
specific concerning which subassemblies will not preclude a good from
being ``wholly assembled''. This commenter suggested that this could be
done by including in the regulation a specific listing of the
assemblies that will qualify a good to be ``wholly assembled'', in the
same manner as the Government of Hong Kong has done. In the
alternative, this commenter suggested that the joining of all
components of a good in one country would always be at least as
important as the joining of components into a subassembly and,
therefore, under the second multicountry rule (Sec. 102.21(c)(5), the
last place where important processing occurs) the country of origin
would be the place where the components of the good are assembled.
Customs response: Customs does not believe that it would be
appropriate to have a rigid set of rules in the context mentioned by
this commenter. In the opinion of Customs it would be preferable to
address these interpretive issues on a case-by-case basis through the
Customs ruling program whereby prospective importers may obtain
appropriate advance guidance according to their particular needs. This
will result in the eventual development of a body of decisions for the
general guidance of importers based on consideration of a multitude of
factors that cannot be anticipated at the present time. As regards the
alternative suggestion of this commenter, Customs agrees with this
interpretation and notes that the comment does not appear to warrant a
change to the regulatory texts.
Fabric
Comment: Six commenters expressed the view that substantial
finishing of greige fabric (e.g. dyeing and/or printing combined with
other finishing processes) results in a new article of commerce and,
therefore, the country of origin of such fabric should be the country
in which those processes were performed. One commenter made essentially
the same argument for yarns.
Customs response: Sections 334(b)(1)(B) and 334(b)(1)(C) of the Act
set forth specific rules for determining the country of origin of yarns
and fabric. Section 334(b)(1)(B) states that the country of origin of
staple yarns is the country where the yarns were spun and that the
country of origin of filament yarns is the country where the filaments
were extruded. Section 334(b)(1)(C)
[[Page 46191]]
states that the country of origin of a fabric is the country in which
the constituent fibers, filaments, or yarns were transformed (that is,
into a fabric) by a fabric-making process. The language of
Secs. 334(b)(1)(B) and 334(b)(1)(C) is clear and unambiguous.
Accordingly, it would be inappropriate for Customs to prescribe rules
that would lead to results inconsistent with that statutory language.
Subheadings 5810.91-5810.99--Embroidery
Comment: Three commenters took issue with the proposed tariff shift
rule for subheadings 5810.91 through 5810.99. They stated that it is
unreasonable for the United States to consider the country of origin of
embroidery in the piece or in strips to be the country where the base
fabric was formed. These commenters argued that the embroidering of
fabrics is a highly complex operation that requires a great deal of
skill and expense. They also pointed out that the HTSUS refers to
embroidery as ``embroidery'' or as ``Embroidery in the piece, [or] in
strips,'' not as ``fabric''.
Customs response: Section 334(b)(1)(C) of the Act provides that the
country of origin of a fabric is the country where the fabric was
created by a fabric-making process. It is the view of Customs that
embroidery, whether in the piece or in strips, is fabric. It is
commonly known in the United States as embroidered fabric. If Customs
were to agree that embroidery cannot be considered to be a fabric
because the relevant tariff provisions do not specifically refer to
embroidery as fabric, Customs would have to take the same position in
regard to other fabrics which are not specifically referred to as such,
i.e. netting, lace, gauze, felt, nonwovens, terry toweling, labels in
the piece, belting, and hosepiping, all of which are imported as
fabrics.
Customs also notes that the industry definition of piece goods
supports the conclusion that embroidery in the piece is fabric.
Fairchild's Dictionary of Textiles, 1970, defines ``Piece Goods'' as
``a general term for fabrics woven in lengths to be sold by the yard in
retail stores. May also mean all goods which are not cut'' (at page
435). The Modern Textile and Apparel Dictionary, 4th Edition, 1973,
defines ``Piece Goods'' as ``Cloth sold by the yard or some definite
cut length'' (at page 422). Both dictionaries define ``Piece'' as
standard lengths of woven fabric or cloth.
Although the commenters would have Customs distinguish embroidery
in strips from other forms of embroidery, Customs believes that
embroideries on base fabrics in strips are just as much fabrics as
those strips without embroidery. Customs perceives no distinction
between embroidering wide lengths of fabric and embroidering fabric
strips. In either case, the process starts with fabric and ends with
embroidered fabric.
The terms of Sec. 334(b)(1)(C) of the Act are clear and Customs has
no choice but to adhere to the express wording of that provision--the
country of origin of embroidered fabric classifiable in subheadings
5810.91 through 5810.99 is the country in which the base fabric was
formed by a fabric-making process.
However, in reviewing this area, Customs has determined that the
proposed tariff shift rule for subheadings 5810.91 through 5810.99 does
not accurately effectuate Sec. 334(b)(1)(C) of the Act. In this regard
Customs notes that under the proposed rule the country of origin of the
embroidered fabric would not always be the country where the base
fabric was formed. This is because the proposed rule refers to ``A
change to subheading 5810.91 through 5810.99 * * *'', and where fabric
is embroidered in a second country there has been no change to
embroidered fabric in the country where the fabric was formed.
Accordingly, the proposed tariff shift rule for subheadings 5810.91
through 5810.99 has been divided into three rules as set forth below
with the first rule intended to address this problem (with regard to
the other two rules, see the discussion below regarding embroidered
badges, emblems, and similar articles).
Subheading 5810.10--Embroidery Without Visible Ground
Comment: A commenter complained that the country of origin of
embroidery without a visible ground, classifiable in subheading
5810.10, should be the country where the embroidery was applied to the
base fabric. The tariff shift rule proposed for subheading 5810.10
provided for a change to that subheading from any other heading.
Customs response: Customs agrees that the rule for subheading
5810.10 does not accomplish what was intended. The proposed tariff
shift rule in question reflected the application of Sec. 334(b)(3)(A)
of the Act, the first multicountry rule. Customs believes that
embroidery without a visible ground is a fabric that is not made by a
fabric-making process because it comes into commercial existence after
a base fabric is embroidered and the base fabric is removed. In the
opinion of Customs, the most important manufacturing process in the
production of embroidery without a visible ground is the application of
the embroidery and not the removal of the ground. Accordingly, Customs
intentionally required a shift from another heading so that the
production prior to the removal of the base fabric would confer origin,
because a change within the heading would allow the removal of the base
fabric to confer origin. However, the proposed rule was inadvertently
drafted to refer to a change ``to subheading 5810.10''. Thus, if fabric
from country A were embroidered in country B and the ground fabric
removed in country C, the tariff shift rule would not be satisfied and
one would be required to go to the next applicable general rule to
determine origin. In this circumstance, country B would properly be
determined to be the country of origin by application of
Sec. 102.21(c)(4). However, Customs believes that for purposes of
transparency, it is desirable, to the greatest extent possible, for a
country of origin to be determinable by application of the rules
referred to in Sec. 102.21(c)(2) and contained in Sec. 102.21(e) rather
than by application of the multicountry rules of Secs. 102.21(c) (4)
and (5). Accordingly, the rule specified for subheading 5810.10 has
been modified as set forth below to reflect these considerations.
Embroidered Badges, Emblems, and Similar Articles
Comment: One commenter expressed the view that embroidered badges
or emblems are not fabrics and should not be treated as such.
Customs response: Customs agrees that badges, emblems, and similar
embroidered articles are not imported in the form of fabric. However,
the country of origin of badges, emblems, and similar embroidered
articles is not necessarily where those goods were embroidered.
Pursuant to Sec. 334(b)(1)(D) of the Act, the country of origin of
badges, emblems, and the like, which consist of two or more layers of
fabric assembled together by gluing, sewing, or other means, is the
country where the good was wholly assembled. A new second rule has been
included in the rules for subheadings 5810.91 through 5810.99 as set
forth below to reflect the application of Sec. 334(b)(1)(D).
However, badges, emblems, and similar embroidered articles which
are processed in more than one country and which do not have multiple
components present certain other problems. Customs believes that there
is a difference between emblems created by embroidery and printed
emblems on which embroidery may be present merely to enhance the
printed design.
[[Page 46192]]
Where embroidery forms the entire design and, therefore, creates the
emblem, the determination of the country of origin of the emblem is
governed by the first multicountry rule (Sec. 334(b)(3) of the Act and
Sec. 102.21(c)(4) of the regulations). With reference to the
requirements of Sec. 334(b)(3) and Sec. 102.21(c)(4), the embroidery is
the most important manufacturing process in the production of the good
and, as a result, the country of origin of that good is the country,
territory, or insular possession where the embroidery was created.
However, where embroidery does not create the motif, but is present
merely to enhance a printed design on the emblem, Customs does not
believe that application of the embroidery should confer origin.
Customs has not been able to draft a tariff shift rule that
adequately distinguishes between the two types of badges, emblems, and
similar embroidered articles mentioned above. Accordingly, it was
decided to make the tariff shift rule applicable to such goods (the
proposed rule for subheadings 5810.91 through 5810.99, which is set
forth below in modified form as the third rule for those subheadings)
difficult to satisfy, that is, by requiring all manufacturing, from the
forming of the fabric forward, to be done in a single country,
territory, or insular possession. Thus, if an emblem, badge, etc., is
produced in country A from fabric formed in country B, the tariff shift
rule will not be satisfied and, in the hierarchy of rules, the next
applicable rule is the first multicountry rule, Sec. 102.21(c)(4),
which provides that the country of origin will be the country,
territory, or insular possession where the most important manufacturing
process occurred. While Customs believes it is preferable in principle
to employ the objective, specific tariff shift or related rules under
Secs. 102.21(c) (2) and (e), in some instances, as here, Customs has
been unable to avoid a certain degree of subjectivity in the
application of the appropriate rule of origin.
Application of Sec. 334(b)(2)(A)--Special Rules for Specified Headings
and Subheadings
Comment: Section 334(b)(2)(A) of the Act provides that the origin
of goods classifiable under certain specified tariff provisions ``shall
be determined under subparagraph (A), (B), or (C) of paragraph (1), as
appropriate''. The May 23, 1995, notice of proposed rulemaking stated
that since all of the headings and subheadings specified in
Sec. 334(b)(2)(A) cover goods that have been advanced beyond yarn or
fabric form, the origin of those goods should be determined by the
yarns (in the case of heading 5609) or the fabrics which comprise the
good. Three commenters concurred with that position, stating that the
majority of time, labor, and cost is in the greige fabric. One
commenter specifically stated that Sec. 334(b)(2)(A) is clear that the
origin of the goods classifiable under the listed headings and
subheadings is determined by the origin of the fabric from which the
goods are constructed. However, six commenters objected to taking a
restrictive interpretation of the words ``as appropriate'' and one,
without mentioning the interpretation of those words, stated that the
origin of goods of subheading 9404.90 should be determined by where
they are assembled.
One commenter noted that the proposed tariff shift rule for
subheading 9404.90, which covers comforters, quilts, etc., would result
in the goods having their country of origin in the country where those
goods are assembled. The commenter stated that this would be contrary
to the terms of Sec. 334(b)(2)(A) under which, notwithstanding the
general assembly rule in Sec. 334(b)(1)(D), the country of origin of
goods classifiable under any of the headings or subheadings listed in
that section will be the country that produced the yarns or fabrics, as
appropriate, from which those goods are made.
Customs response: After reviewing all of the comments and the
commenters' suggestions as to how the words ``as appropriate'' should
be interpreted, Customs adheres to the position set forth in the May
23, 1995, notice. No commenter in opposition to the position proposed
by Customs offered an acceptable legal alternative to that position.
While several of the commenters cited judicial case law concerning the
interpretation of statutes, all of their citations and quotations
involved statutory language that was not the same as, or similar to,
the language of Sec. 334(b)(2)(A). Moreover, none of the
interpretations suggested by those commenters adequately addressed the
fact that all of the headings and subheadings listed in
Sec. 334(b)(2)(A) provide for goods made from materials and that,
therefore, the most reasonable interpretation of that section is that
it is appropriate to determine the origin of those goods according to
Sec. 334(b)(1)(B), the rule for yarns, or Sec. 334(b)(1)(C), the rule
for fabrics.
The comment regarding the tariff shift rule for subheading 9404.90
prompted Customs to review the proposed tariff shift rules for all of
the headings and subheadings listed in Sec. 334(b)(2)(A). That review
disclosed that Customs erred in the proposal for subheading 9404.90 and
in the proposed rules for the other 15 listed headings or subheadings
because, in each instance, the proposed rule both referred to a change
to the named heading or subheading and included a proviso regarding the
process by which the change must result. For example, if a fabric is
woven in one country and wholly assembled in a second country into a
good subject to Sec. 334(b)(2)(A), the required tariff shift change
does not occur in the country in which the fabric was formed (in other
words, the change does not result from a fabric-making process as
prescribed in the applicable proposed rule). As a result and as the
above commenter noted, the terms of the tariff shift rule would not be
met and the next relevant general rule, Sec. 102.21(c)(3)(ii), would
cause the country of origin of that good to be the country of assembly.
Therefore, each of the rules for the headings and subheadings listed in
Sec. 334(b)(2)(A) has been modified as set forth below to provide that
the country of origin of a good classifiable under those headings or
subheadings is either the country of origin of the yarns (in the case
of heading 5609) or of the fabric (for the rest of the listed headings
or subheadings) from which those goods are made.
In addition, since the clear intent of Sec. 334(b)(2)(A) is to
eliminate assembly from conferring origin in the case of goods
classifiable under any of the provisions listed in that section,
Sec. 102.21(c)(3)(ii) has been modified as set forth below to preclude
assembly from automatically conferring origin on those goods when the
Sec. 102.21(c)(2) tariff shift or other requirements are not met (e.g.
when a good is made from fabrics originating in different countries).
Multicountry rules
Comment: Eight commenters stated, in one fashion or another, that
the proposed multicountry rules (Secs. 102.21(c) (4) and (5)) should be
made clearer, either by adding definitions or by adding examples.
Customs response: Given the wide variety of textile and apparel
products and the multiplicity of manufacturing processes involving
those products, Customs is adverse to defining the terms ``most
important assembly or manufacturing process'' and ``important assembly
or manufacturing process'' which form the basis of the multicountry
rules. Customs recognizes that the concern underlying the submitted
comments revolves around
[[Page 46193]]
the meaning of the word ``important'', and, in fact, during the
development of the proposed regulatory texts Customs decided to eschew
use of definitions calling for comparisons of such criteria as time
involved in processing, labor and other costs of processing,
complexity, and value added. Customs views the word ``important'' as
referring to the relative significance of the manufacturing or assembly
processes involved in the production of a good; thus, the word
``important,'' has the same connotation as the word ``meaningful''.
Accordingly, in determining relative importance, a manufacturing
operation in a low wage country is no less important to the production
of a good than that same manufacturing operation in a high wage
country, nor is a manufacturing operation done by an expensive machine
more important than that same manufacturing operation done by hand.
There is only one example, discussed elsewhere in this document, on
which Customs has reached a definitive conclusion regarding relative
importance of manufacturing processes: forming a fabric is a more
important process than cutting that fabric. Decisions on all other
comparisons must be made on a case-by-case basis according to the
specific facts presented. Customs recognizes that this may appear to
leave importers with a degree of uncertainty. However, Customs believes
that a large proportion of multicountry processing is unnecessary from
a manufacturing standpoint and thus is done more for quota-engineering
purposes, that is, for the primary purpose of avoiding quantitative
restraints imposed by international agreements. Moreover, if a
manufacturer or importer has any doubts about which country, territory,
or insular possession is the country of origin of its goods, that party
may obtain appropriate advance guidance under the Customs ruling
program.
Cutting and Products of Insular Possessions
Comment: The May 23, 1995, notice of proposed rulemaking stated
that Customs believes cutting was not intended to play any role in
determining the country of origin of textile and apparel products. That
statement raised the question, both within Customs and among members of
the importing public, of whether Customs would continue the current
tariff treatment of garments that are cut and assembled in insular
possessions.
General Note 3(a)(iv), HTSUS, provides that goods of insular
possessions are excepted from duty if, among other requirements, they
are ``manufactured or produced in any such possession from materials
the growth, product, or manufacture'' of that insular possession.
Customs has ruled that this portion of General Note 3(a)(iv) may be
satisfied by two significant manufacturing or processing operations.
Under existing rulings, the cutting of fabric into garment parts and
the assembly of those parts into garments are normally considered by
Customs to constitute the required two significant manufacturing or
processing operations that would qualify the garments for duty-free
treatment.
One commenter wanted Customs to retain cutting as a process that
confers origin. Nine commenters were concerned that the language in the
May 23, 1995, notice of proposed rulemaking meant that garments cut and
assembled in insular possessions would no longer be eligible for duty-
free entry. Two commenters argued that cutting is equal to, or more
important than, forming fabric while three commenters stated that
cutting fabric is a very small part of producing a garment. One
commenter referred specifically to the importance, for origin purposes,
of the high degree of precision and expense involved in cutting
components for men's tailored clothing. Many of the commenters pointed
out that there is no evidence to indicate that Congress intended to
change the tariff status of apparel goods cut and assembled in insular
possessions. Other commenters noted that General Note 3(a)(iv) was
intended by Congress to benefit insular possessions and should,
therefore, be liberally construed. A number of commenters were
concerned that Customs would never consider cutting when determining
the origin of textiles and apparel products and expressed their
disagreement with that position. Several commenters noted that there is
nothing in Sec. 334 of the Act that requires Customs to ignore entirely
the role cutting plays in the manufacture of textile and apparel
articles. Some commenters also pointed out that General Note 3(a)(iv)
concerns preferential duty status of goods rather than the
determination of their origin.
Customs response: Customs concurs with most of the commenters on
this issue that, since Sec. 334 deals with the country of origin of
textile and apparel products and not with value requirements for
purposes of duty preferences, Sec. 334 will not affect either foreign
material value determinations required under General Note 3(a)(iv) or
value-added requirements contained in other statutory provisions.
Accordingly, Customs intends to continue its current tariff treatment
of garments which are cut and assembled in insular possessions.
Nevertheless, Customs believes that the position that cutting is
not an origin-conferring process is correct for country of origin
determinations. While cutting is a process which may be considered to
be an important manufacturing process, as between the production of
fabric and the cutting of that fabric to shape, fabric production is
considered to be the more important process. The intent of Congress to
not allow cutting of fabric to confer origin is demonstrated by the
adoption of Sec. 334(b)(4) of the Act which continues the present
tariff treatment of components cut to shape in the United States from
imported fabric and sent abroad for assembly: if Congress had intended
the cutting of components from fabric to confer origin, there would
have been no need for Sec. 334(b)(4). Thus, when applying the first
multicountry rule (Sec. 102.21(c)(4), which provides that the most
important assembly or manufacturing process will determine the country
of origin), the country which produced the fabric will be determined to
be the country of origin of unassembled components merely cut from
fabric in another country.
Components Cut in the United States
Comment: Three commenters wrote in support of the continuation of
the treatment accorded goods by subheading 9802.00.80, HTSUS.
Customs response: These comments reflect some apparent confusion
regarding the overall effect of Sec. 334 of the Act in this area.
Under the present rules of origin, cutting apparel components from
fabric (regardless of the country of origin of that fabric) will
usually result in the cut components being considered a product of the
country where the cutting is performed. Thus, when foreign fabric is
imported into the United States and cut into apparel components, the
United States is the country of origin of those components.
Accordingly, if apparel components cut from foreign fabric in the
United States are exported for assembly and the assembled goods are
then imported into the United States, pursuant to subheading
9802.00.80, HTSUS, duty may be assessed on the full value of the
imported goods less the cost or value of the components cut in the
United States.
As previously noted, Congress adopted Sec. 334(b)(4) because
Secs. 334(b) (1) and (2) of the Act in effect eliminate cutting as a
process conferring origin for most purposes. Under Sec. 334(b)(4),
where goods are assembled abroad from components cut in the United
States
[[Page 46194]]
from foreign fabric (even though under the Sec. 334 rules the cut
components are not products of the United States and the assembling
country is the country of origin), the assembled goods, when imported
into the United States, will continue to receive the same duty
treatment presently accorded to such goods under subheading 9802.00.80,
HTSUS. Thus, because Sec. 334(b)(4) serves to preserve a tariff
treatment that otherwise would no longer be available under the
Sec. 334 origin rules, this statutory provision in effect addresses the
concern of these commenters.
World Trade Organization and NAFTA Obligations
Comment: Twelve commenters believed that the proposed rules are in
violation of the Uruguay Round Agreement and the obligations the United
States agreed to when it became a member of the World Trade
Organization (WTO). While some commenters questioned why the United
States is making significant changes in its textile origin rules at the
same time that the WTO is embarking on a project involving the
development of international uniform rules of origin, two other
commenters expressed the view that the proposed rules will simplify the
WTO work on harmonized rules of origin. Several commenters stated that
the new origin rules will change the applicable textile restraint
categories for many products, creating problems in the administration
of international textile agreements.
A number of commenters referred to the obligations the United
States incurred under the North American Free Trade Agreement (NAFTA).
Two commenters made the general statement that Sec. 334(b)(2)(A) of the
Act was contrary to the NAFTA, and a third commenter made the same
statement but with specific reference to Article 309(1) of the NAFTA.
Four commenters noted that the proposed rules conflicted with the NAFTA
marking rules, and one of these commenters argued that Canada has a
reasonable expectation that established marking rules will continue in
effect. Another commenter observed that the proposed rules will cause
some goods now subject to Tariff Preference Levels (TPLs) under the
NAFTA to no longer be considered products of a NAFTA party, with the
result that those goods will not be allowed entry into the United
States under a TPL.
One commenter stated that if the country in which down comforters
are assembled is not the country of origin of those goods, in order to
avoid an unfair advantage for Canadian and Mexican comforter
manufacturers, Customs should clearly state that the NAFTA preference
rules do not govern goods processed in a NAFTA country that fall within
the scope of Sec. 334 of the Act.
Another commenter thought that the wording of proposed Sec. 102.21
is ambiguous concerning the application of Sec. 102.19 (the ``NAFTA
preference override'' provision) to ``originating goods'' under the
NAFTA.
Customs response: In discussing Sec. 334, both the President's
Statement of Administrative Action and the relevant Senate report
stated that Sec. 334 would more accurately reflect where the most
significant production activity occurs, would help combat transshipment
and other circumvention of textile and apparel quotas, would bring the
U.S. rules of origin in line with rules employed by other major textile
and apparel importing countries and by U.S. trading partners, and would
advance the goal of harmonizing international rules of origin set out
in the WTO Agreement on Rules of Origin. It was also noted that,
pursuant to Article 4 of the Agreement on Textiles and Clothing which
provides for consultations in the case of a disruption of trade or an
adverse affect on market access, the Administration will undertake
consultations ``where appropriate''.
It is not the function of Customs to determine whether the
enactment of Sec. 334 constitutes a breach of either the WTO Agreement
or the NAFTA. Both agreements have specified procedures for signatory
parties to follow if it is believed that another signatory has violated
its commitments. Accordingly, the question of whether there has been a
violation of a provision of the WTO Agreement on Rules of Origin or of
the NAFTA is a matter to be decided within the framework of those
agreements.
With regard to the comment on down comforters, Customs is unable to
accede to this commenter's request. Section 334(b)(1) of the Act opens
with the words ``[e]xcept as otherwise provided for by statute,'' and
Customs followed this statutory language by including in the first
sentence of proposed Sec. 102.21(a) the words ``except as otherwise
provided for by statute''; thus, origin rules contained in other
statutes will take precedence over the origin rules in Sec. 334 and in
Sec. 102.21 of the regulations. The NAFTA rules of origin for duty
preference purposes are set forth in 19 U.S.C. 3332 and in General Note
12, HTSUS. Accordingly, if, as in the case of down comforters, the
NAFTA origin rule for duty preference purposes is less restrictive than
the corresponding rule contained in Sec. 334 of the Act and in
Sec. 102.21 of the regulations, then the NAFTA origin rule will control
for NAFTA duty preference purposes.
As regards the alleged ambiguity between Sec. 102.19 and
Sec. 102.21, Customs does not believe that any change to the proposed
regulatory texts is appropriate in this regard. Section 102.19 was
originally adopted in a strictly NAFTA context in order to clarify the
relationship between the Part 102 NAFTA marking rules and the separate
rules of origin that apply under the NAFTA for duty preference
purposes. Proposed Sec. 102.21(c) included Sec. 102.19 among the
existing Part 102 provisions that may apply for purposes of the
Sec. 102.21(c) general rules because a failure to mention Sec. 102.19
in this context might incorrectly give the impression, contrary to the
express terms of Sec. 334 as discussed in the preceding comment
response, that the rules of origin applicable to ``originating goods''
under the NAFTA do not take precedence over the Sec. 102.21 provisions.
Miscellaneous Goods
Comment: One commenter stated that the manufacture of goods
classifiable in headings 5604-5609, 5808-5809, 5901-5903, 5905-5908 and
5910 and in subheading 5911.90 requires special equipment and knowledge
and, therefore, the tariff shift rule for those provisions should
prescribe a change from any other heading.
Customs response: The proposed tariff shift rules for each of the
mentioned headings and subheading were carefully drafted to reflect the
express requirements of Sec. 334(b) of the Act. Most of those headings
mentioned by the commenter provide specifically for yarns, cordage,
braids, or fabrics, and Sec. 334(b) is very specific regarding the
rules for determining the origin of those goods. In some instances, the
proposed tariff shift rule was drafted to reflect that assembly (under
Sec. 334(b)(1)(D) of the Act) confers origin. In a very few instances
(e.g. fishing nets of heading 5608), the tariff shift rule was drafted
to reflect the application of the first multicountry rule
(Sec. 334(b)(3)(A) of the Act and Sec. 102.21(c)(4) of the
regulations). To do as this commenter suggested would cause the
application of the tariff shift rules to result, for some goods, in
determinations of origin not consistent with the requirements of
Sec. 334(b).
Miscellaneous Issues
Comment: Five commenters referred to the substantial transformation
concept, noting variously that there is no definition of ``substantial
transformation'' in the proposed regulatory texts, that the proposed
texts
[[Page 46195]]
do not comply with accepted principles of what constitutes a
substantial transformation, or that the United States should retain
substantial transformation as the basis for determining the origin of
imported goods. One commenter also noted that there is no value-added
criterion. In addition, while two commenters noted that the rules in
Sec. 334 of the Act are more similar to the rules followed by the rest
of the industrialized nations than are the present rules applied by
Customs, another commenter noted that Sec. 334(b)(2)(A) of the Act (the
special rule of origin listing 16 provisions which are not subject to
the assembly rule) is not consistent with rules applied by Canada. One
commenter pointed out that Sec. 334 conflicts with past practices and
rulings of Customs. Finally, one commenter expressed concern that the
rules of origin contained in Sec. 334 are inconsistent with the Federal
Trade Commission Regulation in 16 CFR 303.33(a)(3) which requires that
each textile product made in the United States in whole or part of
imported materials contain a label disclosing those facts.
Customs response: Section 334 is a Congressionally enacted statute
and, as such, it prevails over all prior U.S. regulations, rulings, and
judicial decisions that are inconsistent with its terms, and it applies
without regard to the laws of other countries. It provides an objective
set of rules to be applied without reference to the substantial
transformation concept, which is the present basis applied generally by
the courts and by Customs for determining the origin of merchandise
processed in more than one country. While Sec. 334 may represent the
view of Congress concerning how it believes the substantial
transformation principle should be applied, when the origin provisions
of Sec. 334 take effect on July 1, 1996, they will effectively remove
from consideration the question of whether or not a processing or
manufacturing operation constitutes a substantial transformation for
most Customs and related purposes. With regard to the cited Federal
Trade Commission regulations, Customs would also note that those
regulations are promulgated under separate statutory authority
applicable to that agency and, therefore, the issue of the alleged
inconsistency is not a matter that can be unilaterally addressed by
Customs in the regulations implementing Sec. 334.
Other Changes to the Regulatory Texts
In addition to the changes to the proposed regulatory texts
discussed above in connection with the public comments, Customs has
determined that a number of other changes should be made to the
proposed texts based on further internal review. These changes are
discussed below.
Section 10.26(c)(3)
In proposed new Sec. 10.26, paragraph (a) implemented the
provisions of U.S. Note 2(b), Subchapter II, Chapter 98, HTSUS,
paragraph (b) implemented the provisions of Sec. 334(b)(4)(B) of the
Act, and paragraph (c) set forth definitions or rules for purposes of
the section as a whole. In paragraph (c)(3) which set forth a rule
regarding entry into the commerce of a non-beneficiary country,
reference was made to a ``component'' (which is the term used in
Sec. 334(b)(4)(B) of the Act) but references to a ``material'' and an
``ingredient'' (which are terms used in U.S. Note 2(b), Subchapter II,
Chapter 98, HTSUS) were inadvertently omitted. The text of
Sec. 10.26(c)(3) as set forth below has been modified to correct this
oversight.
Section 102.21(b)(2)--Definition of ``fabric-making process''
In reviewing proposed Sec. 102.21(b)(2), Customs discovered that
fabric strips were inadvertently omitted from the list of materials
which may comprise a fabric. It has been the experience of Customs that
a fabric may be formed (usually woven) with narrow fabric strips. While
fabric strips are not a material specifically mentioned in
Sec. 334(b)(1)(C) of the Act, Customs is of the view that the formation
of a fabric from fabric strips is a fabric-making process and should be
treated as such in the regulations, in particular for purposes of
applying those Sec. 102.21(e) tariff shift or other requirements that
specifically refer to a ``fabric-making process''. Customs also notes
that the first multicountry rule (Sec. 334(b)(3)(A) of the Act and
Sec. 102.21(c)(4) of the regulations) would yield the same result
because, in the case of a fabric, the most important manufacturing
process is the actual forming of the fabric. Accordingly,
Sec. 102.21(b)(2) as set forth below has been modified to reflect that
a fabric-making process may include a manufacturing operation which
begins with fabric strips.
Subheading 5808.10
Customs inadvertently omitted the word ``other'' before the word
``heading'' in the first proposed tariff shift rule for subheading
5808.10. In order to eliminate any possible confusion and conform the
wording to that used in other tariff shift rules, the first tariff
shift for subheading 5808.10 as set forth below has been modified
accordingly.
Heading 5904
Since lamination of preexisting components is considered to be an
assembly, the proposed tariff shift rule for heading 5904 provided a
meaningful rule for goods that have been manufactured by a lamination
process. However, that tariff shift rule did not provide for goods of
heading 5904 that have been produced by means of a coating process. In
view of the various manufacturing processes used in the production of
such coated goods and the differences in materials that may be used,
Customs does not believe that it is feasible to craft a tariff shift
rule for those goods. Consequently, the country of origin of goods of
heading 5904 produced by means of a coating process must be determined
by application of the multicountry rules in Secs. 102.21(c) (4) and
(5). Accordingly, the proposed tariff shift rule for heading 5904 has
been replaced by two rules as set forth below to reflect these
considerations, the first rule covering goods that are wholly assembled
by means of a laminating process and the second rule covering all other
goods.
Subheadings 5911.10-5911.40
On further review of the proposed tariff shift rule for subheadings
5911.10 through 5911.40, Customs found that no provision was made for
application of the assembly rule (Sec. 334(b)(1)(D) of the Act) to
goods classifiable in subheadings 5911.31 through 5911.32 fitted with
linking devices. Customs notes in this regard that the combining of
linking devices with textile fabrics or felts may constitute an
assembly, in which case Sec. 334(b)(1)(D) would apply to determine the
country of origin. Accordingly, the proposed tariff shift rule for
subheadings 5911.10 through 5911.40 has been modified as set forth
below (1) by setting forth a rule separately both for subheading
5911.10 through 5911.20 and for subheading 5911.40 and with no change
in substance and (2) by including two separate rules for subheadings
5911.31 through 5911.32, the first of which follows the originally
proposed rule and the second of which is intended to cover goods
incorporating such linking devices.
Subheading 5911.90
On further review of the three tariff shift rules proposed for
subheading 5911.90, Customs has determined that the first and third
rules overlap in terms of goods covered. The first rule is for ``goods
of yarn, rope, cord, braid'' and thus includes made up articles which,
[[Page 46196]]
using normal classification principles, would be considered to be
``of'' the named materials. The third rule specifically covers goods
which are made up articles. To eliminate this overlap, the third tariff
shift rule for subheading 5911.90 has been modified as set forth below
by the addition of an exception clause for goods subject to the first
tariff shift rule.
Headings 6501 and 6503
Headings 6501 and 6503 cover goods of felt. When the proposed
tariff shift rules for these headings were drafted, Customs
inadvertently included, in the exception clause in the second tariff
shift rule for each heading, a reference to heading 5603 which covers
nonwovens; the reference should have been to heading 5602 which
provides for felts. Accordingly, the second tariff shift rule for each
of these headings has been modified as set forth below to correct this
error.
Issuance of Rulings During the Interim Period
Although this final rule action is effective 30 days after its
publication in the Federal Register, Customs notes that the final
regulatory provisions set forth herein that implement the provisions of
section 334 of the Act apply to goods entered, or withdrawn from
warehouse, for consumption on or after July 1, 1996, in keeping with
the effective date set forth in section 334. Customs recognizes that
the realities of the textile and apparel trade often require sourcing
and production decisions long in advance of the ultimate date of
importation of the goods. In order to ensure that prospective importers
may have appropriate advance guidance regarding the Customs
interpretation of the final regulations set forth in this document,
Customs has determined that the Customs ruling program should
accommodate ruling requests regarding those regulatory texts during the
interim period between the effective date of this final rule action and
the applicability date for the regulatory texts rather than only after
the section 334(b) provisions take effect. Accordingly, Customs will
accept requests for rulings on the regulatory texts set forth herein,
submitted in accordance with the provisions of Part 177 of the Customs
Regulations (19 CFR Part 177), commencing 30 days after the date of
publication of this final rule document in the Federal Register.
Conclusion
Accordingly, based on the comments received and the analysis of
those comments and based on the additional considerations as discussed
above, Customs believes that the proposed regulatory amendments should
be adopted as a final rule with certain changes thereto as discussed
above and set forth below. As a consequence of the adoption of these
substantive regulatory amendments, this document also includes an
appropriate update of the list of information collection approvals
contained in Sec. 178.2 of the Customs Regulations (19 CFR 178.2).
Executive Order 12866
This document does not meet the criteria for a ``significant
regulatory action'' as specified in E.O. 12866.
Regulatory Flexibility Act
Pursuant to the provisions of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.), it is certified that the amendments will not have
a significant economic impact on a substantial number of small
entities. Accordingly, the amendments are not subject to the regulatory
analysis or other requirements of 5 U.S.C. 603 and 604.
Paperwork Reduction Act
The collection of information requirements contained in these final
regulations have been reviewed and approved by the Office of Management
and Budget in accordance with the Paperwork Reduction Act of 1980 (44
U.S.C. 3507) under control number 1515-0207. The estimated average
annual burden associated with this collection is 1.5 hours per
respondent or recordkeeper. Comments concerning the accuracy of this
burden estimate and suggestions for reducing this burden should be
directed to the U.S. Customs Service, Paperwork Management Branch, Room
6316, 1301 Constitution Avenue NW., Washington, D.C. 20229, or the
Office of Management and Budget, Attention: Desk Officer for the
Department of the Treasury, Office of Information and Regulatory
Affairs, Washington, D.C. 20503.
Drafting Information
The principal author of this document was Francis W. Foote, Office
of Regulations and Rulings, U.S. Customs Service. However, personnel
from other offices participated in its development.
List of Subjects
19 CFR Part 10
Customs duties and inspection, Imports, Reporting and recordkeeping
requirements.
19 CFR Part 12
Customs duties and inspection, Labeling, Marking, Reporting and
recordkeeping requirements, Textiles and textile products.
19 CFR Part 102
Customs duties and inspections, Imports, Reporting and
recordkeeping requirements, Rules of origin, Trade agreements.
19 CFR Part 178
Collections of information, Paperwork requirements, Reporting and
recordkeeping requirements.
Amendments to the Regulations
Accordingly, for the reasons stated above, Parts 10, 12, 102 and
178, Customs Regulations (19 CFR Parts 10, 12, 102 and 178), are
amended as set forth below.
PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,
ETC.
1. The general authority citation for Part 10 and the specific
authority citations for Secs. 10.191-10.198 continue to read, and a
specific authority citation for Secs. 10.25 and 10.26 is added to read,
as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized
Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508,
1623, 1624, 3314;
* * * * *
Sections 10.25 and 10.26 also issued under 19 U.S.C. 3592;
* * * * *
Sections 10.191-10.198 also issued under 19 U.S.C. 2701 et seq.;
* * * * *
2. Sections 10.25 and 10.26 are added under the heading ``Articles
assembled abroad with United States components'' to read as follows:
Sec. 10.25 Textile components cut to shape in the United States and
assembled abroad.
Where a textile component is cut to shape (but not to length,
width, or both) in the United States from foreign fabric and exported
to another country, territory, or insular possession for assembly into
an article that is then returned to the United States and entered, or
withdrawn from warehouse, for consumption on or after July 1, 1996, the
value of the textile component shall not be included in the dutiable
value of the article. For purposes of determining whether a reduction
in the dutiable value of an imported article may be allowed under this
section:
(a) The terms ``textile component'' and ``fabric'' have reference
only to goods covered by the definition of ``textile or apparel
product'' set forth in Sec. 102.21(b)(4) of this chapter;
[[Page 46197]]
(b) The operations performed abroad on the textile component shall
conform to the requirements and examples set forth in Sec. 10.16
insofar as they may be applicable to a textile component; and
(c) The valuation and documentation provisions of Secs. 10.17,
10.18, 10.21 and 10.24 shall apply.
Sec. 10.26 Articles assembled or processed in a beneficiary country in
whole of U.S. components or ingredients; articles assembled in a
beneficiary country from textile components cut to shape in the United
States.
(a) No article (except a textile article, apparel article, or
petroleum, or any product derived from petroleum, provided for in
heading 2709 or 2710, Harmonized Tariff Schedule of the United States
(HTSUS)) shall be treated as a foreign article or as subject to duty:
(1) If the article is assembled or processed in a beneficiary
country in whole of fabricated components that are a product of the
United States; or
(2) If the article is processed in a beneficiary country in whole
of ingredients (other than water) that are a product of the United
States; and
(3) Neither the fabricated components, materials or ingredients
after their exportation from the United States, nor the article before
its importation into the United States, enters into the commerce of any
foreign country other than a beneficiary country.
(b) No article (except a textile or apparel product) entered, or
withdrawn from warehouse, for consumption on or after July 1, 1996,
shall be treated as a foreign article or as subject to duty:
(1) If the article is assembled in a beneficiary country in whole
of textile components cut to shape (but not to length, width, or both)
in the United States from foreign fabric; or
(2) If the article is assembled in a beneficiary country in whole
of both textile components described in paragraph (b)(1) of this
section and components that are products of the United States; and
(3) Neither the components after their exportation from the United
States, nor the article before its importation into the United States,
enters into the commerce of any foreign country other than a
beneficiary country.
(c) For purposes of this section:
(1) The terms ``textile article'', ``apparel article'', and
``textile or apparel product'' cover all articles, other than footwear
and parts of footwear, that are classifiable in an HTSUS subheading
which carries a textile and apparel category number designation;
(2) The term ``beneficiary country'' has the meaning set forth in
Sec. 10.191(b)(1); and
(3) A component, material, ingredient, or article shall be deemed
to have not entered into the commerce of any foreign country other than
a beneficiary country if:
(i) The component, material, or ingredient was shipped directly
from the United States to a beneficiary country, or the article was
shipped directly to the United States from a beneficiary country,
without passing through the territory of any non-beneficiary country;
or
(ii) Where the component, material, ingredient, or article passed
through the territory of a non-beneficiary country while en route to a
beneficiary country or the United States:
(A) The invoices, bills of lading, and other shipping documents
pertaining to the component, material, ingredient, or article show a
beneficiary country or the United States as the final destination and
the component, material, ingredient, or article was neither sold at
wholesale or retail nor subjected to any processing or other operation
in the non-beneficiary country; or
(B) The component, material, ingredient, or article remained under
the control of the customs authority of the non-beneficiary country and
was not subjected to operations in that non-beneficiary country other
than loading and unloading and activities necessary to preserve the
component, material, ingredient, or article in good condition.
3. In Sec. 10.195, paragraphs (d) and (e) are redesignated as
paragraphs (e) and (f) respectively and a new paragraph (d) is added to
read as follows:
Sec. 10.195 Country of origin criteria.
* * * * *
(d) Textile components cut to shape in the U.S. The percentage
referred to in paragraph (c) of this section may be attributed in whole
or in part to the cost or value of a textile component that is cut to
shape (but not to length, width, or both) in the U.S. (including the
Commonwealth of Puerto Rico) from foreign fabric and exported to a
beneficiary country for assembly into an article that is then returned
to the U.S. and entered, or withdrawn from warehouse, for consumption
on or after July 1, 1996. For purposes of this paragraph, the terms
``textile component'' and ``fabric'' have reference only to goods
covered by the definition of ``textile or apparel product'' set forth
in Sec. 102.21(b)(4) of this chapter.
* * * * *
PART 12--SPECIAL CLASSES OF MERCHANDISE
1. The authority citation for Part 12 continues to read in part as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 20,
Harmonized Tariff Schedule of the United States (HTSUS)), 1624;
* * * * *
Sections 12.130 and 12.131 also issued under 7 U.S.C. 1854;
* * * * *
2. In Sec. 12.130:
a. the last sentence of paragraph (b) is amended by adding after
``Mexico'' the words ``, and the origin of textile and apparel products
covered by Sec. 102.21 of this chapter,'';
b. the last sentence of the introductory text of paragraph (d) is
amended by adding after ``Mexico'' the words ``, and the origin of
textile and apparel products covered by Sec. 102.21 of this chapter,'';
and
c. the introductory text of paragraph (e)(1) is amended by adding
after ``Mexico'' the words ``and except for textile and apparel
products''.
PART 102--RULES OF ORIGIN
1. The authority citation for Part 102 is revised to read as
follows:
Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized
Tariff Schedule of the United States), 1624, 3314, 3592.
2. Section 102.0 is amended by removing the word ``This'' at the
beginning of the first sentence and adding, in its place, the words
``Except in the case of goods covered by Sec. 102.21, this'' and by
adding a sentence at the end to read as follows:
Sec. 102.0 Scope.
* * * The rules for determining the country of origin of textile
and apparel products set forth in Sec. 102.21 apply for the foregoing
purposes and for the other purposes stated in that section.
3. Section 102.11 is amended by adding an introductory paragraph
before paragraph (a) to read as follows:
Sec. 102.11 General rules.
The following rules shall apply for purposes of determining the
country of origin of imported goods other than textile and apparel
products covered by Sec. 102.21.
* * * * *
4. Section 102.21 is added to read as follows:
Sec. 102.21 Textile and apparel products.
(a) Applicability. Except for purposes of determining whether goods
originate in Israel or are the growth, product, or
[[Page 46198]]
manufacture of Israel, and except as otherwise provided for by statute,
the provisions of this section shall control the determination of the
country of origin of imported textile and apparel products for purposes
of the Customs laws and the administration of quantitative
restrictions. The provisions of this section shall apply to goods
entered, or withdrawn from warehouse, for consumption on or after July
1, 1996.
(b) Definitions. The following terms shall have the meanings
indicated when used in this section:
(1) Country of origin. The term country of origin means the
country, territory, or insular possession in which a good originates or
of which a good is the growth, product, or manufacture.
(2) Fabric-making process. A fabric-making process is any
manufacturing operation that begins with polymers, fibers, filaments
(including strips), yarns, twine, cordage, rope, or fabric strips and
results in a textile fabric.
(3) Knit to shape. The term knit to shape applies to any good of
which 50 percent or more of the exterior surface area is formed by
major parts that have been knitted or crocheted directly to the shape
used in the good, with no consideration being given to patch pockets,
appliques, or the like. Minor cutting, trimming, or sewing of those
major parts will not affect the determination of whether a good is
``knit to shape.''
(4) Major parts. The term major parts means integral components of
a good but does not include collars, cuffs, waistbands, plackets,
pockets, linings, paddings, trim, accessories, or similar parts.
(5) Textile or apparel product. A textile or apparel product is any
good classifiable in Chapters 50 through 63, Harmonized Tariff Schedule
of the United States (HTSUS), and any good classifiable under one of
the following HTSUS headings or subheadings:
3005.90
3921.12.15
3921.13.15
3921.90.2550
4202.12.40-80
4202.22.40-80
4202.32.40-95
4202.92.15-30
4202.92.60-90
6405.20.60
6406.10.77
6406.10.90
6406.99.15
6501
6502
6503
6504
6505.90
6601.10-99
7019.10.15
7019.10.28
7019.20
8708.21
8804
9113.90.40
9404.90.10
9404.90.80-95
9502.91
9612.10.9010
(6) Wholly assembled. The term ``wholly assembled'' when used with
reference to a good means that all components, of which there must be
at least two, preexisted in essentially the same condition as found in
the finished good and were combined to form the finished good in a
single country, territory, or insular possession. Minor attachments and
minor embellishments (for example, appliques, beads, spangles,
embroidery, buttons) not appreciably affecting the identity of the
good, and minor subassemblies (for example, collars, cuffs, plackets,
pockets), will not affect the status of a good as ``wholly assembled''
in a single country, territory, or insular possession.
(c) General rules. Subject to paragraph (d) of this section, the
country of origin of a textile or apparel product shall be determined
by sequential application of paragraphs (c) (1) through (5) of this
section and, in each case where appropriate to the specific context, by
application of the additional requirements or conditions of
Secs. 102.12 through 102.19 of this part.
(1) The country of origin of a textile or apparel product is the
single country, territory, or insular possession in which the good was
wholly obtained or produced.
(2) Where the country of origin of a textile or apparel product
cannot be determined under paragraph (c)(1) of this section, the
country of origin of the good is the single country, territory, or
insular possession in which each foreign material incorporated in that
good underwent an applicable change in tariff classification, and/or
met any other requirement, specified for the good in paragraph (e) of
this section.
(3) Where the country of origin of a textile or apparel product
cannot be determined under paragraph (c) (1) or (2) of this section:
(i) If the good was knit to shape, the country of origin of the
good is the single country, territory, or insular possession in which
the good was knit; or
(ii) Except for goods of heading 5609, 5807, 5811, 6213, 6214, 6301
through 6306, and 6308, and subheadings 6209.20.5040, 6307.10, 6307.90,
and 9404.90, if the good was not knit to shape and the good was wholly
assembled in a single country, territory, or insular possession, the
country of origin of the good is the country, territory, or insular
possession in which the good was wholly assembled.
(4) Where the country of origin of a textile or apparel product
cannot be determined under paragraph (c) (1), (2) or (3) of this
section, the country of origin of the good is the single country,
territory, or insular possession in which the most important assembly
or manufacturing process occurred.
(5) Where the country of origin of a textile or apparel product
cannot be determined under paragraph (c) (1), (2), (3) or (4) of this
section, the country of origin of the good is the last country,
territory, or insular possession in which an important assembly or
manufacturing process occurred.
(d) Treatment of sets. Where a good classifiable in the HTSUS as a
set includes one or more components that are textile or apparel
products and a single country of origin for all of the components of
the set cannot be determined under paragraph (c) of this section, the
country of origin of each component of the set that is a textile or
apparel product shall be determined separately under paragraph (c) of
this section.
(e) Specific rules by tariff classification. The following rules
shall apply for purposes of determining the country of origin of a
textile or apparel product under paragraph (c)(2) of this section:
------------------------------------------------------------------------
HTSUS Tariff shift and/or other requirements
------------------------------------------------------------------------
3005.90................ If the good contains pharmaceutical substances,
a change to subheading 3005.90 from any other
heading; or If the good does not contain
pharmaceutical substances, a change to
subheading 3005.90 from any other heading,
except from heading 5007, 5111 through 5113,
5208 through 5212, 5309 through 5311, 5407
through 5408, 5512 through 5516, 5601 through
5603, 5801 through 5804, 5806, 5809, 5903,
5906 through 5907, and 6001 through 6002.
3921.12.15............. A change to subheading 3921.12.15 from any
other heading.
3921.13.15............. A change to subheading 3921.13.15 from any
other heading.
[[Page 46199]]
3921.90.2550........... A change to subheading 3921.90.2550 from any
other heading.
4202.12.40-4202.12.80.. A change to subheading 4202.12.40 through
4202.12.80 from any other heading, provided
that the change is the result of the good
being wholly assembled in a single country,
territory, or insular possession.
4202.22.40-4202.22.80.. A change to subheading 4202.22.40 through
4202.22.80 from any other heading, provided
that the change is the result of the good
being wholly assembled in a single country,
territory, or insular possession.
4202.32.40-4202.32.95.. A change to subheading 4202.32.40 through
4202.32.95 from any other heading, provided
that the change is the result of the good
being wholly assembled in a single country,
territory, or insular possession.
4202.92.15-4202.92.30.. A change to subheading 4202.92.15 through
4202.92.30 from any other heading, provided
that the change is the result of the good
being wholly assembled in a single country,
territory, or insular possession.
4202.92.60-4202.92.90.. A change to subheading 4202.92.60 through
4202.92.90 from any other heading, provided
that the change is the result of the good
being wholly assembled in a single country,
territory, or insular possession.
5001-5002.............. A change to heading 5001 through 5002 from any
other chapter.
5003................... A change to heading 5003 from any other
heading, provided that the change is the
result of garnetting. If the change to heading
5003 is not the result of garnetting, the
country of origin of the good is the country
of origin of the good prior to its becoming
waste.
5004-5006.............. (1) If the good is of staple fibers, a change
to heading 5004 through 5006 from any heading
outside that group, provided that the change
is the result of a spinning process.
(2) If the good is of filaments, a change to
heading 5004 through 5006 from any heading
outside that group, provided that the change
is the result of an extrusion process.
5007................... A change to heading 5007 from any other
heading, provided that the change is the
result of a fabric-making process.
5101-5103.............. A change to heading 5101 through 5103 from any
other chapter.
5104................... A change to heading 5104 from any other
heading.
5105................... A change to heading 5105 from any other
chapter.
5106-5110.............. A change to heading 5106 through 5110 from any
heading outside that group, provided that the
change is the result of a spinning process.
5111-5113.............. A change to heading 5111 through 5113 from any
heading outside that group, provided that the
change is the result of a fabric-making
process.
5201................... A change to heading 5201 from any other
chapter.
5202................... A change to heading 5202 from any other
heading, provided that the change is the
result of garnetting. If the change to heading
5202 is not the result of garnetting, the
country of origin of the good is the country
of origin of the good prior to its becoming
waste.
5203................... A change to heading 5203 from any other
chapter.
5204-5207.............. A change to heading 5204 through 5207 from any
heading outside that group, provided that the
change is the result of a spinning process.
5208-5212.............. A change to heading 5208 through 5212 from any
heading outside that group provided the change
is the result of a fabric-making process.
5301-5305.............. (1) Except for waste, a change to heading 5301
through 5305 from any other chapter.
(2) For waste, a change to heading 5301 through
5305 from any heading outside that group,
provided that the change is the result of
garnetting. If the change is not the result of
garnetting, the country of origin of the good
is the country of origin of the good prior to
its becoming waste.
5306-5307.............. A change to heading 5306 through 5307 from any
heading outside that group, provided that the
change is the result of a spinning process.
5308................... (1) Except for paper yarns, a change to heading
5308 from any other heading, provided that the
change is the result of a spinning process.
(2) For paper yarns, a change to heading 5308
from any other heading, except from heading
4707, 4801 through 4806, 4811, and 4818.
5309-5311.............. A change to heading 5309 through 5311 from any
heading outside that group, provided that the
change is the result of a fabric-making
process.
5401-5406.............. A change to heading 5401 through 5406 from any
other heading, provided that the change is the
result of an extrusion process.
5407-5408.............. A change to heading 5407 through 5408 from any
heading outside that group, provided that the
change is the result of a fabric-making
process.
5501-5502.............. A change to heading 5501 through 5502 from any
other chapter, provided that the change is the
result of an extrusion process.
5503-5504.............. A change to heading 5503 through 5504 from any
other chapter, except from Chapter 54.
5505................... A change to heading 5505 from any other
heading, provided that the change is the
result of garnetting. If the change is not the
result of garnetting, the country of origin of
the good is the country of origin of the good
prior to its becoming waste.
5506-5507.............. A change to heading 5506 through 5507 from any
other chapter, except from Chapter 54.
5508-5511.............. A change to heading 5508 through 5511 from any
heading outside that group, provided that the
change is the result of a spinning process.
5512-5516.............. A change to heading 5512 through 5516 from any
heading outside that group, provided that the
change is the result of a fabric-making
process.
5601................... (1) A change to wadding of heading 5601 from
any other heading, except from heading 5105,
5203, and 5501 through 5507.
(2) A change to flock, textile dust, mill neps,
or articles of wadding, of heading 5601 from
any other heading or from wadding of heading
5601.
5602-5603.............. A change to heading 5602 through 5603 from any
heading outside that group, provided that the
change is the result of a fabric-making
process.
5604................... (1) If the textile component is of continuous
filaments, including strips, a change of those
filaments, including strips, to heading 5604
from any other heading, except from heading
5001 through 5007, 5401 through 5408, and 5501
through 5502, and provided that the change is
the result of an extrusion process.
[[Page 46200]]
(2) If the textile component is of staple
fibers, a change of those fibers to heading
5604 from any other heading, except from
heading 5004 through 5006, 5106 through 5110,
5204 through 5207, 5306 through 5308, and 5508
through 5511, and provided that the change is
the result of a spinning process.
5605-5606.............. If the good is of continuous filaments,
including strips, a change of those filaments,
including strips, to heading 5605 through 5606
from any other heading, except from heading
5001 through 5007, 5401 through 5408, and 5501
through 5502, and provided that the change is
the result of an extrusion process; or
If the good is of staple fibers, a change of
those fibers to heading 5605 through 5606 from
any other heading, except from heading 5106
through 5110, 5204 through 5207, 5306 through
5308, and 5508 through 5511, and provided that
the change is the result of a spinning
process.
5607................... If the good is of continuous filaments,
including strips, a change of those filaments,
including strips, to heading 5607 from any
other heading, except from heading 5001
through 5007, 5401 through 5406, and 5501
through 5511, and provided that the change is
the result of an extrusion process; or
If the good is of staple fibers, a change of
those fibers to heading 5607 from any other
heading, except from heading 5106 through
5110, 5204 through 5207, 5306 through 5308,
and 5508 through 5511, and provided that the
change is the result of a spinning process.
5608................... (1) A change to netting of heading 5608 from
any other heading, except from heading 5804,
and provided that the change is the result of
a fabric-making process.
(2) A change to fishing nets or other made up
nets of heading 5608:
(a) If the good does not contain nontextile
attachments, from any other heading, except
from heading 5804 and 6002, and provided that
the change is the result of a fabric-making
process; or
(b) If the good contains nontextile
attachments, from any heading, including a
change from another good of heading 5608,
provided that the change is the result of the
good being wholly assembled in a single
country, territory, or insular possession.
5609................... (1) If of continuous filaments, including
strips, the country of origin of a good
classifiable under heading 5609 is the
country, territory, or insular possession in
which those filaments, including strips, were
extruded.
(2) If of staple fibers, the country of origin
of a good classifiable under heading 5609 is
the country, territory, or insular possession
in which those fibers were spun into yarns.
5701-5705.............. A change to heading 5701 through 5705 from any
other chapter.
5801-5803.............. A change to heading 5801 through 5803 from any
other heading, including a heading within that
group, except from heading 5007, 5111 through
5113, 5208 through 5212, 5309 through 5311,
5407 through 5408, 5512 through 5516, and
6002, and provided that the change is the
result of a fabric-making process.
5804.10................ A change to subheading 5804.10 from any other
heading, except from heading 5608, and
provided that the change is the result of a
fabric-making process.
5804.21-5804.30........ A change to subheading 5804.21 through 5804.30
from any other heading, provided that the
change is the result of a fabric-making
process.
5805................... A change to heading 5805 from any other
heading, except from heading 5007, 5111
through 5113, 5208 through 5212, 5309 through
5311, 5407 through 5408, and 5512 through
5516, and provided that the change is the
result of a fabric-making process.
5806................... A change to heading 5806 from any other
heading, except from heading 5007, 5111
through 5113, 5208 through 5212, 5309 through
5311, 5407 through 5408, 5512 through 5516,
and 5801 through 5803, and provided that the
change is the result of a fabric-making
process.
5807................... The country of origin of a good classifiable
under heading 5807 is the country, territory,
or insular possession in which the fabric
comprising the good was formed by a fabric-
making process.
5808.10................ (1) If the good is of continuous filaments,
including strips, a change of those filaments,
including strips, to subheading 5808.10 from
any other heading, except from heading 5001
through 5007, 5401 through 5406, 5501 through
5502, and 5604 through 5607, and provided that
the change is the result of an extrusion
process.
(2) If the good is of staple fibers, a change
of those fibers to heading 5808.10 from any
other heading, except from heading 5106
through 5113, 5204 through 5212, 5306 through
5311, 5401 through 5408, 5508 through 5516,
and 5604 through 5607, and provided that the
change is the result of a spinning process.
5808.90................ (1) For ornamental fabric trimmings, a change
to subheading 5808.90 from any other chapter,
except from heading 5007, 5111 through 5113,
5208 through 5212, 5309 through 5311, 5407
through 5408, and 5512 through 5516, and
provided that the change is the result of a
fabric-making process.
(2) For nonfabric ornamental trimmings:
(a) If the trimming is of continuous filaments,
including strips, a change to subheading
5808.90 from any other heading, except from
heading 5001 through 5007, 5401 through 5408,
5501 through 5502, and 5604 through 5607, and
provided that the change is the result of an
extrusion process; or
(b) If the trimming is of staple fibers, a
change to subheading 5808.90 from any other
heading, except from heading 5106 through
5113, 5204 through 5212, 5306 through 5311,
5401 through 5408, 5508 through 5516, and 5604
through 5607, and provided that the change is
the result of a spinning process.
(3) For tassels, pompons and similar articles:
(a) If the good has been wholly assembled in a
single country, territory, or insular
possession, a change to subheading 5808.90
from any other heading;
(b) If the good has not been wholly assembled
in a single country, territory, or insular
possession and the good is of staple fibers, a
change to subheading 5808.90 from any other
heading, except from heading 5004 through
5006, 5106 through 5110, 5204 through 5207,
5306 through 5308, and 5508 through 5511, and
5604 through 5607, and provided that the
change is the result of a spinning process; or
(c) If the good has not been wholly assembled
in a single country, territory, or insular
possession and the good is of filaments,
including strips, a change to subheading
5808.90 from any other heading, except from
heading 5001 through 5007, 5401 through 5406,
and 5501 through 5502, and provided that the
change is the result of an extrusion process.
5809................... A change to heading 5809 from any other
heading, except from heading 5007, 5111
through 5113, 5208 through 5212, 5309 through
5311, 5407 through 5408, 5512 through 5516,
5801 through 5802, 5804, and 5806, and
provided that the change is the result of a
fabric-making process.
[[Page 46201]]
5810.10................ The country of origin of goods of subheading
5810.10 is the single country, territory, or
insular possession in which the embroidery was
performed.
5810.91-5810.99........ (1) For embroidered fabric, the country of
origin is the country, territory, or insular
possession in which the fabric was produced by
a fabric-making process.
(2) For embroidered badges, emblems, insignia,
and the like, comprised of multiple
components, the country of origin is the place
of assembly, provided that the change is the
result of the good being wholly assembled in a
single country, territory, or insular
possession.
(3) For embroidered badges, emblems, insignia,
and the like, not comprised of multiple
components, a change to subheading 5810.91
through 5810.99 from any other chapter, except
from heading 5007, 5111 through 5113, 5208
through 5212, 5309 through 5311, 5407 through
5408, 5512 through 5516, 5602 through 5603,
5608, 5903, 5907, 6001 through 6002, and
provided that the change is the result of a
fabric-making process.
5811................... The country of origin of a good classifiable
under heading 5811 is the country, territory,
or insular possession in which the fabric
comprising the good was formed by a fabric-
making process.
5901-5903.............. A change to heading 5901 through 5903 from any
other heading, including a heading within that
group, except from heading 5007, 5111 through
5113, 5208 through 5212, 5309 through 5311,
5407 through 5408, 5512 through 5516, 5803,
5806, 5808, and 6002, and provided that the
change is the result of a fabric-making
process.
5904................... (1) For goods that have been wholly assembled
by means of a lamination process, a change to
heading 5904 from any other heading, provided
that the change is the result of the good
being wholly assembled in a single country,
territory, or insular possession.
(2) For all other goods, the country of origin
of the good will be determined by application
of Sec. 102.21(c)(4) or, if the country of
origin cannot be determined under that
section, by application of Sec. 102.21(c)(5).
5905................... A change to heading 5905 from any other
heading, except from heading 5007, 5111
through 5113, 5208 through 5212, 5309 through
5311, 5407 through 5408, 5512 through 5516,
5603, 5803, 5806, 5808, and 6002, and provided
that the change is the result of a fabric-
making process.
5906-5907.............. A change to heading 5906 through 5907 from any
other chapter, except from heading 5007, 5111
through 5113, 5208 through 5212, 5309 through
5311, 5407 through 5408, 5512 through 5516,
5803, 5806, 5808, and 6002, and provided that
the change is the result of a fabric-making
process.
5908................... (1) Except for yarns, twine, cord, and braid, a
change to heading 5908 from any other heading,
except from heading 5007, 5111 through 5113,
5208 through 5212, 5309 through 5311, 5407
through 5408, 5512 through 5516, 5801 through
5802, 5806, 5808, and 6001 through 6002.
(2) For yarns, twine, cord, and braid:
(a) If the good is of continuous filaments,
including strips, a change to heading 5908
from any other heading, except from heading
5001 through 5007, 5401 through 5406, and 5501
through 5502, and provided that the change is
the result of an extrusion process; or
(b) If the good is of staple fibers, a change
to heading 5908 from any other heading, except
from heading 5106 through 5110, 5204 through
5207, 5306 through 5308, and 5508 through
5511, and 5605 through 5607, and provided that
the change is the result of a spinning
process.
5909................... A change to heading 5909 from any other
chapter, except from heading 5007, 5111
through 5113, 5208 through 5212, 5309 through
5311, 5407 through 5408, 5512 through 5516,
5603, 5801 through 5804, 5806, 5808, and 6001
through 6002, and provided that the good does
not contain armor or accessories of nontextile
material and provided that the change is the
result of a fabric-making process; or
A change to textile hosepiping with armor or
accessories of nontextile material, of heading
5909, from any heading, including a change
from another good of heading 5909, provided
that the change is the result of the good
being wholly assembled in a single country,
territory, or insular possession.
5910................... (1) For belts and belting of braid, rope, or
cord:
(a) If the good is of continuous filaments,
including strips, a change of those filaments,
including strips, to heading 5910 from any
other heading, except from heading 5001
through 5006, 5401 through 5406, and 5501
through 5502, and provided that the change is
the result of an extrusion process; or
(b) If the good is of staple fibers, a change
of those fibers to heading 5910 from any other
heading, except from heading 5106 through
5110, 5204 through 5207, 5306 through 5308,
and 5508 through 5511, and provided that the
change is the result of a spinning process.
(2) For fabric belting and belts, not braids
and not combined with nontextile components,
whether or not reinforced with metal or other
material, a change to heading 5910 from any
other heading, except from heading 5007, 5111
through 5113, 5208 through 5212, 5309 through
5311, 5407 through 5408, 5512 through 5516,
5602 through 5603, 5801 through 5804, 5806,
5808 through 5809, and 6001 through 6002, and
provided the change is the result of a fabric-
making process.
(3) For fabric belts, including belts of
braided materials, combined with nontextile
components, whether or not reinforced with
metal or other material, a change to heading
5910 from any heading, including a change from
another good of heading 5910, provided that
the change is the result of the good being
wholly assembled in a single country,
territory, or insular possession.
5911.10-5911.20........ A change to subheading 5911.10 through 5911.20
from any other heading, except from heading
5007, 5111 through 5113, 5208 through 5212,
5309 through 5311, 5407 through 5408, 5512
through 5516, 5602 through 5603, 5801 through
5804, 5806, and 6001 through 6002, and
provided that the change is the result of a
fabric-making process.
5911.31-5911.32........ (1) For goods not combined with nontextile
components, a change to subheading 5911.31
through 5911.32 from any other heading, except
from heading 5007, 5111 through 5113, 5208
through 5212, 5309 through 5311, 5407 through
5408, 5512 through 5516, 5602 through 5603,
5801 through 5804, 5806, and 6001 through
6002, and provided that the change is the
result of a fabric-making process.
(2) For goods combined with nontextile
components, a change to subheading 5911.31
through 5911.32 from any other heading,
provided that the change is the result of the
good being wholly assembled in single country,
territory, or insular possession.
[[Page 46202]]
5911.40................ A change to subheading 5911.40 from any other
heading, except from heading 5007, 5111
through 5113, 5208 through 5212, 5309 through
5311, 5407 through 5408, 5512 through 5516,
5602 through 5603, 5801 through 5804, 5806,
and 6001 through 6002, and provided that the
change is the result of a fabric-making
process.
5911.90................ (1) For goods of yarn, rope, cord, or braid:
(a) If the good is of continuous filaments,
including strips, a change of those filaments,
including strips, to subheading 5911.90 from
any other heading, except from heading 5001
through 5006, 5401 through 5406, and 5501
through 5502, and provided that the change is
the result of an extrusion process; or
(b) If the good is of staple fibers, a change
of those fibers to subheading 5911.90 from any
other heading, except from heading 5106
through 5110, 5204 through 5207, 5306 through
5308, and 5508 through 5511, and provided that
the change is the result of a spinning
process.
(2) If the good is a fabric, a change to
subheading 5911.90 from any other heading,
except from heading 5007, 5111 through 5113,
5208 through 5212, 5309 through 5311, 5407
through 5408, 5512 through 5516, 5602 through
5603, 5801 through 5804, 5806, 5809, and 6001
through 6002, and provided that the change is
the result of a fabric-making process.
(3) If the good is a made up article other than
a good of yarn, rope, cord, or braid, a change
to subheading 5911.90 from any heading,
including a change from another good of
heading 5911, provided that the change is the
result of the good being wholly assembled in a
single country, territory, or insular
possession.
6001-6002.............. A change to heading 6001 through 6002 from any
heading outside that group, provided that the
change is the result of a fabric-making
process.
6101-6117.............. (1) If the good is not knit to shape and
consists of two or more component parts, a
change to an assembled good of heading 6101
through 6117 from unassembled components,
provided that the change is the result of the
good being wholly assembled in a single
country, territory, or insular possession.
(2) If the good is not knit to shape and does
not consist of two or more component parts, a
change to heading 6101 through 6117 from any
heading outside that group, except from
heading 5007, 5111 through 5113, 5208 through
5212, 5309 through 5311, 5407 through 5408,
5512 through 5516, 5806, 5809 through 5811,
5903, 5906 through 5907, and 6001 through
6002, and subheading 6307.90, and provided
that the change is the result of a fabric-
making process.
(3) If the good is knit to shape, a change to
heading 6101 through 6117 from any heading
outside that group, provided that the knit-to-
shape components are knit in a single country,
territory, or insular possession.
6201-6208.............. (1) If the good consists of two or more
component parts, a change to an assembled good
of heading 6201 through 6208 from unassembled
components, provided that the change is the
result of the good being wholly assembled in a
single country, territory, or insular
possession.
(2) If the good does not consist of two or more
component parts, a change to heading 6201
through 6208 from any heading outside that
group, except from heading 5007, 5111 through
5113, 5208 through 5212, 5309 through 5311,
5407 through 5408, 5512 through 5516, 5602
through 5603, 5801 through 5806, 5809 through
5811, 5903, 5906 through 5907, and 6217, and
subheading 6307.90, and provided that the
change is the result of a fabric-making
process.
6209.10.0000-6209.20.50 (1) If the good consists of two or more
35. component parts, a change to an assembled good
of subheading 6209.10.0000 through
6209.20.5035 from unassembled components,
provided that the change is the result of the
good being wholly assembled in a single
country, territory, or insular possession.
(2) If the good does not consist of two or more
component parts, a change to subheading
6209.10.0000 through 6209.20.5035 from any
other heading, except from heading 5007, 5111
through 5113, 5208 through 5212, 5309 through
5311, 5407 through 5408, 5512 through 5516,
5602 through 5603, 5801 through 5806, 5809
through 5811, 5903, 5906 through 5907, and
6217, and subheading 6307.90, and provided
that the change is the result of a fabric-
making process.
6209.20.5040........... The country of origin of a good classifiable in
subheading 6209.20.5040 is the country,
territory, or insular possession in which the
fabric comprising the good was formed by a
fabric-making process.
6209.20.5045-6209.90.90 (1) If the good consists of two or more
00. component parts, a change to an assembled good
of subheading 6209.20.5045 through
6209.90.9000 from unassembled components,
provided that the change is the result of the
good being wholly assembled in a single
country, territory, or insular possession.
(2) If the good does not consist of two or more
component parts, a change to subheading
6209.20.5045 through 6209.90.9000 from any
other heading, except from heading 5007, 5111
through 5113, 5208 through 5212, 5309 through
5311, 5407 through 5408, 5512 through 5516,
5602 through 5603, 5801 through 5806, 5809
through 5811, 5903, 5906 through 5907, and
6217, and subheading 6307.90, and provided
that the change is the result of a fabric-
making process.
6210-6212.............. (1) If the good consists of two or more
component parts, a change to an assembled good
of heading 6210 through 6212 from unassembled
components, provided that the change is the
result of the good being wholly assembled in a
single country, territory, or insular
possession.
(2) If the good does not consist of two or more
component parts, a change to heading 6210
through 6212 from any heading outside that
group, except from heading 5007, 5111 through
5113, 5208 through 5212, 5309 through 5311,
5407 through 5408, 5512 through 5516, 5602
through 5603, 5801 through 5806, 5809 through
5811, 5903, 5906 through 5907, 6001 through
6002, and 6217, and subheading 6307.90, and
provided that the change is the result of a
fabric-making process.
6213-6214.............. The country of origin of a good classifiable
under heading 6213 through 6214 is the
country, territory, or insular possession in
which the fabric comprising the good was
formed by a fabric-making process.
6215-6217.............. (1) If the good consists of two or more
component parts, a change to an assembled good
of heading 6215 through 6217 from unassembled
components, provided that the change is the
result of the good being wholly assembled in a
single country, territory, or insular
possession.
(2) If the good does not consist of two or more
component parts, a change to heading 6215
through 6217 from any heading outside that
group, except from heading 5007, 5111 through
5113, 5208 through 5212, 5309 through 5311,
5407 through 5408, 5512 through 5516, 5602
through 5603, 5801 through 5806, 5809 through
5811, 5903, 5906 through 5907, and 6217, and
subheading 6307.90, and provided that the
change is the result of a fabric-making
process.
[[Page 46203]]
6301-6306.............. The country of origin of a good classifiable
under heading 6301 through 6306 is the
country, territory, or insular possession in
which the fabric comprising the good was
formed by a fabric-making process.
6307.10................ The country of origin of a good classifiable
under subheading 6307.10 is the country,
territory, or insular possession in which the
fabric comprising the good was formed by a
fabric-making process.
6307.20................ A change to subheading 6307.20 from any other
heading, provided that the change is the
result of the good being wholly assembled in a
single country, territory, or insular
possession.
6307.90................ The country of origin of a good classifiable
under subheading 6307.90 is the country,
territory, or insular possession in which the
fabric comprising the good was formed by a
fabric-making process.
6308................... The country of origin of a good classifiable
under heading 6308 is the country, territory,
or insular possession in which the woven
fabric component of the good was formed by a
fabric-making process.
6309-6310.............. The country of origin of a good classifiable
under heading 6309 through 6310 is the
country, territory, or insular possession in
which the good was last collected and packaged
for shipment.
6405.20.60............. A change to subheading 6405.20.60 from any
other heading, provided that the change is the
result of the good being wholly assembled in a
single country, territory, or insular
possession.
6406.10.77............. (1) If the good consists of two or more
components, a change to subheading 6406.10.77
from any other heading, provided that the
change is the result of the good being wholly
assembled in a single country, territory, or
insular possession.
(2) If the good does not consist of two or more
components, a change to subheading 6406.10.77
from any other heading, except from heading
5007, 5111 through 5113, 5208 through 5212,
5309 through 5311, 5407 through 5408, 5512
through 5516, 5602 through 5603, 5608, 5801
through 5804, 5806, 5808 through 5810, 5903,
5906 through 5907, and 6001 through 6002, and
provided that the change is the result of a
fabric-making process.
6406.10.90............. (1) If the good consists of two or more
components, a change to subheading 6406.10.90
from any other heading, provided that the
change is the result of the good being wholly
assembled in a single country, territory, or
insular possession.
(2) If the good does not consist of two or more
components, a change to subheading 6406.10.90
from any other heading, except from heading
5007, 5111 through 5113, 5208 through 5212,
5309 through 5311, 5407 through 5408, 5512
through 5516, 5602 through 5603, 5608, 5801
through 5804, 5806, 5808 through 5810, 5903,
5906 through 5907, and 6001 through 6002, and
provided that the change is the result of a
fabric-making process.
6406.99.15............. (1) If the good consists of two or more
components, a change to subheading 6406.99.15
from any other heading, provided that the
change is the result of the good being wholly
assembled in a single country, territory, or
insular possession.
(2) If the good does not consist of two or more
components, a change to subheading 6406.99.15
from any other heading, except from heading
5007, 5111 through 5113, 5208 through 5212,
5309 through 5311, 5407 through 5408, 5512
through 5516, 5602 through 5603, 5608, 5801
through 5804, 5806, 5808 through 5810, 5903,
5906 through 5907, and 6001 through 6002, and
provided that the change is the result of a
fabric-making process.
6501................... (1) If the good consists of two or more
components, a change to heading 6501 from any
other heading, provided that the change is the
result of the good being wholly assembled in a
single country, territory, or insular
possession.
(2) If the good does not consist of two or more
components, a change to heading 6501 from any
other heading, except from heading 5602, and
provided that the change is the result of a
fabric-making process.
6502................... (1) If the good consists of two or more
components, a change to heading 6502 from any
other heading, provided that the change is the
result of the good being wholly assembled in a
single country, territory, or insular
possession.
(2) If the good does not consist of two or more
components, a change to heading 6502 from any
other heading, except from heading 5007, 5111
through 5113, 5208 through 5212, 5407 through
5408, 5512 through 5516, 5602 through 5603,
5608, 5801 through 5804, 5806, 5808 through
5810, 5903, 5906 through 5907, and 6001
through 6002, and provided that the change is
the result of a fabric-making process.
6503................... (1) If the good consists of two or more
components, a change to heading 6503 from any
other heading, provided that the change is the
result of the good being wholly assembled in a
single country, territory, or insular
possession.
(2) If the good does not consist of two or more
components, a change to heading 6503 from any
other heading, except from heading 5602, and
provided that the change is the result of a
fabric-making process.
6504................... (1) If the good consists of two or more
components, a change to heading 6504 from any
other heading, provided that the change is the
result of the good being wholly assembled in a
single country, territory, or insular
possession.
(2) If the good does not consist of two or more
components, a change to heading 6504 from any
other heading, except from heading 5007, 5111
through 5113, 5208 through 5212, 5407 through
5408, 5512 through 5516, 5602 through 5603,
5608, 5801 through 5804, 5806, 5808 through
5810, 5903, 5906 through 5907, and 6001
through 6002, and provided that the change is
the result of a fabric-making process.
6505.90................ (1) If the good consists of two or more
components, a change to subheading 6505.90
from any other heading, provided that the
change is the result of the good being wholly
assembled in a single country, territory, or
insular possession.
(2) If the good does not consist of two or more
components, a change to subheading 6505.90
from any other heading, except from heading
5007, 5111 through 5113, 5208 through 5212,
5407 through 5408, 5512 through 5516, 5602
through 5603, 5608, 5801 through 5804, 5806,
5808 through 5811, 5903, 5906 through 5907,
and 6001 through 6002, and provided that the
change is the result of a fabric-making
process.
6601.10-6601.91........ A change to subheading 6601.10 through 6601.91
from any other heading, provided that the
change is the result of the good being wholly
assembled in a single country, territory, or
insular possession.
7019.10.15............. (1) If the good is of filaments, a change to
subheading 7019.10.15 from any other heading,
provided that the change is the result of an
extrusion process.
(2) If the good is of staple fibers, a change
to subheading 7019.10.15 from any other
subheading, except from subheading 7019.10.30
through 7019.10.90 and 7019.31 through
7019.90, and provided that the change is the
result of a spinning process.
[[Page 46204]]
7019.10.28............. (1) If the good is of filaments, a change to
subheading 7019.10.28 from any other heading,
provided that the change is the result of an
extrusion process.
(2) If the good is of staple fibers, a change
to subheading 7019.10.28 from any other
subheading, except from subheading 7019.10.30
through 7019.10.90 and 7019.31 through
7019.90, and provided that the change is the
result of a spinning process.
7019.20................ A change to subheading 7019.20 from any other
heading, provided that the change is the
result of a fabric-making process.
8708.21................ (1) For seat belts not combined with nontextile
components, a change to subheading 8708.21
from any other heading, except from heading
5007, 5111 through 5113, 5208 through 5212,
5309 through 5311, 5407 through 5408, and 5512
through 5516, and provided that the change is
the result of a fabric-making process.
(2) For seat belts combined with nontextile
components, a change to an assembled good of
subheading 8708.21 from unassembled
components, provided that the change is the
result of the good being wholly assembled in a
single country, territory, or insular
possession.
8804................... (1) If the good consists of two or more
component parts, a change to an assembled good
of heading 8804 from unassembled components,
provided that the change is the result of the
good being wholly assembled in a single
country, territory, or insular possession.
(2) If the good does not consist of two or more
component parts, a change to heading 8804 from
any other heading, except from heading 5007,
5111 through 5113, 5208 through 5212, 5309
through 5311, 5407 through 5408, 5512 through
5516, 5603, 5801 through 5804, 5806, 5809
through 5811, 5903, 5906 through 5907, and
6001 through 6002, and subheading 6307.90, and
provided that the change is the result of a
fabric-making process.
9113.90.40............. (1) If the good consists of two or more
component parts, a change to an assembled good
of subheading 9113.90.40 from unassembled
components, provided that the change is the
result of the good being wholly assembled in a
single country, territory, or insular
possession.
(2) If the good does not consist of two or more
component parts, a change to subheading
9113.90.40 from any other heading, except from
heading 5007, 5111 through 5113, 5208 through
5212, 5309 through 5311, 5407 through 5408,
5512 through 5516, 5603, 5801 through 5802,
5806, 5809, 5903, 5906 through 5907, and 6001
through 6002, and subheading 6307.90, and
provided that the change is the result of a
fabric-making process.
9404.90................ The country of origin of a good classifiable
under subheading 9404.90 is the country,
territory, or insular possession in which the
fabric comprising the good was formed by a
fabric-making process.
9502.91................ A change to an assembled good of subheading
9502.91 from unassembled components, provided
that the change is the result of the good
being wholly assembled in a single country,
territory, or insular possession.
9612.10.9010........... A change to subheading 9612.10.9010 from any
other heading, except from heading 5007, 5111
through 5113, 5208 through 5212, 5309 through
5311, 5407 through 5408, 5512 through 5516,
5603, 5806, 5903, 5906 through 5907, and 6002,
and provided that the change is the result of
a fabric-making process.
------------------------------------------------------------------------
PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS
1. The authority citation for Part 178 continues to read as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.
2. Section 178.2 is amended by adding to the table a new listing
for Sec. 10.25 to read as follows:
Sec. 178.2 Listing of OMB control numbers.
------------------------------------------------------------------------
OMB control
19 CFR Section Description No.
------------------------------------------------------------------------
* * * * *
Sec. 10.25........ Declaration by foreign assembler and 1515-0207
endorsement by importer that articles
were assembled in whole or in part
from textile components cut to shape
in the U.S.
* * * * *
------------------------------------------------------------------------
George J. Weise,
Commissioner of Customs.
Approved: August 16, 1995.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 95-21905 Filed 9-1-95; 8:45 am]
BILLING CODE 4820-02-P
