[Federal Register Volume 63, Number 114 (Monday, June 15, 1998)]
[Notices]
[Pages 32697-32698]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15809]


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DEPARTMENT OF THE TREASURY

Customs Service


Country of Origin Marking Rules for Textiles and Textile Products 
Advanced in Value, Improved in Condition, or Assembled Abroad

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: Proposed interpretation; solicitation of comments.

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SUMMARY: This notice advises the public that Customs is proposing a new 
interpretation concerning the country of origin rules for certain 
imported textiles and textile products. It is Customs' proposed 
position that 19 CFR 12.130(c) should not control for purposes of 
country of origin marking of textiles and textile products, and that 
Chapter 98, Subchapter II, U.S. Note 2(a), Harmonized Tariff Schedule 
of the United States (HTSUS), does not apply for country of origin 
marking purposes.

DATES: Comments must be received on or before August 14, 1998.

ADDRESSES: Written comments (preferably in triplicate) may be addressed 
to the Regulations Branch, Office of Regulations and Rulings, U.S. 
Customs Service, 1300 Pennsylvania Avenue, N.W., Washington, D.C. 
20229. Comments submitted may be inspected at the Regulations Branch, 
Office of Regulations and Rulings, U.S. Customs Service, 1300 
Pennsylvania Avenue, N.W., Washington, D.C.

FOR FURTHER INFORMATION CONTACT: Monika Brenner, Special Classification 
and Marking Branch, Office of Regulations and Rulings (202-927-1675).

SUPPLEMENTARY INFORMATION:

Background

    On May 9, 1984, the President issued Executive Order 12475 to 
address a number of problems that had arisen in the context of the U.S. 
textile import program. These problems included (1) the absence of 
specific regulatory standards for determining the origin of imported 
textiles and textile products for purposes of textile agreements and 
(2) an ever increasing number and variety of instances in which 
attempts were made to circumvent and frustrate the objectives of the 
United States textile import program and the bilateral and multilateral 
textile agreements negotiated thereunder. Section 1(a) of that 
Executive Order instructed the Secretary of the Treasury, in accordance 
with policy guidance provided by the Committee for the Implementation 
of Textile Agreements (CITA) to issue regulations governing the entry 
of textiles and textile products subject to section 204 of the 
Agricultural Act of 1956, as amended (7 U.S.C. 1854).
    By T.D. 85-38, published in the Federal Register on March 5, 1985 
(50 FR 8710), Customs adopted as a final rule interim amendments to 
part 12 of the Customs Regulations (19 CFR part 12), which involved the 
addition of a new Sec. 12.130 that established criteria to be used in 
determining the country of origin of imported textiles and textile 
products for purposes of multilateral or bilateral textile agreements 
entered into by the United States pursuant to section 204, Agricultural 
Act of 1956, as amended. In that final rule document, Customs stated 
that the principles of origin contained in Sec. 12.130 are applicable 
to merchandise for all purposes, including duty and marking. In T.D. 
90-17 (55 FR 7303, March 1, 1990), which involved a change of practice 
to conform several previously published Customs positions to certain 
provisions within 19 CFR 12.130, Customs again stated that the criteria 
set forth in 19 CFR 12.130 should be used in making country of origin 
determinations for all Customs purposes, including determinations for 
purposes of country of origin marking and for assessing duty on 
imported articles.
    Paragraph (c) of Sec. 12.130 operates as an exception to the basic 
country of origin rule set forth in paragraph (b) of Sec. 12.130. 
Paragraph (c)(1) of Sec. 12.130 specifically provides, in part, that in 
order to have:

a single country of origin for a textile or textile product, 
notwithstanding paragraph (b), merchandise which falls within the 
purview of Chapter 98, Subchapter II, Note 2, Harmonized Tariff 
Schedule of the United States, may not, upon its return to the U.S., 
be considered a product of the U.S.

    Furthermore, 19 CFR 12.130(c)(1) provides that:

Chapter 98, Subchapter II, Note 2, Harmonized Tariff Schedule of the 
United States, provides that any product of the U.S. which is 
returned after having been advanced in value or improved in 
condition abroad, or assembled abroad, shall be a foreign article 
for the purposes of the Tariff Act of 1930, as amended.

Paragraph (c)(2) of section 12.130, added by T.D. 93-27 (58 FR 19347, 
April 14, 1993), accords essentially the same treatment to products of 
insular possessions.
    In T.D. 95-69, published at 60 FR 46188 (September 5, 1995), 
Customs issued final amendments to the Customs Regulations (set forth 
principally at 19 CFR 102.21) to implement the provisions of section 
334 of the Uruguay Round Agreements Act (URAA) regarding the country of 
origin of textile and apparel products, that are to be used for 
purposes of the Customs laws (including the marking statute, section 
304, Tariff Act of 1930, as amended (19 U.S.C. 1304)) and the 
administration of quantitative restrictions and except as otherwise 
provided for by statute. T.D. 95-69 also amended 19 CFR 12.130(b), (d), 
and (e)(1) to clarify that the origin of textile and apparel products 
covered by 19 CFR 102.21 are determined pursuant to that regulatory 
provision. Since T.D. 95-69 did not amend 19 CFR 12.130(c)(1) or (2), 
and since T.D. 85-38 and T.D. 90-17 reflected the Customs position that 
19 CFR 12.130 should be used in making country of origin determinations 
for all Customs purposes, including determinations for purposes of 
country of origin marking, 19 CFR 12.130(c) still applies to products 
of the United States or insular possessions advanced in value, improved 
in condition, or assembled abroad for purposes of country of origin 
marking.
    In connection with the development of the final NAFTA Marking Rules 
(T.D. 96-48, published at 61 FR 28932, June 6, 1996), Customs stated in 
a notice of proposed rulemaking, published at 60 FR 22312, 22318 (May 
5, 1995), that it had reconsidered the position originally set forth in 
the interim NAFTA Marking Rules (T.D. 94-4, published at 59 FR 110, 
January 3, 1994) that Chapter 98, Subchapter II, U.S. Note 2(a), HTSUS, 
has application for general country of origin purposes, including 
marking. (Chapter 98, Subchapter II, U.S. Note 2(a), HTSUS, is 
identical to the U.S. Note 2 referred to in 19 CFR 12.130(c); 
subsequent to the promulgation of 19 CFR 12.130(c), U.S. Note 2 was 
divided into two paragraphs, U.S. Note 2(a) and (b). U.S. Note 2(b) 
provides a special preferential tariff treatment only for goods 
imported from countries listed in General Note 7, HTSUS, that are made 
wholly from U.S. materials and ingredients. U.S. Note 2(b) is not 
applicable and totally unrelated to this proposal. See H.R. Conf. Rep. 
No. 650, 101st Cong., 2d Sess. 133, reprinted in 1990 U.S. Code & 
Admin. News 928, 1023; and subheading 9802.00.8040,

[[Page 32698]]

HTSUS). Accordingly, in order to reflect the reconsidered position of 
Customs reflected in the May 5, 1995 notice of proposed rulemaking, the 
final NAFTA Marking Rules document included the removal of 19 CFR 
102.14 and 19 CFR 10.22. Section 102.14 provided that no good last 
advanced in value or improved in condition outside the United States 
has United States origin, and Sec. 10.22 provided that the country of 
origin of assembled goods entitled to a duty allowance under subheading 
9802.00.80, HTSUS, was the country of assembly for marking purposes.
    Accordingly, since Customs has already stated that Chapter 98, 
Subchapter II, U.S. Note 2(a), HTSUS, no longer applies for country of 
origin marking purposes, Customs proposes to adopt a new position that 
19 CFR 12.130(c) does not apply for purposes of country of origin 
marking. However, 19 CFR 12.130(c) will still be applicable for all 
other purposes specified in T.D. 85-38 and T.D. 90-17, since T.D. 95-69 
as stated above did not repeal 19 CFR 12.130(c).
    It should be noted that this change does not exempt textile and 
apparel products imported into the United States from the labeling 
requirements of the Textile Fiber Products Identification Act, 15 
U.S.C. 70, enforced by the Federal Trade Commission. For example, the 
Rules and Regulations under the Textile Fiber Products Identification 
Act, 16 CFR 303.33(a)(1), provides that unless exempt under section 12 
of that Act, each imported textile fiber product shall be labeled with 
the name of the country where such imported product was processed or 
manufactured. Therefore, once it is determined under the proposed new 
position set forth herein that an imported textile or apparel product 
is not required to be marked in accordance with 19 U.S.C. 1304, as 
implemented by 19 CFR 102.21, the imported textile or apparel product 
would still be required to be labeled in accordance with the Textile 
Fiber Products Identification Act.

Authority

    This notice is published in accordance with Sec. 177.9, Customs 
Regulations (19 CFR 177.9).

Comments

    Before adopting this proposed change in position, consideration 
will be given to any written comments timely submitted to Customs. 
Comments submitted will be available for public inspection in 
accordance with the Freedom of Information Act (5 U.S.C. 552), 
Sec. 1.4, Treasury Department Regulations (31 CFR 1.4), and 
Sec. 103.11(b), Customs Regulations (19 CFR 103.11(b)), on regular 
business days between the hours of 9 a.m. and 4:30 p.m. at the 
Regulations Branch, 1300 Pennsylvania Avenue, NW., Washington, DC.
Samuel H. Banks,
Acting Commissioner of Customs.

    Approved: May 26, 1998.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 98-15809 Filed 6-12-98; 8:45 am]
BILLING CODE 4820-02-P