[Federal Register Volume 70, Number 192 (Wednesday, October 5, 2005)]
[Rules and Regulations]
[Pages 58009-58016]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-19985]


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DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection

DEPARTMENT OF THE TREASURY

19 CFR Parts 12, 102, 141, 144, 146, and 163

[CBP Dec. 05-32; USCBP-2005-0009]
RIN 1505-AB60


Country of Origin of Textile and Apparel Products

AGENCY: Customs and Border Protection, Department of Homeland Security; 
Department of the Treasury.

ACTION: Interim regulations; solicitation of comments.

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SUMMARY: This document sets forth interim amendments to the Customs and 
Border Protection (``CBP'') regulations to update, restructure, and 
consolidate the regulations relating to the country of origin of 
textile and apparel products. The interim amendments reflect changes 
brought about, in part, by the expiration on January 1, 2005, of the 
Agreement on Textiles and Clothing (``ATC'') and the resulting 
elimination of quotas on the entry of textile and apparel products from 
World Trade Organization (``WTO'') members. The primary regulatory 
change set forth in this document is the elimination of the requirement 
that a textile declaration be submitted for all importations of textile 
and apparel products. In addition, to improve the quality of reporting 
of the identity of the manufacturer of imported textiles and apparel 
products, the interim amendments include a requirement that importers 
identify the manufacturer of such products through a manufacturer 
identification code (``MID'').

DATES: Interim rule effective October 5, 2005; comments must be 
received by December 5, 2005.

ADDRESSES: You may submit comments, identified by the docket number, by 
one of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Mail, hand delivery or courier: paper, disk or CD-ROM 
submissions may be mailed or delivered to the Trade and Commercial 
Regulations Branch, Office of Regulations and Rulings, Bureau of 
Customs and Border Protection, 1300 Pennsylvania Avenue, NW. (Mint 
Annex), Washington, DC 20229.
    Instructions: All submissions received must include the agency 
name, document title, and docket number (if available) or Regulatory 
Information Number (``RIN'') for this rulemaking.
    Docket: For access to the docket to read background documents or 
comments received, go to the Federal eRulemaking Portal at http://www.regulations.gov. Submitted comments also may be inspected at the 
Trade and Commercial Regulations Branch, Office of Regulations and 
Rulings, Customs and Border Protection, 799 9th Street, NW. (5th 
Floor), Washington, DC during regular business hours.

FOR FURTHER INFORMATION CONTACT:
    Operational aspects: Roberts Abels, Textile Operations, Office of 
Field Operations (202) 344-1959.
    Legal aspects: Cynthia Reese, Tariff Classification and Marking 
Branch, Office of Regulations and Rulings (202) 572-8812.

SUPPLEMENTARY INFORMATION:

Background

    CBP notes initially that in this document, references to the 
Customs Service or Customs concern the former Customs Service or 
actions undertaken by the former Customs Service prior to its transfer 
to the Department of Homeland Security (``DHS'') under the Homeland 
Security Act and the Reorganization Plan Modification for DHS of 
January 30, 2003.
    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

[[Page 58010]]

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 from the interagency 
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 
(codified at 7 U.S.C. 1854).
    In T.D. 85-38, published in the Federal Register (50 FR 8710) on 
March 5, 1985, the Customs Service adopted as a final rule interim 
amendments to part 12 of the CBP 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. In T.D. 90-17, 
published in the Federal Register (55 FR 7303) on 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 CBP purposes.
    On December 8, 1994, the President signed into law the Uruguay 
Round Agreements Act (``URAA''), Public Law 103-465, 108 Stat. 4809. 
Subtitle D of Title III of the URAA concerns textiles and includes 
section 334 (codified at 19 U.S.C. 3592). Paragraph (a) of section 334 
directed the Secretary of the Treasury to prescribe rules implementing 
the principles contained in paragraph (b) of section 334 for 
determining the origin of textile and apparel products. After the 
enactment of 19 U.S.C. 3592, 7 U.S.C. 1854 was no longer the only 
statute relevant to the administration of quantitative restrictions on 
textile products. The principles set forth in section 334 of the URAA 
for determining the country of origin of textile and apparel products 
apply for the purposes of the customs laws and the administration of 
quantitative restrictions, except as otherwise provided for by statute. 
However, section 334(b)(5) of the URAA excepts from the rules of origin 
governing textile and apparel products set forth in section 334 goods 
which, under rulings and administrative practices in effect immediately 
before the enactment of section 334 (December 8, 1994), would have 
originated in, or been the growth, product, or manufacture of, Israel.
    In T.D. 95-69, published in the Federal Register (60 FR 46188) on 
September 5, 1995, Customs issued final amendments to the CBP 
regulations (set forth principally at 19 CFR 102.21) to implement the 
provisions of Sec.  334 of the URAA regarding the country of origin of 
textile and apparel products. The rules set forth in Sec.  102.21, 
which became effective for goods entered, or withdrawn from warehouse, 
for consumption on or after July 1, 1996, are used to determine the 
country of origin of textile and apparel products subject to 
manufacture or processing in all countries, except Israel. With the 
creation of Sec.  102.21 to implement Sec.  334 of the URAA, the 
principles of origin set forth in Sec.  12.130 are used for the purpose 
of determining whether Israel is the country of origin for imported 
textile and apparel products. If Israel is found not to be the country 
of origin of a textile or apparel product by application of Sec.  
12.130, then the rules set set forth in Sec.  102.21 are used to 
determine the product's country of origin. However, the application of 
Sec.  102.21 under these circumstances cannot result in a determination 
that Israel is the country of origin of the product. See 
``Determination of Origin of Textile Goods Processed in Israel,'' 
General Statement of Policy, published in the Federal Register (61 FR 
40076) on July 31, 1996.
    As Sec.  12.130 exists currently, paragraph (a) defines the scope 
of textile and textile products subject to section 204, Agricultural 
Act of 1956, as amended, as including merchandise which is subject to 
the Multifiber Arrangement Regarding International Trade in Textiles 
(``MFA'') and identifies such merchandise based on value or weight of 
specified fibers. Paragraph (b) of Sec.  12.130 sets out the standards 
for determining the country of origin of a textile or textile product 
subject to section 204, Agricultural Act of 1956, as amended. It 
further provides that the procedures set forth in Part 102 are to be 
used to determine the origin of products of Canada and Mexico as well 
as the origin of textile and apparel products covered by Sec.  102.21.
    Paragraph (c) of Sec.  12.130 sets forth principles for determining 
the country of origin of certain textiles or textile products that are 
exported for processing and returned. Paragraph (c)(1) refers to U.S. 
Note 2, Subchapter II, Chapter 98, HTSUS, and therefore covers products 
of the United States that are returned after having been advanced in 
value, improved in condition, or assembled outside the United States. 
Paragraph (c)(1) provides that those products, upon their return to the 
United States, may not be considered products of the United States. 
Paragraph (c)(2) applies the same rule to products of insular 
possessions of the United States and thus provides that those products, 
if imported into the United States after having been advanced in value, 
improved in condition, or assembled outside the insular possessions, 
are not to be treated as products of those insular possessions.
    It is noted that, pursuant to T.D. 00-44, an interpretative rule 
published in the Federal Register (65 FR 42634) on July 11, 2000, CBP 
no longer applies Sec.  12.130(c) for purposes of country of origin 
marking of textiles and textile products.
    Paragraphs (d) and (e) of Sec.  12.130 set forth factors to 
consider in determining whether the standard for determining the 
country of origin of a textile or textile product set out in paragraph 
(b) has been met. Paragraph (f) of Sec.  12.130 requires the submission 
of a textile declaration for importations of textiles and textile 
products subject to section 204, Agricultural Act of 1956, as amended. 
The textile declaration sets forth information regarding the country of 
origin of the imported products. Paragraphs (g) and (h) of Sec.  12.130 
authorize the port director to require the submission of additional 
information regarding the origin of textiles and textile products. 
Paragraph (i) of Sec.  12.130 defines ``date of exportation'' for 
quota, visa or export license requirements, and statistical purposes, 
for textiles or textile products subject to section 204 of the 
Agricultural Act of 1956, as amended.
    On January 1, 2005, the Agreement on Textiles and Clothing 
(``ATC'') expired. The ATC was the successor agreement to the 
Multifiber Arrangement Regarding International Trade in Textiles 
(``MFA'') which governed international trade in textiles and apparel 
through the use of quantitative restrictions. The ATC provided for the 
integration of textiles and clothing into the General Agreement on 
Tariffs and Trade (``GATT'') regime over a 10-year transition period. 
With the conclusion of the 10-year period, the integration was complete 
and the ATC thus expired. As of January 1, 2005, textiles and apparel 
products of World Trade Organization members are no longer subject to 
quantitative restrictions for entry of such products into the United

[[Page 58011]]

States. The one exception to this would be for textiles and textile 
products subject to safeguard actions taken under China's Accession 
Agreement to the World Trade Organization.
    The United States retains bilateral textile agreements with certain 
countries that are not members of the World Trade Organization. Textile 
products from these countries remain subject to applicable restraints 
which are enforced by CBP pursuant to directives from the Chairman of 
CITA.
    By letter dated February 11, 2005, CITA, through its chairman, 
requested that CBP review the regulations set forth in Sec.  12.130 and 
recommend appropriate changes in light of the conclusion of the ten-
year transition period for the integration of the textiles and apparel 
sector into GATT 1994 to ensure ongoing enforcement of trade in 
textiles and apparel. By letter dated February 23, 2005, CBP responded 
to CITA's request. CITA agreed by letter dated May 4, 2005, that Sec.  
12.130 should be amended at this time and responded to the 
recommendations offered by CBP in response to CITA's solicitation of 
February 11, 2005. By letter dated July 28, 2005, the Department of the 
Treasury, pursuant to the authority retained by the Department of the 
Treasury over the customs revenue functions defined in the Homeland 
Security Act, and pursuant to section 204 of the Agricultural Act of 
1956, as amended, as that authority is delegated by Executive Order 
11651 of March 3, 1972, and Executive Order 12475 of May 9, 1984, and 
in accordance with the policy guidance, recommendation and direction 
provided by the Chairman of CITA in his letter of May 4, 2005, 
authorized and directed the Department of Homeland Security to 
promulgate, as immediately effective regulations, amendments to the CBP 
regulations regarding the country of origin of textiles and textile 
products, including changes to the method of reporting information 
relevant to the origin determination for textile and apparel products.

Discussion of Amendments

    With the implementation of the Harmonized Tariff Schedule of the 
United States (``HTSUS''), the expiration of the MFA and its successor, 
the ATC, and the enactment of section 334 of the URAA, certain of the 
provisions of Sec.  12.130 have become out-of-date. Accordingly, CBP in 
this document is amending its regulations relating to the country of 
origin of textile and apparel products. In addition to revising and 
updating the provisions of Sec.  12.130, this document also is re-
designating revised Sec.  12.130 as new Sec.  102.22. This will 
consolidate the rules of origin for textiles and apparel products from 
all countries in Part 102 of the CBP regulations. As a consequence of 
relocating the provisions of Sec.  12.130 to Part 102, Sec.  12.130 is 
removed from the CBP regulations.
    It is important to note that in this regulatory package CBP is 
eliminating the requirement that a textile declaration accompany 
importations of textiles and apparel products. This will reduce the 
paperwork burden on importers and is consistent with the movement 
toward paperless entries. However, pursuant to guidance from CITA and 
the Department of the Treasury, CBP is amending the CBP regulations to 
require that importers of textile and apparel products construct the 
manufacturer's identification code (``MID'') which is declared at the 
time of entry from the name and address of the entity performing the 
origin-conferring operations. This requirement will better enable CBP 
to enforce trade in textile and apparel products.
    CBP has closely consulted with CITA in the promulgation of the 
interim amendments set forth in this document. A discussion of the 
interim amendments is set forth below.
    Section 102.0, which sets forth the scope of Part 102, is amended 
by including a summary of the provisions that are being relocated from 
Part 12 to Part 102 pursuant to the amendments promulgated by this 
document.
    Paragraph (a) of Sec.  12.130, which defines the scope of textile 
or textile products subject to section 204, Agricultural Act of 1956, 
as amended, includes outdated references to the MFA and to ``chief 
value.'' This document amends Sec.  12.130(a) by re-designating this 
paragraph as paragraph (a) of new Sec.  102.22 and by revising the 
provision to accord with the scope of coverage set forth in Sec.  
102.21. Specifically, a cross-reference to the definition of ``textile 
or apparel products'' in Sec.  102.21(b)(5) is added to Sec.  
102.22(a). This will ensure uniformity of coverage between the 
regulations for determining the origin of textile and apparel products 
of Israel and the regulations for determining the origin of textile and 
apparel products of all other countries. Consistent with the above, all 
references to ``textile or textile product'' in Sec.  12.130 are 
replaced in new Sec.  102.22 by the words ``textile or apparel 
product,'' which CBP considers to be synonymous with the former phrase.
    Section 12.130(b) is amended by incorporating its provisions into 
paragraph (a) of new Sec.  102.22 and by clarifying that Sec.  102.22 
applies, pursuant to section 334 of the URAA, only to textile and 
apparel products that are products of Israel.
    Paragraph (c) of Sec.  12.130, which concerns the origin of 
products of the United States and products of insular possessions of 
the United States that are exported for processing and returned, is 
removed. In view of the limitation of the origin rules of Sec.  12.130 
(now Sec.  102.22) to products of Israel, Sec.  12.130(c) no longer has 
an appropriate context since it has no relevance to products of Israel. 
In addition, with the expiration of the ATC, CBP believes this 
provision is unnecessary.
    Paragraphs (d) and (e) of Sec.  12.130 set forth factors to 
consider in determining whether the standard for determining the 
country of origin of a textile or textile product set forth in Sec.  
12.130(b) (now Sec.  102.22(a)) has been met. Paragraphs (d) and (e) 
are amended by re-designating these provisions as paragraphs (b) and 
(c) of new Sec.  102.22, respectively, and by clarifying that these 
paragraphs are applicable only in determining whether a good is a 
product of Israel, pursuant to section 334 of the URAA.
    Paragraph (f) of Sec.  12.130 is removed. As discussed above, this 
eliminates the requirement that a textile declaration accompany 
importations of textiles and textile products subject to section 204, 
Agricultural Act of 1956, as amended. As stated above, CBP is now 
requiring importers of textile and apparel goods to include on the CBP 
Form 3461 (Entry/Immediate Delivery) and CBP Form 7501 (Entry Summary), 
and in all electronic data transmissions that require identification of 
the manufacturer, a manufacturer's identification code (``MID'') which 
is derived from the name and address of the entity performing the 
origin-conferring operations. This requirement will assist CBP in 
verifying the country of origin of imported textile and apparel 
products, thereby upholding our international obligations by properly 
enforcing the international textile restraint agreements to which the 
United States is a party. CBP is responsible for correctly determining 
the country of origin of textile and apparel imports to prevent such 
goods from entering the United States with a false country of origin. 
The MID requirement will also assist in ensuring that only those 
textile imports that are eligible to receive preferential trade 
benefits receive those benefits. As this requirement applies to textile 
or apparel products from all countries, it is set forth in paragraph 
(a) of new Sec.  102.23 of the CBP regulations. CBP also is amending 
Part 102 by adding an

[[Page 58012]]

appendix to set forth rules for the proper construction of MIDs.
    It is noted that importers of all goods are required to provide a 
manufacturer or shipper identification code at the time of entry. The 
MID requirement for textile or apparel goods described above differs 
from the identification code required for all products only in that the 
MID must identify the manufacturer of the imported product.
    Paragraphs (g) and (h) of Sec.  12.130 concern the circumstances 
under which CBP may require additional information regarding the origin 
of imported textile or apparel products and, if admissibility is an 
issue, deny the release of such products from CBP custody until their 
country of origin is determined. Paragraphs (g) and (h) are amended by 
combining the two provisions and re-designating them as paragraph (b) 
of new Sec.  102.23, and by removing any references to textile 
declarations. New Sec.  102.23(b) applies to textile or apparel 
products from all countries.
    Paragraph (i) of Sec.  12.130 is amended by re-designating this 
provision as paragraph (c) of new Sec.  102.23 and by clarifying that 
this paragraph is applicable only to goods identified in 19 CFR 
102.21(b)(5), regardless of the origin of such goods.
    A new paragraph (d) is added to new Sec.  102.22 to provide that 
the rules of origin set forth in Sec.  102.21 are to be used to 
determine the country of origin of a textile or apparel product if 
Israel is determined not to be the country of origin of the product 
under Sec.  102.22. This application of the rules of origin for textile 
or apparel products is consistent with CBP's practice since the 
implementation of section 334 of the URAA . See ``Determination of 
Origin of Textile Goods Processed in Israel,'' General Statement of 
Policy, published in the Federal Register (61 FR 40076) on July 31, 
1996.
    Conforming changes are also being made in this document to 
Sec. Sec.  141.113(b), 144.38(f)(1), and 146.63(d)(1) of the CBP 
regulations to replace references to ``Sec.  12.130'' with ``Sec.  
102.21 or Sec.  102.22 of this chapter, as applicable.''
    Sections 12.131 and 12.132 set forth certain procedural matters 
regarding the entry of textiles and textile products in general, and 
the entry of textile and apparel products under the North American Free 
Trade Agreement (NAFTA), respectively. These sections are moved to Part 
102 to follow the rules of origin for textile and apparel products set 
forth in Sec.  102.21 and new Sec. Sec.  102.22 and 102.23 as part of 
the consolidation of the textile regulations. Section 12.131 is amended 
by re-designating this provision as Sec.  102.24, by replacing the 
references to ``textiles and textile products'' with the words 
``textile or apparel products,'' and by replacing the reference in 
paragraph (b) to ``12.130'' with the words ``Sec.  102.21 or Sec.  
102.22 of this chapter, as applicable.'' Section 12.131(b) (now Sec.  
102.24(b)) is further amended by adding the words ``or other company'' 
in the first sentence after ``factory, producer or manufacturer'' to 
address a situation in which a company that is declared as the actual 
manufacturer at the time of entry is not a factory, producer or 
manufacturer but is a trading company or other type of company.
    Section 12.132 is amended by re-designating this provision as new 
Sec.  102.25 and by replacing the references to ``textile and apparel 
goods'' with the words ``textile or apparel products.'' As the 
requirement for the submission of a textile declaration has been 
eliminated, the language preceding paragraph (a)(1) of Sec.  12.132 is 
removed, as are paragraphs (a)(1) and (a)(2), which concern 
declarations by manufacturers or producers. Paragraph (a)(3) of Sec.  
12.132, pertaining to incomplete declarations and the ability of the 
port director to determine the country of origin of merchandise, is 
retained although it is amended by deleting the reference to the 
textile declaration. Paragraph (b) of Sec.  12.132 is also retained as 
part of new Sec.  102.25.
    Finally, this document amends Part 163 of the CBP regulations by 
removing from the list of entry records in the Appendix (the interim 
``(a)(1)(A) list'') the reference to former ``Sec.  12.130'' and the 
records listed thereunder and by replacing the reference to ``Sec.  
12.132'' in the Appendix with ``Sec.  102.25.''

Comments

    Before adopting these interim regulations as a final rule, 
consideration will be given to any written comments from the general 
public, including state, local, and tribal governments, that are timely 
submitted to CBP, including comments on the clarity of the interim 
regulations and how they may be made easier to understand. All such 
comments received from the public pursuant to this interim rule 
document will be available for public inspection in accordance with the 
Freedom of Information Act (5 U.S.C. 552) and Sec.  103.11(b), CBP 
regulations (19 CFR 103.11(b)), during regular business days between 
the hours of 9 a.m. and 4:30 p.m. at the Trade and Commercial 
Regulations Branch, Customs and Border Protection, 799 9th Street, NW. 
(5th Floor), Washington, DC. Arrangements to inspect submitted comments 
should be made in advance by calling Mr. Joseph Clark at (202) 572-
8768. Comments may also be accessed at the Federal eRuling Portal. For 
additional information on accessing comments via the Federal 
eRulingmaking Portal, see the ADDRESSES section of this document.

Inapplicability of Notice and Delayed Effective Date Requirements

    Under the Administrative Procedure Act (``APA'') (5 U.S.C. 553), 
agencies generally are required to publish a notice of proposed 
rulemaking in the Federal Register that solicits public comment on 
proposed regulatory amendments, consider public comments in deciding on 
the content of the final amendments, and publish the final amendments 
at least 30 days prior to their effective date. However, section 
553(a)(1) of the APA provides that the standard notice and comment 
procedures do not apply to an agency rulemaking to the extent that it 
involves a foreign affairs function of the United States. The 
Department of the Treasury has directed that these regulations be 
promulgated as immediately effective interim regulations because they 
involve a foreign affairs function of the United States.
    In order to implement import policies with respect to textiles and 
textile products, Congress provided authority to the President to 
negotiate textile restraint agreements in section 204 of the 
Agricultural Act of 1956, as amended (7 U.S.C. 1854), and the authority 
to carry out such agreements by issuing regulations governing the entry 
of merchandise covered by the agreements into the United States. The 
amendments set forth in this document, which are promulgated in large 
part pursuant to 7 U.S.C. 1854, revise, update, and restructure the 
regulations relating to the country of origin of textile and apparel 
products. The primary function of these amendments is to facilitate the 
correct reporting (and deter the fraudulent reporting) of the origin of 
textile and apparel imports, thereby preventing the circumvention or 
frustration of the bilateral textile restraint agreements which remain 
in force or which may be negotiated in the future as well as prevent 
the contravention of actions taken by CITA pursuant to the textile 
safeguard provisions of China's WTO Accession Agreement. The interim 
regulations set forth in this document directly impact upon the 
administration and enforcement of the remaining quantitative 
limitations in bilateral trade agreements and the unilaterally imposed 
restrictions on textile imports by ensuring, to the greatest extent

[[Page 58013]]

possible, that the correct country of origin is attributed to all 
textile imports.
    In addition, by improving the proper reporting of the country of 
origin of textile imports, these interim regulations will facilitate 
enforcement and administration of the various bilateral and 
multilateral free trade agreements with which the United States is a 
party by helping to ensure that only those textile products that are 
entitled to trade benefits receive those benefits.
    For the above reasons, it has also been determined that prior 
notice and public procedure, and a delayed effective date, are 
impracticable, unnecessary and contrary to the public interest pursuant 
to 5 U.S.C. 553(b)(B) and 553(d)(3), respectively.

Executive Order 12866 and Regulatory Flexibility Act

    CBP has determined that this document is not a regulation or rule 
subject to the provisions of Executive Order 12866 of September 30, 
1993 (58 FR 51735, October 1993), because it pertains to a foreign 
affairs function of the United States, as described above, and 
therefore is specifically exempted by section 3(d)(2) of Executive 
Order 12866. Because a notice of proposed rulemaking is not required 
under section 553(b) of the APA for the reasons described above, CBP 
notes that the provisions of the Regulatory Flexibility Act, as amended 
(5 U.S.C. 601 et seq.), do not apply to this rulemaking. Accordingly, 
CBP also notes that this interim rule is not subject to the regulatory 
analysis requirements or other requirements of 5 U.S.C. 603 and 604.

Paperwork Reduction Act

    The collections of information in these interim regulations (the 
identification of the manufacturer on CBP Form 3461 (Entry/Immediate 
Delivery) and CBP Form 7501 (Entry Summary)) have been previously 
reviewed and approved by the Office of Management and Budget in 
accordance with the requirements of the Paperwork Reduction Act (44 
U.S.C. 3507) under control numbers 1651-0024 and 1651-0022, 
respectively. This interim rule clarifies that the manufacturer to be 
identified on entries of textile and apparel products must consist of 
the entity performing the origin-conferring operations.

Drafting Information

    The principal authors of this document were Cynthia Reese and Craig 
Walker, Office of Regulations and Rulings, Customs and Border 
Protection. However, personnel from other offices participated in its 
development.

Signing Authority

    This document is being issued in accordance with Sec.  0.1(a)(1) of 
the CBP regulations (19 CFR 0.1(a)(1)) pertaining to the authority of 
the Secretary of the Treasury (or his delegate) to approve regulations 
related to certain CBP revenue functions.

List of Subjects

19 CFR Part 12

    Customs duties and inspection, Entry of merchandise, Imports, 
Reporting and recordkeeping requirements, Textiles and textile 
products, Trade agreements.

19 CFR Part 102

    Customs duties and inspections, Imports, Reporting and 
recordkeeping requirements, Rules of origin, Trade agreements.

19 CFR Part 141

    Bonds, Customs duties and inspection, Entry of merchandise, Release 
of merchandise, Reporting and recordkeeping requirements.

19 CFR Part 144

    Bonds, Customs duties and inspection, Reporting and recordkeeping 
requirements, Warehouses.

19 CFR Part 146

    Bonds, Customs duties and inspection, Entry, Foreign trade zones, 
Imports, Reporting and recordkeeping requirements.

19 CFR Part 163

    Administrative practice and procedure, Customs duties and 
inspection, Imports, Reporting and recordkeeping requirements, Trade 
agreements.

Amendments to the Regulations

0
Accordingly, chapter I of title 19, Code of Federal Regulations (19 CFR 
chapter I), is amended as set forth below.

PART 12--SPECIAL CLASSES OF MERCHANDISE

0
1. The general authority citation for Part 12 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i), 
Harmonized Tariff Schedule of the United States (HTSUS), 1624;
* * * * *

0
2. The specific authority citation for Sec. Sec.  12.130 and 12.131 is 
removed.


Sec. Sec.  12.130, 12.131, 12.132  [Removed]

0
3. The undesignated center heading ``TEXTILES AND TEXTILE PRODUCTS'' 
and Sec. Sec.  12.130, 12.131, and 12.132 are removed.

PART 102--RULES OF ORIGIN

0
1. The general authority citation for Part 102 is revised to read as 
follows:

    Authority: 7 U.S.C. 1854, 19 U.S.C. 66, 1202 (General Note 3(i) 
Harmonized Tariff Schedule of the United States), 1624, 3314, 3592.


0
2. Section 102.0 is revised to read as follows:


Sec.  102.0  Scope.

    With the exception of Sec. Sec.  102.21 through 102.25, this part 
sets forth rules for determining the country of origin of imported 
goods for the purposes specified in paragraph 1 of Annex 311 of the 
North American Free Trade Agreement (``NAFTA''). These specific 
purposes are: country of origin marking; determining the rate of duty 
and staging category applicable to originating textile and apparel 
products as set out in Section 2 (Tariff Elimination) of Annex 300-B 
(Textile and Apparel Goods); and determining the rate of duty and 
staging category applicable to an originating good as set out in Annex 
302.2 (Tariff Elimination). 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. Section 102.22 sets forth rules for determining whether 
textile and apparel products are considered products of Israel for 
purposes of the customs laws and the administration of quantitative 
limitations. Sections 102.23 through 102.25 set forth certain 
procedural requirements relating to the importation of textile and 
apparel products.

0
3. New Sec. Sec.  102.22 through 102.25 are added to read as follows:


Sec.  102.22  Rules of origin for textile and apparel products of 
Israel.

    (a) Applicability. The provisions of this section will control for 
purposes of determining whether a textile or apparel product, as 
defined in Sec.  102.21(b)(5), is considered a product of Israel for 
purposes of the customs laws and the administration of quantitative 
limitations. A textile or apparel product will be a product of Israel 
if it is wholly the growth, product, or manufacture of Israel. However, 
a textile or apparel product that consists of materials produced or 
derived from, or processed in, another country, or insular possession 
of the United States, in

[[Page 58014]]

addition to Israel, will be a product of Israel if it last underwent a 
substantial transformation in Israel. A textile or apparel product will 
be considered to have undergone a substantial transformation if it has 
been transformed by means of substantial manufacturing or processing 
operations into a new and different article of commerce.
    (b) Criteria for determining country of origin for products of 
Israel. The criteria in paragraphs (b)(1) and (b)(2) of this section 
will be considered in determining whether an imported textile or 
apparel product is a product of Israel. These criteria are not 
exhaustive. One or any combination of criteria may be determinative, 
and additional factors may be considered.
    (1) A new and different article of commerce will usually result 
from a manufacturing or processing operation if there is a change in:
    (i) Commercial designation or identity;
    (ii) Fundamental character; or
    (iii) Commercial use.
    (2) In determining whether merchandise has been subjected to 
substantial manufacturing or processing operations, the following will 
be considered:
    (i) The physical change in the material or article as a result of 
the manufacturing or processing operations in Israel or in Israel and a 
foreign territory or country or insular possession of the U.S.;
    (ii) The time involved in the manufacturing or processing 
operations in Israel or in Israel and a foreign territory or country or 
insular possession of the U.S.;
    (iii) The complexity of the manufacturing or processing operations 
in Israel or in Israel and a foreign territory or country or insular 
possession of the U.S.;
    (iv) The level or degree of skill and/or technology required in the 
manufacturing or processing operations in Israel or in Israel and a 
foreign territory or country or insular possession of the U.S.; and
    (v) The value added to the article or material in Israel or in 
Israel and a foreign territory or country or insular possession of the 
U.S., compared to its value when imported into the U.S.
    (c) Manufacturing or processing operations. (1) An article or 
material usually will be a product of Israel when it has undergone in 
Israel prior to importation into the United States any of the 
following:
    (i) Dyeing of fabric and printing when accompanied by two or more 
of the following finishing operations: bleaching, shrinking, fulling, 
napping, decating, permanent stiffening, weighting, permanent 
embossing, or moireing;
    (ii) Spinning fibers into yarn;
    (iii) Weaving, knitting or otherwise forming fabric;
    (iv) Cutting of fabric into parts and the assembly of those parts 
into the completed article; or
    (v) Substantial assembly by sewing and/or tailoring of all cut 
pieces of apparel articles which have been cut from fabric in another 
foreign territory or country, or insular possession of the U.S., into a 
completed garment (e.g., the complete assembly and tailoring of all cut 
pieces of suit-type jackets, suits, and shirts).
    (2) An article or material usually will not be considered to be a 
product of Israel by virtue of merely having undergone any of the 
following:
    (i) Simple combining operations, labeling, pressing, cleaning or 
dry cleaning, or packaging operations, or any combination thereof;
    (ii) Cutting to length or width and hemming or overlocking fabrics 
which are readily identifiable as being intended for a particular 
commercial use;
    (iii) Trimming and/or joining together by sewing, looping, linking, 
or other means of attaching otherwise completed knit-to-shape component 
parts produced in a single country, even when accompanied by other 
processes (e.g., washing, drying, and mending) normally incident to the 
assembly process;
    (iv) One or more finishing operations on yarns, fabrics, or other 
textile articles, such as showerproofing, superwashing, bleaching, 
decating, fulling, shrinking, mercerizing, or similar operations; or
    (v) Dyeing and/or printing of fabrics or yarns.
    (d) Results of origin determination. If Israel is determined to be 
the country of origin of a textile or apparel product by application of 
the provisions in paragraphs (a), (b), and (c) of this section, the 
inquiry into the origin of the product ends. However, if Israel is 
determined not to be the country of origin of a textile or apparel 
product by application of the provisions in paragraphs (a), (b), and 
(c) of this section, the country of origin of the product will be 
determined under the rules of origin set forth in Sec.  102.21, 
although the application of those rules cannot result in Israel being 
the country of origin of the product.


Sec.  102.23  Origin and Manufacturer Identification

    (a) Textile or Apparel Product Manufacturer Identification. All 
entries of textile or apparel products listed in Sec.  102.21(b)(5) 
must identify on CBP Form 3461 (Entry/Immediate Delivery) and CBP Form 
7501 (Entry Summary), and in all electronic data transmissions that 
require identification of the manufacturer, the manufacturer of such 
products through a manufacturer identification code (MID) constructed 
from the name and address of the entity performing the origin-
conferring operations pursuant to Sec.  102.21 or Sec.  102.22, as 
applicable. This code must be accurately constructed using the 
methodology set forth in the Appendix to this part, including the use 
of the two-letter International Organization for Standardization (ISO) 
code for the country of origin of such products. When a single entry is 
filed for products of more than one manufacturer, the products of each 
manufacturer must be separately identified. Importers must be able to 
demonstrate to CBP their use of reasonable care in determining the 
manufacturer. If an entry filed for such merchandise fails to include 
the MID properly constructed from the name and address of the 
manufacturer, the port director may reject the entry or take other 
appropriate action.
    (b) Incomplete or insufficient information. If the port director is 
unable to determine the country of origin of a textile or apparel 
product, the importer must submit additional information as requested 
by the port director. Release of the product from CBP custody will be 
denied until a determination of the country of origin is made based 
upon the information provided or the best information available.
    (c) Date of exportation. For quota, visa or export license 
requirements, and statistical purposes, the date of exportation for 
textile or apparel products listed in Sec.  102.21(b)(5) will be the 
date the vessel or carrier leaves the last port in the country of 
origin, as determined by application of Sec.  102.21 or Sec.  102.22, 
as applicable. Contingency of diversion in another foreign territory or 
country will not change the date of exportation for quota, visa or 
export license requirements or for statistical purposes.


Sec.  102.24  Entry of textile or apparel products.

    (a) General. Separate shipments of textile or apparel products, 
including samples, which originate from a country subject to visa or 
export license requirements for exports of textile or

[[Page 58015]]

apparel products, arriving in the customs territory of the United 
States for one consignee on the same conveyance on the same day, the 
combined value of which is over $250, will not be entered under the 
informal entry procedures set forth in subpart C, Part 143 or 
procedures set forth in Sec.  141.52 of this chapter. Port directors 
will refuse separate informal entries and require a formal entry and 
visa or export license, as appropriate, for all such merchandise. A 
consignee for purposes of this section is the ultimate consignee and 
does not include a freight forwarder or Customs broker not importing 
for its own account.
    (b) Denial of entry pursuant to directive. Textile or apparel 
products subject to section 204 of the Agricultural Act of 1956, as 
amended (7 U.S.C. 1854), whether or not the requirements set forth in 
Sec.  102.21 or Sec.  102.22, as applicable, have been met, will be 
denied entry where the factory, producer, manufacturer, or other 
company named in the entry documents for such textile or apparel 
products is named in a directive published in the Federal Register by 
the Committee for the Implementation of Textile Agreements as a company 
found to be illegally transshipping, closed or unable to produce 
records to verify production. In these circumstances, no additional 
information will be accepted or considered by CBP for purposes of 
determining the admissibility of such textile or apparel products.


Sec.  102.25  Textile or apparel products under the North American Free 
Trade Agreement.

    In connection with a claim for NAFTA preferential tariff treatment 
involving non-originating textile or apparel products subject to the 
tariff preference level provisions of appendix 6.B to Annex 300-B of 
the NAFTA and Additional U.S. Notes 3 through 6 to Section XI, 
Harmonized Tariff Schedule of the United States, the importer must 
submit to CBP a Certificate of Eligibility covering the products. The 
Certificate of Eligibility must be properly completed and signed by an 
authorized official of the Canadian or Mexican government and must be 
presented to CBP at the time the claim for preferential tariff 
treatment is filed under Sec.  181.21 of this chapter. If the port 
director is unable to determine the country of origin of the products, 
they will not be entitled to preferential tariff treatment or any other 
benefit under the NAFTA for which they would otherwise be eligible.

0
4. Part 102 is amended by adding an appendix to read as follows:

Appendix To Part 102--Textile and Apparel Manufacturer Identification

Rules for Constructing the Manufacturer Identification Code (MID)

    1. Pursuant to Sec.  102.23(a) of this part, all entries of 
textile or apparel products listed in Sec.  102.21(b)(5) must 
identify on CBP Form 3461 (Entry/Immediate Delivery) and CBP Form 
7501 (Entry Summary), and in all electronic data transmissions that 
require identification of the manufacturer, the manufacturer of such 
products through a manufacturer identification code (MID) 
constructed from the name and address of the entity performing the 
origin-conferring operations. The MID may be up to 15 characters in 
length, with no spaces inserted between the characters.
    2. The first 2 characters of the MID consist of the ISO code for 
the actual country of origin of the goods. The one exception to this 
rule is Canada. ``CA'' is not a valid country code for the MID; 
instead, one of the appropriate province codes listed below must be 
used:

ALBERTA--XA
BRITISH COLUMBIA--XC
MANITOBA--XM
NEW BRUNSWICK--XB
NEWFOUNDLAND (LABRADOR)--XW
NORTHWEST TERRITORIES--XT
NOVA SCOTIA--XN
NUNAVUT--XV
ONTARIO--XO
PRINCE EDWARD ISLAND--XP
QUEBEC--XQ
SASKATCHEWAN--XS
YUKON TERRITORY--XY
    3. The next group of characters in the MID consists of the first 
three characters in each of the first two ``words'' of the 
manufacturer's name. If there is only one ``word'' in the name, then 
only the first three characters from the name are to be used. For 
example, ``Amalgamated Plastics Corp.'' would yield ``AMAPLA,'' and 
``Bergstrom'' would yield ``BER.'' If there are two or more initials 
together, they are to be treated as a single word. For example, 
``A.B.C. Company'' or ``A B C Company'' would yield ``ABCCOM,'' 
``O.A.S.I.S. Corp.'' would yield ``OASCOR,'' ``Dr. S.A. Smith'' 
would yield ``DRSA,'' and ``Shavings B L Inc.'' would yield 
``SHABL.'' The English words ``a,'' ``an,'' ``and,'' ``of,'' and 
``the'' in the manufacturer's name are to be ignored. For example, 
``The Embassy of Spain'' would yield ``EMBSPA.'' Portions of a name 
separated by a hyphen are to be treated as a single word. For 
example, ``Rawles-Aden Corp.'' or ``Rawles--Aden Corp.'' would both 
yield ``RAWCOR.'' Some names include numbers. For example, ``20th 
Century Fox'' would yield ``20TCEN'' and ``Concept 2000'' would 
yield ``CON200.''
    a. Some words in the title of the foreign manufacturer's name 
are not to be used for the purpose of constructing the MID. For 
example, most textile factories in Macau start with the same words, 
``Fabrica de Artigos de Vestuario,'' which means ``Factory of 
Clothing.'' For a factory named ``Fabrica de Artigos de Vestuario 
JUMP HIGH Ltd,'' the portion of the factory name that identifies it 
as a unique entity is ``JUMP HIGH.'' This is the portion of the name 
that should be used to construct the MID. Otherwise, all of the MIDs 
from Macau would be the same, using ``FABDE,'' which is incorrect.
    b. Similarly, many factories in Indonesia begin with the prefix 
PT, such as ``PT Morich Indo Fashion.'' In Russia, other prefixes 
are used, such as ``JSC,'' ``OAO,'' ``OOO,'' and ``ZAO.'' These 
prefixes are to be ignored for the purpose of constructing the MID.
    4. The next group of characters in the MID consists of the first 
four numbers in the largest number on the street address line. For 
example, ``11455 Main Street, Suite 9999'' would yield ``1145.'' A 
suite number or a post office box is to be used if it contains the 
largest number. For example, ``232 Main Street, Suite 1234'' would 
yield ``1234.'' If the numbers in the street address are spelled 
out, such as ``One Thousand Century Plaza,'' no numbers representing 
the manufacturer's address will appear in this section of the MID. 
However, if the address is ``One Thousand Century Plaza, Suite 
345,'' this would yield ``345.'' When commas or hyphens separate 
numbers, all punctuation is to be ignored and the number that 
remains is to be used. For example, ``12,34,56 Alaska Road'' and 
``12-34-56 Alaska Road'' would yield ``1234.'' When numbers are 
separated by a space, both numbers are recognized and the larger of 
the two numbers is to be selected. For example, ``Apt. 509 2727 
Cleveland St.'' would yield ``2727.''
    5. The last characters in the MID consist of the first three 
letters in the city name. For example, ``Tokyo'' would yield 
``TOK,'' ``St. Michel'' would yield ``STM,'' ``18-Mile High'' would 
yield ``MIL,'' and ``The Hague'' would yield ``HAG.'' Numbers in the 
city name or line are to be ignored. For city-states, the first 
three letters are to be taken from the country name. For example, 
Hong Kong would yield ``HON,'' Singapore would yield ``SIN,'' and 
Macau would yield ``MAC.''
    6. As a general rule, in constructing a MID, all punctuation, 
such as commas, periods, apostrophes, and ampersands, are to be 
ignored. All single character initials, such as the ``S'' in 
``Thomas S. Delvaux Company,'' are also to be ignored, as are 
leading spaces in front of any name or address.
    7. Examples of manufacturer names and addresses and their 
corresponding MIDs are listed below:
LA VIE DE FRANCE, 243 Rue de la Payees, 62591 Bremond, France; 
FRLAVIE243BRE
20TH CENTURY TECHNOLOGIES, 5 Ricardo Munoz, Suite 5880, Caracas, 
Venezuela; VE20TCEN5880CAR
Fabrica de Artigos de Vestuario TOP JOB, Grand River Building, FI 2-
4, Macau; MOTOPJOB24MAC
THE GREENHOUSE, 45 Royal Crescent, Birmingham, Alabama 35204; 
USGRE45BIR
CARDUCCIO AND JONES, 88 Canberra Avenue, Sidney, Australia; 
AUCARJON88SID
N. MINAMI & CO., LTD., 2-6, 8-Chome Isogami-Dori, Fukiai-Ku, Kobe, 
Japan; JPMINCO26KOB
BOCCHACCIO S.P.A., Visa Mendotti, 61, 8320 Verona, Italy; 
ITBOCSPA61VER
MURLA-PRAXITELES INC., Athens, Greece; GRMURINCATH
SIGMA COY E.X.T., 4000 Smyrna, Italy, 1640 Delgado; ITSIGCOY1640SMY

[[Page 58016]]

COMPANHIA TEXTIL KARSTEN, Calle Grande, 25-27, 67890 Lisbon, 
Portugal, PTKAR2527LIS
HURON LANDMARK, 1840 Huron Road, Windsor, ON, Canada N9C 2L5; 
XOHURLAN1840WIN

PART 141--ENTRY OF MERCHANDISE

0
5. The general authority citation for Part 141 and specific authority 
citation for Sec.  114.113 continue to read as follows:

    Authority: 19 U.S.C. 66, 1448, 1624.
* * * * *
    Section 141.113 also issued under 19 U.S.C. 1499, 1623.


Sec.  141.113  [Amended]

0
6. In Sec.  141.113, paragraph (b) is amended by removing the words 
``12.130 of this chapter'' and by adding, in their place, the words 
``Sec.  102.21 or Sec.  102.22 of this chapter, as applicable,''.

PART 144--WAREHOUSE AND REWAREHOUSE ENTRIES AND WITHDRAWALS

0
7. The general authority citation for Part 144 continues to read as 
follows:

    Authority: 19 U.S.C. 66, 1484, 1557, 1559, 1624.
* * * * *


Sec.  144.38  [Amended]

0
8. In Sec.  144.38, paragraph (f)(1) is amended by removing the words 
``Sec.  12.130 of this chapter'' and by adding, in their place, the 
words ``Sec.  102.21 or Sec.  102.22 of this chapter, as applicable''.

PART 146--FOREIGN TRADE ZONES

0
9. The authority citation for Part 146 is revised to read as follows:

    Authority: 19 U.S.C. 66, 81a-81u, 1202 (General Note 3(i), 
Harmonized Tariff Schedule of the United States), 1623, 1624.


Sec.  146.63  [Amended]

0
10. In Sec.  146.63, paragraph (d)(1) is amended by removing the words 
Sec.  12.130 of this chapter'' and by adding, in their place, the words 
``Sec.  102.21 or Sec.  102.22 of this chapter, as applicable''.

PART 163--RECORDKEEPING

0
11. The authority citation for Part 163 continues to read as follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1484, 1508, 1510, 1624.

0
12. The Appendix to Part 163 is amended by removing under section IV 
the listing of ``Sec.  12.130 Textiles and textile products Single 
country declaration Multiple country declaration VISA'' and the listing 
of ``Sec.  12.132 NAFTA textile requirements'', and by adding a new 
listing under section IV in numerical order to read as follows:
Appendix to Part 163--Interim (a)(1)(A) List.
* * * * *
    IV. * * *


Sec.  102.25  NAFTA textile requirements

* * * * *

Robert C. Bonner,
Commissioner of Customs and Border Protection.
    Approved: September 30, 2005.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 05-19985 Filed 9-30-05; 2:38 pm]
BILLING CODE 9110-06-P