HQ 0081320 - Country of origin of garments manufactured in Saipan - United States International Trade Commision Rulings

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HQ 081320

April 14 1989

CLA-2 CO:R:C:G 081320 JEH

CATEGORY: CLASSIFICATION

Mr. S. M. Kim
Vice President
Mariana Fashions, Inc.
Post Office Box 1417
Chalen Piao, Saipan

RE: Country of origin of garments manufactured in Saipan

Dear Mr. Kim:

In your letter of October 28, 1987, you requested the country of origin for garments manufactured in Saipan, Commonwealth of Northern Mariana Islands (CNMI). You state that the garments will be made from rolls of cloth but you did not specify the country of origin of the cloth.

FACTS:

You state that the entire manufacturing process, starting with the rolls of cloth and ending with the shipment of the finished garments to the United States, will be done in Saipan on machines and equipment that will be installed in Saipan.

You outlined the following manufacturing process for a shirt, as an example:

(I) CUTTING

(1) Arrange and draw out designed patterns on papers in a way that unnecessary spaces are reduced to a minimum extent.

(2) A roll of cloth is put on the trolley which has a horizontal outlet. The trolley is pulled to- and-fro along the long working table. The rolls of cloth are then flattened into 20-100 long folds.

(3) The paper is fixed on top of the folded cloth and electric cutters are used to cut through the cloth according to the design on the paper. The cloth is then separated into patterned pieces with some wasting.

(4) The above-procedure is repeated until the quantity of pieces meet the production demand. Then they are ready for sewing.

(II) SEWING - The patterned pieces of cloth for a shirt are in many shapes and sizes. Nevertheless, there are three main parts - the body, the collar, and the sleeves.

(A) Body

The sewing machine is used to sew the right chest, the left chest and the back pieces into one piece. Then the buttonholes and buttons are added. A pocket is added by sewing a piece on the left chest.

(B) Collar

The upper portion is folded on top of the lower portion and the sewing machine is used to sew along its sides; two plastic sticks are fitted insides the two ends so that the two dips of the collar come out with a rigid look. The collar is then sewn onto the body.

(C) Sleeves

The sewing machine is used to sew together the sides of the sleeve piece to form a column shape. The procedure for making the right and the left sleeve is the same. One end of the sleeve is sewn to the body. The wrist piece is sewn to the other end of the sleeve. Buttons are added and the buttonholes are opened on the shorter side of the wrist so that it could be buttoned.

(III) CHECKING

The body, the collar, and the sleeves are now one piece. Minor work which consist of sewing label and cutting loose threads are performed on the shirt. The shirt is then checked by the controller to see if there are any defects.

(IV) PACKING

The shirt is steam-iron, folded around a cardboard insert into a rectangle shape, and then placed in a plastic bag. The bag is packed and sealed into cartons and is ready for shipment.

ISSUE(S)

(1) What is the country of origin for garments produced in Saipan, CNMI, from imported rolls of cloth?

(2) Do the country of origin marking requirements of 19 U.S.C. 1304 apply to garments manufactured in Saipan, CNMI?

LAW AND ANALYSIS:

The garments are subject to the requirements contained in section 12.130 of the Customs Regulations (19 CFR 12.130), because they resulted from processing in more than one country. In determining the country of origin of textile and textile products which consist of materials produced or derived from, or processed in more than one country, the imported article is considered to be a product of the country in which the last substantial transformation took place. A substantial transformation of a textile or a textile product is said to occur if a commodity undergoes a transformation by means of substantial manufacturing or processing into a new and different article of commerce.

Further, your attention is directed to section 12.130(e)(iv), Customs Regulations, which states that the cutting of fabric into parts and the assembly of those parts into the complete article will usually result in the processing country being the country of origin. In addition, Customs has held that the cutting of fabric (which contains no indication of where that fabric is to be cut) into garment parts constitutes a substantial transformation of the fabric and the parts become a product of the country where the fabric is cut.

Therefore, if the fabric imported into Saipan is not marked in any way for cutting, the resulting garments will be products of Saipan.

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that every article of foreign origin (or its container) imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such manner as to indicate the foreign origin of the article.

Section 134.1(c), Customs Regulations (19 CFR 134.1(c)), defines "foreign origin" as a "country of origin other than the United States, as defined in paragraph (e) of this section, or its possessions and territories." Section 134.32(1), Customs Regulations (19 CFR 134.32(1)), specifically excludes from the marking requirements of 19 U.S.C. 1304 those articles which are "products of possessions of the United States."

Commencing on July 18, 1947, the U.S. became the administering authority of the Trust Territory of the Pacific Islands, an area including the Northern Mariana Islands (Trusteeships Agreement, 61 Stat. 3301, T.I.A.S. No. 1665, 8 U.N.T.S. 189). In accordance with provisions of the trust agreement to promote self-government for the people of the trust territory, on March 24, 1976, the U.S. signed a Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political Union with the United States, Pub. L. 94-241, 90 Stat. 263. That Covenant became fully effective as of November 4, 1986, and replaced the trusteeship agreement.

Article 6 of the Covenant, {603(c), provides that "Imports from the Northern Mariana Islands into the customs territory of the United States will be subject to the same treatment as imports from Guam into the customs territory of the United States."

Customs has previously ruled that products of Guam are excepted from country of origin marking requirements under section 134.32(1), Customs Regulations (19 CFR 134.32(1)), as products of possessions of the U.S. In regards to the Northern Mariana Islands, "Customs treats the Northern Mariana Islands as a territory or possession of the United States and products therefrom would be excluded from the country of origin marking requirements."

The Federal Trade Commission pursuant to rules and regulations issued under the authority of the Textile Fiber Products Identification Act, stated in a staff opinion letter that garments made in Saipan of imported fabric should be labeled "Made in USA of Imported Fabric."

HOLDING:

Applying the provisions of section 12.130, we can advise that under the circumstances outlined in your letter, the country of origin for garments for purposes of international textile agreement and U.S. marking laws will be, Saipan, CNMI.

Garments that are products of the Saipan, CNMI, are exempt from the country of origin marking requirements of 19 U.S.C. 1304 upon importation into the U.S. but must be marked in accord with the FTC requirements noted above.

Sincerely,

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