HQ 0083359 - The assembly of trousers sewn in one country from parts cut in a second does not constitute a substantial transformation as required by 19 CFR 12.130. - United States International Trade Commision Rulings

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HQ 083359
May 18, 1990

CLA-2 CO:R:C:G 083359 JS

CATEGORY: COUNTRY OF ORIGIN

Mr. Schon Chen
Apex International
110 E. 9th Street, A525
Los Angeles, CA 90079

RE: The assembly of trousers sewn in one country from parts cut in a second does not constitute a substantial transformation as required by 19 CFR 12.130.

Dear Mr. Chen:

This is in response to your letter of January 6, 1989, requesting a country of origin determination for men's pants designed and cut in Taiwan and finished in Thailand. Samples of the cut panels and completed articles were submitted.

FACTS:

The sample at issue is a pair of men's pants and pant panels made of 100 percent cotton. The pants have two side pockets in front, a zippered fly, and several pleats at the waist. There are two rear pockets, each having a slit opening with a button closure. The bottom of the pants legs have a 1 3/8 inch cuff. The panels are cut material of the same pattern as the pants, which have not been sewn into the completed garment.

You state that the production flow is as follows: all designing, pattern making (including choice of fabric and trimmings), size grading, marking and cutting of the material is done in Taiwan, from Taiwanese materials. The fabric panels and trimmings are then shipped to Thailand where they are sewn, finished and packaged. The finished articles will be shipped directly from Thailand to the United States.

Furthermore, you advise that materials represent 50 percent of the value of the finished clothing, while the design work and other operations performed in Taiwan, as well as the sewing and finishing operation undertaken in Thailand each represent 25 percent of the value of the finished trousers.

ISSUE:

Whether the sewing and finishing in Thailand of parts cut in Taiwan constitutes a substantial manufacturing or processing transformation such that the completed trousers would be considered a manufacture of Thailand for the purposes of 19 CFR 12.130.

LAW AND ANALYSIS:

The country of origin of textiles and textile products is determined by the application of Section 12.130 of the Customs Regulations. 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 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.

Section 12.130 (d) establishes criteria for determining whether an article has been substantially transformed. However, the criteria set forth in 19 CFR 12.130(d) are not exhaustive; one or any combination of these criteria may be determinative, and additional factors may be considered.

In accordance with 19 CFR 12.130(d)(2), the following factors are to be considered in determining whether merchandise has been subjected to substantial manufacturing or processing operations: the physical change in the material or article, the time involved in the manufacturing or processing operations, the complexity of the operations, the level or degree of skill and/or technology required, and the value added to the article.

Under 19 CFR 12.130(e)(v), an article is a product of a particular country if it has undergone in that country a substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which have been cut from fabric in another foreign country, into a completed garment.

According to T.D. 85-38 (19 Cust. Bull. 58, 70; 50 FR 8714), the final document rule establishing 19 CFR 12.130:

[T]he assembly of all the cut pieces of a garment usually is a substantial manufacturing process that results in an article with a different name, character or use than the cut pieces. It should be noted that not all assembly operations of cut garment pieces will amount to a
substantial transformation of those pieces. Where either less than a complete assembly of all cut pieces of a garment is performed in one country, or the assembly is a relatively simple one, then Customs will rule on the particular factual situations as they arise, utilizing the criteria in section 12.130(d).

Based on the information provided, the sewing together of the trousers at issue does not appear to require any tailoring. Rather, the facts indicate that the joining of the cut parts is a simple assembly operation which does not involve a high degree of skill and workmanship. The trousers at issue are designed, patterned, sized and cut in Taiwan, which operations, together with the cost of the material sourced in Taiwan, represent 75 percent of the value of the finished articles, while sewing, finishing and packing in Thailand comprise the remaining 25 percent. Thus a significant percentage of the articles' value added occurs as a result of work performed or material sourced in Taiwan.

We also note that the sewing and related operations in Thailand comprise the same percentage of value added as do the cutting and related operations performed in Taiwan. However, absent any additional data concerning the complexity of the sewing operation vis a vis the cutting operation, Customs deems cutting to be the more complex of the two. As we stated in HRL 081155 dated February 3, 1988:

It is our understanding that the apparel cutter is the most highly paid and highly skilled production worker in the apparel production process. One mistake can be costly in wasted fabric and can delay a planned production run.

Since there is nothing to suggest that the assembly of the cut parts is in any degree a complex operation as regards, for example, the time or level of skill required, or that the assembly requires anything more than a simple joining of the cut parts by machine stitching, it is Custom's view that the trousers have not undergone a substantial manufacturing or processing operation. See also, HRL 082747 (February 23, 1988), concerning the country of origin of jeans. Consequently, the trousers have not been substantially transformed in Thailand. Wherever the fabric is cut is therefore the country of origin pursuant to 19 CFR 12.130 for quota and country of origin marking purposes.

HOLDING:

The assembly operations performed in Thailand do not constitute a substantial transformation as required by 19 CFR

12.130. The country of origin for the merchandise at issue is Taiwan, and a Taiwanese visa must accompany the goods when shipped to another country.

Sincerely,

Jerry Laderberg, Acting Director
Commercial Operations Division

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