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HQ 085660

October 16, 1989

CLA-2 CO:R:C:G 085660 HP

CATEGORY: CLASSIFICATION

Mr. Trevor Thomas
Co-Operative Consulting, Australia
P.O. Box 250
Mawson, ACT 2607
AUSTRALIA

RE: Country of Origin of T-shirts

Dear Mr. Thomas

This is in reply to your letter of September 15, 1989, concerning the country of origin determination of T-shirts styled in Australia.

FACTS:

The merchandise at issue consists of plain 100 percent knit cotton T-shirts, manufactured in China. Upon importation into Australia, you plan to add Australian- design prints, multi-colored (including metallized) inks, and possibly some lace or other sewn-on adornments (fabric-based) to the T-shirts. You state that the work performed in Australia will be at least twice the cost of the Chinese T- shirts (e.g., 50% local value-added). Thereafter, you plan to package the T-shirts and export them into the
United States.

In a letter dated September 19, 1989, Mr. James W. Wilkie, of our Singapore office, advised you that it was his preliminary opinion
that the processes which you contemplate performing on the Chinese T- shirts in Australia do not constitute a " substantial transformation", and, therefore, would not result in a change in the country of origin from the Peoples Republic of China to Australia. Consequently, the T-shirts would enter the United States as products of the PRC and would be subject to applicable quota requirements.

ISSUE:

Whether the Australian processing is sufficient to constitute a substantial transfor mation of the garment for country of origin purposes? LAW AND ANALYSIS:

Garments produced in more than one foreign country are subject to the country of origin requirements delineated in section 12.130 of the Customs Regulations (19 C.F.R.
12.130). These regulations provide that:

... a textile product ... which consists of materials produced or derived from, or processed in, more than one foreign ... country shall be a product of that foreign ... country where it last underwent a substantial transformation.

12.130(b). A textile product undergoes a substantial transforma tion when it is "... transformed by means of substantial manufacturing or processing operations into a new and different article of commerce."

Section 12.130 of the regulations outlines the criteria used to determine the country of origin for textiles and textile products. Specifically, this provision of the regulations is considered in determining whether a textile product has undergone substantial manufacturing or processing operations, and what constitutes a new and different article of commerce. The factors considered are not exhaustive. In fact , "one or any combination of criteria may be determinative, and additional factors may be considered."

In determining whether merchandise has undergone substantial manufacturing or processing operations, we consider the (1) physical change in the material or the article; (2) time involved; (3) complexity of the operations; (4) level or degree of skill and/or technology required; and (5) value added to the article in each country.

Section 12.130(e)(1) of the regulations describes manufacturing or processing opera tions from which an article will usually be considered a product of the country in which processes occurred. Section 12.130(e)(1)(i) provides:

Dying 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

As none of these finishing operations take place in Australia, this section does not change the country of origin to Australia.

Section 12.130(e)(2) of the regulations describes manufacturing or processing opera tions from which an article will usually not be considered a product of the country in which the processes occurred. Section 12.130(e)(2)(v) provides:

Dying and/or printing of fabrics or yarns.

As the printing and addition comprise the fundamental processes taking place in
Australia, this section would seem to denote China as the country of origin.
Section 12.130(d)(1) of the regulations provides:

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.

It is our opinion that a new and different article of commerce has not arisen from the Australian processes. The article is identified as a T-shirt , still has the character of a T-shirt, and would still be sold and used as a T-shirt, both before and after processing. Therefore, although the article has undergone processing operations in
Australia significantly increasing its value, these operations are not sufficient to change the country of origin for quota purposes.

HOLDING:

As a result of the foregoing, we agree with the preliminary opinion of our Sin gapore office, in that the instant merchandise is considered a product of the People's
Republic of China for quota purposes.

Under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), rates of duty in General Column 1 (Most-Favored-Nation (MFN) Rates) apply to the entry of goods from countries not entitled to special tariff treatment. As of the date of this ruling, goods imported from both Australia and China are entitled to General
Column 1 rates.

In order to ascertain from which textile category a visa from China would be required, a classification decision under the HTSUSA must made. We have enclosed literature on this subject for your information.

Sincerely,

John Durant, Director
Commercial Rulings Division

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