HQ 0733740 - Country of origin marking of imported travel bag; 084935; 086895; U.S.-Canada Free Trade Agreement. - United States International Trade Commision Rulings

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HQ 733740
December 6, 1990

MAR-2-05 CO:R:C:V 733740 KG

CATEGORY: MARKING

Mr. David Coutts
President
BodyPro Inc.
Box 475
2384 Yonge Street
Toronto, Ontario
M4P 2G9 Canada

RE: Country of origin marking of imported travel bag; 084935; 086895; U.S.-Canada Free Trade Agreement.

Dear Mr. Coutts:

This is in response to your letter of April 6, 1990, requesting reconsideration of HQ 084935 (August 23, 1989), which related to the tariff classification and country of origin marking regarding imported travel bags. Customs ruled on the reconsideration of the classification issue in HQ 086895 (August 17, 1990). This ruling pertains to the country of origin marking issue.

FACTS:

You import "pocket gyms" which include a number of items, including exercise equipment. One of the items included in each "pocket gym" is a nylon bag 9 1/4" long by 4" wide by 3 1/2" high. These nylon bags are made in Korea. You asked what the country of origin marking requirements would be with respect to the nylon bag. Customs ruled in HQ 084935 (August 28, 1989), that separate pieces of the set which had different countries of origin for the purposes of 19 U.S.C. 1304, would be required to be separately marked. For instance, the nylon bag, which is manufactured in Korea, must be marked to indicate that Korea is the country of origin for the purposes of 19 U.S.C. 1304. You contend that the country of origin marking must be consistent with the tariff classification of the imported "pocket gym."

ISSUE:

Whether the country of origin marking for the purposes of 19 U.S.C. 1304 must be consistent with the country of origin determination for the purposes of the U.S.-Canada Free Trade Agreement.

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. The Court of International Trade stated in Koru North America v. United States, 701 F.Supp. 229, 12 CIT (CIT 1988), that: "In ascertaining what constitutes the country of origin under the marking statute, a court must look at the sense in which the term is used in the statute, giving reference to the purpose of the particular legislation involved. The purpose of the marking statute is outlined in United States v. Friedlaender & Co., 27 CCPA 297 at 302, C.A.D. 104 (1940), where the court stated that: "Congress intended that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will."

We concur with the analysis set forth in Koru North America which concluded that a good imported into the U.S. may have differing origins for the same product; "... the differing purpose of the marking law compared with the classification schedules justify a different result in the present instance." The purpose of the origin provision in the U.S.-Canada Free Trade Agreement ("FTA") is to determine eligibility of goods for preferential tariff treatment under the FTA while the purpose of the marking law, as set forth above, is to enable U.S. consumers to make informed buying choices.

Section 202 of the United States-Canada Free-Trade Agreement Implementation Act of 1988 (Pub. L. 100-449;19 U.S.C. 2112 note), sets forth the rules for determining eligibility for preferential tariff treatment for goods under the FTA. Its introductory proviso states that:

"For purposes of implementing the tariff treatment contemplated under the Agreement, goods originate in the territory of a Party if-"

Generally, goods are considered to originate in the territory of a Party if they are wholly obtained or produced in the territory of either Party or both Parties or if they have been transformed in the territory of either Party or both Parties so as to be subject to a change in tariff classification as described in Annex 301.2 of the FTA.
Senate Report No. 100-509 states that the rules of origin set forth in section 202 are "designed to ensure that goods of third countries will not benefit from the Agreement....The preferential tariff treatment granted by the Agreement is intended to be accorded only to goods originating in the United States or Canada." The country of origin marking law and regulations do not relate to and are not relevant to the determination of preferential tariff treatment for goods originating in Canada. Further, the Senate Report states in its discussion of section 102(a) of the Implementation Act that "The Agreement is not self-executing and has no independent effect under U.S. law. For example, to the extent not altered by this implementing bill, existing U.S. trade laws, including the antidumping and countervailing duty laws, are not superseded by any provision of the Agreement." The legislation itself and the legislative history are silent with respect to any intended impact that the FTA would have on the country of origin marking law and its regulations. Therefore, it is presumed that there was no legislative intent to alter the country of origin marking law and regulations with respect to goods originating from Canada for the purposes of the FTA. Since the FTA contains no changes regarding the country of origin marking requirements under 19 U.S.C. 1304, the statute continues to apply.

Customs issued Publication No. 592 (May 1989) whose purpose was to briefly describe the FTA and answer some basic questions for importers. The publication states that "The FTA rules of origin will be used only to determine whether or not an article qualifies for reduced or free rates under the Act....The existing standard for determining country of origin for purposes of marking (i.e., "substantial transformation") continues to be applicable, although we note that the result may often be the same. The FTA is silent as to marking, and there is no authority for a change in laws governing marking of merchandise." Based on the above, we conclude that there is no requirement in the FTA that country of origin determinations for the purposes of 19 U.S.C. 1304 be consistent with country of origin determinations under the FTA.

HOLDING:

There is no requirement that country of origin determinations for the purposes of 19 U.S.C. 1304 be consistent with the country of origin determination for the purposes of the U.S.-Canada Free Trade Agreement. The country of origin marking statute has a different purpose from the FTA. The imported nylon bag is made in Korea. Therefore, for the purposes of 19 U.S.C. 1304, it must be marked to indicate its Korean origin. That portion of HQ 084935 which pertains to country of origin marking requirements under 19 U.S.C. 1304 is affirmed.

Sincerely,

John Durant
Director,

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