HQ 558680 - Country of origin of printed advertising material; Article 509, NAFTA - United States International Trade Commision Rulings

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HQ 558680

July 10, 1995

MAR-2-05 R:C:S 558680 KR

CATEGORY: MARKING

Christian Wassan
Border Brokerage Company
P.O. Box 3549
Blaine, WA 98231

RE: Country of origin of printed advertising material; Article 509, NAFTA

Dear Mr. Wassan:

This is in reference to your letter dated July 14, 1994, on behalf of Web Press of Vancouver B.C., concerning whether trade advertisements sold to U.S. companies and inserted in U.S. newspapers for distribution require country of origin marking on the individual advertisements, or is the marking appearing on the exterior carton containing the bulk advertisements sufficient country of origin marking. You have included sample advertisement inserts for our review.

FACTS:

Web Press imports advertisement inserts into the U.S. to be inserted into U.S. newspapers. Since the passage of NAFTA (North American Free Trade Agreement), you believe these advertisement inserts may no longer have to be individually marked with their Canadian country of origin.

ISSUE:

Whether advertisement inserts imported from Canada to be inserted into U.S. newspapers must be individually marked with their country of origin.

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 its 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. Congressional intent in enacting 19 U.S.C. 1304 was "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." United States v. Friedlander & Co., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940). Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. 1304.

The country of origin marking requirements for goods of a NAFTA country are determined in accordance with Annex 311 of the North American Free Trade Agreement, as implemented under the North American Free Trade Agreement Implementation Act ("NAFTA") (Pub. L. 103-182, 107 Stat. 437 (December 8, 1993)). The marking rules used for determining whether a good is a good of a NAFTA country are contained in interim regulations set forth in 19 CFR Part 102. The marking requirements for these goods are set forth as interim amendments to various provisions of Part 134, Customs Regulations.

Section 134.1(b) of the interim regulations, defines "country of origin" as:
the country of manufacture, production, or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within this part; however, for a good of a NAFTA country, the NAFTA marking rules will determine the country of origin. (Emphasis added).

Section 134.1(j), of the interim regulations, provides that the "NAFTA marking rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) of the interim regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico, or the U.S. as determined under the NAFTA marking rules.

In determining the country of origin marking requirements for imported advertisement inserts, it first must be determined who is the ultimate purchaser in the U.S. of the imported article.

Section 134.1(d) of the interim regulations, provides that the ultimate purchaser of a good of a NAFTA country is the last person in the United States who purchases the good in the form in which it was imported. If an imported article is to be sold at retail in its imported form, the purchaser at retail is the ultimate purchaser. However, if an imported NAFTA article is imported and distributed free of charge, the recipient is not the ultimate purchaser. See, Section 134.1(d)(4) of the interim regulations.

The advertisement inserts are not sold separately, but are sold as part of a newspaper in which they are inserted. At the time of purchase of the newspaper, the buyer of the newspaper does not know what, if any, advertisements or inserts may appear in the newspaper. The purchaser is buying the newspaper for the articles and the sections comprising the content of the newspaper. Therefore, Customs determines that the advertising inserts may be treated as gifts or giveaways. See HQ 735555 (November 1, 1994).

Since the advertisement inserts are imported into the U.S. from a NAFTA country (assuming the imported article is a good of a NAFTA country) as gifts or giveaways which are not intended to be sold in the U.S. the ultimate purchaser of the imported article is the last person who purchases the article in the U.S. in its imported condition and not the recipient who receives the imported article as a gift or giveaway. Accordingly, the ultimate purchaser of the imported advertising inserts is the person(s) in the U.S. who purchases the bulk advertising inserts and distributes them free of charge to the newspapers.

An article is excepted from marking under 19 U.S.C. 1304 (a)(3)(D) and section 134.32(d), Customs Regulations (19 CFR 134.32(d)), if the marking of a container of such article will reasonably indicate the origin of such article. Annex 311 (5)(b)(v) of the NAFTA provides that a NAFTA article is exempt from country of origin marking if it is imported in a container that is marked in a manner that will reasonably indicate the good's origin to the ultimate purchaser. Accordingly, provided the outermost container which reaches the ultimate purchaser is marked with the article's origin the advertising inserts themselves are excepted from country of origin marking.

Accordingly, provided that the printed material is a good of a NAFTA country and is considered to be of the types of articles listed above, i.e., they are gifts or giveaways not to be sold except to the distributers in the U.S., and the outermost container which reaches the ultimate purchaser is marked to indicate the article's actual origin, the article itself is excepted from country of origin marking.

HOLDING:

The ultimate purchaser of the advertisement insert, which is a good of a NAFTA country and which is inserted into a U.S. newspaper, is not the purchaser of the newspaper, but the bulk purchaser of the advertisement inserts. Therefore, the individual advertisement insert does not have to be marked with its country of origin, only the container of the bulk advertisement inserts must be marked with the country of origin.

Sincerely,

John Durant, Director
Commercial Rulings Division

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