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HQ 558706

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August 7, 1995

MAR-2-05 R:C:S 558706 KR

CATEGORY: MARKING

Derek Sparnaay
RBW Graphics 1749 Twentieth Street East
Owen Sound, Ontario, Canada N4K 5R2

RE: Country of origin of printed magazine; Article 509, NAFTA

Dear Mr. Sparnaay:

This is in reference to your letter dated July 22, 1994, to U.S. Customs Service in New York and subsequently forwarded to this Office, concerning who is the ultimate purchaser of a magazine which is given to members of an auto club and marked with a $2.00 subscription price. You have included a sample magazine for our review.

FACTS:

RBW wishes to print a magazine, "The Hartford Automobiler" in Canada, and import this magazine for an auto club, AAA, in the U.S. You state that "this magazine is gratis when membership is purchased to Auto Club." You also state that the U.S. customer does not wish to have "Printed in Canada" on the magazine. On the first page of the magazine, which lists the publishing information, the magazine states "Subscription, $2.00 (included in Master membership dues)."

ISSUE:

Who is the ultimate purchaser of the magazine for purposes of country of origin marking under NAFTA?

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.

In HQ 558680 (July 10, 1995), Customs held that advertisement inserts were not sold separately, but were sold as part of a newspaper in which they were inserted. At the time of purchase of the newspaper, the buyer of the newspaper did not know what, if any, advertisements or inserts may appear in the newspaper. The purchaser was buying the newspaper for the articles and the sections comprising the content of the newspaper. Therefore, Customs determined that the advertising inserts may be treated as gifts or giveaways. See HQ 735555 (November 1, 1994).

In this instance, the magazine is specifically marked with a price, $2.00. Although this price is incorporated in the membership fee, the price of the magazine is specifically segregated out as a separate and unique cost involved in purchasing a membership. Since a purchaser of the membership may be influenced by the fact that they are receiving this magazine for $2.00 with the membership, we find that the purchaser of the membership may be making a purchasing decision involving the magazine. Therefore, the magazine is not a gift or giveaway, and the ultimate purchaser of the magazine is the purchaser of the membership rather than the automobile club. Accordingly, each magazine must be marked with the country of origin, Canada.

HOLDING:

The ultimate purchaser of the magazine, which is a good of a NAFTA country, is the purchaser of the individual membership to the auto club. Therefore, each individual magazine must be marked with its country of origin, Canada.

Sincerely,

John Durant, Director
Commercial Rulings Division

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