HQ 735520 - Country of origin marking for geraniums; 19 U.S.C. ?1304; 19 C.F.R. ?134.1; 19 C.F.R. ?102.11; 19 C.F.R. ?102.20 (interim regulation); North American Free Trade Agreement; 19 C.F.R. ?134.35; Ultimate purchaser - United States International Trade Commision Rulings

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HQ 735520

July 22, 1994

MAR-2-05 CO:R:C:S 735520 DEC

CATEGORY: MARKING

Mr. William C. Schultz
Schultz Pacific Horticultural Products
P.O. Box 1007
Grants Pass, Oregon 97626

RE: Country of origin marking for geraniums; 19 U.S.C. ?1304; 19 C.F.R. ?134.1; 19 C.F.R. ?102.11; 19 C.F.R. ?102.20 (interim regulation); North American Free Trade Agreement; 19 C.F.R. ?134.35; Ultimate purchaser

Dear Sir:

This is in response to your letter dated February 23, 1994, concerning the appropriate marking of geraniums that you will be importing into the United States.

FACTS:

Your company (Schultz Pacific Horticultural Products) is in the process of importing geraniums from Canada. These plants (two to four weeks old) will be imported in individual plastic containers which are grouped together and placed on flats. The plants are sold to various growers by the flat. Once imported, the geraniums are planted for a sufficient period of time to bring them into flower (approximately ten to twelve weeks). The geraniums are then transplanted and consolidated into larger containers for sale.

ISSUE:

What are the marking requirements of two to four week old geranium plants and their containers which are imported from Canada in individual plastic holders for sale by the flat to growers who plant the geraniums for ten to twelve weeks in the United States?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. origin imported into the United States 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 United States the English name of the country of origin of the article. Part 134 of the Customs Regulations implements the country of origin marking requirements and exceptions of 19 U.S.C. ?1304.

The country or origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057) (December 8, 1993) and the interim amendments to the Customs Regulations published as T.D. 94-4 (59 Fed. Reg. 109, January 3, 1994) with corrections (59 Fed. Reg. 5082, February 3, 1994) and T.D. 94-1 (59 Fed. Reg. 69460, December 30, 1993). These interim amendments took effect on January 1, 1994, to coincide with the effective date of the NAFTA. The marking rules used for determining whether a good is a good of a NAFTA country are contained in T.D. 94-4 (adding a new Part 102, Customs Regulations). The marking requirements of these goods are set forth in T.D. 94-1 (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 the meaning of 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 United States as determined under the NAFTA marking rules. Section 134.45(a)(2) of the interim regulations provides that a "good of a NAFTA country may be marked with the name of the country of origin in English, French, or Spanish.

In order to determine the country of origin marking requirements, we must first apply the NAFTA Marking Rules in order to determine whether the imported geranium plants are goods of a NAFTA country prior to being further processed in the United States. Part 102 of the interim regulations sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the interim regulations sets forth the required hierarchy for determining country of origin for marking purposes.

Applying the NAFTA rules of origin set forth in Part 102 of the interim regulations to the facts of this case, we find that, for marking purposes, the imported geranium plants are goods of a NAFTA country prior to being further processed in the United States. Section 102.11(a)(3) of the interim regulations is the applicable rule to apply to these facts. Sections 102.11(a)(1) & (2) do not apply because the geraniums are not wholly obtained or produced exclusively from Canadian materials. The note which precedes the applicable change in tariff classifications of section 102.20(b) of the interim regulations provides that

Notwithstanding the specific rules of this section, an agricultural or horticultural good grown in the territory of a country shall be treated as a good of that country even if grown from seed or bulbs, root stock, cuttings, slips or other live parts of plants, imported from a foreign country.

Since the geraniums are grown in the United States for ten to twelve weeks, they are deemed to be articles of United States origin under Part 102 of the interim regulations.

In addition, Section 134.35(b) of the interim regulations provides that
a good of a NAFTA country which is to be processed in the United States in a manner that would result in the good becoming a good of the United States under the NAFTA marking rules is excepted from marking. Unless the good is processed by the importer or on its behalf, the outermost container of the good should be marked in accord with this part.

Based on the facts of this case, we find that the imported two to four week old geranium plants which are planted in the United States and grown for ten to twelve weeks is further processed in the United States. Since the plants are sold by the importer to the growers, the imported geraniums are not processed by the importer or on its behalf. It is the United States growers who are the ultimate purchasers and for whose benefit the goods are marked.

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. The example set forth in section 134.1(d)(1), as amended, states that

If an imported article will be used in manufacture, the manufacturer may be the "ultimate purchaser" if he subjects the imported article to a process which results in a substantial transformation of the article, even though the process may not result in a new or different article, or for a good of a NAFTA country, a process which results in one of the changes prescribed in the NAFTA Marking Rules as effecting a change in the article's country of origin.

Accordingly, these imported geranium plants, which are goods of a NAFTA country that become United States articles as a result of being further processed in the United States, are excepted from marking and only the outermost containers (flats) are required to be marked with the Canadian country of origin of the imported geraniums.

HOLDING:

Two to four week old geranium plants which are imported by the flat and are grown in the United States for ten to twelve weeks are articles of the United States. Pursuant to the NAFTA Marking Rules, the United States growers are the ultimate purchasers and only the outermost containers (flats) must be marked to indicate the Canadian origin of the imported contents.

Sincerely,

John A. Durant, Director

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