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HQ 735538




July 27, 1994

CLA-2 CO:R:C:S 735538 WAS

CATEGORY: MARKING

Steven S. Weiser, Esq.
Siegel, Mandell & Davidson, P.C.
One Astor Plaza
1515 Broadway
43rd Floor
New York, N.Y. 10036-8901

RE: Country of origin marking of automobile convenience nets; 19 CFR 134.35(b); NAFTA Marking Rules; section 102.20

Dear Mr. Weiser:

This is in response to your letter dated February 17, 1994, on behalf of Polytech Netting Industries, L.P. ("Polytech Netting"), requesting a determination on the country of origin marking requirements of automobile convenience nets to be imported from Mexico.

FACTS:

You state that the importer's parent company, Polytech Netting Industries, L.P. of Ontario, Canada, imports polypropylene yarn into Canada from Scotland. The yarn is used to produce raschel netting material in bulk in the company's Canadian facilities. This knitted textile material, which you state is classifiable under subheading 6002.93.00, Harmonized Tariff Schedule of the United States (HTSUS), is shipped in-bond through the U.S. to the firm's plant in Mexico for further processing. In Mexico, the material is first cut to individual lengths. A bungee cord is then threaded around the edges of the fabric and the ends of the cord are sewn together to form a continuous border. At each corner, the bungee cord is sewn to itself to form a loop. Finally, a narrow piece of the woven "webbing" is folded in half, width-wise, and sewn over each of the shorter sides of the fabric. Polytech Netting purchases the webbing and bungee cord material from independent U.S. and Canadian producers, who manufacture these products from imported polypropylene. You claim that the thread is of U.S. or Canadian origin. Moreover, you received a New York Ruling (NYRL) 895690 dated March 28, 1994, which classified the final article - automobile restraint net - under subheading 8708.29.5060, HTSUS.

You state that four different styles of convenience nets will be shipped to Polytech Netting from Mexico in cardboard cartons, with each carton containing several dozen nets. Some of the nets will be individually packaged in poly bags, while other nets will be neatly rolled. Once the shipment reaches the U.S., the individual nets will simply be removed from the original shipping cartons and placed in plastic recyclable bins. The bins will then be forwarded to GM assembly plants. You state that in the future, the bins may instead be shipped to Mexico for direct packaging. You maintain that each bin will be clearly marked to show the origin of its contents, and the invoice will state the origin of the contents. Polytech Netting will sell these convenience nets exclusively to GM for use in the production of new automobiles.

ISSUE:

Whether the convenience nets from Mexico are subject to country of origin marking requirements.

LAW AND ANALYSIS:

The marking statute, section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) 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, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the 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"; 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." 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. Section 102.11(a) of the interim regulations states that "[t]he country of origin of a good is the country in which:

(1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other requirements of these rules are satisfied."

In this case, the applicable rule is section 102.11(a)(3) of the interim regulations. "Foreign Material" is defined in section 102.1(e) of the interim regulations as "a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced." In order to determine whether Mexico is the country of origin, we must look at those materials whose country of origin is other than Mexico. In the instant case, as the automotive nets are classified in subheading 8708.29.50, HTSUS, the change in tariff classification must be made in accordance with section 102.20(q), Section XVII: Chapters 86 through 89 of the interim regulations, which states in part that:

A change to subheading 8708.10 through 8708.29 from any other subheading.

Therefore, each foreign material incorporated in the automotive nets must come from a subheading outside of subheading 8708.29, HTSUS. In the instant case, the netting material, bungee, webbing and thread are all classified in a subheading outside of subheading 8708.29, HTSUS. Thus, a change from any of the foreign materials to an automobile net constitutes an acceptable tariff shift under the interim marking rules. Accordingly, the country of origin of the automobile netting is Mexico, and therefore, the netting is considered a good of a NAFTA country under the interim NAFTA Marking Rules.

As a good of a NAFTA country, the automobile nets are excepted from the marking requirements under 19 CFR section 134.35(b) provided that they are processed in the U.S. in such as manner that would result in the good becoming a good of the U.S. under the NAFTA Marking Rules. In such a case, unless the good is processed by the importer or on its behalf, the outermost container of the good must be marked in accord with this part.

Based on the hierarchy described above, the applicable rule for determining whether a good becomes a good of the U.S. under the NAFTA Marking Rules is 102.11(a)(3). As the automobiles are classifiable under heading 8703, HTSUS, the change in tariff classification must be made in accordance with section 102.20(q), Section XVII: Chapters 86 through 89 of the interim regulations, which states that:

8701-8705 - A change to heading 8701-8705 from any other heading except heading 8706.

As the convenience nets are classified under subheading 8708.29, HTSUS, a change in tariff classification occurs pursuant to section 102.20(q), Section XVII: Chapter 86 through 89 of the interim regulations. The convenience nets are considered processed in the U.S. to such an extent that they become products of the U.S. when installed in the completed automobiles. Therefore, GM is the ultimate purchaser and the nets are excepted from the marking requirements under 19 CFR 134.35(b), although the outermost containers of the imported convenience nets are required to be marked with the Mexican origin of the nets.

HOLDING:

Based on the information provided, pursuant to 19 CFR 134.35(b) and the NAFTA Marking Rules, the convenience nets are considered to be goods of a NAFTA country which are processed in the U.S. to such an extent that they become products of the U.S. Therefore, the convenience nets are excepted from the individual country of origin marking requirements when imported into the U.S., although the outermost containers are required to be marked to indicate the Mexican origin of the imported nets.

Sincerely,

John Durant, Director

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