HQ 735546 - Country of origin marking requirements for gift tags and wall/window decorations which are designed and lithographically printed in the U.S. and exported to Mexico for further processing; U.S. goods exported and returned; North American Free Trade Agreement, Section 102.14 of the interim regulations - United States International Trade Commision Rulings

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HQ 735546

April 15, 1994

MAR-2-05 CO:R:C:V 735546 AT

CATEGORY: MARKING

David A. Eisen, Esq.
Tompkins & Davidson
One Astor Plaza
1515 Broadway, 43rd Floor
New York, New York 10036-8901

RE: Country of origin marking requirements for gift tags and wall/window decorations which are designed and lithographically printed in the U.S. and exported to Mexico for further processing; U.S. goods exported and returned; North American Free Trade Agreement, Section 102.14 of the interim regulations

Dear Mr. Eisen:

This is in response to your letter dated July 28, 1993, on behalf of Cleo, Inc. ("Cleo"), requesting a ruling regarding the country of origin marking requirements for gift tags and wall window decorations which are designed and lithographically printed in the U.S., exported to Mexico for further processing and returned to the U.S. for retail sale. Samples were submitted for review. A separate ruling letter will be issued addressing the processing that is to be performed in NON-NAFTA countries. We regret the delay in responding.

FACTS:

According to your submission, the imported gift tags and wall/window decorations are designed and lithographically printed in the U.S. on large sheets of U.S. paperboard and will be exported to Mexico (in sheet form). Also exported to Mexico will be adhesive, and nylon flocking fibers in very short (described as "minute") length. In Mexico, the paperboard sheets will be either (1) inserted into an automatic cutting machine which cuts (i.e. straight edge and/or die-cut) the sheets, or (2) "popped-out" along pre-cut, perforated lines, to produce the individual articles.

The individual items will then be placed on a conveyor-belt type machine which transports the articles through various stations at which different operations are performed. The first station involves application of the adhesive to the designated area(s); the second station entails depositing the flocking materials onto the adhesive; the third station includes a vacuuming process which removes excess flocking materials; and the fourth station contains radiant heat which serves to dry and harden the adhesive. The article is then removed from the machine and set on a rack for further drying and hardening. The articles are then sorted and grouped in various numbered quantities and blister packed for return to the U.S. for retail sale. By letter dated September 14, 1993, you advised that the gift tags and wall/window decorations may also be subjected to an embossing or "hot stamping" (application of metallic ink to the article) operation in Mexico.

ISSUES:

What are the country of origin marking requirements for imported gift tags and wall/window decorations which are processed in Mexico in the manner described above?

LAW AND ANALYSIS:

The marking statute, section 304, 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 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 the ultimate purchaser in the U.S. 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.

Applicability of NAFTA Marking Rules

The country of 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 for these goods are set forth in T.D. 94-1 (interim amendments to various provisions of Part 134, Customs Regulations).

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. 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.

In this case, you state that U.S. components (large sheets of U.S. lithographically printed and designed gift tags and wall/window decorations, adhesive and nylon flocking fibers) are exported to Mexico where they are further processed prior to being re-imported into the U.S. The processing performed in Mexico consists of inserting the sheets into an automatic cutting machine or "popping them out" along pre-cut perforated lines, applying adhesive to designated area(s), depositing flocking materials onto the adhesive, removing the excess flocking materials by a vacuuming process, drying and hardening the adhesive by heating, in some cases embossing or "hot-stamping" metallic ink to the article and sorting and packaging the finished article for re-importation into the U.S.

Since the imported articles are processed in Mexico, we must apply the NAFTA Marking Rules to determine whether the country of origin for marking purposes is Mexico. These rules are set forth in Part 102, interim Customs Regulations.

Section 102.14 provides in pertinent part that
no good, last advanced in value or improved in condition outside the United States has United States origin. If under any other provisions of this part such a good is determined to be a good of the United States, that determination will be disregarded and the country of origin of the good will be the last foreign country in which the good was advanced in value or improved in condition.

"Advanced in value" is defined in section 102.1(a) as "an increase in the value of a good as a result of production with respect to that good, other than by means of those "minor processing" operations described in paragraphs (m)(5), (m)(6) and (m)(7) of this section". "Improved in Condition" is defined in section 102.1(i) as "the enhancement of the physical condition ofa good as a result of production with respect to that good, other than by means of those "minor processing" operations described in paragraphs (m)(5), (m)(6) and (m)(7) of this section". Minor processing operations described in paragraphs (m)(5), (m)(6) and (m)(7) of section 102.1, include unloading, reloading or any other operation necessary to maintain the good in good condition; putting up in measured doses, packing, repacking, packaging, repackaging; and testing, marking, sorting or grading.

In this case, we find that the U.S. components are advanced in value or improved in condition as a result of the operations performed in Mexico and that these operations are not considered to be minor processing as defined in paragraphs (m)(5), (m)(6) and (m)(7) of section 102.1. Accordingly, pursuant to section 102.14, the country of origin of the imported gift tags and wall/window decorations is "Mexico", the last foreign country in which the good was advanced in value or improved in condition. Therefore, for purposes of the country of origin marking requirements of 19 U.S.C. 1304, the country of origin is "Mexico".

We note however, that section 134.43(e) of the interim regulations, provides in part that "where the country of origin of an article is determined in accordance with section 102.14, part 102 of this Chapter, such article, at the choice of the importer, exporter or producer of the good, may be marked, as appropriate, in a manner such as the following:

(1) Assembled in (name of foreign country) from U.S. Components;

(2) Further processed in (name of country of origin) from U.S. materials;

(3) Product of (name of foreign country) made from U.S. components; or

(4) Product of (name of foreign country)".

HOLDING:

Pursuant to section 102.14, of the interim amendments to the Customs Regulations, the U.S.-origin components are advanced in value or improved in condition as a result of the Mexican perations. Accordingly, for marking purposes, the country of origin of the gift tags and wall/window decorations is "Mexico". A marking such as "Mexico" or "Further processed in Mexico from U.S. materials" is acceptable.

Sincerely,

John Durant, Director

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