HQ 561650 - NAFTA Country of Origin Marking for Optical Fiber Cable Products - United States International Trade Commision Rulings

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HQ 561650

October 16, 2001

MAR-05 RR:CR:SM 561650 RFC

CATEGORY: NAFTA

Mr. Brad Rubin
LeBoeuf, Lamb, Greene & MacRae
1875 Connecticut Avenue, N.W.
Washington, D.C. 20009-5728

RE: NAFTA Country of Origin Marking for Optical Fiber Cable Products

Dear Mr. Rubin:

This letter is in response to a February 23, 2000, letter from your law firm requesting a ruling on behalf of Alcoa Fujikura, Ltd. regarding the country of origin marking for certain optical fiber cable products when returned to the United States after processing in Mexico.

FACTS:

Optical fiber is imported into the United States from various countries. After importation, the optical fiber is sheathed in color-coated plastic, further insulated and processed into fiber optical cable on reels.

The optical fiber cable is then exported to Mexico. In Mexico, the optical fiber cable is cut to the desired lengths and plug-type connectors are placed on each end of the cable. After attachment of the connectors, the optical fiber cables are tested and exported from Mexico to the United States for sale in the United States.

ISSUE:

What is the country of origin under the applicable U.S. law for the optical fiber cable with plug-type connectors when imported into the United States from Mexico?

LAW AND ANALYSIS:

Classification of the Products

Optical Fiber:

Heading 9001 of the Harmonized Tariff Schedule of the United States (HTSUS) provides for, in part, "optical fibers and optical fiber bundles; optical fiber cable other than those of heading 8544."

The Explanatory Notes to heading 9001 provide, in part, as follows:

This heading covers:

(A) Optical fibers and optical fiber bundles, as well as optical fiber cables other than those of heading 8544.

Optical fibers consist of concentric layers of glass or plastics of different refractive indices. Those drawn from glass have a very thin coating of plastics, invisible to the naked eye, which renders the fibers less prone to fracture. Optical fibers are usually presented on reels and may be several kilometers in length. They are used to make optical fiber bundles and optical fiber cables.

Optical fiber bundles may be rigid, in which case the fibers are agglomerated by a binder along their length, or they may be flexible, in which case they are bound only at their ends. If coherently bundled, they are used for transmission of images, but if randomly bundled, they are suitable only for transmission of light for illumination.

Optical fiber cables of this heading (which may be fitted with connectors) consist of a sheath containing one or more optical fiber bundles, the fibers of which are not individually sheathed.

Optical fiber bundles and cables are used primarily in optical apparatus, particularly in endoscopes of heading 9018.

The heading, however, excludes optical fibers cables made up of individually sheathed fibers (heading 8544).

Item (A) to the Explanatory Notes to Heading 9001, page 1579 (2nd edition, 1996).

In light of the above, optical fiber is classified in heading 9001, and specifically in subheading 9001.10 of the HTSUS. Accordingly, in the instant case, the imported optical fiber is classified in subheading 9001.10 which provides for "optical fibers, optical fiber bundles and cables."

Optical Fiber Cable:

Heading 8544 provides for, in part, "optical fiber cables, made up of individually sheathed fibers, whether or not assembled with electric conductors or fitted with connectors."

The Explanatory Notes to heading 8544 provide, in part, as follows:

The heading also covers optical fiber cable, made up of individually sheathed fibers, whether or not assembled with electric conductors or fitted with connectors. The sheaths are usually of different colors to permit identification of the fibers at both ends of the cable. Optical fiber cables are used mainly in telecommunications because their capacity for the transmission of data is greater than that of electrical conductors.

Explanatory Notes to Heading 8544, page 1522 (2nd edition, 1996).

In light of the above, when optical fiber is processed into optical cable made up of individually sheathed fibers, it is classified in heading 8544, and specifically in subheading 8544.70 which provides for "optical fiber cables." The cable remains classified in subheading 8544.70 when fitted with connectors. In the instant case, the optical fiber cable is classified in subheading 8544.70, and it remains classified in that subheading after being fitted with connectors in Mexico.

Country of Origin Marking

The U.S. law relating to country of origin marking for imported merchandise ("the marking statute") is found in section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304). This law 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. The purpose of the marking statute is to allow the ultimate purchaser of the goods to know, by simple inspection, where they were made in case such knowledge might influence his or her decision to purchase the goods (i.e., to permit the ultimate purchaser in the United States to choose between domestic and foreign-made products, or between the products of different foreign countries). See generally, United States v. Friedlaender & Co. Inc., 27 C.C.P.A. 297, at 302 (1940). Part 134, Customs Regulations (19 C.F.R. § 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. As the instant case involves countries that are parties to the NAFTA, the country of origin marking requirements for a "good of a NAFTA country" must be applied. The marking requirements for such goods are 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 regulations set forth in parts 102, 134, Customs Regulations (19 CFR §§ 102, 134).

Section 134.1 (b), Customs Regulations (19 CFR § 134.1(b)), defines "country of origin" as follows:

''Country of origin'' means the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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.

Section 134.1(j), Customs Regulations (19 CFR § 134.1(j)), 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), Customs Regulations (19 CFR § 134.1(g)), 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.

Part 102, Customs Regulations (19 CFR § 102), sets forth the NAFTA marking rules for purposes of determining whether a good is a good of a NAFTA country. Section 102.11, Customs Regulations (19 CFR § 102.11), sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a) provides that:

(a) The 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 § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

A "foreign material" is defined in part 102.1(e), Customs Regulations (19 CFR § 102.1(e)), as follows:

``Foreign material'' means 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 the instant case, the first issue to be addressed as concerns the country of origin is the country of origin of the optical fiber cable that is exported from the United States to Mexico. As the cable is neither wholly obtained or produced in the United States nor produced exclusively from domestic materials, one must first apply the rule in section 102.11(a)(3). As indicated above, in its condition as exported to Mexico, the optical fiber cable is classified in subheading 8544.70 of the HTSUS. The applicable tariff shift rule set forth in section 102.20(o) is as follows:

A change to subheading 8544.11 through 8544.70 from any other subheading, including another subheading within that group, except when resulting from a simple assembly.

Rule 8544.11--8544.70 to section 102.20, Customs Regulations (19 CFR § 102.20).

The above-mentioned rule is satisfied as the foreign optical fiber and other materials used to make the cable in the United States (thermoplastic sheathing and insulation and protective materials) are classified outside of subheadings 8544.11 through 8544.70 of the HTSUS. Therefore, the optical fiber cable exported to Mexico is a good of the United States.

When imported into Mexico, the optical fiber cable is cut to the desired lengths and plug-type connectors are placed on each end of the cable. The finished optical fiber products, referred to as "jumpers," are then exported to the United States. To determine whether the processing of the cables in Mexico results in the finished goods becoming products of Mexico, one must again apply the NAFTA Marking Rules. Upon review, the rules set forth in section 102.11(a)(1) and (2) are inapplicable. Therefore, one must turn to section 102.11(a)(3). When imported into the United States, the optical fiber cable product remains classified in subheading 8544.70 of the HTSUS. Thus, as the applicable section 102.20 tariff shift rule set forth above is not satisfied as a result of the processing performed in Mexico, section 102.11(a)(3) does not result in a determination of the country of origin of the imported cable products.

As section 102.11(a)(3) has not resulted in a determination of the country of origin of the imported cable products, one must turn to section 102.11(b) of the NAFTA Marking Rules, which provides, in relevant part, as follows:

Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section:

(1) The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to he good.

Section 102.18(b)(1), Customs Regulations (19 CFR 102.18(b)(1)), provides that:

For purposes of identifying the material that imparts the essential character to a good under section 102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the section 102.20 specific rule or other requirements applicable to the good.

Applying the foregoing to the facts presented here, the only material that does not satisfy the applicable tariff shift rule as a result of the processing in Mexico is the U.S.-made optical fiber cable. Therefore, pursuant to the above-mentioned rule, the cable is the single material that imparts the essential character of the imported optical fiber cable products. Accordingly, the origin of the cable products is the United States.

HOLDING:

The country of origin under the NAFTA marking rules for the above-described merchandise is the United States when imported into the United States from Mexico. Therefore, the merchandise is excepted from the marking requirements.

The Federal Trade Commission ("FTC") has jurisdiction concerning the use of the phrase "Made in the U.S.A.," or similar words denoting U.S. origin. Consequently, any inquiries regarding the use of such phrases reflecting U.S. origin should be directed to:

Division of Enforcement
Federal Trade Commission
600 Pennsylvania, Avenue, N.W.
Washington, D.C. 20580

Telephone: 202-326-2996
URL address: www.ftc.gov

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John A. Durant, Director
Commercial Rulings Division

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