CLA-2 CO:R:C:G 086779 HP
Ms. Grace Howe
President
Tego Limited
5959 Topanga Canyon Blvd.
Suite 380
Woodland Hills, CA 91367
RE: Clarification of HRL 086549. Country of origin of
diapers; cut; sewn
Dear Ms. Howe:
This is in reference to HRL 086549 of March 13,
1990, in which we determined country of origin for duty
purposes of diapers under the U.S. - Canada Free Trade
Agreement. Our Blaine, Washington, office has re-
quested we extend this analysis for textile quota/visa
purposes.
FACTS:
The merchandise at issue consists of 100% cotton
babies' diapers. The following tables describe the
manufacturing processes.
CHINA PRODUCTION STEPS (CAD$ 2.915/DOZEN)
1. 100% cotton cloth is woven.
2. The cloth is shipped to Canada on large rolls.
CANADA PRODUCTION STEPS (CAD$ 3.2714/DOZEN)
1. Two layers of fabric are placed onto the cutting table.
2. The fabric is cut to size (24" wide x 16" long).
3. The sides of the two layers of fabric are folded
over (left: 4" right: 8").
4. The center panels are sewn using a straight sewing
machine.
5. The sewn fabric is taken to a serging machine,
where the top and bottom edges are trimmed and
overedged.
6. The threads from all edges are trimmed, as a
trailer thread of at least -
" is required.
7. The diaper is inspected.
8. The completed merchandise is packaged into cartons
and shipped.
ISSUE:
Whether the processes taking place in Canada are
sufficient to change the country of origin for
quota/visa purposes from China?
LAW AND ANALYSIS:
Textile commodities produced in more than one
foreign country are subject to the country of origin
requirements delineated in section 12.130 of the Cus-
toms Regulations (19 C.F.R. 12.130). These regu-
lations provide that:
... a textile product ... which consists of
materials produced or derived from, or pro-
cessed in, more than one foreign ... country
shall be a product of that foreign ... coun-
try where it last underwent a substantial
transformation.
12.130(b). A textile product undergoes a substantial
transformation when it is ... transformed by means of
substantial manufacturing or processing operations into
a new and different article of commerce.
Section 12.130 of the regulations outlines the
criteria used to determine the country of origin for
textiles and textile products. Specifically, this
provision of the regulations is considered in
determining whether a textile product has undergone
substantial manufacturing or processing operations, and
what constitutes a new and different article of
commerce. The factors considered are not exhaustive.
In fact, one or any combination of criteria may be
determinative, and additional factors may be
considered.
In determining whether merchandise has undergone
substantial manufacturing or processing operations, we
consider the (1) physical change in the material or the
article; (2) time involved; (3) complexity of the
operations; (4) level or degree of skill and/or
technology required; and (5) value added to the article
in each country.
Section 12.130(e)(2) states that
[a]n article or material
usually will not be considered to
be a product of a particular for-
eign territory or country, ... by
virtue of merely having undergone
any of the following:
* * *
(ii) Cutting to
length or width and hemm-
ing or overlocking fab-
rics which are readily
identifiable as being in-
tended for a particular
commercial use.... [Em-
phasis added.]
It is clear that this provision does not
disqualify the diapers from consideration as products
of Mozambique or Zimbabwe. Upon exportation from
China, the merchandise is mere cotton fabric, suitable
for multiple uses. There is no evidence, i.e., lines
of demarcation, that would aid the examiner in
determining that the fabric is meant to be diapers.
Since there exist no provisions which specifically
eliminate the instant manufacturing processes from
consideration, it is our opinion that the merchandise
has undergone a substantial transformation in Canada.
The merchandise changes from cotton fabric to child-
ren's diapers as a result of Country 2's complex
manufacturing operations. Following the rules of
origin stated above, therefore, Country 2 is considered
the country of origin for quota/visa purposes. See
also HRL 086665 of March 23, 1990.
HOLDING:
As a result of the foregoing, the instant
merchandise is considered to be a product of Canada for
quota/visa purposes.
This notice to you should be considered a
clarification of HRL 086549 of March 13, 1990, as to
the merchandise described as diapers, under 19 C.F.R.
177.9(d)(1) (1989).
Sincerely,
JOHN DURANT, DIRECTOR
COMMERCIAL RULINGS DIVISION