MAR-2-05 CO:R:C:V 732623 KG
Richard A. Rivkin
Latex Glove Co. Inc.
205 Huehl Road
Northbrook, Illinois 60062
RE: Country of origin marking of imported cotton work gloves
Dear Mr. Rivkin:
This is in response to your letter of July 31, 1989,
requesting a country of origin ruling regarding imported cotton
work gloves. A sample glove and the pieces of a glove were
submitted for examination.
FACTS:
The fabric is purchased and cut into pieces in country A.
The pieces are then shipped to country B for sewing, turning,
pressing, matching into pairs, packing, and final shipment to the
U.S. You assert that the skill level associated with cutting the
pieces is relatively low and that a worker can be trained to cut
glove parts in less than one month. In contrast, you state that
a high degree of skill is required for sewing the finished
product because the seams are short and frequently curve and
change direction and that a minimum of six months of training is
necessary to achieve acceptable quality and productivity from a
new worker.
Further, the total time for the manufacturing operations
for one dozen pairs of gloves performed in country A is 0.0188
hours compared to 1.1733 hours in country B.
ISSUE:
What is the country of origin for the purposes of 19 CFR
12.130 of imported cotton work gloves manufactured as described
above.
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), provides that, unless excepted, every article of foreign
origin imported into the U.S. shall be marked in a conspicuous
place as legibly, indelibly, and permanently as the nature of the
article (or container) will permit, in such a manner as to
indicate to the ultimate purchaser in the U.S. the English name
of the country of origin of the article. The U.S. Court of
International Trade stated in Koru North America v. United
States, 701 F.Supp. 229, 12 CIT ___(CIT 1988), that: "In
ascertaining what constitutes the country of origin under the
marking statute, a court must look at the sense in which the term
is used in the statute, giving reference to the purpose of the
particular legislation involved. The purpose of the marking
statute is outlined in United States v. Friedlaender & Co., 27
CCPA 297, 302, C.A.D. 104 (1940), where the court stated that:
'Congress intended that the ultimate purchaser should be able to
know by an inspection of the marking on the imported goods the
country of which the goods is the product. The evident purpose
is to mark the goods so that at the time of purchase the ultimate
purchaser may, by knowing where the goods were produced, be able
to buy or refuse to buy them, if such marking should influence
his will."
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304. Section 12.130, Customs Regulations (19 CFR
12.130), sets forth the principles for making country of origin
determinations for textile and textile products subject to
section 204 of the Agricultural Act of 1956, as amended (7 U.S.C.
1854)("section 204"). According to T.D. 85-38, the final rule
document published in the Federal Register on March 5, 1985 (50
FR 8714),which established 19 CFR 12.130, the principles of
country of origin for textiles and textile products contained in
19 CFR 12.130 are applicable to such merchandise for all
purposes, including duty and marking. This regulation, which
became effective in 1985, came about as a result of Executive
Order No. 12,475, 49 FR 19955 (1984), which directed the
Secretary of Treasury, in accordance with policy guidance
provided by the Committee for the Implementation of Textile
Agreements, to issue regulations governing the entry or
withdrawal from warehouse for consumption of textile and textile
products subject to section 204. The regulations were to include
clarifications in or revisions to the country of origin rules for
textiles and textile products subject to section 204 in order to
avoid circumvention of multilateral and bilateral textile
agreements.
The U.S. Court of International Trade upheld the interim
regulations which included 19 CFR 12.130, published as T.D. 84-
171 in the Federal Register on August 3, 1984 (49 FR 31248), in
Mast Industries, Inc. v. Regan, 596 F. Supp. 1567 at 1582 (CIT
1984). The court stated that the purpose of the interim textile
regulations is "prevention of the entry of textile products into
the United States on quotas not applied to the country which
manufactured all or a substantial part of the textile products.
Accordingly, interim regulation section 12.130 defines country of
origin and established criteria for substantial transformation in
order to prevent nearly completed textile products of one country
from being imported into the United States on the quota of
another country."
When T.D. 85-38 was published, the background information
cited an intention to reject the theory of Cardinal Glove Co. v.
United States, 4 C.I.T. 41 (1982), as one of the motivations of
the drafting of the new textile regulations. Cardinal Glove
involved cotton work gloves. The cotton fabric was produced in
Hong Kong, and cut into front and back panels in Hong Kong.
These front and back panels were assembled by sewing in Haiti.
The gloves were then turned inside out, pressed, inspected,
paired, folded and bundled in Haiti. The court held that the
assembly and processing of the gloves in Haiti transformed the
gloves into an export of Haiti and that therefore, the gloves
were considered to be from Haiti, the country of exportation.
This meant that the bilateral textile agreement between the U.S.
and Hong Kong was inapplicable and a Hong Kong export license or
visa was unnecessary for entry into the U.S. The court noted
that "the exportation of merchandise from a country producing a
product to an intermediate country for the purpose of processing,
manipulating or assembling that product, is a common practice in
our present day industrial and technological economy." Cardinal
Glove at 43-44. It was feared that this theory or principle
would create a mechanism to circumvent the textile import
program and multilateral and bilateral textile agreements.
Customs stated in a notice dated September 16, 1982,
published as T.D. 82-169, its intention not to follow the country
of exportation concept set forth in Cardinal Glove, but rather to
apply the substantial transformation test.
Pursuant to 19 CFR 12.130, the standard of substantial
transformation governs the determination of the country of origin
where textiles and textile products are processed in more than
one country. The country of origin of textile products is deemed
to be that foreign territory, country, or insular possession
where the article last underwent a substantial transformation.
Substantial transformation is said to occur when the article has
been transformed into a new and different article of commerce by
means of substantial manufacturing or processing operations. The
factors to be applied in determining whether or not a
manufacturing operation is substantial are set forth in 19 CFR
12.130(d) and (e).
In this case, we are not convinced that the processing in
country B is a substantial manufacturing or processing operation.
Although 19 CFR 12.130(e) lists substantial assembly by sewing
and/or tailoring of all cut pieces of apparel articles which
have been cut from fabric in another foreign territory, country
or insular possession into a completed garment as an example of a
manufacturing or processing operation that may qualify for
substantial transformation, the regulation clearly does not mean
that all sewing operations will qualify and the examples given
are the complete assembly of all cut pieces of suit-type jackets,
suits, and shirts. The sewing of cotton work gloves is not
analogous to sewing suit-type jackets, suits or shirts.
You compared the skill level and time required for cutting
as opposed to sewing. As discussed above, the complexity of the
sewing operation in this case is less than the complexity
involved in sewing a suit-type jacket, suit or shirt. Further,
while the sewing alone may be more complex and time-consuming
than the cutting alone, cutting and sewing of a garment in a
single country is listed in 19 CFR 12.130(e)(1)(iv) as a
qualifying manufacturing or processing operation. Moreover, in
this instance the cloth is purchased and cut in country A. While
cutting may not involve much labor, it often involves a
substantial capital input. For all the above reasons, Customs
considers country A to be the country of origin for the purposes
of 19 CFR 12.130.
Further, although these work gloves may have been considered
to be from country B in accordance with Cardinal Glove, 19 CFR
12.130 was included as part of the Customs Regulations after
Cardinal Glove was decided and in response to the conclusion
reached. Therefore, Customs does not consider itself bound by
Cardinal Glove in this instance.
HOLDING:
The cotton work gloves are from country A for the purposes
of 19 CFR 12.130.
Sincerely,
John Durant
Director,
Commercial Rulings Division