CLA-2 RR:IA 561941 RFC
Mr. Stephen W. Marlow
TowerGroup International
205 West Service Road
Champlain, NY 12919
RE: Country of Origin of Buttons; NAFTA Marking
Dear Mr. Marlow:
This is in reference to your October 24, 2000, request concerning the country of origin of certain button blanks and buttons.
FACTS:
The facts as presented are as follows: Polyester button blanks that originate in Canada are shipped to the United States. In the United States, the blanks are processed into finished buttons.
ISSUE:
What is the country of origin for marking purposes of button blanks imported into the United States from Canada and processed into buttons?
LAW AND ANALYSIS:
Classification of the Merchandise
Merchandise imported into the United States is classified under the Harmonized Tariff Schedule of the United States (HTSUS). The tariff classification of merchandise under the HTSUS is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which otherwise requires, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes. See Sections 1204(a) and 1204(c) of the Omnibus Trade and Competitiveness Act of 1988 (19 U.S.C. § 1204(a), 1204(c)).
GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule (i.e., (1) merchandise is to be classified under the 4-digit heading that most specifically describes the merchandise; (2) only 4-digit headings are comparable; and (3) merchandise must first satisfy the provisions of a 4-digit heading before consideration is given to classification under a subheading within this 4-digit heading) and any relative section or chapter notes and, provided such headings or notes do not otherwise require, then according to the other GRIs.
GRI 6 prescribes that, for legal purposes, GRIs 1 to 5 shall govern, mutatis mutandis, classification at subheading levels within the same heading. Therefore, merchandise is to be classified at equal subheading levels (i.e., at the same digit level) within the same 4-digit heading under the subheading that most specifically describes or identifies the merchandise.
Heading 9606 specifically provides for, among other things, buttons and button blanks. Within heading 9606, subheading 9606.21 provides for buttons of plastics, not covered with textile materials and subheading 9606.30 provides for button blanks.
Pursuant to GRI 1 and 6, the buttons are classified in subheading 9606.21 and the button blanks are classified in subheading 9606.30.
Country of Origin Marking for the Merchandise
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. See 19 U.S.C. § 1304(a). Products made in the United States do not have to be marked with their country of origin under this statute. The purpose of the marking statute is to allow the ultimate purchaser of the goods to know, by simple inspection, specifically 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).
The “ultimate purchaser” is defined in Part 134 of the Customs Regulations as:
[G]enerally the last person in the United States who will receive the article in the form in which it was imported; however, for a good of a NAFTA country, the “ultimate purchaser”' is the last person in the United States who purchases the good in the form in which it was imported; however, for a good of a NAFTA country, the “ultimate purchaser” is the last person in the United States who purchases the good in the form in which it was imported….
19 CFR § 134.1(d)
Annex 311 to the North American Free Trade Agreement requires the parties to the agreement to establish rules for determining whether a good is a good of a party for country of origin marking purposes. See Annex 311, North American Free Trade Agreement, December 17, 1992, Can-Mex-U.S., 32 I.L.M. 289 (1993). The North American Free Trade Agreement was implemented into U.S. law through the North America Free Trade Agreement Implementation Act. Pub. L. 103-182, 107 Stat. 2057 (December 8, 1993). For the United States, the rules discussed in Annex 311 can be found in part 102 of the Customs Regulations. See 19 CFR § 102. They are known as the “NAFTA Marking Rules, “ and they are to be used for “determining whether a good is a good of a NAFTA country.” See 19 CFR § 134.1(j). A good of a NAFTA country is an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. See 19 CFR § 134.1(g). The NAFTA Marking Rules are the rules to be used to determine the country of origin for marking purposes for goods imported into the United States from Canada or Mexico. See generally, Bestfoods v. United States, 165 F.3d 1371 (Fed. Cir. 1999).
Section 134.35 (b) to the Customs Regulations provides as follows:
Goods of a NAFTA country. A good of a NAFTA country which is to be processed in the United States in a manner that would result in the good becoming a good of the United States under the NAFTA Marking Rules is excepted from marking. Unless the good is processed by the importer or on its behalf, the outermost container of the good shall be marked in accord with this part.
19 CFR § 134.35 (b)
Section 102.11 to the Customs Regulations provides, in pertinent part, as follows:
The following rules shall apply for purposes of determining the country of origin of imported goods other than textile and apparel
products covered by Sec. 102.21.
(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 Sec. 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
(b) 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 the good.
19 CFR § 102.11
With respect to the above-listed rule (a)(3), the required change in tariff classification or tariff shift in section 102.20 for goods classifiable in HTSUS subheading 9606.21 is as follows:
A change to subheading 9606.21 through 9606.29 from any other heading.
19 CFR § 102.20
As imported into the United States from Canada, the button blanks, which are manufactured in Canada, are considered goods of Canada. The issue presented is whether, as a result of the processing performed in the United States, the buttons become goods of the United States as determined by the NAFTA Marking Rules.
The origin of the finished buttons cannot be determined by application of the rules in section 102.11(a)(1) to (3): it is not wholly obtained or produced in a single country; it is not produced exclusively from domestic materials; and each foreign material incorporated in the good does not undergo the above-listed change in tariff classification (as the button blank imported into the United States from Canada does not undergo the above-listed change in tariff classification based on the processing that occurs in the United States, i.e., it is classified in subheading 9606 when imported into the United States and remains classified in that heading after being processed into a button in the United States).
Applying the rules in the required hierarchical order, one finds that the origin of the product can be determined by application of the rule set forth above in section 102.11(b)(1), i.e., the origin of the good is the origin of the single material that imparts the essential character to the good: The product consists of the polyester button blank from Canada that has been processed into a polyester button in the United States. Clearly, the polyester blank itself is the single material that imparts the essential character to the good.
With respect to the material that imparts the essential character to the good, section 102.18(b)(1)(iii) to the Customs Regulations provides as follows:
If there is only one material that is classified in a tariff provision from which a change in tariff classification is not allowed under the Sec. 102.20 specific rule or other requirements applicable to the good, then that material will represent the single material that imparts the essential character to the good under Sec. 102.11.
19 CFR § 102.18(b)(1)(iii).
In light of the above, as the origin of the imported button blanks is Canada, the country of origin of the finished product under the NAFTA Marking Rules is Canada.
HOLDING:
The country of origin of the above-mentioned buttons is Canada, and the buttons must be marked as products of Canada.
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 Service officer handling the transaction.
Sincerely,
Myles B. Harmon, Acting Director
Commercial Rulings Division