MAR-2-05 CO:R:C:V RSD
Mr. Mark Conti
Controller
Lawee, Inc
3083 Walnut Avenue
Long Beach, California 90807
RE: Country of origin marking requirements for bicycles made with
components from several different countries; bicycles frames;
component marking; assembly; 19 CFR 134.46; HQ 733266; HQ 734478
Dear Mr. Conti:
This is in response to a letter dated September 2, 1993,
submitted by Lawee, Inc. regarding the country of origin marking
for bicycles imported from Taiwan. We regret the delay in
responding. A sample bicycle accompanied your submission. You
request that the bicycle be returned to your company. The sample
will be returned provided that you arrange and pay for the
shipping. A copy of a trademark registration with the United
States Patents and Trademarks Office was also submitted.
FACTS:
Lawee, Inc. imports bicycles from Taiwan. The bicycles are
sold in the United States under the name Univega. The sample
bicycle is known as the SHOCKBLOCK model. The bicycle is made with
many different components and subassemblies. The bicycle tubes and
frames are manufactured in Taiwan. The other components of the
bicycle are made in several different countries. For example, the
rims are made in France; the seat (saddle) is made in Italy; the
shock rear is made in Italy. Other significant components such as
the crank, pedals, gears, brakes, etc. could be made in other
countries.
All the components are put together into a finished bicycle
in Taiwan. Certain components are partially disassembled for ease
of shipping so that the bicycles can be put in a box. The bicycles
are shipped in boxes marked "UNIVEGA BICYCLE", "MADE IN
TAIWAN ROC" to Lawee's warehouse facilities in Long Beach,
California. The bicycles are to sold only through retail stores
that specialize in selling bicycles. They are not sold in
department or general toy stores. The retail stores reassemble
and test the bicycles for the in store showroom display and
ultimate sale to the consumer. It is not intended that the
consumer will reassemble the bicycles.
The sample bicycle is marked on the down tube near the crank
with a decal which reads "Made in Taiwan." Lawee has indicated
that the "Made in Taiwan" decal has been moved to the tube just
above the fork so that it will be more visible. Other components
of the bicycle have country of origin markings on them as well.
These markings are put on the components by their manufacturers
and are not removed when the bicycle is assembled together in
Taiwan. In particular, the rims are marked "Made in France". On
the sample the shock rear has a marking "Made in USA". Lawee has
indicated that on all new shipments, this marking has been removed
by its employees. Although the seat (saddle) has a "Taiwan"
marking on the plastic mold, it and the seat tube also has the
marking "Concept USA", which is a represented to be a registered
trade mark.
ISSUES:
What is the country of origin of the finished bicycles which
are assembled in Taiwan and contains components from several
countries?
How must the bicycle be marked under the country of origin
marking law, if the individual bicycle components are marked with
their own country of origin?
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. Congressional intent in enacting
19 U.S.C. 1304 was 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." United States v. Friedlaender & Co., 27 C.C.P.A. 297 at 302
(1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR
134.1(b)), defines "country of origin" as the country of
manufacture, production or growth of any article of foreign origin
entering the U.S. 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 the marking laws and regulations. The case of U.S. v.
Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940),
provides that an article used in manufacture which results in an
article having a name, character, or use differing from that of the
constituent article will be considered substantially transformed.
In such circumstances, the imported article is excepted from
marking. The outermost containers of the imported article shall
be marked. (See 19 CFR 134.35).
The first question that must be addressed is what is the
country of origin of the finished bicycle. Bicycles can be complex
machines, containing many different components and subassemblies.
Generally, these components must be assembled together to make the
finished bicycle. In determining whether the combining of parts
or materials constitutes a substantial transformation, the issue
is the extent of operations performed and whether the parts lose
their identity and become an integral part of a new article.
Belcrest Linens v. United States, 6 CIT 204, 573 F.Supp. 1149
(1983), aff'd, 2 Fed.Cir. 105, 741 F.2d 1369 (1984). Assembly
operation which are minimal or simple, as opposed to complex or
meaningful, will generally not result in a substantial
transformation. See, C.S.D. 80-111, 85-25, 89-118, 90-51 and 90-
57.
In HQ 734478 (June 14, 1993), we ruled that bicycle frames
imported from Taiwan, which were subsequently acid washed, painted
and assembled with other components to make bicycles were not
substantially transformed. In the ruling, we noted that the
bicycle frame is the most costly component and is one of the
essential components of the bicycle (if not the most essential
component) imparting to the bicycle its overall shape, size and
character. In this case the tubing for the bicycle frame is made
in Taiwan, and the tubes are welded together to make the frames in
Taiwan. In addition, all the other components of the bicycles are
assembled together in Taiwan to make the finished bicycle. Because
the bicycle is assembled in Taiwan and one of the bicycle's most
significant components, the frame, is made in Taiwan, we find that
the country of origin of the bicycle is Taiwan. Although the other
components come from several different countries, when they
assembled together in the Taiwan they each lose their separate
identity and become an integral
part of a new article of commerce, a bicycle. Accordingly, the
bicycle must be marked to indicate that its country of origin is
Taiwan.
Although the sample bicycle is marked on one of the tubes of
the frame with "Made in Taiwan", we note that several of the
components are also marked with their own country of origin. For
example, the rims are marked with a decal which reads "Made in
France". In HQ 733266 (August 15, 1990), a case in which
components for an engine were individually marked with their own
country of origin, we stated that the prominent display of country
names such as the U.S.A. and Canada on engine components was likely
to cause confusion as to the correct country of origin of the
finished engines. Therefore, we indicated that the marking on the
engine would be unacceptable unless there was a prominent marking
which clearly displayed the country of origin of the engine and
also specified that the country names on the components referred
only to the components. We required a marking which would clarify
the meaning of the country names on the components, such as "Engine
Made in Brazil; country of origin of components as marked."
We believe that the same analysis would apply to the bicycles
in this case. The prominent display of country names, other than
Taiwan on the components, could be very confusing and misleading
to the ultimate purchasers of the bicycles. If these markings on
the components are not visible after the final assembly of the
bicycle by the retailer then the problem is resolved and no further
marking would be needed. However, if the marking on the components
remains visible after final assembly by the retailer, then an
additional marking clarifying the origin of the bicycle would be
necessary. One alternative would be to put an additional marking
on each part, stating that the country name on the component refers
only to the country of origin of that particular part, such as "Rim
Made in France." However, this solution may be impractical if
there are numerous components on the bicycle which have country
names on them. Another approach would be to have one central
marking for the bicycle, explaining that the country names on the
components parts refers only to the origin of the component parts.
For example, "Bicycle made in Taiwan; origin of other components
as marked". This marking could be permanently embossed on to the
frame, but if that proves to be too burdensome, we believe that
putting this marking on a hang tag which is prominently and
securely affixed to the bicycle would be acceptable. In any case,
the frame should also be conspicuously and permanently marked "Made
in Taiwan" as the sample bike presently is marked.
A remaining issue is the applicability of 19 CFR 134.46 to
the facts of this case. 19 CFR 134.46 requires that when the name
of a city or locality in the U.S. or the name of any foreign
country or locality other than the country or locality in which
the article was manufactured or produced, appears on an imported
article or its container, there shall appear, legibly and
permanently, in close proximity to such words, letters or name,
and in at least a comparable size, the name of the country of
origin preceded by "Made in," "Product of," or other words of
similar meaning. The purpose of this section is to prevent the
possibility of misleading or deceiving the ultimate purchaser as
to the actual origin of the imported goods. Although the country
of origin of the finished bicycle is different than the country of
origin of the component parts and some parts are marked with their
own country of origin, we find if the bicycle is conspicuously
marked with a phrase such as "Bicycle Made in Taiwan - country of
origin of components parts as marked" or a similar phrase that
there is little chance of confusion regarding the origin of the
bicycle and its components because the ultimate purchaser would be
informed regarding the origin of bicycle and that the country
references on the components refer only to the only origin of the
components. Considering the difficulty of requiring an additional
marking on or near each component that has a country reference on
it, we conclude that the requirements of 19 CFR 134.46 would be
satisfied by this central country of origin marking. The
prominence of the markings on the components parts is to be taken
into account in determining whether the required the country of
origin marking on the bicycle is sufficiently conspicuous. See HQ
733266 (August 15, 1990).
HOLDING:
The country of origin of the finished bicycle is Taiwan. If
the country of origin markings on the components are still visible
after the assembly of the bicycle, an additional conspicuous
marking clarifying that the bicycle is made in Taiwan and that the
country references on the components refer only to origin of the
components will be necessary. This additional marking can be
permanently embossed onto the bicycle or included on a hang tag
securely attached to the bicycle. This method of marking satisfies
the requirements of 19 CFR 134.46.
Sincerely,
John Durant, Director