Rules of Origin for Textile and Apparel Products

SUMMARY: This document sets forth final amendments to the Customs

Regulations to implement the provisions of section 334 of the Uruguay

Round Agreements Act (``the Act'') regarding the country of origin of

textile and apparel products. Except for the purpose of identifying

products of Israel, the regulations will govern the determination of

the country of origin of imported textile and apparel products for

purposes of laws enforced by the Customs Service. The regulations also

implement the provisions of section 334 of the Act regarding the

treatment of components that are cut to shape in the United States from

foreign fabric, exported for assembly, and returned to the United

States. This document also sets forth regulations implementing

previously-enacted provisions regarding the treatment of articles

assembled or produced in a Caribbean Basin Initiative beneficiary

country wholly from U.S.-produced components, materials or ingredients.

EFFECTIVE DATE: Final rule effective October 5, 1995.

FOR FURTHER INFORMATION CONTACT: Phil Robins, Office of Regulations and

Rulings (202-482-7029).

SUPPLEMENTARY INFORMATION:

Background

On December 8, 1994, President Clinton signed into law the Uruguay

Round Agreements Act (``the Act''), Public Law 103-465, 108 Stat. 4809.

Subtitle D of Title III of the Act deals with textiles and includes

section 334 (codified at 19 U.S.C. 3592) which concerns rules of origin

for textile and apparel products.

Paragraph (a) of section 334 provides that the Secretary of the

Treasury shall prescribe rules implementing the principles contained in

paragraph (b) for determining the origin of ``textiles and apparel

products''.

Paragraph (b) of section 334 incorporates the following provisions:

(1) for purposes of the customs laws and the administration of

quantitative restrictions and except as otherwise provided for by

statute, general rules for determining when a ``textile or apparel

product'' originates in a country, territory, or insular possession,

and is the growth, product, or manufacture of that country, territory,

or insular possession; (2) special origin rules for goods classifiable

under certain specified tariff headings and subheadings; (3) a

``multicountry rule'' for determining origin when the origin of a good

cannot be determined under the preceding provisions of paragraph (b);

(4) special rules governing the treatment of components that are cut to

shape in the United States from foreign fabric, exported for assembly,

and returned to the United States; and (5) an exception to the

application of section 334 that specifically provides for the continued

application of the administrative practices that were applied

immediately before the enactment of the Act to determine the origin of

textile and apparel products from Israel, unless such practices are

modified by the mutual consent of the United States and Israel.

Paragraph (c) of section 334 provides that section 334 shall apply

to goods entered, or withdrawn from warehouse, for consumption on or

after July 1, 1996. Paragraph (c) further provides that section 334

shall not apply to goods entered or withdrawn from warehouse on or

before January 1, 1998, that are covered by contracts of sale which

were entered into, with all material terms fixed, before July 20, 1994,

and which are filed, with an accompanying certification, with the

Commissioner of Customs within 60 days after the date of the enactment

of the Act. On January 27, 1995, Customs published in the Federal

Register (60 FR 5457) a notice setting forth the procedures for filing

such contracts and certifications.

On May 23, 1995, Customs published in the Federal Register (60 FR

27378) a notice of proposed rulemaking setting forth proposed

amendments to the Customs Regulations to implement the rules of origin

principles of section 334(b) of the Act. In that document Customs

proposed to implement those provisions of section 334(b) of the Act

that have broad application under the terms of the statute by amending

Part 102 of the Customs Regulations (19 CFR Part 102) and by amending

other regulatory provisions as necessary to conform to those Part 102

changes. With regard to the remaining provisions of section 334(b)

(that is, the special rules governing the treatment of components that

are cut to shape in the United States from foreign fabric, exported for

assembly, and returned to the United States), Customs proposed to

implement those provisions through amendments to Part 10 of the Customs

Regulations (19 CFR Part 10). In addition, Customs proposed to make a

number of amendments to existing regulatory provisions to ensure that

those existing provisions will be consistent with the new regulatory

proposals implementing section 334(b) of the Act. Finally, Customs

included in the proposed Part 10 amendments a text to implement U.S.

Note 2(b), Subchapter II, Chapter 98, Harmonized Tariff Schedule of the

United States (HTSUS), which had not been previously treated in the

regulations and which is similar in operation and effect to the cut-to-

shape components provision of section 334(b)(4)(B) of the Act.

The May 23, 1995, notice of proposed rulemaking invited the public

to submit comments on the proposed regulatory amendments for

consideration by Customs before adoption of the proposals as a final

rule. The public comment period closed on June 22, 1995.

Discussion of Comments

A total of 43 commenters responded to the solicitation of public

comments in the May 23, 1995, notice of proposed rulemaking. The

comments submitted, and the Customs responses thereto, are set forth

below.

Effective date

Comment: Five commenters were concerned about the effective date of

Sec. 334 and the regulations implementing that statute. They stated

that sometimes it is not possible to know the exact date goods will

arrive in the United States. As a result, goods will be arriving after

July 1, 1996, with the wrong visa. In order to avoid this problem, four

commenters requested that Customs establish a grace period delaying the

application of Sec. 334 for such goods. One commenter suggested that

the new regulations should only be applicable to goods shipped after

July 1, 1996.

Customs Response: The effective date of Sec. 334 is expressly set

out in that statute. Section 334(c) provides that the provisions of

Sec. 334 ``shall apply to goods entered, or withdrawn for warehouse,

for consumption on or after July 1, 1996.'' Section 334(c) contains an

exception to that effective date only for goods contracted for prior to

July 20, 1994, if a copy of the contract containing all material terms

of sale was filed with Customs within 60 days after enactment of

Sec. 334 and the goods are entered, or withdrawn from warehouse, for

consumption on or before January 1, 1998.

[[Page 46189]]

While Customs recognizes the potential problem faced by importers

receiving land or sea shipments, the statute is clear as regards the

effective date of its provisions, and Customs has no authority to

deviate from the express terms of the statute. As regards the

suggestion for a grace period to allow the entry of goods imported with

incorrect visas, that issue falls within the jurisdiction of, and thus

should be more properly addressed to, the Committee for the

Implementation of Textile Agreements (CITA).

Scope of ``textile or apparel product''

Comment: Several commenters stated that the Customs decision to

utilize the Agreement on Textiles and Clothing of the Agreement

Establishing the World Trade Organization (the WTO Agreement) to

determine the scope of section 334 of the Act constitutes an

unauthorized broadening of that legislation. These commenters believe

there is nothing to indicate that Congress meant to enlarge the scope

of textiles and apparel products. The commenters noted the present

position of Customs that the textile and apparel rules of origin

contained in Sec. 12.130 of the Customs Regulations (19 CFR 12.130)

cover all goods classifiable in Section XI (Chapters 50 though 63),

HTSUS, and any headings or subheadings outside Section XI for which a

textile and apparel category number has been designated. On the other

hand, these commenters noted that the Agreement on Textiles and

Clothing of the WTO Agreement lists several HTSUS headings and

subheadings outside Section XI which do not have a textile and apparel

category number designation and which have not traditionally been

considered within the class of goods known as textiles and apparel.

Customs response: Customs disagrees with the position advocated by

these commenters. As noted in our discussion of this point in the May

23, 1995, notice of proposed rulemaking, the United States is a

signatory to both the WTO Agreement and the Agreement on Textiles and

Clothing annexed thereto. The latter agreement specifically defines the

scope of ``textiles and clothing'' by a listing of headings and

subheadings in the international Harmonized System. Customs also

pointed out in the May 23, 1995, notice that three provisions of the

Act outside section 334 specifically refer to the Agreement on Textiles

and Clothing of the WTO Agreement. One of those provisions is section

332 which amended section 204 of the Agricultural Act of 1956 (7 U.S.C.

1854) to specifically cite the Agreement on Textiles and Clothing of

the WTO Agreement as a multilateral agreement concluded under the

authority of section 204. Section 204, as amended, refers to world

trade in ``the articles with respect to which the agreement [that is,

any multilateral agreement concluded under the authority of section

204] was concluded'' and authorizes the President to issue regulations

governing the entry or withdrawal from warehouse of ``the same

articles'' which are products of countries not parties to the agreement

or countries to which the United States does not apply the agreement.

Thus, the product coverage of section 204 and of the regulations issued

thereunder is a function of the agreements concluded under section 204,

including the Agreement on Textiles and Clothing of the WTO Agreement.

Since section 12.130 of the Customs Regulations was promulgated under

the authority of section 204, the product coverage of Sec. 12.130 must

be the same as that of section 204.

Customs believes that it would be inappropriate to conclude that

Congress, in drafting section 334 of the Act, was unmindful of the

adoption of the Agreement on Textiles and Clothing of the WTO Agreement

and the changes to section 204 made by section 332 of the Act, with the

result that the regulations mandated by section 334 of the Act could be

promulgated without regard to the product coverage of the Agreement on

Textiles and Clothing of the WTO Agreement. In light of the context in

which section 334 of the Act was enacted, Customs believes it is more

proper to conclude that Congress intended that the regulations

implementing section 334 of the Act include the products covered by the

Agreement on Textiles and Clothing of the WTO Agreement for the

specific and limited purpose of section 334 of the Act, that is, the

determination of the country of origin of textile and apparel products,

while recognizing that such products would also be covered by any

regulations governing entry or withdrawal from warehouse that may be

separately issued under the authority of section 204. Therefore,

Customs does not believe that the scope of the regulations implementing

section 334 of the Act should be controlled by the traditional scope of

Sec. 12.130 of the Customs Regulations. On the contrary, it seems clear

that the product coverage of Sec. 12.130 has been effectively expanded

by the adoption of the Agreement on Textiles and Clothing of the WTO

Agreement and by the amendment of section 204 effected by section 332

of the Act. Accordingly, Customs believes that the May 23, 1995, notice

of proposed rulemaking reflects the correct position on this issue.

Section 102.21(b)(3)--Definition of ``knit to shape''

Comment: Section 334(b)(2)(B) of the Act provides that,

notwithstanding the assembly rule contained in section 334(b)(1)(D),

``a textile or apparel product which is knit to shape shall be

considered to originate in, and be the growth, product, or manufacture

of, the country, territory, or possession in which it is knit.'' A

number of comments were submitted regarding the proposed definition of

``knit to shape'' in Sec. 102.21(b)(3). That definition would require a

good to have its entire exterior surface area, except for trimming

around the neck and on the front opening, to be comprised of fabrics

that have been knit or crocheted directly to the shape used in the

good.

Two commenters suggested that Customs should maintain its present

position, that is, that a good is knit to shape if any single major

part has been knit to shape.

One commenter suggested that the term ``components'' be substituted

for the term ``fabrics''.

Two commenters thought that the proposed definition was too rigid

in that the incorporation into a garment of added components such as

trim or pockets would disqualify a good from being considered ``knit to

shape''. These commenters suggested that the definition be amended by

adding the words ``or in principal part'' so that the definition would

read ``. . . with an exterior surface area wholly or in principal part

comprised of one or more fabrics knitted or crocheted directly to the

shape used in the good . . .''

Three commenters noted that socks, pantyhose, tights, and other

hosiery articles are knit to shape and their country of origin should

be determined by where they were knit with no account taken of minor

operations such as closing toes. One commenter specifically referred to

gussets and top elastics in pantyhose, saying that the addition of

those components should not change the country of origin from the

country of knitting. One commenter wanted to ensure that tube-type T-

shirts (T-shirts without side seams) were not considered to be knit to

shape.

Customs response: Customs cannot agree to the suggestion to

maintain the present position, because that position does not

accurately reflect the language of section 334(b)(2)(B) of the Act.

Customs does not believe that it was the intent of Congress, in

providing a

[[Page 46190]]

special rule for knit to shape products, that a good should qualify as

being knit to shape where that good contains only one panel knit or

crocheted to shape.

Customs agrees that the word ``fabrics'' may be confusing and thus

should not be used in the definition. However, Customs believes that

``parts'' would be preferable to ``components''.

Customs agrees that the proposed definition of ``knit to shape'' is

too tightly drawn and thus unnecessarily restricts application of

section 334(b)(2)(B) of the Act. However, Customs believes that the

suggested additional language is imprecise and overly broad and thus

would create uncertainty in the application of the definition.

Customs agrees that socks, pantyhose, tights, and other knitted

hosiery goods should be covered by the definition of ``knit to shape''

without regard to minor finishing operations such as closing toes or

adding gussets or top elastics. Whether a good such as a T-shirt is

knit to shape depends on that particular good; however, Customs would

not normally consider the knitting of a tube with no definitive

contours to constitute the creation of a knit-to-shape good within the

meaning of these origin rules.

In order to address the points made in the above comments on which

Customs is in substantial agreement, the definition of ``knit to

shape'' in Sec. 102.21(b)(3) has been modified as set forth below to

cover a good of which ``50 percent or more'' of the exterior surface

area is formed by ``major parts'' knitted or crocheted directly to the

shape as used in the good. The modified definition specifically

excludes from consideration certain exterior features (that is, patch

pockets, appliques, or the like) but includes ``sewing'' as one of the

specified permisible minor operations. In addition, a new paragraph

(b)(4) has been included in Sec. 102.21 as set forth below to define

``major parts''; this definition is essentially the same as the

definition of ``major parts'' set forth in Note (1)b in the Section XI

rules under Sec. 102.20 of the Customs Regulations (19 CFR 102.20).

Under these definitions, there should be no uncertainty concerning the

treatment of hosiery and similar goods that include features such as

gussets and top elastics or that have been subjected to a toe closing

operation.

Section 102.21(c)(2)--Goods Consisting of Materials That Meet the

Sec. 102.21(e) Tariff Shift and Other Requirements

Comment: Under proposed Sec. 102.21(c)(2), where a good is not

wholly the product of a single country, territory, or insular

possession, the country of origin of the good is the single country,

territory, or insular possession in which ``each foreign material'' in

the good underwent an applicable change in tariff classification, and/

or met any other requirement, specified in Sec. 102.21(e). One

commenter noted that this is inconsistent with the Secs. 102.21 (b)(3)

and (b)(5) definitions of ``knit to shape'' and ``wholly assembled'',

which do not require that all of the materials in the good be knit to

shape or wholly assembled in a single country, territory, or insular

possession. This commenter suggested that only the portion of the good

which imparts the essential character to that good should be required

to comply with the applicable Sec. 102.21(e) requirements.

Customs response: Customs does not agree. This comment appears to

reflect a misunderstanding of the operation of the general rule in

paragraph (c)(2) and the tariff shift and other requirements under

paragraph (e). In this regard Customs notes that the definitions of

``knit to shape'' (as modified as discussed above) and ``wholly

assembled'' make allowances (or exceptions) for some materials so that

the presence of such materials will not affect the status of the good

as ``knit to shape'' or ``wholly assembled''. Those exceptions are

solely for the purpose of applying any Sec. 102.21 general rule, tariff

shift rule or other requirement in which the defined terms are used;

they do not affect the question of whether a requisite tariff shift

rule under paragraph (e) has been met. In other words, if a good in

fact consists of ``knit to shape'' or ``wholly assembled'' components

and those components meet the requisite tariff shift rule, any foreign

materials (as defined in Sec. 102.1(e)) incorporated in the good at

issue that are excepted from the definitions in question would also

undergo the requisite tariff shift.

Section 102.21(d)--Treatment of Sets

Comment: One commenter stated that since it is necessary to

determine the origin of each textile and apparel component in a set,

there is little point in referring to the origin of the entire set in

Sec. 102.21(d).

Customs response: Customs believes the wording of Sec. 102.21(d) is

correct. Section 102.21(d) covers situations in which two or more of

the components in the set were produced in different countries. If all

the components in a set are produced in a single country, there would

be no need for separate determination of the origin of any textile or

apparel components of the set.

Assembly

Comment: With regard to the definition of ``wholly assembled'' in

Sec. 102.21(b)(5), one commenter argued that Customs should be more

specific concerning which subassemblies will not preclude a good from

being ``wholly assembled''. This commenter suggested that this could be

done by including in the regulation a specific listing of the

assemblies that will qualify a good to be ``wholly assembled'', in the

same manner as the Government of Hong Kong has done. In the

alternative, this commenter suggested that the joining of all

components of a good in one country would always be at least as

important as the joining of components into a subassembly and,

therefore, under the second multicountry rule (Sec. 102.21(c)(5), the

last place where important processing occurs) the country of origin

would be the place where the components of the good are assembled.

Customs response: Customs does not believe that it would be

appropriate to have a rigid set of rules in the context mentioned by

this commenter. In the opinion of Customs it would be preferable to

address these interpretive issues on a case-by-case basis through the

Customs ruling program whereby prospective importers may obtain

appropriate advance guidance according to their particular needs. This

will result in the eventual development of a body of decisions for the

general guidance of importers based on consideration of a multitude of

factors that cannot be anticipated at the present time. As regards the

alternative suggestion of this commenter, Customs agrees with this

interpretation and notes that the comment does not appear to warrant a

change to the regulatory texts.

Fabric

Comment: Six commenters expressed the view that substantial

finishing of greige fabric (e.g. dyeing and/or printing combined with

other finishing processes) results in a new article of commerce and,

therefore, the country of origin of such fabric should be the country

in which those processes were performed. One commenter made essentially

the same argument for yarns.

Customs response: Sections 334(b)(1)(B) and 334(b)(1)(C) of the Act

set forth specific rules for determining the country of origin of yarns

and fabric. Section 334(b)(1)(B) states that the country of origin of

staple yarns is the country where the yarns were spun and that the

country of origin of filament yarns is the country where the filaments

were extruded. Section 334(b)(1)(C)

[[Page 46191]]

states that the country of origin of a fabric is the country in which

the constituent fibers, filaments, or yarns were transformed (that is,

into a fabric) by a fabric-making process. The language of

Secs. 334(b)(1)(B) and 334(b)(1)(C) is clear and unambiguous.

Accordingly, it would be inappropriate for Customs to prescribe rules

that would lead to results inconsistent with that statutory language.

Subheadings 5810.91-5810.99--Embroidery

Comment: Three commenters took issue with the proposed tariff shift

rule for subheadings 5810.91 through 5810.99. They stated that it is

unreasonable for the United States to consider the country of origin of

embroidery in the piece or in strips to be the country where the base

fabric was formed. These commenters argued that the embroidering of

fabrics is a highly complex operation that requires a great deal of

skill and expense. They also pointed out that the HTSUS refers to

embroidery as ``embroidery'' or as ``Embroidery in the piece, [or] in

strips,'' not as ``fabric''.

Customs response: Section 334(b)(1)(C) of the Act provides that the

country of origin of a fabric is the country where the fabric was

created by a fabric-making process. It is the view of Customs that

embroidery, whether in the piece or in strips, is fabric. It is

commonly known in the United States as embroidered fabric. If Customs

were to agree that embroidery cannot be considered to be a fabric

because the relevant tariff provisions do not specifically refer to

embroidery as fabric, Customs would have to take the same position in

regard to other fabrics which are not specifically referred to as such,

i.e. netting, lace, gauze, felt, nonwovens, terry toweling, labels in

the piece, belting, and hosepiping, all of which are imported as

fabrics.

Customs also notes that the industry definition of piece goods

supports the conclusion that embroidery in the piece is fabric.

Fairchild's Dictionary of Textiles, 1970, defines ``Piece Goods'' as

``a general term for fabrics woven in lengths to be sold by the yard in

retail stores. May also mean all goods which are not cut'' (at page

435). The Modern Textile and Apparel Dictionary, 4th Edition, 1973,

defines ``Piece Goods'' as ``Cloth sold by the yard or some definite

cut length'' (at page 422). Both dictionaries define ``Piece'' as

standard lengths of woven fabric or cloth.

Although the commenters would have Customs distinguish embroidery

in strips from other forms of embroidery, Customs believes that

embroideries on base fabrics in strips are just as much fabrics as

those strips without embroidery. Customs perceives no distinction

between embroidering wide lengths of fabric and embroidering fabric

strips. In either case, the process starts with fabric and ends with

embroidered fabric.

The terms of Sec. 334(b)(1)(C) of the Act are clear and Customs has

no choice but to adhere to the express wording of that provision--the

country of origin of embroidered fabric classifiable in subheadings

5810.91 through 5810.99 is the country in which the base fabric was

formed by a fabric-making process.

However, in reviewing this area, Customs has determined that the

proposed tariff shift rule for subheadings 5810.91 through 5810.99 does

not accurately effectuate Sec. 334(b)(1)(C) of the Act. In this regard

Customs notes that under the proposed rule the country of origin of the

embroidered fabric would not always be the country where the base

fabric was formed. This is because the proposed rule refers to ``A

change to subheading 5810.91 through 5810.99 * * *'', and where fabric

is embroidered in a second country there has been no change to

embroidered fabric in the country where the fabric was formed.

Accordingly, the proposed tariff shift rule for subheadings 5810.91

through 5810.99 has been divided into three rules as set forth below

with the first rule intended to address this problem (with regard to

the other two rules, see the discussion below regarding embroidered

badges, emblems, and similar articles).

Subheading 5810.10--Embroidery Without Visible Ground

Comment: A commenter complained that the country of origin of

embroidery without a visible ground, classifiable in subheading

5810.10, should be the country where the embroidery was applied to the

base fabric. The tariff shift rule proposed for subheading 5810.10

provided for a change to that subheading from any other heading.

Customs response: Customs agrees that the rule for subheading

5810.10 does not accomplish what was intended. The proposed tariff

shift rule in question reflected the application of Sec. 334(b)(3)(A)

of the Act, the first multicountry rule. Customs believes that

embroidery without a visible ground is a fabric that is not made by a

fabric-making process because it comes into commercial existence after

a base fabric is embroidered and the base fabric is removed. In the

opinion of Customs, the most important manufacturing process in the

production of embroidery without a visible ground is the application of

the embroidery and not the removal of the ground. Accordingly, Customs

intentionally required a shift from another heading so that the

production prior to the removal of the base fabric would confer origin,

because a change within the heading would allow the removal of the base

fabric to confer origin. However, the proposed rule was inadvertently

drafted to refer to a change ``to subheading 5810.10''. Thus, if fabric

from country A were embroidered in country B and the ground fabric

removed in country C, the tariff shift rule would not be satisfied and

one would be required to go to the next applicable general rule to

determine origin. In this circumstance, country B would properly be

determined to be the country of origin by application of

Sec. 102.21(c)(4). However, Customs believes that for purposes of

transparency, it is desirable, to the greatest extent possible, for a

country of origin to be determinable by application of the rules

referred to in Sec. 102.21(c)(2) and contained in Sec. 102.21(e) rather

than by application of the multicountry rules of Secs. 102.21(c) (4)

and (5). Accordingly, the rule specified for subheading 5810.10 has

been modified as set forth below to reflect these considerations.

Embroidered Badges, Emblems, and Similar Articles

Comment: One commenter expressed the view that embroidered badges

or emblems are not fabrics and should not be treated as such.

Customs response: Customs agrees that badges, emblems, and similar

embroidered articles are not imported in the form of fabric. However,

the country of origin of badges, emblems, and similar embroidered

articles is not necessarily where those goods were embroidered.

Pursuant to Sec. 334(b)(1)(D) of the Act, the country of origin of

badges, emblems, and the like, which consist of two or more layers of

fabric assembled together by gluing, sewing, or other means, is the

country where the good was wholly assembled. A new second rule has been

included in the rules for subheadings 5810.91 through 5810.99 as set

forth below to reflect the application of Sec. 334(b)(1)(D).

However, badges, emblems, and similar embroidered articles which

are processed in more than one country and which do not have multiple

components present certain other problems. Customs believes that there

is a difference between emblems created by embroidery and printed

emblems on which embroidery may be present merely to enhance the

printed design.

[[Page 46192]]

Where embroidery forms the entire design and, therefore, creates the

emblem, the determination of the country of origin of the emblem is

governed by the first multicountry rule (Sec. 334(b)(3) of the Act and

Sec. 102.21(c)(4) of the regulations). With reference to the

requirements of Sec. 334(b)(3) and Sec. 102.21(c)(4), the embroidery is

the most important manufacturing process in the production of the good

and, as a result, the country of origin of that good is the country,

territory, or insular possession where the embroidery was created.

However, where embroidery does not create the motif, but is present

merely to enhance a printed design on the emblem, Customs does not

believe that application of the embroidery should confer origin.

Customs has not been able to draft a tariff shift rule that

adequately distinguishes between the two types of badges, emblems, and

similar embroidered articles mentioned above. Accordingly, it was

decided to make the tariff shift rule applicable to such goods (the

proposed rule for subheadings 5810.91 through 5810.99, which is set

forth below in modified form as the third rule for those subheadings)

difficult to satisfy, that is, by requiring all manufacturing, from the

forming of the fabric forward, to be done in a single country,

territory, or insular possession. Thus, if an emblem, badge, etc., is

produced in country A from fabric formed in country B, the tariff shift

rule will not be satisfied and, in the hierarchy of rules, the next

applicable rule is the first multicountry rule, Sec. 102.21(c)(4),

which provides that the country of origin will be the country,

territory, or insular possession where the most important manufacturing

process occurred. While Customs believes it is preferable in principle

to employ the objective, specific tariff shift or related rules under

Secs. 102.21(c) (2) and (e), in some instances, as here, Customs has

been unable to avoid a certain degree of subjectivity in the

application of the appropriate rule of origin.

Application of Sec. 334(b)(2)(A)--Special Rules for Specified Headings

and Subheadings

Comment: Section 334(b)(2)(A) of the Act provides that the origin

of goods classifiable under certain specified tariff provisions ``shall

be determined under subparagraph (A), (B), or (C) of paragraph (1), as

appropriate''. The May 23, 1995, notice of proposed rulemaking stated

that since all of the headings and subheadings specified in

Sec. 334(b)(2)(A) cover goods that have been advanced beyond yarn or

fabric form, the origin of those goods should be determined by the

yarns (in the case of heading 5609) or the fabrics which comprise the

good. Three commenters concurred with that position, stating that the

majority of time, labor, and cost is in the greige fabric. One

commenter specifically stated that Sec. 334(b)(2)(A) is clear that the

origin of the goods classifiable under the listed headings and

subheadings is determined by the origin of the fabric from which the

goods are constructed. However, six commenters objected to taking a

restrictive interpretation of the words ``as appropriate'' and one,

without mentioning the interpretation of those words, stated that the

origin of goods of subheading 9404.90 should be determined by where

they are assembled.

One commenter noted that the proposed tariff shift rule for

subheading 9404.90, which covers comforters, quilts, etc., would result

in the goods having their country of origin in the country where those

goods are assembled. The commenter stated that this would be contrary

to the terms of Sec. 334(b)(2)(A) under which, notwithstanding the

general assembly rule in Sec. 334(b)(1)(D), the country of origin of

goods classifiable under any of the headings or subheadings listed in

that section will be the country that produced the yarns or fabrics, as

appropriate, from which those goods are made.

Customs response: After reviewing all of the comments and the

commenters' suggestions as to how the words ``as appropriate'' should

be interpreted, Customs adheres to the position set forth in the May

23, 1995, notice. No commenter in opposition to the position proposed

by Customs offered an acceptable legal alternative to that position.

While several of the commenters cited judicial case law concerning the

interpretation of statutes, all of their citations and quotations

involved statutory language that was not the same as, or similar to,

the language of Sec. 334(b)(2)(A). Moreover, none of the

interpretations suggested by those commenters adequately addressed the

fact that all of the headings and subheadings listed in

Sec. 334(b)(2)(A) provide for goods made from materials and that,

therefore, the most reasonable interpretation of that section is that

it is appropriate to determine the origin of those goods according to

Sec. 334(b)(1)(B), the rule for yarns, or Sec. 334(b)(1)(C), the rule

for fabrics.

The comment regarding the tariff shift rule for subheading 9404.90

prompted Customs to review the proposed tariff shift rules for all of

the headings and subheadings listed in Sec. 334(b)(2)(A). That review

disclosed that Customs erred in the proposal for subheading 9404.90 and

in the proposed rules for the other 15 listed headings or subheadings

because, in each instance, the proposed rule both referred to a change

to the named heading or subheading and included a proviso regarding the

process by which the change must result. For example, if a fabric is

woven in one country and wholly assembled in a second country into a

good subject to Sec. 334(b)(2)(A), the required tariff shift change

does not occur in the country in which the fabric was formed (in other

words, the change does not result from a fabric-making process as

prescribed in the applicable proposed rule). As a result and as the

above commenter noted, the terms of the tariff shift rule would not be

met and the next relevant general rule, Sec. 102.21(c)(3)(ii), would

cause the country of origin of that good to be the country of assembly.

Therefore, each of the rules for the headings and subheadings listed in

Sec. 334(b)(2)(A) has been modified as set forth below to provide that

the country of origin of a good classifiable under those headings or

subheadings is either the country of origin of the yarns (in the case

of heading 5609) or of the fabric (for the rest of the listed headings

or subheadings) from which those goods are made.

In addition, since the clear intent of Sec. 334(b)(2)(A) is to

eliminate assembly from conferring origin in the case of goods

classifiable under any of the provisions listed in that section,

Sec. 102.21(c)(3)(ii) has been modified as set forth below to preclude

assembly from automatically conferring origin on those goods when the

Sec. 102.21(c)(2) tariff shift or other requirements are not met (e.g.

when a good is made from fabrics originating in different countries).

Multicountry rules

Comment: Eight commenters stated, in one fashion or another, that

the proposed multicountry rules (Secs. 102.21(c) (4) and (5)) should be

made clearer, either by adding definitions or by adding examples.

Customs response: Given the wide variety of textile and apparel

products and the multiplicity of manufacturing processes involving

those products, Customs is adverse to defining the terms ``most

important assembly or manufacturing process'' and ``important assembly

or manufacturing process'' which form the basis of the multicountry

rules. Customs recognizes that the concern underlying the submitted

comments revolves around

[[Page 46193]]

the meaning of the word ``important'', and, in fact, during the

development of the proposed regulatory texts Customs decided to eschew

use of definitions calling for comparisons of such criteria as time

involved in processing, labor and other costs of processing,

complexity, and value added. Customs views the word ``important'' as

referring to the relative significance of the manufacturing or assembly

processes involved in the production of a good; thus, the word

``important,'' has the same connotation as the word ``meaningful''.

Accordingly, in determining relative importance, a manufacturing

operation in a low wage country is no less important to the production

of a good than that same manufacturing operation in a high wage

country, nor is a manufacturing operation done by an expensive machine

more important than that same manufacturing operation done by hand.

There is only one example, discussed elsewhere in this document, on

which Customs has reached a definitive conclusion regarding relative

importance of manufacturing processes: forming a fabric is a more

important process than cutting that fabric. Decisions on all other

comparisons must be made on a case-by-case basis according to the

specific facts presented. Customs recognizes that this may appear to

leave importers with a degree of uncertainty. However, Customs believes

that a large proportion of multicountry processing is unnecessary from

a manufacturing standpoint and thus is done more for quota-engineering

purposes, that is, for the primary purpose of avoiding quantitative

restraints imposed by international agreements. Moreover, if a

manufacturer or importer has any doubts about which country, territory,

or insular possession is the country of origin of its goods, that party

may obtain appropriate advance guidance under the Customs ruling

program.

Cutting and Products of Insular Possessions

Comment: The May 23, 1995, notice of proposed rulemaking stated

that Customs believes cutting was not intended to play any role in

determining the country of origin of textile and apparel products. That

statement raised the question, both within Customs and among members of

the importing public, of whether Customs would continue the current

tariff treatment of garments that are cut and assembled in insular

possessions.

General Note 3(a)(iv), HTSUS, provides that goods of insular

possessions are excepted from duty if, among other requirements, they

are ``manufactured or produced in any such possession from materials

the growth, product, or manufacture'' of that insular possession.

Customs has ruled that this portion of General Note 3(a)(iv) may be

satisfied by two significant manufacturing or processing operations.

Under existing rulings, the cutting of fabric into garment parts and

the assembly of those parts into garments are normally considered by

Customs to constitute the required two significant manufacturing or

processing operations that would qualify the garments for duty-free

treatment.

One commenter wanted Customs to retain cutting as a process that

confers origin. Nine commenters were concerned that the language in the

May 23, 1995, notice of proposed rulemaking meant that garments cut and

assembled in insular possessions would no longer be eligible for duty-

free entry. Two commenters argued that cutting is equal to, or more

important than, forming fabric while three commenters stated that

cutting fabric is a very small part of producing a garment. One

commenter referred specifically to the importance, for origin purposes,

of the high degree of precision and expense involved in cutting

components for men's tailored clothing. Many of the commenters pointed

out that there is no evidence to indicate that Congress intended to

change the tariff status of apparel goods cut and assembled in insular

possessions. Other commenters noted that General Note 3(a)(iv) was

intended by Congress to benefit insular possessions and should,

therefore, be liberally construed. A number of commenters were

concerned that Customs would never consider cutting when determining

the origin of textiles and apparel products and expressed their

disagreement with that position. Several commenters noted that there is

nothing in Sec. 334 of the Act that requires Customs to ignore entirely

the role cutting plays in the manufacture of textile and apparel

articles. Some commenters also pointed out that General Note 3(a)(iv)

concerns preferential duty status of goods rather than the

determination of their origin.

Customs response: Customs concurs with most of the commenters on

this issue that, since Sec. 334 deals with the country of origin of

textile and apparel products and not with value requirements for

purposes of duty preferences, Sec. 334 will not affect either foreign

material value determinations required under General Note 3(a)(iv) or

value-added requirements contained in other statutory provisions.

Accordingly, Customs intends to continue its current tariff treatment

of garments which are cut and assembled in insular possessions.

Nevertheless, Customs believes that the position that cutting is

not an origin-conferring process is correct for country of origin

determinations. While cutting is a process which may be considered to

be an important manufacturing process, as between the production of

fabric and the cutting of that fabric to shape, fabric production is

considered to be the more important process. The intent of Congress to

not allow cutting of fabric to confer origin is demonstrated by the

adoption of Sec. 334(b)(4) of the Act which continues the present

tariff treatment of components cut to shape in the United States from

imported fabric and sent abroad for assembly: if Congress had intended

the cutting of components from fabric to confer origin, there would

have been no need for Sec. 334(b)(4). Thus, when applying the first

multicountry rule (Sec. 102.21(c)(4), which provides that the most

important assembly or manufacturing process will determine the country

of origin), the country which produced the fabric will be determined to

be the country of origin of unassembled components merely cut from

fabric in another country.

Components Cut in the United States

Comment: Three commenters wrote in support of the continuation of

the treatment accorded goods by subheading 9802.00.80, HTSUS.

Customs response: These comments reflect some apparent confusion

regarding the overall effect of Sec. 334 of the Act in this area.

Under the present rules of origin, cutting apparel components from

fabric (regardless of the country of origin of that fabric) will

usually result in the cut components being considered a product of the

country where the cutting is performed. Thus, when foreign fabric is

imported into the United States and cut into apparel components, the

United States is the country of origin of those components.

Accordingly, if apparel components cut from foreign fabric in the

United States are exported for assembly and the assembled goods are

then imported into the United States, pursuant to subheading

9802.00.80, HTSUS, duty may be assessed on the full value of the

imported goods less the cost or value of the components cut in the

United States.

As previously noted, Congress adopted Sec. 334(b)(4) because

Secs. 334(b) (1) and (2) of the Act in effect eliminate cutting as a

process conferring origin for most purposes. Under Sec. 334(b)(4),

where goods are assembled abroad from components cut in the United

States

[[Page 46194]]

from foreign fabric (even though under the Sec. 334 rules the cut

components are not products of the United States and the assembling

country is the country of origin), the assembled goods, when imported

into the United States, will continue to receive the same duty

treatment presently accorded to such goods under subheading 9802.00.80,

HTSUS. Thus, because Sec. 334(b)(4) serves to preserve a tariff

treatment that otherwise would no longer be available under the

Sec. 334 origin rules, this statutory provision in effect addresses the

concern of these commenters.

World Trade Organization and NAFTA Obligations

Comment: Twelve commenters believed that the proposed rules are in

violation of the Uruguay Round Agreement and the obligations the United

States agreed to when it became a member of the World Trade

Organization (WTO). While some commenters questioned why the United

States is making significant changes in its textile origin rules at the

same time that the WTO is embarking on a project involving the

development of international uniform rules of origin, two other

commenters expressed the view that the proposed rules will simplify the

WTO work on harmonized rules of origin. Several commenters stated that

the new origin rules will change the applicable textile restraint

categories for many products, creating problems in the administration

of international textile agreements.

A number of commenters referred to the obligations the United

States incurred under the North American Free Trade Agreement (NAFTA).

Two commenters made the general statement that Sec. 334(b)(2)(A) of the

Act was contrary to the NAFTA, and a third commenter made the same

statement but with specific reference to Article 309(1) of the NAFTA.

Four commenters noted that the proposed rules conflicted with the NAFTA

marking rules, and one of these commenters argued that Canada has a

reasonable expectation that established marking rules will continue in

effect. Another commenter observed that the proposed rules will cause

some goods now subject to Tariff Preference Levels (TPLs) under the

NAFTA to no longer be considered products of a NAFTA party, with the

result that those goods will not be allowed entry into the United

States under a TPL.

One commenter stated that if the country in which down comforters

are assembled is not the country of origin of those goods, in order to

avoid an unfair advantage for Canadian and Mexican comforter

manufacturers, Customs should clearly state that the NAFTA preference

rules do not govern goods processed in a NAFTA country that fall within

the scope of Sec. 334 of the Act.

Another commenter thought that the wording of proposed Sec. 102.21

is ambiguous concerning the application of Sec. 102.19 (the ``NAFTA

preference override'' provision) to ``originating goods'' under the

NAFTA.

Customs response: In discussing Sec. 334, both the President's

Statement of Administrative Action and the relevant Senate report

stated that Sec. 334 would more accurately reflect where the most

significant production activity occurs, would help combat transshipment

and other circumvention of textile and apparel quotas, would bring the

U.S. rules of origin in line with rules employed by other major textile

and apparel importing countries and by U.S. trading partners, and would

advance the goal of harmonizing international rules of origin set out

in the WTO Agreement on Rules of Origin. It was also noted that,

pursuant to Article 4 of the Agreement on Textiles and Clothing which

provides for consultations in the case of a disruption of trade or an

adverse affect on market access, the Administration will undertake

consultations ``where appropriate''.

It is not the function of Customs to determine whether the

enactment of Sec. 334 constitutes a breach of either the WTO Agreement

or the NAFTA. Both agreements have specified procedures for signatory

parties to follow if it is believed that another signatory has violated

its commitments. Accordingly, the question of whether there has been a

violation of a provision of the WTO Agreement on Rules of Origin or of

the NAFTA is a matter to be decided within the framework of those

agreements.

With regard to the comment on down comforters, Customs is unable to

accede to this commenter's request. Section 334(b)(1) of the Act opens

with the words ``[e]xcept as otherwise provided for by statute,'' and

Customs followed this statutory language by including in the first

sentence of proposed Sec. 102.21(a) the words ``except as otherwise

provided for by statute''; thus, origin rules contained in other

statutes will take precedence over the origin rules in Sec. 334 and in

Sec. 102.21 of the regulations. The NAFTA rules of origin for duty

preference purposes are set forth in 19 U.S.C. 3332 and in General Note

12, HTSUS. Accordingly, if, as in the case of down comforters, the

NAFTA origin rule for duty preference purposes is less restrictive than

the corresponding rule contained in Sec. 334 of the Act and in

Sec. 102.21 of the regulations, then the NAFTA origin rule will control

for NAFTA duty preference purposes.

As regards the alleged ambiguity between Sec. 102.19 and

Sec. 102.21, Customs does not believe that any change to the proposed

regulatory texts is appropriate in this regard. Section 102.19 was

originally adopted in a strictly NAFTA context in order to clarify the

relationship between the Part 102 NAFTA marking rules and the separate

rules of origin that apply under the NAFTA for duty preference

purposes. Proposed Sec. 102.21(c) included Sec. 102.19 among the

existing Part 102 provisions that may apply for purposes of the

Sec. 102.21(c) general rules because a failure to mention Sec. 102.19

in this context might incorrectly give the impression, contrary to the

express terms of Sec. 334 as discussed in the preceding comment

response, that the rules of origin applicable to ``originating goods''

under the NAFTA do not take precedence over the Sec. 102.21 provisions.

Miscellaneous Goods

Comment: One commenter stated that the manufacture of goods

classifiable in headings 5604-5609, 5808-5809, 5901-5903, 5905-5908 and

5910 and in subheading 5911.90 requires special equipment and knowledge

and, therefore, the tariff shift rule for those provisions should

prescribe a change from any other heading.

Customs response: The proposed tariff shift rules for each of the

mentioned headings and subheading were carefully drafted to reflect the

express requirements of Sec. 334(b) of the Act. Most of those headings

mentioned by the commenter provide specifically for yarns, cordage,

braids, or fabrics, and Sec. 334(b) is very specific regarding the

rules for determining the origin of those goods. In some instances, the

proposed tariff shift rule was drafted to reflect that assembly (under

Sec. 334(b)(1)(D) of the Act) confers origin. In a very few instances

(e.g. fishing nets of heading 5608), the tariff shift rule was drafted

to reflect the application of the first multicountry rule

(Sec. 334(b)(3)(A) of the Act and Sec. 102.21(c)(4) of the

regulations). To do as this commenter suggested would cause the

application of the tariff shift rules to result, for some goods, in

determinations of origin not consistent with the requirements of

Sec. 334(b).

Miscellaneous Issues

Comment: Five commenters referred to the substantial transformation

concept, noting variously that there is no definition of ``substantial

transformation'' in the proposed regulatory texts, that the proposed

texts

[[Page 46195]]

do not comply with accepted principles of what constitutes a

substantial transformation, or that the United States should retain

substantial transformation as the basis for determining the origin of

imported goods. One commenter also noted that there is no value-added

criterion. In addition, while two commenters noted that the rules in

Sec. 334 of the Act are more similar to the rules followed by the rest

of the industrialized nations than are the present rules applied by

Customs, another commenter noted that Sec. 334(b)(2)(A) of the Act (the

special rule of origin listing 16 provisions which are not subject to

the assembly rule) is not consistent with rules applied by Canada. One

commenter pointed out that Sec. 334 conflicts with past practices and

rulings of Customs. Finally, one commenter expressed concern that the

rules of origin contained in Sec. 334 are inconsistent with the Federal

Trade Commission Regulation in 16 CFR 303.33(a)(3) which requires that

each textile product made in the United States in whole or part of

imported materials contain a label disclosing those facts.

Customs response: Section 334 is a Congressionally enacted statute

and, as such, it prevails over all prior U.S. regulations, rulings, and

judicial decisions that are inconsistent with its terms, and it applies

without regard to the laws of other countries. It provides an objective

set of rules to be applied without reference to the substantial

transformation concept, which is the present basis applied generally by

the courts and by Customs for determining the origin of merchandise

processed in more than one country. While Sec. 334 may represent the

view of Congress concerning how it believes the substantial

transformation principle should be applied, when the origin provisions

of Sec. 334 take effect on July 1, 1996, they will effectively remove

from consideration the question of whether or not a processing or

manufacturing operation constitutes a substantial transformation for

most Customs and related purposes. With regard to the cited Federal

Trade Commission regulations, Customs would also note that those

regulations are promulgated under separate statutory authority

applicable to that agency and, therefore, the issue of the alleged

inconsistency is not a matter that can be unilaterally addressed by

Customs in the regulations implementing Sec. 334.

Other Changes to the Regulatory Texts

In addition to the changes to the proposed regulatory texts

discussed above in connection with the public comments, Customs has

determined that a number of other changes should be made to the

proposed texts based on further internal review. These changes are

discussed below.

Section 10.26(c)(3)

In proposed new Sec. 10.26, paragraph (a) implemented the

provisions of U.S. Note 2(b), Subchapter II, Chapter 98, HTSUS,

paragraph (b) implemented the provisions of Sec. 334(b)(4)(B) of the

Act, and paragraph (c) set forth definitions or rules for purposes of

the section as a whole. In paragraph (c)(3) which set forth a rule

regarding entry into the commerce of a non-beneficiary country,

reference was made to a ``component'' (which is the term used in

Sec. 334(b)(4)(B) of the Act) but references to a ``material'' and an

``ingredient'' (which are terms used in U.S. Note 2(b), Subchapter II,

Chapter 98, HTSUS) were inadvertently omitted. The text of

Sec. 10.26(c)(3) as set forth below has been modified to correct this

oversight.

Section 102.21(b)(2)--Definition of ``fabric-making process''

In reviewing proposed Sec. 102.21(b)(2), Customs discovered that

fabric strips were inadvertently omitted from the list of materials

which may comprise a fabric. It has been the experience of Customs that

a fabric may be formed (usually woven) with narrow fabric strips. While

fabric strips are not a material specifically mentioned in

Sec. 334(b)(1)(C) of the Act, Customs is of the view that the formation

of a fabric from fabric strips is a fabric-making process and should be

treated as such in the regulations, in particular for purposes of

applying those Sec. 102.21(e) tariff shift or other requirements that

specifically refer to a ``fabric-making process''. Customs also notes

that the first multicountry rule (Sec. 334(b)(3)(A) of the Act and

Sec. 102.21(c)(4) of the regulations) would yield the same result

because, in the case of a fabric, the most important manufacturing

process is the actual forming of the fabric. Accordingly,

Sec. 102.21(b)(2) as set forth below has been modified to reflect that

a fabric-making process may include a manufacturing operation which

begins with fabric strips.

Subheading 5808.10

Customs inadvertently omitted the word ``other'' before the word

``heading'' in the first proposed tariff shift rule for subheading

5808.10. In order to eliminate any possible confusion and conform the

wording to that used in other tariff shift rules, the first tariff

shift for subheading 5808.10 as set forth below has been modified

accordingly.

Heading 5904

Since lamination of preexisting components is considered to be an

assembly, the proposed tariff shift rule for heading 5904 provided a

meaningful rule for goods that have been manufactured by a lamination

process. However, that tariff shift rule did not provide for goods of

heading 5904 that have been produced by means of a coating process. In

view of the various manufacturing processes used in the production of

such coated goods and the differences in materials that may be used,

Customs does not believe that it is feasible to craft a tariff shift

rule for those goods. Consequently, the country of origin of goods of

heading 5904 produced by means of a coating process must be determined

by application of the multicountry rules in Secs. 102.21(c) (4) and

(5). Accordingly, the proposed tariff shift rule for heading 5904 has

been replaced by two rules as set forth below to reflect these

considerations, the first rule covering goods that are wholly assembled

by means of a laminating process and the second rule covering all other

goods.

Subheadings 5911.10-5911.40

On further review of the proposed tariff shift rule for subheadings

5911.10 through 5911.40, Customs found that no provision was made for

application of the assembly rule (Sec. 334(b)(1)(D) of the Act) to

goods classifiable in subheadings 5911.31 through 5911.32 fitted with

linking devices. Customs notes in this regard that the combining of

linking devices with textile fabrics or felts may constitute an

assembly, in which case Sec. 334(b)(1)(D) would apply to determine the

country of origin. Accordingly, the proposed tariff shift rule for

subheadings 5911.10 through 5911.40 has been modified as set forth

below (1) by setting forth a rule separately both for subheading

5911.10 through 5911.20 and for subheading 5911.40 and with no change

in substance and (2) by including two separate rules for subheadings

5911.31 through 5911.32, the first of which follows the originally

proposed rule and the second of which is intended to cover goods

incorporating such linking devices.

Subheading 5911.90

On further review of the three tariff shift rules proposed for

subheading 5911.90, Customs has determined that the first and third

rules overlap in terms of goods covered. The first rule is for ``goods

of yarn, rope, cord, braid'' and thus includes made up articles which,

[[Page 46196]]

using normal classification principles, would be considered to be

``of'' the named materials. The third rule specifically covers goods

which are made up articles. To eliminate this overlap, the third tariff

shift rule for subheading 5911.90 has been modified as set forth below

by the addition of an exception clause for goods subject to the first

tariff shift rule.

Headings 6501 and 6503

Headings 6501 and 6503 cover goods of felt. When the proposed

tariff shift rules for these headings were drafted, Customs

inadvertently included, in the exception clause in the second tariff

shift rule for each heading, a reference to heading 5603 which covers

nonwovens; the reference should have been to heading 5602 which

provides for felts. Accordingly, the second tariff shift rule for each

of these headings has been modified as set forth below to correct this

error.

Issuance of Rulings During the Interim Period

Although this final rule action is effective 30 days after its

publication in the Federal Register, Customs notes that the final

regulatory provisions set forth herein that implement the provisions of

section 334 of the Act apply to goods entered, or withdrawn from

warehouse, for consumption on or after July 1, 1996, in keeping with

the effective date set forth in section 334. Customs recognizes that

the realities of the textile and apparel trade often require sourcing

and production decisions long in advance of the ultimate date of

importation of the goods. In order to ensure that prospective importers

may have appropriate advance guidance regarding the Customs

interpretation of the final regulations set forth in this document,

Customs has determined that the Customs ruling program should

accommodate ruling requests regarding those regulatory texts during the

interim period between the effective date of this final rule action and

the applicability date for the regulatory texts rather than only after

the section 334(b) provisions take effect. Accordingly, Customs will

accept requests for rulings on the regulatory texts set forth herein,

submitted in accordance with the provisions of Part 177 of the Customs

Regulations (19 CFR Part 177), commencing 30 days after the date of

publication of this final rule document in the Federal Register.

Conclusion

Accordingly, based on the comments received and the analysis of

those comments and based on the additional considerations as discussed

above, Customs believes that the proposed regulatory amendments should

be adopted as a final rule with certain changes thereto as discussed

above and set forth below. As a consequence of the adoption of these

substantive regulatory amendments, this document also includes an

appropriate update of the list of information collection approvals

contained in Sec. 178.2 of the Customs Regulations (19 CFR 178.2).

Executive Order 12866

This document does not meet the criteria for a ``significant

regulatory action'' as specified in E.O. 12866.

Regulatory Flexibility Act

Pursuant to the provisions of the Regulatory Flexibility Act (5

U.S.C. 601 et seq.), it is certified that the amendments will not have

a significant economic impact on a substantial number of small

entities. Accordingly, the amendments are not subject to the regulatory

analysis or other requirements of 5 U.S.C. 603 and 604.

Paperwork Reduction Act

The collection of information requirements contained in these final

regulations have been reviewed and approved by the Office of Management

and Budget in accordance with the Paperwork Reduction Act of 1980 (44

U.S.C. 3507) under control number 1515-0207. The estimated average

annual burden associated with this collection is 1.5 hours per

respondent or recordkeeper. Comments concerning the accuracy of this

burden estimate and suggestions for reducing this burden should be

directed to the U.S. Customs Service, Paperwork Management Branch, Room

6316, 1301 Constitution Avenue NW., Washington, D.C. 20229, or the

Office of Management and Budget, Attention: Desk Officer for the

Department of the Treasury, Office of Information and Regulatory

Affairs, Washington, D.C. 20503.

Drafting Information

The principal author of this document was Francis W. Foote, Office

of Regulations and Rulings, U.S. Customs Service. However, personnel

from other offices participated in its development.

List of Subjects

19 CFR Part 10

Customs duties and inspection, Imports, Reporting and recordkeeping

requirements.

19 CFR Part 12

Customs duties and inspection, Labeling, Marking, Reporting and

recordkeeping requirements, Textiles and textile products.

19 CFR Part 102

Customs duties and inspections, Imports, Reporting and

recordkeeping requirements, Rules of origin, Trade agreements.

19 CFR Part 178

Collections of information, Paperwork requirements, Reporting and

recordkeeping requirements.

Amendments to the Regulations

Accordingly, for the reasons stated above, Parts 10, 12, 102 and

178, Customs Regulations (19 CFR Parts 10, 12, 102 and 178), are

amended as set forth below.

PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,

ETC.

1. The general authority citation for Part 10 and the specific

authority citations for Secs. 10.191-10.198 continue to read, and a

specific authority citation for Secs. 10.25 and 10.26 is added to read,

as follows:

Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized

Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508,

1623, 1624, 3314;

* * * * *

Sections 10.25 and 10.26 also issued under 19 U.S.C. 3592;

* * * * *

Sections 10.191-10.198 also issued under 19 U.S.C. 2701 et seq.;

* * * * *

2. Sections 10.25 and 10.26 are added under the heading ``Articles

assembled abroad with United States components'' to read as follows:

Sec. 10.25 Textile components cut to shape in the United States and

assembled abroad.

Where a textile component is cut to shape (but not to length,

width, or both) in the United States from foreign fabric and exported

to another country, territory, or insular possession for assembly into

an article that is then returned to the United States and entered, or

withdrawn from warehouse, for consumption on or after July 1, 1996, the

value of the textile component shall not be included in the dutiable

value of the article. For purposes of determining whether a reduction

in the dutiable value of an imported article may be allowed under this

section:

(a) The terms ``textile component'' and ``fabric'' have reference

only to goods covered by the definition of ``textile or apparel

product'' set forth in Sec. 102.21(b)(4) of this chapter;

[[Page 46197]]

(b) The operations performed abroad on the textile component shall

conform to the requirements and examples set forth in Sec. 10.16

insofar as they may be applicable to a textile component; and

(c) The valuation and documentation provisions of Secs. 10.17,

10.18, 10.21 and 10.24 shall apply.

Sec. 10.26 Articles assembled or processed in a beneficiary country in

whole of U.S. components or ingredients; articles assembled in a

beneficiary country from textile components cut to shape in the United

States.

(a) No article (except a textile article, apparel article, or

petroleum, or any product derived from petroleum, provided for in

heading 2709 or 2710, Harmonized Tariff Schedule of the United States

(HTSUS)) shall be treated as a foreign article or as subject to duty:

(1) If the article is assembled or processed in a beneficiary

country in whole of fabricated components that are a product of the

United States; or

(2) If the article is processed in a beneficiary country in whole

of ingredients (other than water) that are a product of the United

States; and

(3) Neither the fabricated components, materials or ingredients

after their exportation from the United States, nor the article before

its importation into the United States, enters into the commerce of any

foreign country other than a beneficiary country.

(b) No article (except a textile or apparel product) entered, or

withdrawn from warehouse, for consumption on or after July 1, 1996,

shall be treated as a foreign article or as subject to duty:

(1) If the article is assembled in a beneficiary country in whole

of textile components cut to shape (but not to length, width, or both)

in the United States from foreign fabric; or

(2) If the article is assembled in a beneficiary country in whole

of both textile components described in paragraph (b)(1) of this

section and components that are products of the United States; and

(3) Neither the components after their exportation from the United

States, nor the article before its importation into the United States,

enters into the commerce of any foreign country other than a

beneficiary country.

(c) For purposes of this section:

(1) The terms ``textile article'', ``apparel article'', and

``textile or apparel product'' cover all articles, other than footwear

and parts of footwear, that are classifiable in an HTSUS subheading

which carries a textile and apparel category number designation;

(2) The term ``beneficiary country'' has the meaning set forth in

Sec. 10.191(b)(1); and

(3) A component, material, ingredient, or article shall be deemed

to have not entered into the commerce of any foreign country other than

a beneficiary country if:

(i) The component, material, or ingredient was shipped directly

from the United States to a beneficiary country, or the article was

shipped directly to the United States from a beneficiary country,

without passing through the territory of any non-beneficiary country;

or

(ii) Where the component, material, ingredient, or article passed

through the territory of a non-beneficiary country while en route to a

beneficiary country or the United States:

(A) The invoices, bills of lading, and other shipping documents

pertaining to the component, material, ingredient, or article show a

beneficiary country or the United States as the final destination and

the component, material, ingredient, or article was neither sold at

wholesale or retail nor subjected to any processing or other operation

in the non-beneficiary country; or

(B) The component, material, ingredient, or article remained under

the control of the customs authority of the non-beneficiary country and

was not subjected to operations in that non-beneficiary country other

than loading and unloading and activities necessary to preserve the

component, material, ingredient, or article in good condition.

3. In Sec. 10.195, paragraphs (d) and (e) are redesignated as

paragraphs (e) and (f) respectively and a new paragraph (d) is added to

read as follows:

Sec. 10.195 Country of origin criteria.

* * * * *

(d) Textile components cut to shape in the U.S. The percentage

referred to in paragraph (c) of this section may be attributed in whole

or in part to the cost or value of a textile component that is cut to

shape (but not to length, width, or both) in the U.S. (including the

Commonwealth of Puerto Rico) from foreign fabric and exported to a

beneficiary country for assembly into an article that is then returned

to the U.S. and entered, or withdrawn from warehouse, for consumption

on or after July 1, 1996. For purposes of this paragraph, the terms

``textile component'' and ``fabric'' have reference only to goods

covered by the definition of ``textile or apparel product'' set forth

in Sec. 102.21(b)(4) of this chapter.

* * * * *

PART 12--SPECIAL CLASSES OF MERCHANDISE

1. The authority citation for Part 12 continues to read in part as

follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 20,

Harmonized Tariff Schedule of the United States (HTSUS)), 1624;

* * * * *

Sections 12.130 and 12.131 also issued under 7 U.S.C. 1854;

* * * * *

2. In Sec. 12.130:

a. the last sentence of paragraph (b) is amended by adding after

``Mexico'' the words ``, and the origin of textile and apparel products

covered by Sec. 102.21 of this chapter,'';

b. the last sentence of the introductory text of paragraph (d) is

amended by adding after ``Mexico'' the words ``, and the origin of

textile and apparel products covered by Sec. 102.21 of this chapter,'';

and

c. the introductory text of paragraph (e)(1) is amended by adding

after ``Mexico'' the words ``and except for textile and apparel

products''.

PART 102--RULES OF ORIGIN

1. The authority citation for Part 102 is revised to read as

follows:

Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized

Tariff Schedule of the United States), 1624, 3314, 3592.

2. Section 102.0 is amended by removing the word ``This'' at the

beginning of the first sentence and adding, in its place, the words

``Except in the case of goods covered by Sec. 102.21, this'' and by

adding a sentence at the end to read as follows:

Sec. 102.0 Scope.

* * * The rules for determining the country of origin of textile

and apparel products set forth in Sec. 102.21 apply for the foregoing

purposes and for the other purposes stated in that section.

3. Section 102.11 is amended by adding an introductory paragraph

before paragraph (a) to read as follows:

Sec. 102.11 General rules.

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.

* * * * *

4. Section 102.21 is added to read as follows:

Sec. 102.21 Textile and apparel products.

(a) Applicability. Except for purposes of determining whether goods

originate in Israel or are the growth, product, or

[[Page 46198]]

manufacture of Israel, and except as otherwise provided for by statute,

the provisions of this section shall control the determination of the

country of origin of imported textile and apparel products for purposes

of the Customs laws and the administration of quantitative

restrictions. The provisions of this section shall apply to goods

entered, or withdrawn from warehouse, for consumption on or after July

1, 1996.

(b) Definitions. The following terms shall have the meanings

indicated when used in this section:

(1) Country of origin. The term country of origin means the

country, territory, or insular possession in which a good originates or

of which a good is the growth, product, or manufacture.

(2) Fabric-making process. A fabric-making process is any

manufacturing operation that begins with polymers, fibers, filaments

(including strips), yarns, twine, cordage, rope, or fabric strips and

results in a textile fabric.

(3) Knit to shape. The term knit to shape applies to any good of

which 50 percent or more of the exterior surface area is formed by

major parts that have been knitted or crocheted directly to the shape

used in the good, with no consideration being given to patch pockets,

appliques, or the like. Minor cutting, trimming, or sewing of those

major parts will not affect the determination of whether a good is

``knit to shape.''

(4) Major parts. The term major parts means integral components of

a good but does not include collars, cuffs, waistbands, plackets,

pockets, linings, paddings, trim, accessories, or similar parts.

(5) Textile or apparel product. A textile or apparel product is any

good classifiable in Chapters 50 through 63, Harmonized Tariff Schedule

of the United States (HTSUS), and any good classifiable under one of

the following HTSUS headings or subheadings:

3005.90

3921.12.15

3921.13.15

3921.90.2550

4202.12.40-80

4202.22.40-80

4202.32.40-95

4202.92.15-30

4202.92.60-90

6405.20.60

6406.10.77

6406.10.90

6406.99.15

6501

6502

6503

6504

6505.90

6601.10-99

7019.10.15

7019.10.28

7019.20

8708.21

8804

9113.90.40

9404.90.10

9404.90.80-95

9502.91

9612.10.9010

(6) Wholly assembled. The term ``wholly assembled'' when used with

reference to a good means that all components, of which there must be

at least two, preexisted in essentially the same condition as found in

the finished good and were combined to form the finished good in a

single country, territory, or insular possession. Minor attachments and

minor embellishments (for example, appliques, beads, spangles,

embroidery, buttons) not appreciably affecting the identity of the

good, and minor subassemblies (for example, collars, cuffs, plackets,

pockets), will not affect the status of a good as ``wholly assembled''

in a single country, territory, or insular possession.

(c) General rules. Subject to paragraph (d) of this section, the

country of origin of a textile or apparel product shall be determined

by sequential application of paragraphs (c) (1) through (5) of this

section and, in each case where appropriate to the specific context, by

application of the additional requirements or conditions of

Secs. 102.12 through 102.19 of this part.

(1) The country of origin of a textile or apparel product is the

single country, territory, or insular possession in which the good was

wholly obtained or produced.

(2) Where the country of origin of a textile or apparel product

cannot be determined under paragraph (c)(1) of this section, the

country of origin of the good is the single country, territory, or

insular possession in which each foreign material incorporated in that

good underwent an applicable change in tariff classification, and/or

met any other requirement, specified for the good in paragraph (e) of

this section.

(3) Where the country of origin of a textile or apparel product

cannot be determined under paragraph (c) (1) or (2) of this section:

(i) If the good was knit to shape, the country of origin of the

good is the single country, territory, or insular possession in which

the good was knit; or

(ii) Except for goods of heading 5609, 5807, 5811, 6213, 6214, 6301

through 6306, and 6308, and subheadings 6209.20.5040, 6307.10, 6307.90,

and 9404.90, if the good was not knit to shape and the good was wholly

assembled in a single country, territory, or insular possession, the

country of origin of the good is the country, territory, or insular

possession in which the good was wholly assembled.

(4) Where the country of origin of a textile or apparel product

cannot be determined under paragraph (c) (1), (2) or (3) of this

section, the country of origin of the good is the single country,

territory, or insular possession in which the most important assembly

or manufacturing process occurred.

(5) Where the country of origin of a textile or apparel product

cannot be determined under paragraph (c) (1), (2), (3) or (4) of this

section, the country of origin of the good is the last country,

territory, or insular possession in which an important assembly or

manufacturing process occurred.

(d) Treatment of sets. Where a good classifiable in the HTSUS as a

set includes one or more components that are textile or apparel

products and a single country of origin for all of the components of

the set cannot be determined under paragraph (c) of this section, the

country of origin of each component of the set that is a textile or

apparel product shall be determined separately under paragraph (c) of

this section.

(e) Specific rules by tariff classification. The following rules

shall apply for purposes of determining the country of origin of a

textile or apparel product under paragraph (c)(2) of this section:

------------------------------------------------------------------------

HTSUS Tariff shift and/or other requirements

------------------------------------------------------------------------

3005.90................ If the good contains pharmaceutical substances,

a change to subheading 3005.90 from any other

heading; or If the good does not contain

pharmaceutical substances, a change to

subheading 3005.90 from any other heading,

except from heading 5007, 5111 through 5113,

5208 through 5212, 5309 through 5311, 5407

through 5408, 5512 through 5516, 5601 through

5603, 5801 through 5804, 5806, 5809, 5903,

5906 through 5907, and 6001 through 6002.

3921.12.15............. A change to subheading 3921.12.15 from any

other heading.

3921.13.15............. A change to subheading 3921.13.15 from any

other heading.

[[Page 46199]]

3921.90.2550........... A change to subheading 3921.90.2550 from any

other heading.

4202.12.40-4202.12.80.. A change to subheading 4202.12.40 through

4202.12.80 from any other heading, provided

that the change is the result of the good

being wholly assembled in a single country,

territory, or insular possession.

4202.22.40-4202.22.80.. A change to subheading 4202.22.40 through

4202.22.80 from any other heading, provided

that the change is the result of the good

being wholly assembled in a single country,

territory, or insular possession.

4202.32.40-4202.32.95.. A change to subheading 4202.32.40 through

4202.32.95 from any other heading, provided

that the change is the result of the good

being wholly assembled in a single country,

territory, or insular possession.

4202.92.15-4202.92.30.. A change to subheading 4202.92.15 through

4202.92.30 from any other heading, provided

that the change is the result of the good

being wholly assembled in a single country,

territory, or insular possession.

4202.92.60-4202.92.90.. A change to subheading 4202.92.60 through

4202.92.90 from any other heading, provided

that the change is the result of the good

being wholly assembled in a single country,

territory, or insular possession.

5001-5002.............. A change to heading 5001 through 5002 from any

other chapter.

5003................... A change to heading 5003 from any other

heading, provided that the change is the

result of garnetting. If the change to heading

5003 is not the result of garnetting, the

country of origin of the good is the country

of origin of the good prior to its becoming

waste.

5004-5006.............. (1) If the good is of staple fibers, a change

to heading 5004 through 5006 from any heading

outside that group, provided that the change

is the result of a spinning process.

(2) If the good is of filaments, a change to

heading 5004 through 5006 from any heading

outside that group, provided that the change

is the result of an extrusion process.

5007................... A change to heading 5007 from any other

heading, provided that the change is the

result of a fabric-making process.

5101-5103.............. A change to heading 5101 through 5103 from any

other chapter.

5104................... A change to heading 5104 from any other

heading.

5105................... A change to heading 5105 from any other

chapter.

5106-5110.............. A change to heading 5106 through 5110 from any

heading outside that group, provided that the

change is the result of a spinning process.

5111-5113.............. A change to heading 5111 through 5113 from any

heading outside that group, provided that the

change is the result of a fabric-making

process.

5201................... A change to heading 5201 from any other

chapter.

5202................... A change to heading 5202 from any other

heading, provided that the change is the

result of garnetting. If the change to heading

5202 is not the result of garnetting, the

country of origin of the good is the country

of origin of the good prior to its becoming

waste.

5203................... A change to heading 5203 from any other

chapter.

5204-5207.............. A change to heading 5204 through 5207 from any

heading outside that group, provided that the

change is the result of a spinning process.

5208-5212.............. A change to heading 5208 through 5212 from any

heading outside that group provided the change

is the result of a fabric-making process.

5301-5305.............. (1) Except for waste, a change to heading 5301

through 5305 from any other chapter.

(2) For waste, a change to heading 5301 through

5305 from any heading outside that group,

provided that the change is the result of

garnetting. If the change is not the result of

garnetting, the country of origin of the good

is the country of origin of the good prior to

its becoming waste.

5306-5307.............. A change to heading 5306 through 5307 from any

heading outside that group, provided that the

change is the result of a spinning process.

5308................... (1) Except for paper yarns, a change to heading

5308 from any other heading, provided that the

change is the result of a spinning process.

(2) For paper yarns, a change to heading 5308

from any other heading, except from heading

4707, 4801 through 4806, 4811, and 4818.

5309-5311.............. A change to heading 5309 through 5311 from any

heading outside that group, provided that the

change is the result of a fabric-making

process.

5401-5406.............. A change to heading 5401 through 5406 from any

other heading, provided that the change is the

result of an extrusion process.

5407-5408.............. A change to heading 5407 through 5408 from any

heading outside that group, provided that the

change is the result of a fabric-making

process.

5501-5502.............. A change to heading 5501 through 5502 from any

other chapter, provided that the change is the

result of an extrusion process.

5503-5504.............. A change to heading 5503 through 5504 from any

other chapter, except from Chapter 54.

5505................... A change to heading 5505 from any other

heading, provided that the change is the

result of garnetting. If the change is not the

result of garnetting, the country of origin of

the good is the country of origin of the good

prior to its becoming waste.

5506-5507.............. A change to heading 5506 through 5507 from any

other chapter, except from Chapter 54.

5508-5511.............. A change to heading 5508 through 5511 from any

heading outside that group, provided that the

change is the result of a spinning process.

5512-5516.............. A change to heading 5512 through 5516 from any

heading outside that group, provided that the

change is the result of a fabric-making

process.

5601................... (1) A change to wadding of heading 5601 from

any other heading, except from heading 5105,

5203, and 5501 through 5507.

(2) A change to flock, textile dust, mill neps,

or articles of wadding, of heading 5601 from

any other heading or from wadding of heading

5601.

5602-5603.............. A change to heading 5602 through 5603 from any

heading outside that group, provided that the

change is the result of a fabric-making

process.

5604................... (1) If the textile component is of continuous

filaments, including strips, a change of those

filaments, including strips, to heading 5604

from any other heading, except from heading

5001 through 5007, 5401 through 5408, and 5501

through 5502, and provided that the change is

the result of an extrusion process.

[[Page 46200]]

(2) If the textile component is of staple

fibers, a change of those fibers to heading

5604 from any other heading, except from

heading 5004 through 5006, 5106 through 5110,

5204 through 5207, 5306 through 5308, and 5508

through 5511, and provided that the change is

the result of a spinning process.

5605-5606.............. If the good is of continuous filaments,

including strips, a change of those filaments,

including strips, to heading 5605 through 5606

from any other heading, except from heading

5001 through 5007, 5401 through 5408, and 5501

through 5502, and provided that the change is

the result of an extrusion process; or

If the good is of staple fibers, a change of

those fibers to heading 5605 through 5606 from

any other heading, except from heading 5106

through 5110, 5204 through 5207, 5306 through

5308, and 5508 through 5511, and provided that

the change is the result of a spinning

process.

5607................... If the good is of continuous filaments,

including strips, a change of those filaments,

including strips, to heading 5607 from any

other heading, except from heading 5001

through 5007, 5401 through 5406, and 5501

through 5511, and provided that the change is

the result of an extrusion process; or

If the good is of staple fibers, a change of

those fibers to heading 5607 from any other

heading, except from heading 5106 through

5110, 5204 through 5207, 5306 through 5308,

and 5508 through 5511, and provided that the

change is the result of a spinning process.

5608................... (1) A change to netting of heading 5608 from

any other heading, except from heading 5804,

and provided that the change is the result of

a fabric-making process.

(2) A change to fishing nets or other made up

nets of heading 5608:

(a) If the good does not contain nontextile

attachments, from any other heading, except

from heading 5804 and 6002, and provided that

the change is the result of a fabric-making

process; or

(b) If the good contains nontextile

attachments, from any heading, including a

change from another good of heading 5608,

provided that the change is the result of the

good being wholly assembled in a single

country, territory, or insular possession.

5609................... (1) If of continuous filaments, including

strips, the country of origin of a good

classifiable under heading 5609 is the

country, territory, or insular possession in

which those filaments, including strips, were

extruded.

(2) If of staple fibers, the country of origin

of a good classifiable under heading 5609 is

the country, territory, or insular possession

in which those fibers were spun into yarns.

5701-5705.............. A change to heading 5701 through 5705 from any

other chapter.

5801-5803.............. A change to heading 5801 through 5803 from any

other heading, including a heading within that

group, except from heading 5007, 5111 through

5113, 5208 through 5212, 5309 through 5311,

5407 through 5408, 5512 through 5516, and

6002, and provided that the change is the

result of a fabric-making process.

5804.10................ A change to subheading 5804.10 from any other

heading, except from heading 5608, and

provided that the change is the result of a

fabric-making process.

5804.21-5804.30........ A change to subheading 5804.21 through 5804.30

from any other heading, provided that the

change is the result of a fabric-making

process.

5805................... A change to heading 5805 from any other

heading, except from heading 5007, 5111

through 5113, 5208 through 5212, 5309 through

5311, 5407 through 5408, and 5512 through

5516, and provided that the change is the

result of a fabric-making process.

5806................... A change to heading 5806 from any other

heading, except from heading 5007, 5111

through 5113, 5208 through 5212, 5309 through

5311, 5407 through 5408, 5512 through 5516,

and 5801 through 5803, and provided that the

change is the result of a fabric-making

process.

5807................... The country of origin of a good classifiable

under heading 5807 is the country, territory,

or insular possession in which the fabric

comprising the good was formed by a fabric-

making process.

5808.10................ (1) If the good is of continuous filaments,

including strips, a change of those filaments,

including strips, to subheading 5808.10 from

any other heading, except from heading 5001

through 5007, 5401 through 5406, 5501 through

5502, and 5604 through 5607, and provided that

the change is the result of an extrusion

process.

(2) If the good is of staple fibers, a change

of those fibers to heading 5808.10 from any

other heading, except from heading 5106

through 5113, 5204 through 5212, 5306 through

5311, 5401 through 5408, 5508 through 5516,

and 5604 through 5607, and provided that the

change is the result of a spinning process.

5808.90................ (1) For ornamental fabric trimmings, a change

to subheading 5808.90 from any other chapter,

except from heading 5007, 5111 through 5113,

5208 through 5212, 5309 through 5311, 5407

through 5408, and 5512 through 5516, and

provided that the change is the result of a

fabric-making process.

(2) For nonfabric ornamental trimmings:

(a) If the trimming is of continuous filaments,

including strips, a change to subheading

5808.90 from any other heading, except from

heading 5001 through 5007, 5401 through 5408,

5501 through 5502, and 5604 through 5607, and

provided that the change is the result of an

extrusion process; or

(b) If the trimming is of staple fibers, a

change to subheading 5808.90 from any other

heading, except from heading 5106 through

5113, 5204 through 5212, 5306 through 5311,

5401 through 5408, 5508 through 5516, and 5604

through 5607, and provided that the change is

the result of a spinning process.

(3) For tassels, pompons and similar articles:

(a) If the good has been wholly assembled in a

single country, territory, or insular

possession, a change to subheading 5808.90

from any other heading;

(b) If the good has not been wholly assembled

in a single country, territory, or insular

possession and the good is of staple fibers, a

change to subheading 5808.90 from any other

heading, except from heading 5004 through

5006, 5106 through 5110, 5204 through 5207,

5306 through 5308, and 5508 through 5511, and

5604 through 5607, and provided that the

change is the result of a spinning process; or

(c) If the good has not been wholly assembled

in a single country, territory, or insular

possession and the good is of filaments,

including strips, a change to subheading

5808.90 from any other heading, except from

heading 5001 through 5007, 5401 through 5406,

and 5501 through 5502, and provided that the

change is the result of an extrusion process.

5809................... A change to heading 5809 from any other

heading, except from heading 5007, 5111

through 5113, 5208 through 5212, 5309 through

5311, 5407 through 5408, 5512 through 5516,

5801 through 5802, 5804, and 5806, and

provided that the change is the result of a

fabric-making process.

[[Page 46201]]

5810.10................ The country of origin of goods of subheading

5810.10 is the single country, territory, or

insular possession in which the embroidery was

performed.

5810.91-5810.99........ (1) For embroidered fabric, the country of

origin is the country, territory, or insular

possession in which the fabric was produced by

a fabric-making process.

(2) For embroidered badges, emblems, insignia,

and the like, comprised of multiple

components, the country of origin is the place

of assembly, provided that the change is the

result of the good being wholly assembled in a

single country, territory, or insular

possession.

(3) For embroidered badges, emblems, insignia,

and the like, not comprised of multiple

components, a change to subheading 5810.91

through 5810.99 from any other chapter, except

from heading 5007, 5111 through 5113, 5208

through 5212, 5309 through 5311, 5407 through

5408, 5512 through 5516, 5602 through 5603,

5608, 5903, 5907, 6001 through 6002, and

provided that the change is the result of a

fabric-making process.

5811................... The country of origin of a good classifiable

under heading 5811 is the country, territory,

or insular possession in which the fabric

comprising the good was formed by a fabric-

making process.

5901-5903.............. A change to heading 5901 through 5903 from any

other heading, including a heading within that

group, except from heading 5007, 5111 through

5113, 5208 through 5212, 5309 through 5311,

5407 through 5408, 5512 through 5516, 5803,

5806, 5808, and 6002, and provided that the

change is the result of a fabric-making

process.

5904................... (1) For goods that have been wholly assembled

by means of a lamination process, a change to

heading 5904 from any other heading, provided

that the change is the result of the good

being wholly assembled in a single country,

territory, or insular possession.

(2) For all other goods, the country of origin

of the good will be determined by application

of Sec. 102.21(c)(4) or, if the country of

origin cannot be determined under that

section, by application of Sec. 102.21(c)(5).

5905................... A change to heading 5905 from any other

heading, except from heading 5007, 5111

through 5113, 5208 through 5212, 5309 through

5311, 5407 through 5408, 5512 through 5516,

5603, 5803, 5806, 5808, and 6002, and provided

that the change is the result of a fabric-

making process.

5906-5907.............. A change to heading 5906 through 5907 from any

other chapter, except from heading 5007, 5111

through 5113, 5208 through 5212, 5309 through

5311, 5407 through 5408, 5512 through 5516,

5803, 5806, 5808, and 6002, and provided that

the change is the result of a fabric-making

process.

5908................... (1) Except for yarns, twine, cord, and braid, a

change to heading 5908 from any other heading,

except from heading 5007, 5111 through 5113,

5208 through 5212, 5309 through 5311, 5407

through 5408, 5512 through 5516, 5801 through

5802, 5806, 5808, and 6001 through 6002.

(2) For yarns, twine, cord, and braid:

(a) If the good is of continuous filaments,

including strips, a change to heading 5908

from any other heading, except from heading

5001 through 5007, 5401 through 5406, and 5501

through 5502, and provided that the change is

the result of an extrusion process; or

(b) If the good is of staple fibers, a change

to heading 5908 from any other heading, except

from heading 5106 through 5110, 5204 through

5207, 5306 through 5308, and 5508 through

5511, and 5605 through 5607, and provided that

the change is the result of a spinning

process.

5909................... A change to heading 5909 from any other

chapter, except from heading 5007, 5111

through 5113, 5208 through 5212, 5309 through

5311, 5407 through 5408, 5512 through 5516,

5603, 5801 through 5804, 5806, 5808, and 6001

through 6002, and provided that the good does

not contain armor or accessories of nontextile

material and provided that the change is the

result of a fabric-making process; or

A change to textile hosepiping with armor or

accessories of nontextile material, of heading

5909, from any heading, including a change

from another good of heading 5909, provided

that the change is the result of the good

being wholly assembled in a single country,

territory, or insular possession.

5910................... (1) For belts and belting of braid, rope, or

cord:

(a) If the good is of continuous filaments,

including strips, a change of those filaments,

including strips, to heading 5910 from any

other heading, except from heading 5001

through 5006, 5401 through 5406, and 5501

through 5502, and provided that the change is

the result of an extrusion process; or

(b) If the good is of staple fibers, a change

of those fibers to heading 5910 from any other

heading, except from heading 5106 through

5110, 5204 through 5207, 5306 through 5308,

and 5508 through 5511, and provided that the

change is the result of a spinning process.

(2) For fabric belting and belts, not braids

and not combined with nontextile components,

whether or not reinforced with metal or other

material, a change to heading 5910 from any

other heading, except from heading 5007, 5111

through 5113, 5208 through 5212, 5309 through

5311, 5407 through 5408, 5512 through 5516,

5602 through 5603, 5801 through 5804, 5806,

5808 through 5809, and 6001 through 6002, and

provided the change is the result of a fabric-

making process.

(3) For fabric belts, including belts of

braided materials, combined with nontextile

components, whether or not reinforced with

metal or other material, a change to heading

5910 from any heading, including a change from

another good of heading 5910, provided that

the change is the result of the good being

wholly assembled in a single country,

territory, or insular possession.

5911.10-5911.20........ A change to subheading 5911.10 through 5911.20

from any other heading, except from heading

5007, 5111 through 5113, 5208 through 5212,

5309 through 5311, 5407 through 5408, 5512

through 5516, 5602 through 5603, 5801 through

5804, 5806, and 6001 through 6002, and

provided that the change is the result of a

fabric-making process.

5911.31-5911.32........ (1) For goods not combined with nontextile

components, a change to subheading 5911.31

through 5911.32 from any other heading, except

from heading 5007, 5111 through 5113, 5208

through 5212, 5309 through 5311, 5407 through

5408, 5512 through 5516, 5602 through 5603,

5801 through 5804, 5806, and 6001 through

6002, and provided that the change is the

result of a fabric-making process.

(2) For goods combined with nontextile

components, a change to subheading 5911.31

through 5911.32 from any other heading,

provided that the change is the result of the

good being wholly assembled in single country,

territory, or insular possession.

[[Page 46202]]

5911.40................ A change to subheading 5911.40 from any other

heading, except from heading 5007, 5111

through 5113, 5208 through 5212, 5309 through

5311, 5407 through 5408, 5512 through 5516,

5602 through 5603, 5801 through 5804, 5806,

and 6001 through 6002, and provided that the

change is the result of a fabric-making

process.

5911.90................ (1) For goods of yarn, rope, cord, or braid:

(a) If the good is of continuous filaments,

including strips, a change of those filaments,

including strips, to subheading 5911.90 from

any other heading, except from heading 5001

through 5006, 5401 through 5406, and 5501

through 5502, and provided that the change is

the result of an extrusion process; or

(b) If the good is of staple fibers, a change

of those fibers to subheading 5911.90 from any

other heading, except from heading 5106

through 5110, 5204 through 5207, 5306 through

5308, and 5508 through 5511, and provided that

the change is the result of a spinning

process.

(2) If the good is a fabric, a change to

subheading 5911.90 from any other heading,

except from heading 5007, 5111 through 5113,

5208 through 5212, 5309 through 5311, 5407

through 5408, 5512 through 5516, 5602 through

5603, 5801 through 5804, 5806, 5809, and 6001

through 6002, and provided that the change is

the result of a fabric-making process.

(3) If the good is a made up article other than

a good of yarn, rope, cord, or braid, a change

to subheading 5911.90 from any heading,

including a change from another good of

heading 5911, provided that the change is the

result of the good being wholly assembled in a

single country, territory, or insular

possession.

6001-6002.............. A change to heading 6001 through 6002 from any

heading outside that group, provided that the

change is the result of a fabric-making

process.

6101-6117.............. (1) If the good is not knit to shape and

consists of two or more component parts, a

change to an assembled good of heading 6101

through 6117 from unassembled components,

provided that the change is the result of the

good being wholly assembled in a single

country, territory, or insular possession.

(2) If the good is not knit to shape and does

not consist of two or more component parts, a

change to heading 6101 through 6117 from any

heading outside that group, except from

heading 5007, 5111 through 5113, 5208 through

5212, 5309 through 5311, 5407 through 5408,

5512 through 5516, 5806, 5809 through 5811,

5903, 5906 through 5907, and 6001 through

6002, and subheading 6307.90, and provided

that the change is the result of a fabric-

making process.

(3) If the good is knit to shape, a change to

heading 6101 through 6117 from any heading

outside that group, provided that the knit-to-

shape components are knit in a single country,

territory, or insular possession.

6201-6208.............. (1) If the good consists of two or more

component parts, a change to an assembled good

of heading 6201 through 6208 from unassembled

components, provided that the change is the

result of the good being wholly assembled in a

single country, territory, or insular

possession.

(2) If the good does not consist of two or more

component parts, a change to heading 6201

through 6208 from any heading outside that

group, except from heading 5007, 5111 through

5113, 5208 through 5212, 5309 through 5311,

5407 through 5408, 5512 through 5516, 5602

through 5603, 5801 through 5806, 5809 through

5811, 5903, 5906 through 5907, and 6217, and

subheading 6307.90, and provided that the

change is the result of a fabric-making

process.

6209.10.0000-6209.20.50 (1) If the good consists of two or more

35. component parts, a change to an assembled good

of subheading 6209.10.0000 through

6209.20.5035 from unassembled components,

provided that the change is the result of the

good being wholly assembled in a single

country, territory, or insular possession.

(2) If the good does not consist of two or more

component parts, a change to subheading

6209.10.0000 through 6209.20.5035 from any

other heading, except from heading 5007, 5111

through 5113, 5208 through 5212, 5309 through

5311, 5407 through 5408, 5512 through 5516,

5602 through 5603, 5801 through 5806, 5809

through 5811, 5903, 5906 through 5907, and

6217, and subheading 6307.90, and provided

that the change is the result of a fabric-

making process.

6209.20.5040........... The country of origin of a good classifiable in

subheading 6209.20.5040 is the country,

territory, or insular possession in which the

fabric comprising the good was formed by a

fabric-making process.

6209.20.5045-6209.90.90 (1) If the good consists of two or more

00. component parts, a change to an assembled good

of subheading 6209.20.5045 through

6209.90.9000 from unassembled components,

provided that the change is the result of the

good being wholly assembled in a single

country, territory, or insular possession.

(2) If the good does not consist of two or more

component parts, a change to subheading

6209.20.5045 through 6209.90.9000 from any

other heading, except from heading 5007, 5111

through 5113, 5208 through 5212, 5309 through

5311, 5407 through 5408, 5512 through 5516,

5602 through 5603, 5801 through 5806, 5809

through 5811, 5903, 5906 through 5907, and

6217, and subheading 6307.90, and provided

that the change is the result of a fabric-

making process.

6210-6212.............. (1) If the good consists of two or more

component parts, a change to an assembled good

of heading 6210 through 6212 from unassembled

components, provided that the change is the

result of the good being wholly assembled in a

single country, territory, or insular

possession.

(2) If the good does not consist of two or more

component parts, a change to heading 6210

through 6212 from any heading outside that

group, except from heading 5007, 5111 through

5113, 5208 through 5212, 5309 through 5311,

5407 through 5408, 5512 through 5516, 5602

through 5603, 5801 through 5806, 5809 through

5811, 5903, 5906 through 5907, 6001 through

6002, and 6217, and subheading 6307.90, and

provided that the change is the result of a

fabric-making process.

6213-6214.............. The country of origin of a good classifiable

under heading 6213 through 6214 is the

country, territory, or insular possession in

which the fabric comprising the good was

formed by a fabric-making process.

6215-6217.............. (1) If the good consists of two or more

component parts, a change to an assembled good

of heading 6215 through 6217 from unassembled

components, provided that the change is the

result of the good being wholly assembled in a

single country, territory, or insular

possession.

(2) If the good does not consist of two or more

component parts, a change to heading 6215

through 6217 from any heading outside that

group, except from heading 5007, 5111 through

5113, 5208 through 5212, 5309 through 5311,

5407 through 5408, 5512 through 5516, 5602

through 5603, 5801 through 5806, 5809 through

5811, 5903, 5906 through 5907, and 6217, and

subheading 6307.90, and provided that the

change is the result of a fabric-making

process.

[[Page 46203]]

6301-6306.............. The country of origin of a good classifiable

under heading 6301 through 6306 is the

country, territory, or insular possession in

which the fabric comprising the good was

formed by a fabric-making process.

6307.10................ The country of origin of a good classifiable

under subheading 6307.10 is the country,

territory, or insular possession in which the

fabric comprising the good was formed by a

fabric-making process.

6307.20................ A change to subheading 6307.20 from any other

heading, provided that the change is the

result of the good being wholly assembled in a

single country, territory, or insular

possession.

6307.90................ The country of origin of a good classifiable

under subheading 6307.90 is the country,

territory, or insular possession in which the

fabric comprising the good was formed by a

fabric-making process.

6308................... The country of origin of a good classifiable

under heading 6308 is the country, territory,

or insular possession in which the woven

fabric component of the good was formed by a

fabric-making process.

6309-6310.............. The country of origin of a good classifiable

under heading 6309 through 6310 is the

country, territory, or insular possession in

which the good was last collected and packaged

for shipment.

6405.20.60............. A change to subheading 6405.20.60 from any

other heading, provided that the change is the

result of the good being wholly assembled in a

single country, territory, or insular

possession.

6406.10.77............. (1) If the good consists of two or more

components, a change to subheading 6406.10.77

from any other heading, provided that the

change is the result of the good being wholly

assembled in a single country, territory, or

insular possession.

(2) If the good does not consist of two or more

components, a change to subheading 6406.10.77

from any other heading, except from heading

5007, 5111 through 5113, 5208 through 5212,

5309 through 5311, 5407 through 5408, 5512

through 5516, 5602 through 5603, 5608, 5801

through 5804, 5806, 5808 through 5810, 5903,

5906 through 5907, and 6001 through 6002, and

provided that the change is the result of a

fabric-making process.

6406.10.90............. (1) If the good consists of two or more

components, a change to subheading 6406.10.90

from any other heading, provided that the

change is the result of the good being wholly

assembled in a single country, territory, or

insular possession.

(2) If the good does not consist of two or more

components, a change to subheading 6406.10.90

from any other heading, except from heading

5007, 5111 through 5113, 5208 through 5212,

5309 through 5311, 5407 through 5408, 5512

through 5516, 5602 through 5603, 5608, 5801

through 5804, 5806, 5808 through 5810, 5903,

5906 through 5907, and 6001 through 6002, and

provided that the change is the result of a

fabric-making process.

6406.99.15............. (1) If the good consists of two or more

components, a change to subheading 6406.99.15

from any other heading, provided that the

change is the result of the good being wholly

assembled in a single country, territory, or

insular possession.

(2) If the good does not consist of two or more

components, a change to subheading 6406.99.15

from any other heading, except from heading

5007, 5111 through 5113, 5208 through 5212,

5309 through 5311, 5407 through 5408, 5512

through 5516, 5602 through 5603, 5608, 5801

through 5804, 5806, 5808 through 5810, 5903,

5906 through 5907, and 6001 through 6002, and

provided that the change is the result of a

fabric-making process.

6501................... (1) If the good consists of two or more

components, a change to heading 6501 from any

other heading, provided that the change is the

result of the good being wholly assembled in a

single country, territory, or insular

possession.

(2) If the good does not consist of two or more

components, a change to heading 6501 from any

other heading, except from heading 5602, and

provided that the change is the result of a

fabric-making process.

6502................... (1) If the good consists of two or more

components, a change to heading 6502 from any

other heading, provided that the change is the

result of the good being wholly assembled in a

single country, territory, or insular

possession.

(2) If the good does not consist of two or more

components, a change to heading 6502 from any

other heading, except from heading 5007, 5111

through 5113, 5208 through 5212, 5407 through

5408, 5512 through 5516, 5602 through 5603,

5608, 5801 through 5804, 5806, 5808 through

5810, 5903, 5906 through 5907, and 6001

through 6002, and provided that the change is

the result of a fabric-making process.

6503................... (1) If the good consists of two or more

components, a change to heading 6503 from any

other heading, provided that the change is the

result of the good being wholly assembled in a

single country, territory, or insular

possession.

(2) If the good does not consist of two or more

components, a change to heading 6503 from any

other heading, except from heading 5602, and

provided that the change is the result of a

fabric-making process.

6504................... (1) If the good consists of two or more

components, a change to heading 6504 from any

other heading, provided that the change is the

result of the good being wholly assembled in a

single country, territory, or insular

possession.

(2) If the good does not consist of two or more

components, a change to heading 6504 from any

other heading, except from heading 5007, 5111

through 5113, 5208 through 5212, 5407 through

5408, 5512 through 5516, 5602 through 5603,

5608, 5801 through 5804, 5806, 5808 through

5810, 5903, 5906 through 5907, and 6001

through 6002, and provided that the change is

the result of a fabric-making process.

6505.90................ (1) If the good consists of two or more

components, a change to subheading 6505.90

from any other heading, provided that the

change is the result of the good being wholly

assembled in a single country, territory, or

insular possession.

(2) If the good does not consist of two or more

components, a change to subheading 6505.90

from any other heading, except from heading

5007, 5111 through 5113, 5208 through 5212,

5407 through 5408, 5512 through 5516, 5602

through 5603, 5608, 5801 through 5804, 5806,

5808 through 5811, 5903, 5906 through 5907,

and 6001 through 6002, and provided that the

change is the result of a fabric-making

process.

6601.10-6601.91........ A change to subheading 6601.10 through 6601.91

from any other heading, provided that the

change is the result of the good being wholly

assembled in a single country, territory, or

insular possession.

7019.10.15............. (1) If the good is of filaments, a change to

subheading 7019.10.15 from any other heading,

provided that the change is the result of an

extrusion process.

(2) If the good is of staple fibers, a change

to subheading 7019.10.15 from any other

subheading, except from subheading 7019.10.30

through 7019.10.90 and 7019.31 through

7019.90, and provided that the change is the

result of a spinning process.

[[Page 46204]]

7019.10.28............. (1) If the good is of filaments, a change to

subheading 7019.10.28 from any other heading,

provided that the change is the result of an

extrusion process.

(2) If the good is of staple fibers, a change

to subheading 7019.10.28 from any other

subheading, except from subheading 7019.10.30

through 7019.10.90 and 7019.31 through

7019.90, and provided that the change is the

result of a spinning process.

7019.20................ A change to subheading 7019.20 from any other

heading, provided that the change is the

result of a fabric-making process.

8708.21................ (1) For seat belts not combined with nontextile

components, a change to subheading 8708.21

from any other heading, except from heading

5007, 5111 through 5113, 5208 through 5212,

5309 through 5311, 5407 through 5408, and 5512

through 5516, and provided that the change is

the result of a fabric-making process.

(2) For seat belts combined with nontextile

components, a change to an assembled good of

subheading 8708.21 from unassembled

components, provided that the change is the

result of the good being wholly assembled in a

single country, territory, or insular

possession.

8804................... (1) If the good consists of two or more

component parts, a change to an assembled good

of heading 8804 from unassembled components,

provided that the change is the result of the

good being wholly assembled in a single

country, territory, or insular possession.

(2) If the good does not consist of two or more

component parts, a change to heading 8804 from

any other heading, except from heading 5007,

5111 through 5113, 5208 through 5212, 5309

through 5311, 5407 through 5408, 5512 through

5516, 5603, 5801 through 5804, 5806, 5809

through 5811, 5903, 5906 through 5907, and

6001 through 6002, and subheading 6307.90, and

provided that the change is the result of a

fabric-making process.

9113.90.40............. (1) If the good consists of two or more

component parts, a change to an assembled good

of subheading 9113.90.40 from unassembled

components, provided that the change is the

result of the good being wholly assembled in a

single country, territory, or insular

possession.

(2) If the good does not consist of two or more

component parts, a change to subheading

9113.90.40 from any other heading, except from

heading 5007, 5111 through 5113, 5208 through

5212, 5309 through 5311, 5407 through 5408,

5512 through 5516, 5603, 5801 through 5802,

5806, 5809, 5903, 5906 through 5907, and 6001

through 6002, and subheading 6307.90, and

provided that the change is the result of a

fabric-making process.

9404.90................ The country of origin of a good classifiable

under subheading 9404.90 is the country,

territory, or insular possession in which the

fabric comprising the good was formed by a

fabric-making process.

9502.91................ A change to an assembled good of subheading

9502.91 from unassembled components, provided

that the change is the result of the good

being wholly assembled in a single country,

territory, or insular possession.

9612.10.9010........... A change to subheading 9612.10.9010 from any

other heading, except from heading 5007, 5111

through 5113, 5208 through 5212, 5309 through

5311, 5407 through 5408, 5512 through 5516,

5603, 5806, 5903, 5906 through 5907, and 6002,

and provided that the change is the result of

a fabric-making process.

------------------------------------------------------------------------

PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

1. The authority citation for Part 178 continues to read as

follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.

2. Section 178.2 is amended by adding to the table a new listing

for Sec. 10.25 to read as follows:

Sec. 178.2 Listing of OMB control numbers.

------------------------------------------------------------------------

OMB control

19 CFR Section Description No.

------------------------------------------------------------------------

* * * * *

Sec. 10.25........ Declaration by foreign assembler and 1515-0207

endorsement by importer that articles

were assembled in whole or in part

from textile components cut to shape

in the U.S.

* * * * *

------------------------------------------------------------------------

George J. Weise,

Commissioner of Customs.

Approved: August 16, 1995.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 95-21905 Filed 9-1-95; 8:45 am]

BILLING CODE 4820-02-P