Country of Origin Marking

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 134

[T.D. 97-72]

RIN 1515-AB82

Country of Origin Marking

AGENCY: Customs Service, Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This document amends the Customs Regulations to ease the

requirement that whenever words appear on imported articles indicating

the name of a geographic location other than the true country of origin

of the article, the country of origin marking always must appear in

close proximity and in comparable size lettering to those words

preceded by the words ``Made in,'' ``Product of,'' or other words of

similar meaning. Customs believes that, consistent with the statutory

requirements of 19 U.S.C. 1304, the country of origin marking only

needs to satisfy these requirements if the name of the other geographic

location may mislead or deceive the ultimate purchaser as to the actual

country of origin.

EFFECTIVE DATE: September 19, 1997.

FOR FURTHER INFORMATION CONTACT: Craig Walker, Office of Regulations

and Rulings, 202-482-6980.

SUPPLEMENTARY INFORMATION:

Background

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304)

provides that, unless excepted, every article of foreign origin

imported into the United States shall be marked in a conspicuous place

as legibly, indelibly, and permanently as the nature of the article (or

container) will permit, in such a manner as to indicate to the ultimate

purchaser in the United States the English name of the country of

origin of the article. Congressional intent in enacting 19 U.S.C. 1304

was that the ultimate purchaser should be able to know by an inspection

of the marking on the imported goods the country of which the goods are

a product. Part 134, Customs Regulations (19 CFR part 134), implements

the country of origin marking requirements and exceptions to 19 U.S.C.

1304.

Section 134.46, Customs Regulations (19 CFR 134.46) provides that

in any case in which the words ``United States'' or ``American,'' the

letters ``U.S.A.,'' any variation of such words or letters, or the name

of any city or locality in the United States, or the name of any

foreign country or locality other than the country or locality in which

the article was manufactured or produced, appear on an imported article

or its container, there shall appear, legibly and permanently, in close

proximity to such words, letters or name, and in at least a comparable

size, the name of the country of origin preceded by ``Made in,''

``Product of,'' or other words of similar meaning.

Section 134.46 was promulgated pursuant to the statutory authority

of 19 U.S.C. 1304(a)(2), which provides that the Secretary of the

Treasury may by regulations require the addition of any words or

symbols which may be appropriate to prevent deception or mistake as to

the origin of the article or as to the origin of any other article with

which such imported article is usually combined subsequent to

importation but before delivery to an ultimate purchaser.

A strict application of Sec. 134.46 would require that in any case

in which a non-origin locality reference appears on an imported article

or its container, the actual country of origin of the article must

appear in close proximity and in comparable size lettering to the

locality reference preceded by the words ``Made in,'' ``Product of,''

or other words of similar meaning.

Because Customs believes that the strict requirements of

Sec. 134.46 are not always necessary to ``prevent deception or mistake

as to the origin of the article'' in accordance with 19 U.S.C. 1304,

Customs proposed to modify Sec. 134.46 in a Notice of Proposed

Rulemaking published in the Federal Register (60 FR 57559) on November

16, 1995.

In that document, Customs also proposed to remove Sec. 134.36(b),

which provides that an exception from marking shall not apply to any

article or retail container bearing any words, letters, names or

symbols described in Sec. 134.46 or Sec. 134.47 which imply that an

article was made or produced in a country other than the actual country

of origin. Since the special marking requirements of Sec. 134.46, as

proposed to be amended, would be triggered only when the the marking

appearing on an imported article or its container is capable of

misleading or deceiving an ultimate purchaser as to the actual country

of origin of the article, Sec. 134.36(b), which serves the same

purpose, would be redundant and no longer needed.

The proposal to modify Sec. 134.46 reflected Customs practice in

applying the regulation. Customs has applied a less stringent standard

in determining whether the country of origin marking appearing on an

imported article or its container is acceptable. That is, Customs takes

into account the question of whether the presence of words or symbols

on an imported article or its container can mislead or deceive the

ultimate purchaser as to the actual country of origin of the article.

Consequently, if a non-origin locality reference appears on an imported

article or its container, Customs applies the special marking

requirements of Sec. 134.46 only if it finds that the reference may

mislead or deceive the ultimate purchaser as to the actual country of

origin of the imported article. If Customs concludes that the non-

origin locality reference would not mislead or deceive an ultimate

purchaser as to the actual country of origin of the imported article,

Customs' policy is that the special marking requirements of Sec. 134.46

are not triggered, and the origin marking only needs to satisfy the

general requirements of permanency, legibility and conspicuousness

under 19 U.S.C. 1304 and 19 CFR part 134. This less stringent

application is evidenced in

[[Page 44212]]

numerous Customs headquarters ruling letters.

Analysis of Comments

A total of 17 entities responded to the proposal. Fourteen

respondents supported the proposal, although some suggested certain

changes. Three commenters opposed the amendment.

Comments Supporting Customs Proposal

Comments: One commenter stated that the proposed amendment to

Sec. 134.46 would provide additional flexibility in accommodating the

country of origin marking on the labels of its food products, many of

which have very limited surface areas available for labelling because

of their size (e.g., small bags of candy, snacks, candy bars, gum).

Two commenters stated that references to places other than the

country of origin are not necessarily misleading. The context must be

considered. These two commenters believe that the proposed amendment

would bring the country of origin marking regulations into closer

conformity with the purpose and congressional intent of section 1304

and would serve the goal of informed compliance by bringing the country

of origin marking regulations into closer conformity with positions

taken in certain Customs rulings.

Two other commenters stated that if the proposed amendment is

adopted, all rulings which require proximity even when there is no

realistic possibility of confusion should be revoked. They specifically

mentioned T. D. 86-129 of June 26, 1996, which currently requires that

the country of origin statement on footwear and its packaging must

appear in close proximity to any non-origin reference, even in

circumstances where the non-origin reference would not be misleading or

deceptive to the consumer. These commenters asked why shoe boxes, for

example, should be held to a higher standard of compliance than other

products, such as wearing apparel, where a design/decoration exception

can be used for not applying the stricter marking requirements of

Sec. 134.46.

Another respondent believes that the proposal will enhance

harmonization between the United States Customs Service and the Bureau

of Alcohol, Tobacco and Firearms (ATF) regarding country of origin

labelling requirements of imported foreign origin alcoholic beverages.

ATF labelling specialists are aware of the general Customs requirement

that country of origin markings should be located on all labels of

imported foreign alcoholic beverages and that these markings should

meet the general requirements of permanency, legibility and

conspicuousness. However, ATF labelling specialists are not usually

aware of the specifics of Customs regulations or Customs rulings which

interpret Customs regulations. Therefore, ATF labelling specialists may

approve a label for ATF purposes which is not in strict accordance with

Customs requirements.

Finally, one commenter noted its belief that the Customs proposal

is consistent with the World Trade Organization Rules, Article 4.5.1.

of the Codex Standard for the labelling of prepackaged foods (Codes

STAN 1-1985, Rev. 1-1995). This rule provides that the ``country of

origin shall be declared if its omission would mislead or deceive the

consumer''. According to the Codex standard, it is not required that

the country of origin be marked in close proximity to the words

indicating a geographic non-origin location.

Response: Customs agrees with the above comments. Any recipient of

a prior ruling which may be inconsistent with this final rule should

request reconsideration of such ruling in the context of the amended

Sec. 134.46.

Comments Supporting Customs Proposal With Suggested Changes

Comment: One commenter supports Customs proposal but suggests that

Sec. 134.46 be amended to read that a country of origin mark must

appear in close proximity to a non-origin geographical reference only

if the reference ``will mislead or deceive the ultimate purchaser''.

This commenter states that the words ``may mislead or deceive'' used in

the proposed regulation will lead to subjective and differing

interpretations. He suggests that one way of remedying this problem is

to permit an importer to submit statistically significant studies

concerning consumer perception of a particular non-origin geographical

reference in order to demonstrate that the reference does not mislead

or deceive the average consumer.

Another respondent supporting the proposal suggests that the word

``may'' be replaced by ``is likely to'' in the final rule if adopted.

This will insure that the Sec. 134.46 stricter marking requirements

will be imposed not when there is a mere possibility, but rather a

likelihood, of misleading or deceiving the ultimate purchaser.

Response: Customs does not agree that the word ``may'' as proposed

in the amendment to Sec. 134.46 should be changed to ``will'' or ``is

likely to.'' Customs believes that the ultimate purchaser is provided

with the greatest assurance and protection against being misled or

deceived by non-origin marks by granting Customs the discretion to

decide on a case-by-case basis whether a mark ``may mislead or deceive

an ultimate purchaser as to the actual country of origin.'' As a

result, Customs is able to be more flexible in deciding not to apply

the stricter marking requirements of Sec. 134.46 in every instance

where a mark has a non-origin type reference. The word ``will'' or the

phrase ``is likely to'' could inhibit accomplishment of these goals.

Therefore, Customs does not believe that a change in the wording of the

proposed amendment is necessary.

Comment: One commenter supports Customs proposal, but suggests that

if Customs adopts the proposal, it should also provide an exception for

manhole covers, rings, frames and assemblies thereof covered by 19

U.S.C. 1304(e). This commenter believes that in the absence of such an

exclusion from the scope of this regulation, it possibly could be

interpreted as ignoring the statutory requirements of section 1304(e).

Response: Section 1304(e) of title 19 United States Code provides

that:

No exception may be made under subsection (a)(3) of this section

with respect to manhole rings or frames, covers, and assemblies

thereof each of which shall be marked on the top surface with the

English name of the country of origin by means of die stamping,

cast-in-mold lettering, etching, engraving, or an equally permanent

method of marking.

Since the special country of origin marking requirements for these

articles in 19 U.S.C. 1304(e) are statutory, rather than regulatory as

the requirements of Sec. 134.46 are, the proposed change, if adopted,

would have no effect on these statutory requirements. The amendment of

Sec. 134.46 will not implement any of the marking exceptions under 19

U.S.C. 1304(a)(3), and therefore will have no impact upon the general

marking requirements of Sec. 1304(e). If the proposed amendment to

Sec. 134.46 is adopted, these articles still must satisfy the statutory

marking requirements of Sec. 1304(e), regardless of Sec. 134.46

marking. Therefore, Customs does not agree with the suggestion.

Comment: One commenter supports Customs proposal but also

encourages Customs to extend this initiative to situations arising

under Sec. 134.47 (displaying the name of a place other than the true

country of origin as part of a trademark, trade name or souvenir). The

commenter states that Customs practice in considering whether to apply

Sec. 134.47 also involves an analysis of

[[Page 44213]]

potential consumer confusion arising from the use of a trademark

displaying the name of a place other than the country of origin. Thus

the proposed amendment would seem logically applicable to Sec. 134.47.

Furthermore, since Customs in its Notice views Sec. 134.36(b) as aimed

essentially at combating confusing, misleading, or deceptive marking,

and as section 134.36(b) in turn identifies as equally confusing,

misleading or deceptive those types of markings defined both by

Secs. 134.46 and 134.47, it would seem that Sec. 134.47 is as good a

candidate for the proposed amendment as is Sec. 134.46. Both are

equally aimed at avoiding confusion to the ultimate purchaser.

Response: Customs agrees with the commenter that Customs proposal

of applying the stricter marking requirements of Sec. 134.46 only if

the non-origin reference ``may mislead or deceive the ultimate

purchaser as to the actual country or origin'' should be applied to

trademarks, trade names or souvenir markings which depict non-origin

references. However, Customs does not agree that this change can be

made under the existing proposal, but that a new proposal is required.

Therefore, Customs will issue a new notice of proposed rulemaking

proposing to either amend Sec. 134.47 consistent with the determination

in this document or to remove Sec. 134.47 since Sec. 134.46, as

amended, will effectively apply to any non-origin type reference,

including those which are part of a trademark, trade name or souvenir

marking.

Comment: One commenter suggests that Customs in its final rule set

forth some examples of cases where the non-origin reference would

likely mislead or deceive the ultimate purchaser as to the actual

country of origin of the article.

Response: Customs agrees that samples of cases where the non-origin

type reference ``may mislead or deceive the ultimate purchaser as to

the actual country of origin of the article'' would assist the

importing community in better understanding the proper use of

Sec. 134.46. Therefore Customs offers the following examples of non-

origin markings which Customs consistently has ruled to be misleading

or deceiving to an ultimate purchaser, thus triggering the requirements

of Sec. 134.46 that the country of origin appear in close proximity and

in comparable size lettering to the non-origin marking preceded by the

words ``Made in,'' ``Product of,'' or other words of similar meaning.

In each of these examples, the country of origin of the imported

article is foreign.

Example 1. ``A product of ABC Corp., Chicago, Illinois.''

Example 2. ``Manufactured by ABC Corp., California, U.S.A.''

Example 3. ``Manufactured and Distributed by ABC, Inc., Denver,

Colorado.''

Example 4. ``Packed for ABC Corp., Greenville, South Carolina.''

Comments Opposing Customs Proposed Regulation

Comment: One commenter who opposed Customs proposed regulation

believes that finalization of the proposed amendments would be ill-

advised. This commenter urges Customs either to withdraw the proposed

amendment in its entirety or to modify the amendment to maintain the

existing proximity and lettering comparability requirements in cases

where the reference to the U.S. is made in the context of a statement

relating to any aspect of the production or distribution of the product

(e.g., ``Designed in U.S.A.,'' ``Made for XYZ Corp., California,

U.S.A.,'' or ``Distributed by ABC, Inc., Colorado, U.S.A.'').

Specifically, the commenter is concerned that the FTC's stringent

policy of generally limiting the use of ``Made in U.S.A.'' claims to

those products that are ``all or virtually all'' of U.S. content

effectively prohibits U.S. firms which add a substantial percentage of

a product's value in the U.S. from labelling it as U.S. origin. At the

same time, importers are regularly permitted by Customs to label wholly

foreign-made products with inconspicuous statements of the foreign

origin, although these products may be festooned with American flags,

brand names which expressly refer to the U.S., or statements (e.g.,

``Designed in U.S.A.,'' ``Made for [U.S. importer's name and

address]''), which could mislead the consumer into assuming that the

article was produced in the U.S. The only way to ensure that such

statements regarding operations performed in the U.S. do not mislead

consumers is to insist that they be coupled with the required country

of origin marking in accordance with Sec. 134.46. Furthermore, if

Customs decides to proceed with the proposal or some variation of it,

Customs should do so only after the conclusion of the FTC's workshop

and the FTC's larger review proceeding, so that relevant information

concerning consumer perception gathered in the FTC proceeding can be

considered by Customs in connection with the proposed amendment to

Sec. 134.46.

Response: Customs agrees that references to the U.S. made in the

context of a statement relating to any aspect of the production or

distribution of the products, such as ``Designed in U.S.A.,'' ``Made

for XYZ Corp., California, U.S.A.,'' or ``Distributed by ABC Inc.,

Colorado, U.S.A.,'' are misleading to the ultimate purchaser and would

still require country of origin marking in accordance with Sec. 134.46,

even as amended by the proposal. Therefore, Customs disagrees with the

idea that these types of markings would be allowed under the proposed

amendment to Sec. 134.46. In the prior comment analysis, these types of

statements have been cited as examples of misleading and deceptive

statements triggering the special marking requirements of Sec. 134.46.

Also, Customs does not agree that it is necessary to consider the FTC's

review of consumer perception gathered during the FTC's ``Made in USA''

workshop in making its decision as to the issuance of the final rule

amending Sec. 134.46. Customs believes that determining whether a non-

origin type reference ``may mislead or deceive an ultimate purchaser as

to the actual origin of the article'' should be limited to the mark

itself and its effect on the ultimate purchaser, not based upon

extrinsic evidence of consumer perception. If Customs were required to

review information about consumer perception when making a

determination as to whether the non-origin reference may be misleading

or deceiving to the ultimate purchaser, rather than just reviewing the

mark itself as is Customs present practice, this could result in long

delays in merchandise being released.

Comment: One commenter opposing Customs proposal believes that

Customs should tighten the enforcement of the country of origin marking

regulations, rather than make them more lenient.

Response: Customs does not agree that adopting the proposed

amendment would make the marking requirements for imported foreign

articles more lenient. Customs has consistently applied the standard of

``whether the non-origin reference may mislead or deceive an ultimate

purchaser as to the actual origin'' in practice and in its rulings when

determining whether a non-origin type reference triggers the special

marking requirements of Sec. 134.46. As a general rule, whenever

Sec. 134.46 is applicable, the article already contains at least one

country of origin marking. This section has triggered additional

markings on an automatic basis. The only difference adopting the

proposed amendment will make is that the standard that Customs has been

applying will be codified so the public will be informed and have

knowledge of it. The intent of the marking statute is to indicate to

the

[[Page 44214]]

ultimate purchaser the country of origin of a foreign article and at

the same time protect an ultimate purchaser from misleading or

deceptive non-origin type references. The proposed amendment to

Sec. 134.46 effectively accomplishes these goals. It also gives the

Customs field offices discretion as to whether the stringent marking

requirements of Sec. 134.46 should be applied in situations where non-

origin type references appearing on the article or its container are

clearly not misleading or deceiving as to the actual origin of the

imported article.

Comment: Another commenter opposes Customs proposed regulation

because he believes that the proposed change would open the door to

litigation due to differing opinions as to what is ``misleading or

deceiving.'' This commenter observes that every time Customs sends out

a Notice of Redelivery for a marking violation for merchandise which is

marked with a country or locality other than the country or locality in

which the merchandise was manufactured or produced, the recipient of

that Notice will respond that the marking ``will'' not mislead or

deceive the ultimate purchaser in the U.S.

Response: Customs disagrees that the proposal would open the door

to litigation due to the differing opinions as to what is ``misleading

or deceiving.'' The proposed amendment applies a standard based on

whether the non-origin type reference ``may mislead or deceive an

ultimate purchaser as to the actual country of origin of the article''

rather than ``will'' as the commenter mistakenly states, so that every

case does not become a question of fact, as the commenter suggests.

Conclusion

In accordance with the analysis of comments above and after further

consideration, Customs concludes that the proposed amendments to

Secs. 134.36(b) and 134.46 should be adopted as proposed. It is noted

that certain editorial changes are made to Sec. 134.46 which are not

substantive in effect. It is also noted that Customs intends to issues

a new Notice of Proposed Rulemaking regarding Sec. 134.47, as discussed

earlier.

Regulatory Reflexibility Act and Executive Order 12866

Pursuant to the provisions of the Regulatory Flexibility Act (5

U.S.C. 601 et seq.), because this regulation eases the country of

origin marking requirements and thus reduces the regulatory burden, it

is certified that the regulations will not have a significant economic

impact on a substantial number of small entities. Accordingly, the

regulations are not subject to the regulatory analysis or other

requirements of 5 U.S.C. 603 and 604.

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

regulatory action'' as specified in Executive Order 12866.

Drafting Information: The principal author of this document was

Janet L. Johnson, Regulations Branch. However, personnel from other

offices participated in its development.

List of Subjects in Part 134

Customs duties and inspection, Labeling, Packaging and containers.

Amendment to the Regulations

For the reasons set forth in the preamble, part 134 of the Customs

Regulations (19 CFR Part 134) is amended as set forth below.

PART 134--COUNTRY OF ORIGIN MARKING

1. The general authority citation for part 134 continues to read as

follows:

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

Harmonized Tariff Schedule of the United States), 1304, 1624.

Sec. 134.36 [Amended]

2. Section 134.36 is amended by revising its heading to read

``Inapplicablity of Marking Exception for Articles Processed by

Importer'', removing the designation and heading of paragraph (a) and

removing paragraph (b).

3. Section 134.46 is revised to read as follows:

Sec. 134.46 Marking when name of country or locality other than

country of origin appears.

In any case in which the words ``United States,'' or ``American,''

the letters ``U.S.A.,'' any variation of such words or letters, or the

name of any city or location in the United States, or the name of any

foreign country or locality other than the country or locality in which

the article was manufactured or produced appear on an imported article

or its container, and those words, letters or names may mislead or

deceive the ultimate purchaser as to the actual country of origin of

the article, there shall appear legibly and permanently in close

proximity to such words, letters or name, and in at least a comparable

size, the name of the country of origin preceded by ``Made in,''

``Product of,'' or other words of similar meaning.

George J. Weise,

Commissioner of Customs.

Approved: July 1, 1997.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 97-22034 Filed 8-19-97; 8:45 am]

BILLING CODE 4820-02-U