Details of CBP’s Part 102 Origin Changes for Pipe, Cards, Optical Fiber, Rice, Textiles; Nixed Uniform Rules

This final rule also announces CBP’s decision not to move forward right with the major thrust of its 2008 proposed rule, to uniformly apply the Part 102 rules of origin to all country of origin and "product of" determinations, with certain exceptions.

Final Rule’s Changes to Specific Part 102 Rules of Origin

The final rule amends the country of origin rules in Part 102 for five product areas: pipe fittings and flanges, greeting cards, glass optical fiber, rice preparations, and certain textile and apparel products:

Pipe Fittings and Flanges -- Change for Consistency with Court Decisions, Etc.

The final rule amends the tariff shift rule in 19 CFR 102.20(n) for goods classified in Harmonized Tariff Schedule (HTS) headings 7301 through 7307 to provide for a change within heading 7307 from fitting forgings or flange forgings to fittings or flanges made ready for commercial use by certain processing, including beveling, bore threading, center or step boring, face machining, heat treating, recoining or resizing, taper boring, machining ends or surfaces other than a gasket face, drilling bolt holes, and burring or shot blasting.

CBP states that the change is consistent with the 1970 decision in Midwood Industries, Inc. v. United States and is appropriate following further consideration of the 2000 judicial guidance in Boltex Manufacturing Co. v. United States and comments received in response to a proposed modification/revocation of rulings published in the Customs Bulletin and Decisions on November 21, 2001.

Greeting Cards -- Adds Rule on Country of Initial Printing of Text

The tariff shift rule in 19 CFR 102.20(j) for goods classified in HTS headings 4901 through 4911, which includes printed greeting cards, is amended by creating a specific rule for heading 4909, providing for a change to that heading from any other heading except from heading 4911 when the change is a result of adding text. According to CBP, the effect of this change is to enable the country of origin of all printed greeting cards to be determined according to the country of initial printing of literary text, photographs, graphic designs, or illustrations. This change is also consistent with CBP practice in applying the substantial transformation standard to printed materials, as reflected in CBP’s administrative rulings.

Glass Optical Fiber -- Conforms with 1999 HQ Ruling

The final rule amends the tariff shift rule in 19 CFR 102.20(q) for HTS subheading 9001.10, which encompasses optical fibers and optical fiber bundles and cables, by providing for a change to subheading 9001.10 from any other subheading, except from subheading 8544.70, or glass preforms of heading 7002. CBP states that this change will conform the tariff shift rule to the determination in HQ 560660 (April 9, 1999), that no substantial transformation (and thus no change in origin) results for purposes of the country of marking statute (19 USC 1304) from the drawing of a glass preform into optical fiber.

Rice Preparations -- Conforms with 2006 HQ Ruling

The tariff shift rule in 19 CFR 102.20(d) is amended for HTS subheading 1904.90, which encompasses certain rice preparations, by providing for a change to subheading 1904.90 from any other heading, except from heading 1006, or wild rice of subheading 1008.90. According to CBP, this change will eliminate the inconsistency between the tariff shift rule and HQ 967925 (February 28, 2006), in which CBP held that no substantial transformation results for purposes of the country of origin marking statute when rice is processed with 2% water, 0.4% sunflower oil, 0.2% salt, and 0.4% soy lecithin, placed into cups and sealed, and thermally processed.

Fabrics and Body-Supporting Garments -- Alignment with Underlying Statute

In regard to the rules of origin for textile and apparel products set forth in 19 CFR 102.21, the final rule makes the following two amendments to properly align the rules with the language of the underlying statute, 19 USC 3592:

Adds language to ensure Ch. 59 fabrics derive origin where formed. First, the final rule amends 19 CFR 102.21(c)(3)(ii) by adding the words “fabrics of chapter 59 and” so that the amended text would read “Except for fabrics of chapter 59 and goods of heading. . .” This change has the effect of ensuring that fabrics of HTS Chapter 59 derive their country of origin from where the fabric is formed, consistent with 19 USC 3592(b)(1)(C).

Creates HTS 6212 rule to account for knit-to-shape bras, etc. The final rule also amends the tariff shift rule in 19 CFR 102.21(e) for goods classified in HTS headings 6210 through 6212, by creating a separate rule for heading 6212, which encompasses “brassieres, girdles, corsets, braces, suspenders, garters and similar articles and parts thereof, whether or not knitted or crocheted.” This is because the existing tariff shift rule for headings 6210 through 6212 does not provide for the possibility of knit-to-shape goods, even though the body-supporting garments of heading 6212 may be knit to shape. CBP states that this change will ensure that a knit-to-shape good of heading 6212 is found to derive its origin from where the good is knit to shape in accordance with 19 USC 3592(b)(2)(A)(ii).

Uniform Rules of Origin Proposal on Hold

Holding off on Uniform Rules to Allow Further Consideration of Issues

While the major thrust of the 2008 proposed rule dealt with CBP's proposal to uniformly apply the Part 102 tariff shift and other rules of origin, CBP states that it is not going forward with this aspect of its proposal at this time in order to permit further consideration of relevant issues involved.

Majority of Commenters Opposed Uniform Rules, Others Raised Questions

CBP notes that 42 of the 70 comments it received on the proposed rule expressed opposition to the proposed uniform application of the country of origin rules set forth in Part 102, while 16 of the 70 comments raised specific concerns or questions regarding the uniform rules proposal without expressly supporting or opposing the proposal.

(CBP had proposed amending its regulations in order to uniformly apply the tariff shift and other rules in 19 CFR 102 to all country of origin or “product of” determinations made under the customs and related laws, the navigation laws of the U.S., and the CBP regulations, unless:

• the use of another test for determining origin for the purposes of applying a preferential trade agreement is specified,
• the purpose is to determine whether goods are entitled to preferential treatment under the U.S. -- Israel or U.S.-Jordan free trade agreements (FTAs), or
• otherwise specified², or otherwise provided for by statute.)

¹The rules in 19 CFR Part 102 are currently used, and will continue to be used, to determine the country of origin for marking purposes for North American Free Trade Agreement imports from Canada and/or Mexico. The Part 102 rules are not used for the application of NAFTA’s tariff benefits, which will continue to be determined by the origin rules set out in NAFTA Chapter 4. (See also HTS General Note 12.) Note that certain other U.S. trade agreements also refer to the Part 102 rules. For example, the regulations for AGOA textiles and apparel state that origin is determined by 19 CFR 102.21.

²Origin-related determinations for antidumping and countervailing purposes and Section 201 or 421 safeguard remedies, etc. may differ from the origin determinations made by CBP for customs purposes. However, these origin determinations are for trade remedy purposes only, and do not alter CBP’s origin determination for customs purposes that are unrelated to trade remedies.

(See ITT's Online Archives or 08/15/08 news, 08081510, for BP summary of CBP's 2008 proposed rule. See ITT's Online Archives or 09/08/08 and 10/31/08 news, 08090810 and 0810315, for BP summaries of the extension and reopening of the comment period on the proposed rule in light of an October 2008 final rule that made technical corrections to 19 CFR 102.20 and 102.21 to reflect modifications to the HTS that became effective in 2007.)

CBP contact - Monika Brenner (202) 325-0038

(FR Pub 09/02/11, D/N USCBP-2007-0100)