[Federal Register Volume 62, Number 161 (Wednesday, August 20, 1997)]
[Rules and Regulations]
[Pages 44211-44214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22034]


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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