[Federal Register Volume 65, Number 17 (Wednesday, January 26, 2000)]
[Proposed Rules]
[Pages 4193-4203]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-1682]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 134

RIN 1515-AC32


Country of Origin Marking

AGENCY:  U.S. Customs Service, Department of the Treasury.

ACTION:  Notice of proposed rulemaking.

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SUMMARY:  This document proposes amendments to restructure and clarify 
the country of origin marking rules set forth in part 134 of the 
Customs Regulations. These proposed amendments do not create any new 
marking requirements, but rather clarify the existing ones. These 
proposals are being made to promote the concept of informed compliance 
by the trade and proper field administration of the statutory 
requirements.

DATES:  Comments must be received on or before March 27, 2000.

ADDRESSES:  Comments may be submitted to and inspected at the 
Regulations Branch, Office of Regulations and Rulings, U.S. Customs 
Service, 1300 Pennsylvania Avenue, NW., Washington, DC 20229.

FOR FURTHER INFORMATION CONTACT:  Questions with regard to the 
following

[[Page 4194]]

subject areas may be directed to the following staff attorneys of the 
Special Classification and Marking Branch, (202) 927-2310: Definitions 
of ``country,'' ``country of origin'' and ``ultimate purchaser''--
Kristen VerSteeg; Marking of containers--Monika Brenner; and Marking 
and certification requirements for processed and repackaged articles--
Burton Schlissel.

SUPPLEMENTARY INFORMATION:

Background

    Section 304(a) of the Tariff Act of 1930 (hereinafter ``Tariff 
Act''), as amended (19 U.S.C. 1304), provides that unless excepted, 
every article of foreign origin imported into the U.S. shall be marked 
in a conspicuous place as legibly, indelibly, and permanently as the 
nature of the article (or its container) will permit, in such a manner 
as to indicate to the ultimate purchaser in the U.S. the English name 
of the country of origin of the article. Part 134, Customs Regulations 
(19 CFR part 134), implements the country of origin marking 
requirements and the exceptions of 19 U.S.C. 1304.
    In view of the extensiveness of the marking requirements and 
exceptions under section 304, the regulations implementing this law by 
necessity are very detailed. Over the years Customs has received 
comments from various members of the trade community expressing 
difficulty in understanding their basic obligations under the marking 
statute. For example, importers have expressed difficulty in 
understanding when they or their transferees would be considered the 
``ultimate purchaser'' under section 304, or when a container would 
have to be marked with its own origin.
    Acknowledging these types of concerns and the fact that the current 
Customs Regulations may not sufficiently assist importers in meeting 
their statutory obligations, Customs announced in a Notice of 
modification of a country of origin marking ruling letter published in 
the Customs Bulletin (30 Cust. B. & Dec. 14 at 22) on April 3, 1996, 
that it would undertake a revision of 19 CFR part 134. In adherence to 
this commitment, Customs is now initiating significant restructuring 
and clarification of the provisions contained in part 134.
    Customs believes that these proposals, which do not create any new 
marking requirements, but rather clarify the existing ones, will 
promote the concept of informed compliance by facilitating compliance 
by the trade and proper field administration of the statutory 
requirements. Customs is encouraged in this regard by the trade's 
positive response to its recent amendments relating to ``marking when 
name of country or locality other than country of origin appears'' 
(Treasury Decision (T.D.) 97-72), which made the regulations not only 
less rigid, but more consistent with Customs current practices. Below 
is a description of the proposed changes set forth in this document.

I. Restructuring of Part 134

    During the course of this review of part 134, Customs discovered 
that one of the major reasons part 134 of the Customs Regulations is 
difficult to follow is due to the order of the provisions setting forth 
the marking requirements and exceptions under the statute. Presently, 
the subpart setting forth ``Exceptions to Marking Requirements'' is 
placed in the regulatory scheme after the subpart concerning ``Marking 
of Containers or Holders''. We believe that the logical sequence would 
be to place the subpart pertaining to ``exceptions'' to the marking 
requirements immediately following the subpart containing the general 
marking requirements. Moreover, since a majority of the marking 
requirements for containers arise in connection with an article that is 
excepted from individual marking, we believe it makes it easier to 
understand the statutory requirements and is more conducive to informed 
compliance if the container marking requirements are set forth in the 
regulations after both the general marking requirements and exceptions 
for marking of individual articles. Accordingly, Customs is proposing 
that the order of subparts under part 134 be redesignated so that 
current subpart D (``Exceptions to Marking Requirements'') is 
redesignated as subpart C and current subpart C (Marking of Containers 
or Holders) is redesignated as subpart D.

II. Definition of ``Country''

    The definition of the term ``country'' is found in para.134.1(a), 
Customs Regulations (19 CFR 134.1(a)). In the past, Customs has relied 
upon advice received from the Department of State in making 
determinations regarding the ``country of origin'' of a good for 
marking purposes. For example, based upon instructions received from 
the Department of State, in T.D. 49743, dated November 10, 1938, 
Customs held that, as a result of a change in jurisdiction from 
Czechoslovakia to Germany in the Sudenten areas under German 
occupation, products manufactured in these areas and exported on or 
after the date of German occupation were considered products of Germany 
for country of origin marking purposes. In United States v. 
Friedlaender & Co., 27 C.C.P.A. 297 (February 26, 1940); C.A.D. 104 
(1940), the court concurred with Customs decision that merchandise 
which had been exported at a time in which the Czechoslovakian location 
of manufacture was under German occupation should be marked to indicate 
``Germany'' as the country of origin. Subsequently, acting upon 
information received from the Department of State that the boundaries 
of Czechoslovakia had been reestablished as they had existed prior to 
the date of occupation by Germany, Customs held in T.D. 51360, dated 
November 30, 1945, that articles manufactured or produced in 
Czechoslovakia after May 8, 1945, should be regarded as products of 
Czechoslovakia and marked accordingly.
    More recently, by letter dated October 24, 1994, the Department of 
State notified the Department of the Treasury that, in view of certain 
developments, principally the Israeli-PLO Declaration of Principles on 
Interim Self-Government Arrangements (signed on September 13, 1993), 
the primary purpose of 19 U.S.C. 1304 would be best served if goods 
produced in the West Bank and Gaza Strip were permitted to be marked 
``West Bank'' or ``Gaza Strip.'' Accordingly, in T.D. 95-25, published 
in the Federal Register (60 FR 17067) on April 6, 1995, Customs 
notified the public that, unless excepted from marking, goods produced 
in the West Bank or Gaza Strip shall be marked as ``West Bank'' or 
``Gaza Strip'' and not contain the words ``Israel,'' ``Made in 
Israel,'' ``Occupied Territories-Israel,'' or words of similar meaning. 
Subsequently, upon receipt from advice from the Department of State 
that it considered the West Bank and Gaza Strip to be one area for 
political, economic, legal and other purposes, Customs notified the 
public that acceptable country of origin markings for goods produced in 
the territorial areas known as the West Bank or Gaza Strip include the 
following: ``West Bank/Gaza,'' ``West Bank/Gaza Strip'' ``West Bank and 
Gaza,'' ``West Bank and Gaza Strip,'' ``West Bank,'' ``Gaza'' and 
``Gaza Strip.'' (See, T.D. 97-16, published in the Federal Register (62 
FR 12269) on March 14, 1997).
    Therefore, in light of Customs past reliance on advice from the 
Department of State, Customs is proposing that Sec. 134.1(a), of the 
Customs Regulations (19 CFR 134.1(a)) be amended to allow

[[Page 4195]]

greater flexibility to encompass changes by the Department of State in 
the political recognition of territories and nation-states.

III. Definition of ``Country of Origin''

    On December 8, 1994, the President signed into law the Uruguay 
Round Agreements Act (URAA) (Pub. L. 103-465, 108 Stat. 4809). Subtitle 
D of Title III addresses textiles and includes section 334 (codified at 
19 U.S.C. 3592) which provides rules of origin for textiles 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.'' Accordingly, on September 5, 1995, Customs published 
Sec. 102.21, Customs Regulations (19 CFR 102.21), in the Federal 
Register (60 FR 46188), implementing section 334. Thus, with limited 
exceptions, effective July 1, 1996, the country of origin for a textile 
or apparel product is determined by a sequential application of the 
origin rules set forth in para. 102.21.
    Section 334(b)(1) of the URAA sets forth general principles 
concerning how the origin of textile and apparel products should be 
determined, stating, in pertinent part, that the origin rules set forth 
in section 334 apply ``for purposes of the customs laws and the 
administration of quantitative restrictions * * * '' There is no 
dispute that section 304 of the Tariff Act of 1930 is a customs law. 
Although the current language of 19 CFR 134.1(b), which defines 
``country of origin,'' previously has been modified to incorporate 
other recent legislative action (e.g., the implementation of the North 
American Free Trade Agreement (NAFTA)), no reference is made to those 
rules affecting the determination of origin of textile and apparel 
articles. This document proposes to include such a reference.

IV. Definition of ``Ultimate Purchaser''

    Section 304 requires that articles of foreign origin be marked as 
legibly, indelibly, and permanently as the nature of the article will 
permit to indicate to the ultimate purchaser in the United States, the 
name of the country of origin. Congressional intent in enacting the 
marking statute, was:

that the ultimate purchaser should be able to know by an inspection 
of the marking on the imported goods the country of which the goods 
is the product. The evident purpose is to mark the goods so that at 
the time of purchase the ultimate purchaser may, by knowing where 
the goods were produced, be able to buy or refuse to buy them, if 
such marking should influence his will. United States v. 
Friedlaender & Co., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).

    The term ``ultimate purchaser'' currently is defined in 
Sec. 134.1(d) of the Customs Regulations (19 CFR 134.1(d)) as ``the 
last person in the United States who will receive the article in the 
form in which it was imported; however, for a good of a NAFTA country, 
the ``ultimate purchaser'' is the last person in the United States who 
purchases the good in the form in which it was imported.'' As an 
example of ``ultimate purchaser'', Sec. 134.1(d) states that a U.S. 
manufacturer may be the ``ultimate purchaser'' if he subjects the 
imported article to a process which results in a substantial 
transformation, ``even though the process may not result in a new and 
different article.''
    On the other hand, Sec. 134.35(a) Customs Regulations (19 CFR 
134.35(a)), which is currently set forth in the regulations under the 
subpart covering ``exceptions to marking requirements'', applies the 
principle of the decision in the case of the United States v. Gibson-
Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) in determining the 
ultimate purchaser for non-NAFTA origin articles. Under this principle, 
the manufacturer or processor in the United States who converts or 
combines the imported article into the new and different article will 
be considered the ``ultimate purchaser'' of the imported article.
    In United States v. Gibson-Thomsen Co., Inc., supra (1940), the 
court considered the acceptability of country of origin marking on 
imported merchandise which would be ultimately obscured by subsequent 
processing in the United States. Upon review of the legislative history 
of section 304(a), Tariff Act of 1930, the court found nothing to 
indicate that Congress intended to require that an imported article 
used as a material in the manufacture of a new article with a new name, 
character and use be marked so as to indicate the foreign origin of the 
material to the retail purchaser. Accordingly, the court concluded that 
the U.S. processor was the ``ultimate purchaser'' of the imported 
materials and held that the articles were properly marked upon 
importation.
    While the incorporation of the Gibson-Thomsen decision into the 
Customs Regulations in general is appropriate, its placement in the 
subpart relating to ``exceptions to the marking requirements'' causes 
confusion in understanding the marking statute. The court in Gibson-
Thomsen did not create a new marking exception to the marking 
requirements under section 304(a). Rather, the court provided an 
interpretation of when one of the elements of the marking requirement 
is satisfied, i.e., the requirement that a good be marked until it 
reaches the ultimate purchaser in the U.S.
    The example currently cited in Sec. 134.1(d)(1), that a 
manufacturer who subjects the imported article to a process may be the 
``ultimate purchaser'' even though the process may not result in a new 
and different article represents a glaring contradiction to the new 
name, character and use test of Gibson-Thomsen, supra. Therefore, 
Customs is proposing to amend the regulations to clarify that only the 
Gibson-Thomsen standard (which Customs has incorporated into the NAFTA 
Marking Rules) will be applicable for determining whether a U.S. 
processor of imported articles becomes the ``ultimate purchaser'' for 
purposes of section 304. This standard should be set forth in the 
definitions under ``general provisions'' as opposed to the subpart 
pertaining to the exceptions to marking requirements.
    Also problematic for Customs and importers is the identity of the 
``ultimate purchaser'' of an article supplied by one party to another, 
as a gift or other distribution outside the context of a direct 
purchase transaction. Customs has consistently ruled that when an 
article is provided as a gift or convenience, the donee or recipient is 
the ultimate purchaser and the article must be individually marked with 
its country of origin (See HRL 709964 (May 7, 1979), also published as 
Customs Service Decision (C.S.D.) 79-406, 13 Cust. Bull. 1609 (1979), 
where Customs held that the ``ultimate purchaser'' of imported plastic 
pencils distributed as giveaway advertising material was the donee).
    However, in Pabrini, Inc. v. United States, 630 F. Supp. 360 (CIT 
1986), the court discussed the identity of the ``ultimate purchaser'' 
of imported umbrellas distributed to race track patrons upon payment of 
the regular admission fee. The court observed that, although Customs 
had applied the requirements of the marking statute to gifts since 
1924, the language of the current statute which specifically protects 
an ``ultimate purchaser in the United States'' was not adopted until 
1938, as part of the Customs Administrative Act of 1938, chapter 679, 
section 3, 52 Stat. 1077 (See T.D. 40547, dated December 6, 1924, where 
six unmarked clocks purchased abroad as gifts for friends were denied 
entry). The court examined the congressional history of the 1938 
statute and found no

[[Page 4196]]

evidence of congressional intent in the 1938 revision with respect to 
the meaning of the ``ultimate purchaser'', but noted that the term 
``consumer'' had been used in colloquy at hearings before the 
subcommittee (Pabrini, supra, citing Customs Administrative Act: 
Hearings on H.R. 8099 Before a Subcomm. Of the Comm. On Finance, United 
States Senate, 75th Cong., 3d Sess. 57 (1938)). Ultimately, the court 
made no finding regarding the validity of 19 CFR 134.1(d), but 
determined that the race track patrons, by paying the price of regular 
admission, were not donees of gifts, but rather were the ``ultimate 
purchasers'' of the imported umbrellas.
    Articles distributed in the context of an employer-employee 
relationship have been treated somewhat differently. In HRL 732793 
(December 29, 1989), Customs held that the commercial employer, not the 
recipient of the gloves was the ``ultimate purchaser'' of disposable 
string knit gloves sold to the employer for distribution to their 
employees. (See also C.S.D. 89-89 (March 18, 1989); HRL 703319 (May 14, 
1974); HRL 729800 (October 10, 1989); and HRL 734681 (October 16, 
1992)).
    Finally, there is the dichotomy which appears in the language of 
the current regulations, which provide that the ``ultimate purchaser'' 
of an article from a non-NAFTA country distributed as a gift is the 
recipient, but the ``ultimate purchaser'' of a similar article which is 
a good of a NAFTA country is the purchaser of the gift (19 CFR 
134.1(d)(4)). Thus, in this instance, the identity of the ``ultimate 
purchaser'' is dependent upon the origin of the article, permitting 
disparate resolution for articles similarly distributed.
    Therefore, in view of the absence of evidence of a contrary 
legislative intent or judicial interpretation, Customs is proposing to 
consider the ``ultimate purchaser in the United States'' for purposes 
of section 304(a) as representing only the person who is the last 
purchaser in the United States, as opposed to the last recipient in the 
United States, of the imported article in all cases regardless of 
either the origin of the imported article or the purpose for which the 
imported article is distributed.
    Accordingly, in view of the foregoing discussions, Customs is 
proposing that Sec. 134.35 be removed and that Sec. 134.1(d) of the 
Customs Regulations (19 CFR 134.1(d)) be amended.

V. Revision of 19 CFR 134.1(d) Regarding Textiles

    As previously indicated in the discussion of the definition of 
``country of origin,'' the country of origin of textile or apparel 
products is generally determined in accordance with the Uruguay Round 
Agreements Act (URAA), supra, section 334 (codified at 19 U.S.C. 3592). 
A U.S. processor of foreign textile or apparel products is the 
``ultimate purchaser'' of such articles if such processing effects a 
change in the country of origin (i.e., a ``substantial 
transformation'') of the imported article under the section 334 rules 
of origin, which are implemented under 19 CFR 102.21. Customs has taken 
this position in numerous rulings based upon the fact that--(1) except 
for determining the origin of goods processed in Israel, section 334 
applies for all ``origin'' determinations for purposes of the ``customs 
laws'', (2) section 304 of the Tariff Act is a customs law, and (3) the 
origin question in ``ultimate purchaser'' determinations involving U.S. 
processing is whether, as a result of such processing, the imported 
article is still of ``foreign origin''. See, HRL 559625 (January 19, 
1996); See also HRL 559627 (June 27, 1996), and HRL 559760 (July 19, 
1996). Therefore, for textile or apparel products within the scope of 
section 334, URAA, Sec. 134.1(d) is proposed to be amended to expressly 
reflect that only Sec. 102.21 rules are applicable for determining who 
is the ``ultimate purchaser'' on the basis of the post-importation 
processing in the U.S.

VI. Addition of Definition of ``Usual Containers''

    Section 304(b) states in part that usual containers in use as such 
at the time of importation shall in no case be required to be marked to 
show the country of their own origin. Currently, the term ``usual 
container'' is defined in Sec. 134.22(d)(1), Customs Regulations. Since 
the statutory exception for section 304(b) applies to all ``usual 
containers'' used as such at the time of importation and not just to 
usual containers that are goods of a NAFTA country, to avoid confusion 
and promote clarity and understanding of the general marking 
requirements, Customs is proposing that the regulation establishing the 
definition of ``usual container'' be set forth in a more general area 
of part 134. Accordingly, Customs is proposing that Sec. 134.22(d)(1) 
be removed and the text of that current section be moved to the general 
provisions of subpart A, as a new Sec. 134.1(l). Other provisions 
relating to the marking requirements for usual containers should 
continue to be set forth in the specific subpart for containers with 
cross references to the definition in Sec. 134.1(l) as appropriate.

VII. Articles Usually Combined

    Section 134.14(b), Customs Regulations was promulgated pursuant to 
19 U.S.C. 1304(a)(2) to provide that the marking on an imported article 
shall clearly show that the origin indicated is that of the imported 
article only and not that of any other article with which the imported 
article may be combined after importation. The phrase ``combined with 
another article'' was initially intended to refer to a combining of an 
imported article with another article without any process of 
manufacture or production and in such a manner that their separate 
identities are maintained and do not become integral parts of an 
article manufactured or produced in the U.S. See T.D. 49715 (October 4, 
1938). As various rulings indicate, the scope of Sec. 134.14 was 
expanded from the initial example provided therein regarding the 
combination of an imported article with a marked bottle. Accordingly, 
Customs is proposing to set forth another example to show that 
Sec. 134.14 also refers to situations in which an imported article is 
later combined after importation with another article which is not 
necessarily a container.

VIII. Exceptions to Marking Requirements (Redesignated Subpart C)

    1. To clarify that some of the provisions set forth under current 
Sec. 134.32 pertain to articles that are not required to be marked 
under section 304 in the first instance, e.g., as in current 
Sec. 134.32(m) ``products of U.S. exported and returned'' or current 
Sec. 134.32(j) ``articles entered or withdrawn from warehouse for 
immediate exportation or for transportation and exportation'', Customs 
is proposing that the first paragraph of current Sec. 134.32 be 
amended. It is noted that it is proposed to redesignate current 
Sec. 134.32 as Sec. 134.22.
    2. Current Sec. 134.26 (proposed to be redesignated as Sec. 134.34) 
discusses imported articles repacked or manipulated and current 
Sec. 134.34 (proposed to be redesignated as Sec. 134.24) pertains to 
certain repacked articles. In order to clarify the distinction between 
these two sections, Customs is proposing to amend current Sec. 134.34 
(proposed to be redesignated as Sec. 134.24) to make it clear that this 
section only applies when both the articles and their containers are 
unmarked as to country of origin at the time of importation, but are 
intended to be repacked into containers that will be marked with the 
origin of the imported articles. Also, Customs is proposing to add an 
example to illustrate the circumstances in which certification

[[Page 4197]]

requirements may be imposed as part of the port director's discretion 
to authorize the marking exception under current Sec. 134.32(d) 
(proposed to be redesignated as Sec. 134.22(d)) when the articles will 
be repacked after release from Customs custody.

IX. Marking of Containers--General Requirements (Redesignated Subpart 
D)

    Certain portions of the container marking regulations in part 134 
which were promulgated by T.D. 72-262, 37 FR 20318 (1972), do not 
reflect current law or are otherwise out-of-date or unclear. As 
previously noted in this document, Customs is proposing that the 
definition for ``usual containers'' be moved to the General Provisions 
under subpart A. As discussed more fully below, additional 
modifications are needed to clarify the general requirements relating 
to the marking of containers. If the following changes are adopted, 
current Secs. 134.23 and 134.24 will be removed and the provisions 
thereof that are not duplicative will be incorporated into Sec. 134.32 
which is proposed to be a revised and redesignated version of current 
Sec. 134.22. Proposed Sec. 134.32 will set forth the general 
requirements and exceptions for marking all containers.
    1. Sections 304(a)(3)(A) through (K) of the Tariff Act (19 U.S.C. 
1304(a)(3)(A) through (K)) provide for various circumstances where an 
article is excepted from the marking requirements. Section 304(b) of 
the Tariff Act (19 U.S.C. 1304(b)) generally provides that where an 
article is excepted from the marking requirements, its immediate 
container or such other container or containers of such article as may 
be prescribed by the Secretary of the Treasury, shall be marked to 
indicate to the ultimate purchaser the country of origin of such 
article. Section 304(b), however, excepts from marking usual containers 
in use as such at the time of importation.
    In Bausch & Lomb Inc. v. United States, 17 CIT 790 (August 5, 
1993), the United States Court of International Trade noted that while 
an importer of foreign origin eyeglass cases could insert eyeglasses 
into the cases so that the cases may be considered as ``usual 
containers in use as such at the time of importation'' and be excepted 
from marking pursuant to 19 U.S.C. 1304(b), the court stated that since 
the cases at issue were empty and were not being used as usual 
containers at the time of importation, the cases were required to be 
marked with their own origin at the time of importation.
    It is clear from a reading of 19 U.S.C. 1304(b) that usual 
containers used as such at the time of importation are not required to 
be marked with their own country of origin whether or not they are 
goods of a NAFTA country. Therefore, proposed Sec. 134.32 reflects that 
(1) any usual container, whether or not a good of a NAFTA country, 
which is used as such at the time of importation, is not required to be 
marked with its own country of origin and (2) any language pertaining 
to whether a usual container is disposable is not relevant.
    2. Currently, Sec. 134.22(a) implements 19 U.S.C. 1304(b) and 
states that where an article is excepted from the marking requirements, 
the outermost container or holder in which the article ordinarily 
reaches the ultimate purchaser shall be marked to indicate the country 
of origin of the article, whether or not the article is marked to 
indicate its country of origin. Also, current Sec. 134.24(d)(2) 
requires the container to be marked with the country of origin of its 
contents in cases where the articles within the container are marked 
but the container is normally sold without being opened by the ultimate 
purchaser. To reconcile the overlap between these two provisions, the 
last portion of current Sec. 134.22(a) pertaining to whether or not the 
article is marked is not set forth in proposed Sec. 134.32. Current 
Sec. 134.24(d)(1) is also removed because this section basically 
contains the same requirements that are set forth in current 
Sec. 134.22(a) and (e) and repeated in proposed Sec. 134.32(a) and (c).
    3. As stated earlier, in Bausch & Lomb, supra, the court 
acknowledged that a usual container not in use as such at the time of 
importation is to be treated as an article, required to be marked 
pursuant to 19 U.S.C. 1304(a), and is not subject to the exception 
under 19 U.S.C. 1304(b). Current Sec. 134.22(b), however, requires that 
a container or holder which itself is an imported article, shall be 
marked with its own origin in addition to any marking which may be 
required to show the country of origin of its contents. Current 
Sec. 134.22(b) also requires, pursuant to Annex 311 of the NAFTA, that 
no such marking is required for any good of a NAFTA country which is a 
usual container.
    Therefore, in proposed Sec. 134.32, Customs is proposing to clarify 
current Sec. 134.22(b) to distinguish between usual containers used as 
such at the time of importation, usual containers not used as such at 
the time of importation, and containers or holders which do not meet 
the definition of a ``usual container''. The last portion of current 
Sec. 134.22(b) pertaining to the exception for usual containers not in 
use at the time of importation which is a good of a NAFTA country is 
proposed to be repeated in proposed Sec. 134.32(c)(2)(i) as it was 
promulgated to implement a provision of the NAFTA Annex 311.
    Proposed Sec. 134.32 also reflects the removal of the last sentence 
in current Sec. 134.22(d)(2) pertaining to a container which is 
imported empty. In addition, it is proposed to not set forth the 
contents of current Sec. 134.24(c)(2) in the proposed revision as it 
essentially contains the same requirements as current Sec. 134.22(b) 
(proposed to be contained in Sec. 134.32(d)).
    4. Currently, Sec. 134.22(b) requires containers or holders to be 
marked with their own country of origin when they are treated as 
imported articles under the Harmonized Tariff Schedule of the United 
States (19 U.S.C. 1202). Current Secs. 134.23 and 134.24 provide for 
the marking of containers or holders designed and capable of reuse and 
those containers not designed for or capable of reuse (disposable vs. 
non-disposable containers). Customs believes the confusion created by 
some of these provisions stems from the incorrect premise that there is 
a necessary distinction between these categories of containers and the 
categories of ``usual'' versus ``non-usual'' containers. Since the 
statute exempts ``usual'' containers from individual marking when in 
use at the time of importation, every container should first be 
measured against the definition of ``usual container'' to see whether a 
statutory marking exemption is applicable. The provisions in current 
Secs. 134.23 and 134.24, generally do not provide this approach. To 
eliminate the confusion and sometimes totally unnecessary distinctions 
drawn between containers which are disposable vs. non-disposable and 
imported empty vs. imported full, Customs is proposing to make the 
following regulatory changes: (1) remove current Sec. 134.23(a) since 
all usual containers used as such at the time of importation are 
excepted from marking; (2) remove current Sec. 134.23(b) since the 
substance of this provision is already incorporated in the definition 
of ``usual containers'', which Customs is proposing to be moved to 
subpart A of part 134; and (3) remove current Sec. 134.24(a) since 
disposable containers are encompassed within the definition of ``usual 
containers''.
    5. Current Sec. 134.22(c) provides that containers or holders which 
bear the name and address of a person or company in the U.S. which is 
not the country of origin shall be marked, in close proximity to such 
address, with the origin of the contents. This section is analogous to 
current Sec. 134.46 which,

[[Page 4198]]

prior to its recent amendment, required an article indicating the name 
of a geographic location other than the true country of origin of the 
article to be marked in close proximity and in comparable size 
lettering with the country of origin of the article preceded by the 
words ``Made in'', ``Product of'', or words of similar meaning. In a 
final rule published August 20, 1997, in the Federal Register (62 FR 
44211, T.D. 97-72), Customs amended Sec. 134.46 to require such special 
marking only if the name of the geographic location that is not the 
country of origin may mislead or deceive the ultimate purchaser as to 
the actual country of origin. Therefore, Customs is proposing to modify 
current Sec. 134.22(c) (to be redesignated as Sec. 134.32(e)) to mirror 
the new Sec. 134.46.
    6. Customs, in order to provide further clarity, is proposing that 
the requirements set forth in current Secs. 134.24(b) and 134.24(c)(1), 
i.e., pertaining to the marking of the outermost containers of 
disposable containers imported empty, be placed within Sec. 134.32 (the 
wholly revised and redesignated Sec. 134.22) which will provide the 
general marking requirements for containers. Customs is also proposing 
to move the requirements of current Sec. 134.24(d)(2) and (3), to the 
general rules for marking containers in Sec. 134.32.
    7. Subsection (b) of 19 U.S.C. 1304 provides that where an article 
is excepted from the marking requirements pursuant to 19 U.S.C. 
1304(a)(3)(F), (G), or (H), its usual container also shall not be 
subject to the marking requirements. Furthermore, 19 U.S.C. 
1304(j)(1)(C) generally provides that where an article that qualifies 
as a good of a NAFTA country is excepted from the marking requirements 
pursuant to 19 U.S.C. 1304(a)(e)(E) or (I) or 19 U.S.C. 
1304(j)(1)(B)(i) or (ii), its ``usual container'' shall not be subject 
to the marking requirements. Currently, Sec. 134.22(e) implements the 
above statutory provisions. In order to clarify when these exceptions 
for marking ``usual containers'' are applicable, Customs is proposing 
that they be moved to the same section which sets forth the 
circumstances for required marking of usual containers. Accordingly, 
these exceptions are proposed to be set forth in the wholly revised and 
redesignated Sec. 134.32.

X. Marking of Containers--Repacked and Processed Articles

    Currently, Sec. 134.32 contains the general exceptions to the 
marking requirements. See also 19 U.S.C. 1304(a)(3). Among the 
exceptions are articles set forth in current Sec. 134.33, known as the 
``J-list.''
    In T.D. 83-155, dated October 24, 1983 (48 FR 33860), Customs 
amended part 134 by adding a new section, 19 CFR 134.25, which pertains 
to the repacking of ``J-list'' articles and articles incapable of being 
marked. While the articles subject to these exceptions are not required 
to be marked, the containers or holders of these articles are subject 
to the marking requirements. The new section was added to address the 
issue of repacking in the U.S. by the importer or a subsequent 
purchaser of articles excepted from marking, after release of such 
articles from Customs custody. In such cases, it was often found that 
the new container in which the article was repacked for sale to the 
ultimate purchaser was not marked, thus frustrating the intent of 
Congress that the ultimate purchaser in the U.S. be aware of the 
country of origin of the article.
    To ensure that the importer properly mark the repacked articles if 
the importer does the repacking or that subsequent repackers are made 
aware of their country of origin marking obligations, Sec. 134.25 
currently requires importers to certify to the port director that: (a) 
if the importer does the repacking, the new container will be marked to 
indicate the country of origin of the article; or (b) if the article is 
sold or transferred, the importer will notify the subsequent 
repurchaser or repacker, in writing, at the time of sale or transfer, 
that any repacking of the article must conform to the marking 
requirements.
    In addition, current Sec. 134.25 specifically provides that if the 
importer fails to comply with the certification requirements, the 
importer may be subject to assessment of liquidated damages under 19 
CFR 134.54 for failure to mark or redeliver merchandise released from 
Customs custody and marking duties pursuant to 19 U.S.C. 1304(h). This 
section further provides that the importer also may be subject to a 
penalty under 19 U.S.C. 1592, if fraud or negligence is involved.
    By T.D. 84-127 dated July 2, 1984 (49 FR 22793), Customs added 19 
CFR 134.26 to the regulations which was intended to cover those 
situations involving the repacking of marked articles in retail 
containers (e.g., blister packs) after their release from Customs 
custody. As in current 19 CFR 134.25, Sec. 134.26 currently requires 
the importer to certify to the port director that: (a) if the importer 
does the repacking, the country of origin information appearing on the 
article will not be obscured or concealed, or else the container will 
be marked in accordance with applicable law and regulation; or (b) if 
the article is sold or transferred, the importer will notify the 
subsequent purchaser or repacker, in writing, at the time of sale or 
transfer, that any repacking of the article must conform to the marking 
requirements. As under current 19 CFR 134.25, under current 
Sec. 134.26, the importer may be subject to the imposition of 
liquidated damages, marking duties and penalties for failure to comply 
with the notification and certification requirements.
    Current Secs. 134.25 and 134.26 were intended to apply to articles 
which are repacked after importation, and the repacker is not the 
`ultimate purchaser'' under 19 CFR 134.1(d) as a result of operations 
performed in the U.S. In cases where the repacker is the ultimate 
purchaser neither the article nor the container in which it is repacked 
is required to be marked. Consistent with the foregoing, Customs has 
frequently held that ``repacking'' to an article that may have been 
further processed, but not substantially transformed. See, e.g., HRL 
734989 (June 23, 1993).
    However, the language in current Sec. 134.25 is imprecise and does 
not convey the intent, as noted, that the regulations were intended to 
cover not only those articles that are subject to mere repackaging but 
also articles that have been processed but not substantially 
transformed (or which have not become a good of the U.S. under the 
NAFTA Marking Rules). Current Sec. 134.26 does cover articles `repacked 
or manipulated''; however, this provision similarly fails to indicate 
that it is not applicable when the manipulation results in a 
substantial transformation. In addition, the penalty provisions in both 
sections do not spell out the extent of the importer's statutory 
liability, which continues (unless the notice requirements are 
satisfied) even though the article is sold or transferred to subsequent 
repackers until the article reaches the ultimate purchaser.
    It is further noted that the heading of current 19 CFR 134.25 
refers only to certain articles that are excepted from marking, i.e., 
J-list articles and articles incapable of being marked. Since this 
provision should encompass all articles excepted from individual 
marking but not from marking on their containers upon repacking or 
processing, Customs is proposing that the title and body of the 
provision be amended to reflect that the certification requirements 
extend to such other articles.
    Therefore, Customs is proposing changes consistent with the 
foregoing discussion to clarify the scope of current Secs. 134.25 and 
134.26, and the extent of

[[Page 4199]]

the importer's liability under 19 U.S.C. 1304(a):
    In accordance with prior Customs rulings, these regulations are 
proposed to be amended to provide that the term ``repacker'' shall 
include a U.S. party who also processes the articles when such 
operations in the U.S. do not amount to a substantial transformation 
(including an origin change under the NAFTA Marking Rules). This 
definition will make clear that there may be more than one repacker, 
prior to transfer to an ultimate purchaser. Examples will illustrate 
how the importer's statutory liability continues through all repackers 
until the article reaches the ultimate purchaser unless the 
certification requirements under the regulations are satisfied.
    The definition of ``repacker'' is proposed to be included as 
paragraph (b) in both proposed redesignated Sec. 134.33 (which consists 
basically of current Sec. 134.25) and Sec. 134.34 (which consists 
basically of current Sec. 134.26). Current paragraphs (b), (c), (d), 
and (e) of Sec. 134.25 are proposed to become paragraphs (c), (d), (e) 
and (f), respectively, of proposed Sec. 34.33; and paragraphs (b), (c), 
(d), (e) and (f) of current Sec. 134.26 are proposed to become 
paragraphs (c), (d), (e), (f), and (g), respectively, of proposed 
Sec. 134.34.
    Finally, since, as proposed, paragraphs (b) of both proposed 
Secs. 134.33 and 134.34 will include a processor within the definition 
of ``repacker,'' the heading of Sec. 134.34 will reflect that the 
section covers only ``repacked'' articles. There is no necessity for 
the term ``manipulated'' included within the heading as it is currently 
included within Sec. 134.26.

XI. Removal of 19 CFR 134.47

    In a final rule published in the Federal Register (62 FR 44211) on 
August 20, 1997, T.D. 97-72, Sec. 134.46 was amended 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 words of similar 
meaning. As a result of this amendment, the special marking 
requirements of Sec. 134.46 are triggered only if the non-origin 
reference ``may mislead or deceive the ultimate purchaser as to the 
actual country of origin.''
    Section 134.47 (19 CFR 134.47) provides that when as part of a 
trademark or trade name or there appears as part of souvenir marking, 
the name of a location in the U.S., or the words ``United States'' or 
``America'', the article shall be legibly, conspicuously and 
permanently marked to indicate the name of the country of origin of the 
article preceded by ``Made in,'' ``Product of,'' or other similar 
words, in close proximity or in some other conspicuous location. Unlike 
Sec. 134.46, Sec. 134.47 does not require the name of the country of 
origin to appear in at least a comparable size lettering as the non-
origin reference. Section 134.47 is also less stringent than 
Sec. 134.46 in that the latter provision requires the country of origin 
to appear ``in close proximity'' to the non-origin reference, while the 
former provision only requires that the country of origin appear ``in 
close proximity to the U.S. locality information or in some other 
conspicuous location.''
    Customs believes there is no legal or practical reason for 
maintaining the disparity between the special marking requirements set 
forth in Sec. 134.47 and those set forth in Sec. 134.46, as amended by 
T.D. 97-72. The purpose of the requirements in both provisions, when 
triggered, is the same: to prevent the ultimate purchaser from being 
misled or deceived as to the actual country of origin of the article. A 
reference to a place other than the country of origin on an imported 
article or its container has the same potential for misleading or 
deceiving the ultimate purchaser when it appears as part of a 
trademark, trade name or souvenir marking as when it does not. 
Therefore, if such marking may mislead or deceive the ultimate 
purchaser as to the actual country of origin, it is immaterial that 
such marking appears as part of a trademark, trade name or souvenir 
marking, and the special marking requirements of Sec. 134.46, should be 
applicable. Accordingly, Customs proposes to remove Sec. 134.47 from 
the regulations. If this proposal is adopted, Sec. 134.46, when 
triggered, will apply to any non-origin type reference, including those 
that are part of a trademark, trade name or souvenir marking.

Comments

    Before adopting the proposed amendments, consideration will be 
given to any written comments timely submitted to Customs. Comments 
submitted will be available for public inspection in accordance with 
the Freedom of Information Act (5 U.S.C. 552), Sec. 1.4, Treasury 
Regulations (31 CFR 1.4), and Sec. 103.11(b), Customs Regulations (19 
CFR 103.11(b)), on regular business days between the hours of 9:00 a.m. 
and 4:30 p.m. at the Regulations Branch, 1300 Pennsylvania Avenue, NW, 
Washington, DC 20229.

Regulatory Flexibility Act

    Insofar as the proposed amendments merely clarify existing 
regulations, pursuant to the provisions of the Regulatory Flexibility 
Act (5 U.S.C. 601, et seq.), it is certified that the amendments, if 
adopted, will not have a significant economic impact on a substantial 
number of small entities. Accordingly, the proposed amendments are not 
subject to the regulatory analysis or other requirements of 5 U.S.C. 
603 and 604.

Executive Order 12866

    The proposed amendments do not meet the criteria for a 
``significant regulatory action'' as specified in E.O. 12866.

Drafting Information

    The principal author of this document was Keith B. Rudich, 
Regulations Branch, Office of Regulations and Rulings, U.S. Customs 
Service. However, personnel from other offices participated in its 
development.

List of Subjects in 19 CFR Part 134

    Canada, Country of origin marking, Customs duties and inspection, 
Imports, Labeling, Marking, Mexico, Packaging and containers, Reporting 
and recordkeeping requirements, Trade agreements.

Proposed Amendment

    It is proposed to amend part 134, Customs Regulations (19 CFR part 
134) as set forth below:

PART 134--COUNTRY OF ORIGIN MARKING

    1. The authority citation for part 134 will continue 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.

    2. Section 134.1 (19 CFR 134.1) is proposed to be amended by 
revising paragraphs (a), (b) and (d) and adding a new paragraph (l) to 
read as follows:


Sec. 134.1  Definitions.

* * * * *
    (a) Country. ``Country'' means the political entity known as a 
nation. In addition, colonies, possessions, or protectorates outside 
the boundaries of the mother county may be considered separate 
countries. For other territorial areas, advice received from the U.S. 
Department of State or appropriate interagency council will be 
considered for determining whether a particular

[[Page 4200]]

territorial area should be treated as a ``country'' for marking 
purposes.
    (b) Country of origin. ``Country of origin'' means the country of 
manufacture, production, or growth of any article of foreign origin 
entering the United States. Further work or material added to an 
article in another country must effect a substantial transformation in 
order to render such other country the ``country of origin'' within the 
meaning of this part; for a non-textile or non-apparel good of a NAFTA 
country, this determination will be made pursuant to the NAFTA Marking 
Rules. Except when determining whether a textile or apparel article is 
a product of Israel, the country of origin of all textile or apparel 
products will be determined in accordance with the rules set forth in 
Sec. 102.21 of this chapter.
* * * * *
    (d) Ultimate purchaser. The ``ultimate purchaser'' is generally the 
last person in the United States who purchases the good in the form in 
which it was imported.
    (1) Where a substantial transformation of an imported article has 
occurred as a result of processing in the United States.
    (i) Non-textile or non-apparel products of a NAFTA country. If a 
non-textile or non-apparel good of a NAFTA country will be used in the 
United States in manufacture, the manufacturer is the ``ultimate 
purchaser'' if it subjects the imported article to a process that would 
result in the good becoming a good of the United States under the NAFTA 
Marking Rules. Unless the good is processed by the importer or on its 
behalf, the outermost container of the good shall be marked in 
accordance with this part.
    (ii) Non-textile or non-apparel products other than goods of a 
NAFTA country. If a non-textile or non-apparel imported article other 
than a good of a NAFTA country will be used in the United States in 
manufacture, the manufacturer is the ``ultimate purchaser'' if the 
processing results in a substantial transformation of the imported 
article, i.e., the creation of a new article having a name, character, 
and use differing from that of the imported article, in accordance with 
the principle set forth in the case of United States v. Gibson-Thompson 
Co., 27 C.C.P.A. 267 (C.A.D. 98).
    (iii) Textile or apparel products. If an imported textile or 
apparel product will be processed in the United States, the processor 
is the ``ultimate purchaser'' if it subjects the imported article to a 
process that would result in the good becoming a good of the United 
States under Sec. 102.21 of this chapter.
    (2) Where no substantial transformation of an imported article has 
occurred during processing in the United States.
    (i) Non-textile or non-apparel products of a NAFTA country. If a 
non-textile or non-apparel good of a NAFTA country will be used in 
manufacture in the U.S. and the manufacturing process does not result 
in one of the changes set forth in the NAFTA Marking Rules as effecting 
a change in the article's country of origin, the consumer who purchases 
the article after processing will be regarded as the ``ultimate 
purchaser'' and the article shall be marked in accordance with this 
part.
    (ii) Non-textile or non-apparel products other than goods of a 
NAFTA country. For non-textile or non-apparel products other than goods 
of a NAFTA country, if the manufacturing process does not result in a 
substantial transformation of the imported article, then the consumer 
or user of the article who obtains the article after the processing 
will be regarded as the ``ultimate purchaser'' and the article must be 
marked in accordance with this part.
    (iii) Textile or apparel products. If an imported textile or 
apparel product will be further processed in the United States and the 
processing does not result in one of the changes set forth in 
Sec. 102.21 of this title as effecting a change in the article's 
country of origin, the consumer who purchases the article after 
processing will be regarded as the ``ultimate purchaser'' and the 
imported textile or apparel product shall be marked in accordance with 
this chapter.
    (3) Goods sold at retail. If an article is to be sold at retail in 
its imported form, the purchaser at retail is the ultimate purchaser. 
For example, where an imported screwdriver is repackaged in the U.S. as 
part of a tool kit, the ``ultimate purchaser'' is the retail purchaser, 
not the repackager.
    (4) Gifts or Samples. If the imported article is distributed as a 
gift or sample free of charge, the last person who purchases the gift 
or sample is the ``ultimate purchaser.'' For example, where imported 
printed material is distributed as part of an unsolicited mailing, the 
recipient is not the ``ultimate purchaser.''
    (5) Articles purchased by an employer.If an imported article is 
purchased by an employer on behalf of an employee, then the employer is 
the ``ultimate purchaser'' of the article. However, if the employee 
contributes to the purchase of the imported article, then the employee 
is considered the ``ultimate purchaser'' of the article. For example, 
where imported work gloves are sold to industrial supply distributors, 
who sell them to commercial employers (e.g., meat cutters, hospitals, 
restaurant food handlers) which distribute the gloves to their 
employees for use on the premises, the ``ultimate purchaser'' of the 
imported articles is the commercial employer.
    (l) Usual containers--A ``usual container'' means the container in 
which a good will ordinarily reach its ultimate purchaser. Containers 
which are not included in the price of the goods with which they are 
sold, or which impart the essential character to the whole, or which 
have significant uses, or lasting value independent of the contents, 
will generally not be regarded as usual containers. However, the fact 
that a container is sturdy and capable of repeated use with its 
contents does not preclude it from being considered a usual container 
so long as it is the type of container in which its contents are 
ordinarily sold. A usual container may be any type of container, 
including one which is specially shaped or fitted to contain a specific 
good or set of goods such as a camera case or an eyeglass case, or 
packing, storage and transportation materials.
    3. It is proposed to amend Sec. 134.14 (19 CFR 134.14) by removing 
paragraph (b); redesignating paragraph (c) as paragraph (b); and adding 
two examples following paragraph (a) to read as follows:


Sec. 134.14  Articles usually combined.

    (a) Articles combined before delivery to purchaser.
* * * * *
    Example 1. A ball point pen of Israeli origin and metal pen 
holder of Mexican origin are packaged together as a set in the 
United States. Pursuant to paragraph (a) of this section, the pen 
must be marked in such a manner as to distinguish the Israeli origin 
pen from the Mexican component, and it would be appropriate to mark 
the set ``Pen Made in Israel, Holder Made in Mexico''.
    Example 2. Labels and similar articles so marked that the name 
of the country of origin of the label or article is visible after it 
is affixed to another article in this country shall be marked with 
additional descriptive words such as ``Label made (or printed) in 
(name of country)'' or words of similar meaning. See subpart D of 
this part for marking of bottles, drums, or other containers.
* * * * *
    4. It is proposed to redesignate subpart C, ``Marking of Containers 
or Holders'', consisting of Secs. 134.21 through 134.26 as subpart D. 
It is proposed to redesignate Secs. 134.21 and 134.22, respectively, as 
Secs. 134.31 and 134.32, remove Secs. 134.23 and 134.24,

[[Page 4201]]

and redesignate Secs. 134.25 and 134.26, respectively, as Secs. 134.33 
and 134.34.
    5. It is proposed to redesignate subpart D, ``Exceptions to Marking 
Requirements'', consisting of Secs. 134.31 through 134.36, as subpart 
C. It is proposed to redesignate Secs. 134.31 through 134.34, 
respectively, as Secs. 134.21 through 134.24, remove Sec. 134.35, and 
redesignate Sec. 134.36 as Sec. 134.25.
    6. It is proposed to amend redesignated Sec. 134.22 by revising the 
introductory paragraph to read as follows:


Sec. 134.22  General exceptions to marking requirements.

    The articles described or meeting the specified conditions set 
forth below are either excepted from or are not subject to the marking 
requirements (See subpart D of this part for marking of containers):
* * * * *
    7. It is proposed to amend redesignated Sec. 134.24 by revising the 
heading and introductory paragraph (a) and adding an example after 
paragraph (a)(2) to read as follows:


Sec. 134.24  Repacked unmarked articles and containers.

    (a) If imported articles or their outside containers are both not 
marked with the origin of the articles at the time of importation, but 
the articles are intended to be repacked into containers marked with 
the country of origin of the articles, an exception under 
Sec. 134.22(d) may be authorized in the discretion of the port director 
under the following conditions:
* * * * *
    Example. Unmarked surgical pack wrappers are imported in bulk 
cartons which are also not marked, but will be repacked by the 
importer into containers for sale exclusively to hospitals. Since 
the wrappers at the time of importation are not individually marked 
to indicate their country of origin or imported in marked containers 
that will reach the hospitals (ultimate purchasers), as a condition 
for granting an exception under Sec. 134.22(d) the port director has 
discretion to require that--the importer mark the repacked wrappers 
under Customs supervision; or the importer execute a written 
certification that the repacked wrappers will be properly marked and 
submit a sample of the remarked wrappers.
* * * * *
    8. It is proposed to revise redesignated Sec. 134.32 to read as 
follows:


Sec. 134.32  General rules for marking of containers or holders.

    (a) Marking the origin of contents--(1) Contents excepted from 
marking. Except as provided in paragraph 134.32(b)(1) of this section, 
whenever an article is excepted from the marking requirements by 
subpart C of this part, the outermost container or holder in which the 
article ordinarily reaches the ultimate purchaser shall be marked to 
indicate the country of origin of the article.

    Example 1. Dog rawhide bones incapable of being marked by means 
of a sticker, dye, ink, or tag because of their porous, rough, and 
uneven texture and potential harm to the animal are excepted from 
individual country of origin marking pursuant to Sec. 134.22(a), but 
their outermost container or holder in which the bones ordinarily 
reach the ultimate purchaser shall be marked to indicate the country 
origin of the bones.
    Example 2. Tomatoes imported from Mexico are excepted from the 
country of origin marking requirements pursuant to Sec. 134.23, as 
J-List articles. When imported in master containers, these 
containers must be marked with the origin of the tomatoes. 
Furthermore, if the tomatoes are repacked into trays for 
distribution and sale at retail grocery stores, the trays must be 
marked with the origin of the tomatoes.
    Example 3. An ancient Turkish statue is imported into the United 
States. Pursuant to Sec. 134.22(i) it is excepted from individual 
country of origin marking requirements. The container in which the 
statue reaches the ultimate purchaser must be marked to indicate the 
origin of the statue.

    (2) Contents not excepted from marking. When an article not 
excepted from marking is sold in a container or holder that is normally 
not opened by the ultimate purchaser or the marking on the article is 
not visible through the container (e.g., individually wrapped soap bars 
or tennis balls in a vacuum sealed can), the container shall be marked 
to indicate the country of origin of its contents, regardless of 
whether the contents are marked.
    Example 1. Surgical instruments of foreign origin are each 
packed inside opaque sealed bags, and are sold exclusively to 
hospitals. Although the surgical instruments are individually etched 
with their country of origin pursuant to Sec. 134.43(a), since the 
ultimate purchasers, i.e., the hospitals cannot view the marking 
through the opaque bag, the outside container in which the hospitals 
receive the surgical instruments shall be marked with the origin of 
the surgical instruments.
    Example 2. Small statues or figurines are articles that 
purchasers typically remove from their box to examine for damage 
prior to purchase. Accordingly, if figurines of foreign origin are 
legibly marked with their country of origin in a conspicuous place, 
their unsealed containers do not have to be marked with the country 
of origin, provided the containers themselves do not contain any 
markings that would trigger the application of paragraph (e) of this 
section 134.32(e).

    (b) Exception for marking the origin of contents--(1) Certain 
excepted articles. The outermost container or holder in which the 
article ordinarily reaches the ultimate purchaser is not required to be 
marked if:
    (i) It is a container or holder of an article excepted from marking 
pursuant to Sec. 134.22(f), (g), or (h); or
    (ii) It is a container of a good of a NAFTA country which is 
excepted from marking pursuant to Sec. 134.22(e), (f), (g), (h), (i), 
(p), or (q).

    Example. A major department store imports holiday decorations 
such as artificial trees, garlands, and wreaths of French-origin, 
and ornaments of German-origin only for use in the decoration of 
their stores and not for resale. Provided local port officials are 
satisfied that the ultimate purchaser, i.e., the department store, 
is aware of the origins of the decorations and that the decorations 
will not be resold in the United States, both the decorations and 
their cartons in which the decorations are packed are excepted from 
marking pursuant to Sec. 134.22(f).

    (c) Marking of the origin of usual containers--(1) Usual Container 
used as such at the time of importation. A usual container, as defined 
in Sec. 134.1(l) which is in use at the time of importation is not 
required to be marked with its own country of origin regardless whether 
it is reusable or not.

    Example. Sunglasses of foreign origin are each packed and 
imported inside eyeglass cases of foreign origin. The sunglasses are 
marked as to their origin by means of an adhesive sticker on the 
lenses. As the eyeglass cases are considered usual containers and 
are used as such at the time of importation, they are not required 
to be marked with their own country of origin provided local Customs 
officials at the port of entry are satisfied that the eyeglass cases 
will reach the ultimate purchaser with the sunglasses packed 
therein.
    (2) Usual container not used as such at the time of importation. 
(i) Except for a good of a NAFTA country, a usual container, as defined 
in Sec. 134.1(l), which is not used as such at the time of importation 
shall be marked to indicate clearly the country of its own origin, 
unless the container itself is excepted from marking under subpart C of 
this part. A good of a NAFTA country which is a usual container is not 
required to be individually marked with its own origin whether or not 
in use as a usual container at the time of importation.

    Example. Wooden crates of Mexican and Guatemalan origin are 
imported into the United States by the truckload and stacked upon 
each other. Once they are imported, they are sold to farmers who use 
them to transport their Florida tomatoes to market. As the wooden 
crates may be considered the usual containers of tomatoes, but are 
not used as such at the time of importation, the crates of 
Guatemalan origin each must be marked to clearly indicate that they 
are of Guatemalan origin, such as ``Crate Made in Guatemala''. 
However, since goods of a

[[Page 4202]]

NAFTA country that are usual containers are not required to be 
marked, the crates of Mexican origin that are imported by the 
truckload will not be required to be marked, provided Customs 
officials at the port of entry are satisfied that the Mexican crates 
will be used as usual containers after importation.

    (ii) Regardless of the origin, if usual containers not in use as 
such at the time of entry are packed and imported in multiple units 
(dozens, gross, etc.), only the outermost container in which the usual 
containers reach the ultimate purchaser in the U.S. needs to be marked.

    Example. Unmarked petri dishes of Canadian origin are imported 
inside large cartons and sold to Biologics Company in the United 
States. Biologics who fills the petri dishes with microorganisms for 
sale to various customers in the science community, is the ultimate 
purchaser of the dishes. Since the petri dishes are the usual 
containers of microorganisms, but are not used as such at the time 
of importation, the large carton (outer container) in which the 
petri dishes are packed and imported must be marked to indicate 
their Canadian origin.

    (iii) If a usual container is marked with its own country of origin 
at the time of importation and the marking will be visible after it is 
filled, the marking shall clearly indicate that the named country 
pertains to the container only and not the contents. For example, if 
bottles, drums, or other containers imported empty, to be filled in the 
United States, are individually marked with their own origin, they 
shall be marked with such words as ``Bottle (or container) made in 
(name of country)''.
    (d) Container or holder other than usual containers. Regardless of 
origin, a container or holder considered as an imported article under 
the Harmonized Tariff Schedule of the United States (19 U.S.C. 1202), 
and not considered a ``usual container'' as defined in Sec. 134.1(l), 
shall be marked to clearly indicate the country of its own origin in 
addition to any marking which may be required to show the country of 
origin of its contents, except when such container or holder itself is 
excepted from marking under subpart C of this part.

    Example 1. Suntan lotion of French origin is imported inside a 
plastic bracelet of Pakistani origin. Since the bracelet is not a 
container in which suntan lotion ordinarily reaches the ultimate 
purchaser, the bracelet is not considered a usual container and must 
be marked with its own country of origin, along with the origin of 
the suntan lotion if the origins are not the same. An appropriate 
marking would be ``Suntan lotion Made in France, Bracelet Made in 
Pakistan''.
    Example 2. Necklaces of Italian origin illegibly stamped 
``Italy'' are imported into the United States for retail sale. At 
the time of importation, each necklace is packed in a jewelry box of 
Taiwanese origin constructed of a hard-shell plastic covered by a 
gray velvet type material. The boxes open and close with the aid of 
a hinge, and the inside of the boxes is covered with a satin 
material. As the jewelry boxes are not usual containers, they must 
be marked to clearly indicate their own origin, along with the 
origin of the necklaces since the necklaces themselves are not 
legibly marked. A marking such as ``Box Made in Taiwan; Necklace 
Made in Italy'' would be acceptable.

    (e) Marking of containers of imported articles when a name of 
country or locality other than the country of origin of its contents 
appears on a container or holder. 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 contents were 
manufactured or produced appear on the container, and those words, 
letters or names may mislead or deceive the ultimate purchaser as to 
the actual country of origin of the contents, 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.

    Example. The Canadian company ``Courrege'' distributes bracelets 
of French origin. The bracelets will be sold in jewelry boxes 
containing the words ``Distributed by Courrege, Ottawa'', and the 
bracelets are legibly stamped ``Made in France''. As the words 
``Distributed by Courrege, Ottawa'' may mislead the ultimate 
purchaser that Canada is the country of origin, the boxes must be 
labeled ``Made in France'' or similar words on the same side as the 
words ``Distributed by Courrege, Ottawa'' and in at least a 
comparable size.

    9. It is proposed to amend redesignated Sec. 134.33 as follows:
    a. Revise the heading;
    b. Remove in paragraph (a) the words at the beginning of the first 
sentence ``If an article subject to these requirements is intended to 
be repacked in new containers'' and add in their place the words ``With 
the exception of articles whose containers are not required to be 
marked under Sec. 134.32(b) of this part, if an article listed under 
Sec. 134.23 or otherwise excepted from the marking requirements under 
Sec. 134.22 is intended to be repacked in new containers''
    c. Redesignate current paragraphs (b) through (e), respectively as 
new paragraphs (c) through (f);
    d. Add a new paragraph (b); and
    e. Add three examples following redesignated paragraph (f).
    The revisions and additions read as follows:


Sec. 134.33  Containers or holders for repacked J-list articles and 
other articles excepted from marking.

* * * * *
    (b) Repacker. A ``repacker'' means a person, including the 
importer, who repackages an article subject to these requirements, and 
includes a person who processes such article in the U.S. but as a 
result of such processing is not the ultimate purchaser of the article 
under 19 CFR 134.1(d). An article may be repacked more than once before 
reaching the ultimate purchaser.
* * * * *
    (f) Duties and penalties.
* * * * *
    Example 1. The importer enters bulk packed articles from China 
which are incapable of being marked. The articles are not processed 
in any way while in the importer's possession but are sold to a 
person in the U.S. who will repackage the articles into individual 
containers without further processing for sale to retail purchasers. 
The importer does not notify the repacker of the marking 
requirements and provide the port director with a certification 
pursuant to this section. The articles are excepted from marking 
under Sec. 134.22(a) of this part. Since the containers of the 
articles are not excepted from marking under Sec. 134.32(b), and the 
transferee is considered a repacker under paragraph (b) of this 
section, the importer's failure to comply with the certification 
requirements may subject him to duties and penalties as provided 
under paragraph (e) of this section. The importer would also be 
obligated to comply with the certification requirements under 
similar facts if the articles were on the ``J-list'' (Sec. 134.23).
    Example 2. The importer enters an article from Mexico which was 
produced more than 20 years ago, and in its original packaging 
resells it to a person in the U.S. who repacks it for sale to an 
ultimate purchaser. Under Sec. 134.22(i), the article is excepted 
from the marking requirements. In addition, since the article is a 
good of a NAFTA country, the container is also excepted from the 
marking requirements pursuant to Sec. 134.32(b). Therefore, the 
certification requirements of this section are not applicable.
    Example 3. The importer enters an article from China which is on 
the J-list. The container housing the article is properly marked 
with China as the country of origin. The importer sells the article 
in its original packaging to a customer in the U.S. who processes it 
and then repacks it for sale to a third party. The third party in 
turn processes the article and repacks it for sale to a retail 
customer who consumes the article. The U.S. processor is not the 
ultimate purchaser under 19 CFR 134.1(d). Although the importer 
fails to follow the certification procedures of this section and 
does not notify its immediate customer of the marking requirements, 
the immediate customer repacks the article in

[[Page 4203]]

properly marked containers. However, the third party processor fails 
to mark the new container after processing and repacking the 
article, as required under 19 U.S.C. 1304. In this example, the 
article is excepted from individual marking but each new container 
in which the article is repacked is required to be marked with the 
country of origin, until the article reaches the ultimate purchaser, 
in this case, the retail customer. As a result of the importer's 
failure to comply with the certification requirements of this 
section the importer may be subject to the assessment of marking 
duties and penalties as provided under paragraph (e) of this 
section.

    10. It is proposed to amend redesignated Sec. 134.34 as follows:
    a. Revise the heading;
    b. Redesignate current paragraphs (b), (c), (d), (e) and (f), 
respectively, as new paragraphs (c), (d), (e), (f) and (g);
    c. Add a new paragraph (b); and
    d. Add an example after redesignated paragraph (f).
    The revisions and additions will read as follows:


Sec. 134.34  Repacked marked articles.

* * * * *
    (b) Repacker. A ``repacker'' means a person, including the 
importer, who repackages an article subject to these requirements, and 
includes a person who processes such article in the U.S. but, as a 
result of such processing is not the ultimate purchaser of the article 
under 19 CFR 134.1(d). An article may be repacked more than once before 
reaching the ultimate purchaser.
* * * * *
    (f) Duties and penalties.
* * * * *
    Example. The importer enters articles from China which are 
individually marked with their country of origin. He sells the 
articles in their bulk packaging to a customer in the U.S. who 
processes the articles and also repacks them in bulk for sale to a 
third party. The third party repacks them into blister packs for 
sale to retail customers. The U.S. processor is not the ultimate 
purchaser under 19 CFR 134.1(d). However, the blister packages 
obscure the country of origin marking on the article. Although it is 
clear that the articles will be repackaged for retail sale, the 
importer fails to follow the certification procedures of this 
section and does not notify its immediate customer of the marking 
requirements. In this example, having reasonable knowledge of the 
subsequent repacking of the articles into retail containers after 
release from Customs custody imposes an obligation upon the importer 
to notify its U.S. customer of the marking requirements and to 
provide the required certification to the port director. Since the 
importer has failed to comply with the certification requirements of 
this provision, and the retail packages obscure country of origin 
marking, the importer may be subject to duties and penalties as 
provided under paragraph (f) of this section.
* * * * *


Sec. 134.47  [Removed]

    11. It is proposed that Sec. 134.47 (19 CFR 134.47) be removed.

Raymond W. Kelly,
Commissioner of Customs.
    Approved: January 19, 2000.
Dennis M. O'Connell,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 00-1682 Filed 1-25-00; 8:45 am]
BILLING CODE 4820-02-P