[Federal Register Volume 65, Number 50 (Tuesday, March 14, 2000)]
[Notices]
[Pages 13827-13831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6115]


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DEPARTMENT OF THE TREASURY

Customs Service

[T.D. 00-15]


Application of Producers' Good Versus Consumers' Good Test in 
Determining Country of Origin Marking

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

ACTION: Final interpretation.

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SUMMARY: This notice advises the public that Customs does not intend to 
rely on the distinction between producers' goods and consumers' goods 
in making country of origin marking determinations. It is Customs' 
opinion that as demonstrated in a number of recent court decisions, the 
consumer-good-versus-producer-good distinction is not determinative 
that a substantial transformation, as it traditionally is defined, has 
occurred.

EFFECTIVE DATE: June 12, 2000.

FOR FURTHER INFORMATION CONTACT: Monika Brenner, Attorney, Special 
Classification and Marking Branch, Office of Regulations and Rulings 
(202-927-1254).

SUPPLEMENTARY INFORMATION:

Background

    The marking statute, section 304, Tariff Act of 1930, as amended 
(19 U.S.C. 1304), provides that, unless excepted, every article of 
foreign origin (or its container) 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.
    In Midwood Industries Inc. v. United States, 313 F. Supp. 951 
(Cust. Ct. 1970), appeal dismissed 57 CCPA 141 (1970), the U.S. Customs 
Court considered whether an importer of steel forgings was the ultimate 
purchaser for purposes of the marking statute, 19 U.S.C. 1304. The 
court cited the principles set forth in United States v. Gibson-Thomsen 
Co., Inc., 27 CCPA 267 (1940), in determining that the importer's 
manufacturing operations made it the ultimate purchaser, namely that 
the importer may be considered the ultimate purchaser for marking 
purposes if it subjects the article to further processing that results 
in the manufacture of a ``new article with a new name, character and 
use.'' Midwood, 313 F. Supp. at 956. However, the Midwood court also 
found it relevant to that finding that the imported forgings at issue 
were transformed from producers' goods to consumers' goods, stating:

    While it may be true * * * that the imported forgings are made 
as close to the dimensions of ultimate finished form as is possible, 
they, nevertheless, remain forgings unless and until converted by 
some manufacturer into consumers' goods, i.e., flanges and fittings. 
And as producers' goods the forgings are a material of further 
manufacture, having, as such, a special value and appeal only for 
manufacturers of flanges and fittings. But, as consumers' goods and 
flanges and fittings produced from these forgings are end use 
products, having, as such, a special value and appeal for industrial 
users and for distributors of industrial products. Id. at 957.

    It is Customs opinion that based on subsequent court decisions 
applying substantial transformation analysis, Midwood would be decided 
differently today. Accordingly, Customs proposed in a notice published 
in the Federal Register (63 FR 14751, March 26, 1998), to no longer 
rely on the distinction between producers' and consumers' goods.

Analysis of Comments

    A total of 14 entities responded to the proposal (one untimely). 
Nine comments supported the proposal, three comments opposed the 
proposal, and two comments neither supported nor opposed the proposal.
    Comment: Three commenters supporting and three commenters opposing 
the proposal provided detailed analyses of court decisions to support 
their respective positions. One commenter supporting the proposal 
states that recent court decisions, in particular Superior Wire v. 
United States, 669 F. Supp. 472 (CIT 1987), aff'd, 867 F.2d 1409 (Fed. 
Cir. 1989), did not use a producers' versus consumers' goods analysis. 
The court in Superior Wire, according to this commenter, made its 
decision based on an analysis of the effect on the metallurgical 
properties of wire rod, the fact that the wire rod specification is 
generally determined by reference to the end product for which the 
drawn wire will be used, the value added, and the amount of labor and 
capital investment. The commenter also claims that Superior Wire should 
control because the Federal Circuit rendered the decision.
    Another commenter supporting the proposal points out that the court 
in Superior Wire noted that Uniroyal v. United States, 542 F. Supp. 
1026 (CIT 1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983), did not find 
the producers' to consumers' goods distinction as determinative whether 
a substantial transformation occurred.
    A commenter opposing the proposal states that the court in Superior 
Wire did look at the shift from producers' to consumers' goods. Two of 
the commenters opposing the proposal state that Midwood was cited with 
approval in Superior Wire.
    Response: Customs believes that both the lower court and appellate 
court decisions in Superior Wire support the proposed interpretation. 
In Superior Wire, the parties agreed that the U.S. Court of 
International Trade (CIT) should make its determination of whether wire 
was a product of Spain or Canada on the basis of the substantial 
transformation test. Superior Wire, 669 F. Supp. at 478. The CIT in 
Superior Wire noted that recent cases cite the test used in Anheuser-
Busch Brewing Ass'n v. United States, 207 U.S. 556, 568 (1908), but 
apply it differently. Id. The court also noted that the courts have 
concentrated on a change in use or character, along with certain cross-
checks, including value added, and the amount of processing. Id. 
However, in making its decision, the court decided to examine cases, in 
particular Torrington Co. v. United States, 596 F. Supp. 1083 (CIT 
1984), aff'd, 764 F.2d 1563 (Fed. Cir. 1985), that involved the 
processing of metal objects without combination or assembly operations. 
Id. at 479. The court noted that Torrington cited Midwood with 
approval, but also noted that the ``producer to consumer goods 
distinction drawn in Midwood, * * * was found not determinative as to 
substantial transformation'' in Uniroyal. Id. The court then stated 
that ``there is no clear change from producers' to consumers' goods.'' 
Id. The Superior Wire court, however, did not analyze the facts of 
Midwood, although Midwood also was a case involving the processing of 
metal objects. In contrast to the decision in Midwood, this court found 
that ``wire rod and wire may be viewed as different stages of the same 
product.'' Id.
    While the CIT in Superior Wire did state that there was a change in 
name, the court also found that there was no transformation from 
producers' to consumers' goods, no change from many uses to limited 
uses, no complicated processing, and that only a small percentage of 
value was added. The Federal Circuit held that the CIT's

[[Page 13828]]

conclusions were correct that the drawing of wire rod into wire was not 
the manufacture of a new and different product as required by Anheuser-
Busch. Superior Wire, 867 F.2d at 1415. While the Federal Circuit in 
Superior Wire did acknowledge, without further comment, that the CIT 
cited other considerations, including no transformation from producers' 
to consumers' goods, it did not include this as a basis for its 
holding, and in its decision it only analyzed the changes in name, 
character and use.
    Comment: One supporting commenter states that in SDI Tech., Inc. v. 
United States, 977 F. Supp. 1235 (CIT 1997), the court observed that 
the Midwood test exempts from marking virtually any product that was 
imported in unfinished form and finished prior to sale. Another 
supporting commenter states that while consumer electronics products 
changed from producers' to consumers' goods in SDI, the court 
determined that they did not undergo a substantial transformation. Two 
opposing commenters state that the court in SDI did look at the shift 
from producers' to consumers' goods.
    Response: While Customs agrees that the court in SDI did look at 
the shift from producers' to consumers' goods as this was specifically 
raised by the plaintiff, the court also stated, citing Uniroyal, that 
it ``has never held that the producer/consumer shift alone is 
dispositive.'' SDI, 977 F. Supp. at 1240. Furthermore, the court stated 
that by plaintiff's argument, ``virtually any unfinished product that 
is finished by a producer before it is sold to a consumer would have 
undergone substantial transformation.'' Id. While the court recognized 
that the producer/consumer shift has some evidentiary value, the court 
found that the chassis could be used by a consumer, and found that the 
essence of the chassis remained the same. Also of relevance, is the 
court's statement that while a change in essence is not always a 
necessary prerequisite to a change in character, a lack of a change in 
essence evidences a lack of a change in character. Id. This does not 
hold true for the producer/consumer shift since even if there may be a 
producer/consumer good shift, this is not necessarily indicative of a 
change in character. Ultimately, the court in SDI decided that there 
was no change in character and use and the subject goods did not 
undergo a substantial transformation.
    Comment: One supporting commenter states that in National Juice 
Products Ass'n v. United States, 628 F. Supp. 978 (CIT 1986), the court 
did not reach the result that Midwood would have dictated and expressly 
stated that it was not obligated to follow the producers' good/
consumers' good test. One opposing commenter states that it was dicta 
in National Juice to say that Uniroyal diminished the value of the 
producers' versus consumers' goods test, and that National Hand Tool 
Corp. v. United States, 16 CIT 308 (1992), stated that the 
determination of substantial transformation must be based on the 
totality of evidence.
    Response: It is Customs opinion that in both Uniroyal and National 
Juice, the imported materials could clearly be characterized as 
producers' goods and the finished articles could clearly be considered 
consumers' goods had the court wished to adopt the reasoning used in 
Midwood. In National Juice, the court stated that the significance of 
the producers' goods to consumers' goods transformation in marking 
cases is diminished in light of its decision in Uniroyal. The court 
also stated that ``under recent precedents, the transition from 
producers' to consumers' goods is not determinative.'' National Juice, 
628 F. Supp. at 989-990. Disregarding plaintiff's specific reliance on 
Midwood, the court in National Juice stated that the imported product 
was ``the very essence'' of the retail product and held that 
manufacturing juice concentrate was not substantially transformed when 
it was processed into retail orange juice. Id. at 991. We also note 
that in National Hand Tool, the court did not even mention Midwood.
    Comment: One supporting and two opposing commenters state that 
Uniroyal distinguished the facts of Midwood. However, the supporting 
commenter states that the court could have applied the Midwood test and 
would have reached the opposite conclusion. The supporting commenter 
also points out that the only case that used Midwood was Torrington, 
which can be reconciled with the Uniroyal essence test, and that 
Uniroyal and its progeny establish that there cannot be a substantial 
transformation without changing the fundamental character, as 
exemplified in National Juice and CPC Int'l, Inc. v. United States, 971 
F. Supp. 574 (CIT 1997), appeal docketed, No. 98-1069 (Fed. Cir. 1997).
    Response: Customs agrees with the supporting commenter. In both 
Midwood and Uniroyal, the issue centered around the processes occurring 
after the articles were imported into the United States.
    In Midwood, the court only looked at the operations occurring after 
importation. Witnesses also testified that as imported, the forgings 
had no commercial use as they did not meet any specifications. The 
court then found that the processes were manufacturing processes 
``irrespective of how performed, and albeit that these processes are 
representative of a successive stage of manufacture.'' Midwood, 313 F. 
Supp. at 957. The court found that the ``end result of the 
manufacturing processes'' was the transformation into ``different 
articles having a new name, character and use.'' Id. The court noted 
that the imported articles were `` `forgings' of one kind or another,'' 
indicating a name change. However, as to providing an analysis of the 
change in use and character of the traditional substantial 
transformation test, there was none except for the court's statement 
that as producers' goods they are not used by the consumer and are not 
capable of use by the consumer in that state. Further, the court found 
that while the imported forgings are made as close to the dimensions of 
ultimate finished form as is possible, they still remain forgings 
unless and until converted by some manufacturer into consumers' goods. 
Id. Lastly, the court in Midwood stated that a country of origin 
marking for the benefit of the purchaser of flanges and fittings serves 
no purpose because the ASA specifications have their own marking 
requirements. Id. Accordingly, in effect the court concluded that 
because of ASA marking requirements no other markings were necessary. 
There was no mention of changes in character and use in terms of the 
actual physical characteristics or purpose of the imported and finished 
goods.
    By contrast, the court in Uniroyal did not solely focus upon the 
attachment of the outsole to the imported upper, but also considered 
the processes that occurred in making the upper abroad. Furthermore, 
unlike Midwood where the court noted that the forgings' dimensions were 
close to their finished form, but nevertheless found a substantial 
transformation, the court in Uniroyal focused upon the imported upper's 
finished shape, form, and size in finding no change in either character 
or use when made into the finished shoe. The court in Uniroyal made 
this finding even though the upper was not marketable at retail as a 
complete shoe without the outsole.
    In making distinctions with other court decisions, the court in 
Uniroyal could point to the fact that in Gibson-Thomsen the imported 
articles were materials that lost their identity when combined with 
other articles and were substantially transformed. In distinguishing 
United States v. International Paint Co., Inc., 35 CCPA, C.A.D. 376 
(1948), a case involving

[[Page 13829]]

drawback, the court in Uniroyal noted that the upper did not undergo 
any physical change whatever and did not change in use as the upper was 
intended to be attached to an outsole. In International Paint, however, 
the paint changed into an antifouling paint. In distinguishing Grafton 
Spools Ltd. v. United States, 45 Cust. Ct. 16, C.D. 2190 (1960), a case 
pertaining to the country of origin marking of ribbon spools, the court 
pointed to the fact that the ribbon, and not the spool, was what was 
important or the essence of the article. However in distinguishing 
Midwood, the court in Uniroyal had to emphasize Midwood's analysis of 
the manufacturing processes, because the court in Midwood had not 
analyzed changes in the character and use of the forgings except to the 
extent that they changed from producers' to consumers' goods. 
Therefore, while Customs agrees that Uniroyal distinguished Midwood, as 
stated in SDI, ``while a change in essence is not always a necessary 
prerequisite to a change in character, a lack of a change in essence 
evidences a lack of a change in character.'' SDI, 977 F. Supp. at 1240.
    Comment: Two supporting commenters state that in CPC, the plaintiff 
relied on Midwood that peanut slurry was a producer good, and pointed 
out that the court dismissed the Midwood test, stating that National 
Juice had rejected the transformation from a producers' goods to 
consumers' goods as a determinative criterion in marking cases.
    Response: Customs agrees that as in SDI, the court in CPC rejected 
plaintiff's reliance on Midwood.
    Comment: One supporting commenter states that in Madison Galleries, 
Ltd. v. United States, 688 F. Supp. 1544 (CIT 1988), aff'd, 870 F.2d 
627 (Fed Cir. 1989), the court in dicta stated that the post-Midwood 
cases may have diminished the significance of a producers' good-
consumers' good approach. An opposing commenter states that Midwood has 
been cited with approval in Madison Galleries.
    Response: Customs does not believe that the court in Madison 
Galleries either approved or disapproved of the Midwood decision. In 
Madison Galleries, a case pertaining to the Generalized System of 
Preferences (GSP), the court did not have to find that the article was 
a ``product of'' a GSP country, as the GSP at that time did not have 
such a requirement. While Madison Galleries cited Midwood, it was in 
response to the defendant's argument that it is not logical for an 
article to receive duty-free treatment under the GSP when that article 
would not have to be marked as a product of that GSP country. The court 
in Madison Galleries responded that, as exemplified in Midwood, 
analysis of the marking requirements ``can include consideration of the 
nature of the intended, immediate recipient of a foreign article, i.e., 
whether, for example that recipient is a producer or a consumer.'' 
Madison Galleries, 588 F. Supp. at 1547. Therefore, the court in 
Madison Galleries did not cite Midwood as support for the contention 
that the good was a ``product of'' the GSP country.
    Comment: One supporting commenter states that in Ferrostaal Metals 
Corp. v. United States, 664 F. Supp. 535 (CIT 1987), where the result 
was consistent with the producers' good/consumers' good test, the 
court, while citing Midwood, did not rely on Midwood, but stated that 
the change was indicative of a substantial transformation. One opposing 
commenter states that Ferrostaal specifically rejected the essence 
test, and two opposing commenters state that Midwood was cited with 
approval in the Ferrostaal case.
    Response: Customs does not believe that Ferrostaal supports the 
producers' goods versus consumers' goods test for determining 
substantial transformation. The court in Ferrostaal noted that while 
Uniroyal referred to an essence test, the test to be applied was 
whether the ``imported article underwent a `substantial transformation' 
which results in an article having a name, character or use differing 
from that of the imported article.'' Ferrostaal, 664 F. Supp. at 538, 
citing Uniroyal, 542 F. Supp. at 1029-30. Therefore, the court in 
Ferrostaal specifically rejected defendant's argument that an 
``essence'' test displaced the change in name, character, and use test. 
Id.
    Customs, by this notice, is not suggesting that the essence test 
replace the substantial transformation test. To the contrary, Customs 
adheres to the position stated in CPC, supra, that the essence test is 
``embraced by and aids in applying the traditional change of name, 
character or use test.'' CPC, 971 F. Supp. at 583. As Customs noted in 
the notice of proposed interpretation, the court in Ferrostaal also 
cited Midwood for its conclusion that a transition from producers' 
goods to consumers' goods was indicative of a change in use. Id. at 
541. However, the court extensively considered the changes in character 
as result of the annealing and galvanizing processes as evidence of a 
substantial transformation. Id. at 539.
    Comment: One supporting commenter states that Midwood is legally 
unnecessary as courts have completely disregarded the producers' versus 
consumers' goods test or given it little to no weight. As support, the 
commenter cites Zuniga v. United States, 996 F.2d 1203 (Fed. Cir. 
1993), where a casting slip was not substantially transformed by minor 
processes; Aztec Milling Co. v. United States, 890 F.2d 1150 (Fed. Cir. 
1989), where dry corn flour was not substantially transformed and 
intermediate products did not lose identifying characteristics of 
constituent material; United States v. Murray, 621 F.2d 1163 (1st Cir. 
1980), cert denied, 449 U.S. 837 (1980), where glue blend was not 
substantially transformed because it did not undergo a fundamental 
change; and Grafton Spools, Ltd. v. United States, 45 Cust. Ct. 16 
(1960), where imported empty spools were not substantially transformed 
when wound with thread.
    Response: Customs agrees that the courts generally have disregarded 
or given little weight to the producers' versus consumers' goods test.
    Comment: One commenter states that Customs incorrectly cited Gibson 
Thomsen, supra, as support for the position that the substantial 
transformation test requires a change in name, character, ``and'' use, 
as opposed to a change in name, character ``or'' use.
    Response: Customs disagrees. The Court of Customs and Patent 
Appeals in Gibson-Thomsen cited the criteria, ``a new name, character, 
and use'', five times in its decision. 27 CCPA 267, 270, 271, 272, 273 
(1940) (emphasis added).
    Comment: The proposal violates the Congressional request not to 
undertake changes to the country of origin rules while the World Trade 
Organization (WTO) continues to develop international harmonized 
country of origin rules.
    Response: In the letter dated September 30, 1996, referred to in 
the comment, members of the Senate and the House of Representatives 
requested that any changes in policy with regard to country of origin 
marking requirements be deferred. The letter particularly requested 
deferring any changes in policy with regard to the country of origin 
marking requirements of metal forgings for hand tools. In fact, Customs 
has not made any policy changes with regard to hand tools, and also has 
not finalized its proposed regulations governing rules of origin for 
non-preferential trade even though the original deadline for completing 
the WTO process has passed. Moreover, in a September 30th letter, the 
Chairmen of the Senate Finance Committee and the Committee on Ways and 
Means

[[Page 13830]]

expressly recognized that such deferment in no way would affect the 
right of private parties to contest existing Treasury rulings. The 
subject notice of proposed interpretation was specifically initiated as 
a result of a private party's request to make the NAFTA and non-NAFTA 
rules for the country of origin marking of fittings and flanges 
uniform.
    Comment: Two opposing commenters state that Customs lacks authority 
to limit Midwood and that 19 U.S.C. 1625(d) and 19 CFR 177.10(d) does 
not give Customs authority to disregard a court decision without first 
seeking appellate review, citing Nestle Refrigerated Food Co. v. United 
States, 18 CIT 661 (1994), Orlando Food Corp. v. United States, Slip 
Op. 97-19 (CIT 1997), and Volkswagenwerk Aktiengesellschaft v. Federal 
Maritime Commission, 390 U.S. 261, 272 (1968). They state that in 
Orlando Food, the CIT criticized Customs for limiting the application 
of a CIT decision after publication in the Federal Register. In Orlando 
Food, the court stated that Customs application of the section 1625(d) 
process circumvented judicial process. These commenters also cite CPC 
Int'l, Inc. v. United States, 933 F. Supp. 1093, 1101-02, 1104 (CIT 
1996), appeal pending, where the court stated that Custom may not 
encroach on the judicial function by abrogating binding case law.
    Response: Customs disagrees. Congress specifically codified 19 CFR 
177.10 as part of Title VI, Customs Modernization, of the North 
American Free Trade Agreement implementation Act, Pub. L. 103-182, 103d 
Congress, 107 Stat. 2057 (1993), by adding 19 U.S.C. 1625(d) which 
states that ``a decision that proposes to limit the application of a 
court decision shall be published in the Customs Bulletin together with 
notice of opportunity for public comment thereon prior to a final 
decision.'' The legislative history, House Report No. 103-361(I), 
reflects that Congress specifically recognizes that section 623 of H.R. 
3450 (which became section 623 of Pub. L. 103-182 amending 19 U.S.C. 
1625) requires only that ``a decision that limits the application of a 
court decision * * * be published for notice and comment in the Customs 
Bulletin.'' In this instance, Customs not only published the notice of 
proposed interpretation in the Customs Bulletin, but also in the 
Federal Register soliciting comments. Congress explained that the 
reason for the change was to provide ``assurances of transparency 
concerning Customs rulings and policy directives through publication in 
the Customs Bulletin or other easily accessible sources.'' House Report 
at 2674.
    The CIT reference in Orlando Food that Customs application of 19 
U.S.C. 1625(d) circumvents the judicial process is dicta. However, it 
is Customs opinion that considering all of the industry and trading 
pattern changes with which it has been faced and challenged within the 
last 28 years since the Midwood decision, Customs action under this 
notice is justified. Customs has acted in direct response to a private 
party's inquiry and in the absence of Customs action pursuant to 19 
U.S.C. 1625(d), the country of origin marking requirements for fittings 
and flanges would remain unchanged and not uniform.
    Comment: Seven commenters state that the Midwood decision has 
caused artificial distinctions within the pipe fitting industry, 
confusion, or does not accurately indicate the origin to consumers, 
which is the purpose of the marking statute, citing Globemaster Inc. v. 
United States, 340 F. Supp. 974, 976 (Cust. Ct. 1972), as support. One 
supporting commenter states that it is a GATT violation if the proposal 
is not adopted since the NAFTA Marking Rules are different. One 
opposing commenter states that it is unclear why Customs wants to 
eliminate the producers' versus consumers' good test.
    Response: In response to the opposing commenter, the comments in 
support of the proposal illustrate why Customs has responded to the 
private party's request to address the situation concerning the marking 
of fittings and flanges. As one commenter puts it: ``this whole issue 
has been a thorn of incredible proportion in the side of industry in 
general and the pipe fitting industry in particular.'' Because Customs 
believes that the issue presented in Midwood would be decided 
differently today, and because the NAFTA Marking Rules and Midwood 
decision render different results, it is Customs position that this 
action is necessary in order to provide equitable treatment to all 
importers of pipe fittings and flanges.
    Comment: Three commenters supporting the proposal request that it 
be applied immediately or as expeditiously as possible. One commenter 
states that any marking required by the change can be accomplished 
through inexpensive means, in a short time frame, and without 
substantial economic loss. The commenter states that any further delay 
will continue to cause economic injury to certain industry members who 
have suffered lost sales and price suppression because of unmarked 
foreign flanges. One commenter opposing the proposal states that 
Customs in the past has delayed the effective date of a rule change for 
12 months. The commenter states that if Customs adopts the proposal, it 
would represent a drastic change to the rules under which fitting and 
flange producers operate. This commenter states that if the proposal is 
adopted, marking pipe fittings and flanges would entail far more than 
printing new labels; it would also require the purchase and 
installation of new machinery.
    Response: Customs understands the concerns of both opposing and 
supporting parties. However, the fact remains that the rules for the 
country of origin marking for importations from NAFTA and non-NAFTA 
countries are not uniform. The change in treatment proposed by Customs 
will place all importers of pipe fittings and flanges on an equal 
footing. Customs notes that when the NAFTA Marking Rules were adopted, 
importations from NAFTA countries that were previously not subject to 
marking became subject to a marking requirement and those importers 
were able to make these changes in far less than a one-year period. 
Because the current country of origin marking requirement for pipe 
fittings and flanges is based on administrative treatment, rather than 
a specific ruling, Customs will require that all pipe fittings and 
flanges produced in the United States from imported forgings be marked 
with the country of origin of the imported forging. As specified in 19 
CFR 177.10, Customs will make the change effective 90 days after 
publication of this notice in the Federal Register, except in the case 
of a ruling subject to the procedure specified in 19 U.S.C. 1625.

Conclusion

    In Superior Wire v. United States, supra, while the Federal Circuit 
acknowledged the lower court's reference to the producers' to 
consumers' goods shift, the Federal Circuit only analyzed the changes 
in name, character and use. The Federal Circuit also relied on 
Uniroyal, supra, where that distinction was not found to be 
determinative as to substantial transformation. The lower court in 
Superior Wire also did not analyze the facts of Midwood, supra, 
although it was a metal objects case. The court in Ferrostaal, supra, 
did not advocate the dilution of the traditional substantial 
transformation test in not finding the producers' to consumers' goods 
distinction to be particularly determinative. In SDI, National Juice, 
Uniroyal, and CPC, supra, the Midwood argument was rejected and the 
courts

[[Page 13831]]

examined the ``essence'' of the articles at issue. The court in 
National Hand Tool, Aztec Milling, Murray, and Zuniga, supra, did not 
even mention the Midwood decision. The only cases that really did not 
outright reject or diminish the application of the producers' to 
consumers' good shift are Torrington and Madison Galleries, supra, but 
the citation to Midwood in Madison Galleries does not even stand for 
the position that the article became a ``product of'' the GSP country.
    Customs has provided notice in the Customs Bulletin (and Federal 
Register) as required by 19 U.S.C. 1625(d) of its intention not to rely 
on the producers' to consumers' good test. The opposing commenters have 
not cited a single decision (not even the favorable Torrington 
decision) where a court decided the substantial transformation test 
solely based on the producers' to consumers' good transition.
    Furthermore, since the transition from producers' to consumers' 
good is not necessarily indicative of a substantial transformation, 
unlike a change in ``essence'', the purpose of the producers' to 
consumers' goods analysis does not aid in the determination of whether 
an article underwent a substantial transformation. Therefore, Customs 
will no longer rely on the distinction between producers' goods and 
consumers' goods in making country of origin determinations.
    Inasmuch as the question of whether a good has been substantially 
transformed is based on specific facts, parties who have received 
rulings based on the producers' goods-consumers' goods analysis 
articulated in Midwood can continue to rely on those rulings unless and 
until Customs modifies or revokes them pursuant to 19 U.S.C. 1625, or 
they are specifically overruled by a court.

    Approved: February 11, 2000.
Raymond W. Kelly,
Commissioner of Customs.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 00-6115 Filed 3-13-00; 8:45 am]
BILLING CODE 4820-02-P