Textile & Apparel Rules of Origin

Published CBP guidance; operative status and applicability must be assessed from the retained publisher edition.

What Every Member of the
Trade Community Should Know About:
Textile & Apparel
Rules of Origin

AN INFORMED COMPLIANCE PUBLICATION
REVISED APRIL 2004

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Textile & Apparel Rules of Origin
April 2004

NOTICE:

This publication is intended to provide guidance and information to the trade community. It
reflects the position on or interpretation of the applicable laws or regulations by U.S. Customs
and Border Protection (CBP) as of the date of publication, which is shown on the front cover.
It does not in any way replace or supersede those laws or regulations. Only the latest official
version of the laws or regulations is authoritative.

Publication History

Revised: March 2004
Revised: December 2000
Revised: November 1998
First Issued: October 1996

PRINTING NOTE:
This publication was designed for electronic distribution via the CBP website
(http://www.cbp.gov/) and is being distributed in a variety of formats. It was originally set up
in Microsoft Word97
®
. Pagination and margins in downloaded versions may vary depending
upon which word processor or printer you use. If you wish to maintain the original settings,
you may wish to download the .pdf version, which can then be printed using the freely
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®
.

Textile & Apparel Rules of Origin
April 2004
PREFACE

On December 8, 1993, Title VI of the North American Free Trade Agreement Implementation
Act (Pub. L. 103-182, 107 Stat. 2057), also known as the Customs Modernization or “Mod” Act,
became effective. These provisions amended many sections of the Tariff Act of 1930 and
related laws.

Two new concepts that emerge from the Mod Act are “informed compliance” and “shared
responsibility,” which are premised on the idea that in order to maximize voluntary compliance
with laws and regulations of U.S. Customs and Border Protection, the trade community needs to
be clearly and completely informed of its legal obligations. Accordingly, the Mod Act imposes a
greater obligation on CBP to provide the public with improved information concerning the trade
community's rights and responsibilities under customs regulations and related laws. In addition,
both the trade and U.S. Customs and Border Protection share responsibility for carrying out
these requirements. For example, under Section 484 of the Tariff Act, as amended (19 U.S.C.
1484), the importer of record is responsible for using reasonable care to enter, classify and
determine the value of imported merchandise and to provide any other information necessary to
enable U.S. Customs and Border Protection to properly assess duties, collect accurate
statistics, and determine whether other applicable legal requirements, if any, have been met.
CBP is then responsible for fixing the final classification and value of the merchandise. An
importer of record’s failure to exercise reasonable care could delay release of the merchandise
and, in some cases, could result in the imposition of penalties.

The Office of Regulations and Rulings (ORR) has been given a major role in meeting the
informed compliance responsibilities of U.S. Customs and Border Protection. In order to
provide information to the public, CBP has issued a series of informed compliance publications
on new or revised requirements, regulations or procedures, and a variety of classification and
valuation issues.

This publication, prepared by the Textiles Branch, Commercial Rulings Division, ORR, is an
informed compliance publication to advise the trade community on the rules for determining the
country of origin of textile products. We sincerely hope that this material, together with seminars
and increased access to rulings of U.S. Customs and Border Protection, will help the trade
community to improve voluntary compliance with customs laws and to understand the relevant
administrative processes.

The material in this publication is provided for general information purposes only. Because
many complicated factors can be involved in customs issues, an importer may wish to obtain a
ruling under Regulations of U.S. Customs and Border Protection, 19 C.F.R. Part 177, or to
obtain advice from an expert who specializes in customs matters, for example, a licensed
customs broker, attorney or consultant.

Comments and suggestions are welcomed and should be addressed to the Assistant
Commissioner at the Office of Regulations and Rulings, U.S. Customs and Border Protection,
1300 Pennsylvania Avenue, NW, (Mint Annex), Washington, D.C. 20229.

Michael T. Schmitz,
Assistant Commissioner
Office of Regulations and Rulings

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INTRODUCTION..........................................................................................7
EFFECTIVE DATE.......................................................................................7
COVERAGE................................................................................................. 8
SEE 19 CFR §102.21(B)(5).........................................................................8
PRINCIPLES BEHIND THE RULES...........................................................8
(1) General Rules.........................................................................................................8
(A) Wholly obtained or produced...............................................................................9
(B) Yarn, Including Single and Multiple Yarns...........................................................9
(C) Fabric..................................................................................................................9
(D) All Other Textile Products....................................................................................9
(2) Special rules.........................................................................................................10
(A) Specified HTS Classifications............................................................................10
(B) Special rules govern knit-to-shape products......................................................11
(C) Dyed and Printed Fabrics and Articles Made from Fabrics...............................11
(3) Multi-country Rule.................................................................................................12
HIERARCHY OF RULES...........................................................................13
SPECIAL EXCEPTIONS & CONSIDERATIONS......................................15
Israel Free Trade Agreement.....................................................................................15
Insular Possessions...................................................................................................16
Components Cut in the U. S. from Foreign Fabric and Assembled Abroad...............16
NAFTA Override.........................................................................................................17
U.S. Goods Sent Abroad For Processing...................................................................17
Sets............................................................................................................................17
SUMMARY OF RULES.............................................................................18
TEXTILE DECLARATION AND QUOTA CHARGE STATEMENT...........18
FAILURE TO FOLLOW THE ORIGIN RULES..........................................19
ADDITIONAL INFORMATION...................................................................20
The Internet................................................................................................................20
Customs Bulletin........................................................................................................20
Importing Into the United States.................................................................................21
Informed Compliance Publications.............................................................................21
Value Publications......................................................................................................21
“Your Comments are Important”.................................................................................22

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RULES OF ORIGIN FOR TEXTILE AND APPAREL PRODUCTS

INTRODUCTION

Section 334 of the Uruguay Round Agreements Act (Pub. L. 103-465, codified
as 19 U.S.C. §3592) established rules of origin for textile and apparel products which
are imported into the Customs Territory of the United States. Except as otherwise
provided by statute, these rules apply for purposes of the Customs laws and the
administration of quantitative restrictions (quotas). The law required the Secretary of
the Treasury to promulgate implementing regulations, which appear as section 102.21
of the Customs Regulations (19 CFR §102.21). Section 405 of the Trade and
Development Act of 2000 (Pub. L. 106-200) amended Section 334 of the Uruguay
Round Agreements Act to clarify the rules of origin for certain textile products. CBP has
amended the regulations contained in 19 CFR §102.21 to reflect the changes mandated
by Section 405.

This publication was adapted from material which was originally prepared to help
CBP Attachés in foreign countries interpret and explain the §334 rules of origin to
manufacturers and exporters. It has answers to many of the questions which CBP
headquarters has received from both CBP field personnel and the trade. While it is only
a guide, this publication provides the basis of the rules in a format which should be
useful to importers and exporters. For that reason we are making the material available
not only to CBP personnel, but to the trade as well.

It must be remembered that this publication does not supersede any Customs
laws, regulations or rulings and should only be used as a general guide. If there are
any technical questions, they should be addressed to the National Import Specialist
responsible for the particular commodity. Addresses for these offices appear in the
material which follows.

EFFECTIVE DATE

The country of origin rules contained in 19 CFR §102.21 apply to textile and apparel
products (see below for coverage) entered, or withdrawn from warehouse, for
consumption on or after July 1, 1996. This date is set by law and does not provide for a
grace period for shipments on the water, time entered into the port limits, entry rejects
or any other exceptions except for certain pre-existing contracts entered into prior to
July 20, 1994 which were required to be filed with the Commissioner of Customs and
Border Protection. The country of origin rules, as amended by Section 405 of the Trade
and Development Act of 2000, apply to goods entered or withdrawn from warehouse for
consumption, on or after May 18, 2000.

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COVERAGE

The §334 country of origin rules for textile and apparel products apply to the textile
items classified in Chapters 50 through 63 of the Harmonized Tariff System (HTS) and
to the following textile items in the HTS classifications listed below:

3005.90 Wadding, gauze, bandages and the like (nonadhesive)
3921.12 Cellular plates, sheets, film, foil and strip of plastics of polymers of vinyl
chloride, combined with textile materials
3921.13 Cellular plates, sheets, film, foil and strip of plastics, of polymers of
polyurethanes, combined with textile materials
3921.90 Cellular plates, sheets, film, foil and strip of plastics of polymers, other,
combined with textile materials
4202.12 Trunks, suitcases, vanity cases, attache cases, briefcases, school
satchels and similar containers with outer surface of textile materials
4202.22 Handbags with outer surface of textile materials
4202.32 Articles carried in the pocket or handbag with outer surface of textiles
4202.92 Other containers of heading 4202 with outer surface of textile materials
6405.20 Footwear with soles and uppers of wool felt
6406.10 Footwear uppers with 50% or more of the external surface area of textile
materials
6406.99 Leg warmers and gaiters of textile material
6501- 6505 Headwear of textiles
6601.10-99 Umbrellas
7019 Yarns and woven fabrics of glass fibers
8708.21 Safety seat belts for motor vehicles
8804 Parachutes; their parts and accessories
9113.90 Watch straps, bands and bracelets of textile materials
9404.90 Comforters, quilts, pillows and cushions, and similar articles of textile
materials
9502.91 Doll clothing
9612.10 Woven typewriter ribbons or similar ribbons, of man-made fibers

See 19 CFR §102.21(b)(5).

PRINCIPLES BEHIND THE RULES

(1) General Rules

In general, except as otherwise provided for by law, a textile or apparel product, for
purposes of Customs laws and the administration of quantitative restrictions, originates
in a country, territory or insular possession according to the following rules:

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(A) Wholly obtained or produced

The country of origin is the country in which a textile or apparel product is wholly
obtained or produced when the product is completely produced or manufactured in
one country (except for de minimis materials as defined in 19 CFR §102.13).

(B) Yarn, Including Single and Multiple Yarns

The country of origin of yarn, thread, twine, cordage, rope, cable or braiding is:

(i) STAPLE yarn, etc. - the country in which staple fibers are spun into
yarn

(ii) FILAMENT yarn, etc. - the country in which filament is extruded

(iii) PLIED, GIMPED AND CABLED yarns, etc. - the country in which the
fibers or filaments used in the yarn are spun or extruded

(C) Fabric

The country of origin of a FABRIC is the country in which the fabric is woven,
knitted, needled, tufted, felted, entangled or created by any other fabric making
process. (NOTE: A fabric making process is defined in 19 CFR §102.21(b)(2) as "any
manufacturing operation that begins with polymers, fibers, filaments (including strips),
yarns, twine, cordage, rope, or fabric strips and results in a textile fabric.)

NOTE: The country of origin of QUILTED FABRICS is the country in which the fabrics
are formed (one of the specific exceptions listed below).

(D) All Other Textile Products

The country of origin of all other textile and apparel products is the country in
which the components of the product are wholly assembled (except for minor
attachments such as buttons, beads, spangles, embroidery, etc., or minor
subassemblies such as collars, cuffs, pockets, plackets, etc.).

NOTE: The rules generally provide that processing operations or assembly (particularly
for apparel), not cutting components, confer country of origin (however, see pre-existing
contracts above and the Israel and insular possession exceptions below).

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(2) Special rules

(A) Specified HTS Classifications

Special rules govern the articles in the following 16 specified Harmonized Tariff
System (HTS) classifications (the HTS classification is followed by a general
description):

(i) Articles Produced from Yarns

5609 - the country of origin of articles made from yarn, strips, twine, cordage,
rope or cables is the country in which the yarn, etc., is produced.

(ii) Articles Produced From Fabric

The country of origin of certain articles made from fabric in the following
Harmonized Tariff System classifications is the country in which the fabric is
produced:

5807 Labels, badges, emblems
5811 Quilted textile products in the piece (i.e., lengths or rolls of
quilted fabrics)
6209.20 Baby diapers (cotton woven)
6213 Handkerchiefs
6214 Shawls, scarves, mufflers, mantillas, veils and the like
6301 Blankets, traveling rugs
6302 Bed Linen, table linen, toilet linen, kitchen linen
6303 Curtains, drapes, interior blinds, valances
6304 Bedspreads, furnishings
6305 Sacks and bags for packing
6306 Tarpaulins, awnings, sunblinds, tents, sails, camping goods
6307.10 Dust cloths, mop cloths, polishing cloths, shop towels, bar
mops, dish cloths
6307.90 Labels, cords, tassels, corset and footwear lacings, toys for
pets, wall banners, surgical towels, surgical drapes, tufted
towels, pillow shells, quilt and comforter shells, national
flags, moving pads, and other made up textile articles not
specifically provided for elsewhere
6308 Needlecraft sets
9404.90 Comforters, quilts, pillows and cushions, and similar articles
of textile materials

NOTE: The country of origin of certain articles is affected by special rules set forth in
section 2(C) below.

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(B) Special rules govern knit-to-shape products.

The country of origin of knit-to-shape products is the country in which major
parts are knitted or crocheted directly to the shape used in the finished product.

Knit-to-shape means that the panels or parts (not including parts such as collars,
cuffs, waistbands, plackets, pockets, linings, paddings, trim or similar parts) are knit to
the shape used in the final assembly process (rather than knit into a tube or blanket of
material that is cut to shape). Minor cutting, trimming or sewing does not affect whether
components are knit to shape. Knit-to-shape applies when 50 percent or more of the
exterior surface area (not including patch pockets, appliques, etc.) is formed by major
parts that have been knitted or crocheted directly to the shape used in the good.

For hosiery, the addition of gussets or top elastics or the closing of toes does not
affect the status of knit-to-shape.

(C) Dyed and Printed Fabrics and Articles Made from Fabrics

Special rules are applicable to certain fabrics and articles made from fabrics
which are dyed and printed when accompanied by two or more certain specified
finishing operations.

(i) Fabrics

The country of origin of fabric classified under the Harmonized Tariff Schedule as
of silk, cotton, man-made fiber or vegetable fiber is the country in which the fabric
is both dyed and printed when accompanied by two or more of the following
finishing operations: bleaching, shrinking, fulling, napping, decating, permanent
stiffening, weighting, permanent embossing or moireing.

(ii) Articles Made From Fabric

Notwithstanding the rule set forth in (A)(ii) above, the country of origin of certain
articles made from fabric in the following eighteen (18) Harmonized Tariff
Schedule classifications is the country in which the fabric is both dyed and
printed when accompanied by two or more of the following finishing operations:
bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting,
permanent embossing or moireing, except for goods classified under such
headings as of cotton or wool or consisting of fiber blends containing sixteen
(16%) or more by weight of cotton (the HTS classifications are followed by
general descriptions):

6117.10 0 knitted or crocheted shawls, scarves, mufflers, mantillas, veils and
the like
6213 handkerchiefs, not knitted or crocheted

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6214 shawls, scarves, mufflers, mantillas, veils and the like not knitted or
crocheted
6302.22 printed bed linen, not knitted or crocheted, of man-made fibers
6302.29 printed bed linen, not knitted or crocheted, of other textile materials
6302.52 table linen, not knitted or crocheted, of flax
6302.53 table linen, not knitted or crocheted, of man-made fibers
6302.59 table linen, not knitted or crocheted, of other textile materials
6302.92 toilet and kitchen linen of flax
6302.93 toilet and kitchen linen of man-made fibers
6302.99 toilet and kitchen linen of other textile materials
6303.92 curtains, including drapes, interior blinds and bed valences, of
synthetic fibers
6303.99 curtains, including drapes, interior blinds and bed valences, not
knitted or crocheted, of other textile materials
6304.19 bedspreads, not knitted or crocheted
6304.93 other furnishing articles, not knitted or crocheted, of synthetic fibers
6304.99 other furnishing articles, not knitted or crocheted, of other textile
materials
9404.90.85 quilts, eiderdowns, comforters and similar articles
9404.90.95 other articles of bedding and similar furnishings

(3) Multi-country Rule

If the country of origin of a textile or apparel product cannot be determined by
one of the above rules and the product is created as a result of processing in two or
more countries, the country of origin is:

(A) The country in which the most important assembly or most important
manufacturing process occurs.

The most important processing operation must be determined on a case-by-
case basis through binding rulings and court decisions. The resulting body of
rulings and court decisions may serve as guidelines in the future.

(B) If the most important assembly or manufacturing process cannot be
determined, the country of origin is the last country in which an important
assembly or manufacturing operation occurred.

For example: if the right half of a coat is assembled in one country and the left
half is assembled in another country, and provided the processing steps in each
country are equally balanced, then the country of origin is probably the country in
which the two halves are sewn together (that is, the last country in which an
important processing operation occurred) because each half is equally important.

More realistically, if one yarn of a plied yarn is produced in one country and the
other yarn is produced in a second country, and the yarns are twisted to form a plied

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yarn, then, assuming both yarns are equal in the final product, the country in which the
yarns are twisted together is the country of origin because each yarn is equally
important and you have to resort to the last country in which an important processing
occurred.

Another example of when the last important processing rule would be used to
determine origin is in the case of a tent in which the fabric for the roof and floor are
produced in one country, the fabric for the walls is produced in another country, and all
the fabrics are cut and assembled in a third country. As a tent is classified in heading
6306, according to the language of §334 its origin should be based on where the fabric
for the tent is formed. But as the fabric is formed in different countries, and it is difficult
to argue that fabric for roofs and floors is more important than fabric for walls, resort to
the last important processing, i.e., where the fabrics are cut and sewn into the tent,
renders the origin determination.

Multi-country processing of goods often leads to origin determinations based
upon the place where the most important processing operation occurred or, if that
cannot be ascertained, the last place where an important processing operation
occurred. Such determinations can only be made on a case-by-case basis, conditioned
upon the specific facts in each case. As such, binding rulings should be requested
from:

U.S. Customs and Border Protection
Director, National Commodity Specialists Division
One Penn Plaza, 10
th
Fl
ATTN: Binding Rulings Section
New York, New York 10119

The requestor should be sure to specify that the ruling is requested pursuant to
the textile and apparel rules of origin in §334. Complete information should be supplied
as to manufacturing and processing and a sample (or drawings if a sample is not
practical) showing exact subassemblies or processing steps should be submitted with
the request for a ruling. Rulings requested from New York will be answered within 30
days if information provided by the requestor is complete.

Initial rulings are issued by the National Commodity Specialists Division in New
York while CBP Headquarters considers any appeals.

HIERARCHY OF RULES

The above rules are arranged in a hierarchy to be applied in the following sequential
order as specified in Customs Regulation §102.21 (c):

1. Textile or apparel products wholly produced in one country.

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2. Each foreign material undergoes requisite tariff shift (as provided in
Customs Regulation 102.21),

EXPLANATION:

All textile and apparel products are listed by 4-digit to 10-digit HTS classifications
or groups of classifications in the tariff shift rules. The tariff shift rules simply explain the
requirements to change the country of origin of textile and apparel products (as shown
in the preceding section) by using tariff classifications rather than textile or apparel
product descriptions. A tariff shift states that, for any given classification, to change the
country of origin of a textile or apparel product there must be a shift from one
Harmonized Tariff System (HTS) classification to another as listed in the tariff shift rules
and/or the processing which occurs must meet any other requirement that is specified in
the tariff shift rules in Customs Regulation §102.21(e).

EXAMPLE:

One group of classifications in the tariff shift rules is 5208 through 5212, which contains
the classifications for cotton woven fabrics. The tariff shift rule for classifications 5208-
5212 states that:

(a) A change from greige fabric of heading 5208 through 5212 to finished
fabric of heading 5208 through 5212 by both dyeing and printing when
accompanied by two or more of the following finishing operations:
bleaching, shrinking, fulling, napping, decating, permanent stiffening,
weighting, permanent embossing, or moireing; or

(b) If the country of origin cannot be determined under (1) above, a change of
heading 5208 through 5212 from any classification outside that group,
provided that the change is the result of a fabric making process.

To confer country of origin to a cotton fabric, a greige fabric must have been
dyed and printed and accompanied by two or more specified finishing operations. For
example, a greige fabric formed in China which is imported into Pakistan where it is
dyed, printed, shrunk and permanently embossed will have its country of origin as
Pakistan.

In the alternative, the creation of fabric must be from some product other than
another cotton woven fabric; for example, the fabric could be formed from cotton yarns,
or from polyester and cotton yarns, from fibers or any other product except cotton
woven fabric (e.g. joining two narrow fabrics). The second requirement of creating a
fabric from a fabric forming process must also be met. This tariff shift rule merely
restates the fabric rule (in the section above) using tariff classification terms or
definitions.

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The result is that the determination of the country of origin is defined in objective
tariff classification shifts rather than subjective terms such as “substantial
assembly” or “new commercial product.” By using HTS classifications, there is no doubt
when a change in the country of origin occurs. If a shipper knows the classification of a
textile product he is exporting, he merely has to locate the classification in the tariff shift
rules to see if the required change of classifications occurred when the product was
produced or manufactured. If the tariff shift has occurred and any other listed
requirement is met, then the country of origin is changed by the processing.

For example, the tariff classification for 5204 through 5207 (cotton yarns) states
that the tariff shift must be from any other heading provided that the change or shift
results from a spinning process. This defines the country of origin for spun yarns (see
above). The tariff shift for 5208 through 5212 requires a shift from classifications for
yarns, fibers or filaments that results from a fabric making process. Similarly, shifts for
6302 require that the country of origin of certain linens must be from the fabric forming
process, i.e., the country in which the fabric was woven and not the country in which the
fabric for the linens were cut and sewn, while certain other linens may originate in the
country where the fabric comprising the good was both dyed and printed when
accompanied by two or more specified finishing operations.

3. Textile or apparel products for which the major parts are knit-to-shape.

4. Textile or apparel products wholly assembled in one country except for
the 16 specified exceptions.

When the product is manufactured in two or more countries and the country of
origin cannot be determined by the four rules above, the country of origin is:

5. The country in which the most important assembly or manufacturing
process occurs, and, if that cannot be determined,

6. The last country in which an important assembly or manufacturing
process occurs.

REMEMBER: Cutting will almost never confer country of origin. For garments, the
above rules are based on assembly operations, not on cutting.

SPECIAL EXCEPTIONS & CONSIDERATIONS

Israel Free Trade Agreement

Israel is an exception to the country of origin rules. The country of origin for
textile and apparel products from Israel will continue to be determined by the rules set
forth in § 12.130 (19 CFR § 12.130), e.g., the origin of most garments is the country in
which the components are cut to shape, although for tailored or complex garments, the
origin is the country in which the garments are wholly assembled. In T.D. 96-58,

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published in the Federal Register on July 31, 1996, CBP explained how to determine
the origin of textile and apparel products that are processed in Israel and another
country. If Israel is determined not to be the country of origin under § 12.130 (19 CFR §
12.130), then the rules in § 102.21 are applied to determine the origin. As Israel cannot
be found to be the country of origin under §102.21, the processing in Israel will be
disregarded when applying the steps in §102.21.

Insular Possessions

The §102.21 country of origin rules apply to the insular possessions of the
United States. The rules will be used to determine whether the goods qualify as a
product of the insular possession under General Note 3(a)(iv) of the Harmonized Tariff
Schedule of the United States.

However, CBP will continue to follow past rulings to determine whether foreign
fabric has been subjected to a “double substantial transformation” for purposes of the
50 percent foreign material content restriction under General Note 3(a)(iv). Cutting will
continue to be used to maintain current status in achieving a double substantial
transformation. The first portion of the substantial transformation test may occur when
fabric is cut into components, while the second may occur when the components are
assembled into wearing apparel. In determining whether the apparel meets the 50
percent foreign value limitation, components which undergo a double substantial
transformation are (and will continue to be) treated as materials produced in the
insular possession rather than as foreign materials.

Components Cut in the U. S. from Foreign Fabric and Assembled Abroad

The value of components cut to shape (but not to length, width or both) in the
U.S. from foreign fabric and exported for assembly abroad into an article that is then
returned is not included in the dutiable value of the finished article imported into the
U.S. (19 CFR §10.25).

a. For textile and apparel products that do not have category numbers (e.g.
umbrellas, parachutes), as well as all footwear and parts of footwear,
assembled in a Caribbean Basin Initiative (CBI) country from components
that were cut to shape (but not including pieces merely cut to length
and/or width) in the U.S. from foreign fabric, the assembled textile
articles are not subject to duty. (19 CFR §10.26).

This provision is necessary in the statute because under the country of origin
rules cutting does not confer country of origin, and therefore components cut in the U.S.
of foreign fabric are not considered to be U.S. products. The definition of textile and
apparel products includes articles that were not considered as textile articles by the
United States prior to implementation of the new World Trade Organization definitions.
See the Annex to the Agreement on Textiles and Clothing. This provision continues the

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current duty free treatment under U.S. Note 2(b), Subchapter II, Chapter 98 of the
Harmonized Tariff Schedule of the United States.

b. The value of the components cut in the U.S. from foreign fabric, up to
the 15 percent cap for U.S. origin materials, may be applied toward
determining the minimum 35 percent requirement to qualify for the
benefits of CBI.

NAFTA Override

Any NAFTA override rules currently in existence will continue to be applied if
a NAFTA preference is claimed.

FOR EXAMPLE: China is the country of origin of comforter shells and also the
country of origin of down used to fill the shells. Both of these components are
sent to Canada where the down is inserted into the shells. The country of origin
of the finished comforter under the §334 rules of origin is China. However,
NAFTA provides for an override rule that applies if a claim is made. Because the
processing in Canada (a NAFTA country) satisfies the NAFTA duty preference
rule, if a claim is made for duty preference at the time of entry (or within one
year), the country of origin is Canada. The NAFTA preference rule continues to
override the §334 country of origin rules in determining the country of origin for
NAFTA products.

U.S. Goods Sent Abroad For Processing

For a U.S. produced textile good sent abroad for processing which results in an
advancement in value or improvement in condition:

a. For duty assessment purposes, the good will continue to be considered
foreign under Note 2(a), Subchapter II, Chapter 98, HTS.

b. For quota purposes, the good will continue to be considered foreign under
19 CFR §12.130(c).

c. The origin of textile or apparel goods for marking purposes is determined
solely by the rules under §102.21. 19 CFR §12.130(c) does not apply for
country of origin marking purposes.
Sets

If one or more components in a set are textile articles and there is no single
country of origin for these components, the country of origin for each textile
component of the set is determined separately. A composite good will
continue to be considered as one combined good.

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For example the country of origin for a comforter set consisting of a flat sheet, a fitted
sheet and pillow cases produced in Pakistan and a comforter, a dust ruffle, and pillow
shams produced in India would be determined separately for each textile component of
the set. Thus, the comforter, dust ruffle and pillow shams that were wholly obtained or
produced in India have a country of origin as India. The sheets and pillowcases that
were wholly obtained or produced in Pakistan have a country of origin as Pakistan.

A woman’s dress, self-fabric belt and shawl that are wholly assembled in Korea are
considered a "composite good" in which the dress imparts the essential character. As
such, the country of origin of the dress will determine the origin of the composite good
and the country of origin of the accompanying self-fabric belt and shawl are not
determined separately. Accordingly, as per the terms of Section 102.21(c)(2) and
Section 102.21(e), as the dress is composed of two or more component parts and is
wholly assembled in a single country, that is, Korea, the country of origin of the subject
dress, self-fabric belt and shawl is Korea. See Headquarters Ruling Letter (HQ)
960047, dated February 20, 1997.

SUMMARY OF RULES

1. Cutting does not determine the country of origin. The §334 rules are
based on processing or assembly operations.

2. CBP’s previous interpretation of substantial transformation for origin
purposes has been replaced with statutory rules based on processing.

3. A subjective determination under the provisions of §12.130 (19 CFR
§12.130) is largely replaced by objective processing operations
expressed in terms of tariff shifts.

4. Generally fabrics originate in the country where the fabric is formed,
however, certain fabrics and articles made from fabric originate in the
country in which they are dyed and printed when accompanied by two or
more specified finishing operations as set forth in §405.

5. Country of origin for textile and apparel products processed, assembled or
manufactured in two or more countries is determined by where the most
important processing occurs, and, if that cannot be ascertained, by where
the last important assembly or manufacturing process occurs.

TEXTILE DECLARATION AND QUOTA CHARGE STATEMENT

A single or multiple country of origin declaration and quota charge statement are
required under 19 CFR §12.130.

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FAILURE TO FOLLOW THE ORIGIN RULES

Because the §334 rules govern the origin of goods for purposes of quantitative
restrictions (quota), goods subject to quota which arrive without correct visas are
inadmissable and may be detained (until correct visas are obtained), denied entry, or in
certain cases seized. Material false statements or omissions regarding origin may also
lead to civil penalties or criminal prosecution. Failure to have the goods properly marked
with the correct country of origin may also lead to the assessment of marking duties, or
in certain cases, penalties, or in cases of repeated or intentional violations, seizure and
forfeiture. In addition, goods which were released may be subject to orders to redeliver
the goods to CBP. Failure to comply with such orders may lead to the assessment of
liquidated damages.

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ADDITIONAL INFORMATION

The Internet

The home page of U.S. Customs and Border Protection on the Internet’s World Wide
Web, provides the trade community with current, relevant information regarding CBP
operations and items of special interest. The site posts information -- which includes
proposed regulations, news releases, publications and notices, etc. -- that can be
searched, read on-line, printed or downloaded to your personal computer. The web site
was established as a trade-friendly mechanism to assist the importing and exporting
community. The web site also links to the home pages of many other agencies whose
importing or exporting regulations that U.S. Customs and Border Protection helps to
enforce. The web site also contains a wealth of information of interest to a broader
public than the trade community. For instance, on June 20, 2001, CBP launched the
“Know Before You Go” publication and traveler awareness campaign designed to help
educate international travelers.

The web address of U.S. Customs and Border Protection is http://www.cbp.gov

Customs Regulations

The current edition of Customs Regulations of the United States is a loose-leaf,
subscription publication available from the Superintendent of Documents, U.S.
Government Printing Office, Washington, DC 20402; telephone (202) 512-1800. A
bound, 2003 edition of Title 19, Code of Federal Regulations, which incorporates all
changes to the Regulations as of April 1, 2003, is also available for sale from the same
address. All proposed and final regulations are published in the Federal Register, which
is published daily by the Office of the Federal Register, National Archives and Records
Administration, and distributed by the Superintendent of Documents. Information about
on-line access to the Federal Register may be obtained by calling (202) 512-1530
between 7 a.m. and 5 p.m. Eastern time. These notices are also published in the
weekly Customs Bulletin described below.

Customs Bulletin

The Customs Bulletin and Decisions (“Customs Bulletin”) is a weekly publication that
contains decisions, rulings, regulatory proposals, notices and other information of
interest to the trade community. It also contains decisions issued by the U.S. Court of
International Trade, as well as customs-related decisions of the U.S. Court of Appeals
for the Federal Circuit. Each year, the Government Printing Office publishes bound
volumes of the Customs Bulletin. Subscriptions may be purchased from the
Superintendent of Documents at the address and phone number listed above.

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Importing Into the United States

This publication provides an overview of the importing process and contains general
information about import requirements. The February 2002 edition of Importing Into the
United States contains much new and revised material brought about pursuant to the
Customs Modernization Act (“Mod Act”). The Mod Act has fundamentally altered the
relationship between importers and U.S. Customs and Border Protection by shifting to
the importer the legal responsibility for declaring the value, classification, and rate of
duty applicable to entered merchandise.

The February 2002 edition contains a section entitled "Informed Compliance." A key
component of informed compliance is the shared responsibility between U.S. Customs
and Border Protection and the import community, wherein CBP communicates its
requirements to the importer, and the importer, in turn, uses reasonable care to assure
that CBP is provided accurate and timely data pertaining to his or her importation.

Single copies may be obtained from local offices of U.S. Customs and Border
Protection, or from the Office of Public Affairs, U.S. Customs and Border Protection,
1300 Pennsylvania Avenue NW, Washington, DC 20229. An on-line version is
available at the CBP web site. Importing Into the United States is also available for
sale, in single copies or bulk orders, from the Superintendent of Documents by calling
(202) 512-1800, or by mail from the Superintendent of Documents, Government Printing
Office, P.O. Box 371954, Pittsburgh, PA 15250-7054.

Informed Compliance Publications

U.S. Customs and Border Protection has prepared a number of Informed Compliance
publications in the “What Every Member of the Trade Community Should Know About:”
series. Check the Internet web site http://www.cbp.gov for current publications.

Value Publications

Customs Valuation under the Trade Agreements Act of 1979 is a 96-page book
containing a detailed narrative description of the customs valuation system, the customs
valuation title of the Trade Agreements Act (§402 of the Tariff Act of 1930, as amended
by the Trade Agreements Act of 1979 (19 U.S.C. §1401a)), the Statement of
Administrative Action which was sent to the U.S. Congress in conjunction with the TAA,
regulations (19 C.F.R. §§152.000-152.108) implementing the valuation system (a few
sections of the regulations have been amended subsequent to the publication of the
book) and questions and answers concerning the valuation system. A copy may be
obtained from U.S. Customs and Border Protection, Office of Regulations and Rulings,
Value Branch, 1300 Pennsylvania Avenue, NW, (Mint Annex), Washington, D.C. 20229.

Customs Valuation Encyclopedia (with updates) is comprised of relevant statutory
provisions, CBP Regulations implementing the statute, portions of the Customs
Valuation Code, judicial precedent, and administrative rulings involving application of

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22

valuation law. A copy may be purchased for a nominal charge from the Superintendent
of Documents, Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-
7054. This publication is also available on the Internet web site of U.S. Customs and
Border Protection.

The information provided in this publication is for general information
purposes only. Recognizing that many complicated factors may be
involved in customs issues, an importer may wish to obtain a ruling under
CBP Regulations, 19 C.F.R. Part 177, or obtain advice from an expert
(such as a licensed Customs Broker, attorney or consultant) who
specializes in customs matters. Reliance solely on the general
information in this pamphlet may not be considered reasonable care.

Additional information may also be obtained from U.S. Customs and Border Protection
ports of entry. Please consult your telephone directory for an office near you. The
listing will be found under U.S. Government, Department of Homeland Security.

“Your Comments are Important”

The Small Business and Regulatory Enforcement Ombudsman and 10 regional
Fairness Boards were established to receive comments from small businesses about
Federal agency enforcement activities and rate each agency’s responsiveness to small
business. If you wish to comment on the enforcement actions of U.S. Customs and
Border Protection, call 1-888-REG-FAIR (1-888-734-3247).

REPORT SMUGGLING 1-800-BE-ALERT OR 1-800-NO-DROGA

Visit our Internet web site: http://www.cbp.gov