[Federal Register Volume 62, Number 161 (Wednesday, August 20, 1997)]
[Rules and Regulations]
[Pages 44211-44214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22034]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Part 134
[T.D. 97-72]
RIN 1515-AB82
Country of Origin Marking
AGENCY: Customs Service, Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This document amends the Customs Regulations to ease the
requirement that whenever words appear on imported articles indicating
the name of a geographic location other than the true country of origin
of the article, the country of origin marking always must appear in
close proximity and in comparable size lettering to those words
preceded by the words ``Made in,'' ``Product of,'' or other words of
similar meaning. Customs believes that, consistent with the statutory
requirements of 19 U.S.C. 1304, the country of origin marking only
needs to satisfy these requirements if the name of the other geographic
location may mislead or deceive the ultimate purchaser as to the actual
country of origin.
EFFECTIVE DATE: September 19, 1997.
FOR FURTHER INFORMATION CONTACT: Craig Walker, Office of Regulations
and Rulings, 202-482-6980.
SUPPLEMENTARY INFORMATION:
Background
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304)
provides that, unless excepted, every article of foreign origin
imported into the United States shall be marked in a conspicuous place
as legibly, indelibly, and permanently as the nature of the article (or
container) will permit, in such a manner as to indicate to the ultimate
purchaser in the United States the English name of the country of
origin of the article. Congressional intent in enacting 19 U.S.C. 1304
was that the ultimate purchaser should be able to know by an inspection
of the marking on the imported goods the country of which the goods are
a product. Part 134, Customs Regulations (19 CFR part 134), implements
the country of origin marking requirements and exceptions to 19 U.S.C.
1304.
Section 134.46, Customs Regulations (19 CFR 134.46) provides that
in any case in which the words ``United States'' or ``American,'' the
letters ``U.S.A.,'' any variation of such words or letters, or the name
of any city or locality in the United States, or the name of any
foreign country or locality other than the country or locality in which
the article was manufactured or produced, appear on an imported article
or its container, there shall appear, legibly and permanently, in close
proximity to such words, letters or name, and in at least a comparable
size, the name of the country of origin preceded by ``Made in,''
``Product of,'' or other words of similar meaning.
Section 134.46 was promulgated pursuant to the statutory authority
of 19 U.S.C. 1304(a)(2), which provides that the Secretary of the
Treasury may by regulations require the addition of any words or
symbols which may be appropriate to prevent deception or mistake as to
the origin of the article or as to the origin of any other article with
which such imported article is usually combined subsequent to
importation but before delivery to an ultimate purchaser.
A strict application of Sec. 134.46 would require that in any case
in which a non-origin locality reference appears on an imported article
or its container, the actual country of origin of the article must
appear in close proximity and in comparable size lettering to the
locality reference preceded by the words ``Made in,'' ``Product of,''
or other words of similar meaning.
Because Customs believes that the strict requirements of
Sec. 134.46 are not always necessary to ``prevent deception or mistake
as to the origin of the article'' in accordance with 19 U.S.C. 1304,
Customs proposed to modify Sec. 134.46 in a Notice of Proposed
Rulemaking published in the Federal Register (60 FR 57559) on November
16, 1995.
In that document, Customs also proposed to remove Sec. 134.36(b),
which provides that an exception from marking shall not apply to any
article or retail container bearing any words, letters, names or
symbols described in Sec. 134.46 or Sec. 134.47 which imply that an
article was made or produced in a country other than the actual country
of origin. Since the special marking requirements of Sec. 134.46, as
proposed to be amended, would be triggered only when the the marking
appearing on an imported article or its container is capable of
misleading or deceiving an ultimate purchaser as to the actual country
of origin of the article, Sec. 134.36(b), which serves the same
purpose, would be redundant and no longer needed.
The proposal to modify Sec. 134.46 reflected Customs practice in
applying the regulation. Customs has applied a less stringent standard
in determining whether the country of origin marking appearing on an
imported article or its container is acceptable. That is, Customs takes
into account the question of whether the presence of words or symbols
on an imported article or its container can mislead or deceive the
ultimate purchaser as to the actual country of origin of the article.
Consequently, if a non-origin locality reference appears on an imported
article or its container, Customs applies the special marking
requirements of Sec. 134.46 only if it finds that the reference may
mislead or deceive the ultimate purchaser as to the actual country of
origin of the imported article. If Customs concludes that the non-
origin locality reference would not mislead or deceive an ultimate
purchaser as to the actual country of origin of the imported article,
Customs' policy is that the special marking requirements of Sec. 134.46
are not triggered, and the origin marking only needs to satisfy the
general requirements of permanency, legibility and conspicuousness
under 19 U.S.C. 1304 and 19 CFR part 134. This less stringent
application is evidenced in
[[Page 44212]]
numerous Customs headquarters ruling letters.
Analysis of Comments
A total of 17 entities responded to the proposal. Fourteen
respondents supported the proposal, although some suggested certain
changes. Three commenters opposed the amendment.
Comments Supporting Customs Proposal
Comments: One commenter stated that the proposed amendment to
Sec. 134.46 would provide additional flexibility in accommodating the
country of origin marking on the labels of its food products, many of
which have very limited surface areas available for labelling because
of their size (e.g., small bags of candy, snacks, candy bars, gum).
Two commenters stated that references to places other than the
country of origin are not necessarily misleading. The context must be
considered. These two commenters believe that the proposed amendment
would bring the country of origin marking regulations into closer
conformity with the purpose and congressional intent of section 1304
and would serve the goal of informed compliance by bringing the country
of origin marking regulations into closer conformity with positions
taken in certain Customs rulings.
Two other commenters stated that if the proposed amendment is
adopted, all rulings which require proximity even when there is no
realistic possibility of confusion should be revoked. They specifically
mentioned T. D. 86-129 of June 26, 1996, which currently requires that
the country of origin statement on footwear and its packaging must
appear in close proximity to any non-origin reference, even in
circumstances where the non-origin reference would not be misleading or
deceptive to the consumer. These commenters asked why shoe boxes, for
example, should be held to a higher standard of compliance than other
products, such as wearing apparel, where a design/decoration exception
can be used for not applying the stricter marking requirements of
Sec. 134.46.
Another respondent believes that the proposal will enhance
harmonization between the United States Customs Service and the Bureau
of Alcohol, Tobacco and Firearms (ATF) regarding country of origin
labelling requirements of imported foreign origin alcoholic beverages.
ATF labelling specialists are aware of the general Customs requirement
that country of origin markings should be located on all labels of
imported foreign alcoholic beverages and that these markings should
meet the general requirements of permanency, legibility and
conspicuousness. However, ATF labelling specialists are not usually
aware of the specifics of Customs regulations or Customs rulings which
interpret Customs regulations. Therefore, ATF labelling specialists may
approve a label for ATF purposes which is not in strict accordance with
Customs requirements.
Finally, one commenter noted its belief that the Customs proposal
is consistent with the World Trade Organization Rules, Article 4.5.1.
of the Codex Standard for the labelling of prepackaged foods (Codes
STAN 1-1985, Rev. 1-1995). This rule provides that the ``country of
origin shall be declared if its omission would mislead or deceive the
consumer''. According to the Codex standard, it is not required that
the country of origin be marked in close proximity to the words
indicating a geographic non-origin location.
Response: Customs agrees with the above comments. Any recipient of
a prior ruling which may be inconsistent with this final rule should
request reconsideration of such ruling in the context of the amended
Sec. 134.46.
Comments Supporting Customs Proposal With Suggested Changes
Comment: One commenter supports Customs proposal but suggests that
Sec. 134.46 be amended to read that a country of origin mark must
appear in close proximity to a non-origin geographical reference only
if the reference ``will mislead or deceive the ultimate purchaser''.
This commenter states that the words ``may mislead or deceive'' used in
the proposed regulation will lead to subjective and differing
interpretations. He suggests that one way of remedying this problem is
to permit an importer to submit statistically significant studies
concerning consumer perception of a particular non-origin geographical
reference in order to demonstrate that the reference does not mislead
or deceive the average consumer.
Another respondent supporting the proposal suggests that the word
``may'' be replaced by ``is likely to'' in the final rule if adopted.
This will insure that the Sec. 134.46 stricter marking requirements
will be imposed not when there is a mere possibility, but rather a
likelihood, of misleading or deceiving the ultimate purchaser.
Response: Customs does not agree that the word ``may'' as proposed
in the amendment to Sec. 134.46 should be changed to ``will'' or ``is
likely to.'' Customs believes that the ultimate purchaser is provided
with the greatest assurance and protection against being misled or
deceived by non-origin marks by granting Customs the discretion to
decide on a case-by-case basis whether a mark ``may mislead or deceive
an ultimate purchaser as to the actual country of origin.'' As a
result, Customs is able to be more flexible in deciding not to apply
the stricter marking requirements of Sec. 134.46 in every instance
where a mark has a non-origin type reference. The word ``will'' or the
phrase ``is likely to'' could inhibit accomplishment of these goals.
Therefore, Customs does not believe that a change in the wording of the
proposed amendment is necessary.
Comment: One commenter supports Customs proposal, but suggests that
if Customs adopts the proposal, it should also provide an exception for
manhole covers, rings, frames and assemblies thereof covered by 19
U.S.C. 1304(e). This commenter believes that in the absence of such an
exclusion from the scope of this regulation, it possibly could be
interpreted as ignoring the statutory requirements of section 1304(e).
Response: Section 1304(e) of title 19 United States Code provides
that:
No exception may be made under subsection (a)(3) of this section
with respect to manhole rings or frames, covers, and assemblies
thereof each of which shall be marked on the top surface with the
English name of the country of origin by means of die stamping,
cast-in-mold lettering, etching, engraving, or an equally permanent
method of marking.
Since the special country of origin marking requirements for these
articles in 19 U.S.C. 1304(e) are statutory, rather than regulatory as
the requirements of Sec. 134.46 are, the proposed change, if adopted,
would have no effect on these statutory requirements. The amendment of
Sec. 134.46 will not implement any of the marking exceptions under 19
U.S.C. 1304(a)(3), and therefore will have no impact upon the general
marking requirements of Sec. 1304(e). If the proposed amendment to
Sec. 134.46 is adopted, these articles still must satisfy the statutory
marking requirements of Sec. 1304(e), regardless of Sec. 134.46
marking. Therefore, Customs does not agree with the suggestion.
Comment: One commenter supports Customs proposal but also
encourages Customs to extend this initiative to situations arising
under Sec. 134.47 (displaying the name of a place other than the true
country of origin as part of a trademark, trade name or souvenir). The
commenter states that Customs practice in considering whether to apply
Sec. 134.47 also involves an analysis of
[[Page 44213]]
potential consumer confusion arising from the use of a trademark
displaying the name of a place other than the country of origin. Thus
the proposed amendment would seem logically applicable to Sec. 134.47.
Furthermore, since Customs in its Notice views Sec. 134.36(b) as aimed
essentially at combating confusing, misleading, or deceptive marking,
and as section 134.36(b) in turn identifies as equally confusing,
misleading or deceptive those types of markings defined both by
Secs. 134.46 and 134.47, it would seem that Sec. 134.47 is as good a
candidate for the proposed amendment as is Sec. 134.46. Both are
equally aimed at avoiding confusion to the ultimate purchaser.
Response: Customs agrees with the commenter that Customs proposal
of applying the stricter marking requirements of Sec. 134.46 only if
the non-origin reference ``may mislead or deceive the ultimate
purchaser as to the actual country or origin'' should be applied to
trademarks, trade names or souvenir markings which depict non-origin
references. However, Customs does not agree that this change can be
made under the existing proposal, but that a new proposal is required.
Therefore, Customs will issue a new notice of proposed rulemaking
proposing to either amend Sec. 134.47 consistent with the determination
in this document or to remove Sec. 134.47 since Sec. 134.46, as
amended, will effectively apply to any non-origin type reference,
including those which are part of a trademark, trade name or souvenir
marking.
Comment: One commenter suggests that Customs in its final rule set
forth some examples of cases where the non-origin reference would
likely mislead or deceive the ultimate purchaser as to the actual
country of origin of the article.
Response: Customs agrees that samples of cases where the non-origin
type reference ``may mislead or deceive the ultimate purchaser as to
the actual country of origin of the article'' would assist the
importing community in better understanding the proper use of
Sec. 134.46. Therefore Customs offers the following examples of non-
origin markings which Customs consistently has ruled to be misleading
or deceiving to an ultimate purchaser, thus triggering the requirements
of Sec. 134.46 that the country of origin appear in close proximity and
in comparable size lettering to the non-origin marking preceded by the
words ``Made in,'' ``Product of,'' or other words of similar meaning.
In each of these examples, the country of origin of the imported
article is foreign.
Example 1. ``A product of ABC Corp., Chicago, Illinois.''
Example 2. ``Manufactured by ABC Corp., California, U.S.A.''
Example 3. ``Manufactured and Distributed by ABC, Inc., Denver,
Colorado.''
Example 4. ``Packed for ABC Corp., Greenville, South Carolina.''
Comments Opposing Customs Proposed Regulation
Comment: One commenter who opposed Customs proposed regulation
believes that finalization of the proposed amendments would be ill-
advised. This commenter urges Customs either to withdraw the proposed
amendment in its entirety or to modify the amendment to maintain the
existing proximity and lettering comparability requirements in cases
where the reference to the U.S. is made in the context of a statement
relating to any aspect of the production or distribution of the product
(e.g., ``Designed in U.S.A.,'' ``Made for XYZ Corp., California,
U.S.A.,'' or ``Distributed by ABC, Inc., Colorado, U.S.A.'').
Specifically, the commenter is concerned that the FTC's stringent
policy of generally limiting the use of ``Made in U.S.A.'' claims to
those products that are ``all or virtually all'' of U.S. content
effectively prohibits U.S. firms which add a substantial percentage of
a product's value in the U.S. from labelling it as U.S. origin. At the
same time, importers are regularly permitted by Customs to label wholly
foreign-made products with inconspicuous statements of the foreign
origin, although these products may be festooned with American flags,
brand names which expressly refer to the U.S., or statements (e.g.,
``Designed in U.S.A.,'' ``Made for [U.S. importer's name and
address]''), which could mislead the consumer into assuming that the
article was produced in the U.S. The only way to ensure that such
statements regarding operations performed in the U.S. do not mislead
consumers is to insist that they be coupled with the required country
of origin marking in accordance with Sec. 134.46. Furthermore, if
Customs decides to proceed with the proposal or some variation of it,
Customs should do so only after the conclusion of the FTC's workshop
and the FTC's larger review proceeding, so that relevant information
concerning consumer perception gathered in the FTC proceeding can be
considered by Customs in connection with the proposed amendment to
Sec. 134.46.
Response: Customs agrees that references to the U.S. made in the
context of a statement relating to any aspect of the production or
distribution of the products, such as ``Designed in U.S.A.,'' ``Made
for XYZ Corp., California, U.S.A.,'' or ``Distributed by ABC Inc.,
Colorado, U.S.A.,'' are misleading to the ultimate purchaser and would
still require country of origin marking in accordance with Sec. 134.46,
even as amended by the proposal. Therefore, Customs disagrees with the
idea that these types of markings would be allowed under the proposed
amendment to Sec. 134.46. In the prior comment analysis, these types of
statements have been cited as examples of misleading and deceptive
statements triggering the special marking requirements of Sec. 134.46.
Also, Customs does not agree that it is necessary to consider the FTC's
review of consumer perception gathered during the FTC's ``Made in USA''
workshop in making its decision as to the issuance of the final rule
amending Sec. 134.46. Customs believes that determining whether a non-
origin type reference ``may mislead or deceive an ultimate purchaser as
to the actual origin of the article'' should be limited to the mark
itself and its effect on the ultimate purchaser, not based upon
extrinsic evidence of consumer perception. If Customs were required to
review information about consumer perception when making a
determination as to whether the non-origin reference may be misleading
or deceiving to the ultimate purchaser, rather than just reviewing the
mark itself as is Customs present practice, this could result in long
delays in merchandise being released.
Comment: One commenter opposing Customs proposal believes that
Customs should tighten the enforcement of the country of origin marking
regulations, rather than make them more lenient.
Response: Customs does not agree that adopting the proposed
amendment would make the marking requirements for imported foreign
articles more lenient. Customs has consistently applied the standard of
``whether the non-origin reference may mislead or deceive an ultimate
purchaser as to the actual origin'' in practice and in its rulings when
determining whether a non-origin type reference triggers the special
marking requirements of Sec. 134.46. As a general rule, whenever
Sec. 134.46 is applicable, the article already contains at least one
country of origin marking. This section has triggered additional
markings on an automatic basis. The only difference adopting the
proposed amendment will make is that the standard that Customs has been
applying will be codified so the public will be informed and have
knowledge of it. The intent of the marking statute is to indicate to
the
[[Page 44214]]
ultimate purchaser the country of origin of a foreign article and at
the same time protect an ultimate purchaser from misleading or
deceptive non-origin type references. The proposed amendment to
Sec. 134.46 effectively accomplishes these goals. It also gives the
Customs field offices discretion as to whether the stringent marking
requirements of Sec. 134.46 should be applied in situations where non-
origin type references appearing on the article or its container are
clearly not misleading or deceiving as to the actual origin of the
imported article.
Comment: Another commenter opposes Customs proposed regulation
because he believes that the proposed change would open the door to
litigation due to differing opinions as to what is ``misleading or
deceiving.'' This commenter observes that every time Customs sends out
a Notice of Redelivery for a marking violation for merchandise which is
marked with a country or locality other than the country or locality in
which the merchandise was manufactured or produced, the recipient of
that Notice will respond that the marking ``will'' not mislead or
deceive the ultimate purchaser in the U.S.
Response: Customs disagrees that the proposal would open the door
to litigation due to the differing opinions as to what is ``misleading
or deceiving.'' The proposed amendment applies a standard based on
whether the non-origin type reference ``may mislead or deceive an
ultimate purchaser as to the actual country of origin of the article''
rather than ``will'' as the commenter mistakenly states, so that every
case does not become a question of fact, as the commenter suggests.
Conclusion
In accordance with the analysis of comments above and after further
consideration, Customs concludes that the proposed amendments to
Secs. 134.36(b) and 134.46 should be adopted as proposed. It is noted
that certain editorial changes are made to Sec. 134.46 which are not
substantive in effect. It is also noted that Customs intends to issues
a new Notice of Proposed Rulemaking regarding Sec. 134.47, as discussed
earlier.
Regulatory Reflexibility Act and Executive Order 12866
Pursuant to the provisions of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.), because this regulation eases the country of
origin marking requirements and thus reduces the regulatory burden, it
is certified that the regulations will not have a significant economic
impact on a substantial number of small entities. Accordingly, the
regulations are not subject to the regulatory analysis or other
requirements of 5 U.S.C. 603 and 604.
This document does not meet the criteria for a ``significant
regulatory action'' as specified in Executive Order 12866.
Drafting Information: The principal author of this document was
Janet L. Johnson, Regulations Branch. However, personnel from other
offices participated in its development.
List of Subjects in Part 134
Customs duties and inspection, Labeling, Packaging and containers.
Amendment to the Regulations
For the reasons set forth in the preamble, part 134 of the Customs
Regulations (19 CFR Part 134) is amended as set forth below.
PART 134--COUNTRY OF ORIGIN MARKING
1. The general authority citation for part 134 continues to read as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 20,
Harmonized Tariff Schedule of the United States), 1304, 1624.
Sec. 134.36 [Amended]
2. Section 134.36 is amended by revising its heading to read
``Inapplicablity of Marking Exception for Articles Processed by
Importer'', removing the designation and heading of paragraph (a) and
removing paragraph (b).
3. Section 134.46 is revised to read as follows:
Sec. 134.46 Marking when name of country or locality other than
country of origin appears.
In any case in which the words ``United States,'' or ``American,''
the letters ``U.S.A.,'' any variation of such words or letters, or the
name of any city or location in the United States, or the name of any
foreign country or locality other than the country or locality in which
the article was manufactured or produced appear on an imported article
or its container, and those words, letters or names may mislead or
deceive the ultimate purchaser as to the actual country of origin of
the article, there shall appear legibly and permanently in close
proximity to such words, letters or name, and in at least a comparable
size, the name of the country of origin preceded by ``Made in,''
``Product of,'' or other words of similar meaning.
George J. Weise,
Commissioner of Customs.
Approved: July 1, 1997.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 97-22034 Filed 8-19-97; 8:45 am]
BILLING CODE 4820-02-U