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HQ 560372

May 8, 1997

MAR-2-05 RR:TC:SM 560372 MLR


Steven B. Zisser, Esq.
Stein, Shostak, Shostak & O'Hara, P.C.
Suite 1200
515 South Figueroa Street
Los Angeles, CA 90071-3329

RE: Country of origin marking for Q-Clip packages from Mexico; NAFTA; Article 509

Dear Mr. Zisser:

This is in reference to your letter of October 21, 1996, requesting a ruling on behalf of your client, Yakima Products, Inc., concerning the country of origin marking of Q-Clip packages.


You state that the Q-Clip packages are made from a combination of U.S. and Mexican components, with some processing performed in Mexico on the U.S. components. The Q-Clips are packaged in Mexico and imported into the U.S. It is stated that the Q-Clip package qualifies as a originating article of the North American Free Trade Agreement (NAFTA), since all materials and components are manufactured in either the U.S. or Mexico and meet the origin requirements of Article 401, NAFTA.

You state that the Q-Clip package is classifiable under subheading 8708.99.80, Harmonized Tariff Schedule of the United States (HTSUS), which provides for "parts and accessories of motor vehicles...Other;, Other, Other". Each Q-Clip package will contain the following components: two U.S.-origin stainless steel Q-Clips, four Mexican-origin base pads, and four U.S.-origin vinyl clip pads. You also state that the stainless steel Q-Clip and the vinyl pads are classifiable under subheading 8708.99.80, HTSUS.

In Mexico, a protective powder coating is applied to the stainless steel Q-Clips, and the Mexican base pads are made from a rubber mold. No processes are performed to the vinyl clips pads in Mexico. You state that Yakima produces over 70 different types of stainless steel Q-Clips. Each Q-Clip is specially designed to attach a Yakima automobile rack to a specific automobile make and model. Users require four Q-Clips, which are designed to grab onto the door frame of the automobile. Each Q-Clip package is sold with two Q-Clips. The base pads and vinyl clip pads are generically designed and work with virtually all Q-Clips. Yakima has seven different sizes of base pads and two sizes of vinyl clips. After processing in Mexico, the components are packaged together in retail packaging in Mexico along with U.S. printed instructions.


What are the country of origin marking requirements applicable to the finished
Q-Clip packages?


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. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines "country of origin" as:

The country of manufacture, production or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within the meaning of this part; however for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added.)

Section 134.1(j), Customs Regulations (19 CFR 134.1(j)), provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. A "good of a NAFTA country" is defined in 19 CFR 134.1(g) as an article for which the country of origin is Canada, Mexico, or the U.S. as determined under the NAFTA Marking Rules set out at 19 CFR Part 102.

Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking purposes. Paragraph (a) of this section states that the country of origin of a good is the country in which:

(1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

Since the finished Q-Clip packages consist of U.S. and Mexican components, these goods are neither wholly obtained or produced, nor produced exclusively from domestic materials. Accordingly, neither 19 CFR 102.11(a)(1) or (2) are applicable. Accordingly, 19 CFR 102.11(a)(3) is the next rule that must be applied to determine the origin of the finished Q-Clip packages.

You state that the finished Q-Clip packages are classifiable under subheading 8708.99.80, HTSUS. In this case, the article consists of two steel Q-Clips, four rubber base pads, and four vinyl clip pads, and we find that it is a "set" under General Rule of Interpretation (GRI) 3(b) because it consists of components that are prima facie classifiable in different headings which are put up together for retail sale in order to meet a particular need. Under GRI 3(b), we find that the essential character is imparted to the whole by the Q-Clips as they perform the actual assembly or fastening function. Since these "packages" are classifiable as if consisting only of the Q-Clips which are of stainless steel, we find that they are classifiable under subheading 8302.30.30, HTSUS as mountings, fittings, and similar articles suitable for motor vehicles "of base metal." The applicable change in tariff classification for subheading 8302.30.30 set out in section 102.20(n), Section XV, Chapters 72 through 83, provides:

8302.10 - 8302.60 ... A change to subheading 8302.10 through 8302.60 from any other subheading, including another subheading within that group.

Since the U.S.-origin stainless steel Q-Clips are also classifiable under subheading 8302.30.30, HTSUS, all foreign materials will not undergo the requisite tariff shift, and 19 CFR 102.11(b) of the hierarchial rules must be applied. We find that 19 CFR 102.11(b) is not applicable because, as we found above, the Q-Clip package is a "set" under GRI 3(b). Therefore, 19 CFR 102.11(c) must be applied, which provides that:

Where the country of origin cannot be determined under paragraph (a) or (b) of this section and the good is specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture or composite good pursuant to General Rule of Interpretation 3, the country of origin of the good is the country or countries of origin of all materials that merit equal consideration for determining the essential character of the good.

In T.D. 94-4, dated December 17, 1993 (59 Fed. Reg. 110, 109), Customs stated the following with regard to section 102.11(c):

Paragraph (c) of section 102.11 reflects current practice whereby multiple countries of origin may exist for goods that are classified as "sets", and for goods classified as "mixtures" or "composite" goods to which no single component can be found to impart their essential character. However, only the countries of origin of the countries meriting equal consideration for determining the essential character of the good would constitute the country or countries of origin of the good.

An example where an item did not require marking was in Headquarters Ruling Letter (HRL) 555365 dated September 5, 1990, where foreign-made screws packaged with U.S.-origin junction boxes abroad were excepted from country of origin marking because they lost their separate identity and became an integral part of the U.S.-origin boxes as a result of their inclusion in the kit. However, in HRL 559032 dated October 25, 1995, Customs found that batteries did not lose their identity as a result of their inclusion in a smoke alarm set, as the smoke alarms could not function without the power furnished by the batteries. Accordingly, both the batteries and the smoke alarms merited "equal consideration" in determining the essential character of the good. This finding was not based on the value of the batteries, but rather was based on the function of the batteries in an operating smoke alarm.

In this case, the articles in the set are U.S. Q-Clips, Mexican base pads, and U.S. vinyl clip pads. We do not agree that the Mexican rubber base pads lose their identity as a result of their inclusion in the package. Although the stainless steel Q-Clip, in one of its 70 different types, performs the actual fastening function, and the pads are more generic in nature, the base pads do perform an important protective function. Without the base pads, it appears that the Q-Clips would not remain as firmly attached to the vehicle and the Q-Clips could damage the finish on the vehicle. Furthermore, the base pads do not represent a de minimis value of the Q-Clip set. Accordingly, in our opinion, the Q-Clip package must be marked with the country of origin of the base pads. It will be appropriate to only mark the package "Made in Mexico" or "Base pads Made in Mexico". Pursuant to 19 CFR 134.32(m), which provides that products of the U.S. exported and returned are excepted from country of origin marking requirements, no marking will be required for the imported Q-Clips or vinyl pads. Whether or not the Q-Clips may be labeled "U.S.A." is within the jurisdiction of the Federal Trade Commission. However, the Customs Service does not object to a marking which also identifies the origin of the Q-Clips.


Based upon the information provided, pursuant to 19 CFR 102.11(c), since the
Q-Clip package is classified as a "set" and the base pads perform an essential protective function, the Q-Clip package must be marked with the country of origin of the base pads. A marking such as "Made in Mexico" or "Base pads Made in Mexico" will be appropriate for Customs marking purposes.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.


John Durant, Director

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