Federal Trade Commission Recieved Documents Jan. 16, 1996 P894219 B18354900027 Law Offices Ross & Hardies A Partnership Including Professional Corporations Park Avenue Tower 65 East 55th Street New York, New York 10022-3219 212-421-5555 Telecopier 212-421-5682 JOHN B. PELLEGRINI Direct Line (212) 418-0607 February 5, 1996 Office of the Secretary Federal Trade Commission Room 159 Sixth and Pennsylvania Avenue, N.W. Washington, DC 20580 "Made in USA" - Policy Comment (FTC File No. P894219) Dear Mr. Clark: These comments are submitted on behalf of the Footwear Distributors and Retailers of America ("FDRA") in response to the Commission's request for comments on "Made in USA" claims. 60 Federal Register 53922 (October 18, 1995). FDRA is an association of some 70 retailers, importers, distributors and producers of footwear that account for approximately three-quarters of footwear sales in the United States. The Commission requests comments in six areas of inquiry: 1) consumer perceptions of "Made in USA" claims; 2) the cost and benefits of the "all or virtually all" threshold as opposed to a lower threshold; 3) the cost and benefits of incorporating United States Customs Service ("Customs") origin principles; 4) whether foreign customs officials prohibit the addition of qualifying phrases on "Made in USA" labels; 5) the measurement of domestic content in respect to "Made in USA" claims; and, 6) the form of Commission guidance with respect to such claims. FDRA's comments are limited to points two through six. FDRA does not have any surveys or other direct evidence of consumer perception of "Made in USA" claims. 2. "All or Virtually All" - FDRA opposes the "all or virtually all" standard as impossible to satisfy. It is probable that all footwear manufactured in this country has some foreign material content. Most footwear has one or more components which incorporate rubber. Rubber is not produced in the United States. Thus, if the "all, or virtually all" standard is applied strictly, no footwear manufactured in this country could be labeled "Made in U.S." without some form of qualification. This is not a realistic standard. Domestic producers must be allowed to claim United States origin for footwear which contains foreign materials. Indeed, this claim is not misleading even when there is significant foreign material content. Nevertheless, we agree that there is a point when the foreign content is so significant that an unqualified "Made in U.S." claim would be deceptive. We believe that this point is reached when the foreign content consists of major components, specifically uppers or outsoles. The approach we urge is to permit the "Made in U.S." label when all of the labor necessary to produce the component parts and to assemble the complete footwear is performed in this country.{1} The fact that some or all of the materials are of foreign origin should have no significance. This is not true of foreign-made uppers or outsoles because of the foreign labor necessary to produce the component.{2} On the other hand, the Commission should permit footwear produced in this country using leather imported in material form to be labelled as having been made in this country without qualification. Authorizing the use of qualified "Made in USA" claims when imported major components are used would permit domestic manufacturers to take advantage of the fact that production takes place in this country. This would not be the case if the "all or virtually all" standard is perpetuated. There is no doubt that qualified claims are more difficult to prepare but the difficulty is not significant when compared to the potential advantages of such claims. Certainly, a qualified claim such as "Made in USA of Domestic and Imported Components" is not a terrible hardship. On the other hand, it would be quite difficult for manufacturers to use percentage claims. As indicated elsewhere in these comments, there are enormous uncertainties associated with percentage claims. First, there is no commonly understood meaning for such claims. Are such claims limited to materials, parts and components, or do they include labor? How does one calculate labor costs, overhead costs or research and development costs, etc.? Also, the Commission should be very careful about permitting comparative claims in this area. One of the labels suggested by the Commission is "The most U.S. content of any leading brand". The Commission asks whether such a claim would unduly burden an advertiser's content message. There is a much more important difficulty with this type of comparative claim. It is inconceivable that a domestic manufacturer of footwear could make such a claim since there is no way that one manufacturer would have reliable information about another manufacturer's domestic content. The Commission should be very wary of sanctioning comparative claims when it comes to origin. The Commission asks whether it should permit unqualified "Made in USA" claims for products shipped to both domestic and foreign markets as long as the articles sold for domestic consumption disclose the foreign content by other means, such as packaging or hangtags. This is not a solution. A manufacturer which knows that a certain production batch is to be shipped to a particular market, will be able to ensure that the correct label for the market is applied to the good. The problem arises because manufacturers do not have that information at time of production. If different labeling is required, the adjustment is done after production as part of the packing process. Therefore, permitting the qualified language to be set forth on packaging or hangtags really does not change the dynamic as it would be as easy to use an entirely different label. The real solution here is to permit qualified statements which would be accepted both by the Commission and by the country of importation. 3. Customs Origin Principles - FDRA believes that, although, it would be simpler for the Commission to adopt the same test used by Customs in determining "substantial transformation", adopting this approach would result in a sizable likelihood of consumer deception. Under the rules promulgated by Customs, footwear assembled in Country B with an upper manufactured in Country A and an outsole manufactured in Country C would be labeled as a product of Country B, without qualification. By the same token, footwear assembled in this country using both imported uppers and outsole, need not be marked with a foreign country of origin. This is because, under the Customs rules, the assembly of footwear using imported uppers and outsoles constitutes a "substantial transformation". The only exception is footwear assembled with so-called "formed" uppers, as defined in Chapter 64 of the Harmonized Tariff Schedule of the United States. Although FDRA has no direct information of consumer perception of "Made in USA" claims, we think it is quite clear that consumers would be deceived by a "Made in USA" label on footwear which is merely assembled in this country using imported uppers and outsoles. Under this approach, virtually all footwear manufactured in this country could be labeled "Made in USA". The only exception would be that footwear which is assembled using imported "formed" uppers. While use of Customs rules in other commodity sectors may be appropriate, their use would not be appropriate in the footwear sector. 4. Foreign Requirements - It is the experience of FDRA members that foreign customs officials do not prohibit the addition of qualifying phrases on "Made in USA" labels. A label such a "Made in USA of Foreign and Domestic Components" likely would be accepted by foreign customs officials. A label which discloses the country of origin of the components would not be accepted. For example, a label which reads "Made in USA of Uppers from the Peoples' Republic of China" would not be accepted in most countries as confusing. Accordingly, should the Commission permit a qualified label, it should not require a disclosure of the country of origin of the imported parts or components. The only requirement should be to disclose that parts and components are imported. This is the approach of Part 303 to the Commission's Regulations which implements the requirements of the Textile Products Identification Act. The Commission should not require disclosure of the country of origin of components used in the manufacture of footwear in this country. First, a requirement to disclose the country of origin of individual parts and components would be quite burdensome. It is not unusual for a United States manufacturer to purchase parts and components from multiple sources. Requiring the country of origin of outsoles, for example, when the component might be sourced in four different countries, would be unnecessarily burdensome. It would be necessary to retain component inventory by origin rather than part number. On the other hand, this information is not necessary to avoid consumer deception. While it may be the case that consumers have a preference for United States-manufactured merchandise, there is no particular preference for merchandise manufactured in the United States using components from a particular country. Indeed, a case could be made that requiring the disclosure of the country of origin of the parts and components could, itself, be an occasion for deception. Disclosing the origin of the components might mislead consumers to believe that the product originated in that country. At a minimum statements such as, "Made in the United States with Components from France and China" are unwieldy and could well be confusing the consumers. In short, requiring the country of origin of individual components would be burdensome, it could be deceiving in some case and, in all cases, would lead to confusion. Accordingly, the Commission should permit the use of "Made in USA" labels on products which are manufactured with imported major components as long as the statement of origin is qualified to disclose the fact that imported components were used. The Commission should not require that the country of origin of those components be disclosed. 5. Measurement of Domestic Content - It is FDRA's position that in measuring domestic content, the Commission should limit its inquiry to function. The Commission should not adopt a value-added rule requiring that a certain percentage of cost be domestic in order to label the product "Made in USA". FDRA urges that the Commission adopt the rule that products manufactured in the United States using imported materials, as opposed to imported parts and components, may be labeled "Made in USA" without qualification. Products manufactured in this country using imported major components, on the other hand, if they claim "Made in USA" status, would have to disclose the fact that imported components were used. It is FDRA's view that a value-based rule is not practical. The first question raised by a value-based rule is the basis of comparison. Is it limited to direct costs of processing, i.e. materials and labor, or does it include overhead, general expenses and the like. In either case substantive and complex accounting issues arise. The Commission has recognized this issue and has requested comments on the approach. Value-based approaches are inherently unworkable or so complex that the Commission will never be able to ascertain whether a "Made in USA" claim is justified without a comprehensive audit of a company's financial records.{3} The first question raised by a value-based rule is the basis of comparison. It is limited to direct costs of processing, i.e. materials and labor, or does it include overhead, general expenses and the like. In either case, substantive and complex accounting issues arise. The next difficulty is how to measure labor. Do you look at cost, effort or time? If you look at cost, domestic labor, because it is relatively more expensive, could exceed one-half of all labor but represent less than one-half of the time and effort involved. If you look at time and effort, domestic labor could be less than one-half because of higher skill levels, greater productivity and a greater degree of automation. Exchange rate fluctuations will have a disproportionate impact on these calculations. It is likely that the correct label for footwear made in the same manner, in the same domestic factories with the same mix of domestic and foreign labor and materials will vary from period to period because of relative currency values. The Commission should consider the experience of the United States Customs Service with respect to value comparisons. Until 1989, the tariff classification of footwear was based, in part, on a determination of the "component material of chief value". In converting to the Harmonized System, the international classification system, the United States eliminated all classifications based upon chief value. Also, in developing new rules of origin, the Customs Service has moved away from value analyses to origin determinations based upon changes in tariff classification. Customs abandoned the value approach in order to provide rules that are more objective and transparent and which will lead to greater certainty and predictability. Value-based rules can be applied only on a case-by-case basis and often involve subjective judgments.{4} The Customs Service, which has substantial experience in determining the country of origin of imported merchandise has abandoned value-based rules in favor of what we would describe as a functional approach. The Commission should not ignore the experience of the Customs Service. The Commission should not adopt a value-based approach. We have described some of the difficulties inherent in a value-based approach. We believe that the functional approach described above offers greater objectivity, a higher degree of certainty and predictability, and is far easier to administer. 6. Guidance - The Commission should provide guidance in the form of general principles, and, where appropriate, guidelines for specific industry sectors. Perhaps the most effective approach would be an enforcement policy statement combined with rule-making proceedings in those sectors where more specific guidance is necessary. Should the Commission adopt the functional approach suggested in comment 5 above, an enforcement policy statement would be sufficient. Thus, domestic manufacturers of footwear would understand that if they use imported major parts or components in assembling footwear in this country, they could not make a "Made in USA" claim without an appropriate qualification. If, on the other hand, the only foreign content was raw material, such as rubber or leather, or a minor component, they could make a "Made in USA" claim without regard as to whether the cost of the imported inputs represents more than a given percentage of the cost of the footwear. If the Commission adopts this general approach, it could leave it up to particular industry sectors to seek further guidance in the form of guides or rule-making proceedings. We believe that this approach would cover a large percentage of domestic manufacturers. This approach would give most domestic manufacturers a clear idea of when they could use the "Made in USA" label and when they can use the label but only with an appropriate qualification. This approach would require that the Commission define materials as opposed to parts and components. The Commission should consider adopting the large body of rulings and judicial decisions which define the term "fabricated components" for purposes of the preferential tariff treatment for articles manufactured abroad in whole or in part of United States-made parts and components. See, for example 19 C.F.R.  10.14, copy attached. We believe that this regulation provides a very clear distinction between fabricated components and materials. Articles produced in this country using imported fabricated components could not be labeled as "Made in USA" without an appropriate qualification. On the other hand, products manufactured in the United States using only imported materials, as opposed to fabricated components, could be labeled as "Made in USA", without qualification. * * * FDRA and its members appreciate the opportunity to comment on this important topic and urges that its suggestions be adopted. FDRA requests that it be selected to participate in the public workshop on the use of "Made in USA" claims as announced at 60 Federal Register 65327 (December 19, 1995). Respectfully submitted, ROSS & HARDIES John B. Pellegrini cc: Mr. Peter T. Mangione, FDRA In Six Copies and Disk Enc. Footnotes: {1} This approach is supported by Commissioner Acquenaga's Dissenting Statement in Hyde Athletic Industries, Inc., File No. 922-3236. {2} We believe that insignificant components such as midsoles and eyelets could be used without triggering an obligation to qualify a claim of United States origin. {3} An illustration of the complexity may be found in regulations promulgated to administer tariff preferences under the North American Free Trade Agreement. 60 Federal Register 46334 (September 8, 1995). The regulations relating to calculation of value content run from pages 46399 to 46463. {4} A full discussion of these issues may be found in the Background section of "Rules of Origin Applicable to Imported Merchandise", 59 Federal Register 141 (January 3, 1994), copy attached. Database Mode Citation FOUND DOCUMENT FR Page 59 FR 141-01 1994 WL 933 (F.R.) (Cite as: 59 FR 141) PROPOSED RULES DEPARTMENT OF THE TREASURY Customs Service 19 CFR Parts 4, 10, 12, 102, 134, and 177 RIN 1515-AB19 Rules of Origin Applicable to Imported Merchandise Monday, January 3, 1994 *141 AGENCY: U.S. Customs Service, Department of the Treasury. ACTION: Notice of proposed rulemaking. SUMMARY: This document proposes to amend the Customs Regulations to set forth uniform rules governing the determination of the country of origin of imported merchandise. These rules would codify existing principles used for determining when under the customs laws an article "is wholly the growth, product or manufacture" of a country or when an article is "a new and different article" (or article of commerce) as a result of a manufacturing process in a given country. The proposed rules are intended to codify the present country of origin rules in order to provide rules that are more objective and transparent and thereby to provide greater certainty and predictability for both the trade community and the Customs Service in making country of origin determinations required under existing laws and regulations. DATES: Comments must be received on or before April 4, 1994. ADDRESSES: Written comments (preferably in triplicate) may be addressed to U.S. Customs Service, 1301 Constitution Avenue, NW., Franklin Court, Washington, DC 20229, and they may be inspected at the Regulations Branch located at 1099 14th St.-NW., suite 4000, Washington, DC. FOR FURTHER INFORMATION CONTACT: Sandra L. Gethers, Office of Regulations and Rulings (202-482-6980). SUPPLEMENTARY INFORMATION: Background On September 25, 1991, a document was published in the Federal Register (56 FR 48448) proposing to amend the Customs Regulations to set forth a uniform rule governing the determination of the country of origin of imported merchandise which is wholly obtained or produced in a single country. The document also proposed to amend the Customs Regulations to establish rules, for determining the country of origin of imported goods, and solicited comments on those proposals. Customs has refined the original proposal and has decided to issue this second proposal regarding uniform rules for the determination of the country of origin of imported merchandise. All goods imported into the United States are subject to a determination as to their country of origin because origin determinations affect the treatment of imported goods under various laws. Examples of laws that involve country of origin determinations include laws regarding admissibility, duty assessment, country of origin marking, and quota administration. The rules of origin as historically applied in the United States reflect tests and criteria developed through the years in judicial decisions and in Customs interpretations of those judicial decisions. In more recent years, the importance of rules of origin has been demonstrated by the adoption of statutory or regulatory origin rules applicable in specific contexts, including for purposes of government procurement, certain duty-preference programs, and the U.S. textile import program. An article may be grown or mined or otherwise extracted from the ground in a country and not be further processed prior to exportation. Such an article is "wholly the growth or product" of that country and as such has its origin in that country because it reflects no materials or processing attributable to any other country. Similarly, an article may be processed or manufactured exclusively in a country from materials wholly grown or produced in that same country. In such a case the article is "wholly the product or manufacture" of that country and thus has its origin in that country because, again, it reflects no materials or processing attributable to any other country. The U.S. origin rule in these cases is expressed by the phrase "wholly the growth, product, or manufacture of a country" (or "wholly grown, produced, or manufactured in a country"). The more problematic origin determinations arise when an article is not wholly the growth, product, or manufacture of a country. In these other, more problematic determinations, the product in question incorporates or reflects materials and/or processing which are attributable to two or more countries. In such cases origin is determined based on the effect of processing performed on materials or articles which originated in another country. Under the current judicially-developed test, a case-by-case determination is made as to whether the processing is such that it results in a "new and different article" (or "new and different article of commerce") having a "new name, character, and use" which is different from that which existed prior to the processing; Customs has expressed this test as the "substantial transformation" rule. Under this rule, the country of origin of an imported article is considered to be the last country in which a substantial transformation took place (in other words, the country in which the imported article assumed its final and distinctive identity prior to importation). Notwithstanding the long history of the substantial transformation rule, its administration has not been without problems. These problems devolve from the fact that application of the substantial transformation rule is on a case-by-case basis and often involves subjective judgments as to what constitutes a new and different article or as to whether processing has resulted in a new name, character, and use. As a result, application of the substantial transformation rule has remained essentially non-systematic in that a judicial or administrative determination in one case more often than not has little or no bearing on another case involving a different factual pattern. Thus, while judicial and administrative decisions involving the substantial transformation rule may have some value as restatements or refinements of the basic rule, they are often of little assistance in resolving individual cases involving the myriad of issues or tests that have arisen, such as the distinction between producer's goods and consumer's goods, the significance of further manufacturing or finishing operations, and the issue of dedication to use. The very fact that the substantial transformation rule has been the subject of a large number of judicial and administrative determinations is testament to the basic problem: The case-by-case approach, involving application of the rule based on specific sets of facts, has led to varied case-specific interpretations of the basic rule, resulting in a lack of predictability which in turn has engendered a significant degree of uncertainty both within Customs and in the trade community as regards the effect that a particular type of processing should have on an origin determination. The United States-Canada Free-Trade Agreement (CFTA), Public Law 100449, 102 Stat. 1851 (codified at 19 U.S.C. 2112 note), sets forth rules for determining the origin of goods for purposes of duty preference under the CFTA. Those rules, which are set forth in General Note 3 HTSUS, and the rules of origin in Chapter 4 of the North American Free Trade Agreement *142 (NAFTA), WHICH WILL SUPPLANT THE CFTA Rules, PROVIde that goods will have their origin (1) in the country in which they are wholly obtained or produced, or (2) in the case of goods not wholly obtained or produced in a country, in the country in which they were transformed so as to be subject to a specified change in tariff classification (with minimum value-added requirements applying in addition to a tariff classification change in certain cases). The change in tariff classification standard was specifically developed as an alternative to the traditional substantial transformation rule in order to obviate the problems described above. Customs believes that rules based upon the change in tariff classification approach, would provide by virtue of their greater specificity, more objectivity, transparency, and predictability in origin determinations. Consequently, Customs is proposing to adopt a system of country of origin determination rules based on change in tariff classification that would be applicable to all merchandise imported into the United States. To that end this document would amend interim regulations (19 CFR part 102) published in today's Federal Register, that follow the change in tariff classification approach applicable to North American products. Discussion of Proposals This document proposes to amend the interim regulations as set forth in part 102 of the Customs Regulations, published elsewhere in today's issue of the Federal Register, to make them uniformly applicable to all merchandise imported into the United States. The background section of the interim regulations as well as the regulatory text of part 102, is applicable to this document. This document proposes to amend s102.0 to set forth the scope of areas for which the rules of origin set forth in part 102 are proposed to be used to make country of origin determinations. These proposed rules of origin will be applicable for all purposes for which the "product of" or "country of origin" criterion is prescribed by statute. As this position would be consistent (except in the case of waste and scrap which are treated as if they originated as raw materials) with the position Customs has always taken regarding the concept of goods "wholly grown, produced or manufactured" in one country, including under preferential trade arrangements, such as the Generalized System of Preferences (GSP) and Caribbean Basin Initiative (CBI) statutes and regulations, Customs proposes that this definition apply for all purposes under the Customs and related laws and the navigation laws of the United States (for example, for duty assessment and country of origin marking purposes). Consequently, this document proposes to amend all provisions where the phrase, "wholly the growth, product or manufacture", or "wholly obtained or produced" or a similar phrase, is used in the current regulations for origin purposes, by including crossreferences to the definition of "wholly obtained or produced in a country" set forth in the proposed slO2.1(g). Moreover, since the new rules of origin include specific tariff rules (tariff classification change and/or specific operations) which codify the "substantial transformation" rule, i.e., the criteria for determining whether a good has become a "new and different article of commerce" as a result of a manufacturing process in a given country, and provide the results that would be reached under a case-by-case application of the substantial transformation rule, the new rules would apply for all purposes where "substantial transformation" currently is specified in the Customs Regulations as the test for determining origin under Customs law. This does not include origin determinations under antidumping, countervailing duty, or government procurement statutes, although the authorities responsible for promulgating determinations under those statutes may avail themselves of these rules if they so choose. The proposed amendments to part 134 concerning country of origin marking also clarify that the substantial transformation rule currently used for identifying an ultimate purchaser is the same rule that is used for determining the country of origin of a foreign article imported into the United States. Proposed changes were also made to parts 4, 10, 12, and 177, Customs Regulations (19 CFR parts 4, 10, 12, and 177). The Interim Regulations set forth in Part 102 also are proposed to be used to determine whether a good meets the "product of" criterion for receiving duty preferences under General Note 3(a)(iv), 3(c)(ii), (viii), (ix) (Insular Possessions, Generalized System of Preferences (GSP), Caribbean Basin Economic Recovery Act (CBERA), Freely Associated States, Andean Trade Preferences Act (ATPA) and following bilateral consultations now underway, under General Note 3(c)(vi) (the United States-Israel Free-Trade Agreement). The value content requirements under these provisions, however, must still be met in order for a good to qualify for the duty preference. 19 CFR s10.14 Page 1 19 C.F.R.s 10.14 CODE OF FEDERAL REGULATIONS TITLE 19--CUSTOMS DUTIES CHAPTER I--UNITED STATES CUSTOMS SERVICE, DEPARTMENT OF THE TREASURY PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, ETC. ARTICLES ASSEMBLED ABROAD WITH UNITED STATES COMPONENTS Current through August 31, 1995; 60 FR 45646 s10.14 Fabricated components subject to the exemption. (a) Fabricated components, the product of the United States. Except as provided in s 10.15, the exemption provided under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS) (19 U.S.C. 1202), applies to fabricated components, the product of the United States. The components must be in condition ready for assembly without further fabrication at the time of their exportation from the United States to qualify for the exemption. Components will not lose their entitlement to the exemption by being subjected to operations incidental to the assembly either before, during, or after their assembly with other components. Materials undefined in final dimensions and shapes, which are cut into specific shapes or patterns abroad are not considered fabricated components. Example 1. Articles identifiable in their exported condition as components or parts of the article into which they will be assembled, such as transistors, diodes, integrated circuits, machinery parts, or precut parts of wearing apparel, are regarded as fabricated components. Example 2. Prestamped metal lead frames for semiconductor devices exported in multiple unit strips in which the individual frame units are connected to each other, or integrated circuit wafers containing individual integrated circuit dice which have been scribed or scored in the United States, are regarded as fabricated components. The separation of the individual frames by cutting, or the segmentation of the wafer into individual dice by flexing and breaking along scribed or scored lines, is regarded as an operation incidental to the assembly process. Example 3. Wires of various type, electrical conductors, metal foils, insulating tapes, ribbons, findings used in dressmaking, and similar products, which are in a finished state when exported from the United States, and are ready for use in the assembly of the imported article, are regarded as fabricated components if they are only cut to length or subjected to operations incidental to the assembly process while abroad. Example 4. Uncut textile fabrics exported in bolts from which wearing apparel components will be cut according to a pattern are not regarded as fabricated components. Similarly, other materials, such as lumber, leather, sheet metal, plastic sheeting, exported in basic shapes and forms to be fabricated into components for assembly, are not eligible for treatment as fabricated components. (b) Substantial transformation of foreign-made articles or materials. Foreign-made articles or materials may become products of the United States if they undergo a process of manufacture in the United States which results in their substantial transformation. Substantial transformation occurs when, as a result of manufacturing processes, a new and different article emerges, having a distinctive name, character, or use, which is different from that originally possessed by the article or material before being subject to the manufacturing process. The mere finishing or modification of a partially or nearly complete foreign product in the United States will not result in the substantial transformation of such product and it remains the product of a foreign country. Example 1. A cast metal housing for a valve is made in the United States from imported copper ingots, the product of a foreign country. The housing is a product of the United States because the manufacturing operations performed in the United States to produce the housing resulted in a substantial transformation of the foreign copper ingots. Example 2. An integrated circuit device is assembled in a foreign country and imported into the United States where its leads are formed by bending them to a specified angle. It is then tested and marked. The imported article does not become a product of the United States because the operations performed in the United States do not result in a substantial transformation of the foreign integrated circuit device. Example 3. A circuit board assembly for a computer is assembled in the United States by soldering American-made and foreign-made components onto an American-made printed circuit board. The finished circuit board assembly has a distinct electronic function and is ready for incorporation into the computer. The foreign-made components have undergone a substantial transformation by becoming permanent parts of the circuit board assembly. The circuit board assembly, including all of its parts is regarded as a fabricated component, the product of the United States, for purposes of subheading 9802.00.80, HTSUS (19 U.S.C. 1202). [T.D. 75-230, 40 FR 43022, Sept. 18, 1975; T.D. 89-1, 53 FR 51247, Dec. 21, 1988; 55 FR 40166, Oct. 2, 1990] < C PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, ETC. > > Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484, 1498, 1508, 1623, 1624; Section 1O.17 also issued under 19 U.S.C. 1401a, 1402; Section 10.22 also issued under 19 U.S.C. 1304; Sections 10.41, 10.41a, 10.107 also issued under 19 U. S.C. 1322; Section 10.53 also issued under 16 U.S.C. 1521, et seq.; Section 10.59 also issued under 19 U.S.C. 1309, 1317; Sections 10.61, 10.62, 10.63, 10.64, 10.64a also issued under 19 U.S.C. 1309; Sections 10.62a, 10.65 also issued under 19 U.S.C. 1309, 1317, 1555, 1556, 1557, 1646a; Sections 10.70, 10.71 also issued under 19 U.S.C. 1486; Sections 10.80, 10.81, 10.82, 10.83 also issued under 19 U.S.C. 1313(e) and (i); Sections 10.171 through 10.178 also issued under 19 U.S.C. 2461 et seq.; Sections 10.191 through 10.198 also issued under 19 U.S.C. 2701 et seq.; Sections 10.321 through 10.323 also issued under 19 U.S.C. 2253 note. Source: 28 FR 14663, Dec. 31, 1963. Sections 10.151 through 10.153 appear at 38 FR 17445, July 2, 1973; 50 FR 38976, Sept. 26, 1985; 53 FR 51246, Dec. 21, 1988; 53 FR 51765, Dec. 23, 1988; 54 FR 6881, Feb. 15, 1989; 55 FR 37703, Sept. 13, 1990; 55 FR 40166, Oct. 2, 1990; 56 FR 40779, Aug. 16, 1991; 59 FR 25566, May 17, 1994; T.D. 94-51, 59 FR 30923, June 13, 1994; T.D. 95-31, 60 FR 18990, April 14, 1995, unless otherwise noted. Copr. ~ West 1996 No claim to orig. U.S. govt. works