Certificate of Origin Circulars

Ref : CERT 200

28 June 1996

Dear Sirs,

Certificate of Origin Circular No. 7/96

Additional Certification Requirements for Export of
Fabrics and Certain Textile Made-up Articles to the USA

Introduction

With effect from 1 July 1996, traders applying for a Certificate of Hong Kong Origin to cover the export to the USA of certain textiles and made-up articles including fabrics, bedlinen, handkerchiefs, scarves and other specified articles (Note1) will be required to meet additional certification requirements to tie in with the changes in licensing requirements as announced in Notice to Exporters : Series 1 (USA) No. 26/96 of 29 May 1996. This Circular sets out the details of the additional certification requirements applicable to the affected products. Moreover, the existing certification requirements covering the export of finished fabrics to the USA as set out in Certificate of Origin Circulars Nos. 2/91, 5/91 and 11/91 of 1 March 1991, 30 May 1991 and 27 July 1991 are hereby superseded.

Requirements in respect of the Manufacture of Specified Textile Products

2. As a result of the implementation of the rules of origin provided for under the US Uruguay Round Agreements Act as from 1 July 1996, the Department has introduced, on top of existing Hong Kong origin criteria, special requirements in respect of the manufacture of certain textiles and made-up articles for the products to be entitled to a Hong Kong origin for export to the USA. These special requirements are as follows:-
   

   1. All fabrics including finished fabrics must be formed in Hong Kong; and
      
   2. Bedlinen, handkerchiefs, scarves and other made-up articles (Note1) must be made from fabrics formed in Hong Kong.
      
      
   Note 1 :Textile made-up articles subject to additional certification requirements are items under the following HS headings:
   
   

   HS Heading	Product Description
   5807	Labels and badges, not embroidered
   5811	Quilted textile products in the piece
   6209.20.5040	Infants' diapers
   6213	Handkerchiefs, woven
   6214	Mufflers, shawls and scarves, woven
   6301	Blankets and travelling rugs
   6302	Bed, table, toilet and kitchen linens
   6303	Curtains, drapes and interior blinds
   6304	Other furnishing articles
   6305	Sacks and bags
   6306	Tarpaulins, awnings, sunblinds, tents and camping goods
   6307.10	Floorcloths, dishcloths, dusters and cleaning cloths
   6307.90	Other made-up textile articles (labels, cords, tassels, corset and footwear lacings, toys for pets, wall banners, surgical towels, tufted towels, pillow shells, quilt shells, comforters, national flags, moving pads)
   6308	Needlecraft sets
   9404.90	Pillows, cushions, quilts, eiderdowns and comforters

   
   
3. Under these requirements, "fabrics formed in Hong Kong" will mean that the fabrics have undergone the "fabric-making process" in Hong Kong, which by definition is any manufacturing operation that begins with polymers, fibers, filaments, yarns, twine, cordage, rope or fabric strips and results in a textile fabric.
   

Additional Certification Requirements

4. To tie in with the revised requirements for licensing the products concerned for export to the USA, the special requirements as set out in paragraph 2 above will, with effect from 1 July 1996 have to be met as an additional condition for issue of Certificates of Hong Kong Origin (CHKO) to cover the exports. In this connection, manufacturers who wish to apply for a Certificate of Hong Kong Origin for these products should, apart from satisfying the Hong Kong origin rules as set out in Certificate of Origin Circular No. 6/95 of 26 May 1995, comply with the requirements as set out in paragraphs 5 to 9 below.
   

A. Finished Fabrics

5. As from 1 July 1996, all fabrics that are subjects of aCertificate of Hong Kong Origin destined to the USA must be formed in Hong Kong. Foreign origin grey fabrics printed and dyed in Hong Kong will no longer qualify for the issue of a Certificate of Hong Kong Origin to cover their export to the USA. Moreover, CHKOs issued under the existing requirements to cover the export of finished fabrics manufactured from foreign origin grey fabrics will thereafter cease to be valid for supporting export licence applications to the USA.
   
   
6. Henceforth, the applicant manufacturer for a CHKO who has not performed the fabric-making process but purports to have satisfied the special requirement in paragraph 2(a) above is required to make the following declarations at the designated space on the manufacturer's page of the certificate application form [TIC 185 (Revised)] :
   
   1. All the finishing processes done by it and/or its authorized local subcontractor under paragraph 3;
      
   2. A statement to the effect that : "Fabric formed by (the name, address and factory registration number (if any) of the local factory which performs the fabric-making process in Hong Kong)" under paragraph 2; and
      
   3. An additional declaration under paragraph 7 which reads : "I further declare that the fabric(s) described herein is (are) formed in Hong Kong".
      
   
   
7. The requirements in paragraphs 6 above are applicable where the applicant manufacturer or its authorized local subcontractor has not performed the fabric-making process. For CHKO applications where the declared manufacturer or its authorized local subcontractor has declared under paragraph 3 of the manufacturer's page that the fabric is produced by it in Hong Kong, the additional declarations in paragraphs 6(b) and (c) above are not necessary.
   

B. Bedlinens, Handkerchiefs, Scarves and other Made-up Articles

8. Under the existing Hong Kong origin rule, bedlinens, handkerchiefs, scarves and certain other made-up articles (except terry towellings) have to be cut and sewn in Hong Kong in order to qualify for the issue of a Certificate of Hong Kong Origin. With effect from 1 July 1996, manufacturers who wish to apply for the issue of Certificates of Hong Kong Origin to cover the export of such goods to the USA should ensure that these products are manufactured from fabrics formed in Hong Kong.
   
   
9. Henceforth, the applicant manufacturer who purports to have satisfied the special requirement at paragraph 2(b) above is required to make the following declarations at the designated space on the manufacturer's page of the Certificate of Hong Kong Origin application form [TIC 185 (Revised)] :
   
   1. All the manufacturing processes done by it and/or his authorized local subcontractor under paragraph 3;
      
   2. A statement to the effect that : "Fabric formed by (the name, address and factory registration number (if any) of the local factory which performs the fabric-making process in Hong Kong)" under paragraph 2; and
      
   3. An additional declaration under paragraph 7 which reads : "I further declare that the fabric(s) making up the goods described herein is (are) formed in Hong Kong."
      
   
   
10. Notwithstanding the above special requirements, traders are reminded that for the purpose of applying for a CHKO, the applicant manufacturer should continue to be the registered factory which has carried out the cutting and sewing processes of the textile products concerned in Hong Kong, either by itself or by the authorized local subcontractor on its behalf. Applications submitted by the factory which only performs the "fabric-making process" will not be accepted.
    

Submission of Certificate of Hong Kong Origin Applications

11. Specimen of the CHKO application forms completed in accordance with the additional certification requirements in paragraphs 5-9 above are at Appendices I and II. Certificate applicants are also requested to note that separate certificate applications should be submitted to cover each shipment of the products subject to the new certification requirements.
    

Warning

12. The Trade Department and the Government Approved Certificate-issuing Organizations (GACOs) (Note2) work closely with the Customs and Excise Department, through checks and inspections, to ensure compliance with the provisions of the origin certification system. Breach of any of the provisions of the origin certification system is taken seriously. In addition to prosecution under the Import and Export Ordinance or the Protection of Non-Government Certificates of Origin Ordinance as appropriate, which provides for a penalty of a fine of HK$500,000 and 2 years' imprisonment, the Trade Department and the GACOs may take administrative actions against the exporters or manufacturers (including subcontractors as the case may be) concerned irrespective of whether they have been prosecuted. Such administrative actions may involve, but shall not necessarily be confined to, any or all of the following : refusal to issue a Certificate of Origin; suspension of certification facilities; cancellation of Factory Registration of the company/registered business concerned; disallowing a manufacturer to contract out the principal process(es) of manufacture locally and disallowing a subcontractor to undertake the principal process(es) of manufacture.
    
    Note 2 :
    The five Government Approved Certificate-issuing Organizations are the Hong Kong General Chamber of Commerce; Federation of Hong Kong Industries; the Chinese Manufacturers' Association of Hong Kong; the Indian Chamber of Commerce, Hong Kong and the Chinese General Chamber of Commerce.

Enquiries

13. Should you require any further information on the contents of this circular, please contact the following officers of the Certificate of Origin Section of the Certification Branch at 3/F, Trade Department Tower, 700 Nathan Road, Kowloon :

    Name	Telephone No.
    Ms. Grace Lai (Assistant Trade Officer)	2398 5540
    Mr. K.M. Ng (Trade Controls Officer)	2398 5545
    Mr. K.K. Ng (Trade Controls Officer)	2398 5544

Yours faithfully,

(Ms. Grace Lai)
for Director-General of Trade

To:
All Registered Textiles and Garment Manufacturers
All Trade and Industrial Associations
All Subscribers of Certification Branch Circulars

Encl.

Note :
The Chinese text of this circular is for reference only. In case of discrepancies between the English and Chinese texts, the English text shall for all purposes be conclusive.

GL/FYYL/AOYT/el