Mr. Chet K. Wilson
Executive Consultant
AEI Consulting
38345 Ten Mile Road
Suite 230
Farmington Hills, MI 48335

Dear Mr. Wilson:

This responds to your letter concerning regulations issued under the American Automobile Labeling Act. I apologize for the delay in our response. You ask about the following factual situation:

An outside supplier, in preparing a response to a request from an unrelated motor vehicle manufacturer, pursuant to 49 CFR 583.10, determined the following percentages of foreign and domestic content contained in the equipment (which is not an engine or transmission) supplied directly to the manufacturer:

U.S./Canada (U.S.=30%; Can=20%)50%
Japan40%
Germany10%

You ask three questions under these facts, which are addressed below.

Question 1. Because the combined U.S./Canadian content is less than 70% in the equipment, the supplier must determine and report the country of origin. In determining the country of origin, are the Canadian and U.S. content percentages to be combined or treated separately?

The Canadian and U.S. content percentages are combined. Section 583.10(a)(5) specifies that, for equipment which has less than 70 percent of its value added in the United States and Canada, an outside supplier is to provide "the country of origin of the equipment, determined under 583.7(c)." Section 583.7(c) specifies that the U.S. and Canada are treated together in making this determination.

Question 2. If Canadian and U.S. are to be combined, how is the supplier to report the country of origin?

The supplier should specify the country of origin as U.S./Canada, but must do so in a manner that makes it clear this determination is being made pursuant to 583.10(a)(5), and not 583.10(a)(4). The country of origin would not be "U.S./Canada" under the latter section because 70 percent of more of its value was not added in the U.S. and/or Canada.

Question 3. Does the supplier have to report the percentage of content or just the name of the country of origin?

Section 583.10(a)(5) only requires the supplier to report the name of the country of origin.

I hope this information is helpful. If you have further questions, please feel free to call Edward Glancy of my staff at (202) 366-2992.

Sincerely,
John Womack
Acting Chief Counsel
ref:583
d.7/25/97