Flocked Swabs, Products Containing Flocked Swabs, and Methods of Using Same; Comments Due December 14, 2022

On November 21, 2022, the U.S. International Trade Commission published in the Federal Register (87 FR 70863) Flocked Swabs, Products Containing Flocked Swabs, and Methods of Using Same; Notice of Request for Submissions on the Public Interest

Section 337 of the Tariff Act of 1930 provides that, if the U.S. International Trade Commission finds a violation (i.e., violation of intellectual property rights), it shall exclude the articles concerned from the United States unless, after considering the effect of such exclusion upon the public health and welfare, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, and United States consumers, it finds that such articles should not be excluded from entry.

The Commission is soliciting submissions on public interest issues raised by the recommended relief should the Commission find a violation, specifically: a general exclusion order ("GEO") directed to certain flocked swabs and products containing same, or, if no GEO is issued, a limited exclusion order directed to certain flocked swabs and products containing same imported, sold for importation, and/or sold after importation by respondents Wuxi NEST Biotechnology Co., Ltd., NEST Scientific Inc., and NEST Scientific USA (collectively, "NEST"); Jiangsu Changfeng Medical Industry Co.; BioTeke Corporation (Wuxi) Co., Ltd.; Miraclean Technology Co.; and Huachenyang (Shenzhen) Technology Co., Ltd. and HCY USA, LLC (collectively, "Respondents"); and a cease and desist order directed to the NEST Respondents.

The Commission is interested in further development of the record on the public interest in this investigation. Accordingly, members of the public are invited to file submissions of no more than five (5) pages, inclusive of attachments, concerning the public interest in light of the ALJ's Recommended Determination on Remedy and Bonding issued in this investigation on November 14, 2022. Comments should address whether issuance of the recommended remedial orders in this investigation, should the Commission find a violation, would affect the public health and welfare in the United States, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, or United States consumers.

In particular, the Commission is interested in comments that:

(i) explain how the articles potentially subject to the recommended remedial orders are used in the United States;

(ii) identify any public health, safety, or welfare concerns in the United States relating to the recommended orders;

(iii) identify like or directly competitive articles that complainant, its licensees, or third parties make in the United States which could replace the subject articles if they were to be excluded;

(iv) indicate whether complainant, complainant's licensees, and/or third-party suppliers have the capacity to replace the volume of articles potentially subject to the recommended orders within a commercially reasonable time; and

(v) explain how the recommended orders would impact consumers in the United States.

Written submissions must be filed no later than by close of business on December 14, 2022.

Gird Yourself to Learn about Medical Compression Textiles

Gird yourself for more than you ever wanted to know about medical compression textiles. But don't feel I'm putting you under pressure, it won't be on a test.

Note to the trade: post-surgery compression garments are not, generally duty-free as medical devices. This is significant, as the correct duty on these articles can be as high as 20% for girdles and 23.5% for corsets, even if they are post-operative garments. NOTE, these import duties can be avoided if you source from a country the U.S. has a free trade agreement with and you satisfy the agreement's yarn forward rule.

Some importers have tried, unsuccessfully, to take advantage of tariff heading 9021, which provides duty-free treatment for:

Orthopedic appliances, including crutches, surgical belts and trusses; splints and other fracture appliances; artificial parts of the body; hearing aids and other appliances which are worn or carried, or implanted in the body, to compensate for a defect or disability.

Specially they have looked to Harmonized Tariff Schedule of the U.S. classification 9021.90.81, which is a "basket" category, which catches anything in 9021 not more specifically provided in that heading.

They were not unreasonable in looking to 9021. Chapter 90 Note 6 states:

For the purposes of heading 9021, the expression 'orthopedic appliances' means appliances for:

(a) Preventing or correcting bodily deformities; or

(b) Supporting or holding parts of the body following an illness, operation or injury.

However, they have not been successful in getting Customs to agree.

For example, a company proposed classification at 9021.90.81 (duty-free) for textile knee and leg braces. Customs rejected that and classified them at 6307.90.9889, with rate of duty of 7%. They also proposed 9021.90.81 for compression gloves, but Customs said the correct classification is 6116.99.4800, with rate of duty of 18.8%. This ruling, N229875 (September 5, 2012) citing ruling HQ966874 (May 17, 2004), which stated:

[S]ubheading 9021.90 did not apply to items which "are nothing like either the hearing aids of the heading text or the listed examples in the Explanatory Notes. First, all of the appliances listed are precision electronic devices that actively compensate for the defect or disability. Second, all of the examples assist or replace the function of a failed organ.…"

In ruling N304769 (July 11, 2021), Customs addressed several post-surgery torso compression garments and classified them under heading 6212, which provides for "brassieres, girdles, corsets, braces, suspenders, garters and similar articles."

Some were classified at 6212.20.00, which provides for girdles, and has a 20% rate of duty. Others were classified at 6212.90.00, which provides for "other," with a rate of duty of 6.6%. The lower or higher duty was depending on whether the garment had the "structural characteristics of a girdle."

The question of what make a girdle a girdle has been the subject of rulings, and even litigation. In ruling H256542 (January 9, 2018) Customs looked to the Harmonized Commodity Description and Coding System Explanatory Notes (ENs). The ENs constitute the official interpretation of the Harmonized System at the international level. While not legally binding or dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).

The ENs to heading 62.12, provide in pertinent part, that:

The heading includes, inter alia:

* * *

(2) Girdles and panty-girdles.

* * *

(7) Maternity, post pregnancy or similar supporting or corrective belts, not being orthopaedic appliances of heading 90.21.

Customs went on to state:

It is well settled that articles enumerated in heading 6212, HTSUS, each feature the unifying characteristic of providing support for the body or other garment. Victoria’s Secret Direct, LLC v. United States, 769 F.3d 1102, 1108 (Fed. Cir. 2014). This support for the body or other garments, constitutes the paramount function of the exemplars listed eo nominee in heading 6212, HTSUS. Victoria’s Secret at, 1108. The subheadings of heading 6212, HTSUS, focus the scope of the heading into distinct categories while retaining the unifying characteristic and paramount function of the overall heading. The subheadings at issue are contrasted by the least descriptive (subheading 6212.90.00, HTSUS) and the most descriptive terms (subheading 6212.20.00, HTSUS). In particular, subheading 6212.90.00, HTSUS, is a residual provision which provides for garments not otherwise specified elsewhere in heading 6212, HTSUS. On the other hand, subheading 6212.20.00, HTSUS, contemplates merchandise which is classifiable eo nominee as girdles and/or panty-girdles. Accordingly, garments which share the essential unifying characteristic, and paramount function of the overall heading while meeting the description of a girdle or panty-girdle are classifiable ejusdem generis with the articles of subheading 6212.20.00, HTSUS.

While the ENs to heading 6212, HTSUS, do not provide a definition of a girdle, both the Courts and CBP have addressed its meaning. The Ninth Circuit stated that: "[a] girdle may be defined as an undergarment that provides support and holds in the body along the lower torso, specifically, including the waist and hips." Riddell, Inc. v. United States, 906 F. Supp. 2d 1355, 1365 (Fed Cir. 2013); citing, HQ 957469, dated November 7, 1995, CBP defined a girdle as being: "[f]lexible, light-weight shaped corset, made partly or entirely of elastic… [a]n elasticized flexible undergarment worn over the hips and waist.").

CBP Informed Compliance Publication, Classification: Apparel Terminology Under the HTSUS (June 2008) page 15. "Girdles/panty girdles (6212) - are garments normally worn next to the skin, which are designed to mold the lower torso and sometimes legs. They are typically made with two-way stretch fabric or one-way stretch fabric with non-stretchable control panels, with or without garters. Panty girdles are girdles with a closed crotch, and resemble panties."

Similarly, in HQ 959284, dated October 29, 1996, CBP stated that: "A girdle is commonly understood as a garment which provides overall support for the lower torso- this would include the cinching of the waist to enhance the bosom, holding in hips, rear and thighs, holding up stockings (when garters are present) and providing for decency and hygiene when the girdle is also worn in place of panties."

The common factors found among the various definitions offered for girdles and panty-girdles is that these items are undergarments made up of elastic or stretchable fabric which provide body support to the lower torso, hip, waist, and thigh area.

Customs also ruled:

[T]he post-surgical nature of [the garment] does not preclude classification under subheading 6212.20.00, HTSUS. As EN 62.12 explains, post-pregnancy, supportive or corrective belts which are not orthopedic appliances of heading 9021, HTSUS, are classifiable in this heading. For example, in NY N014148 (August 10, 2007), CBP classified a 'post-partum girdle' as a girdle under subheading 6212.20.00, HTSUS. Likewise, in NY N004382 (January 8, 2007), CBP classified a 'maternity support garment' as a girdle under subheading 6212.20.00, HTSUS. By contrast, in HQ 964402 (May 24, 2002)…

USITC Institutes Section 337 Investigation of Certain Flocked Swabs, Products Containing Flocked Swabs, and Methods of Using Same

USITC Institutes Section 337 Investigation of Certain Flocked Swabs, Products Containing Flocked Swabs, and Methods of Using Same

The U.S. International Trade Commission (USITC) has voted to institute an investigation of certain flocked swabs, products containing flocked swabs, and methods of using same. The products at issue in the investigation are described in the Commission’s notice of investigation.

The investigation is based on a complaint filed by Copan Italia S.p.A of Brescia, Italy, and Copan Industries, Inc., of Aguadilla, Puerto Rico, on July 9, 2021.  Supplements to the complaint were filed on August 16, 2021; August 19, 2021; and August 23, 2021.  The complaint, as supplemented, alleges violations of section 337 of the Tariff Act of 1930 in the importation into the United States and sale of certain flocked swabs, products containing flocked swabs, and methods of using same that infringe patents asserted by the complainants.  The complainants request that the USITC issue a general exclusion order, or in the alternative a limited exclusion order, and cease and desist orders. 

The USITC has identified the following as respondents in this investigation:

Han Chang Medic of Chungnam, Republic of Korea;
Wuxi NEST Biotechnology Co., Ltd. of Wuxi, Jiangsu, China;
NEST Scientific Inc. of Rahway, NJ;
NEST Scientific USA of Rahway, NJ;
Miraclean Technology Co., Ltd., of Shenzhen, Guangdong, China;
Vectornate Korea Ltd. of Jangseong, Jeonnam, Republic of Korea;
Innovative Product Brands, Inc., of Highland, CA;
Thomas Scientific, Inc., of Swedesboro, NJ;
Thomas Scientific, LLC, of Swedesboro, NJ;
Stellar Scientific, LLC, of Owings Mills, MD;
Cardinal Health, Inc., of Dublin, OH;
Ksl Biomedical, Inc., of Williamsville, NY;
Ksl Diagnostics, Inc., of Williamsville, NY;
Jiangsu Changfeng Medical Industry Co., Ltd., of Yangzhou, Jiangsu, China;<
No Borders Dental Resources, Inc., dba MediDent Supplies, of Queen Creek, AZ;<
BioTeke Corporation (Wuxi) Co., Ltd., of Wuxi, Jiangsu, China;
Fosun Pharma USA Inc. of Princeton, NJ;<
Hunan Runmei Gene Technology Co., Ltd., of Changsha, Hunan, China;
VWR International, LLC, of Radnor, PA; and
Slmp, LLC, dba StratLab Medical Products of McKinney, TX.

By instituting this investigation (337-TA-1279), the USITC has not yet made any decision on the merits of the case.  The USITC’s Chief Administrative Law Judge will assign the case to one of the USITC’s administrative law judges (ALJ), who will schedule and hold an evidentiary hearing.

ALJ will make an initial determination as to whether there is a violation of section 337; that initial determination is subject to review by the Commission.

The USITC will make a final determination in the investigation at the earliest practicable time.  Within 45 days after institution of the investigation, the USITC will set a target date for completing the investigation.  USITC remedial orders in section 337 cases are effective when issued and become final 60 days after issuance unless disapproved for policy reasons by the U.S. Trade Representative within that 60-day period.

Nasopharyngeal Swab Contract Awarded

Thomas Scientific LLC, Swedesboro, New Jersey, has been awarded a maximum $105,820,000 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for nasopharyngeal swabs. This was a sole-source acquisition using justification 10 U.S. Code 2304(c)(2), as stated in Federal Acquisition Regulation Part 6.302-2. This is a four-month contract with a three-month option period. Location of performance is New Jersey, with an April 24, 2020, ordering period end date. Using customers are Veterans Administration, Indian Health Service, Department of Justice, Department of Homeland Security, Department of Health and Human Services and Department of Defense. Type of appropriation is fiscal 2021 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE2DP-21-D-0004).

Hardwood Products Awarded $11.6 Million Contract for Flock Tip Medical Swabs

Hardwood Products Co. LP, Guilford, Maine, has been awarded a not-to-exceed $11,640,270 firm-fixed-price, undefinitized contract action as a modification (P00003) to contract FA8730-20-C-0056 for industrial base expansion for U.S. domestic production capacity for medical flock tip swabs. This contract modification funds the design, procurement and expedited implementation of facility upgrades, enabling an early, interim production capability of flock tip swabs. Work will be performed in Pittsfield, Maine, and is expected to be completed March 30, 2021. Fiscal 2021 other procurement funds in the amount of $5,078,350 are being obligated at the time of award. The cumulative face value of the contract is $62,599,861. The Air Force Life Cycle Management, Hanscom Air Force Base, Massachusetts, is the contracting activity.

President Trump Invokes Defense Production Act to Switch Northern New England Company Puritan Medical to Production of Flocked Swabs for Corona Virus Testing

The president shared his decision on Sunday, telling reporters at a White House press conference, "We’re preparing to use the Defense Production Act to increase swab production in one U.S. facility by over 20 million additional swabs per month," according to the Washington Examiner.

Catching Up on Section 301 Exclusions for Medical Textiles

On March 10, 2020, the Office of the U.S. Trade Representative published in the Federal Register (85 FR 13970) Notice of Product Exclusions: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. Among the articles excluded from Tranche 4A China Section 301 tariffs are three medical textile products>

6210.10.5000 Nonwoven disposable apparel designed for use in hospitals, clinics, laboratories or contaminated areas.

6307.90.6090 Surgical drapes: Of fabric formed on a base of paper or covered or lined with paper.

6307.90.6800 Spunlaced or bonded fiber fabric disposable surgical drapes of man-made fibers.

More Health Care Textile Products Excluded from China 301 Tariffs

On March 17, 2020, the Office of the U.S. Trade Representative published in the Federal Register (82 FR 15244) Notice of Product Exclusions: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. This list of 19 articles relates to Tranche 4A and includes the following textile products, which, as in earlier exclusion orders, relate to heath care products.

6) Cold packs consisting of a single-use, instant, endothermic chemical reaction cold pack combined with a textile exterior lining (described in statistical reporting number 6307.90.9889)

7) Disposable shoe and boot covers of man-made fiber fabrics (described in statistical reporting number 6307.90.9889)

8) Eye compresses, each consisting of a fabric cover filled with silica or gel beads, with or without a hook-and-loop fastener strap (described in statistical reporting number 6307.90.9889)

9) Face masks, single-use, of textile fabrics (described in statistical reporting number 6307.90.9889)

10) Gel pads of textile materials, each with removable fabric sleeves, in the shape of hearts, circles or quadrants (described in statistical reporting number 6307.90.9889)

11) Hot packs of textile material, single-use (exothermic chemical reaction) (described in statistical reporting number 6307.90.9889)

12) Laparotomy sponges of cotton (described in statistical reporting number 6307.90.9889)

13) Patient restraint or safety straps of textile materials, with hook-and-loop or ladder lock fasteners (described in statistical reporting number 6307.90.9889)

14) Single-use blood pressure cuff sleeves of textile materials (described in statistical reporting number 6307.90.9889)

15) Single-use medical masks of textile material (described in statistical reporting number 6307.90.9889)

16) Single-use stethoscope covers (described in statistical reporting number 6307.90.9889)

17) Woven gauze sponges of cotton in square or rectangular sizes (described in statistical reporting number 6307.90.9889)

Certain Nonwoven Fabric on Latest China 301 Exclusion List

On March 16, 2020, the Office of the U.S. Trade Representative published in the Federal Register (85 FR 15015) Notice of Product Exclusions: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. This notice includes five more 10-digit statistical reporting numbers in the Harmonized Tariff Schedule of the U.S. that are being excluded from Tranche 3 China 301 tariffs:

3923.21.0030,

3923.21.0095,

3926.20.9050,

4015.19.1010, and

5603.12.0090.

The final classification, 5603.12.0090, relates to Nonwovens, whether or not impregnated, coated, covered or laminated: Of man-made filaments: Weighing more than 25 g/m2 but not more than 70 g/m2: OTHER THAN impregnated, coated or covered with material other than or in addition to rubber, plastics, wood pulp or glass fibers, or "imitation suede."

Petitions relating to this classification were filed by:

1. NORTHERN PACIFIC FIBERS LLC
2. Nutex Concepts of North Carolina Corp
3. Oxco, Inc.
4. Medline Industries, Inc.
5. Crown Awards
6. Jobe's Company
7. Fluvitex USA Inc
8. U.S. Nonwovens Corp.

The requests related to nonwovens for a range of applications, including bedding, upholstery, automotive, and building materials, but the most frequently cited use was in health care. Approval of these request follows a history of approvals for articles critical to health care. Importers of the nonwoven for non-health care uses will also get the benefit of the exclusion because Customs cannot know at the time of importation what the final use of an article will be.

Applicant for Medical Bandage FTZ Re-Files, Asserts AFMA, NCTO, USIFI "Have no understanding of quality requirements

Today the Foreign Trade Zone Board reopened the comment period, through July 9, 2014, for the Foreign Trade Zone application from ASO, LLC, relating to certain woven fabrics of cotton, polyester, and cotton/polyester blend used in the production of medical bandages. The Board's action is in response to ASO's May 14, 2014, submission, attacking the credibility of joint comments in opposition submitted by the American Fiber Manufacturers Association, National Council of Textile Organizations, and the United States Industrial Fabrics Institute. The ASO submission also questions the ability of the sole U.S. manufacturer to respond to actually produce the fabrics ASO needs.

Clients of Agathon Associates and subscribers to Agathon Associates' Trade Advisor service may read more, including the original submissions from the interested parties, by CLICK HERE. You will need to enter your username and password. If you do not know your username and password email David Trumbull at david@agathonassociates.com.

Florida Company Applies for FTZ for Polyester and Cotton Fabrics for Adhesive Bandages

An application has been submitted to the Foreign-Trade Zones Board ("FTZ Board") by ASO LLC ("ASO"), operator of Subzone 169A, for its facility located in Sarasota, Florida. The ASO facility (270 employees, 31 acres/150,000 square feet) is located within Subzone 169A, in Sarasota, Florida. The facility is used for the production of plastic and textile fabric adhesive bandages. ASO is also proposing to coat foreign uncoated textile fabric under FTZ procedures. Production under FTZ procedures could exempt ASO from customs duty payments on the foreign textile fabrics used in export production. The company anticipates that some four percent of the plant's shipments will be exported. On its domestic sales, ASO would be able to choose the duty rate during customs entry procedures that applies to textile fabric adhesive bandages (duty-free) for the foreign inputs noted below. Customs duties also could possibly be deferred or reduced on foreign status production equipment. The request indicates that the savings from FTZ procedures would help improve the plant's international competitiveness.

Uncoated textile fabrics sourced from abroad (representing some 22% of the value of the finished product) include the following: 100% polyester, 100% cotton dyed plain weave, and 62% cotton/38% polyester plain weave (duty rates range from 7 to 12%).

Public comment is invited from interested parties. Submissions shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is May 28, 2013. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to June 10, 2013.