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Do not cut the fabric out!

what you want to do next is set your sewing machine to a very tight zig zag stitch, as if you were sewing a button hole.

then sew along the scalloped lines you traced earlier. (this is where the clear foot come sin handy)

it's not necessary to sew to top edge of the collar (i did for some reason, but it's not necessary)

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Burdastyle

http://burdastyle.com//techniques/lace-peter-pan-collar/technique_steps/5