CLA-2 CO:R:C:V
TARIFF NO: 9802.00.00 (807.00, TSUS)
Mr. Rafael Etzion
Variety Accessories Inc.
P.O. Box 4528
Great Neck, N.Y. 11027
RE: Duty-free eligibility of certain "Christmas Bows"
assembled in Guatemala
Dear Mr. Etzion:
In your letter of March 11, 1988, you mentioned that your
company is planning to duplicate a "Christmas Bow" assembly
operation, currently in Haiti, in Guatemala. You ask that the
articles produced in Guatemala be afforded the same duty-free
treatment given the articles produced in Haiti, in accordance
with the Generalized System of Preferences (GSP) and Caribbean
Basin Initiative (CBI).
FACTS:
You included, with your letter, a copy of Headquarters
ruling 553674, dated June 14, 1985. The operation described in
this ruling is, you state, identical to the one you propose to
begin in Guatemala. Ribbon, from the U.S., will be exported in
cut lengths, along with 10 inch cards, labels, plastic bags,
tinsel wire, and packaging materials. The ribbon will be folded
into a bow shape and tied in the center with the exported tinsel
wire to hold the bow shape. The bows will be mounted, 12 to a
card, each card packaged and stapled in a poly bag, and returned
to the U.S. In HQ 553674, we held that item 807.00, Tariff
Schedules of the United States (TSUS) (9802.00.00, Harmonized
Tariff Schedule of the United States (HTS)), would be applicable
to this operation and that if the bows were in chief value of
plastic, classifiable in item 772.95, TSUS (9505.10.20, HTS),
they would be eligible for duty-free treatment under the GSP or
CBI, upon compliance with all applicable regulations and if the
35% value-added criterion is satisfied.
-2-
LAW AND ANALYSIS:
We agree that the process described in HQ 553674 would
satisfy the requirements of item 870.00, TSUS. However, we
question whether the CBI or GSP would be applicable.
In order for merchandise to be eligible for duty-free
treatment under the CBI or GSP the article must be, grown,
produced, or manufactured in the beneficiary country (for CBI,
any beneficiary country) and it must meet the following rules-of-
origin. First, an article must be imported directly from a
beneficiary country; second, the cost or value of the article
must consist of at least 35% direct cost of processing in the
beneficiary country (for CBI, processing may take place in more
than one beneficiary country and U.S.-made components may
comprise 15 percentage points of the 35, leaving 20% value-added
in beneficiary countries); and third, any product including
foreign components must be substantially transformed into a "new
and different article of commerce" in the beneficiary country (in
one or more beneficiary countries for CBI).
It is hard to conceive, considering the fact that the
components are sent from the U.S., and are merely assembled in
Guatemala, that the operation described in your letter could
satisfy the country-of-origin requirements of either the CBI or
GSP. However, if you provide a detailed submission which
addresses the problems mentioned herein, we will be glad to
review the matter. We have included some material pertaining to
the CBI and GSP that you may find helpful.
Sincerely,
John Durant
Acting Director,
Commercial Rulings Division
Enc: