CLA-2 CO:R:C:V 555517 DSN
Mr. Stanley R. Leacock
346 College Avenue
Palo Alto, California 84306
RE: GSP and country of origin of surgical towels
Dear Mr. Leacock:
This is in response to your letters of October 30, and
December 11, 1989, and January 10, and April 18, 1990, on behalf
of Beach Medical Supplies, Ltd., in which you request a ruling
that certain cotton surgical towels produced in Barbados from
yarn originating elsewhere are entitled to duty-free treatment
under the Generalized System of Preferences (GSP) (19 U.S.C.
2461-2467). You also ask whether Barbados will be the country of
origin for quota purposes.
FACTS:
According to your submissions and conversations with a
member of my staff by telephone, 100% cotton yarn originating in
China or Pakistan will be imported into Barbados where it will be
woven into fabric, cut to length and width, and hemmed to create
finished surgical towels. After being packaged, the towels will
be exported to the U.S.
ISSUES:
1. Whether the surgical towels are entitled to duty-free
treatment under the GSP when imported into the U.S.
2. Whether the operations performed in Barbados render
Barbados the country of origin of the surgical towels.
LAW AND ANALYSIS:
1. Applicability of GSP
For articles to be eligible for GSP treatment, they must
first be classified under a GSP eligible provision in the
Harmonized Tariff Schedule of the United States Annotated
(HTSUSA). An article classifiable under a GSP eligible
provision is entitled to duty-free entry if it is imported
directly from a designated beneficiary developing country (BDC)
into the U.S., and the sum of the cost or value of the materials
produced in the BDC plus the direct cost involved in processing
the eligible article in the BDC is at least 35% of the article's
appraised value at the time it is entered into the U.S.
The cotton surgical towels, as of May 1, 1990, are
classified under subheading 6307.90.8740, HTSUSA, which provides
for other made up articles, other, other, surgical towels. This
provision is not a GSP eligible provision. See Presidential
Proclamation No. 6123, 55 Fed. Reg. 18075 (1990). Therefore, the
rate of duty applicable to the surgical towels would be 7% ad
valorem.
2. Country of Origin
Textile articles produced in more than one foreign country
are subject to the country of origin criteria set forth in
section 12.130, Customs Regulations (19 CFR 12.130). According
to 19 CFR 12.130(b):
...a textile product...which consists of materials produced
or derived from, or processed in, more than one foreign...
country shall be a product of that foreign...country where
it last underwent a substantial transformation. A textile
or textile product will be considered to have undergone a
substantial transformation if it has been transformed by
means of substantial manufacturing or processing operations
into a new and different article of commerce.
According to 19 CFR 12.130(e)(1)(iii)and(iv):
An article...will be a product of a...country,...when it
has undergone prior to importation into the U.S.,...weaving
knitting or otherwise forming fabric; cutting of fabric into
parts and assembly of those parts into the completed
article.
Thus, since the imported yarn is woven in Barbados into fabric,
which is then cut to length and width, and hemmed in Barbados,
Barbados is clearly the country of origin of the surgical towels.
We note that at the present time, surgical towels from
Barbados are not subject to quota. However, due to the
changeable nature of quota agreements, you are advised to contact
your local Customs office prior to importation to determine the
current status of any textile agreements with Barbados. Import
restraints are imposed by the U.S. Customs Service under
directives of the Committee for the Implementation of Textile
Agreements, U.S. Department of Commerce, Washington, D.C. 20230.
Further advice or information pertaining to those agreements may
be obtained from the chairman of that Committee.
HOLDING:
The surgical towels are classified under subheading
6307.90.8740, HTSUSA, which provides for other made up articles,
other, other, surgical towels, which is not a GSP eligible
provision. The rate of duty is 7% ad valorem. The country of
origin for quota purposes is Barbados.
Sincerely,
Acting Director
Commercial Rulings Division