CLA-2 RR:CR:SM 562298 KSG
Dale Riddle, Controller
Performance Wear Division
Burlington Industries
3330 West Friendly Avenue
Greensboro, N.C. 27410
RE: U.S. Caribbean Basin Trade Partnership Act; U.S. Note 3(d), Subchapter XX; use of non-U.S. made nylon filament yarn
Dear Mr. Riddle:
This is in response to an e-mail from Mr. Jim Leonard dated November 23, 2001, on behalf of Burlington Industries, requesting an opinion on the eligibility of apparel made using non-U.S. made nylon filament yarn under the preferential trade provisions in the Caribbean Basin Trade Partnership Act (CBTPA). You also request information on the proper method to indicate the use of this yarn on the textile certificate of origin that is required for this program.
FACTS:
Burlington Industries would be forming fabric in the United States using nylon filament yarn that originates in Israel, Canada, or Mexico. The fabric would then be used in producing apparel articles assembled or cut and assembled in one or more CBTPA beneficiary countries from fabrics wholly formed and cut in the United States or from fabrics wholly formed in the United States.
ISSUES:
Whether the apparel articles produced from these fabrics would qualify for preferential treatment under the CBTPA.
In addition, how should the required certificate of origin for this apparel identify the use of non-U.S. made nylon filament yarn.
LAW AND ANALYSIS:
Title II of the Trade and Development Act of 2000, (Pub. L. 106-200, 114 Stat. 251), concerns trade benefits for the Caribbean Basin and is referred to as the United States-Caribbean Basin Trade Partnership Act ("CBTPA"). Section 211 of the CBTPA amended section 213 (b) of the Caribbean Basin Economic Recovery Act (CBERA) (19 U.S.C. 2703(b)) to provide expanded trade benefits during a “transition period” to designated countries in the Caribbean Basin.
Section 211 of the CBTPA eliminates tariffs and quantitative restrictions on specific textile and apparel articles and extends North American Free Trade Agreement duty treatment standards to non-textile articles that previously were ineligible for preferential treatment under the CBERA. “Transition period” is defined in 19 U.S.C. 2703(b)(5)(D) as meaning, with respect to a designated CBTPA country, the period that begins on October 1, 2000, and ends on the earlier of September 30, 2008, or the date on which a free trade agreement enters into force with respect to the U.S. and the CBTPA country.
Presidential Proclamation 7351, dated October 2, 2000, published in the Federal Register on October 4, 2000 (65 Fed. Reg. 59329), implemented the CBTPA by designating the eligible CBTPA countries and amending Chapter 98, HTSUS (including the creation of new subchapter XX) to facilitate the entry of the specific textile and apparel articles eligible for preferential treatment under the CBTPA.
The enhanced trade benefits provided by the CBTPA are available to eligible articles imported directly from a country (1) that is designated as a CBTPA beneficiary country and (2) which the U.S. Trade Representative (“USTR”) has determined has implemented and follows, or is making substantial progress toward implementing and following certain customs procedures that allow U.S. Customs to verify the origin of the articles.
In addition, Interim Customs Regulations to implement the trade benefit provisions of section 211 of the CBTPA were published in the Federal Register as T.D. 00-68 on October 5, 2000 (65 Fed. Reg. 59650). The T.D. invited public comments to be submitted on the Interim Regulations by December 4, 2000. It is noted that the issue raised in this ruling letter is outside the scope of the comments received.
U.S. Note 3(d), Subchapter XX, HTSUS, provides as follows:
For purposes of U.S. note 7(i) to subchapter II of this chapter and subheading 9820.11.03, 9820.11.06 and 9820.11.18, an article otherwise eligible for preferential treatment under such subheadings shall not be ineligible for such treatment because the article contains nylon filament yarn (other than elastomeric yarn) classifiable under subheading 5402.10.30, 5402.10.60, 5402.31.30, 5402.31.60, 5402.32.30, 5402.32.60, 5402.41.10, 5401.41.90, 5402.51.00, or 5402.61.00 of the tariff schedule that entered free of duty as a product of Israel under the terms of general note 8 to the tariff schedule or as a good of Canada or a good of Mexico under the terms of general note 12 to the tariff schedule.
Further, U.S. Note 7(b), Subchapter II, HTSUS, provides that articles meeting the conditions set forth in U.S. Note 3, Subchapter XX, HTSUS, and meeting the other requirements set forth in U.S. Note 7(b) and subheading 9802.00.80, HTSUS, shall not be ineligible to enter under subheading 9802.00.80, HTSUS.
Accordingly, pursuant to U.S. Note 3(d), Subchapter XX, HTSUS, the use of certain nylon filament yarn (other than elastomeric yarn) classifiable in the heading 5402 or 5401 subheadings specified in U.S. Note 3(d)) that originates in Israel, Canada, or Mexico and is entered duty-free is permitted if the apparel meets the other requirements for classification in subheadings 9820.11.03, 9820.11.06 or 9820.11.18, HTSUS.
Pursuant to U.S. Note 7(b), Subchapter II, HTSUS, the use of certain nylon filament yarn (other than elastomeric yarn) classifiable in the heading 5402 or 5401 subheadings specified in U.S. Note 3(d)) that originates in Israel, Canada, or Mexico and is entered duty-free is permitted if the apparel meets the other requirements for classification in subheading 9802.00.80, HTSUS.
The regulations applicable to textile and apparel articles eligible for preferential treatment under the CBTPA are set forth in 19 CFR 10.221-10.227. The regulation applicable to the Certificate of Origin is set forth in 19 CFR 10.224. The form for the Certificate of Origin is set forth in 19 CFR 10.224(b). Pursuant to 19 CFR 10.224(c)(6), block 5 should indicate the preference group which applies to the article.
There is no one correct procedure to indicate the use of this yarn on the textile Certificate of Origin. However, a clear indication should be made directly on the form itself. One method would be to make a note on the certificate of origin in block 5 indicating that fabric formed in the United States used yarns that were provided for in U.S. Note 3(d) to Subchapter XX, HTSUS.
HOLDING:
Pursuant to U.S. note 3(d), Subchapter XX, HTSUS, in order to receive preferential treatment under the CBTPA, the foreign nylon filament yarn (other than elastomeric yarn) would have to originate in Israel, Canada, or Mexico and be classified and entered duty-free under subheadings 5402.10.30, 5402.10.60, 5402.31.30, 5402.31.60, 5402.32.30, 5402.32.60, 5402.41.10, 5402.41.90, 5402.51.00, or 5402.61.00, HTSUS. The finished apparel articles assembled or cut and assembled in one or more of CBTPA beneficiary countries, must be eligible for entry under subheadings 9802.00.80, 9820.11.03, 9820.11.06 or 9802.11.18, HTSUS, except for the non-U.S. formed nylon filament yarn.
A clear indication that non-U.S. formed nylon filament yarn was used in producing the apparel should be made directly on the Certificate of Origin. One method would be to make a note on the Certificate of Origin in block 5 (headed “Preference Group”) indicating that fabric formed in the United States used yarns that were provided for in U.S. Note 3(d), Subchapter XX, HTSUS.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division