CLA-2 RR:CR:TE 966121 JFS
Mr. Frank Prackler
Attorney in Fact
Tawil Associates, Inc.
100 West 33rd Street
Suite 813
New York, NY 10001
RE: African Growth and Opportunity Act, Lesser Developed Country; Kenya, Foreign Components; United States-Jordan Free Trade Area Implementation Act, Wholly Assembled.
Dear Mr. Prackler:
This is in response to your letter dated November 22, 2002, requesting a binding ruling on the eligibility of two sets of children’s apparel under the African Growth and Opportunity Act (AGOA) and the United States-Jordan Free Trade Area Implementation Act (JFTA).
FACTS:
You submitted two samples for consideration. Style EJ001I, is a boys’ pants set. The top is a long sleeve shirt made of jersey knit fabric that is 60 percent cotton and 40 polyester. It has a two snap back placket closure, a rib knit neckline with a v-shaped rib knit insert in front, hemmed sleeves, hemmed bottom, and a raised heat transfer applique depicting a green dinosaur. The pants are pull-on, have a self-fabric elasticized waist band and hemmed cuffs. The sample submitted is composed of jersey knit fabric that is 60 percent cotton and 40 percent polyester. The ruling request indicates that the bottoms will be composed of french terry knit fabric that is 96 percent cotton and 4 percent spandex. The articles are sized for infants, newborn to 24 months of age.
Style EJ002T, is a girls’ pants set. The top is a short sleeve shirt. The sample submitted is composed of jersey knit fabric that is 100 percent cotton. The ruling request states that the top will be of 60 percent cotton and 40 percent polyester jersey knit fabric. It has a two button back placket closure, divided peter pan collar, hemmed sleeves, hemmed bottom, and applique work and embroidery depicting flowers on the shirt bottom and on one side of the collar. The pants are pull-on, have an elasticized waist and hemmed cuffs. The sample submitted is of jersey knit fabric that is 100 percent cotton. The ruling request indicates that the pants will be composed of french terry knit fabric that is 96 percent cotton and 4 percent spandex. The articles are sized for toddlers, 2T through 4T.
You state that the fabric for the garments will be produced in China. The cutting of the components will be conducted in China. The embroidery work on cut parts will be done in China. The assembly of the garment will occur either in Jordan or in Kenya.
ISSUES:
Whether the subject apparel articles are eligible for preferential treatment under the AGOA?
Whether the subject apparel articles are the “product of” Jordan and are thereby eligible for preferential duty treatment under the JFTA?
LAW AND ANALYSIS:
The boys’ shirt and pants set, style EJ001I, is classified in subheading 6111.20.6020, HTSUSA, which provides for babies’ garments and clothing accessories, knitted or crocheted of cotton, other, other, sets. The textile category is 239.
The girls’ shirt, style EJ002T, is classified in subheading 6106.10.0030, HTSUSA, which provides for women’s or girls’ blouses and shirts, knitted or crocheted, of cotton, girls’ other. The textile category is 339. The girls’ pants, style EJ002T, are classified in subheading 6104.62.2028, HTSUSA, which provides for women’s or girls’ trousers and breeches, knitted or crocheted, of cotton, girls’ other, other. The textile category is 348.
1. Whether the subject apparel articles are eligible for preferential treatment under the AGOA?
Title I of the Trade and Development Act of 2000, Pub. L 106-200, 114 Stat. 251, May 18, 2000, as amended by section 3108 of the Trade Act of 2002, referred to as the African Growth and Opportunity Act, seeks to promote trade opportunities between the U.S. and the countries of sub-Saharan Africa. The AGOA provides for the extension of duty-free treatment under the GSP to non-textile articles normally excluded from GSP duty-free treatment that are not import sensitive; and the entry of specific textile and apparel articles free of duty. In order to implement the AGOA, Customs issued Interim Regulations in T.D. 00-67, 65 Fed. Reg. 59668, which became effective October 1, 2000. With regard to the textile and apparel provisions, the law became effective on October 1, 2000, and shall remain in effect through September 30, 2008. See Sec. 112(f), AGOA.
The enhanced trade benefits provided by the AGOA are available to eligible textile and apparel articles imported directly from a country (1) that is designated as a beneficiary sub-Saharan African country and (2) which the U.S. Trade Representative (“USTR”) has determined by a proclamation published in the Federal Register has satisfied the requirements of the AGOA and therefore should be afforded the tariff treatment authorized in such Act. Such countries shall be enumerated in U.S. Note 1, Subchapter XIX, Chapter 98, HTSUS, whenever the USTR issues a Federal Register notice as described herein. See Presidential Proclamation 7350, Annex, dated October 2, 2000, 65 Fed. Reg. 59321.
Kenya was designated as a beneficiary sub-Saharan African country under AGOA by Presidential Proclamation 7350. The USTR issued a determination finding that Kenya has adopted an effective visa system and related procedures to prevent unlawful transshipment and the use of counterfeit documents in connection with shipments of textile and apparel articles and has implemented and follows, or is making substantial progress toward implementing and following, the customs procedures required by the AGOA, effective March 20, 2002. See 67 Fed. Reg. 14761, dated March 27, 2002.
Apparel articles wholly assembled in a sub-Saharan African lesser developed beneficiary country (LDBC) and directly imported into the U.S. are entitled to duty free status, subject to certain restrictions. Such articles are entered under subheading 9819.11.12, HTSUS, which provides as follows:
Apparel articles wholly assembled, or knit-to-shape and wholly assembled, or both, in one or more such lesser developed countries enumerated in U.S. note 2(d) to this subchapter, subject to the provisions of U.S. note 2 to this subchapter, regardless of the country of origin of the fabric or the yarn used to make such articles, if entered during the period beginning on the date announced in a Federal Register notice issued by the United States Trade Representative and continuing through September 30, 2004, inclusive
U.S. Note 2(d) lists Kenya as qualifying for designation as a LDBC. U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS, provides for a quantitative restriction for apparel articles classified in subheading 9819.11.12.
The statute allowing for duty free entry of apparel articles from LDBC’s, 19 U.S.C. 3721 (b) (3) (B) (i), as amended by section 3108(a)(3)(B) of the Trade Act of 2002, provides as follows:
In general --Subject to subparagraph (A), preferential treatment under this paragraph shall be extended through September 30, 2004, for apparel articles wholly assembled, or knit-to-shape and wholly assembled, or both, in one or more lesser developed beneficiary sub-Saharan African countries regardless of the country of origin of the fabric or the yarn used to make such articles.
Emphasis added. This provision only allows for the use of foreign fabric and yarn in the production of apparel articles. It does not allow the components to be foreign. Stated alternatively, it does not allow for the cutting of the components in a non-LDBC.
Other provisions of AGOA that allow for assembly of textile articles in beneficiary countries specifically provide for the assembly of fabric components. For example section 3108 (a) (1) of the Trade Act of 2002, provides as follows:
(1) APPAREL ARTICLES ASSEMBLED IN ONE OR MORE BENEFICIARY SUB-SAHARAN AFRICAN COUNTRIES. – Apparel articles sewn or otherwise assembled in one or more beneficiary sub-Saharan African countries from fabrics wholly formed and cut, or from components knit-to-shape, in the United States from yarns wholly formed in the United States . . .
The LDBC provision, by not allowing for the inclusion of non-LDBC components, and only allowing for the use of foreign yarn and fabric, imposes a requirement that the components be either knit to shape or cut in the LDBC country.
The provisions of the AGOA only allow for foreign yarn or fabric to be used in the manufacture of apparel articles in LDBC’s. They do not accord duty free status to apparel articles incorporating textile components originating from a non-LDBC. See HQ 965871, dated September 25, 2002. Thus, because the components are cut in China and then assembled into garments in Kenya, they do no qualify for duty free status under the AGOA.
Whether the subject apparel articles are the “product of” Jordan and are thereby eligible for preferential duty treatment under the JFTA?
Title I of the United States-Jordan Free Trade Area Implementation Act of 2001, Pub. L. No. 107-43, 115 Stat. 243., referred to as the Jordan Free Trade Area Implementation Act, seeks to promote trade opportunities between the U.S. and the Hashemite Kingdom of Jordan. The JFTA provides preferential treatment for eligible apparel articles that: are the growth, product, or manufacture of Jordan; meet the 35 percent value content requirement; and are imported directly into the U.S. The rules for determining whether an article is entitled to preferential treatment under the JFTA are provided for in General Note (GN) 18, to the HTSUSA, as implemented by Presidential Proclamation 7512, dated December 7, 2001, 66 Fed. Reg. 64495, December 13, 2001.
GN 18 provides, in part, as follows:
The products of Jordan described in Annex 2.1 of the Agreement between the United States of America and the Hashemite Kingdom of Jordan on the Establishment of a Free Trade Area, entered into on October 24, 2000, are subject to duty as provided herein. Products of Jordan, as defined in subdivisions (b) through (d) of this note, that are imported into the customs territory of the United States and entered under a provision for which a rate of duty appears in the “Special” subcolumn followed by the “JO” in parentheses are eligible for the tariff treatment set forth in the “Special” subcolumn, in accordance with sections 101 and 102 of the United States-Jordan Free Trade Area Implementation Act (Public Law 107-43, 115 Stat. 243).
(b) For purposes of this note, subject to the provisions of subdivisions (d) and (e), goods imported into the customs territory of the United States are eligible for treatment as “products of Jordan” only if –
such goods are imported directly from Jordan into the customs territory of the United States, and
they are –
wholly the growth, product or manufacture of Jordan, or
new or different articles of commerce that have been grown, produced or manufactured in Jordan and meet the requirements of subdivision (c) of this note.
(c) * * *
For purposes of subdivision (b)(ii)(B), goods are eligible for the tariff treatment provided in this note if the sum of –
the cost or value of the materials produced in Jordan, plus
the direct costs of processing operations performed in Jordan,
is not less than 35 percent of the appraised value of such article at the time it is entered. If the cost or value of materials produced in the customs territory of the United States is included with respect to an article to which this subdivision applies, an amount not to exceed 15 percent of the appraised value of the article at the time it is entered that is attributable to such United States cost or value may be applied toward determining the percentage referred to in this subdivision
* * *
Textile and apparel articles.
For purposes of this note, a textile or apparel article imported directly from Jordan into the Customs territory of the United States shall be eligible for the tariff treatment provided in subdivision (a) of this note only if –
the article is wholly obtained or produced in Jordan;
the article is a yarn, thread, twine, cordage, rope, cable or braiding, and
the constituent staple fibers are spun in Jordan, or
the continuous filament is extruded in Jordan;
the article is a fabric, including a fabric classified in chapter 59 of the tariff schedule, and the constituent fibers, filaments or yarns are woven, knitted, needled, tufted, felted, entangled or transformed by any other fabric-making process in Jordan; or
the article is any other textile or apparel article that is wholly assembled in Jordan from its component pieces.
Such textile and apparel articles not wholly obtained or produced in Jordan must comply with the requirements of this subdivision and of subdivision (c)(ii) of this note.
* * *
The pants, style EJ002T, are classified in subheading 6104.62.2028, HTSUSA. There is no “JO” symbol in the “Special” subcolumn for this subheading as required by GN 18(a). Therefore, the pants are not eligible for preferential treatment under the JFTA.
The remaining articles under consideration do not meet the terms of GN 18(d)(i)(A) through (C), but they are described in subdivision (D). Thus the terms of GN 18(d)(i)(D) are applicable to these garments, which are assembled in Jordan from Chinese components.
The term “wholly assembled” as used in subdivision (D) is not defined in the JFTA. However, guidance as to its scope and meaning can be found in the Customs rules of origin which state that wholly assembled means:
* * *
all components, of which there must be at least two, preexisted in essentially the same condition as found in the finished good and were combined to form the finished good in a single country, territory, or insular possession. Minor attachments and minor embellishments (for example, appliques, beads, spangles, embroidery, buttons) not appreciably affecting the identity of the good, and minor subassemblies (for example, collars, cuffs, plackets, pockets), will not affect the status of a good as “wholly assembled” in a single country, territory, or insular possession.
19 CFR 102.21(b)(6). Thus, the fact that some of the components contain embroidery and appliques that are applied in China, does not impact the status of the garments as “wholly assembled” in Jordan.
However, even though the articles are wholly assembled in Jordan from their component pieces, they must still meet the terms of subdivision (c)(ii) to GN 18. Subdivision (c)(ii) requires that the sum of the cost or value of the materials produced in Jordan, plus the direct costs of processing operations performed in Jordan, not be less than 35 percent of the appraised value of such articles at the time they are entered. You have provided no information to allow us to state whether the 35 percent value content requirement can be met. Whether the requirement is satisfied can only be ascertained when the “appraised value” of the garments is determined at the time of entry into the United States.
HOLDING:
The subject garments are not eligible for preferential treatment under the AGOA due to the fact that the articles are assembled from components cut in a non-LDBC.
The pants, style EJ002T, are classified in subheading 6104.62.2028, HTSUSA, which provides for women’s or girls’ trousers and breeches, knitted or crocheted, of cotton, girls’ other, other. There is no “JO” symbol in the “Special” subcolumn for this subheading. The pants are not eligible for preferential treatment under the JFTA.
The top, style EJ002T, and the pants set, style EJ001I, based on the information provided, if they meet the 35 percent value content requirement, will be considered the product of Jordan and will be eligible for preferential treatment under the JFTA, provided they are imported directly into the United States. Whether the 35 percent value content requirement will be met must await actual entry of the articles.
Sincerely,
Myles B. Harmon, Director
Commercial Rulings Division