OT:RR:CTF:VS H230385 CMR
Mr. Reinaldo Rodriguez
Customs and Trade Services, Inc.
10801 N.W. 97th Street
Suite #1
Miami, FL 33178
RE: Ruling request on the eligibility of certain garments under DR-CAFTA; Cumulation; Fabric from Mexico
Dear Mr. Rodriguez:
This is in response to your letter of July 31, 2012, requesting a ruling on behalf of your client, Argus International L.C., on the eligibility of certain garments under the Dominican Republic – Central America – United States Free Trade Agreement Implementation Act (hereinafter DR-CAFTA).
FACTS:
The garments at issue are described as men’s woven coveralls of 88% cotton/12% nylon or 90% cotton/10% nylon fabric; and, men’s woven blue denim 100% cotton pants. You indicate that the coveralls are classified in subheading 6211.32.0010, Harmonized Tariff Schedule of the United States (HTSUS), and the pants are classified in subheading 6203.42.4011, HTSUS.
You indicate that the garments are manufactured in Nicaragua. With the exception of the outershell and pocket bag fabrics, which are formed in Mexico, and some trim items, such as zippers, which will be sourced from outside the DR-CAFTA parties, the components of the garments (including threads) are formed and finished in the DR-CAFTA region, and manufacturing processes (such as cutting and sewing) take place in a DR-CAFTA country. Further, the outershell fabrics are formed in Mexico
from yarns formed in Mexico or formed in Mexico from yarns formed in the United States. The pocket bag fabrics may be formed in Mexico as follows:
yarns and fabrics formed and finished in Mexico;
fabric formed and finished in Mexico from foreign yarns (other than Mexico or DR-CAFTA party);
fabrics formed in Mexico from yarns formed in the United States.
Your concern is with the garments’ eligibility for DR-CAFTA under General Note 29(d)(vii) and subheading 9822.05.11, HTSUS. Specifically, the concern is whether the garments will qualify under the cumulation provision of the DR-CAFTA when the fabric of the outershell and the pocketing bag fabric are formed in Mexico.
ISSUE:
Do the garments at issue qualify for preferential tariff treatment under the DR-CAFTA?
LAW AND ANALYSIS:
The Dominican Republic--Central America--United States Free Trade Agreement (DR-CAFTA) was signed by the governments of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States on August 5, 2004. The CAFTA-DR was approved by the U.S. Congress with the enactment on August 2, 2005, of the Dominican Republic-Central America-United States Free Trade
Agreement Implementation Act (the Act), Pub. L. 109-53, 119 Stat. 462 (19 U.S.C. 4001 et seq.).
GN 29 of the Harmonized Tariff Schedule of the United States (HTSUS) implements the DR-CAFTA. GN 29(b) sets forth the criteria for determining whether a good (other than agricultural goods provided for in GN 29(a)(ii)) is an originating good for purposes of the DR-CAFTA. GN 29(b) states:
For the purposes of this note, subject to the provisions of subdivisions (c), (d), (m) and (n) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good under the terms of this note if –
(i) the good is a good wholly obtained or produced entirely in the territory of
one or more of the parties to the Agreement;
(ii) the good was produced entirely in the territory of one or more of the
parties to the Agreement, and –
each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (n) of this note; or
the good otherwise satisfies any applicable regional value content or other requirements specified in subdivision (n) of this note;
and the good satisfies all other applicable requirements of this note; or
(iii) the good was produced entirely in the territory of one or more of the
parties to the Agreement exclusively from originating materials.
The tariff shift rules for the garments at issue, which your state are classifiable in subheadings 6203.42, HTSUS, and 6211.21, HTSUS, are, respectively:
A change to subheadings 6203.41 through 6203.49 from any other chapter, except from headings 5111 through 5113, 5204 through 5212, 5310 through 5311, chapter 54, headings 5508 through 5516, 5801 through 5802 or 6001 through 6006, provided that the good is cut or knit to shape, or both, and sewn or otherwise assembled in the territory of one or more of the parties to the Agreement.
and,
A change to subheadings 6211.31 through 6211.39 from any other chapter, except from headings 5111 through 5113, 5204 through 5212, 5310 through 5311, chapter 54, headings 5508 through 5516, 5801 through 5802 or 6001 through 6006, provided that the good is cut or knit to shape, or both, and sewn or otherwise assembled in the territory of one or more of the parties to the Agreement.
As goods of Chapter 62, the garments are subject to Chapter Rule 2, Chapter 62, GN 29(n) which provides:
For purposes of determining whether a good of this chapter is originating, the rule applicable to that good shall only apply to the component that determines the tariff classification of the good and such component must satisfy the tariff change requirements set out in the rule for that good. If the rule requires that the good must also satisfy the tariff change requirements for visible lining fabrics listed in chapter rule 1, such requirement shall only apply to the visible lining fabric in the main body of the garment, excluding sleeves, which covers the largest surface area, and shall not apply to removable linings.
In the case of the garments at issue, the outershell determines the tariff classification of the garments. Therefore, for purposes of the tariff shift rules, only the outershell is considered. However, all other applicable chapter rules must also be met.
GN 29(d)(vii) contains the “cumulation” provision of the DR-CAFTA and provides:
Notwithstanding other provisions of this note, for purposes of determining whether a good of chapter 62 of the tariff schedule is an originating good, materials used in the production of such a good that are produced in the territory of Canada or of Mexico and that would be originating under this note if produced in the territory of a party to the Agreement shall be considered as having been produced in the territory of a party to the Agreement, provided that the United States Trade Representative has determined in a notice published in the Federal Register that the requirements of Appendix 4.1-B of the Agreement specified in subdivision (a) of this note have been met with respect to Canada or Mexico, as the case may be, and has announced the effective date of U.S. note 21 to subchapter XXII of chapter 98 of the tariff schedule. Such goods shall be entered under subheading 9822.05.05 of the tariff schedule, subject to the terms of such U.S. note 21, on or after the effective date specified in such notice. [Compiler’s Note: effective with respect to materials from MX, 8/15/08; reference to subheading 9822.05.05 is obsolete and current provisions appear to be 9822.05.11 and 9822.05.13.]
“Notice of effective dates for CAFTA-DR amendment and rule of origin for woven apparel,” issued by the Office of the United States Trade Representative, appeared in the Federal Register on August 7, 2008 (73 Fed. Reg. 46057). The notice announced the effective date for the cumulation rule which allows, “subject to certain conditions, for Mexican or Canadian inputs to be treated as though they originated in a CAFTA-DR country for purposes of determining whether certain woven apparel imported into the United States qualifies for duty-free treatment under the agreement.” See 73 Fed. Reg. 46058. The notice announced that this cumulation rule would enter into force with respect to woven apparel containing materials produced in Mexico on August 15, 2008.
Therefore, in determining whether the men’s coveralls and denim cotton pants at issue qualify for preferential tariff treatment under the DR-CAFTA, the outershell and pocket bag fabrics formed in Mexico may be treated as if produced in the territory of a party to the DR-CAFTA in accordance with GN 29(d)(vii) provided that the fabrics would be originating under GN 29 if produced in the territory of a DR-CAFTA party.
The outershell fabrics of the garments at issue are classifiable as woven cotton fabrics. You indicate the fabrics are formed in Mexico from yarns formed in Mexico or formed in Mexico from yarns formed in the United States. However, as we do not know the origin of the fibers, we must consider whether the fabrics are originating pursuant to the tariff shift rule for woven cotton fabrics contained in GN 29(n). The tariff shift rule provides:
A change to headings 5208 through 5212 from any heading outside that group, except from headings 5106 through 5110, 5205 through 5206, 5401 through 5404 or 5509 through 5510.
Therefore, in order for a 100% cotton fabric to qualify as originating under the tariff shift rule, it must be formed in the territory of a party from cotton yarns which are formed in the territory of a party. In the case of the cotton/nylon fabrics, both the cotton and nylon yarns must be formed in the territory of a party. As the yarns from which the outershell fabrics are made are formed in Mexico or the United States, the outershell fabrics would qualify as originating pursuant to GN 29(d)(vii). Additionally, as the garments are cut and sewn in a DR-CAFTA country, the tariff shift rules are met.
As to the other applicable chapter rules in Chapter 62, GN 29(n), you indicate that threads (presumably sewing threads) are formed and finished in a DR-CAFTA country. Therefore, Chapter Rule 4 requiring sewing thread to be formed and finished in a DR-CAFTA country or countries has been met. There is no indication that either of the garments at issue contains any fabrics of heading 6002 or subheading 5806.20. As such, Chapter Rule 3 does not appear to be at issue.
With regard to the pocket bag fabrics, we must consider Chapter Rule 5, which states in relevant part:
Chapter Rule 5. Notwithstanding chapter rule 2, a good of this chapter, other than—
(a) a good of headings 6207 through 6208 (for boxers, pajamas, and nightwear only), . . . , 6203.39.90 (for goods subject to wool restraints), . . ., 6211.20.15 (for anoraks (including ski-jackets), windbreakers, and similar articles (including padded, sleeveless jackets), for women or girls, of cotton, imported as parts of ski suits), 6211.20.58 (for goods of cotton), 6211.41.00 (for jackets and jacket-type garments excluded from heading 6202), 6211.42.00 (for track suits, other than trousers, or for jackets and jacket-type garments excluded from heading 6202) or 6217.90.90 (for coats and jackets, of cotton); or
* * *
that contains a pocket or pockets shall be considered originating only if the pocket bag fabric has been formed and finished in the territory of one or more of the parties to the Agreement from yarn wholly formed in the territory of one or more of the parties to the Agreement.
When the pocket bag fabrics are formed and finished in Mexico from yarns formed in Mexico or the United States, the pocket bag fabrics will meet the terms of Note 5 by application of GN 29(d)(vii). However, when foreign yarns (other than Mexico or DR-CAFTA party) are used to form the fabric in Mexico, the pocket bag fabrics will not meet the terms of Note 5 and garments containing such pocket bag fabrics cannot qualify for DR-CAFTA preferential treatment.
HOLDING:
Based on the facts set forth above, the garments at issue, men’s woven coveralls of 88% cotton/12% nylon or 90% cotton/10% nylon fabric; and, men’s woven blue denim 100% cotton pants, will qualify as originating goods under the DR-CAFTA except when the pocketing fabrics are formed in Mexico of foreign (other than Mexico and DR-CAFTA) yarns.
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 CBP officer handling the transaction.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch