HQ 088932
July 23,1991
CLA-2 CO:R:C:F 088932 JGH
Mr. Keith B. Berkholtz
ShieldAlloy Metallurgical Corporation
West Boulevard
P.O.Box 768
Newfield, N.J. 08344
RE: Dutiable status of Ferrovanadium under the
United States-Canada Free Trade Agreement (CFTA).
Dear Mr. Berkholtz:
Your letter of March 13, 1991, concerns the classification
under the Harmonized Tariff Schedules of the United States
(HTSUS) of a ferroalloy produced in Canada.
FACTS:
At the outset we must point out that your letter does not
contain sufficient facts on which to provide you with definite
advice.
You state that vanadium pentoxide from South Africa is
exported to Canada where it is converted into ferrovanadium,
which you contend is being imported into the United States.
ISSUE:
Whether the ferrovanadium is eligible for duty treatment
under the CFTA?
-2-
LAW AND ANALYSIS:
You are concerned that by converting vanadium pentoxide
from South Africa into a ferroalloy in Canada, an importer can
not only bring into the United States an article subject to the
South African sanctions, but also circumvent the high duty on
the chemical compound by changing it into a ferroalloy.
In any event, the question of sanctions has become moot in
view of the Presidential executive order, signed July 10, 1991,
which terminated all sanctions imposed on South Africa pursuant
to Title III of the Comprehensive Anti-Apartheid Act of 1986.
To be eligible for tariff preferences under the CFTA,
goods must be "goods originating in the territory of Canada"
within General Note 3(c)(vii)(B), HTSUS. One method by which a
product may become an originating good for CFTA purposes is for
goods to be transformed in Canada and/or the United States in
accordance with General Note 3(c)(vii)(B)(2). A transformation
results when a change in tariff classification occurs that is
described by General Note 3(c)(vii)(R). In this instance the
vanadium pentoxide is classified in heading 2825, HTSUS, when it
enters Canada. The processing performed on the vanadium
pentoxide in Canada results in a ferroalloy which you state is
classifiable in subheading 7202.92.00, HTSUS. Such a change in
tariff classification would be considered a transformation
described in General Note 3(c)(vii)(R)(15).
You also mention that the CFTA includes a provision that
further clarifies and defines the rules of origin by requiring a
50% value-content test for all goods. However, Annex 301.2,
paragraph 4, is not a general value-content rule. It is a
specific rule that applies to the two situations described in
paragraph 3 of Annex 301.2. The provisions in Annex 301.2,
paragraphs 3 and 4, are codified in General Note 3 (c) (vii)(G)
and (H) of the HTSUS. These provisions do not apply to the
situation in question because the processing which converts the
vanadium pentoxide into ferrovanadium results in a change in
classification.
-3-
As to the materials classification in Chapter 72 as a
ferroalloy, chapter note 1(c), HTSUS, states that classification
as a ferroalloy is dependent, among other factors, on the
material containing at least 4 percent by weight of iron and at
least 10 percent by weight of the other element. Since the
specifications of the ferrovanadium were not given, no definite
classification may be given.
HOLDING:
From the facts submitted, it is concluded that the
ferrovanadium in question has been transformed in Canada in
accordance with General Note 3(c)(vii)(15)(R)(aa): The
ferrovanadium is an originating good under General Note
3(c)(vii)(R)(2)(I), and is therefore eligible for tariff
preference under the CFTA, if the remaining CFTA requirements are
met.
Sincerely,
John Durant, Director
Commercial Rulings Division
6cc A.D., N.Y. Seaport
2cc CIE
hurley library/peh
088932