CLA-2 RR:CR:SM 562309 TJM
Darrell Sekin, Jr.
DJS International Services, Inc.
PO Box 612785
DFW Airport TX 75261
RE: Caribbean Basin Trade Partnership Act; CBTPA; 19 CFR § 10.223(a)(3); interim regulations; apparel; findings and trimmings; non-textile component; leather; fabric belt; Ana Trading.
Dear Mr. Sekin:
This is in reply to your letter dated December 13, 2001, addressed to the National Commodity Specialists Division, which was subsequently forwarded to this office on January 16, 2002. In your letter, you request a ruling regarding preferential treatment under the Caribbean Basin Trade Partnership Act (the "CBTPA") for belts produced in Guatemala. Our response follows.
FACTS:
You state that the cotton cable belt will be manufactured in Guatemala from cotton cable wholly formed in the United States from yarns wholly formed in the United States. The woven cotton fabric is cut to length in Guatemala. The belts will be assembled in Guatemala with thread that is formed in the United States. You represent that these belts as imported into the U.S. are classifiable in subheading 6217.10.95, HTSUS. You state that the importer would like to enter the belts under subheading 9820.11.06, HTSUS, a provision provided under the CBTPA.
The belt includes leather components for joining the metal buckles with the woven cotton fabric and for the end strap. The leather components are sourced from Italy, Spain, or Mexico. The metal buckles also originate in the United States.
ISSUE:
Whether the woven cotton belt assembled in Guatemala as described above qualifies for preferential treatment under the Caribbean Basin Trade Partnership Act (CBTPA).
LAW AND ANALYSIS:
The Trade and Development Act of 2000 was signed into law on May 18, 2000 (Pub. L. 106-200, 114 Stat. 251). Title II of the Act concerns trade benefits for the Caribbean Basin and is referred to as the United States-Caribbean Basin Trade Partnership Act. 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 by eliminating tariffs and quantitative restriction on specific textile and apparel articles and by extending NAFTA duty treatment standards to non-textile articles that previously were ineligible for preferential treatment under the CBERA. “Transition period” is defined in section 213(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 FR 59329), implemented the CBTPA by designating the eligible CBTPA countries and amending Chapter 98, Harmonized Tariff Schedule of the United States (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. To date, the countries which the USTR has determined meet the second criterion stated above are set forth in notices published in the Federal Register on October 10, 2000 (65 FR 60236); November 21, 2000 (65 FR 69988); February 12, 2001 (66 FR 9888); and June 11, 2001 (66 FR 31272). Guatemala has been designated as a CBTPA beneficiary country, and in the notice published on October 10, 2000, USTR determined that Guatemala meets the second criterion set forth above.
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 FR 59650). The T.D. invited public comments to be submitted on the Interim Regulations by December 4, 2000. It is noted that the issue you have raised is outside the scope of the comments received.
As amended by section 211 of the CBTPA, section 213(b)(2)(A) of the CBERA provides various categories of textile and apparel goods that qualify for CBTPA preference. It states, in pertinent part, that:
(ii) Apparel articles cut and assembled in one or more CBTPA Beneficiary countries -- Apparel articles cut in one or more CBTPA beneficiary countries from fabric wholly formed in the United States from yarns wholly formed in the United States. . . , if such articles are assembled in one or more such countries with thread formed in the United States.
The above statutory provision has been implemented by interim regulation in section 10.223(a)(3), Customs Regulations (19 CFR §10.223(a)(3)), which states, in pertinent part, as follows:
General. The preferential treatment referred to in § 10.221 applies to the following textile and apparel articles that are imported directly into the customs territory of the United States from a CBTPA beneficiary country:
. . . .(3) Apparel articles. . .cut in one or more CBTPA beneficiary countries from fabric wholly formed in the United States from yarns wholly formed in the United States. . ., if those articles are assembled in one or more CBTPA beneficiary countries with thread formed in the United States. . . .
Goods satisfying the requirements of section 213 of the CBERA (§10.223(a)(3) of the interim regulations) are eligible for duty-free and quota-free entry under subheading 9820.11.06, HTSUS.
In the instant case, the specific country of assembly of the belt is Guatemala, a designated beneficiary country under the CBTPA. The fabric is cut to length in Guatemala. The fabric is wholly formed in the United States from yarns wholly formed in the United States. The thread used to assemble the belt is also formed in the United States. Therefore, the requirements set forth in section 10.223(a)(3), Interim Customs Regulations (19 CFR § 10.223(a)(3)), and subheading 9820.11.06, HTSUS, regarding the fabric, cutting of fabric and its assembly are satisfied.
However, the remaining issue is whether the leather components used to assemble the belt would prejudice the eligibility of the belt for CBTPA preference. Section 211(a) of the Act, amending 19 U.S.C. § 2703(b)(2)(A)(vii)(I) provides exceptions for findings and trimmings:
An article otherwise eligible for preferential
treatment under this paragraph shall not be ineligible for such treatment because the article contains findings or trimmings of foreign origin, if such findings and trimmings do not exceed 25 percent of the cost of the components of the assembled product. Examples of findings and trimmings are sewing thread, hooks and eyes, snaps, buttons, “bow buds”, decorative lace, trim, elastic strips, zippers, including zipper tapes and labels, and other similar products. Elastic strips are considered findings or trimmings only if they are each less than 1 inch in width and are used in the production of brassieres.
In the case of an article described in clause (ii)
of this subparagraph, sewing thread shall not be treated as findings or trimmings under this subclause.
It is our opinion that the leather strap end and the leather component that joins the buckle to the fabric belt do not qualify as findings or trimmings. Therefore, they are not subject to the value limitation referenced above. Furthermore, it is our opinion that eligibility of the textile belt for CBTPA preferential treatment as set forth in 19 CFR §10.223(a)(3) is not precluded because it incorporates foreign-made non-textile components (not qualifying as findings or trimmings).
Therefore, based on the facts provided and the assumption that all other CBTPA requirements will be met, the belt at issue qualifies for CBTPA preference.
HOLDING:
For the foregoing reasons, it is our opinion that the use of foreign non-textile components that do not qualify as findings or trimmings to produce the fabric belt in Guatemala does not preclude the belt’s eligibility under the CBTPA. Therefore, assuming that all other CBTPA requirements will be met, the belt described above qualifies for preferential treatment under the CBTPA.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents are filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
Sincerely,
Myles B. Harmon, Acting Director
Commercial Rulings Division