MAR-2 RR:CR:SM 562401 KSG
Thomas J. Kovarcik, Esq.
237 Park Avenue, 21st Floor
New York, NY 10017-3142
RE: U.S.-Caribbean Basin Trade Partnership Act; subheading 9820.11.09
Dear Mr. Kovarcik:
This is in response to your letter of April 10, 2002, on behalf of Elastic Corporation of America ("ECA") requesting a binding ruling on the eligibility of garments made in Honduras or El Salvador for preferential tariff treatment under the United States-Caribbean Basin Trade Partnership Act (“CBTPA”). You submitted a sample for our examination.
FACTS:
The sample garment provided is a women's full cut panty constructed of 100% knit cotton fabric. The garment features a one-inch wide exposed elastic waistband, capped leg openings, side seams and a self fabric gusset sewn into the crotch.
The cotton fabric is produced as follows:
In the U.S., U.S. origin cotton is spun into yarns; the yarns are knit into tubular fabric; and the tubular fabric is bleached, dyed and finished. The fabric is then sent to Honduras or El Salvador.
In Honduras or El Salvador, the fabric is cut into components and the components are assembled into finished panties.
The elastic waistband is produced as follows:
In the U.S., the elastic yarns are extruded and spun. The yarns are then sent to Honduras.
In Honduras, the elastic yarns are crochet knit into fabric; "Fruit of the Loom" logos are printed on the elastic fabric; the finished elastic fabric is wound on rolls; and the rolls are then sent to assembly plants in Honduras or El Salvador.
In Honduras or El Salvador, the elastic rolls are cut and sewn onto the panties. The panties are then shipped to the U.S., imported into the ports of Miami, Florida or Gulfport, Mississippi and sold under the "Fruit of the Loom" label.
ISSUE:
Whether the women's knitted cotton panties described above are eligible for preferential tariff treatment under the CBTPA.
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 section 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. Both Honduras and El Salvador are CBTPA beneficiary countries. See U.S. Note 1, Subchapter XX , Chapter 98, HTSUS.
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).
Subheading 9820.11.09, HTSUS, provides as follows:
Apparel articles (other than socks provided for in heading 6115 of the tariff schedule) knit to shape in such a country from yarns wholly formed in the United States; knitted or crocheted apparel articles (except t-shirts, other than underwear, classifiable in subheading 6109.10.00 and 6109.90.10 and described in subheading 9820.11.12) cut and wholly assembled in one or more such countries from fabrics formed in one or more such countries or from fabrics formed in one or more such countries and the United States, all the foregoing from yarns wholly formed in the United States (including fabrics not formed from yarns, if such fabrics are classifiable in heading 5602 or 5603 of the tariff schedule and are formed in one or more such countries) and subject to the provisions of U.S. note 2(b) to this subchapter
U.S. Note 2(b), Subchapter XX, Chapter 98, HTSUS, provides as follows:
Imports of apparel articles under subheading 9820.11.09 shall be limited, in the period beginning on October 2, 2000 and continuing through the close of September 30, 2001, to an aggregate quantity not to exceed 250,000,000 square meter equivalents. Such imports of apparel articles shall be limited during each of the one-year periods provided for herein, to the following aggregate quantity of square meter equivalents:
12-month Period Square Meter Equivalents
October 1, 2001 through September 30, 2002…………290,000,000
October 1, 2002 through September 30, 2003…………336,400,000
October 1, 2003 through September 30, 2004
and subsequent 12-month periods………………………390,224,000
Based on the facts presented, the yarns are wholly formed in the United States as required in subheading 9820.11.09, HTSUS. The cotton and elastic fabrics are formed in the United States and Honduras. The cotton and elastic fabrics are cut and assembled in Honduras or El Salvador, CBTPA beneficiary countries. Accordingly, the cotton panties are eligible for preferential treatment under subheading 9820.11.09, HTSUS, subject to the quantitative limitations set forth in U.S. Note 2(b), Subchapter XX, Chapter 98, HTSUS.
HOLDING:
The women's knitted cotton panties, manufactured as described above, are eligible for preferential tariff treatment under subheading 9820.11.09, HTSUS, subject to the quantitative limitations set forth in U.S. Note 2(b), Subchapter XX, Chapter 98, 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,
Myles B. Harmon, Acting Director
Commercial Rulings Division