CLA-2 CO:R:C:T 955814 BC
William J. LeClair
Trans-Border Customs Services, Inc.
P.O. Box 800
Champlain, New York 12919
RE: Applicability of the North American Free Trade Agreement
(NAFTA) to Indonesian plywood imported into Canada to be face
finished; originating good; Annex 401; General Note 12, HTSUSA
Dear Mr. LeClair:
This responds to your letter of January 18, 1994, wherein
you requested, on behalf of your client Okaply Ltd. of Quebec,
Canada, a ruling concerning the applicability of a duty
preference under NAFTA for Indonesian plywood face finished in
Canada and imported into the United States. We have reviewed the
matter and our decision follows.
FACTS:
The merchandise at issue is unfinished lauan plywood
originating in Indonesia. It is imported into Canada where it is
face finished by either laminating the surface with a vinyl sheet
or by painting and printing a motif or woodgrain on the surface.
The face finished plywood is then imported into the United
States.
On August 17, 1992, we issued to you (on behalf of the same
client) a ruling concerning applicability of the United States-
Canada Free Trade Agreement to the same face finished plywood -
Headquarters Ruling Letter 951538. We noted in that ruling that
the exact species of the wood involved was unknown. This
information was not necessary to our determination in that
ruling. We note that this information remains unknown but
likewise is unnecessary to our determination here.
ISSUE:
Does unfinished Indonesian plywood that is imported into
Canada, face finished in Canada, and then imported into the
United States as face finished plywood qualify as an originating
good under Chapter 4 and Annex 401 of the NAFTA?
LAW AND ANALYSIS:
Chapter 4 of the NAFTA sets forth rules for determining
whether an imported good qualifies as an originating good of a
NAFTA country (originating good). A good that qualifies as an
originating good is eligible for preferential tariff (duty free
or reduced duty) treatment as provided for under Article 302(2)
and Annex 302.2 of the NAFTA. The basic rules of origin in
Chapter 4 of the NAFTA, as well as the specific rules of origin
found in Annex 401 of the NAFTA, are set forth in General Note
12, Harmonized Tariff Schedule of the United States Annotated
(HTSUSA). (See 58 Fed. Reg. 69,460 (Dec. 30, 1993).) (In your
letter, you cited rules for determining the country of origin for
marking purposes under Annex 311 of the NAFTA. These are not
applicable for determining whether a good qualifies as an
originating good, as above.)
Subdivision (b) of General Note 12, HTSUSA, sets forth the
rules of origin for determining whether an imported good is an
originating good. It provides, in pertinent part, the following:
For the purposes of this note, goods imported into the
customs territory of the United States are eligible for
the tariff treatment and quantitative limitations set
forth in the tariff schedule as "goods originating in
the territory of a NAFTA party only if --
(i) they are goods wholly obtained or produced
entirely in the territory of Canada, Mexico and/or the
United States; or
(ii) they have been transformed in the territory of
Canada, Mexico and/or the United States so that --
(A) except as provided for in subdivision (f) of
this note, each of the non-originating materials used
in the production of such goods undergoes a change
in tariff classification described in subdivisions (r),
(s) and (t) of this note or the rules set forth
therein.
* * *
Subdivision (b)(i) of General Note 12 is inapplicable since the
plywood at issue is not wholly obtained or produced in a NAFTA
country. Subdivision (b)(ii) of General Note 12 applies, and
subdivision (t) of General Note 12, entitled "Change in Tariff
Classification Rules," is pertinent to the instant plywood.
The applicable subdivision (t) rule for Chapter 44 provides
the following: "A change to headings 4401 through 4421 from any
other heading, including another heading within that group."
Thus, according to General Note 12(t), goods of Chapter 44 must
undergo a tariff shift from one heading to another heading. The
subject Indonesian plywood imported into Canada in an unfinished
condition is classifiable under heading 4412, HTSUSA. That same
plywood, after being face finished in Canada, is classifiable
under heading 4412, HTSUSA, upon importation into the United
States. Thus, the plywood at issue does not undergo a tariff
classification change after processing in Canada, as required
under the NAFTA.
The face finished plywood imported into the United States
from Canada is not considered a good originating in the territory
of a NAFTA party. It therefore is not entitled to preferential
duty treatment under the NAFTA.
Sincerely,
John Durant, Director
Commercial Rulings Division