CLA-2 RR:CR:TE 960841 jb
Category: Classification
Port Director
U.S. Customs Service
477 Michigan Avenue, Suite 200
Detroit, Michigan 48226
RE: Internal Advice; The Eligibility for Preferential Treatment
under the North American Free Trade Agreement (NAFTA) for
wearing apparel accessories
Dear Sir:
This is in response to your memorandum, dated April 30,
1998, wherein you ask for internal advice with respect to the
eligibility for preferential treatment under the NAFTA for knit
and woven wearing apparel accessories classified in headings
6117, 6214 and 6217, Harmonized Tariff Schedule of the United
States (HTSUS). Specifically, you request whether wearing
apparel accessories can be considered to be "apparel goods" for
purposes of the Tariff Preference Levels (TPL).
FACTS:
The merchandise which is the subject of this request
consists of woven scarves, classifiable in heading 6214, HTSUS,
and knit headbands and hair scrunchies classifiable in heading
6117, HTSUS. The manufacturing operations for the subject
merchandise are as follows:
Woven Scarves
Thailand
yarns are created
Canada
fabric is woven
fabric is cut and sewn
Headbands
Thailand
yarns are spun from cotton and polyester fibers
Canada
fabric is knitted
fabric is cut and sewn
Hair Scrunchies
Pakistan
fabric is formed
Canada
fabric is cut and sewn
ISSUE:
Whether wearing apparel accessories are eligible for
preferential treatment under the North American Free Trade
Agreement (NAFTA)?
LAW AND ANALYSIS:
North American Free Trade Agreement Eligibility
The subject merchandise undergoes processing operations in
Canada which is a country provided for under the North American
Free Trade Agreement (NAFTA). General Note 12, HTSUSA,
incorporates Article 401 of the North American Free Trade
Agreement (NAFTA) into the HTSUSA. Note 12(a) provides, in
pertinent part:
* * *
(i) Goods that originate in the territory of a NAFTA party
under the terms of subdivision (b) of this note and
that qualify to be marked as goods of Canada under the
terms of the marking rules... and are entered under a
subheading for which a rate of duty appears in the
"Special" subcolumn followed by the symbol "CA" in
parentheses, are eligible for such duty rate... .
[Emphasis added]
Accordingly, the merchandise at issue will be eligible for the
"Special" "CA" rate of duty provided it is a NAFTA "originating"
good under General Note 12(b), Harmonized Tariff Schedule of the
Unites States Annotated (HTSUSA), and it qualifies to be marked
as a good of Canada. Note 12(b) provides, in pertinent part,
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 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, or
(B) the goods otherwise satisfy the applicable
requirements of subdivisions (r), (s) and (t)
where no change in tariff classification is required, and the
goods satisfy all other requirements of this
note; or
(iii) they are goods produced entirely in the territory
of Canada, Mexico and/or the United States exclusively
from originating materials; or
* * *
Accordingly, the subject merchandise qualifies for NAFTA
treatment only if the provisions of General Note 12(b)(ii)(A) are
met, that is, if the merchandise is transformed in the territory
of Canada so that the non-originating materials undergo a change
in tariff classification as described in subdivision (t).
As the woven scarf is classifiable in subheading
6214.30.0000, HTSUSA, subdivision (t), Chapter 62, rule 38,
applies. That note states:
A change to headings 6213 through 6217 from any other
chapter, except from headings 5106 through 5113, 5204
through 5212, 5307 through 5308 or 5310 through 5311,
chapter 54, or headings 5508 through 5516, 5801 through 5802
or 6001 through 6002, provided that the good is both cut (or
knit to shape) and sewn or otherwise assembled in the
territory of one or more of the NAFTA parties.
When the yarn for the subject woven scarf leaves Thailand it
falls within chapter 54 or heading 5509. As chapter 54 and
headings 5508 through 5516 are excepted by subdivision (t),
chapter 62, rule 38, the merchandise does not meet the terms of
the note. Accordingly, the subject merchandise is not eligible
for NAFTA treatment.
As the knit hairband and hair scrunchies are classifiable in
subheading 6117.80.8500, HTSUSA, subdivision (t), Chapter 61,
rule 39, applies. That note states:
A change to headings 6113 through 6117 from any other
chapter, except from headings 5106 through 5113, 5204
through 5212, 5307 through 5308 or 5310 through 5311,
chapter 54, or heading 5508 through 5516 or 6001 through
6002, provided that the good is both cut (or knit to shape)
and sewn or otherwise assembled in the territory of one or
more of the NAFTA parties.
When the yarn for the hairband leaves Thailand it falls
within chapter 54 or heading 5509.
When the fabric for the hair scrunchies leaves Pakistan it falls
within chapter 60. As chapter 54, headings 5508 through 5516,
and headings 6001 through 6002, are excepted by subdivision (t),
chapter 61, rule 39, the merchandise does not meet the terms of
the note. Accordingly, neither the hair bands nor the hair
scrunchies are eligible for NAFTA treatment.
Tariff Preference Levels
You raise the issue of whether the scope of the Tariff
Preference Levels is intended to include "apparel accessories"
such as the merchandise discussed above, or whether the scope was
meant to be restricted only to wearing apparel.
Additional U.S. Note 3(a) states:
The rate of duty in the "Special" subcolumn of rates of duty
column 1 followed by the symbol "CA" in parentheses shall
apply to imports from Canada, up to the annual quantities
specified in subdivisions (f) of this note, of apparel goods
provided for in chapters 61 and 62 that are both cut (or
knit to shape) and sewn or otherwise assembled in the
territory of a NAFTA party from fabric or yarn produced or
obtained outside the territory of one of the NAFTA parties.
This office has had the opportunity to discuss the intent of
the scope of the TPL's with the relevant offices who participated
in the drafting of the pertinent Additional U.S. Notes. Based on
those discussions, it is our understanding that the term "apparel
goods" was not meant to be read restrictively to encompass only
textile wearing apparel, but was intended to encompass a broad
range of garments inclusive of wearing apparel accessories. It
is our belief that this is further bolstered by the fact that the
Notes make reference to "apparel goods" which, are indicative not
only of wearing apparel, but also of those articles associated
with wearing apparel, that is, accessories.
Accordingly, although the subject apparel accessories are
within the scope of Additional U.S. Note 3(a), they do not meet
the requirements set out in that note. That is to say, although
the subject merchandise is cut in Canada, the merchandise does
not meet the second prong of the note, that is "sewn or otherwise
assembled in the territory of a NAFTA party..." Thus, neither
the scarves, headbands or hair scrunchies undergo the requisite
sewing or assembly process in Canada. There is no "component to
component" assembly; only the mere joining of a single component
piece. As such, none of the subject merchandise is eligible for
the tariff preference levels.
Sincerely,
John Durant, Director
Commercial Rulings Division