CLA-2 RR:CR:TE 965076 mbg
Teresa M. Polino, Esq.
Susan L. Renton, Esq.
Sandler, Travis & Rosenberg, P.A.
1300 Pennsylvania Ave. NW
Washington, DC 20004-3002
RE: CBTPA; girl’s knit top with embroidery; subheading 9820.11.18; heading 6109, HTSUSA
Dear Ms. Renton and Ms. Polino:
This is in response to your letter of May 17, 2001, on behalf of your client OshKosh B’Gosh, requesting a binding ruling on the eligibility of a girl’s knit top for duty-free treatment under the United States-Caribbean Basin Trade Partnership Act (“CBTPA”).
FACTS:
The subject merchandise is a sleeveless girl’s knit top constructed of 100 percent cotton fabric with embroidery work in the form of small flowers, vines, etc. utilizing non-US formed embroidery thread.
You have provided that the top is manufactured in the Caribbean from fabric wholly formed in the United States from yarns wholly formed in the United States. You have further stated that the fabric is cut into components in the Caribbean. Certain components are then embroidered then the garment is assembled in the Caribbean using sewing thread formed in the United States. The girl’s knit tank top is classified in subheading 6109.10.0065, HTSUSA.
This garment is designated eligible for preferential tariff treatment within subheading 9820.11.18, HTSUSA, as provided for in Subchapter XX, U.S. Note 2(a) HTSUSA, which provides:
Except as provided in this note, textile and apparel articles described in subheading 9820.11.03 through 9820.11.30, inclusive, of this subchapter that are imported directly into the custom territory of the United States from a designated beneficiary CBTPA country enumerated in general note 17(a) to the tariff schedule shall be eligible to enter free of duty and free of any quantitative limitations, except as provided in this subchapter, under the terms of the provisions set forth in such subheadings and applicable legal notes, as indicated by the rate of duty of “Free” in the Special rates of duty subcolumn for such provisions.
ISSUE:
Whether the subject knit top with embroidery is 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 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.
I. Applicable Apparel Provisions under the CBTPA
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). The T.D. invited public comments to be submitted on the Interim Regulations by December 4, 2000.
The subject girl’s knit top is eo nomine classified in subheading 6109.10.0065, HTSUSA, which provides for “T-shirts, singlets, tank tops and similar garments, knitted or crocheted: Of cotton: Women’s or girls’: Tank tops: Girls’.”
Subheading 9820.11.18, HTSUSA, was created for the entry of certain articles eligible for preferential treatment under AGOA. (see Presidential Proclamation 7351, dated October 2, 2000, published in the Federal Register on October 4, 2000 (65 Fed. Reg. 59329). This subheading provides for the duty-free entry of:
Articles imported from designated beneficiary Caribbean Basin Trade Partnership country enumerated in general note 17(a) to the tariff schedule: Knitted or crocheted apparel articles (except T-shirts, other than underwear, classifiable in subheadings 6109.10.00 and 6109.90.10 and described in subheadings 9820.11.12) cut and assembled in one or more such countries from fabrics wholly formed in the United States 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 wholly in the United States), if such assembly is with thread formed in the United States.
Therefore, in regard to the facts of this case, the subject knit top is said to be cut and assembled in the Caribbean from fabric produced in United States with sewing thread produced in the United States.
II. Findings and Trimmings Provisions under the CBTPA
Subchapter XX, U.S. Note 3(a), HTSUSA, provides:
An article otherwise eligible for preferential treatment under any provision of this subchapter shall not be ineligible for such treatment because the article contains—
(i) findings and trimmings of foreign origin, if the value of such findings and trimmings does not exceed 25 percent of the cost of the components of the assembled article[.]
The Interim Regulations, regarding findings and trimmings further provide:
An article otherwise described under paragraph (a) of this section will not be ineligible for the preferential treatment referred to in [19 C.F.R.] § 10.221 because the article contains:
(A) Findings and trimmings of foreign origin, if the value of those findings and trimmings does not exceed 25 percent of the cost of the components of the assembled article. For the purposes of this section “findings and trimmings” include, but are not limited to, hooks and eyes, snaps, buttons, “bow buds”, decorative lace trim, elastic strips (but only if they are each less than 1 inch in width and are used in the production of brassieres), zippers (including zipper tapes), labels, and sewing thread except in the case of an article described in paragraph (a)(3) or (a)(12) of this section.
See 19 C.F.R. §10.223(b)(1)(i)(A).
Of particular importance in the subject case, the Interim Regulations also provide:
If any fibers or yarns not wholly formed in the United States or one or more beneficiary countries are used in an article as a finding or trimming described in paragraph (b)(1)(i)(A) of this section, the fibers or yarns will be considered to be a finding or trimming for purposes of paragraph (b)(1)(i) of this section.
See 19 C.F.R. § 10.223(b)(ii).
“Findings” are generally accepted to be sewing essentials used in textile goods while “trimmings” are decorative or ornamental parts. See, for example, Headquarters Ruling Letter (“HQ”) 559552, dated February 14, 1996; HQ
560398, dated July 29, 1997; HQ 560458, dated March 6, 1998; HQ 559780, dated May 19, 1997 and HQ 560520, dated September 22, 1997, for examples of what qualifies as a finding or trimming. See also, HQ 558954, dated June 30, 1995; HQ 559522, dated February 14, 1996; HQ 559738, dated July 2, 1996; HQ 559794, dated June 3, 1996; and HQ 559738, dated July 2, 1996, for examples of what does not qualify as a finding or trimming.
The CBTPA legislation states that the assembly of the garment which qualifies for preferential treatment under this provision of the CBTPA must occur using US formed thread. Although the legislation specifies that the “thread” must be manufactured in the US, it is a commonly understood practice in the textile industry that sewing thread is used for assembly and, as with the subject merchandise, that “embroidery” is considered further processing rather than actual “assembly” of the garment. The embroidery is done on the garment for decorative purposes and not as part of the actual garment assembly and therefore foreign thread may be used for the embroidery under the provisions of the CBTPA.
As such, in regard to the facts of this case, the subject knit top with embroidery classified in subheadings 6109.10.0065, HTSUSA, is said to be cut and assembled in the Caribbean from fabric produced in the U.S. with sewing thread produced in the US. The embroidery stitching is considered to be a trim and, as stated in your submission, is done using foreign thread.
The imported article will be eligible for preferential treatment under subheading 9820.11.18, HTSUSA, provided the value of the embroidery thread does not exceed 25 percent of the cost of the components of the assembled knit tank top and the tank top is assembled in a CBTPA beneficiary country from fabric wholly formed in the US from yarns wholly formed in the US using thread formed in the US.
HOLDING:
Provided the cost of the foreign findings and trimmings is less than 25 percent of the cost of the components of the assembled knit tops and if constructed of fabrics wholly formed in the US from yarns wholly formed in the US, the subject girl’s knit shirts, as described above, are eligible for duty free/quota free treatment under subheading 9820.11.18, HTSUSA, provided it is imported directly into the customs territory of the U.S. from a CBTPA beneficiary country.
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,
John Durant, Director
Commercial Rulings Division