CLA-2 RR:TC:TE 966495 CMR
Mr. Desmond Tan
Tuntex Textile Company (Pty) Ltd
P.O. Box 1898
Matsapha Ind. Area
Kingdom of Swaziland
RE: Effect of imported PVC belt on eligibility of pants and shorts for AGOA; Definition of "elastic strips" under AGOA
Dear Mr. Tan:
This ruling is in response to your letter of April 29, 2003, requesting guidance from the Bureau of Customs and Border Protection (CBP) on the eligibility of pants and shorts produced in Swaziland and exported to the United States with a PVC (polyvinylchloride) belt from Taiwan. In addition, you have asked for information on the definition of "elastic strips" under AGOA. Sample garments were submitted for review along with elastic bands.
FACTS:
The first sample is a pair of ladies' pants of 65 percent polyester/35 percent cotton woven twill fabric. We note the sample indicates it was made in Taiwan. We assume it is for illustrative purposes only as it has a PVC belt threaded through the belt loops. In your letter, you indicated the pants produced in Swaziland would be of 65 percent cotton/35 percent polyester woven twill fabric. In an e-mail message of June 27, 2003, you stated that the fabric from which the pants are produced is made in Taiwan, China, or Hong Kong. The fabric is cut into components and assembled into the pants in Swaziland. After the pants are completed, a PVC belt made in Taiwan is attached at the waist. The pants are then prepared and packed for export to the United States.
The second sample is a pair of ladies' shorts. The shorts contain no marking or labeling to indicate origin or fiber content. The shorts are made from a woven twill fabric. As with the pants, a PVC belt is threaded through the belt loops of the shorts. We assume the shorts will be produced in the same manner as the pants described above.
The third sample is a pair of pants made of 100 percent polyester, napped knit fabric. The pant features an enclosed elasticized waistband with a set of slits on the exterior of the waistband on each side of the fly presumably to accommodate a drawstring. The pant has two side seam pockets, elasticized leg cuffs and a front fly opening which does not break at the waist and is secured by a single button. The pants contain a label stating the pants were made in Swaziland. We assume this sample was submitted to illustrate how you intend to use elastic strip.
ISSUE:
Does the addition of a non-textile foreign belt to a pair of pants, which otherwise would qualify for preferential treatment under AGOA, disqualify the pants for preferential treatment?
What is meant by "elastic strips" in the "findings and trimmings" rule of AGOA?
LAW AND ANALYSIS:
The African Growth and Opportunity Act (AGOA) provides certain specified trade benefits for countries of sub-Saharan Africa. These benefits include duty-free treatment for certain non-textile articles previously excluded from preferential treatment under the Generalized System of Preferences, and duty- and quota-free treatment for certain textile and apparel articles which meet the requirements set forth in Section 112 of the Act (codified at 19 U.S.C. 3721). Beneficiary countries are designated by the President of the United States after having met eligibility requirements set forth in the AGOA. Once designated, a beneficiary country is entitled to the duty-free treatment for the designated non-textile articles determined not to be import-sensitive in the context of imports from the beneficiary sub-Saharan African countries. A second designation by the United States Trade Representative (USTR), published in the Federal Register, that a beneficiary country has taken the measures required by the Act to prevent unlawful transshipment and has adopted an effective visa system, is necessary before a beneficiary country may enjoy the duty- and quota-free benefits extended to textile and apparel articles under the Act. Swaziland was designated a beneficiary country by Presidential Proclamation 7400 of January 17, 2001, published in the Federal Register on January 23, 2001 (66 Fed. Reg. 7373). It was determined to be eligible for textile benefits under the AGOA by the USTR effective July 26, 2001 (66 Fed. Reg. 41649).
The provisions implementing the textile provisions of the AGOA in the Harmonized Tariff Schedule of the United States (HTSUS) are contained, for the most part, in subchapter XIX, Chapter 98, HTSUS (one provision may be found in subheading 9802.00.80, HTSUS). The regulations pertinent to the textile provisions of the AGOA may be found at ยงยง 10.211 through 10.217 of the Customs Regulations (19 CFR 10.211 through 10.217).
Based on the information you have provided, the ladies' pants at issue qualify for classification in subheading 9819.11.12, HTSUSA, which provides for:
Apparel articles wholly assembled, or knit-to-shape and wholly assembled, or both, in one or more such lesser developed countries enumerated in U.S. note 2(d) to this subchapter, subject to the provisions of U.S. note 2 to this subchapter, regardless of the country of origin of the fabric or the yarn used to make such articles, if entered during the period beginning on the date announced in a Federal Register notice issued by the United States Trade Representative and continuing through September 30, 2004, inclusive.
The fabric for the pants is imported from a third (non-beneficiary) country and is cut into components which are wholly assembled in Swaziland into the ladies' pants. Thus, the subject ladies' pants qualify for preferential treatment under the AGOA.
The issue at hand is whether adding a foreign non-textile belt to an otherwise eligible garment, i.e., the ladies' pants, will preclude eligibility for preferential treatment.
For classification purposes, the ladies' pants and the PVC belt from Taiwan are classified together as a set put up for retail sale. If imported separately, the pants would be classified in heading 6204, HTSUS, which provides for, among other things, women's woven pants. The PVC belt, if imported separately, would be classified in heading 3926, HTSUS, which provides for, among other things, other articles of plastics. General Rule of Interpretation (GRI) 3(b) provides, in part, that when not classifiable under GRI 2(b) (a rule for classification of mixtures and combinations of materials or substances), goods put up in sets for retail sale are classified as if they consisted of the component that imparts the essential character to the set. CBP (formerly, U.S. Customs Service) has issued numerous rulings on the classification of garments put up as a set with non-textile belts. See, e.g., NY I85652 of September 20, 2002, classifying a women's shorts and belt set. In each case, the garment determined the classification of the set. The same is true here. The PVC belt is classified with the ladies' pants as a set. If you intend to produce shorts, such as the submitted sample, the same principle would hold, i.e., the PVC belt would be classified with the shorts as a set.
Having established that the pants and belt are classified together, the issue remains as to whether inclusion of the belt will preclude the set from receiving preferential treatment under the AGOA.
The language of the various apparel provisions of the AGOA sets forth requirements regarding the production of the apparel, including requirements specific to the formation of the yarn and fabric used in the production of the apparel. There are no requirements set forth with regard to non-textile components which may be used in the production of the apparel except for those items which would be considered "findings or trimmings." Note 3, Subchapter XIX, Chapter 98, provides, in relevant part, that:
(a) [a]n article otherwise eligible for preferential treatment under any provision of [subchapter XIX] shall not be ineligible for such treatment because the article contains--
(i) findings or 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;
* * *
(b) For purposes of subdivision (a)(i) above, findings and trimmings eligible under such subdivision include sewing thread, hooks and eyes, snaps, buttons, "bow buds", decorative lace trim, elastic strips, and zippers (including zipper tapes) and labels. Elastic strips are considered findings and trimmings only if they are each less than 2.54 cm in width and used in the production of brassieres. For purposes of articles described in subheading 9819.11.06 and 9819.11.30, sewing thread shall not be considered to be findings or trimmings.
Clearly, the PVC belt is not a finding or trimming; it is an accessory to the pants.
CBP has issued rulings on the affect non-textile components have on the eligibility of textile articles for preferential treatment under other programs. In HQ 562018 of March 22, 2002, CBP ruled that a third country (non-beneficiary) polyurethane strip which functioned as a brassiere strap and a polyurethane cup used in the production of brassieres had no affect on the eligibility of the brassieres under the Caribbean Basin Trade Partnership Act (CBTPA). In HQ 562309 of July 16, 2002, CBP ruled that leather components used to form the strap end and to join metal buckles with the woven cotton fabric that formed the strap of a belt did not preclude the belt's eligibility for preferential treatment under the CBTPA. In 557875 of May 4, 1995, CBP ruled that textile soft-sided luggage qualified for preferential treatment under subheading 9802.00.90, HTSUSA, (provided the findings and trimmings did not exceed the applicable value limitation) because the textile components met the requirements of the provision. Non-textile components, such as the metal frame, were not considered in determining eligibility. This was also true in HQ 560649 of December 9, 1997, in which CBP ruled a pet toy stuffed with polyester fiber of foreign origin qualified under 9802.00.90, HTSUSA.
Based on the above cited precedent, the inclusion of the PVC belt with the otherwise eligible ladies' pants will not preclude eligibility of the set for preferential treatment under the AGOA.
As to your question regarding the meaning of "elastic strip," we assume your request is related to the special rule under the AGOA for "findings and trimmings." That rule, cited above, refers specifically to elastic strip. CBP has stated in earlier rulings interpreting identical language for different preferential programs that "elastic strip" as used in the "findings and trimmings" rule refers to narrow elastic fabric less than one inch in width and used in the production of brassieres. See HQ 561868 of July 10, 2001; HQ 562018 of March 22, 2002; and, HQ 965909 of January 7, 2003.
The samples of "elastic strip" that you have submitted with your request measure 1-1/8 and 1-3/8 inches wide. We assume you intend to use these "elastic strips" in the waistbands and leg cuffs of pants as is evident in the sample knit pants you submitted. As the submitted "elastic strips" are narrow elasticized fabrics greater than one inch or 2.54 centimeters in width and are used in the production of garments other than brassieres, they do not fall within the "findings and trimmings" special rule.
However, as Swaziland is designated a lesser developed beneficiary country for purposes of the AGOA, if preferential treatment is sought under the provision of AGOA which requires apparel be wholly assembled in a lesser developed beneficiary country regardless of the country of origin of the fabric or yarn (subheading 9819.11.12), the origin of the elasticized fabric will be of no consequence. It may originate from anywhere, as may the remaining fabric used in producing the garment. We note that this provision of the AGOA allows for the use of fabric or yarn from anywhere, but this is not true for components. The use of non-beneficiary origin knit-to-shape or cut to shape components, or such
components from beneficiary countries that are not LDCs, will preclude preferential treatment under this provision.
HOLDING:
The addition of a PVC belt from Taiwan with a pair of ladies' pants or shorts will not preclude eligibility for preferential treatment under the AGOA provided the ladies' pants or shorts otherwise meet the requirements for preferential treatment under the AGOA. Provided the pants and shorts are produced as described in your e-mail message of June 27, 2003, according to GRI 3(b), the pants and belt or shorts and belt will be classifiable in subheading 9819.11.12, HTSUS.
"Elastic strip" as used in the "findings and trimmings" special rule refers to narrow elasticized fabric.
A copy of this ruling 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 CBP officer handling the transaction.
Sincerely,
Myles B. Harmon, Director
Commercial Rulings Division