CLA-2 RR:CR:TE 966634 KSH
Mr. James Langford
ISIS International Ltd.
P.O. Box 46
Port Clinton, PA 19549
RE: African Growth and Opportunity Act; Knit Polo Shirt; Lesser Developed Country; Swaziland, Ghana
Dear Mr. Langford:
This is in response to your letter dated July 17, 2003 and supplemental letter of August 21, 2003, requesting a binding ruling on the eligibility of collars for preferential treatment under the African Growth and Opportunity Act (AGOA).
FACTS:
You have submitted a sample of rib knit fabric with pre-marked lines of demarcation that indicate where to cut to separate the section which will be further cut using a template. Each section identified for cutting has a finished and unfinished edge. The fabric is formed on a jacquard knitting machine and vat dyed in Taiwan or Thailand. The fabric is then cut and shaped using a template and attached to the body of a polo shirt in Swaziland or Ghana.
ISSUE:
Whether apparel assembled in a Lesser Developed Beneficiary Country (LDC) of foreign textile components is eligible for preferential treatment under the 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 Africa 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, 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. See 66 Fed. Reg. 41648, dated August 8, 2001.
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 §§10.211 through 10.217 of the Customs
Regulations (19 CFR 10.211 through 10.217).
Apparel articles wholly assembled in a sub-Saharan African lesser developed
beneficiary country (LDC) and directly imported into the U.S. are entitled to duty free
status, subject to certain restrictions. Such articles are entered under subheading
9819.11.12, HTSUS, which provides as follows:
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.
U.S. Note 2(d) lists Swaziland and Ghana as qualifying for designation as a
LDC. U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS, provides for a
quantitative restriction for apparel articles classified in subheading
9819.11.12, HTSUS.
The statute allowing for duty free entry of apparel articles from LDC’s, 19
U.S.C. 3721(b)(3)(B)(i), as amended by section 3108(a)(3)(B) of the Trade Act
of 2002, provides as follows: In general --Subject to subparagraph (A), preferential treatment under this paragraph shall be extended through September 30, 2004, for apparel articles wholly assembled, or knit-to-shape and wholly assembled, or both, in one or more lesser developed beneficiary sub-Saharan African countries regardless of the country of origin of the fabric or the yarn used to make such articles.
The provisions of the AGOA only allow foreign yarn or fabric to be used in the manufacture of apparel articles in LDC’s. It does not extend duty-free treatment to foreign formed textile components (i.e. cut to shape or knit to shape collars and cuffs). See HQ 965871, dated September 25, 2002 and HQ 562612, dated April 30, 2003.
To determine if the sample you submitted may be used in apparel that will qualify
for preferential treatment under the AGOA, we must first decide whether the sample is
foreign fabric to be used in the manufacture of apparel articles or consists of foreign
formed textile components. Knit fabric is classified under Chapter 60, HTSUS. Knit
textile components are classified under Chapter 61, HTSUS. To determine whether the
submitted sample is fabric or a textile component, we turn to General Rule of
Interpretation 2(a) which states that: Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled.
Accordingly, the first part of GRI 2(a) extends the scope of an article provision to cover
not only the complete article, but also that article incomplete or unfinished, provided
that, as presented, it has the essential character of the complete or finished article. See
Explanatory Note (I) to GRI 2(a). The second part of the rule provides that an article
presented unassembled is classified in the same heading as the assembled article.
See Explanatory Note (V) to GRI 2(a). In addition, an unfinished article possessing the
essential character of the finished article remains classifiable as the finished article
when presented unassembled. See Explanatory Note (VI) to GRI 2(a).
The identifiable components within the sample are dedicated for use and possess the approximate shape of finished collar components. The components have both an unfinished edge to be sewn into the shirt and a finished edge. They have been clearly demarcated to identify cutting and require only minimal cutting to the shape of the collar template. The components as imported have the essential character of collars. Consequently, the sample consists of foreign formed textile components.
Apparel wholly assembled in an AGOA LDC from textile components formed in Taiwan or Thailand would not be eligible for preferential tariff treatment under subheading 9819.11.12, HTSUS.
HOLDING:
The submitted sample knit and dyed in Taiwan or Thailand consists of fourteen textile components (i.e., collars) and garments assembled in an AGOA LDC using such components would not be eligible for preferential tariff treatment under subheading 9819.11.12, HTSUS.
Sincerely,
Myles B. Harmon, Director
Commercial Rulings Division