CLA-2 RR:CR:TE 966689 SG
Ms. Melissa Weiss
Barthco International, Inc.
721 Chestnut Street
Philadelphia, PA 19106
RE: African Growth and Opportunity Act; Women’s Cotton Pant; Subheading 9819.11.12; Lesser Developed Beneficiary Country; Draw Cord; "Hook and Loop" Closure; Elastic Strip; Findings and Trimmings
Dear Ms. Weiss:
This is in response to your letter, dated July 7, 2003, and follow-up correspondence of September 9, 2003, concerning the eligibility of women’s cotton pants for duty-free treatment under the African Growth and Opportunity Act (AGOA).
FACTS:
You have submitted a sample, style 62982, of a women's Capri style pants made of 100 percent cotton woven fabric. The pants have a partially elasticized waistband, two side seam pockets, one pocket at the side of the leg, and hemmed leg openings with side slits. The pants have a front fly opening which breaks at the waist and is secured by a zipper and a single button at the waist. There is also a partial draw cord sewn at the side seams and inserted into the front of the waistband, tying at the front. The leg pocket has a pocket flap with a "hook and loop" closure. The pants also have grommets attached to the pocket and the waistband, and a one and one quarter inch elastic strip sewn into the back of the waistband.
The fabric from which the pants is made, as well as the draw cord material, are manufactured in India, imported into Kenya in rolls, where they are cut to size, sewn, and finished. The origin of the "hook and loop" material and of the elastic strip is not indicated, however, we are advised that they will be imported into Kenya in rolls. No information is provided as to the origin of the button, zipper, grommets or sewing thread. For purposes of this ruling we will assume they are of foreign origin.
ISSUE:
Are the women’s pants that are cut and assembled in Kenya from fabric from India and which incorporate draw cords imported in roll form from India, foreign "hook and loop" fastener tape and elastic strips, as well as a button, zipper, grommets, and thread assumed to be of foreign origin eligible for lesser developed beneficiary country preferential tariff and quota treatment pursuant to the African Growth and Opportunity Act?
What is the country of origin of the subject pants?
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.
Kenya was designated as a beneficiary sub-Saharan African country under AGOA by Presidential Proclamation 7350. The USTR issued a determination finding that Kenya has adopted an effective visa system and related procedures to prevent unlawful transshipment and the use of counterfeit documents in connection with shipments of textile and apparel articles and has implemented and follows, or is making substantial progress toward implementing and following, the customs procedures required by the AGOA, effective January 18, 2001 (66 Fed. Reg. 7836).
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).
Heading 9819, HTSUS, provides that preferential treatment shall apply to articles imported from a designated beneficiary sub-Saharan African country enumerated in
U.S. note 1 to the subchapter. U.S. Note 1 to Subchapter XIX states that the tariff treatment provided therein in shall be accorded only to textile articles that are described
in such subheadings and imported directly into the customs territory of the United States from those beneficiary sub-Saharan African countries previously designated by proclamation which have subsequently been determined in a Federal Register notice issued by the USTR to have satisfied the requirements of AGOA.
U.S. Note 1 lists Kenya as having been found by the USTR to have satisfied the requirements of AGOA.
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 Kenya 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 garments subject to this ruling letter are cut and sewn in Kenya from cotton fabric that is imported from India. The garment also contains draw cord material that is manufactured in India, foreign "hook and loop" fabric and elastic strips. In addition, the button, zipper, grommets and thread is also of foreign origin. In Kenya, the cotton fabric is cut into component panels and the component panels are sewn together to form the pants.
The draw cord is imported into Kenya in rolls. It is cut to the length to be used, the ends knotted, and sewn onto the pants in Kenya. Therefore the draw cords are unfinished upon importation to Kenya. In HQ 966585, dated September 24, 2003, we determined that rolls of tubular braided drawstrings with no cutting lines or tipping, that would be cut and finished in a lesser developed beneficiary country, to form a finished drawstring was classified as unfinished braids in the piece. Accordingly, the draw cords, imported in
rolls, are considered non-originating "fabric" under the AGOA .
Subheading 9819.11.12, HTSUS, specifically provides that the country of origin of the fabric is not a consideration. Since the country of origin of the fabric is not relevant to the receipt of AGOA lesser developed beneficiary country preferential tariff and quota treatment, provided the other requirements of the Act are met, the fact that the cotton fabric and draw cord fabric originate in India does not have an affect on benefit eligibility.
Having established that the origin of the fabric is not a consideration for AGOA eligibility, we must determine whether the elastic strip and "hook and loop" tape on the garment constitute fabric or findings and trimmings.
Findings & Trimmings Requirements
U.S. Note 3(a)(i), to Subchapter XIX, Chapter 98, provides that:
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 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; or
* * *
U.S. Note 3(b) to Subchapter XIX, Chapter 98, states:
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.
While "findings and trimmings" for purposes of the AGOA were not specifically defined, the examples set forth above, such as zippers, buttons, decorative lace trim and labels are indicative of the types of components which are considered to be within the purview of this provision. The exception for findings and trimmings was necessarily intended to be of a restrictive nature, as the intent of the statute was to ensure that all fabric components be formed and cut in the U.S. and sub-Saharan African beneficiary countries. "Findings" are generally accepted to be sewing essentials used in textile goods while "trimmings" have been defined as "decoration or ornamental parts." See M. Picken, The Fashion Dictionary (1973). With regard to what items constitute "findings" or "trimmings," CBP has previously held under subheading 9802.00.90, HTSUS, that fabric items such as shoulder pads, sleeve headers, and velveteen collars are not
"findings and trimmings." See Headquarters Ruling Letter (HRL) 559552, dated February 14, 1996, and HRL 558954, dated June 30, 1995.
The legislation limits the scope of the findings and trimmings exception provided for in AGOA by only allowing for a narrow use of elastic strips and specifically states that elastic strips are considered findings and trimmings “only if they are each less than 1 inch in width and are used in the production of brassieres.” Accordingly, the elastic strip in the waistband is not considered a finding and trimming because it is 1.25 inches in width and is not used in the production of brassieres. The elastic strip is considered to be a fabric instead. Therefore, the use of non-U.S. or non-beneficiary country elastic fabric imported in rolls used to make the waistband would not render the women's trousers ineligible for classification in subheading 9819.11.12, HTSUS. See HQ 562766, dated August 6, 2003, and HQ 562451, dated September 4, 2002.
Upon examination of the submitted sample woven nylon hook and loop fastener tape, it is our opinion that this article which will be used to fasten the flap onto the top portion of the front pocket of the cotton pants, is a "finding" because it is used in the same manner as buttons or zippers, which are examples of findings because they fasten garments together. Further, hook and loop tape is displayed and marketed in sewing notion departments of retailers as findings. See, HQ 966428, dated August 19, 2003. Accordingly, we find that the subject woven nylon hook and loop fastener tape, used in
the manner previously described, is a "finding" for purposes of the AGOA.
Provided the cost of the foreign findings and trimmings (including the button, zipper, grommets and hook and loop fastener tape) is less than 25 percent of the cost of the components of the garment, they would not preclude the pants from qualifying for AGOA preferential treatment. See U.S. Note 3(a)(i), to Subchapter XIX, Chapter 98, above. The women’s pants meet the requirements of subheading 9819.11.12, HTSUS, as well as the U.S. Notes to Subchapter XIX, and are therefore eligible to receive the preferential tariff and quota benefits provided by the African Growth and Opportunity Act.
COUNTRY OF ORIGIN
Section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 C.F.R. 102.21), published September 5, 1995, in the Federal Register, implements Section 334 (60 FR 46188). Section 334 of the URAA was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, section 102.21 was amended (68 Fed. Reg. 8711). Thus, the country of origin of a textile or apparel product shall be determined by the sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
Paragraph (c)(1) states that "The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced." As the subject merchandise (pants) is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable. Paragraph (c)(2) states that "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each of the foreign materials incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e) of this section:"
Paragraph (e) in pertinent part states that "The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section": 6201–6208 (1) If the good consists of two or more component parts, a change to an assembled good of heading 6201 through 6208 from unassembled components, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession.
The subject pants will be classified within the above noted range, in heading 6204, HTSUS. The pants consist of two or more components. As the pants are wholly assembled in a single country (Kenya), the terms of the tariff shift are met.
Based upon the origin rules provided in 102.21(c)(2), the subject pants are wholly assembled in Kenya and therefore the origin is Kenya.
HOLDING:
The subject women’s pants are eligible for AGOA preference under subheading 9819.11.12, HTSUSA, provided the pants otherwise meet the requirements for eligibility under AGOA. The use of the foreign origin hook and loop fastener tape, button, zipper, and grommets will not render the pullover ineligible for preferential treatment under the AGOA provided the value of the foreign-origin origin hook and loop fastener tape, button, zipper, and grommets used in the pants combined does not exceed 25 percent of the total cost of the components of the pants. They should be entered under Preference Group E and Visa Group 5.
The country of origin of the pants is Kenya.
Statistical reporting of the merchandise should be in accordance with Chapter 98, Subchapter XIX, U.S. Statistical Note 1 which provides that for merchandise under the subheadings of the subchapter, the 8 digit number (or 10 digit number, if any) should be reported in addition to the 10 digit number appearing in chapters 1-97 which would be applicable for the provisions of the subchapter and that the quantities reported should be in the units provided in chapters 1-97.
The Column 1 Special Rate of Duty is FREE.
The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in 19 CFR 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination. Accordingly, if there is any change in the facts submitted to CBP, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.
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 CBP officer handling the transaction.
Sincerely,
Myles B. Harmon, Director Commercial Rulings Division