CLA-2 RR:CR:TE 967028 CMR
Thomas G. Travis, Esq.
Sandler, Travis & Rosenberg, P.A.
5200 Blue Lagoon Drive
Miami, Fl. 33126-2022
RE: Eligibility under the Caribbean Basin Trade Partnership Act (CBTPA) of certain
belts and suspenders produced from yarns formed in the United States
incorporating Malaysian rubber thread
Dear Mr. Travis:
This letter is in response to your request of January 15, 2004, on behalf of your client, Joe-Anne Company International, for a ruling on the eligibility for preferential treatment under the Caribbean Basin Trade Partnership Act (CBTPA) of certain textile belts and suspenders produced in the Dominican Republic from yarns produced in the United States incorporating rubber thread from Malaysia. Your request, along with the submitted samples of the rubber thread, covered elastic yarn, webbing fabric, and finished goods, were forwarded to this office for a response.
FACTS:
The goods at issue are suspenders and belts produced in the Dominican Republic from webbing fabric which is woven in the United States with a covered yarn which is produced in the United States. The production process for the covered yarn involves importing rubber thread from Malaysia. In the United States, the rubber thread is wrapped with U.S. formed textile yarn (polyester and/or cotton) in a covering machine. The resulting textile covered rubber thread is then woven into the webbing fabric. The finished webbing fabric is shipped to the Dominican Republic where is it cut and sewn into the suspenders and belts at issue.
You submit that the goods qualify for entry under subheading 9820.11.06, Harmonized Tariff Schedule of the United States (HTSUS), as apparel articles sewn or otherwise assembled in a CBTPA beneficiary country with thread formed in the United States from fabric wholly formed in the United States from yarn wholly formed in the United States. You state the only issue that may preclude eligibility of the belt and suspenders is whether the textile covered rubber thread is considered "wholly formed" in the United States and that the goods otherwise meet all CBTPA requirements, including the use of U.S. thread in the assembly process.
The textile belt consists of the webbing fabric and metal clasps. It is classifiable in subheading 6217.10.95, HTSUS, as an other made up clothing accessory. The submitted suspenders consist of the webbing fabric, metal clasps for adjusting the straps, and simulated leather button fasteners for securing the suspenders. The suspenders are classifiable in subheading 6212.90.00, HTSUS, which provides for, among other things, suspenders.
ISSUE:
Does the use of Malaysian rubber thread in the production of the textile covered rubber thread in the United States preclude the finished yarn from meeting the definition of "wholly formed" as it applies to yarn under the CBTPA and thus preclude the belt and suspenders at issue from qualifying under the CBTPA?
LAW AND ANALYSIS:
The United States-Caribbean Basin Trade Partnership Act (CBTPA) provides certain specified trade benefits for countries of the Caribbean region. The Act extends North American Free Trade Agreement (NAFTA) duty treatment standards to non-textile articles that previously were ineligible for preferential treatment under the Caribbean Basin Economic Recovery Act (CBERA) and provides for duty- and quota-free treatment for certain textile and apparel articles which meet the requirements set forth in Section 211 of the CBTPA (amended 213(b) of the CBERA, codified at 19 U.S.C. 2703(b)). Beneficiary countries are designated by the President of the United States after having met eligibility requirements set forth in the CBPTA. Eligibility for benefits under the CBTPA is contingent on designation as a beneficiary country by the President of the United States and a determination 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 implement and follow, or is making substantial progress toward implementing and following, certain customs procedures, drawn from Chapter 5 of the NAFTA, that allow the United States to verify the origin of products. Once both these designations have occurred, a beneficiary country is entitled to preferential treatment provided for by the CBTPA. The Dominican Republic was designated a beneficiary country by Presidential Proclamation 7351, published in the Federal Register on October 4, 2000. See 65 Federal Register 59329. It was determined to have met the second criteria concerning customs procedures by the USTR and thus eligible for benefits under the CBTPA effective October 2, 2000. See 65 Federal Register 60236 (dated October 10, 2000).
The provisions implementing the textile provisions of the CBTPA in the Harmonized Tariff Schedule of the United States (HTSUS) are contained, for the most part, in subchapter XX, Chapter 98, HTSUS (two provisions may be found in subheading 9802.00.80, HTSUS). The regulations pertinent to the textile provisions of the CBTPA may be found at ยงยง 10.221 through 10.228 of the Customs Regulations (19 CFR 10.221 through 10.228).
Section 10.222 of the Customs Regulations (19 CFR 10.222) contains definitions of various terms used in the provisions applicable for preferential treatment under the CBTPA. "Apparel articles" is defined as including, among other things, "goods classifiable in Chapters 61 and 62." As the belt and suspenders are classifiable in Chapter 62, they are clearly "apparel articles."
This office agrees that the issue on which eligibility for preferential treatment under the CBTPA turns is whether the yarn formed in the U.S. incorporating Malaysian rubber thread qualifies as "wholly formed" in the United States. The definition of "wholly formed" states in pertinent part:
"Wholly formed," when used in reference to yarns, means that all of the production processes, starting with the extrusion of filament, strip, film, or sheet and including slitting a film or sheet into strip or the spinning of all fibers into yarn or both and ending with a yarn or plied yarn, took place in a single country, . . . .
The yarn at issue is formed by wrapping a U.S. formed yarn around a rubber core, i.e, the rubber thread imported from Malaysia. At the time the rubber thread is imported into the United States, it is classifiable in subheading 4007.00.00, HTSUS, which provides for "vulcanized rubber thread and cord." After being combined in the United States with a U.S. formed cotton and/or polyester yarn, the resulting yarn is classifiable as a textile covered rubber thread in subheading 5604.10.00, HTSUS.
In Headquarters Ruling (HQ) 965960, Customs and Border Protection (CBP) addressed the eligibility of apparel, under the African Growth and Opportunity Act (AGOA), incorporating certain drawstrings and elasticized fabric. The issue of the affect of the elasticized fabric on the eligibility of apparel which incorporated it turned on whether foreign origin rubber thread, i.e., rubber thread from Malaysia, as is the case herein, used in the production of the elasticized fabric would preclude the fabric from being considered "wholly formed" in South Africa of yarns "originating" in South Africa.
In HQ 965960, CBP stated: "It is Customs [now CBP] belief that the term 'yarn' as used in the AGOA refers to textile yarn." Although the issue before this office involves the CBTPA, it is our belief that, as in the AGOA, the term "yarn" as used in the CBTPA refers to textile yarn. This belief is based upon the clear intent of Congress as expressed in the CBTPA to extend benefits for certain textile and apparel articles to the various beneficiary countries.
CBP has issued rulings on the eligibility of certain apparel articles, under the CBTPA, that contained non-textile components. These rulings have consistently held that the non-textile component, which was not a finding or trimming, did not affect the apparel article's eligibility for preferential treatment, regardless of the origin of that component. See HQ 562018, dated March 22, 2002, which dealt with the eligibility under the CBTPA of brassieres with polyurethane straps and cups; and HQ 562309, dated July 16, 2002, which dealt with the eligibility of a cotton cable belt with leather components and metal buckles.
The definition of "wholly formed" as it applies to yarns includes "the extrusion of filament, strip, film, or sheet and includ[es] slitting a film or sheet into strip." In the discussion of amendments in the interim regulations for the CBTPA, published on March 21, 2003 in the Federal Register, CBP noted that the definition of "wholly formed" as it relates to yarn was being amended to include the formation of textile strip. See 68 Federal Register 13827. In this case, the yarn at issue, like the apparel articles noted above, consists of a textile component and a non-textile component, i.e., the cotton and/or polyester yarn and the rubber thread. When combined, these components form the yarn classifiable as a textile yarn of heading 5604, HTSUS. However, when considered separately, the rubber thread maintains its identity as a product of rubber.
Based on the earlier decisions by CBP that non-textile components, which are not findings or trimmings, do not affect the eligibility of apparel articles for preferential treatment under the CBTPA and the fact that the rubber thread remains a rubber thread and becomes classifiable as a textile yarn only by being combined with textile yarn, the textile covered rubber thread formed in the United States with textile yarn wholly formed in the U.S. and rubber thread from Malaysia is "wholly formed" in the U.S. for purposes of the CBTPA.
HOLDING:
The webbing belt and suspenders at issue which are wholly assembled in the Dominican Republic of fabric wholly formed in the United States of yarn which is formed in the United States with U.S. wholly formed yarn and Malaysian rubber thread will qualify for preferential treatment under the CBTPA provided all other applicable CBTPA requirements are met. Goods produced as described will be classifiable in subheading 9820.11.06, HTSUS, which provides for "[a]pparel articles sewn or otherwise assembled in one or more [beneficiary countries] with thread formed in the United States from fabrics wholly formed in the United States and cut in one or more [beneficiary countries] from yarns wholly formed in the United States, . . . , under the terms of U.S. note 2(a) to [subchapter XX]." We note that among the applicable CBTPA requirements, U.S. note 2(a) requires that apparel articles of subheading 9820.11.06, HTSUS, that are entered on or after September 1, 2002, and that are assembled in a CBTPA beneficiary country from knit or woven fabrics shall be eligible to receive preferential duty treatment only if all dyeing, printing and finishing of such fabrics is carried out in the United States.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents are 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