- Type : • HTSUS :
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Related:
563499
OT:RR:CTF:VS H232882 KSG
Mr. Guy Manchuk
TriMarine International Inc.
10500 N.E. 8th Street
Bellevue WA 98004
RE U.S.-Morocco FTA; tuna; canning:
Dear Mr. Manchuk:
This is in response to your letter dated August 1, 2012, forwarded to us by our New York office in which you requested a ruling concerning the eligibility of certain canned tuna for duty-free treatment under the U.S.-Morocco Free Trade Agreement.
FACTS:
You state that the tuna is fished from the Exclusive Economic Zones of third countries and the U.S. The tuna is frozen on board the ship and delivered to Thailand. In Thailand, the processor will thaw, cook, clean and process the tuna into frozen tuna loins. The frozen tuna loins will then be shipped to a cannery in Morocco. In Morocco, the cannery will defrost the tuna loins, and pack the meat into cans with vegetable oil of either U.S. or Moroccan origin. The cans will be produced in the U.S. The canned tuna will then be shipped to the U.S. for importation.
ISSUE:
Whether the imported canned tuna is an originating good eligible for duty-free treatment under the U.S.-Morocco FTA?
LAW AND ANALYSIS:
The United States - Morocco Free Trade Agreement (“UMFTA”) was signed on June 15, 2004, and entered into force on January 1, 2006, as approved and implemented by the U.S.-Morocco Free Trade Agreement Implementation Act, Pub. L. 108-302, 118 Stat. 1103, dated August 17, 2004. The provisions of the agreement are set forth in General Note (“GN”) 27 of the Harmonized Tariff Schedule of the United States (“HTSUS”). Pursuant to GN 27(b), goods are eligible for treatment as an originating good under the UMFTA only if—
The good is wholly the growth, product or manufacture of Morocco, the United States, or both;
The good is a new or different article of commerce that has been grown, produced or manufactured in the territory of Morocco or the United States, or both; and that falls in a heading or subheading of the tariff schedule that is not covered by the product-specific rules of subdivision (h), GN 27; and the sum of—
The value of each material produced in the territory of Morocco or the United States, or both, and
The direct costs of processing operations performed in the territory of Morocco or the United States, or both, is not less than 35 percent of the appraised value of the good at the time the good is entered into the territory of the United States; or
The good falls in a heading or subheading covered by a product-specific rule in [GN 27](h)…
and is imported directly into the territory of the United States from the territory of Morocco.
The canned tuna classified in heading 1604, is not subject to a product specific rule in GN 27(h). Accordingly, the regulations applicable to the UMFTA set forth in 19 CFR 10.761, et seq., specifically 19 CFR 10.769(i) is applicable. Section 10.769(i) provides that a new or different article of commerce exists when the country of origin of a good which is produced in a Party from foreign materials is determined to be that country under the provisions of sections 102 through 102.21 of this chapter (otherwise known as the NAFTA Marking Rules).
Counsel argues that the canned tuna is originating as a good wholly the growth, product or manufacture of Morocco. In 19 CFR 10.769(d)(5), the regulation states that goods obtained from hunting, trapping, or fishing in the territory of one or both of the parties would be wholly the growth, product, or manufacture of one or both of the Parties for purposes of the UMFTA. However, the canned tuna is not wholly the growth of Morocco since it is processed, cut and cooked in Thailand. The good obtained from fishing would be the whole fish, which is classified in Chapter 3, HTSUS, not the processed, cut and cooked tuna loins.
Pursuant to 19 CFR 102.20, for goods classified in headings 1601-1605, a chapter change is required. Cooked tuna loins are classified in subheading 1604.14, as is canned tuna. Therefore, no chapter change occurs. Accordingly the canned tuna would not be considered an originating good under the UMFTA.
Section 304 of the Tariff Act of 1930, 19 U.S.C. 1304 requires that, unless excepted, all imported foreign goods be marked with their country of origin. Pursuant to 19 CFR 134.1(b), the country of origin of an imported good for marking purposes is the country of manufacture, production or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the country of origin within the meaning of this part. In Koru North America v. United States, 701 F. Supp. 229 (CIT 1988), the court considered whether the processing of headed and gutted fish in South Korea by thawing, skinning, boning, trimming, freezing and packaging constituted a substantial transformation. The court concluded that the processing performed in South Korea into “quick-frozen” fillets substantially transformed the headed fish because there was a change in name and character. The court noted that while the fish arrived in South Korea with the look of a whole fish, when they left they no longer possessed the essential shape of a fish. The fillets were considered discrete commercial goods and had a different tariff classification. In HQ 563499, dated June 23, 2006, raw salmon which was cooked, mixed with other ingredients and canned was held to be substantially transformed. In this case, the processing of the whole fish by filleting, cutting, cutting and cooking in Thailand would constitute a substantial transformation. Further, processing the cooked tuna loins by packing them in cans with oil will not result in a substantial transformation in Morocco. Therefore, the canned tuna is a product of Thailand and not an originating good eligible for duty-free treatment under the U.S.-Morocco FTA.
HOLDING:
The imported canned tuna, processed as described above, is not an originating good eligible for duty-free treatment under the U.S.-Morocco FTA. The imported canned tuna would be a product of Thailand for purposes of 19 U.S.C. 1304.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy of this ruling, it should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation & Special Programs Branch