OT:RR:CTF:VS H248919 GaK
Don Malcuit
FROMM Packaging Systems
85 Fulton St., Ste 4
Boonton, NJ 07005
RE: U.S.-Chile Free Trade Agreement; Transshipment
Dear Mr. Malcuit:
This is in response to your letter dated December 19, 2013, requesting a ruling on behalf of FROMM Packaging Systems (the “Company”). Your request concerns the eligibility of merchandise exported from Chile to the U.S. under the U.S.-Chile Free Trade Agreement (“USCFTA”). In particular, you ask whether Polyethylene terephthalate (“PET”) Straps that is produced in Chile and then shipped to Mexico for temporary storage and further distribution into the U.S. would qualify for preferential treatment under the USCFTA.
FACTS:
According to your letter, Fromm Chile, S.A. is based in Santiago, Chile. Fromm Chile manufactures PET Straps classified under 3920.62.00, Harmonized Tariff Schedule of the United States (“HTSUS”). You state that the country of origin for the PET Straps is Chile and that these qualify as originating under the USCFTA.
The PET straps will be shipped from Chile to its international distribution warehouse, Fromm Packaging Systems, Mexico, located in Apodaca, Mexico for temporary storage before distribution to the U.S. You claim that the product reaches Mexico as a finished product and no further production takes place in Mexico. The purpose of routing the product to Mexico prior to import is to benefit from its distribution center, which is close in proximity to the Laredo Port and thereby decrease the cost of distribution into the U.S. The only activity performed outside of U.S. or Chile is unloading and reloading.
ISSUE:
Whether temporary storage of the PET straps in Mexico is permitted under the USCFTA.
LAW AND ANALYSIS:
Eligibility for preferential tariff treatment under the USCFTA is determined under General Note 26, HTSUS. Also applicable are the implementing regulations, codified at 19 C.F.R. 10.401 – 490, which follow and supplement the provisions of General Note 26.
General Note 26(c)(iii) provides:
A good that has undergone production necessary to qualify as an originating good under this note shall not be considered to be an originating good if, subsequent to that production, the good undergoes further production or any other operation outside the territory of Chile or of the United States, other than unloading, reloading or any other process necessary to preserve the good in good condition or to transport the good to the territory of Chile or of the United States.
The relevant provisions of the USCFTA regulations provide as follows:
§ 10.463. Transit and transshipment.
(a) General. A good will not be considered an originating good by reason of having undergone production that occurs entirely in the territory of Chile, the United States, or both, that would enable the good to qualify as an originating good if subsequent to that production the good undergoes further production or any other operation outside the territories of Chile and the United States, other than unloading, reloading, or any other process necessary to preserve the good in good condition or to transport the good to the territory of Chile or the United States.
(b) Documentary evidence. An importer making a claim that a good is originating may be required to demonstrate, to CBP's satisfaction, that no further production or subsequent operation, other than permitted under paragraph (a) of this section, occurred outside the territories of Chile or the United States. An importer may demonstrate compliance with this section by submitting documentary evidence. Such evidence may include, but is not limited to, bills of lading, packing lists, commercial invoices, and customs entry and exit documents.
19 C.F.R. § 10.463. See also 19 C.F.R. § 10.416(b)
Further, the USCFTA, importers must file a written declaration that the good qualifies for preferential treatment. See 19 C.F.R. § 10.411.
We assume that the PET straps will otherwise qualify for USCFTA treatment and that the only issue is the warehousing of the finished goods in Mexico prior to U.S. distribution. Under this scenario, the transshipment in Mexico may disqualify the merchandise if it violates the transit and transshipment provisions of the USCFTA.
In this case, the only activity occurring outside of U.S. and Chile are unloading and reloading, which explicitly falls within the scope of the transit and transshipment provision of the USCFTA. Should any processing beyond unloading and reloading occurs, CBP may determine that it is beyond the scope of the transit and transshipment provision of the USCFTA, and such further processing would preclude the issuance of a declaration under 19 C.F.R. § 10.411.
HOLDING:
The operation of unloading and reloading in Mexico are those permitted under the transit and transshipment provision of the USCFTA as set forth in General Note 26(c)(iii), HTSUS and section 10.463, CBP Regulations.
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 Customs officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch