CLA-2-63:OT:RR:NC:N3:351
Mr. Ameet Shah
Culp Incorporated
7209 Highway 158 East P.O. Box 488
Stokesdale, NC 27357
RE: Eligibility status of textile foundation covers under the Caribbean Basin Trade Partnership Act (CBTPA) from Haiti and preferential treatment under the General System of Preferences (GSP) from Turkey.
Dear Mr. Shah:
In your letter dated December 7, 2016, you requested a ruling on the status of a textile foundation cover from Haiti under the CBTPA and Turkey under the GSP.
The classification for the textile foundation cover was previously determined to be 6307.90.9889, Harmonized Tariff Schedule of the United States (HTSUS). See HQ Ruling H273340.
The two scenarios under consideration are as follows:
In Scenario One, the cover is made entirely in Haiti, (cut, sewn and assembled) using the following: woven fabrics (headings 5407 and 5516), knit fabrics (headings 6001 and 6006) and nonwoven fabric (heading 5603). All fabrics are entirely produced in the U.S. from yarns that are of U.S. origin (wholly made U.S. components and materials). Sewing threads, labels and zippers are also of U.S. origin.
In Scenario Two, the cover will be produced in Turkey from Turkish fabrics identical in type to the United States fabrics. The fabrics will be entirely produced in Turkey and will not contain any US (fiber/yarn). The other components that will be used in producing the cover (zippers, thread, and labels) will be from Turkey or possibly China.
CBTPA - LAW AND ANALYSIS:
The 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 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 §§ 10.221 through 10.228 of the CBP Regulations (19 CFR 10.221 through 10.228).
The applicable Chapter 98 provisions provide as follows:
For purposes of heading 9820.63.05, any made-up textile article described in subdivision (r)(ii) of this note that is wholly assembled, or knit-to-shape, in Haiti from any combination of fabrics, fabric components, components knit-to-shape or yarns and is imported directly from Haiti or the Dominican Republic shall enter the United States free of duty, without regard to the source of the fabric, fabric components, components knit-to-shape or yarns from which the article is made.
Subchapter XX, U.S. Note 6(r)(ii) states that made-up textile articles that are eligible for the treatment provided under subdivision (r)(i) of this note are the made-up textile articles that are described in the following statistical reporting numbers of the tariff schedule, as in effect on May 23, 2010:
5601.10.2000, 5601.22.0090, 5601.29.0010, 5601.29.0020, 5601.29.0090, 5701.10.9000, 5701.90.1030, 5701.90.2010, 5701.90.2020, 5701.90.2030, 5702.31.1000, 5702.31.2000, 5702.32.1000, 5702.32.2000, 5702.39.2010, 5702.42.2090, 5702.50.2000, 5702.50.4000, 5702.50.5200, 5702.50.5600, 5702.91.3000, 5702.91.4000, 5702.92.1000, 5702.92.9000,
5702.99.0500, 5702.99.1500, 5703.10.2000, 5703.10.8000, 5703.20.1000, 5703.20.2010, 5703.20.2090, 5703.30.2000, 5703.30.8030, 5703.30.8080, 5704.10.0010, 5704.10.0090, 5705.00.2005, 5705.00.2015, 5705.00.2030, 5807.10.0510, 5807.10.0520, 5807.90.0510, 5807.90.0520, 6301.30.0010, 6301.30.0020, 6301.40.0010, 6301.40.0020, 6301.90.0010,
6301.90.0020, 6301.90.0030, 6302.39.0010, 6302.60.0010, 6302.60.0020, 6302.60.0030, 6302.91.0005, 6302.91.0015, 6302.91.0035, 6302.91.0045, 6302.91.0050, 6304.11.2000, 6304.11.3000, 6304.19.3040, 6304.19.3060, 6304.91.0020, 6304.91.0040, 6304.91.0050, 6304.91.0070, 6304.92.0000, 6304.93.0000, 6304.99.1500, 6304.99.3500, 6304.99.6010,
6304.99.6020, 6304.99.6040, 6305.20.0000, 6305.32.0010, 6305.32.0020, 6305.32.0050, 6305.32.0060, 6305.39.0000, 6305.90.0000, 6307.10.1020, 6307.10.1090, 6307.90.3010, 6307.90.3020, 6307.90.8910, 6307.90.8940, 6307.90.8945,6308.00.0020, 6406.10.7700, 6406.10.9020, 6406.10.9040, 6406.10.9060, 6406.10.9090, 9404.90.1000 or 9404.90.9505.
The textile foundation cover is classified under subheading 6307.90.9889, HTSUS and is not one of the tariff numbers listed within this provision. As a result, it is not eligible for duty free treatment under CBTPA.
GSP – LAW AND ANALYSIS:
Under the GSP, eligible articles the growth, product or manufacture of a designated beneficiary developing country ("BDC") which are imported directly into the customs territory of the U.S. from a BDC may receive duty-free treatment if the sum of (1) the cost or value of materials produced in the BDC, plus (2) the direct costs of the processing operations performed in the BDC, is equivalent to at least 35 percent of the appraised value of the article at the time of entry into the U.S. 19 U.S.C. § 2463(a)(2)(A). No article or material of a beneficiary developing country shall be eligible for such treatment by virtue of having merely undergone simple combining or packing operations, or mere dilution with water or mere dilution with another substance that does not materially alter the characteristics of the article.
For purposes of GSP, Turkey is designated as a BDC. Articles are considered "products of" Turkey if they are made entirely of materials originating there, or, if made from materials imported into Turkey are substantially transformed.
Section 334 of the Uruguay Round Agreements Act ("section 334") (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 CFR 102.21), published September 5, 1995, in the Federal Register, implements section 334 (60 Fed. Reg. 46188). Section 334 was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, 19 CFR 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 (c)(5) of section 102.21
Paragraph (c)(1) states, “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 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, “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, 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:
6307.90 The country of origin of a good classifiable under subheading 6307.90 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.
The fabric is made in Turkey, the country of origin for the foundation cover is Turkey.
Articles classifiable under subheading 6307.90.9889, HTSUS, which are products of Turkey, may be entitled to duty free treatment under the GSP, provided they meet the statutory requirements of that program. However, you did not present the value of the materials produced in the BDC and the direct costs of processing operations performed in such BDC or such member countries, which together must not be less than the 35 percent of the appraised value of such article at the time of its entry into the customs territory of the United States. Providing that the foundation cover meets all of the requirements, it would be eligible for duty free treatment. However, without more information about the processing operation in the GSP country, we cannot issue a definitive ruling to that effect.
The GSP is subject to modification and periodic suspension, which may affect the status of your transaction at the time of entry for consumption or withdrawal from warehouse. To obtain current information on GSP, check our Web site at www.cbp.gov and search for the term “GSP”.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Adleasia Lonesome via email at [email protected].
Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs and Border Protection, Regulations & Rulings, 90 K Street, N.E. – 10th floor, Washington, DC 20229-1177.
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division