OT:RR:NC:N2:247
George Tuttle, III
Tuttle Law Offices
3950 Civic Center Drive, Suite 310 San Rafael, CA 94901
RE: The tariff classification and country of origin of footwear produced in South Korea; Eligibility for preferential treatment under the United States-Korea Free Trade Agreement (UKFTA); Applicability of Section 301 trade remedy duties
Dear Mr. Tuttle:
In your letters dated January 30, 2023, you requested a tariff classification and country of origin ruling on behalf of your client Bedrock Sandals. You have submitted descriptive literature, photographs, diagrams, and a detailed description of the manufacturing process for two styles of unisex footwear, identified as “Mountain Clog Leather” and “Mountain Clog Synthetic.” No samples were submitted with your request. Additional information regarding gender was provided via email.
The “Mountain Clog Leather” style is a unisex closed-toe/open-back, below-the-ankle shoe. The external surface area of the upper (esau) is predominantly leather. The shoe has straps with hook and loop closures around the heel and on the medial and lateral sides. The shoe has a midsole and an extra deep toe box. There is no foxing or foxing-like band. The outer sole is made of Vibram rubber.
The applicable subheading for the “Mountain Clog Leather” style shoe will be 6403.99.9065, Harmonized Tariff Schedule of the United States (HTSUS), which provides for footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather: Other footwear: Other: Other: Other: Other: For other persons: Valued over $2.50/pair. Other: Women: Other. The rate of duty is 10 percent ad valorem.
The “Mountain Clog Synthetic” footwear is identical in styling and construction to the “Mountain Clog Leather” with the only difference being the upper’s material. The “Mountain Clog Synthetic” has an upper predominantly of synthetic textile material.
The applicable subheading for the “Mountain Clog Synthetic” footwear will be 6404.19.3960, HTSUS, which provides for footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials: footwear with outer soles of rubber or plastics: other: footwear of the slip-on type, that is held to the foot without the use of laces or buckles or other fasteners, the foregoing except footwear of subheading 6404.19.20 and except footwear having a foxing or foxing-like band wholly or almost wholly of rubber or plastics applied or molded at the sole and overlapping the upper: other: other: other: for women. The rate of duty will be 37.5 percent ad valorem.
Both styles of footwear were manufactured with essentially the same components from both originating and non-originating materials. The outer soles, midsoles, 38 mm webbing, and side buckle originated in China. The hook and loop hardware is obtained from Vietnam. The footbed, rubber tip, toe box, woven label, and upper lining are sourced from South Korea. The paracord and webbing (12 mm and 20 mm) originate in the United States. The Cowhide leather originates in the U.S., is chrome tanned in Thailand, and is exported to South Korea. The synthetic (textile) upper is sourced from Japan. In South Korea the upper materials are cut, sewn, the midsole is laminated/bonded, and lasted to the outer sole.
Under the terms of General Note (GN) 33(b), HTSUS, a good imported into the customs territory of the United States is eligible for treatment as an originating good of a UKFTA country under the terms of this note if–
(i) the good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both
(ii) the good is produced entirely in the territory of Korea or of the United States,
or both, and—
(A) each of the no originating materials used in the production of the good
undergoes an applicable change in tariff classification specified in
subdivision (o) of this note; or
(B) the good otherwise satisfies any applicable regional value-content or other
requirements set forth in such subdivision (o); and satisfies all other
applicable requirements of this note and of applicable regulations; or
(iii) the good is produced entirely in the territory of Korea or of the United States, or
both, exclusively from materials described in subdivisions (i) or (ii), above.
Chapter 64.
1. A change to subheading 6401.10 or tariff items 6401.92.90, 6401.99.10, 6401.99.30, 6401.99.60, 6401.99.90, 6402.91.10, 6402.91.20, 6402.91.26, 6402.91.50, 6402.91.80, 6402.91.90, 6402.99.08, 6402.99.16, 6402.99.19, 6402.99.33, 6402.99.80, 6402.99.90, 6404.11.90 or 6404.19.20 from any other heading outside headings 6401 through 6405, except from subheading 6406.10, provided that there is a regional value content of not less than 55 percent under the build-up method; or
2. A change to any other good of chapter 64 from any other subheading.
In South Korea, the non-originating materials undergo an applicable change in tariff classification specified in subdivision (o) of GN 33, Product-Specific Rules, for Chapter 64, Note 2. Therefore, unisex style names “Mountain Clog Leather” and “Mountain Clog Synthetic” are eligible for preferential treatment under the UKFTA.
In addition to tariff shift rule, we must determine whether the non-originating component parts undergo a substantial transformation. The test for determining whether a substantial transformation occurs is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 69 C.C.P.A. 151 (1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993). In this case, the non-originating components from China, Vietnam, Japan, and Thailand are either raw materials or unfinished components without any commercial use or commercial identity. Based on the facts provided, the non-originating components from China, Vietnam, Japan, and Thailand undergo a substantial transformation during the manufacturing process that occurs in South Korea. Since a new product with a new name, character and use emerges as a result of the substantial transformation in South Korea, the country of origin of the finished footwear will be South Korea.
Additionally, you inquired as to whether the footwear would be subject to Section 301duties pursuant to chapter 99, Section III, Note (s)(i). As the origin of the footwear is South Korea, they are not subject to trade remedy duties applicable to certain goods of Chinese origin.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at https://hts.usitc.gov/current.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Stacey Kalkines at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division