HQ 0555517 - GSP and country of origin of surgical towels - United States International Trade Commision Rulings

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HQ 555517

May 21, 1990

CLA-2 CO:R:C:V 555517 DSN

CATEGORY: CLASSIFICATION

TARIFF NO.: 6307.90.8740

Mr. Stanley R. Leacock
346 College Avenue
Palo Alto, California 84306

RE: GSP and country of origin of surgical towels

Dear Mr. Leacock:

This is in response to your letters of October 30, and December 11, 1989, and January 10, and April 18, 1990, on behalf of Beach Medical Supplies, Ltd., in which you request a ruling that certain cotton surgical towels produced in Barbados from yarn originating elsewhere are entitled to duty-free treatment under the Generalized System of Preferences (GSP) (19 U.S.C. 2461-2467). You also ask whether Barbados will be the country of origin for quota purposes.

FACTS:

According to your submissions and conversations with a member of my staff by telephone, 100% cotton yarn originating in China or Pakistan will be imported into Barbados where it will be woven into fabric, cut to length and width, and hemmed to create finished surgical towels. After being packaged, the towels will be exported to the U.S.

ISSUES:

1. Whether the surgical towels are entitled to duty-free treatment under the GSP when imported into the U.S.

2. Whether the operations performed in Barbados render Barbados the country of origin of the surgical towels.

LAW AND ANALYSIS:

1. Applicability of GSP

For articles to be eligible for GSP treatment, they must first be classified under a GSP eligible provision in the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). An article classifiable under a GSP eligible provision is entitled to duty-free entry if it is imported directly from a designated beneficiary developing country (BDC) into the U.S., and the sum of the cost or value of the materials produced in the BDC plus the direct cost involved in processing the eligible article in the BDC is at least 35% of the article's appraised value at the time it is entered into the U.S.

The cotton surgical towels, as of May 1, 1990, are classified under subheading 6307.90.8740, HTSUSA, which provides for other made up articles, other, other, surgical towels. This provision is not a GSP eligible provision. See Presidential Proclamation No. 6123, 55 Fed. Reg. 18075 (1990). Therefore, the rate of duty applicable to the surgical towels would be 7% ad valorem.

2. Country of Origin

Textile articles produced in more than one foreign country are subject to the country of origin criteria set forth in section 12.130, Customs Regulations (19 CFR 12.130). According to 19 CFR 12.130(b):

...a textile product...which consists of materials produced or derived from, or processed in, more than one foreign... country shall be a product of that foreign...country where it last underwent a substantial transformation. A textile or textile product will be considered to have undergone a substantial transformation if it has been transformed by means of substantial manufacturing or processing operations into a new and different article of commerce.

According to 19 CFR 12.130(e)(1)(iii)and(iv):

An article...will be a product of a...country,...when it has undergone prior to importation into the U.S.,...weaving knitting or otherwise forming fabric; cutting of fabric into parts and assembly of those parts into the completed article.

Thus, since the imported yarn is woven in Barbados into fabric, which is then cut to length and width, and hemmed in Barbados, Barbados is clearly the country of origin of the surgical towels.

We note that at the present time, surgical towels from Barbados are not subject to quota. However, due to the changeable nature of quota agreements, you are advised to contact your local Customs office prior to importation to determine the current status of any textile agreements with Barbados. Import restraints are imposed by the U.S. Customs Service under directives of the Committee for the Implementation of Textile Agreements, U.S. Department of Commerce, Washington, D.C. 20230. Further advice or information pertaining to those agreements may be obtained from the chairman of that Committee.

HOLDING:

The surgical towels are classified under subheading 6307.90.8740, HTSUSA, which provides for other made up articles, other, other, surgical towels, which is not a GSP eligible provision. The rate of duty is 7% ad valorem. The country of origin for quota purposes is Barbados.

Sincerely,

Acting Director
Commercial Rulings Division

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