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HQ 960841





October 8, 1998
CLA-2 RR:CR:TE 960841 jb

Category: CLASSIFICATION

Port Director
U.S. Customs Service
477 Michigan Avenue, Suite 200
Detroit, Michigan 48226

RE: Internal Advice; The Eligibility for Preferential Treatment under the North American Free Trade Agreement (NAFTA) for wearing apparel accessories

Dear Sir:

This is in response to your memorandum, dated April 30, 1998, wherein you ask for internal advice with respect to the eligibility for preferential treatment under the NAFTA for knit and woven wearing apparel accessories classified in headings 6117, 6214 and 6217, Harmonized Tariff Schedule of the United States (HTSUS). Specifically, you request whether wearing apparel accessories can be considered to be "apparel goods" for purposes of the Tariff Preference Levels (TPL).

FACTS:

The merchandise which is the subject of this request consists of woven scarves, classifiable in heading 6214, HTSUS, and knit headbands and hair scrunchies classifiable in heading 6117, HTSUS. The manufacturing operations for the subject merchandise are as follows:

Woven Scarves

Thailand yarns are created

Canada fabric is woven fabric is cut and sewn

Headbands

Thailand yarns are spun from cotton and polyester fibers

Canada fabric is knitted fabric is cut and sewn

Hair Scrunchies

Pakistan fabric is formed

Canada fabric is cut and sewn

ISSUE:

Whether wearing apparel accessories are eligible for preferential treatment under the North American Free Trade Agreement (NAFTA)?

LAW AND ANALYSIS:

North American Free Trade Agreement Eligibility

The subject merchandise undergoes processing operations in Canada which is a country provided for under the North American Free Trade Agreement (NAFTA). General Note 12, HTSUSA, incorporates Article 401 of the North American Free Trade Agreement (NAFTA) into the HTSUSA. Note 12(a) provides, in pertinent part:

(i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules... and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "CA" in parentheses, are eligible for such duty rate... . [Emphasis added]

Accordingly, the merchandise at issue will be eligible for the "Special" "CA" rate of duty provided it is a NAFTA "originating" good under General Note 12(b), Harmonized Tariff Schedule of the Unites States Annotated (HTSUSA), and it qualifies to be marked as a good of Canada. Note 12(b) provides, in pertinent part,

For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if--

(i) they are goods wholly obtained or produced entirely in the territory of Canada,
Mexico and/or the United States; or

(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that--

(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or

(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or

(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; or

Accordingly, the subject merchandise qualifies for NAFTA treatment only if the provisions of General Note 12(b)(ii)(A) are met, that is, if the merchandise is transformed in the territory of Canada so that the non-originating materials undergo a change in tariff classification as described in subdivision (t).

As the woven scarf is classifiable in subheading 6214.30.0000, HTSUSA, subdivision (t), Chapter 62, rule 38, applies. That note states:

A change to headings 6213 through 6217 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapter 54, or headings 5508 through 5516, 5801 through 5802 or 6001 through 6002, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of one or more of the NAFTA parties.

When the yarn for the subject woven scarf leaves Thailand it falls within chapter 54 or heading 5509. As chapter 54 and headings 5508 through 5516 are excepted by subdivision (t), chapter 62, rule 38, the merchandise does not meet the terms of the note. Accordingly, the subject merchandise is not eligible for NAFTA treatment.

As the knit hairband and hair scrunchies are classifiable in subheading 6117.80.8500, HTSUSA, subdivision (t), Chapter 61, rule 39, applies. That note states:

A change to headings 6113 through 6117 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapter 54, or heading 5508 through 5516 or 6001 through 6002, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of one or more of the NAFTA parties.

When the yarn for the hairband leaves Thailand it falls within chapter 54 or heading 5509.
When the fabric for the hair scrunchies leaves Pakistan it falls within chapter 60. As chapter 54, headings 5508 through 5516, and headings 6001 through 6002, are excepted by subdivision (t), chapter 61, rule 39, the merchandise does not meet the terms of the note. Accordingly, neither the hair bands nor the hair scrunchies are eligible for NAFTA treatment.

Tariff Preference Levels

You raise the issue of whether the scope of the Tariff Preference Levels is intended to include "apparel accessories" such as the merchandise discussed above, or whether the scope was meant to be restricted only to wearing apparel.

Additional U.S. Note 3(a) states:

The rate of duty in the "Special" subcolumn of rates of duty column 1 followed by the symbol "CA" in parentheses shall apply to imports from Canada, up to the annual quantities specified in subdivisions (f) of this note, of apparel goods provided for in chapters 61 and 62 that are both cut (or knit to shape) and sewn or otherwise assembled in the territory of a NAFTA party from fabric or yarn produced or obtained outside the territory of one of the NAFTA parties.

This office has had the opportunity to discuss the intent of the scope of the TPL's with the relevant offices who participated in the drafting of the pertinent Additional U.S. Notes. Based on those discussions, it is our understanding that the term "apparel goods" was not meant to be read restrictively to encompass only textile wearing apparel, but was intended to encompass a broad
range of garments inclusive of wearing apparel accessories. It is our belief that this is further bolstered by the fact that the Notes make reference to "apparel goods" which, are indicative not only of wearing apparel, but also of those articles associated with wearing apparel, that is, accessories.

Accordingly, although the subject apparel accessories are within the scope of Additional U.S. Note 3(a), they do not meet the requirements set out in that note. That is to say, although the subject merchandise is cut in Canada, the merchandise does not meet the second prong of the note, that is "sewn or otherwise assembled in the territory of a NAFTA party..." Thus, neither the scarves, headbands or hair scrunchies undergo the requisite sewing or assembly process in Canada. There is no "component to component" assembly; only the mere joining of a single component piece. As such, none of the subject merchandise is eligible for the tariff preference levels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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