HQ 962001 - Eligibility under the North American Free Trade Agreement (NAFTA) and Tariff Preference Levels (TPL) for an adult bib - United States International Trade Commision Rulings

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HQ 962001

October 1, 1998
CLA-2 RR:CR:TE 962001 jb

CATEGORY: CLASSIFICATION

Mr. Gilles Guilbault
Affiliated
411, Des Recollets
Montreal, Quebec H2Y 1W3

RE: Eligibility under the North American Free Trade Agreement (NAFTA) and Tariff Preference Levels (TPL) for an adult bib

Dear Mr. Guilbault:

This is in response to your letter, dated June 22, 1998, requesting clarification regarding the eligibility under the North American Free Trade Agreement (NAFTA) and Tariff Preference Levels (TPL) for an adult size bib.

FACTS:

The subject merchandise was addressed in New York Ruling Letter (NY) C84565, dated March 12, 1998, wherein a determination was given with respect to the classification and country of origin of the adult bib. As the determinations rendered in that ruling are accurate, this letter will only address the issues of NAFTA and TPL eligibility.

The subject merchandise consists of an adult bib, composed of 100 percent woven cotton fabric, which is designed for physically and/or mentally handicapped persons. The bib covers the front torso, and features three button holes for adjustment around the neck, and a fabric button.

The manufacturing operations for the subject merchandise are as follows:

Pakistan fabric is formed

Canada fabric is cut into the shape of the bib piping is sewn around the edge and neckline of the bib three button holes are sewn at the neckline fabric button is sewn

ISSUE:

1. Does the merchandise qualify for NAFTA treatment?

2. Is the merchandise eligible for a TPL?

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 adult bib is classifiable in heading 6217, HTSUS, 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 and sewn or otherwise assembled in the territory of one or more of the NAFTA parties.

When the fabric for the subject bib leaves Pakistan it falls within heading 5802. As heading 5802 is 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.

Tariff Preference Levels

The issue has been raised 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, as per the terms of Additional U.S. Note 3(a), the subject merchandise which is cut and sewn (piping sewn around the edge and neckline of the bib) in Canada from fabric produced in Pakistan, is eligible for the tariff preference levels.

HOLDING

The subject merchandise, the adult bib, does not qualify for NAFTA treatment.

The subject merchandise is eligible for the TPL.

As determined in NY C84565, the country of origin of the subject merchandise is Pakistan.

The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 19 CFR 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.

Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.

Sincerely,

John Durant, Director
Commercial Rulings Division

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