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HQ 562139

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November 27, 2001

CLA-02 RR:CR:sm 562139 tjm

Category: CLASSIFICATION

Ms. Gail T. Cumins
Sharretts, Paley, Carter & Blauvelt, P.C. 75 Broad Street
New York NY 10004

RE: Caribbean Basin Trade Partnership Act; CBTPA; textiles and wearing apparel; girls’ wearing apparel; findings and trimmings; 19 CFR Part 10; interim regulations; Kahn Lucas Lancaster.

Dear Ms. Cumins:

This is in reply to your letter, dated May 18, 2001, requesting a ruling on the qualification of wearing apparel assembled in a Caribbean Basin Trade Partnership Act (CBTPA) beneficiary country, such as Guatemala, for the preferential treatment under the Caribbean Basin Trade Partnership Act, Section 211 et seq. of the Trade and Development Act of 2000 (P.L. 106-200). Please find our response below.

FACTS:

Your client, Kahn Lucas Lancaster, Inc., wishes to assemble apparel for girls in a CBTPA beneficiary country. In all instances, the shell fabric will be wholly formed in the United States from yarns wholly formed in the United States. In the beneficiary CBTPA country, the U.S. fabrics will be cut and assembled with the use of thread formed in the U.S. In addition, foreign piece goods will be cut and formed into certain cording, binding, and reinforcing tape in the beneficiary country. These components made from foreign fabric will then be sewn to the garments. You stated that these foreign-origin components will have a cost which will be less than 25 percent of the cost of the components of the assembled article. You ask whether these components qualify as “findings and trimmings” for purposes of the CBTPA.

You provided three samples of the girls’ apparel as described below:

Sample 1 (Style 73380-1): This dress features a white cording made from foreign piece goods that is sewn around the neck and sleeves. The balance of this garment is composed of fabrics, which are formed in the U.S. from U.S. yarns. In a CBTPA country, these fabrics will be cut and sewn with U.S. originating thread to produce the garment.

Sample 2 (Style 140B036-1-1): This one-piece playsuit features white satin binding made from foreign piece goods that is sewn around the neck and sleeves. Sewn to the binding is ornamental lace which are formed in the United States from U.S. formed yarn. The balance of the garment will also be composed of fabrics which are formed in the U.S. from U.S. formed yarns. In a CBTPA country, these fabrics will be cut and sewn with U.S. thread to produce the garment.

Sample 3 (Style 340C10222-1-1): This dress has a black reinforcing tape, which will be made from foreign fabric, sewn to the inside of the garment around the neck. The balance of the garment will be composed of fabrics which are formed in the United States from U.S. formed yarns. In a CBTPA country, these fabrics will be cut and sewn with U.S. thread to produce the garment.

ISSUE:

Whether the above-described cording, binding and reinforcing tape made from foreign fabric and used in the assembly of the three samples in a CBTPA beneficiary country qualify as “findings and trimmings” under the CBTPA.

LAW AND ANALYSIS:

The Trade and Development Act of 2000 was signed into law on May 18, 2000 (Pub. L. 106-200, 114 Stat. 251). Title II of the Act concerns trade benefits for the Caribbean Basin and is referred to as the United States-Caribbean Basin Trade Partnership Act (CBTPA). Section 211 of the CBTPA amended section 213(b) of the Caribbean Basin Economic Recovery Act (CBERA) (19 U.S.C. 2703(b)) to provide expanded trade benefits during a “transition period” to designated countries in the Caribbean Basin by eliminating tariffs and quantitative restriction on specific textile and apparel articles and by extending NAFTA duty treatment standards to non-textile articles that previously were ineligible for preferential treatment under the CBERA. “Transition period” is defined in section 213(b)(5)(D) as meaning, with respect to a designated CBTPA country, the period that begins on October 1, 2000, and ends on the earlier of September 30, 2008, or the date on which a free trade agreement enters into force with respect to the U.S. and the CBTPA country.

Presidential Proclamation 7351 dated October 2, 2000, published in the Federal Register on October 4, 2000 (65 FR 59329), implemented the CBTPA by designating the eligible CBTPA countries and amending Chapter 98, Harmonized Tariff Schedule of the United States (HTSUS) (including the creation of new subchapter XX) to facilitate the entry of the specific textile and apparel articles eligible for preferential treatment under the CBTPA. The enhanced trade benefits provided by the CBTPA are available to eligible articles imported directly from a country (1) that is designated as a CBTPA beneficiary country and (2) which the U.S. Trade Representative (“USTR”) has determined has implemented and follows, or is making substantial progress toward implementing and following certain customs procedures that allow U.S. Customs to verify the origin of the articles.

The Interim Customs Regulations to implement the trade benefit provisions of section 211 of the CBTPA were published in the Federal Register as T.D. 00-68 on October 5, 2000 (65 FR 59650). The T.D. invited public comments to be submitted on the Interim Regulations by December 4, 2000. It is noted that the issue you have raised is outside the scope of the comments received.

Paragraph (b)(2)(A)(ii) of amended section 213 of the CBERA provides preferential tariff treatment to apparel articles cut and assembled in one or more CBTPA beneficiary countries if such articles are assembled with thread formed in the United States:

Apparel articles cut in one or more CBTPA beneficiary countries from fabric wholly formed in the United States from yarns wholly formed in the United States. . .if such articles are assembled in one or more such countries with thread formed in the United States.

Subheading 9820.11.06, HTSUS, was created for the entry of articles eligible for preferential treatment under section 213(b)(2)(A)(ii) of the CBERA. See also, section 10.2 23(a)(3), Interim Customs Regulations (19 CFR § 10.223(a)(3)).

Within the scope of the facts provided, the production process – U.S. fabric formed from U.S. yarns cut in a CBTPA country and assembled with U.S. thread falls within the scope of section 213(b)(2)(A)(ii) of the CBERA and subheading 9820.11.06, HTSUS.

The pertinent issue with the three products is the findings and trimmings provision of the Act (section 213(b)(2)(A)(vii)(I) of the CBERA). An article otherwise eligible for preferential treatment will not be ineligible for that treatment because the article contains findings or trimmings of foreign origin, if those findings and trimmings do not exceed 25 percent of the cost of the components of the assembled product. Section 10.223(b), Interim Customs Regulations, (19 C.F.R. § 10.223(b)), states:

An article otherwise described under paragraph (a) of this section will not be ineligible for the preferential treatment referred to in § 10.221 because the article contains: (A) Findings and trimmings of foreign origin, if the value of those findings and trimmings does not exceed 25 percent of the cost of the components of the assembled article. For purposes of this section “finding and trimmings” include, but are not limited to, hooks and eyes, snaps, buttons, “bow buds” decorative lace trim, elastic strips. . .zippers. . .labels. . . .

The examples of findings and trimmings listed in the statute and in the regulations are exemplary and not exhaustive. In rulings issued under subheading 9802.00.90, HTSUS, Customs noted the following definition of findings and trimmings:

Findings have been defined as threads, tapes, buttons, bindings, hooks and eyes, slide fasteners, Feather bone, belting, braids, and other sewing essentials used in garment making, and trimming is defined as decoration or ornamental parts. See M. Picken, The Fashion Dictionary (1973).

See Headquarters Ruling Letter (“HRL”) 559552, dated February 14, 1996, HRL 559738, dated July 2, 1996, and HRL 560458, dated March 6, 1998.

Applying the above definition to this case, we find that the white cord sewn around the neck and sleeves of Sample 1 and the white satin binding sewn around the neck and the sleeves of Sample 2 are findings as binding is specifically listed in the definition and the cord is analogous to bindings. In addition, the cord and the satin binding also satisfy the common understanding of trimmings in that the contrasting color of the cord and satin binding gives a decorative or ornamental effect to the garments.

As for the black reinforcing tape that is sewn in the seam inside the neck area in Sample 3, Customs has in the past defined such tapes as findings for purposes of subheading 9802.00.90, HTSUS. See HRL 559552, dated February 14, 1996, HRL 560398, dated July 29, 1997, and HRL 560459, dated March 6, 1998. In particular, HRL 559552, dated February 14, 1996, states, in pertinent part, that:

In regard to the reinforcing tape which purposes is to add strength to the armhole seam, we are of the opinion that it may be considered a finding, as it is analogous to zipper tape, and is more of a necessity in constructing the garment such as the use of button, hooks, etc. Therefore, jackets made with foreign reinforcing tape may qualify for duty-free treatment under subheading 9802.00.90, HTSUS, provided the reinforcing tape and other acceptable findings and trimmings do not exceed 25 percent of the total cost of all the jacket’s components, all of the fabric components are U.S.-formed (i.e., the fabric is woven or milled in the U.S.), and cut, and the other conditions of the statute are satisfied.

Therefore, the non-U.S. white cording for Sample 1, white satin binding for Sample 2, and black reinforcing tape for Sample 3, qualify as findings and trimmings. Assuming that these findings and trimmings do not exceed 25 percent of the cost of the components of the assembled products and that all other CBTPA requirements are met, the articles described above would qualify for the CBTPA preference under subheading 9820.11.06, HTSUS.

HOLDING:

For the foregoing reasons, the use of non-U.S. findings and trimmings described above in producing the apparel articles would not preclude CBTPA eligibility. Assuming that the cost of the findings and trimmings do not exceed 25 percent of the cost of the components of the assembled product and that other CBTPA requirements will be met, the above described apparel articles would qualify for the CBTPA preference.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents are filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant
Director

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See also:

• Tariff No.: 9802.00.90 - Textile and apparel goods, assembled in Mexico in which all fabric components were wholly formed and cut in the United States, etc.
• Tariff No.: 9820.11.06 - CBTPA goods: Apparel articles cut in one or more CBTPA from US formed fabric of US formed yarn assembed in CBTPA with US yarn