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HQ 562001




January 30, 2002
cLA-2 RR:CR:sm 562001 tjm

Category: CLASSIFICATION

Ms. Brenda A. Jacobs
Powell, Goldstein, Frazer & Murphy LLP
Sixth Floor
1001 Pennsylvania Ave NW
Washington DC 20004

RE: Caribbean Basin Trade Partnership Act; CBTPA; 19 CFR § 10.223(a)(2) and (3); de minimis, foreign fibers; interim regulations; apparel; QST Industries; 9820.11.03; 9820.11.06, HTSUS.

Dear Ms. Jacobs:

This is in reply to your letter dated December 22, 2000, and additional submissions dated November 25, 2001, and December 26, 2001, requesting a ruling on behalf of your client regarding the eligibility of certain wearing apparel for preferential treatment under the Caribbean Basin Trade Partnership Act (the "CBTPA"). Our response follows.

FACTS:

Your client, QST Industries, Inc. (“QST) plans to import wearing apparel eligible for duty-free and quota-free entry under the CBTPA. The wearing apparel incorporates an undercollar cloth that contains some foreign fibers. The undercollar cloth is a composite fabric formed from non-U.S. rayon (80 percent) and wool (20 percent) fibers that are needle-punched into a domestically-formed scrim, with that scrim formed from U.S. yarns, to create a felted fabric. The foreign fibers, as imported into the U.S., have a weight of nine ounces per square yard. The undercollar cloth is not visible in the finished garment. All of the fabrics comprising the apparel, including the scrim for the undercollar cloth, are wholly formed in the U.S. from yarns wholly formed in the U.S.

On November 25, 2001, by electronic mail, counsel submitted to this office additional information. Counsel noted that the final apparel at issue is men’s tailored jackets. Counsel affirmed that the foreign fibers are less than 7 percent of the total weight of the finished garment.

On December 26, 2001, by electronic mail, counsel submitted additional information. In that submission counsel noted that the importer intends to enter the goods under either subheading 9820.11.03, HTSUS, or under 9820.11.06, HTSUS.

ISSUE:

Whether the use of foreign fibers in the production of the wearing apparel described above precludes preferential treatment under the Caribbean Basin Trade Partnership Act.

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. 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 restrictions 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. To date, the countries which the USTR has determined meet the second criterion above are set forth in notices published in the Federal Register on October 10, 2000 (65 FR 60236); November 21, 2000 (65 FR 69988); February 12, 2001 (66 FR 9888); and June 11, 2001 (66 FR 31272).

In addition, 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.

As amended by section 211 of the CBTPA, section 213(b)(2)(A) of the CBERA provides various categories of textile and apparel goods that qualify for the CBTPA preference. It states, in pertinent part, that:

Apparel articles Assembled in one or more CBTPA Beneficiary Countries -- Apparel articles assembled in one or more CBTPA beneficiary countries from fabrics wholly formed and cut in the United States, from yarns wholly formed in the United States. . . that are – . . . . entered under chapter 61 or 62 of the HTS, if, after such assembly, the articles would have qualified for entry under subheading 9802.00.80 of the HTS but for the fact that the articles were embroidered or subjected to stone-washing, enzyme-washing, acid washing, perma-pressing, oven-baking, bleaching, garment-dyeing, screen printing, or other similar processes. (ii) Apparel articles cut and assembled in one or more CBTPA Beneficiary countries -- 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.

The above statutory provisions have been implemented by interim regulation in section 10.223(a)(2) and (3), Customs Regulations (19 CFR §10.223(a)(2) and (3)), which states, in pertinent part, as follows:

General. The preferential treatment referred to in § 10.221 applies to the following textile and apparel articles that are imported directly into the customs territory of the United States from a CBTPA beneficiary country: Apparel articles assembled in one or more CBTPA beneficiary countries from fabrics wholly formed and cut in the United States, from yarns wholly 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 those articles are assembled in one or more CBTPA beneficiary countries with thread formed in the United States. . . .

Goods satisfying the requirements of section 213(b)(2)(A)(i)(II) or (b)(2)(A)(ii) of the CBERA (§10.223(a)(2) or (a)(3) of the interim regulations) are eligible for duty-free and quota-free entry under sub-heading 9820.11.03 or 9820.11.06, HTSUS, respectively.

In the instant case, the specific country of assembly of the cut fabric is not provided. For purposes of this ruling letter, we assume the assembly of the wearing apparel will be in one of the designated CBTPA beneficiary countries which the USTR has found meets the criteria set forth previously. Based on the facts provided and assuming that all other requirements of the CBTPA will be met, the apparel at issue qualifies for the CBTPA preference under either of the above provisions.

Both of the above provisions require the use of fabrics wholly formed in the U.S. from yarns wholly formed in the U.S. According to the information you have provided, all the fabrics from which the tailored jackets will be made, including the scrim for the undercollar cloth, will be formed in the U.S. from U.S.-formed yarns. Although foreign fibers will be needle punched into the scrim fabric in the U.S. to produce the undercollar cloth, neither of the above provisions requires the use of U.S. fibers. Therefore, under the circumstances of this case, the use of foreign fibers in producing the undercollar cloth will not preclude the apparel articles from receiving preferential treatment under the CBTPA. Furthermore, the de minimis provision of the CBTPA is inapplicable in the instant case because no foreign yarns are used in the production of the garments.

Therefore, based on these facts and the assumption that all other CBTPA requirements will be met, the use of foreign fibers in the instant case as described above will not preclude preferential treatment under the CBTPA.

HOLDING:

For the foregoing reasons, it is our opinion that the use of non-U.S. fibers in producing the apparel described above does not preclude CBTPA preference. Therefore, assuming that all other CBTPA requirements will be met, the apparel described above qualifies for preferential treatment under the CBTPA.

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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