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HQ 562271




July 12, 2002

CLA-2 RR:CR:SM 562271 KSG

CLASSIFICATION: 9819.11.12

John B. Pellegrini, Esq.
Ross & Hardies
65 East 55th Street
New York, NY 10022-3219

RE: Eligibility of certain handkerchiefs for duty-free treatment under the AGOA; subheading 9819.11.12; quota/visa requirements

Dear Mr. Pellegrini:

This is in response to your letter dated September 17, 2001, on behalf of Paris Accessories, Inc., in which you requested a binding ruling concerning the eligibility of certain cotton handkerchiefs for preferential treatment under the African Growth and Opportunity Act ("AGOA").

FACTS:

Paris Accessories, Inc. proposes to produce cotton handkerchiefs. The handkerchiefs will be made of cotton fabric formed in China. The fabric will be cut and sewn in a lesser developed sub-Saharan African beneficiary country ("LDBC") . There are four different scenarios proposed.

In scenario one, the fabric will be bleached in China and will not have cutting lines. The fabric will be cut, hemmed by machine and packaged in the LDBC.

In the second scenario, the fabric will be bleached as well as cut, hemmed by machine and packaged in the LDBC.

The third scenario will involve bleached fabric with either cord or satin borders consisting of cutting lines. The bleaching and addition of the cutting lines will be performed in China. The fabric with the cutting lines will be cut and hemmed and packed in the LDBC.

In the fourth scenario, the fabric will be bleached, dyed, printed and marked with cutting lines in China. The fabric with the cutting lines will be cut and hemmed and packaged in the LDBC. The cotton handkerchief are classified in subheading 6213.20.10, of the Harmonized Tariff Schedule of the United States ("HTSUS").

You asked if the goods would be eligible under the four scenarios for duty and quota treatment under the AGOA.

ISSUE:

Whether the handkerchiefs, manufactured as described above in scenarios one through four, are eligible for duty-free and quota-free treatment under the AGOA.

LAW AND ANALYSIS:

Title I of the Trade and Development Act of 2000, Pub. L 106-200, 114 Stat. 251, May 18, 2000, referred to as the African Growth and Opportunity Act (“AGOA”), seeks to promote trade opportunities between the U.S. and the countries of sub-Saharan Africa. The AGOA provides for the extension of duty-free treatment under the GSP to non-textile articles normally excluded from GSP duty-free treatment that are not import sensitive, and the entry of specific textile and apparel articles free of duty. In order to implement the AGOA, Customs issued Interim Regulations in T.D. 00-67, 65 Fed. Reg. 59668, which became effective October 1, 2000. With regard to the textile and apparel provisions, the law became effective on October 1, 2000, and shall remain in effect through September 30, 2008. See Sec. 112(f), AGOA.

The enhanced trade benefits provided by the AGOA are available to eligible textile and apparel articles imported directly from a country (1) that is designated as a beneficiary sub-Saharan African country and (2) which the U.S. Trade Representative (“USTR”) has determined by a proclamation published in the Federal Register has satisfied the requirements of the AGOA and therefore should be afforded the tariff treatment authorized in such Act. Such countries shall be enumerated in U.S. Note 1, Subchapter XIX, Chapter 98, HTSUS, whenever the USTR issues a Federal Register notice as described herein. See Presidential Proclamation 7350, Annex, dated October 2, 2000, 65 Fed. Reg. 59321.

Section 112(b)(3)(B) of AGOA provides that :

[s]ubject to subparagraph (A), preferential treatment shall be extended through September 30, 2004, for apparel articles wholly assembled in one or more lesser developed beneficiary sub-Saharan African countries regardless of the country of origin of the fabric used to make such articles.

Subheading 9819.11.12 provides:

Apparel articles wholly assembled in a lesser developed such country enumerated in U.S. note 2(d) to this subchapter, subject to the provisions of U.S. note 2 to this subchapter, if entered during the period beginning on the date announced in a Federal Register notice issued by the United States Trade Representative and continuing through September 30, 2004, inclusive

U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS, provides for a quantitative restriction for apparel articles classified in subheading 9819.11.09 and 9819.11.12. U.S. Note 2(a) and (b), provide:

(a) Imports of apparel articles under subheadings 9819.11.09 and 9819.11.12 shall be limited, in the period beginning on the date announced in a notice published in a Federal Register by the United States Trade Representative and continuing through the close of September 30, 2001, to an aggregate quantity not to exceed 1.5 percent of the aggregate square meter equivalents of all apparel articles imported into the United States in the preceding 12-month period for which data are available. Of that aggregate quantity, an amount not to exceed 1 percent of such aggregate square meter equivalents shall be eligible to enter under such subheadings during the period beginning on the date announced in such Federal Register notice and continuing through the close of December 31, 2000. The remaining 0.5 percent of such aggregate square meter equivalents, together with any quantity remaining unfilled from the 1 percent eligible to enter prior to January 1, 2001, shall be eligible to enter under such subheadings during the period beginning on January 1, 2001 and continuing through the close of September 30, 2001.

(b) Such imports of apparel articles under subheadings 9819.11.09 and 9819.11.12 shall be limited, in each of the seven one-year periods beginning on October 1, 2001, to an aggregate quantity not to exceed the applicable percentage set forth herein of aggregate square meter equivalents of all apparel articles imported into the United States in the preceding 12-month period for which data are available:

12-Month Period Applicable Percentage

October 1, 2001 through September 30, 2002 1.7857

October 1, 2002 through September 30, 2003 2.0714 October 1, 2003 through September 30, 2004 2.3571 October 1, 2004 through September 30, 2005 2.6428

October 1, 2005 through September 30, 2006 2.9285 October 1, 2006 through September 30, 2007 3.2142 October 1, 2007 through September 30, 2008 3.5

The Customs Interim Regulations define "wholly assembled in" in 19 CFR 10.212 as:

When used with reference to a textile or apparel article in the context of one or more beneficiary countries or one or more lesser developed beneficiary countries, the expression "wholly assembled in" means that all of the components of the textile or apparel article (including thread, decorative embellishments, buttons, zippers, or similar components) were joined together in one or more beneficiary countries or one or more lesser developed beneficiary countries.

In scenarios one and two, the processing in the LDBC satisfies the definition of "wholly assembled in" because the components (fabric and thread) are joined together in the LDBC from fabric. The finished handkerchiefs under these two scenarios would be eligible for preferential treatment under subheading 9819.11.12, HTSUS, subject to the quantitative limitations set forth in U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS.

However, in scenarios three and four, the processing in the LDBC does not satisfy the requirement of section 112(b)(3)(B) of the AGOA. This provision states that regardless of the country of origin of the fabric, the apparel article must be wholly assembled in one or more lesser developed beneficiary sub-Saharan African countries. In these scenarios, the processing in the LDBC does not result in a transition from fabric to an apparel article, as required by this provision. Adding the cutting lines to the fabric in China causes the goods to be considered unfinished handkerchiefs when they arrive in the LDBC. Therefore, under scenarios three and four, the handkerchiefs are not eligible for AGOA treatment under subheading 9819.11.12, HTSUS.

Counsel withdrew his argument with regard to the quota/visa requirements. The Committee for the Implementation of Textile Agreements ("CITA") informed Customs on December 20, 2001, that effective on January 1, 2002, for textiles and textile products produced or manufactured in China and exported on or after December 11, 2001, in stages one and two, quota will be removed and export visas will not be required. See 66 Fed. Reg. 67229, dated December 28, 2001. Since cotton handkerchiefs of subheading 6213.20 of Chinese origin are in stage two, they are not subject to quota or visa requirements provided they were exported on or after December 11, 2001.

HOLDING:

Based on the information provided, the handkerchiefs, manufactured as described in this case in scenarios one and two, are eligible for preferential treatment under the AGOA (subheading 9819.11.21, HTSUS) subject to the quantitative limitations set forth in U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS.

The handkerchiefs, manufactured as described in scenarios three and four, are not eligible for preferential treatment under the AGOA.

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

Sincerely,

Myles B. Harmon, Acting Director
Commercial Rulings Division


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