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HQ 964979




May 31, 2002

CLA-2 RR:CR:TE 964979 SS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9820.11.24

Mr. Edward Johnson
Levi Strauss & Co.
P.O. Box 7215
San Francisco, CA 94120

RE: Classification of Woven Shirts Made from Certain Corduroy Fabric; U.S.-Caribbean Basin Trade Partnership Act; Subheading 9820.11.24, HTSUSA; “Short Supply” Provision

Dear Mr. Johnson:

This is in response to your letter dated February 7, 2001, requesting a binding ruling on the eligibility of woven shirts made from certain corduroy fabric for duty-free treatment under the United States-Caribbean Basin Trade Partnership Act (“CBTPA”). You submitted a swatch of fabric for our examination.

FACTS:

The submitted sample is a swatch of 100 percent cotton printed corduroy fabric formed in Vietnam. A letter of certification from the fabric manufacturer indicates that the fabric is “100% cotton 21 wales corduroy discharge print.” It appears that the reference to “21 wales” means 21 wales per inch. Based on a visual examination of the fabric and using standard conversion factors, the fabric has 8.26 wales per centimeter.

1 inch = 2.54 centimeters Thus, the fabric is classified under subheading 5801.22.1000 which provides for “[w]oven pile fabrics and chenille fabrics, other than fabrics of heading 5802 or 5806: Of cotton: Cut corduroy: Greater than 7.5 wales per cm.”

You indicate that the fabric will be cut and assembled into shirts in one or more of “the qualifying CBI countries.” You also state that the fabric is “on the short supply list.”

ISSUE:

Whether shirts made from the subject corduroy fabric are eligible for preferential tariff treatment under the CBTPA?

LAW AND ANALYSIS:

Title II of the Trade and Development Act of 2000, (Pub. L. 106-200, 114 Stat. 251), 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.

Section 211 of the CBTPA, among other things, eliminates tariffs and quantitative restrictions on specific textile and apparel articles. “Transition period” is defined in 19 U.S.C. 2703(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 Fed. Reg. 59329), implemented the CBTPA by designating the eligible CBTPA countries and amending Chapter 98, HTSUSA (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 specific “qualifying CBI countries” involved in the manufacture of the subject shirts were not identified. However, for the purposes of this ruling we will assume that the “qualifying CBI countries” are CBTPA beneficiary countries that have been designated as eligible for textile benefits.

You specifically request verification that the instant fabric meets the requirements of the “short supply list.” The provision commonly referred to as the “NAFTA short supply” provision is contained in subheading 9820.11.24, of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). We wish to point out that there is no definitive list of “short supply” fabrics or yarns for purposes of the North American Free Trade Agreement (NAFTA). The determination of these short supply fabrics or yarns is based upon the various provisions of NAFTA and whether, under NAFTA, for the particular apparel article at issue, certain fabrics or yarns may be sourced from outside the NAFTA parties for use in the production of an “originating” good. If sourcing of certain fabrics or yarns outside the NAFTA parties is allowed, then those fabrics or yarns are deemed to be in “short supply.”

Subheading 9820.11.24, HTSUSA, provides as follows:

Articles imported from a designated beneficiary Caribbean Basin Trade Partnership country enumerated in general note 17(a) to the tariff schedule: Apparel articles both cut (or knit-to-shape) and sewn or otherwise assembled in one or more such countries from fabrics or yarn not formed in the United States or in one or more such countries, provided that such apparel articles of such fabrics or yarn would be considered an originating good under the terms of general note 12(t) to the tariff schedule without regard to the source of the fabric or yarn if such apparel article had been imported from the territory of Canada or the territory of Mexico directly into the customs territory of the United States.

The fabric is formed in Vietnam and it is assumed that the yarns are not formed in the U.S. or a CBTPA beneficiary country. Thus, in order to determine whether the shirts are eligible for preferential treatment under the CBPTA, we must determine whether the shirts would be considered originating goods under General Note 12(t), HTSUSA.

General Note 12(t), HTSUSA, sets out the tariff shift rules for determining whether non-originating materials used in the production of a good have been transformed into originating goods under NAFTA. Prior to considering the tariff shift rule applicable to woven shirts, we examine the chapter notes to Chapter 62 contained in General Note 12(t), HTSUSA. Chapter rule 2 to Chapter 62 of General note 12(t) states:

Apparel goods of this chapter shall be considered to originate if they are both cut and sewn or otherwise assembled in the territory of one or more of the NAFTA parties and if the fabric of the outer shell, exclusive of collar and cuffs, is wholly of one or more of the following:

Corduroy fabrics of subheading 5801.22, containing 85 per cent or more by weight of cotton and containing more than 7.5 wales per centimeter.

Thus, as long as the instant shirts are both cut and sewn in a CBTPA beneficiary country and the outer shell, exclusive of collars and cuffs, is wholly of the instant corduroy fabric, the shirts will qualify as originating goods under the terms of General note 12(t). Accordingly, the shirts would qualify for duty-free treatment under the CBTPA.

HOLDING:

Assuming all the requirements of the subheading are satisfied, the shirts are classified under subheading 9820.11.24, HTSUSA, and are eligible for duty free/quota free treatment provided they are imported directly into the customs territory of the U.S. from a CBTPA beneficiary country and all other documentary requirements are satisfied.

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,

John Durant, Director

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