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HQ 966249





April 21, 2003

CLA-2 RR:CR:TE 966249 jsj

CATEGORY: CLASSIFICATION

TARIFF NO.: 9819.11.12

Mr. Paul Ryberg
Ryberg and Smith, L.L.P.
Canal Square
1054 Thirty-First Street, N.W.
Washington, D.C. 20007

RE: African Growth and Opportunity Act; 19 U.S.C. 3721 (b)(3); Limitations on Benefits, Special Rule for Lesser Developed Countries, 19 U.S.C. 3721 (b)(3)(B)(i).

Dear Mr. Ryberg:

The purpose of this correspondence is to respond to your request dated January 27, 2003. The correspondence in issue requested, on the behalf of your client, Frame Textile Group of South Africa, a binding classification ruling of the merchandise described as "chinos."

FACTS

The articles in issue, identified as "chinos," are understood by Customs to be men's pants. The fabric from which the pants will be made is formed in China and subsequently dyed in South Africa. The fabric, after dyeing, will be exported to Lesotho where it will be cut, sewn and assembled into pants. The pants will be exported from Lesotho to the United States.

No sample was provided or examined in the preparation of this ruling letter.

ISSUE

Are "chinos" that are cut and assembled in Lesotho from fabric that is formed in China and dyed in South Africa eligible for lesser developed beneficiary country preferential tariff and quota treatment pursuant to the African Growth and Opportunity Act, 19 U.S.C. 3721 (b)(3)(B)(i) ?

LAW AND ANALYSIS

The federal agency responsible for initially interpreting and applying the Customs laws addressing the importation of goods, including the United States Code, the Code of Federal Regulations and the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), is the Bureau of Customs and Border Protection.1 The federal law subject to interpretation and application in this ruling letter is the African Growth and Opportunity Act. See 19 U.S.C. 3701 et seq. The AGOA was initially enacted as Title I of the Trade and Development Act of 2000, Pub. L. 106-200, 114 Stat. 251 (May 18, 2000) to promote "increased trade and investment between the United States and sub-Saharan Africa." 19 U.S.C. 3702 (1). The Act was amended in the Trade Act of 2002, Pub. L. 107-210, 116 Stat. 933 (Aug. 6, 2002).

The AGOA provides for the extension of the Generalized System of Preferences (GSP) duty-free treatment to non-textile articles normally excluded from GSP duty-free treatment and for preferential treatment of certain textile and apparel articles described in the Act. The textile and apparel provisions of the AGOA became effective on October 1, 2000, and remain in effect until September 30, 2008. Customs issued Interim Regulations implementing the AGOA which became effective on October 1, 2001 and March 21, 2003 See 19 C.F.R. 10.211 et seq.; See also T.D. 00-67, 65 Fed. Reg. 59668 (2000); T.D. 03-15, 68 Fed. Reg. 13820 (2003) (interim regulations amending the interim regulations issued in Oct. 2000).

Preferential treatment of certain textile and apparel articles is available under the AGOA for articles imported directly2 from: (1) A country that has been designated by the President as a "beneficiary sub-Saharan African country;" and (2) That has satisfied the U.S. Trade Representative that it has met the requirements of 19 U.S.C. 3722 (a) and (b), having adopted protections against transshipment. The Kingdom of Lesotho is a designated "beneficiary sub-Saharan African country" and has been declared by the U.S. Trade Representative to have satisfied the requirements of the Act protecting against transshipment. See Presidential Proclamation 7350, 65 Fed. Reg. 59321 (2000); 66 Fed. Reg. 21192 (2001).

Section 3721 (b) of Title 19 provides, in part, that preferential treatment shall apply only to the following textile and apparel products:

(3) APPAREL ARTICLES FROM REGIONAL FABRIC OR YARNS.-Apparel articles wholly assembled in one or more beneficiary sub-Saharan African countries from fabric wholly formed in one or more beneficiary sub-Saharan African countries from yarns originating either in the United States or one or more beneficiary sub-Saharan African countries (including fabrics not formed from yarns, if such fabrics are classified under heading 5602 or 5603 of the Harmonized Tariff Schedule of the United States and are wholly formed in one or more beneficiary sub-Saharan African countries), or from components knit-to-shape in one or more beneficiary sub-Saharan African countries from yarns originating either in the United States or one or more beneficiary sub-Saharan African countries, or apparel articles wholly formed on seamless knitting machines in a beneficiary sub-Saharan African country from yarns originating either in the United States or one or more beneficiary sub-Saharan African countries, subject to the following:

(B) SPECIAL RULE FOR LESSER DEVELOPED COUNTRIES.-

IN GENERAL.- Subject to subparagraph (A), preferential treatment under this paragraph shall be extended through September 30, 2004, for apparel articles wholly assembled, or knit-to-shape and wholly assembled, or both, in one or more lesser developed beneficiary sub-Saharan African countries regardless of the country of origin of the fabric or the yarn used to make such articles. 3

Customs notes that Chapter 98, Subchapter XIX, U.S. Note 2, HTSUSA, sets forth limitations on the preferential treatment available under this provision of the AGOA.

The instant ruling requires Customs to determine whether the "chinos" constitute "apparel articles wholly assembled, or knit-to-shape and wholly assembled, or both" in Lesotho "regardless of the country of origin of the fabric or the yarn used to make" the garment. 19 U.S.C. 3721 (b)(3)(B)(i). The specific issue Customs must resolve is whether the dyeing process that is undertaken in South Africa on Chinese fabric precludes the importer from obtaining AGOA lesser developed beneficiary country preferential tariff and quota treatment on otherwise qualifying apparel.

"Apparel articles" are defined by Customs Regulations as "goods classifiable in Chapters 61 and 62 and headings 6501, 6502, 6503 and 6504 and subheadings 6406.99 and 6505.90 of the HTSUS." 19 C.F.R. 10.212. The "chinos," if made of woven fabric, would be classifiable in headings 6203 or 6204, HTSUSA, depending on whether they are made for men or women. The garments are, therefore, "apparel articles" for the purposes of the AGOA.

The garments subject to this ruling letter are assembled in Lesotho from fabric that is cut and sewn in Lesotho. AGOA eligibility requires that the apparel articles be "[w]holly assembled in" the lesser developed beneficiary sub-Saharan African country to be eligible for lesser developed country benefits. "Wholly assembled in" for the purpose of textile and apparel articles under the AGOA,
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. 19 C.F.R. 10.212.

The assembly process of the "chinos" meets the regulatory definition of "[w]holly assembled in."

Frame Textile Group's principal issue is whether the dyeing operations undertaken on the Chinese fabric in South Africa preclude the "chinos" from AGOA lesser developed beneficiary country eligibility. Section 3721 (b)(3)(B)(i) specifically provides that the country of origin of the fabric is not a consideration. Since the country of origin of the fabric is not relevant to the receipt of AGOA lesser developed beneficiary country preferential tariff and quota treatment, provided the other requirements of the Act are met, the dyeing operations do not have an effect on benefit eligibility. But see HQ 965961 (Jan. 15, 2003) (holding that a garment assembled in a lesser developed beneficiary sub-Saharan African country from fabric and garment components formed in a country other than a lesser developed beneficiary country is not eligible for AGOA lesser developed country benefits).

The "chinos" meet the requirements of the AGOA lesser developed beneficiary country special rule and are, therefore, eligible to receive the preferential tariff and quota benefits provided in section 3721 (b)(3)(B)(i) of the African Growth and Opportunity Act.

HOLDING

The "chinos" or trousers are eligible to receive the lesser developed beneficiary country preferential tariff and quota benefits of the African Growth and Opportunity Act.

They are classified in subheading 9819.11.12, Harmonized Tariff Schedule of the United States Annotated.

They should be entered under Preference Group E and Visa Group 5.

Statistical reporting of the merchandise should be in accordance with Chapter 98, Subchapter XIX, U.S. Statistical Note 1.4

The Column 1 Special Rate of Duty is FREE.

Sincerely,

Myles B. Harmon, Director
Commercial Rulings Division

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