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November 26, 2003

CLA-2 RR:CR:TE 966693 TMF

CATEGORY: CLASSIFICATION

TARIFF NO.: 6105.10.0010

Paul Ryberg, Jr.
Ryberg and Smith, LLP
Canal Square
1054 Thirty-First Street, N.W.
Suite 300
Washington, DC 20007

RE: Eligibility of men’s knitted shirts containing foreign collars and cuffs under the African Growth and Opportunity Act (AGOA); HQ 966634, dated September 9, 2003

Dear Mr. Ryberg:

This is in response to your letter dated August 19, 2003, on behalf of your client, Mauritius Export Processing Zone Association, (MEPZA), in which you requested a binding ruling on the eligibility of men’s polo-style shirts containing collars and cuffs of third-country origin under the African Growth and Opportunity Act (AGOA). Your request, along with samples of the collars and cuffs, a finished shirt and DVD which shows the production process, were submitted to our office for our consideration.

FACTS:

You stated that the body of the shirts would be cut, sewn and trimmed in an AGOA-eligible lesser-developed country (LDC). You provided two scenarios for the manufacture of the subject polo-style garments. In both scenarios, the body of the shirts would be cut, sewn and trimmed in an AGOA-eligible LDC from fabric knit, dyed and finished in Mauritius from imported third-country yarn--100 percent cotton yarn that will be spun in India. You stated that the “fabric” for the collars and cuffs of the subject polo-style shirts would also be knitted, dyed and finished in Mauritius. To ensure that the shirt’s body and collars/cuffs match, both sets of fabric would be dyed together in a single batch. After that step is completed, the body fabric and collars/cuffs “fabric” will be shipped to an AGOA-eligible LDC for cutting, sewing and trimming.

You indicated that the threads connecting the collars and cuffs will be cut, and the individual collars and cuffs will be separated from the bolt of fabric. You stated that this is not mere trimming of length and width, but a contouring of the collars' shape based on a pattern to the shirt’s neckline. You also noted that ten percent of the collar fabric is cut away and discarded as waste.

You indicated that it is more preferable to make the body fabric and collars/cuffs “fabric” from the same yarn to ensure matching texture, appearance and feel. You also stated that your client did not use African-origin yarn for the body fabric due to its higher costs and lower availability.

In your submission, you are requesting an AGOA-eligibility determination under both of the following scenarios:

In scenario one, you stated that the collars/cuffs “fabric” would be knitted in Mauritius from the Indian-spun, cotton yarn which is also used in the body of the shirt.

In scenario two, the collars/cuffs “fabric” would be knitted in Mauritius from African-origin yarn spun in an AGOA-eligible country with an approved visa system.

ISSUE: Whether the foreign origin collars used in the subject men’s polo-style shirts are eligible for AGOA preference?

LAW AND ANALYSIS:

The African Growth and Opportunity Act (AGOA) provides certain specified trade benefits for countries of sub-Saharan Africa. These benefits include duty-free treatment for certain non-textile articles previously excluded from preferential treatment under the Generalized System of Preferences, and duty- and quota-free treatment for certain textile and apparel articles which meet the requirements set forth in Section 112 of the Act (codified at 19 U.S.C. 3721). Beneficiary countries are designated by the President of the United States after having met eligibility requirements set forth in the AGOA. Once designated, a beneficiary country is entitled to the duty-free treatment for the designated non-textile articles determined not to be import-sensitive in the context of imports from the beneficiary sub-Saharan African countries. A second designation by the United States Trade Representative (USTR), published in the Federal Register, that a beneficiary country has taken the measures required by the Act to prevent unlawful transshipment and has adopted an effective visa system, is necessary before a beneficiary country may enjoy the duty- and quota-free benefits extended to textile and apparel articles under the Act. Mauritius was designated a beneficiary country by Presidential Proclamation 7350, published in the Federal Register on October 4, 2000. It was determined to be eligible for textile benefits under the AGOA by the USTR effective January 19, 2001. See 66 Fed. Reg. 8440, dated January 31, 2001.

The provisions implementing the textile provisions of the AGOA in the Harmonized Tariff Schedule of the United States (HTSUS) are contained, for the most part, in subchapter XIX, Chapter 98, HTSUS (one provision may be found in subheading 9802.00.80, HTSUS). The regulations pertinent to the textile provisions of the AGOA may be found at §§ 10.211 through 10.217 of the Customs Regulations (19 CFR 10.211 through 10.217).

In both scenarios, foreign origin collars are imported into Mauritius for use in the manufacture of the subject men’s polo-style shirts. The first issue we must consider is whether the foreign origin collars are knitted fabric of Chapter 60, HTSUSA, or made up articles under Chapter 61, HTSUSA.

Scenario I: Collars/Cuffs Made From Cotton Yarn From India and Knitted in Mauritius

In scenario one, you stated that the collars/cuffs “fabric” would be knitted in Mauritius from cotton yarns spun in India which are also used in the body of the shirt. In this instance, we consider subheading 9819.11.12, HTSUSA, which sates:

Apparel articles wholly assembled, or knit-to-shape and wholly assembled, or both, in one or more such lesser developed countries enumerated in U.S. note 2(d) to this subchapter, subject to the provisions of U.S. Note 2 to this subchapter, regardless of the country of origin of the fabric or the yarn used to make such articles, 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.

See U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS, provides for a quantitative restriction for apparel articles classified in subheading 9819.11.12, HTSUSA.

The term "wholly assembled in", 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, means :

[A]ll 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. See 19 C.F.R. 10.212.

The term "Knit-to-shape components”, when used with reference to textile components, means: Components that are knitted or crocheted from a yarn directly to a specific shape containing a self-start edge. Minor cutting or trimming will not affect the determination of whether a component is "knit-to-shape." Id.

In the instant case, we find the subject collars/cuff “fabric” are knit-to-shape components as each collar is made by knitting or crocheting a yarn directly to a specific shape of a collar and each contains a self-start, finished edge. Further, the provisions of the AGOA only allow foreign yarn or fabric to be used in the manufacture of apparel articles in LDCs. It does not extend duty-free treatment to foreign-formed textile components (i.e. cut to shape or knit to shape collars and cuffs). See HQ 966634, dated September 9, 2003

It should be noted that HQ 966634 determined that garments incorporating similar knit shirt collars were ineligible for AGOA benefits as the collars were not “yarn or fabric” within subheading 9819.11.12, HTSUSA, by application of GRI 2(a), which states, in pertinent part, that articles which are entered in their incomplete or unfinished state and possessing the essential character of the complete or finished article are classifiable as the complete or finished article., which determined that collars made of foreign formed textile components were not eligible for AGOA benefits; Id., citing also to HQ 965871 dated September 25, 2002 and HQ 562612, dated April 30, 2003.

Based upon our review of your sample collars and cuffs, we find that they (in their incomplete, unfinished state), cannot overcome their essential character as knit to shape components. They lack a fabric formation stage as they are not created from fabric, but are made directly from yarn into the shape of knit components. The cutting process subsequent to importation into the LDC does not preclude the application of GRI 2(a) to determine that these items are knit components at the time of importation into the LDC, as their essential character as collars and cuffs remains. See HQ 966634, supra.

In concurrence with HQ 966634, we find that while subheading 9819.11.12, HTSUSA, allows for the use of foreign yarn or fabric in the production of apparel articles, it does not allow for the use of components formed outside the LDC in the manufacture of the polo-style shirts. Therefore, the subject polo-style men’s shirts will not be accorded AGOA eligibility as they incorporate foreign origin, knitted textile components.

Scenario II: Collars/Cuffs Made from Cotton Yarns From An AGOA-Eligible Country and Knitted in Mauritius

In scenario two, you stated that the collars/cuffs “fabric” would be knitted in Mauritius from African-originating cotton yarns which will be spun in an AGOA-eligible country with an approved visa system. Subheading 9819.11.09, HTSUS, states:

Apparel articles wholly assembled in one or more such countries from fabric wholly formed in one or more such countries from yarn originating in either the United States or one or more such countries [emphasis added] (including fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 and are wholly formed and cut in one or more such countries), or from components knit-to-shape in one or more such countries from yarns originating either in the United States or in one or more such countries [emphasis added], or apparel articles wholly formed on seamless knitting machines in such a country from yarns originating either in the United States or one or more such countries, subject to the provisions of U.S. note 2 to this subchapter.

In scenario two, you stated that the cotton collars/cuffs “fabric” will be knitted in Mauritius from yarns spun in an AGOA beneficiary country. In this instance, although you indicated that the collars/cuffs knit-to-shape components will originate from an AGOA-eligible beneficiary country, they are assembled together with fabric knitted in Mauritius from third-country yarn. By using third-country yarn in the fabric for the body of the shirt, the polo-style shirt is precluded from receiving AGOA preferential treatment under subheading 9819.11.09, HTSUSA.

In sum, under both scenarios one and two, the subject polo-style shirt is not eligible to receive AGOA preference.

HOLDING:

The submitted sample men’s knitted, polo-style shirt does not qualify for AGOA eligibility under both scenarios one and two.

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, Director

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