NY K85251 - Classification and country of origin determination for women’s knitwear; United States - Israel Free Trade Agreement: Products of the West Bank, the Gaza Strip and Irbid, Jordan, Qualifying Industrial Zone; General Note 3(a)(v), Harmonized Tariff Schedule of the United States (HTS);19 CFR 102.21(c)(4); TD 98-62; and the United States-Jordan Free Trade Area Implementation Act (JFTA). - United States International Trade Commision Rulings

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NY K85251

June 14, 2004

CLA2-61:RR:NC:TA-359:K85251

CATEGORY: CLASSIFICATION

Ms. Stacy Bauman
American Shipping Company, Inc.
140 Sylvan Avenue
Englewood Cliffs, NJ 07632

RE: Classification and country of origin determination for women’s knitwear; United States - Israel Free Trade Agreement: Products of the West Bank, the Gaza Strip and Irbid, Jordan, Qualifying Industrial Zone; General Note 3(a)(v), Harmonized Tariff Schedule of the United States (HTS);19 CFR 102.21(c)(4); TD 98-62; and the United States-Jordan Free Trade Area Implementation Act (JFTA).

Dear Ms. Bauman:

We are replying to your letter dated May 17, 2004, on behalf of your client, Dress Barn, Inc., Suffern, NY. You request a classification and country of origin determination for women’s knitwear that will be imported into the United States. You have submitted samples identified as style 6528 and style 6529.

FACTS:

The subject merchandise consists of a woman’s knitted cardigan and pants. The cardigan is identified as style 6528 and the pants are identified as style 6529. Style 6528 is made of a 52% cotton and 48% knit polyester knit fabric with more than 9 stitches per 2 centimeters in the horizontal direction. The garment features a full frontal opening with a zippered closure, a straight hemmed bottom, two pockets at the waist, long hemmed sleeves, a hood with a drawstring in lieu of a collar, and piping along the edge of the front opening and the hood. The pull-on pants, made of the same fabric, feature an elasticized waistband with a drawcord, piping along the outside seams, and hemmed leg openings. You state that these garments will be sold separately.

Two scenarios for manufacturing the garments have been presented:

SCENARIO A:

The fabric for the garment bodies, the fabric for the piping and the drawstring material, all of Taiwanese origin, are imported in rolls into Jordan. The elastic tape for the waistband is formed in Jordan.

The cardigan and pants are completely manufactured and assembled in Jordan. Upon completion, the garments are inspected, packed and shipped to the United States directly from Jordan.

SCENARIO B:

The fabric for the garment bodies, the fabric for the piping and the drawstring material, all of Taiwanese origin, are imported in rolls into the Irbid Qualifying Zone (QIZ) in Jordan. The elastic tape for the waistband is formed in Jordan and delivered to the Irbid QIZ.

The cardigan and pants are completely manufactured and assembled in the Irbid QIZ, Jordan. Upon completion, the garments are inspected, packed and shipped to the United States directly from the Irbid QIZ, Jordan.

In Scenario A, all of the assembly into garments takes place in Jordan. In Scenario B, all of the assembly takes place in the Irbid QIZ, Jordan.

ISSUES:

What are the classification and country of origin of the subject merchandise? Whether the subject apparel articles are eligible for preferential duty treatment under the JFTA? Whether the subject apparel articles, produced in the Irbid QIZ as described above, will qualify for duty-free treatment under General Note 3(a)(v), HTSUS, when imported into the U.S?

CLASSIFICATION:

The applicable subheading for the woman’s knitted cardigan, Style 6528, will be 6110.20.2075, Harmonized Tariff Schedule of the United States (HTS), which provides for sweaters, pullovers --- and similar articles, knitted or crocheted: of cotton, other: other: other: women’s or girls’. The general rate of duty will be 16.5% ad valorem.

The applicable subheading for the woman’s knitted pants, Style 6529, will be 6104.62.2011, HTS, which provides for women’s or girls’ trousers, bib and brace overalls, breeches and shorts: of cotton: other: trousers and breeches: women’s: other. The general rate of duty will be 14.9% ad valorem.

The cotton cardigan, style 6528, falls within textile category designation 339. The cotton pants, style 6529, falls within textile category designation 348. The designated textile and apparel categories and their quota and visa status are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information, we suggest that you check, close to the time of shipment, the Textile Status Report for Absolute Quotas, which is available at our Web site at www.cbp.gov. In addition, the designated textile and apparel categories may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected and should also be verified at the time of shipment.

COUNTRY OF ORIGIN - LAW AND ANALYSIS:

On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. 3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing Section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.

You stated that the processing operations for in Jordan, for Scenario B, were performed in the Irbid Qualifying Industrial Zone (QIZ). General Note 3(a)(v)(G), HTSUS, defines a "qualifying industrial zone" as any area that:"(1) encompasses portions of the territory of Israel and Jordan or Israel and Egypt; (2) has been designated by local authorities as an enclave where merchandise may enter without payment of duty or excise taxes; and (3) has been designated by the U.S. Trade representative in a notice published in the Federal Register as a qualifying industrial zone."

By letters dated June 30, 1997 and July 1, 1997, to the U.S. Trade Representative, the Governments of Jordan and Israel, respectively, requested the designation of the industrial zone in Irbid, Jordan, as a QIZ. Pursuant to subsequent consultations among the three Governments, the Governments of Israel and Jordan entered into a written agreement dated November 16, 1997, relating to the establishment of the Irbid QIZ, which included the following provision, entitled "Rules of Origin":

The [Governments of Israel and Jordan] agree that the origin of any textile or apparel product that is processed in the Irbid Qualifying Zone, regardless of the origin or place of processing of any of its inputs or materials prior to entry into, or subsequent withdrawal from, the zone, will be determined solely pursuant to the rules of origin for textile and apparel products set out in Section 334 of Uruguay Rounds Act, 19 U.S.C.§ 3592.

By notice published in the Federal Register on March 13, 1998 (63 FR 12572), the Office of the U.S. Trade Representative formally designated the Israeli-Jordanian Irbid Qualifying Industrial Zone as a QIZ. Treasury Decision 98-62, published in the Federal Register on June 26, 1998 (63 FR 34960), determined that pursuant to the agreement between the Governments of Israel and Jordan, and by mutual consent of the U.S. and Israel, Customs will exclusively apply the textile and apparel rules of origin set forth in 19 C.F.R. §102.21 in determining the country of origin of a textile or apparel product processed in the Irbid QIZ.

Section 102.21, Paragraph (c)(1) states that "The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced." As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable.

Paragraph (c)(2) states that "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each of the foreign materials incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e) of this section:"

Paragraph (e) in pertinent part states that "The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section":

HTSUS Tariff shift and/or other requirements

6101 - 6117 If the good is not knit to shape and consists of two or more component parts, a change to an assembled good of heading 6101 through 6117 from unassembled components, provided that the change is the result of the good being wholly assembled in a single country, territory or insular possession.

The subject garments will be classified within the above noted range, in headings 6110 and 6104. Each garment consists of two or more components. Under Scenario A and Scenario B, the garments are wholly assembled in a single country, therefore, the terms of the tariff shift are met and the country of origin for the garments, in Scenario A and in Scenario B, is Jordan.

STATUS UNDER THE UNITED STATES-JORDAN FREE TRADE AREA IMPLEMENTATION ACT (JFTA):

Title I of the United States-Jordan Free Trade Area Implementation Act of 2001, Pub. L. No. 107-43, 115 Stat. 243., referred to as the Jordan Free Trade Area Implementation Act, seeks to promote trade opportunities between the U.S. and the Hashemite Kingdom of Jordan. The JFTA provides preferential treatment for eligible apparel articles that: are the growth, product, or manufacture of Jordan; meet the 35 percent value content requirement; and are imported directly into the U.S. The rules for determining whether an article is entitled to preferential treatment under the JFTA are provided for in General Note (GN) 18, to the HTSUSA, as implemented by Presidential Proclamation 7512, dated December 7, 2001, 66 Fed. Reg. 64495, December 13, 2001. GN 18 provides, in part, as follows: (a) The products of Jordan described in Annex 2.1 of the Agreement between the United States of America and the Hashemite Kingdom of Jordan on the Establishment of a Free Trade Area, entered into on October 24, 2000, are subject to duty as provided herein. Products of Jordan, as defined in subdivisions (b) through (d) of this note, that are imported into the customs territory of the United States and entered under a provision for which a rate of duty appears in the "Special" subcolumn followed by the "JO" in parentheses are eligible for the tariff treatment set forth in the "Special" subcolumn, in accordance with sections 101 and 102 of the United States-Jordan Free Trade Area Implementation Act (Public Law 107-43, 115 Stat. 243).

The cardigan, style 6528 is classified in subheading 6110.20.2075, HTS. The pants, style 6529, are classified in subheading 6104.62.2011, HTS. There is no “JO” symbol in the “Special” subcolumn for either of those subheadings as required by GN 18(a). Therefore, the garments are not eligible for preferential treatment under the JFTA (Scenario A).

STATUS UNDER THE UNITED STATES-ISRAEL FREE TRADE AGREEMENT

Pursuant to the authority conferred by section 9 of the U.S. - Israel Free Trade Area Implementation Act of 1985 (19 U.S.C § 2112 note), the President issued Proclamation No. 6955 dated November 13, 1996 (published in the Federal Register on November 18, 1996 (61 Fed. Reg. 58761)), which modified the Harmonized Tariff Schedule of the United States (HTSUS) (by creating a new General Note 3 (a)(v)) to provide duty-free treatment to articles which are the product of the West Bank, Gaza Strip or a qualifying industrial zone, provided certain requirements are met. Such treatment was effective for products of the West Bank, Gaza Strip or a qualifying industrial zone entered or withdrawn from warehouse for consumption on or after November 21, 1996.

Under General Note 8, HTSUS, products of a qualifying industrial zone (QIZ) are eligible, when imported into the United States, for the "special" rate of duty set forth in the tariff schedule if the article is imported directly from the QIZ into the customs territory of the United States and if all other statutory requirements are met. The "special" duty rate for the two submitted garments under consideration is Free.

Under General Note 3 (a) (v), HTS, articles that are the products of the West Bank, Gaza Strip or a QIZ which are imported directly to the United States from the West Bank, Gaza Strip, a QIZ or Israel, qualify for duty free treatment provided that i) the sum of (a) the cost or value of materials produced in the West Bank, the Gaza Strip, a QIZ or Israel plus (b) the direct costs of processing operations performed in the West Bank, the Gaza Strip, a QIZ or Israel is not less than 35 percent of the appraised value of such articles when imported into the United States.

Regarding the requirement that the articles be imported directly, General Note 3 (a) (v) (B) (1) provides that: articles are “imported directly” for purposes of this paragraph if (1) they are shipped directly from the West Bank, the Gaza Strip, a QIZ, or Israel into the United States without passing through the territory of any intermediate country.

In your submission (Scenario B), you have noted that this merchandise will be imported directly from the Irbid QIZ, Jordan into the United States. We note that we cannot ascertain whether or not the 35 percent value requirement is met until the appraised value of the merchandise is established. This will occur at the time of the entry of the merchandise into the United States.

HOLDING:

The country of origin of style 6528 and 6529 is Jordan. Based upon international textile trade agreements products of Jordan are not subject to quota or the requirement of a visa.

Based upon the information submitted for Scenario A, and based upon the fact that no “JO” appears in the “Special” subcolumn, there is no preferential duty treatment; no consideration under the JFTA.

Based upon the information submitted for Scenario B, the garments are considered products of the Irbid, QIZ, Jordan and are eligible for preferential duty treatment under General Note 3 (a) (v), HTS, provided that they are imported directly from Jordan and the 35 percent value requirement is satisfied.

The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 19 CFR 177.9(b)(1). This section states that a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Mike Crowley at 646-733-3049.

Sincerely,

Robert B. Swierupski
Director,

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