HQ 967822 - Country of origin of men’s, boy’s, women’s and girl’s pants, jeans and shorts - United States International Trade Commision Rulings

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HQ 967822

November 4, 2005

CLA-RR:CTF:TC 967822 RSD

CATEGORY: CLASSIFICATION

Mr. Victor Chung, President
Pacic Apparel Resources, Inc.
2530 Corporate Place
A112
Monterey Park, California 91754

RE: Country of origin of men’s, boy’s, women’s and girl’s pants, jeans and shorts

Dear Mr. Chung:

This is in response to your letter dated July 20, 2005, requesting a ruling on the country of origin and the import requirements for men’s, boy’s, women’s and girl’s pants, jeans and shorts.

FACTS:

Pacic Apparel Resources, Inc. is planning to import men’s, boy’s, women’s and girl’s non–lined simple woven or knit pants, jeans and shorts into the United States from Canada. The garments will be made of unlined cotton or man-made woven or knit fabric. You indicate that the fabric used to make the garments is not made in the United States or Canada, but you do not indicate the country of origin of the fabric. The garments will be made in China. They will be exported in bulk packages to Canada and stored there. In Canada, the processing of the garments includes putting on hangtags and price tags. The garments are individually packed into customer designated plastic bags so that they are in a retail sellable format.

You ask whether after the processing is completed in Canada, if the country of origin of the garments will become Canada under the NAFTA agreement, and if there are any other restrictions involved in importing the garments into the U.S. from Canada. ISSUE:

Whether the country of origin of the garments will become Canada under the NAFTA agreement as a result of the processing described above performed in Canada.

LAW and ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article.

Part 134, Customs and Border Protection Regulations (CBP) (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 334 of the Uruguay Round Agreements Act (19 U.S.C. 3592), provides the rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. Section 102.21, Customs and Border Protection Regulations (19 CFR 102.21) implements Section 334. Pursuant to 19 CFR 102.21, the country of origin of a textile or apparel product is determined by sequential application of the general rules set forth in paragraphs (c)(1) through (c)(5).

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.”

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 foreign material 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.” Section 102.21(e) states, in pertinent part, 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.”

The articles that you inquire about, jeans, pants and shorts are classified in headings 6103, 6104, 6203, and 6204, HTSUS depending upon the construction, knit or woven, and whether they are designed for wear by men or boys, or women or girls. The rules in 19 CFR 102.21(e) provide that for such goods, consisting of two or more component parts, “a change to an assembled good of [headings 6103, 6104, 6203 or 6204] from unassembled components, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession.” From the information provided, the goods are wholly assembled in China. This means that the country of origin of the garments that are imported into Canada will be China. Looking at the processing completed in Canada, consisting of labeling and packaging, the assembled goods of headings 6103, 6104, 6203, or 6204 do not undergo a change in tariff classification in Canada.

Additionally, under 19 CFR 102.17, a foreign material shall not be considered to have undergone the applicable change in tariff classification set out in 19 CFR 102.21, or satisfy the other applicable requirements of that section by reason of:

(c) Simple packing, repacking or retail packaging without more than minor processing;

In this instance, in accordance with the clear wording of the above quoted Customs and Border Protection (CBP) regulation, the garments made in China and only subjected in Canada to labeling, simple packing, repacking or retail packaging without more than minor processing will remain products of China. See HQ 561326 dated April 26, 1999. Accordingly, pursuant to 19 U.S.C. 1304, the garments must be legibly, conspicuously, and permanently marked to indicate that their country of origin is China.

However, the non-qualifying operations listed in section 102.17 are applicable only in determining the country of origin of an imported good under Part 102. Section 102.17 is not applicable in determining whether an imported apparel article is entitled to preferential treatment under the North America Free Trade Agreement (NAFTA) pursuant to General Note 12 (GN 12) of the Harmonized Tariff Schedule of the United States (HTSUS).

In cases where non-originating materials are used to produce a good in a NAFTA country, such as Canada, in order to qualify for the NAFTA preferential treatment, the non-originating material, under applicable provisions of GN 12, HTSUS, (19 U.S.C. § 1202), and the NAFTA Rules of Origin Regulations (ROR) (19 C.F.R. Part 181, App.) must: undergo a change in tariff classification; undergo an applicable change in tariff classification and meet regional value content requirements; or simply meet regional value content requirements, as applicable to the specific situation. See GN 12(b), HTSUS (19 U.S.C. § 1202), and 19 CFR part 181, app. § 4(2)(a) – (c). GN 12(b) states, in pertinent part, that:

For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as “goods originating in the territory of a NAFTA party” only if –

(ii) they have been transformed in the territory of Canada, Mexico, and/or the United States so that –

(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or

(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note.

In other words, in order to determine whether garments are eligible for the duty preference under NAFTA, it is necessary to obtain the proper tariff classifications of the garments coming into and going out of Canada before they enter the United States to see if the requisite tariff shift under GN 12, HTSUS, has occurred in Canada. In this case, based on your description, we know that finished garments will be going into Canada and that finished garments will be coming out of Canada. Therefore, as a result of the processing done in Canada, the garments will not undergo a change in tariff classification. Thus, they will not be eligible for the duty preference under NAFTA.

Although the garments will be imported from Canada, since they are of Chinese origin rather than of Canadian origin, they could be subject to the safeguards on textiles and apparel products imported from China. We suggest that you refer to the web site “http://otexa.ita.doc.gov” for information regarding safeguards on imports of Chinese textile and apparel products to the United States.

HOLDING:

The country of origin of the garments produced in China that are imported into Canada for repackaging and labeling before being imported into the United States will be China.

Sincerely,

Gail A. Hamill, Chief
Tariff Classification and Marking Branch

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