CLA-2 RR:CR:SM 562612 KKV
Arthur W. Bodek, Esq.
Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt LLP
245 Park Avenue, 33rd Floor
New York, NY 10167-3397
RE: Eligibility of girls’ woven pants for preferential tariff treatment under the African Growth and Opportunity Act; subheading 9819.11.12; fabric components cut in China
Dear Mr. Bodek:
This is in response to your letter dated December 19, 2002, on behalf of H.I.S. International, which requests a binding ruling regarding the eligibility of certain girl’s woven pants for duty-free treatment under the African Growth and Opportunity Act (“AGOA”). No sample garment was submitted for our examination.
FACTS:
The article at issue is described as girls’ woven trousers. We are informed that the fabric of Chinese origin will be cut into components in China and assembled together with other components into finished garments in a designated lesser-developed AGOA country. No information was received regarding the country of origin of such other components. Therefore, for purposes of this ruling we assume that the origin of these components will not preclude the trousers from receiving preferential treatment under AGOA (e.g., the value of any foreign-origin findings and trimmings will not exceed 25% of the cost of the components of the assembled article.)
ISSUE:
Whether the subject apparel articles manufactured as described above are eligible for preferential treatment under AGOA.
LAW AND ANALYSIS:
Title I of the Trade and Development Act of 2000, Pub. L 106-200, 114 Stat. 251, May 18, 2000, referred to as the African Growth and Opportunity Act (“AGOA”), seeks to promote trade opportunities between the U.S. and the countries of sub-Saharan Africa. The AGOA provides for the extension of duty-free treatment under the Generalized System of Preferences (GSP) to non-textile articles normally excluded from GSP duty-free treatment that are not import sensitive and the entry of specific textile and apparel articles free of duty and quota. In order to implement the AGOA, Customs issued Interim Regulations in Treasury Decision (T.D.) 00-67, 65 Fed. Reg. 59668, which became effective October 1, 2000. With regard to the textile and apparel provisions, the law became effective on October 1, 2000, and shall remain in effect through September 30, 2008. See Sec. 112(f), AGOA.
The enhanced trade benefits provided by the AGOA are available to eligible textile and apparel articles imported directly from a country (1) that is designated as a beneficiary sub-Saharan African country and (2) which the U.S. Trade Representative (“USTR”) has determined by a proclamation published in the Federal Register has satisfied the requirements of the AGOA and therefore should be afforded the tariff treatment authorized in such Act. Such countries shall be enumerated in U.S. Note 1, Subchapter XIX, Chapter 98, HTSUS, whenever the USTR issues a Federal Register notice as described herein. See Presidential Proclamation 7350, Annex, dated October 2, 2000, 65 Fed. Reg. 59321. A special rule for sub-Saharan African countries is set forth in 19 U.S.C. 3721(b)(3)(B), as amended by section 3108(a)(3)(B) of the Trade Act of 2002, which provides as follows:
(3) APPAREL ARTICLES ASSEMBLED FROM REGIONAL AND OTHER FABRIC. - 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 classifiable under heading 5602 or 5603 of the Harmonized Tariff Schedule of the United States and are wholly formed and cut in one or more beneficiary sub-Saharan African countries), or from components knit-to-shape in one or
more benefiicary 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:
SPECIAL RULE FOR LESSER DEVELOPED COUNTRIES
(i) 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.
Such articles are entered under subheading 9819.11.12, HTSUS, which provides as follows:
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, regardless of the country of origin of the fabric or 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…
U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS, provides for a quantitative restriction for apparel articles classified in subheading 9819.11.12.
In support of its position that the girls’ woven trousers at issue in this case would be eligible for preferential tariff treatment, counsel asserts that because other AGOA provisions explicitly require that cutting occur in an AGOA beneficiary country and this provision does not, the classification of
merchandise in subheading 9819.11.12, HTSUS does not require cutting of components in an AGOA LDC.
Examining the language of the statute, we note that preferential treatment under this provision is extended “regardless of the country of origin of the fabric or the yarn used to make such articles.” Emphasis added. See 19 U.S.C. 3721(b)(3)(B)(I), as amended by section 3108(a)(3)(B) of the Trade Act of 2002. Thus, while the provision allows for the use of foreign fabric and yarn in the production of apparel articles, it does not sanction the use of textile components cut from foreign fabric. See Headquarters Ruling Letter (HRL) 966121, dated February 21, 2003.
In HRL 965951, dated January 15, 2003, Customs found that while subparagraph (b)(3)(B)(i) of section 3721 states that the country of origin of the fabric is not relevant and that the apparel article must be wholly assembled in a lesser developed beneficiary country or countries, the provision cannot be read in isolation. Instead, Customs stated, “[t]he intent of Congress may only be understood when subparagraph (b)(3)(B)(i) is read in conjunction with all of paragraph (b)(3)” and noted that paragraph (b)(3), including subparagraph (b)(3)(B)(i), is silent as to the origin requirement for garment components.
With regard to the legislative intent behind the passage of the Act, Customs stated that Congress:
… in section 102 of the Act specifically acknowledged the value of promoting “stable and sustainable economic growth and development,” as well as encouraging “direct investment” in the region. 19 U.S.C. 3701(1) and (9). Since the AGOA I expressly authorizes the use of fabric
without regard to the country of origin of the fabric, but is silent as to an origin requirement for garment components, Customs concludes for the purposes of subparagraph (b)(3)(B)(i) that garment components must be from a lesser developed beneficiary sub-Saharan African country or countries.
Such a determination, Customs held in HRL 965961, supra, is supported by a reading of the language of subparagraph (b)(3)(B)(i), as amended by AGOA II to provide that the special benefits of this provision are:
…[O]nly available for apparel articles wholly assembled, or knit-to-shape and wholly assembled, or both.
(Emphasis added). Paragraph (b)(3), as amended in AGOA II, provides that apparel components must be manufactured in a beneficiary country. Interpreting AGOA II, section 3721 (b)(3), in conjunction with section 3721 (b)(3)(B)(i), the special rule for lesser developed countries is available only for apparel the components of which are manufactured in one or more lesser developed beneficiary countries.
Therefore, based on the foregoing analysis it is our determination that girls’ woven pants wholly assembled in an AGOA LDC from fabric of Chinese origin cut into textile components in China would not be eligible for preferential tariff treatment under subheading 9819.11.12, HTSUS
HOLDING:
Girls’ woven pants wholly assembled in an AGOA LDC from fabric of Chinese origin cut into textile components in China are not be eligible for preferential tariff treatment under subheading 9819.11.12, HTSUS.
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
Commercial Rulings Division