CLA-2 RR:CR:TE 964907 mbg
Allan H. Kamnitz, Esq.
Sharretts, Paley, Carter & Blauvelt
75 Broad Street
New York, NY 10004
RE: U.S.-Caribbean Basin Trade Partnership Act; woman’s coat with lining
Dear Mr. Kamnitz:
This is in response to your letter dated March 12, 2001, on behalf of your client, Fleet Street Ltd., requesting a binding ruling on the eligibility of a woman’s coat with a lining for preferential tariff treatment under the United States-Caribbean Basin Trade Partnership Act (“CBTPA”). You submitted a sample for our examination.
The subject merchandise is a women’s coat, style 500847, which is manufactured in the Dominican Republic. The shell of the garment is composed of wool fabric wholly formed in the United States from yarns wholly formed in the United States. The inside lining is composed of man-made fibers and is manufactured in an Asian country from foreign fibers and yarns. The garment features a hood, four button closure, two large outer patch pockets with flaps and two side slit pockets located above the patch pockets.
Whether the subject merchandise is eligible for preferential tariff treatment under the CBTPA?
LAW AND ANALYSIS:
Title II of the Trade and Development Act of 2000, (Pub. L. 106-200, 114 Stat. 251), concerns trade benefits for the Caribbean Basin and is referred to as the United States-Caribbean Basin Trade Partnership Act ("CBTPA"). Section 211 of the CBTPA amended section 213 (b) of the Caribbean Basin Economic Recovery Act (CBERA) (19 U.S.C. 2703(b)) to provide expanded trade benefits during a “transition period” to designated countries in the Caribbean Basin.
Section 211 of the CBTPA eliminates tariffs and quantitative restrictions on specific textile and apparel articles and extends North American Free Trade Agreement duty treatment standards to non-textile articles that previously were ineligible for preferential treatment under the CBERA. “Transition period” is defined in 19 U.S.C. 2703(b)(5)(D) as meaning, with respect to a designated CBTPA country, the period that begins on October 1, 2000, and ends on the earlier of September 30, 2008, or the date on which a free trade agreement enters into force with respect to the U.S. and the CBTPA country.
Presidential Proclamation 7351, dated October 2, 2000, published in the Federal Register on October 4, 2000 (65 Fed. Reg. 59329), implemented the CBTPA by designating the eligible CBTPA countries and amending Chapter 98, HTSUS (including the creation of new subchapter XX) to facilitate the entry of the specific textile and apparel articles eligible for preferential treatment under the CBTPA.
The enhanced trade benefits provided by the CBTPA are available to eligible articles imported directly from a country (1) that is designated as a CBTPA beneficiary country and (2) which the U.S. Trade Representative (“USTR”) has determined has implemented and follows, or is making substantial progress toward implementing and following certain customs procedures that allow U.S. Customs to verify the origin of the articles. Dominican Republic is designated as a CBTPA beneficiary country (see Presidential Proclamation 7351, dated October 2, 2000, 65 Fed. Reg. 59329) and has satisfied the second criterion (see 65 Fed. Reg. 60236, dated October 10, 2000).
In addition, Interim Customs Regulations to implement the trade benefit provisions of section 211 of the CBTPA were published in the Federal Register as T.D. 00-68 on October 5, 2000 (65 Fed. Reg. 59650). The T.D. invited public comments to be submitted on the Interim Regulations by December 4, 2000.
Certain textile articles are designated eligible for preferential tariff treatment within subheading 9820.11.06, HTSUSA, as provided for in Subchapter XX, U.S. Note 2(a), HTSUSA, which provides:
Except as provided in this note, textile and apparel articles described in subheading 9820.11.03 through 9820.11.30, inclusive, of this subchapter that are imported directly into the custom territory of the United States from a designated beneficiary CBTPA country enumerated in general note 17(a) to the tariff schedule shall be eligible to enter free of duty and free of any quantitative limitations, except as provided in this subchapter, under the terms of the provisions set forth in such subheadings and applicable legal notes, as indicated by the rate of duty of “Free” in the Special rates of duty subcolumn for such provisions.
The relevant apparel provision, is set forth in 9820.11.06, HTSUSA, which provides that preferential treatment shall apply to:
Apparel articles cut in one or more such countries from fabric wholly formed in the United States from yarns wholly formed in the United States (including fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 and are wholly formed in the United States), if such articles are assembled in one or more such countries with thread formed in the Untied States.
In regard to the facts of this case, the woolen outer shell of the subject women’s coat which is said to be cut and assembled in the Dominican Republic from fabrics produced in the United States from yarns produced in the United States would appear to meet the requirements for preferential treatment under the CBTPA. However, the women’s coat also contains an inner lining manufactured of man-made fibers in an Asian country from foreign fibers and yarns. The issue for determining the eligibility of the subject women’s coat for preferential treatment under the CBTPA depends upon whether the foreign lining can be allowed under the de minimus rule.
The relevant provision, is set forth in 19 U.S.C. 2703(b)(2)(A)(vii)(III), which provides:
An article that would otherwise be ineligible for preferential treatment under this paragraph because the article contains fibers or yarns not wholly formed in the United States or in one or more CBTPA beneficiary countries shall not be ineligible for such treatment if the total weight of all such fibers or yarns is not more than 7 percent of the total weight of the good. Notwithstanding the preceding sentence, an apparel article containing elastomeric yarns shall be eligible for preferential treatment under this paragraph only if such yarns are wholly formed in the United States.
See also U.S. Note 3(a)(iii), Subchapter XX, Chapter 98, HTSUSA, which provides:
An article otherwise eligible for preferential treatment under any provision of this subchapter shall not be ineligible for such treatment because the article contains fibers or yarns not wholly formed in the United States or in one or more designated beneficiary countries enumerated in general note 17(a) to the tariff schedule, provided that the total weight of all such fibers and yarns is not more than 7 percent of the total weight of the article.
Notwithstanding subdivision (iii) above, an apparel article containing elastomeric yarns shall be eligible for preferential tariff treatment under this note only if such yarns are wholly formed in the United States.
Your submission questions the scope of the application of this de minimis rule to the inner fabric lining of foreign origin used in the subject women’s coat. In your submission you claim that, “We believe that reliance upon the interpretation of the NAFTA de minimis rule is totally inapplicable as that rule was crafted to only apply to foreign fibers and yarns, while CBTPA has no such limitation.” The definition of de minimis upon which U.S. Customs relied in drafting the interim regulations is directly based upon the wording of the CBTPA legislation itself.
As set forth by Congress and provided in the CBTPA legislation, (Title II, Subtitle B, Section 211, (b)(2)(A)(vii)(III)), the de minimis rule is specifically structured to utilize “the total weight of all such fibers or yarns.” (H.R. 434-30, 31, 106th Cong. § 2 (2000)).
The legislation specifically refers to the total weight of foreign fibers and yarns rather than the total weight of foreign fabrics for the de minimus rule. Therefore, in drafting the implementing regulations, Customs relied upon the plain wording of the legislation and used the total weight of the foreign fibers and yarns for the de minimis rule. The lining for the women’s coat is of Asian origin and therefore not allowed under the CBTPA since this special rule is limited to fibers and yarns and cannot be extended to fabric.
The application of the de minimis rule to the subject merchandise would not make the garment eligible for CBTPA preferential treatment. Congress intended for the provisions of the CBTPA to ensure that the processes essential for yarn or thread or fabric formation are performed in the United States or CBTPA beneficiary countries. There is no provision that provides for linings of foreign origin. Therefore, the subject wool coat would not be eligible for preferential treatment under the CBTPA because the lining is made of foreign fabric.
The subject coat is ineligible for preferential treatment under the CBTPA due to the inclusion of the foreign made lining which is excluded from the de minimis provision.
The subject merchandise is classified in subheading 6202.11.0010, HTSUSA, which provides for “Women’s or girls’ overcoats, carcoats, capes, cloaks, anoraks (including ski-jackets), windbreakers and similar articles (including padded, sleeveless jackets), other than those of heading 6204: Overcoats, carcoats, capes, cloaks and similar coats: Of wool or fine animal hair: Women’s.” The general column one rate of duty is 42.1 cents per kilogram plus 17.2 percent ad valorem. The textile category number is 435.
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.
The designated textile and apparel category may be subdivided into parts. If so, visa and quota requirements applicable to subject merchandise may be affected. Since part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes, to obtain the most current information available, we suggest that you check, close to time of shipment, The Status Report on Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service, which is available for inspection at your local Customs office.
Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (quota/visa) categories, you should contact your local Customs office prior to importation of this merchandise to determine the current status of any import restraints or requirements.
John Durant, Director
Commercial Rulings Division