HQ 083697
April 11 1989
CLA 2 CO:R:C:G 083697 SM 836247
TARIFF NO.:
Mr. C. Di Prinzio
A. N. Deringer, Inc.
30 West Service Road
Champlain, NY 12919 9703
RE: Dutiability of certain Dralon yarn under the U.S. Canada FTA
Dear Mr. Di Prinzio:
Your letter of January 25, 1989, on behalf of Garlock du Canada Limitee, addressed
to U.S. Customs in Champlain, New York, has been referred to this office for reply to the
question of eligibility for special rates of duty under the U.S. Canada Free Trade
Agreement (FTA).
FACTS:
The merchandise, a sample of which was submitted, is described as Style 1.5/2 Dralon Yarn W.R., Code 08418 5010, a multiple yarn containing 85 percent or more by weight of
acrylic or modacrylic staple fibers. You were sent a New York Ruling Letter, 836247 of February 14, 1989, which determined that the yarn is classified under subheading 5509.32.0000,
Harmonized Tariff Schedule of the United States Annotated (HTSUSA), a provision for yarn other than sewing thread, of synthetic staple fibers, not put up for retail sale, containing 85 percent or more by weight of synthetic staple fibers, multiple or cabled yarn.
You state that the raw material from which the yarn is made is acrylic staple fiber imported from Germany into Canada where it is spun into the two ply yarn by Garlock and exported to the United States. You state that the acrylic fiber is classified under subheading 5506.30.00 when imported into Canada.
ISSUE:
Does the yarn spun in Canada from German fiber qualify for special rates of duty under the U.S. Canada FTA when imported into the United States?
2
LAW AND ANALYSIS:
Goods originating in the territory of Canada that are imported into the customs territory of the United States and entered under a subheading for which a rate of duty appears in
the "Special" subcolumn followed by the symbol "CA" are eligible for the tariff treatment set forth in the "Special" subcolumn, in accordance with section 201 of the U.S. Canada FTA Implementation Act of 1988. The provisions of the FTA for determining whether goods originate in the territory of Canada are set out in General Note (GN) 3(c)(vii) of the HTSUSA.
Under GN 3(c)(vii)(B) goods are eligible for treatment as goods originating in the territory of Canada if, first, they are goods "wholly obtained or produced in the territory
of Canada and/or the United States." This phrase is defined in GN 3(c)(vii)(L). Since the yarn in question here is made from German origin staple fibers, it does not qualify under
this provision.
Goods are also considered to originate in the territory of Canada if they have been transformed in the territory of Canada and/or the United States so as to be subject to a
change in tariff classification in Canada as described in the rules of GN 3(c)(vii)(R). This subsection provides, at GN 3(c)(vii)(R)(11)(hh), that goods qualify as originating in the
territory of Canada if there is a change in classification to headings 5508 through 5516 from any heading outside that group. Since the acrylic staple fibers imported into Canada under heading 5506 undergo a change in classification to heading 5509 when spun into yarn in Canada, the yarn qualifies as goods originating in the territory of Canada and is eligible for FTA treatment. We assume from your letter that the yarn meets the additional requirements of being shipped from
Canada to the United States without having entered the commerce of any third country or having undergone any processing in any third country, within the meaning of GN 3(c)(vii)(E) and (F).
HOLDING:
The Dralon yarn, classified under subheading 5509.32.0000, HTSUSA, is subject to the 1989 Special "CA" rate of duty of 10.8 percent.
Sincerely,
John Durant, Director
Commercial Rulings Division