OT:RR:CTF:VS: H325879 JMV
705 W 1st Avenue
Spokane, WA 99201
RE: United States Mexico Canada Agreement; Fiber Glass Cloth
Dear Mr. Magner,
This is in response to your request, received June 8, 2022, filed on behalf of Pyrotek Inc. ("Pyrotek"). In your letter, you request a binding ruling regarding whether fiberglass cloth ("glasscloth") imported from Canada is eligible for preferential tariff treatment under the United States-Mexico-Canada Agreement ("USMCA"). You also requested a ruling on the proper tariff classification of the glasscloth. Your request, submitted as an electronic ruling request, was forwarded to this office from the National Commodity Specialist Division for response.
At issue is the tariff classification of "glasscloth," which is distributed to customers for molten aluminum filtration. The primary function is to remove impurities from aluminum to improve cast quality. Pyrotek is also requesting duty free treatment of their glasscloth under the United States-Mexico-Canada Agreement ("USMCA").
Pyrotek Canada imports Latvian fiberglass yarn into Canada. Pyrotek states that the yarn as imported into Canada is classified under subheading 7019.13 of the Harmonized Tariff Schedule of the United States ("HTSUS"). Pyrotek states the raw material of the yarn is alkali free alumina borosilicate E-glass with a maximum alkali content of 1.0%. The yarn usually consists of 400-1,600 whole glass fiber threads with a filament diameter of 6, 9, 11, or 13 microns and does not consist of any polymers. The yarn is also less than 136 tex.
In Canada, the yarn is placed on spools (bobbins), then woven into an open fiberglass fabric on industrial looms. The woven fiberglass fabric is cut to size, at least 30 cm wide, and then imported into the United States. Pyrotek states that the weight of the glasscloth as imported into the United States is greater than 250 grams/square meter.
1. What is the tariff classification of the glasscloth?
2. Whether the fiberglass cloth is eligible for preferential tariff treatment under the USMCA when it is imported from Canada into the United States.
LAW AND ANALYSIS:
Classification under the HTSUS is determined in accordance with the General Rules of Interpretation ("GRI") and, in the absence of special language or context which otherwise requires, by the Additional U.S. Rules of Interpretation ("ARI"). GRI 1 provides that the classification of goods shall be "determined according to the terms of the headings and any relative section or chapter notes." In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, GRIs 2 through 6 may be applied in order.
The following headings and subheadings of the HTSUS are under consideration in this case:
7019 Glass fibers (including glass wool) and articles thereof (for example, yarn, woven fabrics):
7019.12 Slivers, rovings, yarn and chopped strands and mats thereof: Rovings
7019.66 Mechanically bonded: Open woven fabrics of a width exceeding 30 cm: Plain weave, weighing less than 250 g/m2, of filaments measuring per single yarn not more than 136 tex:
7019.69 Mechanically bonded fabrics: Other: Not colored:
7019.69.40.21 Weighing more than 215 grams per square meter, with a filament diameter of 7 to 13 microns
In addition, in interpreting the HTSUS, the Explanatory Notes ("ENs") of the Harmonized Commodity Description and Coding System may be utilized. The ENs to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The EN for heading 7019 defines mechanical binding of fiberglass fiber to include weaving processes via "Weaving machines, or looms, interlace the warp fibres (lengthwise direction) and filling fibres (weft) according to various weave patterns (plain weave, leno weave, etc.) to form a closed or open fabric structure."
The EN for subheading 7019.12 states that a glass roving is "a collection of parallel strands (assembled or multi-end roving) or parallel filaments (direct or single-end roving) assembled without intentional twist from glass fibre cakes . . . and usually without a cardboard tube."
The EN for subheading 7019.66 states:
Open woven fabrics having a regular "open" structure, for example in the shape of circles, ovals, rectangles (including squares), equilateral triangles or regular convex polygons. These woven fabrics are more than 30 cm wide and are usually used as reinforcement for facades in external thermal insulation composite systems, for marbles and mosaics, for gypsum boards, walls, and floors.
. . .
Open mesh fabrics with a special resistant or silica glass coating are usually used for high temperature filtration or grinding wheel reinforcement.
Here, the glasscloth is woven into an open cloth on industrial looms; therefore, it qualifies as a woven fabric under either subheading 7019.66, or 7019.69, HTSUS, depending on its weight being under or over 250 grams per square meter. Additionally, it is used as a filtration device for molten aluminum and therefore qualifies as used "for high temperature filtration." Because it is also not colored and weighs more than 250 grams per square meter, we find that the glasscloth is classified by application of GRI 1 under 7019.69.40.21, HTSUSA when the filament used is either 9, 11, or 13 microns thick. However, when the filament used is 6 microns thick, 7019.69.40.96, HTSUSA is the proper tariff classification of the glasscloth.
The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. 4511(a)). General Note ("GN") 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(a)(i) provides:
Goods that originate in the territory of Mexico, Canada or the United States (hereinafter referred to as "USMCA country" or "USMCA countries" as further defined in subdivision (l)(xxiv) of this note) under the terms of subdivision (b) of this note and regulations issued by the Secretary of the Treasury (including Uniform Regulations provided for in the USMCA), and goods enumerated in subdivision (p) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn, followed by the symbol "S" in parentheses, are eligible for such duty rate, in accordance with section 202 of the United States-Mexico-Canada Agreement Implementation Act; and . . .
GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a "good originating in the territory of a USMCA country" only if-
i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
iii) the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or
Since the fiberglass cloth contains non-originating materials, it is not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and GN 11(b)(ii). Thus, we must next determine whether the fiberglass cloth qualifies under GN 11(b)(iii). The fiberglass cloth is classified in 7019.69, HTSUS, which provides, in pertinent part, for "glass fibers (including glass wool) and articles thereof (for example, yarn, woven fabrics)."
The applicable rule of origin for items classified under subheading 7019, HTSUS, is in GN 11(o)/70.10, HTSUS, which requires, "A change to heading 7019 from any other heading, except from headings 7007 through 7018 or 7020."
The fiberglass cloth contains a non-originating material classified in 7019.13, HTSUS, specifically, fiberglass thread, which does not meet the tariff shift rule. Therefore, the fiberglass cloth does not originate under the USMCA. However, Pyrotek states that when using the net cost method, the labor and warehouse costs outweigh the non-originating material cost, and therefore, the glasscloth should qualify under USMCA.
Under the USMCA, an imported good that does not meet the relevant tariff shift rule under the agreement may still qualify for preferential tariff treatment if the good meets the requirements of the de minimis exception. The de minimis exception provided for in GN 11(e)(i), HTSUS, states as follows:
(e) De minimis amounts of nonoriginating materials.
(i) In general.-Except as provided in subparagraphs (e)(ii) through (iv) below, a good that does not undergo a change in tariff classification or satisfy a regional value content requirement set forth in subdivision (o) of this note is an originating good if-
A) the value of all nonoriginating materials that are used in the production of the good, and do not undergo the applicable change in tariff classification set forth in subdivision (o) of this note-
1) does not exceed 10 percent of the transaction value of the good, adjusted to exclude any costs incurred in the international shipment of the good; or
2) does not exceed 10 percent of the total cost of the good;
. . .
To determine whether the warehouse costs should be included in the de minimis calculation, we turn to section 5 of the USMCA Rules of Origin Regulations, (19 C.F.R. Part 182. App), which provides further guidance on the applicability of GN 11(e)(i). Section 5(12) states that the calculation of total costs "consists of the costs referred to in subsection 1(6) and is calculated in accordance with that subsection and subsection 1(7)." Subsection 1(6)(a) states, "total cost consists of all product costs, period costs and other costs that are recorded, except as otherwise provided in subparagraphs (b)(i) and (ii), on the books of the producer without regard to the location of the persons to whom payments with respect to those costs are made." Therefore, if the warehousing costs are included on the books of the producer, they may be included in the calculation of non-originating material. However, even when including warehousing costs, the value of non-originating material is 35.2 percent. Therefore, the fiberglass cloth does not meet the de minimis exception and does not qualify for preferential tariff treatment under the USMCA.
By application of GRI 1, we find that the glasscloth is classified in heading 7016, HTSUS, and specifically in subheading 7019.69.40.21, HTSUS, which provides for "Mechanically bonded: Other not colored: Other: Weighing more than 215 grams per square meter, with a filament diameter of 7 to 13 microns" or 7019.69.40.96, HTSUS, which provides for "Mechanically bonded: Other: Not colored: Other: Other." The 2023 general, column one rate of duty for both subheadings is 7.3 percent.
Based on the information provided, the fiberglass fiber is not eligible for preferential tariff treatment under the USMCA when imported from Canada into the United States.
Please note that 19 C.F.R. 177.9(b)(1) provides that "[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by [CBP] field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based."
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 CBP officer handling the transaction.
Monika R. Brenner, Chief
Valuation and Special Programs Branch