OT:RR:NC:N2:349
Mr. Harry Yao
Down Home LLC
402 Maxwell Avenue Greenwood, SC 29646
RE: Country of origin and status under the United States-Israel Free Trade Area Implementation Act (IFTA Act) determination for sheet sets; Qualifying Industrial Zone (QIZ); General Note 3(a)(v); 19 CFR 102.21(c)(2); 19 CFR 102.21(e)(2)(ii); tariff shift
Dear Mr. Yao:
This is in reply to your letter dated November 4, 2024, requesting a country of origin and status under the United States-Israel Free Trade Area Implementation Act of 1985 (IFTA Act) determination for sheet sets, which will be imported into the United States.
FACTS:
The subject merchandise consists of sheet sets made from 100 percent polyester microfiber, dyed, woven fabric. The sets will be available in Twin/XL, Full, Queen and King sizes and will consist of a flat sheet, a fitted sheet and two standard pillowcases with the exception of the Twin/XL sets which will have one pillowcase. Each set will be imported in a self-fabric bag.
The manufacturing operations for the sheet sets are as follows:
China:
Fabric is woven and dyed.
Fabric is exported to Egypt.
Egypt:
Fabric is cut and sewn into flat sheets, fitted sheets, pillowcases and self-fabric packaging.
Sheet sets are inspected, packed and exported to the United States.
The manufacturing facility in Egypt is identified as Nile Linen Group located in El Ameria Public Free Zone in the Alexandria Qualified Industrial Zone (QIZ).
ISSUE:
What is the country of origin of the subject merchandise and is it eligible for duty-free entry under the United States-Israel Free Trade Area Implementation Act of 1985?
COUNTRY OF ORIGIN - LAW AND ANALYSIS:
You have indicated that the processing operations in Egypt will be performed in the Alexandria QIZ. General Note 3(a)(v)(G), Harmonized Tariff Schedule of the United States (HTSUS), defines a “qualifying industrial zone” as any area that: “(1) encompasses portions of the territory of Israel and Jordan or Israel and Egypt; (2) has been designated by local authorities as an enclave where merchandise may enter without payment of duty or excise taxes; and (3) has been designated by the U.S. Trade representative in a notice published in the Federal Register as a qualifying industrial zone.”
On December 29, 2004, notice was published by the Office of the United States Trade Representative (USTR) in the Federal Register (69 Fed. Reg. 78094), announcing the designation of the Greater Cairo zone, Alexandria zone, and Suez Canal zone as qualifying industrial zones under sections 9(e)(1) and (2) of the United States – Israel Free Trade Area Implementation Act of 1985. The notice states that “[t]he names and locations of the factories comprising these three zones are specified on maps and materials submitted by Egypt and Israel and on file with the Office of the U.S. Trade Representative.” On March 12, 2013, notice was published by the USTR in the Federal Register (78 Fed. Reg. 15802), modifying the designation of previously designated QIZs, including the Alexandria zone, to provide that “all present and future facilities in the named zones are potentially able to export goods duty-free to the United States.” The modification clarifies and, in some cases, adjusts the geographic boundaries of the QIZs. The names of factories within designated zones are available on the Egyptian Ministry of Trade and Industry QIZ web site, http://www.qizegypt.gov.eg/Page/QualifiedCompanies. We note that the named manufacturer is listed as a company operating in Ameria Free Zone in the Alexandria QIZ.
The Governments of Israel and Egypt agree that the origin of any textile or apparel product processed in a QIZ, regardless of the origin or place of processing of any of its inputs or materials prior to entry into, or subsequent withdrawal from, the zone, will be determined solely pursuant to the rules of origin for textile and apparel products set out in Section 334 of Uruguay Rounds Act (“URAA”), 19 U.S.C. §3592.
Section 334 of the URAA (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provides the rules of origin for textiles and apparel products for purposes of the customs laws and the administration of quantitative restrictions, unless otherwise provided by the statute, entered, or withdrawn from warehouse, for consumption on or after July 1, 1996. Section 3592 has been described as Congress’s expression of substantial transformation as it relates to textile and apparel products. Section 102.21 of the Code of Federal Regulations (19 C.F.R. 102.21), implements the URAA. The country of origin of a textile or apparel product shall be determined by the sequential application of the general rules set forth in paragraphs (c)(1) through (5) of section 102.21. See 19 C.F.R. 102.21(c).
Paragraph (c)(1) states, “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.” As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, the country of origin cannot be determined pursuant to paragraph (c)(1) of Section 102.21.
Paragraph (c)(2) states, “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 of the foreign materials 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:” The sheets and pillowcases are classified under subheading 6302.32, HTSUS.
Paragraph (e) in pertinent part states,
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:
HTSUS
Tariff shift and/or other requirements
6301-6306
Except for goods of heading 6302 through 6304 provided for in paragraph (e)(2) of this section, the country of origin of a good classifiable under heading 6301 through 6306 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.
The regulations, specifically 19 C.F.R. 102.21(b)(2), define a “fabric-making process” as “any manufacturing operation that begins with polymers, fibers, filaments (including strips), yarns, twine, cordage, rope, or fabric strips and results in a textile fabric.” Subheading 6302.32 is not included in the paragraph (e)(2) exception to the above tariff shift rule. As the fabric comprising the sheets and pillowcases is formed in a single country, that is, China, by a “fabric-making process,” as defined in 19 C.F.R. 102.21(b)(2), the country of origin is conferred in China.
STATUS UNDER THE UNITED STATES-ISRAEL FREE TRADE AREA IMPLEMENTATION ACT
Pursuant to the authority conferred by section 9 of the IFTA Act (19 U.S.C. 2112 note), the President issued Proclamation No. 6955 dated November 13, 1996 (published in the Federal Register on November 18, 1996 (61 Fed. Reg. 58761)), which modified the HTSUS by creating a new General Note 3(a)(v) to provide duty-free treatment to articles which are the product of the West Bank, Gaza Strip or a qualifying industrial zone, provided certain requirements are met. Such treatment was effective for products of the West Bank, Gaza Strip or a qualifying industrial zone entered or withdrawn from warehouse for consumption on or after November 21, 1996. Under General Note 3(a)(v), HTSUS, articles that are products of the West Bank, Gaza Strip, or qualifying industrial zone which are imported directly to the U.S. from the West Bank, Gaza Strip, a qualifying industrial zone or Israel qualify for duty-free treatment, provided the sum of 1) the cost or value of materials produced in the West Bank, Gaza Strip, a qualifying industrial zone or Israel, plus (2) the direct costs of processing operations performed in the West Bank, Gaza Strip, a qualifying industrial zone or Israel, is not less than 35% of the appraised value of such articles when imported into the U.S. An article is considered to be a product of the West Bank, Gaza Strip or a qualifying industrial zone if it is either wholly the growth, product or manufacture of one of those areas or a new and different article of commerce that has been grown, produced or manufactured in one of those areas.
Based upon the above production information provided, the sheets have been processed in an Egyptian QIZ; however, the sheets have been determined to be products of China under the applicable rules of origin for textiles. Therefore, these sheets do not qualify for preferential treatment under the IFTA Act.
HOLDING:
The country of origin of the sheet sets is China. They are not eligible for preferential treatment under the IFTA Act.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (C.F.R.), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 C.F.R. 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, please contact National Import Specialist Kim Wachtel at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division