 HQ 086549 |
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March 13, 1990
CLA-2 CO:R:C:G 086549 HP
CATEGORY: Classification
Ms. Grace Howe President Tego Limited 5959 Topanga Canyon Blvd.
Suite 380 Woodland Hills, CA 91367
RE: Country of origin of diapers. FTA; cotton; Free-Trade Agreement; Canada; cut and sewn
Dear Ms. Howe:
This is in reply to your letter of January 30, 1990, concern ing the country of origin of diapers, for duty purposes under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA ).
FACTS:
The merchandise at issue consists of 100% cotton babies' diapers. The following tables describe the manufacturing proces ses.
China Production Steps (CAD$ 2.915/dozen)
1.100% cotton cloth is woven.
2.The cloth is shipped to Canada on large rolls.
Canada Production Steps (CAD$ 3.2714/Dozen )
1.Two layers of fabric are placed onto the cutting table.
2.The fabric is cut to size (24" wide x 16" long").
3.The sides of the two layers of fabric are folded over (left:
4" right: 8").
4.The center panels are sewn using a straight sewing machine.
5.The sewn fabric is taken to a serging machine, where the top and bottom edges are trimmed and overedged.
6.The threads from all edges are trimmed, as a trailer thread of at least " is required.
7.The diaper is inspected.
8.The completed merchandise is packaged into cartons and shipped.
ISSUE:
Whether China or Canada is considered the country of origin for duty purposes under the HTSUSA?
LAW AND ANALYSIS:
General Note 3(c)(vii) to the HTSUSA embodies the Uni ted States-Canada Free-Trade Agreement of 1988. Subdivision (vi i)(A) provides that "[g]oods originating in ... Canada" and im ported into the United States may be subject to a distinct rate of duty set forth in the "Special" subcolumn of the Tariff Schedule.
For the purposes of this subdivision, General Note 3(c)(vii)(B) allows consideration of goods as "goods originating in the territory of Canada" if:
* * *
(2)they have been transformed in the ter ritory of Canada and/or the United States, so as to be subject--
(I)to a change in tariff class ification in Canada as des cribed in the rules of sub division (c)(vii)(R) of this note, or
(II)to such other requirements subdivision (c)(vii)(R) of this note may provide when no change in tariff classification oc curs, and they meet the other conditions set out in sub divisions (c)(vii) ... (G), (H), (J) and (R) of this note.
Assuming heading 6209, Section XI, HTSUSA, provides for the instant merchandise in its completed form, and heading 5208 prior to this, General Note 3(c)(vii)(R)(11) governs the change in tariff classification. Subdivision (R)(11) states, in pertinent part, that in order to be considered goods originating in the territory of Canada, merchandise must undergo
(oo)A change to any heading of chapter 62 from any heading outside that chapter other than headings * * * 5204 through 5212
* * *
(qq)Notwithstanding rules (nn) and (oo), apparel goods provided for in chapters 61 and 62 that are both cut and sewn in * * * Canada [ (emphasis added) ] * * * from fabric produced or obtained in a third country, and that meet other applicable conditions for preferred tariff treatment under subdivision (c)(vii) of this note, shall be subject to the rate of duty provided in the "Special" subcolumn for goods that originate in Canada, in the annual quantities set forth below, and shall, above those quantities for the remainder of the annual period, be sub ject to duty at the rates provided for in the "General" subcolumn of column 1:
Non-wool apparel 41,805,000 square meters Wool apparel 5,016,600 square meters
HOLDING:
Our analysis of the other applicable conditions for pre ferred tariff treatment under subdivision (c)(vii) of the Free- Trade Agreement establishes that the instant merchandise, in its completed form, is considered, for duty purposes under the HTSUSA, goods originating in Canada.
Sincerely,
John Durant, Director Commercial Rulings Division