NAFTA Eligibility of Denim Jeans

HQ 956362 JULY 11, 1994 CLA-2 CO:R:C:T 956362 PR CATEGORY: Classification Ralph S. Newitter, Jr. Level Export Sales Corporation 1460 Broadway New York, New York 10036 RE: NAFTA Eligibility of Denim Jeans Dear Mr. Newitter: This is in reply to your letter of April 29, 1994, concerning the status of denim jeans under the North American Free Trade Agreement (NAFTA). Our ruling on the matter follows. FACTS: You state that United States grown cotton will be spun in the United States into yarn which will be woven in the United States into fabric. The fabric will be made in Mexico into jeans by cutting and sewing. ISSUE: The issue presented is whether garments wholly produced in NAFTA countries are qualifying goods under the NAFTA. LAW AND ANALYSIS: The NAFTA eliminates tariffs on most goods originating in Canada, Mexico, and the United States, over a maximum transition period of fifteen years. Generally, tariffs only will be eliminated on goods that "originate", as defined in Article 401, NAFTA. Article 401 states that a good is "originating" if (1) it is wholly obtained or produced in the NAFTA region; (2) it is produced in the NAFTA region wholly from originating materials; (3) each of the nonoriginating materials used in the production of the good undergoes the applicable tariff shift set out in Annex 401 and any other applicable requirements of that Annex; or (4) it is unassembled, or is classified with its parts, and does not meet the Annex 401 requirements but contains 60 percent regional value content using the transaction method (50 percent using the net cost method).  -2- HOLDING: Under the facts presented, the jeans are wholly produced in the NAFTA region. Accordingly, those jeans are qualifying goods for purposes of the NAFTA. There are no quantitative restrictions (e.g. quotas) applicable to the subject goods. Without samples, we are unable to determine the tariff classification or rate of duty applicable to the imported merchandise. Sincerely, John Durant, Director Commercial Rulings Division