African Growth and Opportunity Act; Woven Cotton Trousers; Scrub Sets; Lesser Developed Country Status; Ghana

HQ 965833 September 13, 2002 CLA-2 RR:CR:TE 965833 JFS CATEGORY: Classification TARIFF NO.: 9819.11.12 Mr. Milad F. Millet Agridotcom Limited P.O. Box 439 Accra, Ghana RE: African Growth and Opportunity Act; Woven Cotton Trousers; Scrub Sets; Lesser Developed Country Status; Ghana Dear Mr. Millet: This is in response to your letter dated August 19, 2002, requesting a binding ruling on the eligibility of a pair of man’s trousers and a scrub set for preferential treatment under the African Growth and Opportunity Act (“AGOA”). FACTS: You submitted two articles for consideration. The first article is a pair of trousers manufactured from black denim. You state that the denim fabric, the pocketing fabric and the trimmings such as zippers, buttons and labels will all be sourced from Asia. The second article is a scrub set (shirt and pants) manufactured from woven cotton fabric. You state that the fabric and trimmings will be sourced from Asia. For the purposes of this ruling, Customs will infer that cutting, sewing and assembly of the garments will occur in Ghana. ISSUE: Whether the subject apparel articles are eligible for preferential treatment under AGOA? LAW AND ANALYSIS: Title I of the Trade and Development Act of 2000, Pub. L 106-200, 114 Stat. 251, May 18, 2000, referred to as the African Growth and Opportunity Act (“AGOA”), seeks to promote trade opportunities between the U.S. and the countries of sub-Saharan Africa. The AGOA provides for the extension of duty-free treatment under the GSP to non-textile articles normally excluded from GSP duty-free treatment that are not import sensitive; and the entry of specific textile and apparel articles free of duty. In order to implement the AGOA, Customs issued Interim Regulations in T.D. 00-67, 65 Fed. Reg. 59668, which became effective October 1, 2000. With regard to the textile and apparel provisions, the law became effective on October 1, 2000, and shall remain in effect through September 30, 2008. See Sec. 112(f), AGOA. The enhanced trade benefits provided by the AGOA are available to eligible textile and apparel articles imported directly from a country (1) that is designated as a beneficiary sub-Saharan African country and (2) which the U.S. Trade Representative (“USTR”) has determined by a proclamation published in the Federal Register has satisfied the requirements of the AGOA and therefore should be afforded the tariff treatment authorized in such Act. Such countries shall be enumerated in U.S. Note 1, Subchapter XIX, Chapter 98, HTSUS, whenever the USTR issues a Federal Register notice as described herein. See Presidential Proclamation 7350, Annex, dated October 2, 2000, 65 Fed. Reg. 59321. Ghana was designated as a beneficiary sub-Saharan African country under AGOA by Presidential Proclamation 7350. The USTR issued a determination finding that Ghana has adopted an effective visa system and related procedures to prevent unlawful transshipment and the use of counterfeit documents in connection with shipments of textile and apparel articles and has implemented and follows, or is making substantial progress toward implementing and following, the customs procedures required by the AGOA, effective March 20, 2001. See 67 Fed. Reg. 14761, dated March 27, 2002. Apparel articles wholly assembled in a lesser developed country and directly imported into the U.S. are entitled to duty free status, subject to certain restrictions. Subheading 9819.11.12, HTSUS, provides as follows: Apparel articles wholly assembled in a lesser developed such country enumerated in U.S. note 2(d) to this subchapter, subject to the provisions of U.S. note 2 to this subchapter, if entered during the period beginning on the date announced in a Federal Register notice issued by the United States Trade Representative and continuing through September 30, 2004, inclusive U.S. Note 2(d) lists Ghana as qualifying for designation as a lesser developed beneficiary country. U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS, provides for a quantitative restriction for apparel articles classified in subheading 9819.11.12. In this case, fabric will be wholly formed in Asia and cut and wholly assembled into apparel articles in Ghana. Accordingly, the garments will be entitled to be classified in subheading 9819.11.12, HTSUS, subject to the quantitative limits set forth in U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS. II. Findings & Trimmings Requirements Subchapter XIX, U.S. Note 3(a), HTSUSA, provides: An article otherwise eligible for preferential treatment under any provision of this subchapter shall not be ineligible for such treatment because the article contains— (i) findings or trimmings of foreign origin, if the value of such findings and trimmings does not exceed 25 percent of the cost of the components of the assembled article[.] The Interim Regulations, regarding findings and trimmings further provide: An article otherwise described under paragraph (a) of this section will not be ineligible for the preferential treatment referred to in [19 C.F.R.] § 10.211 because the article contains: (i) Findings and trimmings of foreign origin, if the value of those findings and trimmings does not exceed 25 percent of the cost of the components of the assembled article. For the purposes of this section “findings and trimmings” include, but are not limited to, hooks and eyes, snaps, buttons, ‘bow buds’, decorative lace trim, elastic strips (but only if they are each less than 1 inch in width and are used in the production of brassieres), zippers (including zipper tapes), labels, and sewing thread except in the case of an article described in paragraph (a)(3) of this section. See 19 C.F.R. §10.213(b)(1)(i). The zippers, buttons and labels that you state are sourced from Asia are acceptable as findings and trimmings under the AGOA. Assuming the value of the findings and trimmings does not exceed 25 percent of the cost of the components of the assembled article, the subject garments will remain eligible for preferential treatment under the AGOA. HOLDING: The subject trousers and scrub set are eligible for preferential treatment under the AGOA and are appropriately entered under visa group 5 and preference group E. Provided the cost of the foreign findings and trimmings is less than 25 percent of the cost of the components of the assembled garments and the garments are wholly assembled in Ghana, the garments are eligible for duty free/quota free treatment under subheading 9819.11.12, HTSUSA. Duty free treatment is contingent upon the garments being imported directly into the customs territory of the U.S. from an AGOA beneficiary country. 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 Customs officer handling the transaction. Sincerely, Myles B. Harmon, Acting Director Commercial Rulings Division