Eligibility of refined sugar for preferential tariff treatment under the DR-CAFTA; further production

HQ H076917 November 25, 2009 CLA-2 OT:RR:CTF:VS H076917 KSG CATEGORY: Classification Robert L. Morris, Jr. President Morris International, LLC 603 Ranch Road Laredo, TX 78045 Re: Eligibility of refined sugar for preferential tariff treatment under the DR-CAFTA; further production Dear Mr. Morris: This is in reply to your letter dated September 11, 2009, on behalf of your client, Crosswood Associates, Inc., concerning the eligibility of certain imported refined sugar for preferential tariff treatment under the Dominican Republic Central America United States Free Trade Agreement (“DR-CAFTA”). FACTS: Sugar cane is grown in Guatemala and processed into sugar. The sugar is packaged in bulk bags and shipped to Mexico. In Mexico, the sugar will be filtered to eliminate impurities and to achieve consistent grain size. The refined sugar will then be packaged into 50 pound bags, put on pallets and shipped to the U.S. ISSUE: Whether the imported refined sugar is considered an originating good pursuant to the DR-CAFTA? LAW AND ANALYSIS: The DR-CAFTA was signed on August 5, 2004, and includes as parties the United States, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Costa Rica. The provisions of the DR-CAFTA were adopted by the U.S. in the Dominican Republic Central America Free Trade Agreement Implementation Act, Public Law 109-53 (2005). General Note 29, of the Harmonized Tariff Schedule of the United States (“HTSUS”) sets forth the rules of origin for the DR-CAFTA. Interim regulations for the DR-CAFTA are set forth in 73 FR 33673, dated June 13, 2008, and are found at 19 CFR 10.581 et seq. As you note, GN 29(c)(iii) states that “A good that has undergone production necessary to qualify as an originating good under this note shall not be considered to be an originating good if, subsequent to that production, the good—(A) undergoes further production or any other operation outside the territories of the parties to the Agreement, other than unloading, reloading or any other operation necessary to preserve the good in good condition or to transport the good to the territory of a party to the Agreement; or (B) does not remain under the control of customs authorities in the territory of a country other than a party to the Agreement. In addition, this requirement is stated in 19 CFR 10.604. In this case, the imported good, is shipped to Mexico, which is not a party to the DR-CAFTA. In Mexico, the sugar is filtered. We find that this processing is considered further production outside the territories of the Parties. The Mexican processing is not necessary to preserve the sugar in good condition. Therefore, pursuant to GN 29(c)(iii)(A) and 19 CFR 10.604(a), the imported sugar would not be considered an originating good under the DR-CAFTA . HOLDING: The imported sugar involved in this case undergoes further production in Mexico. Pursuant to GN 29(c)(iii)(A) and 19 CFR 10.604(a), the imported sugar would not be eligible for preferential tariff treatment under the DR-CAFTA. 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 official handling the transaction. Sincerely, Monika R. Brenner, Chief Valuation & Special Programs Branch