The tariff classification and status under the North American Free Trade Agreement (NAFTA), of baby hats from Canada; Article 509

N119795 September 9, 2010 CLA-2-65:OT:RR:NC:TA:353 CATEGORY: Classification TARIFF NO.: 6505.90.6030, 6505.90.2030, 6505.90.3030 Ms. Margo Isbister Caliboo Hats Inc. 9075 Scurfield Drive NW Calgary, Alberta T3L 1L3 RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of baby hats from Canada; Article 509 Dear Ms. Isbister: In your letter dated August 19, 2010 you requested a ruling on the status of hats from Canada under the NAFTA. The merchandise is crocheted baby hats. There is a beanie-style hat and beret-style hat constructed of 100 percent acrylic, a beanie-style hat and sunhat-style hat constructed of 100 percent cotton, and a beanie-style hat constructed of 100 percent wool; all are hand crocheted. Various combinations of silk flowers, ribbon bows, clips, and acrylic gemstones are attached to the hats. The operations in Canada are as follows: Canadian acrylic is dyed and spun into yarn in Canada. United States cotton is dyed and spun into yarn in Canada. Canadian wool is dyed and spun into yarn in Canada. The yarn is crocheted into hats in Canada. Combinations of silk flowers and ribbon bows from China, and clips and acrylic gemstones of undetermined origin are attached to the hats. The applicable subheading for the hand crocheted acrylic beanie-style and beret-style hats will be 6505.90.6030, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Hats or other headgear, knitted or crocheted, or made from lace, felt or other textile fabrics, in the piece (but not in strips)…Other: Other: Of man-made fibers: Knitted or crocheted or made up of from knitted or crocheted fabric: Not in part of braid, For babies.” The rate of duty will be 20 cents per kilogram plus 7 percent ad valorem. The applicable subheading for the hand crocheted cotton beanie-style and sunhat-style hats will be 6505.90.2030, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Hats or other headgear, knitted or crocheted, or made from lace, felt or other textile fabrics, in the piece (but not in strips)…Other: Other: Of cotton, flax or both: Not knitted…headwear of cotton, For babies.” The rate of duty will be 7.5 percent ad valorem. The applicable subheading for the hand crocheted wool beanie-style hat will be 6505.90.3030, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Hats or other headgear, knitted or crocheted, or made from lace, felt or other textile fabrics, in the piece (but not in strips)…Other: Other: Of wool: Knitted or crocheted or made up from knitted or crocheted fabric, For babies.” The rate of duty will be 25.4 cents per kilogram plus 7.7 percent ad valorem. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/. General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as “goods originating in the territory of a NAFTA party” only if-- (i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or (ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that-- (A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or (B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or (iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; or (iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for “parts” and used in the production of such goods does not undergo a change in tariff classification because-- (A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or (B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts, provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note. Based on the facts provided, the goods described above qualify for NAFTA preferential treatment, because they will meet the requirements of HTSUS General Note 12(b)(ii)(A) and 12(t) 65.2. The goods will therefore be entitled to a Free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements. Section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 C.F.R. 102.21), published September 5, 1995 in the Federal Register, implements Section 334 (60 FR 46188). Section 334 of the URAA was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, section 102.21 was amended (68 Fed. Reg. 8711). Thus, 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. 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, paragraph (c)(1) of Section 102.21 is inapplicable. 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:” 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 6505.90 (4) For any other good, if the good does not consist of two or more components, a change to subheading 6505.90 from any other heading, except from heading 5007, 5111 through 5113, 5208 through 5212, 5407 through 5408, 5512 through 5516, 5602 through 5603, 5608, 5801 through 5804, 5806, 5808 through 5811, 5903, 5906 through 5907, and 6001 through 6002, and provided that the change is the result of a fabric-making process. As the hats are crocheted to shape and the change is not the result of a fabric making process, Section 102.21(c)(2) is inapplicable. Section 102.21(c)(3) states, Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) or (2) of this section: (i) If the good was knit to shape, the country of origin of the good is the single country, territory, or insular possession in which the good was knit; or (ii) Except for goods of heading 5609, 5807, 5811, 6213, 6214, 6301 through 6306, and 6308, and subheadings 6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was not knit to shape and the good was wholly assembled in a single country, territory, or insular possession, the country of origin of the good is the country, territory, or insular possession in which the good was wholly assembled. Section 102.21(c)(b) states:(3) Knit to shape. The term knit to shape applies to any good of which 50 percent or more of the exterior surface area is formed by major parts that have been knitted or crocheted directly to the shape used in the good, with no consideration being given to patch pockets, appliques, or the like. Minor cutting, trimming, or sewing of those major parts will not affect the determination of whether a good is "knit to shape". As the subject merchandise is crocheted to shape, Section 102.21(c)(3) applies. The country of origin of the hats is Canada. We are unable to issue a ruling regarding the country of origin marking for the hats. Please provide samples of the hats in their imported condition in their retail packaging showing the proposed marking of the goods. When this information is available, you may wish to consider resubmission of your request. Information regarding the labeling of textile goods can be found at the Federal Trade Commission (FTC) website: http;//www.ftc.gov/bcp/edu/pubs/business/textile/bus21.shtm. This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181). 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, contact National Import Specialist Kenneth Reidlinger at (646) 733-3053. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division