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

N159135 April 20, 2011 CLA-2-56:OT:RR:NC:N3:351 CATEGORY: Classification TARIFF NO.: 5605.00.9000 Ms. Nancy deVries Spinrite LP 320 Livingstone Avenue South Listowel, Ontario, Canada N4W 3H3 RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of metalized yarn from Canada; Article 509 Dear Ms. deVries: In your letter dated March 21, 2011, you requested a ruling on the status of metalized yarn from Canada under the NAFTA. You submitted a ball of yarn called Sugar and Cream Sparkle, product number 102059. You state the fiber content to be 98.3% cotton and 1.7% metalized yarn. The cotton component is a four-ply twisted yarn. The metalized component is a metalized strip less than one millimeter in width; the strip meets the dimensional requirements of textile strips contained in Section XI, Legal Note 1(g), Harmonized Tariff Schedule of the United States (HTSUS). The silver metalized strip gimps, or wraps, the cotton yarn approximately twice per inch, creating a sparkly decorative effect. Please note that any yarn containing metalized yarn in any amount is considered to be metalized yarn for tariff purposes. Section XI Note 2(B)(a), HTSUS, noted. The applicable subheading for the metalized yarn number 102059 will be 5605.00.9000, HTSUS, which provides for metalized yarn, whether or not gimped, being textile yarn, combined with metal in the form of thread, strip, or powder or covered with metal; Other. The general rate of duty will be 13.2% ad valorem. You have also inquired about NAFTA eligibility for this merchandise. You say the cotton is imported from the United States and reeled, dyed and wrapped with metalized strip in Canada. The metalized strip is imported from the United Kingdom. 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. The tariff shift for heading 5605 requires a change from any other chapter. The metalized strip that is imported from the United Kingdom is already classified in chapter 56 (heading 5605) and so the terms of the tariff shift have not been met for this component. However, General Note 12(f)(vi) states that: (vi) A good provided for in chapters 50 through 63, inclusive, of this schedule that does not originate because certain fibers or yarns used in the production of the component of the good that determines the tariff classification of the good do not undergo an applicable change in tariff classification, provided for in subdivisions (r), (s) and (t) of this note, shall nonetheless be considered to originate if the total weight of all such fibers or yarns in that component is not more than 7 percent of the total weight of that component. Based on your figures that the yarn is comprised of 1.7% by weight metalized strip, the merchandise qualifies for preferential treatment under the NAFTA because the above de minimus rule applies. The merchandise will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements. 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 Mitchel Bayer at (646) 733-3102. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division