HQ 086549: Country of origin of diapers. FTA; cotton; Free-TradeAgreement; Canada; cut and sewn

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                                        HQ 086549

                                     March 13, 1990


CLA-2 CO:R:C:G  086549  HP

CATEGORY:  Classification

Ms. Grace Howe
President
Tego Limited
5959 Topanga Canyon Blvd.
Suite 380
Woodland Hills, CA 91367

RE:  Country of origin of diapers. FTA; cotton; Free-Trade
Agreement; Canada; cut and sewn

Dear Ms. Howe:

     This is in reply to your letter of January 30, 1990, concern
ing the country of origin of diapers, for duty purposes under the
Harmonized Tariff Schedule of the United States Annotated (HTSUSA
).

FACTS:

     The merchandise at issue consists of 100% cotton babies'
diapers.  The following tables describe the manufacturing proces
ses.

                        China Production Steps (CAD$ 2.915/dozen)

1.100% cotton cloth is woven.
2.The cloth is shipped to Canada on large rolls.


                                 Canada Production Steps (CAD$ 3.2714/Dozen
)

1.Two layers of fabric are placed onto the cutting table.
2.The fabric is cut to size (24" wide x 16" long").
3.The sides of the two layers of fabric are folded over (left:
4" right: 8").
4.The center panels are sewn using a straight sewing machine.
5.The sewn fabric is taken to a serging machine, where the top
and bottom edges are trimmed and overedged.
6.The threads from all edges are trimmed, as a trailer thread
of at least " is required.
7.The diaper is inspected.
8.The completed merchandise is packaged into cartons and
shipped.


ISSUE:

     Whether China or Canada is considered the country of origin
for duty purposes under the HTSUSA?

LAW AND ANALYSIS:

          General Note 3(c)(vii) to the HTSUSA embodies the Uni
ted States-Canada Free-Trade Agreement of 1988.  Subdivision (vi
i)(A) provides that "[g]oods originating in ... Canada" and im
ported into the United States may be subject to a distinct rate of
duty set forth in the "Special" subcolumn of the Tariff Schedule.
For the purposes of this subdivision, General Note 3(c)(vii)(B)
allows consideration of goods as "goods originating in the
territory of Canada" if:

                                                    * * *

(2)they have been transformed in the ter
ritory of Canada and/or the United
States, so as to be subject--

(I)to a change in tariff class
ification in Canada as des
cribed in the rules of sub
division (c)(vii)(R) of this
note, or

(II)to such other requirements
subdivision (c)(vii)(R) of this
note may provide when no change
in tariff classification oc
curs, and they meet the other
conditions set out in sub
divisions (c)(vii) ... (G),
(H), (J) and (R) of this note.

     Assuming heading 6209, Section XI, HTSUSA, provides for the
instant merchandise in its completed form, and heading 5208 prior
to this, General Note 3(c)(vii)(R)(11) governs the change in
tariff classification.  Subdivision (R)(11) states, in pertinent
part, that in order to be considered goods originating in the
territory of Canada, merchandise must undergo

(oo)A change to any heading of chapter 62
from any heading outside that chapter
other than headings * * *  5204 through
5212

                                                    * * *

(qq)Notwithstanding rules (nn) and (oo),
apparel goods provided for in chapters 61
and 62 that are both cut and sewn in * *
* Canada [ (emphasis added) ] * * * from
fabric produced or obtained in a third
country, and that meet other applicable
conditions for preferred tariff treatment
under subdivision (c)(vii) of this note,
shall be subject to the rate of duty
provided in the "Special" subcolumn for
goods that originate in Canada, in the
annual quantities set forth below, and
shall, above those quantities for the
remainder of the annual period, be sub
ject to duty at the rates provided for in
the "General" subcolumn of column 1:

                    Non-wool apparel              41,805,000
                                             square meters
                    Wool apparel                  5,016,600
                                             square meters

HOLDING:

     Our analysis of the other applicable conditions for pre
ferred tariff treatment under subdivision (c)(vii) of the Free-
Trade Agreement establishes that the instant merchandise, in its
completed form, is considered, for duty purposes under the HTSUSA,
goods originating in Canada.

                                                 Sincerely,


                                            John Durant, Director
                                    Commercial Rulings Division