HQ 555517

May 21, 1990

CLA-2 CO:R:C:V 555517 DSN

CATEGORY: Classification

TARIFF NO.: 6307.90.8740

Mr. Stanley R. Leacock

346 College Avenue

Palo Alto, California 84306

RE: GSP and country of origin of surgical towels

Dear Mr. Leacock:

This is in response to your letters of October 30, and

December 11, 1989, and January 10, and April 18, 1990, on behalf

of Beach Medical Supplies, Ltd., in which you request a ruling

that certain cotton surgical towels produced in Barbados from

yarn originating elsewhere are entitled to duty-free treatment

under the Generalized System of Preferences (GSP) (19 U.S.C.

2461-2467). You also ask whether Barbados will be the country of

origin for quota purposes.

FACTS:

According to your submissions and conversations with a

member of my staff by telephone, 100% cotton yarn originating in

China or Pakistan will be imported into Barbados where it will be

woven into fabric, cut to length and width, and hemmed to create

finished surgical towels. After being packaged, the towels will

be exported to the U.S.

ISSUES:

1\. Whether the surgical towels are entitled to duty-free

treatment under the GSP when imported into the U.S.

2\. Whether the operations performed in Barbados render

Barbados the country of origin of the surgical towels.

LAW AND ANALYSIS:

1\. Applicability of GSP

For articles to be eligible for GSP treatment, they must

first be classified under a GSP eligible provision in the

Harmonized Tariff Schedule of the United States Annotated

(HTSUSA). An article classifiable under a GSP eligible

provision is entitled to duty-free entry if it is imported

directly from a designated beneficiary developing country (BDC)

into the U.S., and the sum of the cost or value of the materials

produced in the BDC plus the direct cost involved in processing

the eligible article in the BDC is at least 35% of the article\'s

appraised value at the time it is entered into the U.S.

The cotton surgical towels, as of May 1, 1990, are

classified under subheading 6307.90.8740, HTSUSA, which provides

for other made up articles, other, other, surgical towels. This

provision is not a GSP eligible provision. See Presidential

Proclamation No. 6123, 55 Fed. Reg. 18075 (1990). Therefore, the

rate of duty applicable to the surgical towels would be 7% ad

valorem.

2\. Country of Origin

Textile articles produced in more than one foreign country

are subject to the country of origin criteria set forth in

section 12.130, Customs Regulations (19 CFR 12.130). According

to 19 CFR 12.130(b):

\...a textile product\...which consists of materials produced

or derived from, or processed in, more than one foreign\...

country shall be a product of that foreign\...country where

it last underwent a substantial transformation. A textile

or textile product will be considered to have undergone a

substantial transformation if it has been transformed by

means of substantial manufacturing or processing operations

into a new and different article of commerce.

According to 19 CFR 12.130(e)(1)(iii)and(iv):

An article\...will be a product of a\...country,\...when it

has undergone prior to importation into the U.S.,\...weaving

knitting or otherwise forming fabric; cutting of fabric into

parts and assembly of those parts into the completed

article.

Thus, since the imported yarn is woven in Barbados into fabric,

which is then cut to length and width, and hemmed in Barbados,

Barbados is clearly the country of origin of the surgical towels.

We note that at the present time, surgical towels from

Barbados are not subject to quota. However, due to the

changeable nature of quota agreements, you are advised to contact

your local Customs office prior to importation to determine the

current status of any textile agreements with Barbados. Import

restraints are imposed by the U.S. Customs Service under

directives of the Committee for the Implementation of Textile

Agreements, U.S. Department of Commerce, Washington, D.C. 20230.

Further advice or information pertaining to those agreements may

be obtained from the chairman of that Committee.

HOLDING:

The surgical towels are classified under subheading

6307.90.8740, HTSUSA, which provides for other made up articles,

other, other, surgical towels, which is not a GSP eligible

provision. The rate of duty is 7% ad valorem. The country of

origin for quota purposes is Barbados.

Sincerely,

Acting Director

Commercial Rulings Division