H313149

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H313149 July 16, 2021 OT:RR:CTF:FTM H313149 MJD CATEGORY: Classification TARIFF NO.: 6305.33.00 Center Director U.S. Customs and Border Protection Apparel, Textile and Footwear CEE 555 Battery Street San Francisco, CA 94111 Attn: Delana F. Kametani-Webber, Import Specialist RE: Application for Further Review of Protest No. 3001-20-102229; Eligibility of polypropylene bags for preferential tariff treatment under the United States-Panama Trade Promotion Agreement (“PANTPA”) Dear Center Director: This is in reference to the Application for Further Review (“AFR”) of Protest No. 3001-20-102229, timely filed on or before June 10, 2020, by Sandler, Travis and Rosenberg, P.A., on behalf of their client, Ace Packaging, Inc. ( “Protestant”). The AFR concerns the eligibility of polypropylene bags for preferential tariff treatment under the United States-Panama Trade Promotion Agreement (“PANTPA”). FACTS: The AFR consists of five styles of polypropylene bags used to transport, carry, and store grass seeds commercially. The styles of the polypropylene bags are the following: 20323, (P) Black Beauty Ultra 25# BA; 27031, (P) Green “new” woven 25#; 22221, (P) Turf Pro S&S 25#; 27030, (P) Green “new” woven 50#; and 22220 (P) Turf Pro S&S 50#. The bags are made of clear woven fabric made from polypropylene strip less than 5mm in width, classified in heading 5407 of the Harmonized Tariff Schedule of the United States (“HTSUS”); translucent sheeting classified in Chapter 39, HTSUS; Biaxially Oriented Polypropylene (“BOPP”) film classified in heading 3920, HTSUS; and sewing thread classified in heading 5509, HTSUS, all from Vietnam. These raw materials are shipped from Vietnam to Panama for cutting and assembly. The final product is shipped directly to the United States from Panama. The manufacturing steps, for the polypropylene bags, are as follows: Vietnam Polyester staple fiber thread is formed. BOPP colored film is formed (outer layer). Translucent sheet is formed (middle layer). Polypropylene fabric is formed (bottom layer). Materials are shipped to Panama. Panama Polypropylene fabric is laminated with translucent sheet. BOPP film is laminated on top of the translucent sheet and polypropylene fabric. Bag configuration: folding, cutting. Sewing EZ Open and packaging. The bag is shipped to the United States The polypropylene bags were entered as goods eligible for preferential tariff treatment under the PANTPA and classified under heading 6305, HTSUS, and specifically in subheading 6305.33.0040, HTSUSA (“Annotated”), which provides for “[s]acks and bags, of a kind used for the packing of goods: Of man-made textile materials: Other, of polyethylene or polypropylene strip or the like: Other: Weighing less than 1 kg, with an outer laminated ply of plastics sheeting: Printed with three or more colors.” On September 13, 2019, the U.S. Customs and Border Protection (“CBP”) laboratory tested a sample of the 27030, (P) Green “new” woven 50# polypropylene bag and reported via laboratory report no. LA20191046 the following regarding the sample: The colors of the sample include green, white, black, red, and grey. The sample is a three-layer composite. The front layer is a ply of a clear sheet. The middle layer is a translucent sheet. The back layer is woven. The sample weighs less than 1 kilogram. The strips and the clear ply are composed of polypropylene (man-made textile material). The average width of the polypropylene strips is 2.5 millimeters. On November 26, 2019, CBP issued a Notice of Action (“CBP Form 29”) stating that the polypropylene bags were classified as entered under subheading 6305.33.0040, HTSUSA, but were not eligible for preferential tariff treatment under the PANTPA. Subsequently, CBP tested a sample of the thread and reported on January 25, 2021, via laboratory report no. NY20201219 the following: The sample is a 3-ply multiple polyester staple yarn on a cone and weighs 2122.3 grams including the support cone. The sample has a s twist and 224 turns per meter, the linear density of the sample is 2167 decitex. The sample is not impregnated, covered, coated, or laminated with silicones, wax paraffin, or starch. The CBP laboratory also provided a supplemental laboratory report for the 27030, (P) Green “new” woven 50# sample of the polypropylene bag via laboratory report no. LA20191046S, dated April 1, 2021, which stated the following: The sample’s colors include green, white, black, red and grey. The sample is a three-layer composite. The front layer is a clear sheet. The middle layer is a translucent sheet. The back layer is woven as it has interlaced strips. All three layers are composed of polypropylene (man-made textile material). The sample weighs less than 1 kilogram (0.13543 kg). The average width of the back layer polypropylene strips is 2.5 millimeters (mm).” Protestant claims that the subject merchandise is eligible for preferential tariff treatment under the PANTPA. ISSUE: Whether the polypropylene bags are eligible for preferential tariff treatment under the PANTPA. LAW AND ANALYSIS: Initially, we note that this matter is protestable under19 U.S.C. §1514(a)(2) as a decision on classification and rate amount of duties chargeable. The protest was timely filed within 180 days of liquidation. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). On October 21, 2011, the President signed into law the United States- Panama Trade Promotion Agreement Implementation Act (the ‘‘Act’’), Public Law 112–43, 125 Stat. 497 (19 U.S.C. 3805 note), which approved and made statutory changes to implement the PANTPA. The PANTPA is implemented in the tariff schedule in General Note (“GN”) 35, HTSUS. GN 35(a) provides: Originating goods under the terms of the United States-Panama Trade Promotion Agreement are subject to duty as provided herein. For the purposes of this note, goods of Panama, subject to subdivisions (b) through (o) of this note, that are imported into the customs territory of the United States and entered under a provision for which a rate of duty appears in the “Special” subcolumn of column 1 followed by the symbol “PA” in parentheses are eligible for the tariff treatment, and any applicable quantitative limitations, set forth in the “Special” subcolumn, in accordance with sections 201 and 202 of the United States-Panama Trade Promotion Agreement Implementation Act (Pub.L. 112-43; 125 Stat. 497). GN 35(b) sets forth the criteria for determining whether a good is an originating good for purposes of the PANTPA. GN 35(b) states: For the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of Panama or of the United States under the terms of this note if– the good is wholly obtained or produced entirely in the territory of Panama or of the United States, or both; the good is produced entirely in the territory of Panama or of the United States, or both, and— each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or the good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o); and satisfies all other applicable requirements of this note and of applicable regulations; or the good is produced entirely in the territory of Panama or of the United States, or both, exclusively from materials described in subdivisions (i) or (ii), above. Since the polypropylene bags are made of non-originating materials, they are not considered goods wholly obtained or produced entirely in the territory of Panama or of the United States, or both under GN 35(b)(

Initially, we note that this matter is protestable under19 U.S.C. §1514(a)(2) as a decision on classification and rate amount of duties chargeable. The protest was timely filed within 180 days of liquidation. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)).On October 21, 2011, the President signed into law the United States- Panama Trade Promotion Agreement Implementation Act (the ‘‘Act’’), Public Law 112–43, 125 Stat. 497 (19 U.S.C. 3805 note), which approved and made statutory changes to implement the PANTPA. The PANTPA is implemented in the tariff schedule in General Note (“GN”) 35, HTSUS. GN 35(a) provides: Originating goods under the terms of the United States-Panama Trade Promotion Agreement are subject to duty as provided herein. For the purposes of this note, goods of Panama, subject to subdivisions (b) through (o) of this note, that are imported into the customs territory of the United States and entered under a provision for which a rate of duty appears in the “Special” subcolumn of column 1 followed by the symbol “PA” in parentheses are eligible for the tariff treatment, and any applicable quantitative limitations, set forth in the “Special” subcolumn, in accordance with sections 201 and 202 of the United States-Panama Trade Promotion Agreement Implementation Act (Pub.L. 112-43; 125 Stat. 497).GN 35(b) sets forth the criteria for determining whether a good is an originating good for purposes of the PANTPA. GN 35(b) states: For the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of Panama or of the United States under the terms of this note if–the good is wholly obtained or produced entirely in the territory of Panama or of the United States, or both;the good is produced entirely in the territ