HQ 0554955 - GSP Eligibility of Certain Wood Picture Frames - United States International Trade Commision Rulings

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HQ 554955

October 17, 1988

CLA-2 CO:R:C:V 554955 DBI

CATEGORY: VALUATION

Mr. Carlos R. Bustamante
4 Calle Poniente #40
Santa Ana, El Salvador
Central America

RE: GSP Eligibility of Certain Wood Picture Frames

Dear Mr. Bustamante:

This is in response to your undated request for information regarding the applicability of the Generalized System of Preferences (GSP) to wood picture frames manufactured in El Salvador.

FACTS:

You advise that picture frames will be cut and assembled from wood grown in El Salvador. Glass and/or mirrors will be imported into El Salvador where they will be cut and shaped to fit the inside of the frames and inserted therein. You indicate that the glass or mirror will compromise 9 percent of the value of the completed article. You request a ruling on the wood frames alone and on the frames to which a glass or mirror component has been added.

ISSUE:

Whether the wood frames alone, and the frames with a glass or mirror component inserted, are eligible for duty-free treatment under the GSP.

LAW AND ANALYSIS:

An article imported directly from a beneficiary developing country (BDC) may qualify for duty-free entry under the GSP only if it meets the country of origin criteria set forth in section 10.176(a), Customs Regulations (19 CFR 10.176(a)). The first of these criteria provides that an article must be the growth, product, manufacture, or assembly of the BDC. In other words, the article must either be wholly the growth, product, or manufacture of a BDC, or it must have undergone a
substantial transformation in the BDC so as to make it a product of the BDC. The second of the country of origin criteria provides that the sum of the cost or value of the materials produced in the BDC, plus the direct costs of processing operations performed in the BDC, must not be less than 35 percent of the appraised value of the imported article. Thus, if the first country of origin requirement is not met, then the article would not be eligible for GSP treatment even though the article satisfies the 35 percent requirement.

Section 10.177(a), Customs Regulations (19 CFR 10.177(a)), provides that the words "produced in the beneficiary developing country" refer to the constituent materials of which the eligible article is composed which are either (1) wholly the growth, product, or manufacture of the BDC, or (2) substantially transformed in the BDC into a new and different article of commerce. In the case of materials imported into a BDC, the cost or value of that material may be counted towards the 35 percent requirement only if the imported material is first substantially transformed into a new and different intermediate article of commerce which is then used in the BDC in the production of the final imported article.

In the present case, the wood frames are wholly the growth, product or manufacture of El Salvador. Therefore, the wood frames alone, without any glass or mirror added, clearly would satisfy both GSP country of origin criteria.

With regard to the frames with the glass or mirror inserted, we are assuming that the glass or mirror being cut is initially imported into El Salvador in the form of sheets which are then cut to shape to fit into each individual frame size. Under these circumstances, the cutting of glass or mirror to size and shape and inserting it into the frame results in a substantial transformation of the glass or mirror imported into El Salvador so that the finished article would qualify as a product of El Salvador for purposes of the first country of origin criterion. The cost information you have provided indicates that the 35 percent requirement also would be met with respect to the frames with the glass or mirror insertion.

HOLDING:

On the basis of the information submitted, it is our opinion that the wood frames alone and the wood frames with the glass
or mirror inserted would be entitled to duty-free treatment under the GSP.

Sincerely,

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