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HQ 955814

April 29, 1994

CLA-2 CO:R:C:T 955814 BC


William J. LeClair
Trans-Border Customs Services, Inc.
P.O. Box 800
Champlain, New York 12919

RE: Applicability of the North American Free Trade Agreement (NAFTA) to Indonesian plywood imported into Canada to be face finished; originating good; Annex 401; General Note 12, HTSUSA

Dear Mr. LeClair:

This responds to your letter of January 18, 1994, wherein you requested, on behalf of your client Okaply Ltd. of Quebec, Canada, a ruling concerning the applicability of a duty preference under NAFTA for Indonesian plywood face finished in Canada and imported into the United States. We have reviewed the matter and our decision follows.


The merchandise at issue is unfinished lauan plywood originating in Indonesia. It is imported into Canada where it is face finished by either laminating the surface with a vinyl sheet or by painting and printing a motif or woodgrain on the surface. The face finished plywood is then imported into the United States.

On August 17, 1992, we issued to you (on behalf of the same client) a ruling concerning applicability of the United States- Canada Free Trade Agreement to the same face finished plywood - Headquarters Ruling Letter 951538. We noted in that ruling that the exact species of the wood involved was unknown. This information was not necessary to our determination in that ruling. We note that this information remains unknown but likewise is unnecessary to our determination here.


Does unfinished Indonesian plywood that is imported into Canada, face finished in Canada, and then imported into the United States as face finished plywood qualify as an originating good under Chapter 4 and Annex 401 of the NAFTA?


Chapter 4 of the NAFTA sets forth rules for determining whether an imported good qualifies as an originating good of a NAFTA country (originating good). A good that qualifies as an originating good is eligible for preferential tariff (duty free or reduced duty) treatment as provided for under Article 302(2) and Annex 302.2 of the NAFTA. The basic rules of origin in Chapter 4 of the NAFTA, as well as the specific rules of origin found in Annex 401 of the NAFTA, are set forth in General Note 12, Harmonized Tariff Schedule of the United States Annotated (HTSUSA). (See 58 Fed. Reg. 69,460 (Dec. 30, 1993).) (In your letter, you cited rules for determining the country of origin for marking purposes under Annex 311 of the NAFTA. These are not applicable for determining whether a good qualifies as an originating good, as above.)

Subdivision (b) of General Note 12, HTSUSA, sets forth the rules of origin for determining whether an imported good is an originating good. It provides, in pertinent part, the following:

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 for 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.

Subdivision (b)(i) of General Note 12 is inapplicable since the plywood at issue is not wholly obtained or produced in a NAFTA country. Subdivision (b)(ii) of General Note 12 applies, and subdivision (t) of General Note 12, entitled "Change in Tariff Classification Rules," is pertinent to the instant plywood.

The applicable subdivision (t) rule for Chapter 44 provides the following: "A change to headings 4401 through 4421 from any other heading, including another heading within that group." Thus, according to General Note 12(t), goods of Chapter 44 must undergo a tariff shift from one heading to another heading. The subject Indonesian plywood imported into Canada in an unfinished condition is classifiable under heading 4412, HTSUSA. That same plywood, after being face finished in Canada, is classifiable under heading 4412, HTSUSA, upon importation into the United States. Thus, the plywood at issue does not undergo a tariff classification change after processing in Canada, as required under the NAFTA.

The face finished plywood imported into the United States from Canada is not considered a good originating in the territory of a NAFTA party. It therefore is not entitled to preferential duty treatment under the NAFTA.


John Durant, Director

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