HQ 951283: Hot Rolled Coils and Stainless Steel Rods of Foreign Origin Processed in Canada into Cold Rolled Coils and Stainless Steel Wire; Eligibility for the Partial Duty Exemption Under the United States-Canada Free- Trade Agreement (CFTA)

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 951283

                            JULY 9 1992

CLA-2:CO:R:C:M   951283 JAS

CATEGORY:   Classification

TARIFF NO.: Headings 7219, 7223, HTSUS

Mr. Chris Lee
SAMMI Atlas Sales Inc.
7420 Airport Road, Mississauga
Ontario, Canada L4T 4E5

RE:  Hot Rolled Coils and Stainless Steel Rods of Foreign
     Origin Processed in Canada into Cold Rolled Coils and
     Stainless Steel Wire; Eligibility for the Partial
     Duty Exemption Under the United States-Canada Free-
     Trade Agreement (CFTA)

Dear Mr. Lee:

     In your letter of February 28, 1992, you ask whether certain
stainless steel products processed in Canada as described would
be eligible upon entry into the Customs territory for a reduced
rate of duty under the CFTA.

FACTS:

     There are two fact patterns presented.  In the first
situation, hot rolled coils from unspecified European countries
are imported into Canada and classified, depending on thickness,
in one of two subheadings of heading 7219, a provision for flat-
rolled products of stainless steel, of a width of 600 mm or more,
not further worked than hot-rolled.  In Canada, the hot rolled
coils are pickled and oiled, then cold reduced in a rolling mill
to a product classifiable, depending on thickness, in one of four
subheadings of heading 7219, for flat-rolled products not further
worked than cold-rolled (cold-reduced).

     In the second situation, stainless steel billets of
Canadian origin are hot rolled in unspecified countries into
stainless steel rod.  Upon its return to Canada, this rod is
classifiable in heading 7221, bars and rods, hot-rolled, in
irregularly wound coils, of stainless steel.  In Canada, the
coiled rod is cold drawn into stainless steel wire of heading
                              - 2 -

7223.  You state that more than seventy (70) percent of the value
of the cold drawn wires is accounted for in Canada.  It is
unclear, however, whether this figure represents the drawing
process only or includes the original cost of the billets.

ISSUE:

     Whether the described processing in Canada results in one of
the changes in tariff classification in Canada required by
General Note 3(c)(vii)(R).

LAW AND ANALYSIS:

     With respect to goods not wholly obtained or produced in
Canada and/or the United States, General Note 3(c)(vii)(B)(2),
HTSUS, states in part that goods imported into the Customs
territory of the United States are eligible for treatment as
"goods originating in the territory of Canada" if they have been
transformed in either Canada or the United States so as to be
subject to a change in tariff classification as described in
subdivision (c)(vii)(R) of note 3.

     Likewise, General Note 3(c)(vii)(F), HTSUS, states in part
that whenever the processing or assembly of goods in the
territory of Canada and/or the United States results in one of
the changes in tariff classification in Canada described in
subdivision (c)(vii)(R) of [this] note, such goods shall be
considered to have been transformed in the territory of Canada
and shall be treated as goods originating in the territory of
Canada.

     One of the changes in classification in Canada with respect
to chapters 72 through 83 is authorized by General Note 3(c)(vii)
(R)(15)(ee).  This is a change to headings 7218 through 7222 from
any other heading outside that group.  In the first fact pattern
presented, the hot rolled coils entering Canada are classifiable
in heading 7219.  The processing of hot-rolled coil into cold-
rolled coil does not result in a change in classification within
the rules set forth in General Note 3(c)(vii)(R)(15).

     In the second fact pattern presented, the wire cold drawn in
Canada cannot be considered wholly obtained or produced in Canada
for CFTA purposes, even if the original billets were melted and
poured in Canada from materials wholly obtained or produced in
Canada or the United States, because the billets were processed
into wire rod in a third country.  The coiled wire rod of heading
7221 is drawn in Canada into wire of heading 7223.
                              - 3 -

     With respect to the wire drawn in Canada, the change in
classification necessary to confer originating good status is
stated in General Note 3(c)(vii)(R)(15)(ff).  This is a change to
heading 7223 from any other heading except headings 7221 and
7222.  The wire rods imported into Canada are classifiable in
heading 7221.  Therefore, the change in classification as a
result of the processing into wire is specifically excluded from
conferring originating good status on the wire.


HOLDING:

     The processing of hot-rolled flat-rolled products of heading
7219 into cold-rolled flat-rolled products of heading 7219, and
the processing of wire rod of heading 7221 into wire of heading
7223, do not result in changes in classification as required by
General Note 3(c)(vii)(B)(2).  Therefore, neither the cold-rolled
flat-rolled products nor the wire qualify as originating goods
for purposes of the CFTA tariff preferences.


                         Sincerely,


                         John Durant, Director
                         Commercial Rulings Division