LOCAL APPAREL COMPANIES WITH OFFSHORE OPERATIONS IN CARIBBEAN COUNTRIES SHOULD BENEFIT FROM A FEDERAL COURT RULING EARLIER THIS MONTH WHICH SAID THAT “OVENBAKED” GARMENTS WILL NO LONGER LOSE THEIR DUTY EXEMPT STATUS UNDER U.S. CUSTOMS REGULATIONS, ACCORDING TO LYNNE WENDT, AN ATTORNEY WITH THE ATLANTA OFFICE OF SANDLER, TRAVIS & ROSENBERG.
MS. WENDT’S FIRM REPRESENTED HAGGAR APPAREL CO., THE IMPORTER IN THE CASE. IN ITS DECISION, THE COURT OF INTERNATIONAL TRADE REJECTED A LONG-HELD POSITION OF THE U.S. CUSTOMS SERVICE THAT THE PERMANENT PRESSING PROCESS OF OVENBAKING IMPARTED NEW CHARACTERISTICS TO GARMENTS AND THEREBY DISQUALIFIED THE ARTICLES FROM PARTIAL DUTY REDUCTIONS UNDER TARIFF HEADING 9802, HTS.
MEANWHILE, MS. WENDT TOLD GLOBALFAX, NAFTA PROVISIONS PROVIDED SUCH DUTY REDUCTIONS FOR CERTAIN ARTICLES ASSEMBLED IN MEXICO FROM U.S. ORIGIN FABRIC COMPONENTS THAT ARE OVENBAKED AFTER ASSEMBLY AND BEFORE EXPORTATION TO THE U.S.
“BECAUSE OF NAFTA A LOT OF COMPANIES WHICH WANTED TO DO CERTAIN FINISHING OPERATIONS OFFSHORE PULLED OUT OF THE CARIBBEAN AND WENT TO MEXICO. NOW SOME OF THOSE COMPANIES CAN GO BACK TO THE CARIBBEAN WITHOUT HAVING TO WAIT FOR PASSAGE OF A CARIBBEAN BUSINESS INITIATIVE PARITY BILL.”
UNDER THE CODE, THERE IS A DEDUCTION FROM THE DUTIABLE VALUE FOR IMPORTERS OF ARTICLES WHICH HAVE BEEN SEWN AND ASSEMBLED OVERSEAS FROM U.S. ORIGIN COMPONENTS, A TARIFF PROVISION REFERRED TO AS 9802 (FORMERLY 807), SHE SAID.
BUT THE CUSTOMS SERVICE DID NOT ALLOW THE PARTIAL DUTY REDUCTIONS ON GROUNDS THAT OVENBAKING IMPARTED NEW CHARACTERISTICS TO GARMENTS. THE COURT RULED INSTEAD THAT OVENBAKING QUALIFIES AS AN OPERATION “INCIDENTAL” TO THE ASSEMBLY PROCESS, AND NOT A MAJOR ADDITION OF NEW CHARACTERISTICS.
MS. WENDT SAID THAT SIMILAR PROCESSES TO OVENBAKING SUCH AS BLEACHING AND STONE WASHING WHICH GIVE GARMENTS A FADED LOOK ALSO MAY BE AFFECTED BY THE RULING.
FOR MORE INFORMATION, MS. WENDT MAY BE REACHED BY CALLING (404) 522-6072.