Notice to the Trade: Gimped Yarn is Exemption from the Yarn Forward Rule in US FTAs

In 14 free trade agreements ("FTAs") the United States is currently a partner to, non-originating gimped yarn, or for that matter any non-originating article classified in Chapter 56 of the HTSUS, contained in a textile or apparel article of Chapters 50 through 55, or Chapters 57 through 63, does not disqualify an otherwise qualifying article from the benefits of the FTA. Although the texts of the agreements seem clear on the matter, there has been some question, particularly as it relates to DR-CAFTA.

On May 20, 2008, CBP issued letter N028235, ruling, "The non DR-CAFTA [gimped] yarns, used in the production of the hosiery, meet the terms of the tariff shift rule. Therefore [the hosiery articles] are entitled to a free rate of duty under the DR-CAFTA." On June 12, 2009, CBP published in Customs Bulletin Vol. 43, No. 24 a proposal to revoke that ruling and bring gimped yarn under the yarn forward rule. CBP received 18 comments and, in end, on January 27, 2010, published in Customs Bulletin Vol. Vol. 45, No. 5 that it was withdrawing the proposal. Subsequently, On May 7, 2014, CBP issued letter HQ H236917, ruling, again, that, "The hosiery at issue containing non-originating elastomeric [gimped] yarn qualifies as originating goods under the DR-CAFTA."