Old T-Shirts Used as Rags Not Eligible for NAFTA Treatment as Waste, CBP Says

Rags made from used T-shirts and imported from Canada don't meet the NAFTA requirements for "waste" or scrap," CBP said in a March 2 ruling (here). The ruling came in response to a request for further review of protest from Wipeco Industries, which imported the "t-shirt wipers." The Port of Buffalo rejected the original NAFTA claim "because Wipeco could not substantiate the origin of the yarns and fibers in the used t-shirts," CBP said.

Wipeco protested and said that the merchandise is "wholly obtained or produced,” which includes "waste or scrap derived from" goods collected in NAFTA countries, "provided that such goods are fit only for the recovery of raw materials.” "According to Wipeco, the origin of the t-shirts’ yarn or fibers is irrelevant because the t-shirts qualify as 'waste or scrap,' were collected in the United States or Canada, and are suitable only for the recovery of raw materials," CBP said. Wipeco relies on two suppliers to gather used clothing in the U.S. or Canada, and the suppliers "then grade and sort the clothing according to whether it can be resold in other markets as clothes or whether stains, holes, missing buttons, or broken zippers are present," the company told CBP. "If these defects are present, the suppliers sell the clothing to Wipeco by the pound for use as rags."

CBP disagreed that Wipeco's process meets the NAFTA requirements for "waste," it said. The company's argument doesn't address how the t-shirts "are fit only for the recovery of raw materials,” CBP said. A past agency ruling on defective electronics parts found the merchandise to be "waste" because the parts "had no value except as scrap metal," CBP said. "Here, the raw materials that comprise the t-shirts are fibers," CBP said. "Used clothing and other fabric is frequently broken down into its raw materials (i.e., fibers) for use in products such as carpet, insulation, or packaging, or for weaving into new fabric."

Since the old t-shirts "are marketed to many industries for use as rags, the merchandise is both suitable for and intended for a purpose other than the recovery of the fibers," CBP said. "The t-shirt wipers thus are not 'fit only for the recovery of raw materials' and do not qualify as NAFTA originating." CBP said the protest should be denied as a result.