H303139

HQ H303139 January 14, 2020 OT:RR:CTF:VS H303139 YAG/JMV CATEGORY: Origin Mr. Daniel Shapiro Olympus Scientific Solutions Americas 48 Woerd Avenue Waltham, MA 02453 RE: U.S. Government Procurement; Country of Origin of Videoscopes; Title III, Trade Agreements Act of 1979 (19 U.S.C. § 2511 et seq.); Subpart B, Part 177, CBP Regulations Dear Mr. Shapiro: This is in response to your correspondence, dated March 12, 2019, requesting a final determination, on behalf of Olympus Scientific Solutions Technologies Inc. (“OSST”), concerning the country of origin of certain videoscopes, pursuant to subpart B of Part 177 of the U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. § 177.21 et seq.). We note that OSST is a party-at-interest within the meaning of 19 C.F.R. § 177.22(d)(1) and is entitled to request this final determination. FACTS: OSST imports the IPLEX GT and GX Videoscope (remote visual inspection equipment), from Japan. This equipment allows for the non-destructive inspection of turbines, heat exchangers, pipes, boiler tubes, and other products. According to OSST’s submission, the videoscopes feature three main components: (1) an 8-inch touch screen or computer control unit (“CCU”); (2) a scope unit with a light source (“scope”); and, (3) a tip adapter. OSST states that the overall manufacturing process involves Olympus Japan, a parent company of OSST, designing the CCU and the scope, and assembling these components into an operational unit in Japan. The CCU base unit, which streams live images captured by the scope, has a wide video graphics array with a 5-step adjustable LCD backlight, a 100V to 240V AC power supply, 10.8V battery, HDMI video input, and a headset microphone CTIA plug. A third-party supplier manufactures the main components of the CCU in Thailand. The following steps of the CCU manufacturing process are performed in Thailand: printed circuit board (“PCB”) mounting, and assembling the LCD panel to the PCB assembly. The software for the CCU is wholly designed in Japan, but the core of the Japanese software (firmware) is installed in Thailand. In Japan, the latest version of the software and configurations are installed, and the CCU is inspected and tested. Final assembly and packaging of the CCU and scope are completed in Japan and shipped. The scope includes LED illumination, a 2-stage indicator for high temperature warning, and a handle with a true feel electronic scope tip articulation/fine mode articulation control using the touch screen menu. OSST claims that the scope represents the essence of the videoscope. According to the submission, a third-party Thai supplier assembles the handset of the scope unit by screwing the plastic handset, handset PCB, button and joystick together, and ships these components to Japan. Olympus Japan then connects the handset to the insertion tube, to create the scope unit subassembly. In addition to the handset, the scope unit subassembly includes the insertion tube and an optics assembly. The insertion tube is made of four layers: a stainless steel cord, a stainless steel braid, a Viton waterproof layer, and a tungsten braid. All four layers are created and assembled in Japan through wire brazing using a microscope, braiding of high durability tungsten, and soldering. At the end of the insertion tube is the optics assembly. Manufacturing of the optics assembly includes the creation and testing of micro lenses, and small parts assembly in a clean room. The optics assembly is essentially a small camera completely manufactured in Japan. The scope unit then undergoes software installation, calibration and product testing. The insertion tube and optics assembly, controlled by the handset, are what enable the videoscope to move around tight spaces and capture images. According to OSST, once Olympus Japan completes the manufacturing process for the CCU and the scope, it combines both units to make a functional videoscope in Japan by fitting a connector into both the CCU and the scope, centering the cable gasket to assure ingress protection (“IP”) rating and screwing the doors shut to complete the physical mating. OSST states that these steps allow the CCU and scope to communicate without which the scope and CCU as separate units would not have much practical application. Olympus Japan assembles all scope and CCU models together to make 12 different versions, which will then be imported into the United States. Tip adapters are necessary for the function of the scope but will be separately shipped to the United States due to the number of tip adapter models and variations that may apply. The tip adapters are wholly designed, manufactured and assembled in Japan to accommodate different field, and direction of view and depths of field. In a phone call with this office, OSST likened the tip adapter to an interchangeable lens on a camera. OSST claims that the tip adapter does not change the videoscope’s ability to function, but it does enhance the videoscope’s ability to focus or take clear pictures. Once imported into the United States, the videoscope will then be paired with the tip adapter per customer order by screwing the tip adapter to the scope. You have provided charts and cost figures to show that over 80 percent of the total cost of the combined unit represents the portion of the cost incurred in Japan to develop and produce the CCU and scope units for the IPLEX GT and GX Videoscopes. ISSUE: What is the country of origin of the videoscopes for purposes of U.S. Government procurement? LAW AND ANALYSIS: CBP issues country of origin advisory rulings and final determinations as to whether an article is or would be a product of a designated country or instrumentality for the purposes of granting waivers of certain “Buy American” restrictions in U.S. law or practice for products offered for sale to the U.S. Government, pursuant to subpart B of Part 177, 19 C.F.R. § 177.21 et seq., which implements Title III of the Trade Agreements Act of 1979 (“TAA”), as amended (19 U.S.C. § 2511 et seq.). Under the rule of origin set forth under 19 U.S.C. § 2518(4)(B): An article is a product of a country or instrumentality only if (i) it is wholly the growth, product, or manufacture of that country or instrumentality, or (ii) in the case of an article which consists in whole or in part of materials from another country or instrumentality, it has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. See also 19 C.F.R. § 177.22(a). In rendering advisory rulings and final determinations for purposes of U.S. Government procurement, CBP applies the provisions of subpart B of Part 177 consistent with the Federal Procurement Regulations. See 19 C.F.R. § 177.21. In this regard, CBP recognizes that the Federal Acquisition Regulations restrict the U.S. Government’s purchase of products to U.S.-made or designated country end products for acquisitions subject to the TAA. The regulations define a “designated country end product” as: WTO GPA [World Trade Organization Government Procurement Agreement] country end product, an FTA [Free Trade Agreement] country end product, a least developed country end product, or a Caribbean Basin country end product. A “WTO GPA country end product” is defined as an article that: Is wholly the growth, product, or manufacture of a WTO GPA country; or In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a WTO GPA country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to the artic

CBP issues country of origin advisory rulings and final determinations as to whether an article is or would be a product of a designated country or instrumentality for the purposes of granting waivers of certain “Buy American” restrictions in U.S. law or practice for products offered for sale to the U.S. Government, pursuant to subpart B of Part 177, 19 C.F.R. § 177.21 et seq., which implements Title III of the Trade Agreements Act of 1979 (“TAA”), as amended (19 U.S.C. § 2511 et seq.).Under the rule of origin set forth under 19 U.S.C. § 2518(4)(B): An article is a product of a country or instrumentality only if (i) it is wholly the growth, product, or manufacture of that country or instrumentality, or (ii) in the case of an article which consists in whole or in part of materials from another country or instrumentality, it has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed.See also 19 C.F.R. § 177.22(a).In rendering advisory rulings and final determinations for purposes of U.S. Government procurement, CBP applies the provisions of subpart B of Part 177 consistent with the Federal Procurement Regulations. See 19 C.F.R. § 177.21. In this regard, CBP recognizes that the Federal Acquisition Regulations restrict the U.S. Government’s purchase of products to U.S.-made or designated country end products for acquisitions subject to the TAA. The regulations define a “designated country end product” as:WTO GPA [World Trade Organization Government Procurement Agreement] country end product, an FTA [Free Trade Agreement] country end product, a least developed country end product, or a Caribbean Basin country end product.A “WTO GPA country end product” is defined as an article that:Is wholly the growth, product, or manufacture of a WTO GPA country; orIn the case of an article that consists in whole or in part of materials from another country