H305503

HQ H305503 February 20, 2020 CLA-2 OT:RR:CTF:VS H305503 EGJ CATEGORY: Origin George R. Tuttle Tuttle Law Offices 1100 Larkspur Landing Circle, Suite 385 Larkspur, CA 94939 RE: Country of origin of a Ratchet and Tie Down; Section 301 trade remedy Dear Mr. Tuttle: This is in response to your request, dated September 3, 2019, filed on behalf of Hampton Products International Corp. (“Hampton”), regarding the country of origin of a ratchet and tie-down. In your letter, you request a binding ruling on the applicability of Section 301 trade remedies to proposed transactions involving the ratchet and tie down. FACTS: The subject merchandise is a ratchet and tie down, item number 04622. It consists of a ratchet subassembly, a short length of tie down strap, a long length of tie down strap, and two metal hooks. The short strap is stitched at one end to a metal hook, and is attached at the other end to the ratchet. The long strap is stitched at one end to a metal hook, and the other end remains free to be fed into the slot of the ratchet during use. The user will secure the hooks of the long and short straps at anchor points to strap down cargo. The user will feed the outer end of the long strap through the slot of the ratchet to reduce the slack when securing cargo. If necessary, the user can reduce any further slack and tension generated in the strap by working the ratchet handle. Regarding the ratchet subassembly, you note that it includes a base frame, nut and bolt, spool, gears, handle, and pawl. All of these components are made from metal from China and are typically formed by stamping or extruding. Also, the polymer grip at the end of the handle is made in China. After the final metal processing, which includes deburring and plating, workers combine the components to form the finished ratchet subassembly. In addition, you note that both metal hooks are made in China. Hampton is considering moving some of its production processes to an undetermined third country, which will hereinafter be referred to as “Country X.” Specifically, Hampton proposes to ship Chinese yarn to Country X, where it will be woven into the finished strap, and where loops will be stitched for the attachment of the ratchet and the metal hooks. The ratchet subassembly and the metal hooks will be shipped from China to Country X, where they will be combined together with the straps. The finished ratchet and tie down will be packaged and shipped from Country X to the United States. In your request, you inquire as to whether moving the aforementioned processes would result in having Country X as the country of origin for the purposes of applying Section 301 trade remedies. ISSUE: What is the country of origin of the ratchet and tie down for the purposes of applying Section 301 trade remedies? LAW AND ANALYSIS: The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 25% will be imposed on certain Chinese imports pursuant to its authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). There is no dispute that weaving the two straps in Country X will result in the straps becoming products of Country X. The question presented is whether the two straps will be substantially transformed when they are combined with the Chinese metal parts in Country X to form a ratchet and tie down. When determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 69 C.C.P.A. 151 (1982). In order to determine whether a substantial transformation has occurred, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. CBP has stated that a new and different article of commerce is an article that has undergone a change in commercial designation or identity, fundamental character, or commercial use. A determinative issue is the extent of the operations performed and whether the materials lose their identity and become an integral part of the new article. This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). In determining whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 573 F. Supp. 1149 (Ct. Int’l Trade 1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations that are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. Factors which may be relevant in this evaluation may include the nature of the operation (including the number of components assembled), the number of different operations involved, and whether a significant period of time, skill, detail, and quality control are necessary for the assembly operation. If the manufacturing or combining process is a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States (“Uniroyal”), 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d 702 F. 2d 1022 (Fed. Cir. 1983). In Uniroyal, the U.S. Court of International Trade (“CIT”) examined whether a finished shoe upper was substantially transformed when it was combined with the shoe’s outer sole. Id. The CIT noted that “the upper -- which in its condition as imported is already a substantially complete shoe -- is readily recognizable as a distinct item apart from the outsole to which it is attached.” Id. at 224. In addition, the CIT cited to Grafton Spools, Ltd. v. United States, 45 Cust. Ct. 16 (1960), another substantial transformation case in which the U.S. Customs Court noted that purchasers of typewriter ribbons were buying the ribbon, and not the spool upon which the ribbon was wound. The CIT noted that “in Grafton Spools the ribbon and not the spool was the essence of the finished article, while here the upper is the essence of the completed shoe.” Id. at 226 – 227. In Uniroyal, the CIT ultimately concluded that adding the outer soles did not result in a substantial transformation of the uppers as the uppers were the very essence of the finished shoe. Similarly, the woven straps at issue are the very essence of the finished article. The purchasers of the ratchet and tie down are purchasing the tie down straps in order to secure their cargo. We note that after assembly, both straps maintain their name, character and use as tie down straps. For these reasons, we find that the straps will remain products of Country X even after they are combined with the metal parts. Therefore, the complete ratchet and tie down will be a product of Country X. As the ratchet and tie down will be a product of Country X, the relevant Section 301 provision does not apply. HOLDING: As the merchandise will be a product of Country X, Section 301 measures will not apply. A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy of this ruling, it should be brought to the attention of the CBP officer handling the transaction. Sincerely, Monika R. Brenner, Chief Valuation and Special Programs Branch

The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 25% will be imposed on certain Chinese imports pursuant to its authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). There is no dispute that weaving the two straps in Country X will result in the straps becoming products of Country X. The question presented is whether the two straps will be substantially transformed when they are combined with the Chinese metal parts in Country X to form a ratchet and tie down. When determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 69 C.C.P.A. 151 (1982). In order to determine whether a substantial transformation has occurred, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. CBP has stated that a new and different article of commerce is an article that has undergone a change in commercial designation or identity, fundamental character, or commercial use. A determinative issue is the extent of the operations performed and whether the materials lose their identity and become an integral part of the new article. This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993).In determining whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 573 F. Supp. 1149 (Ct. Int’l Trade