H306340

 HQ H306340 August 3, 2023 OT:RR:CTF:VS H306340 RSD CATEGORY: Classification Brett Ian Harris, Esq. Roll & Harris, LLP 2001 L Street, NW., Suite 500 Washington, D.C. 20036 RE: Eligibility for DR-CAFTA of Automotive Starters and Alternators Removed from Used Automobiles in the Dominican Republic and Costa Rica Dear Mr. Harris: This is in response to your correspondence dated October 3, 2019, submitted on behalf of Schnitzer Steel Industries (SSI) requesting a ruling concerning the eligibility of automotive alternators and starters taken from used vehicles for preferential tariff treatment under the Dominican Republic-Central America Free Trade Agreement (“DR-CAFTA”). On October 23, 2020, a teleconference meeting was held with you, myself, and members of my staff to discuss SSI’s request for a ruling. You have also submitted a supplemental submission dated March 23, 2021. FACTS: SSI collects, processes, and recycles metals ranging from basic iron and steel to stainless steel, aluminum, copper, lead, and zinc which it then provides to mills and foundries for use in the production of new steel and other metal products. One of the principal sources of supply for the scrap metal that SSI processes at its U.S. facilities is end-of-life vehicles. SSI purchases these end-of-life vehicles, but prior to crushing and providing them to its scrap yards, it will harvest operational auto parts and sell them to retail customers. SSI is contemplating supplementing its supply of used automotive parts by importing two types of automotive parts – alternators and starters which will be obtained from salvage and scrap facilities located in the Dominican Republic and Costa Rica. These used automotive parts will have been removed from either operational or end-of-life passenger vehicles by private parties in the Dominican Republic and Costa Rica. SSI will not know, and will likely not be able to determine, the original country of origin of the vehicles or the used alternators and starters, which are the subject of this request. According to your submission, the passenger vehicles from which the starters and alternators are removed are generally classified in heading 8703 of the Harmonized Tariff Schedule of the United States ("HTSUS"). This provision covers "[m]otor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars . . . ." The automobile starters and alternators covered by this ruling request are classified under HTSUS subheadings 8511.40 and 8511.50, respectively. Heading 8511 provides for: Electrical ignition or starting equipment of a kind used for spark ignition or compression-ignition internal combustion engines (for example, ignition magnetos, magneto-dynamos, ignition coils, spark plugs and glow plugs, starter motors); generators (for example, dynamos, alternators) and cut-outs of a kind used in conjunction with such engines; parts thereof: In an email sent on October 6, 2020, counsel advised that SSI confirmed that in addition to the alternators and starters that it plans to import into the United States, there will also be other parts removed from used cars in the Dominican Republic and Costa Rica, even if those other parts may not be imported into the United States. Counsel further claims that every possible part may be removed from the used vehicles at these facilities before they are processed into scrap – even if some of those parts are not ultimately imported. However, no verification of this contention was provided, and no indication was presented on how SSI intends to keep track of the other parts that are removed from the used automobiles at its facilities. ISSUE: Whether the imported automotive alternators and starters removed from used vehicles in the Dominican Republic and Costa Rica are considered as originating goods pursuant to DR-CAFTA. LAW AND ANALYSIS: DR-CAFTA was signed on August 5, 2004, and includes as parties the United States, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Costa Rica. The provisions of DR-CAFTA were adopted by the U.S. in the Dominican Republic – Central America – United States Free Trade Agreement Implementation Act, Public Law 109-53 (2005). General Note (GN) 29 of the Harmonized Tariff Schedule of the United States ("HTSUS") sets forth the rules of origin for DR-CAFTA. Pursuant to GN 29(b), goods are eligible for treatment as an originating good if— (i) the good is a good wholly obtained or produced entirely in the territory of one or more of the parties to the agreement; (ii) the good was produced entirely in the territory of one or more of the parties to the agreement and— (A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (n) of this note; or (B) the good otherwise satisfies any applicable regional value content or other requirements specified in subdivision (n) of this note; and the good satisfies all other applicable requirements of this note; or (iii) the good was produced entirely in the territory of one or more of the parties to the agreement exclusively from originating materials. In the definition of a "good wholly obtained or produced," GN 29(c)(i)(J) and (K) includes "waste and scrap derived from--(1) manufacturing or processing operations in the territory of one or more of the parties to the Agreement; or (2) used goods collected in the territory of one or more of the parties to the Agreement, provided such goods are fit only for the recovery of raw materials, and recovered goods derived in the territory of one or more of the parties to the Agreement from used goods, and utilized in the territory of one or more of the parties to the Agreement in the production of remanufactured good." Further, the term "recovered goods" is defined in GN 29(c)(ii)(A) to mean: materials in the form of individual parts that are the result of-- (i) the disassembly of used goods into individual parts; and (ii) cleaning, inspecting, testing, or other processes as necessary for improvement to sound working condition. Additionally, GN 29(c)(ii)(B) defines the term "remanufactured goods" as "goods classified in chapter 84, 85 or 87 of the tariff schedule … that-- (i) are entirely or partially comprised of recovered goods; and (ii) have a similar life expectancy and enjoy a factory warranty similar to such a new good. These concepts make it clear that in the case of waste and scrap, what is recovered must be fit only for the recovery of raw materials which is not the situation when automotive parts are sold to retail customers and possibly refurbished. See Headquarters Ruling Letter (HQ) 558823 dated February 6, 1995. Additionally, in the case of "recovered goods" and "remanufactured goods," it is clear that a good may be considered to be originating as "wholly obtained or produced" if it is first recovered, and then used to make certain remanufactured goods in specific classifications. Here, the alternators and starters are recovered from the used cars by disassembly. However, the plan is to export the alternators and starters in this condition to the United States. The Agreement does not provide for recovered goods to be considered originating at the disassembly stage, but only after undergoing further steps to become remanufactured goods. You contend, however, that the alternators and starters are not necessarily considered originating as "wholly obtained or produced" goods, but rather that they undergo the requisite tariff shift pursuant to GN 29(b)(ii)(A), HTSUS, which provides that an imported article is considered originating under the DR-CAFTA if "the good was produced entirely in the territory of one or more of the parties to the Agreement, and . . . each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in s

DR-CAFTA was signed on August 5, 2004, and includes as parties the United States, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Costa Rica. The provisions of DR-CAFTA were adopted by the U.S. in the Dominican Republic – Central America – United States Free Trade Agreement Implementation Act, Public Law 109-53 (2005). General Note (GN) 29 of the Harmonized Tariff Schedule of the United States ("HTSUS") sets forth the rules of origin for DR-CAFTA. Pursuant to GN 29(b), goods are eligible for treatment as an originating good if—(i) the good is a good wholly obtained or produced entirely in the territory of one or more of the parties to the agreement; (ii) the good was produced entirely in the territory of one or more of the parties to the agreement and—(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (n) of this note; or(B) the good otherwise satisfies any applicable regional value content or other requirements specified in subdivision (n) of this note;and the good satisfies all other applicable requirements of this note; or(iii) the good was produced entirely in the territory of one or more of the parties to the agreement exclusively from originating materials.In the definition of a "good wholly obtained or produced," GN 29(c)(i)(J) and (K) includes "waste and scrap derived from--(1) manufacturing or processing operations in the territory of one or more of the parties to the Agreement; or (2) used goods collected in the territory of one or more of the parties to the Agreement, provided such goods are fit only for the recovery of raw materials, and recovered goods derived in the territory of one or more of the parties to the Agreement from used goods, and utilized in the territory of one or more of the parties to the Agreement in the production of remanufactured good." Further, the term "recovered goods" is defined in GN 29(c)(ii)(A) to