H312437

 HQ H312437 August 25, 2021 OT:RR:CTF:VS H312437 RSD CATEGORY: Classification Ms. Julie Turvold Windings Inc. 208 N. Valley Street New Ulm, Minnesota 56073 RE: USMCA Eligibility; Stator Assembly; Country of Origin; Marking; 19 U.S.C. § 1304; Trade Remedy Section 301 Duties Dear Ms. Turvold: This is in response to your ruling request, filed on June 21, 2020, on behalf of Windings Inc. (“importer”) requesting a binding ruling regarding the eligibility for preferential tariff treatment under the United States-Mexico-Canada Agreement (“USMCA”), for stator assemblies, their country of origin for purposes of marking under 19 U.S.C. 1304, and applicability of Section 301 trade remedy duties. FACTS: The product under consideration is a stator assembly, specifically a 4-pole type stator assembly presently being processed in Mexico and imported into the United States. However, you indicate that it is currently exported to the United States as a Chinese product, which is assembled in Mexico. The stator assembly will be used as a part of an electric auxiliary hydraulic pump motor for the Boeing 737 aircraft. The finished stator assembly consists of an elaborate electric stator stack and other materials that originate in the USMCA territory with one exception. Near the end of the assembly process, a Chinese origin metal housing is installed on the stator assembly to provide protection to the electric stator. You claim that this housing is a simple external component that only serves as support and to protect the mechanism and its internal components. Thus, you contend that the housing is not an essential part of an electric motor. Instead, you maintain that the essential element of the product is the U.S.-origin laminated stack, which is currently classified under heading 8503, Harmonized Tariff Schedule of the United States (HTSUS), and is sourced from Dix-Mex S.A. of C.V. You have provided the following parts list used to make the stator assembly: .
 
 You indicate that the following steps are involved in the assembly of the stator assemblies: Stack/core washing and cleaning. End lam bonding to stack/core. Stack/core Internal Diameter machining. Stack/core Outer Diameter precision machining Stack/core hole drilling precision machining. Stack/core visual and mechanical inspection. Prepare and install dielectric protection insulation into stack/core. Prepare, wind, and insert coil bundles into stack/core. Prepare and install insulation coil retainers into stack/core. Prepare and install sleeving over magnet wire leads. Cut coil winding leads. Install phase insulators into coil end bundles. Top and bottom lace winding. Pre-form coil winding with hydraulic press. Top and bottom second lace winding. Form coil winding with hydraulic press. Stator visual, mechanical, and electrical Inspection before varnishing. Stator preparation/masking for varnishing. Stator varnishing (Vacuum + drain + cure). Stator sand and wipe out after varnishing. Stator visual, mechanical, and electrical Inspection after varnishing. Housing installation onto stator (this process is very simple). Stator/housing assembly visual, mechanical, and electrical final inspection. Export to USA. ISSUES: Whether the stator assemblies are eligible for preferential tariff treatment under the USMCA when they are imported from Mexico into the United States. What is the country of origin for marking purposes of the stator assemblies that are assembled in Mexico? What is the country of origin of the stator assemblies for purposes of applying Section 301 trade remedy duties? LAW AND ANALYSIS: Eligibility for USMCA The United States-Mexico-Canada Agreement (“USMCA”) was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (GN) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states: For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a "good originating in the territory of a USMCA country" only if— 1) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries; 2) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials; 3) the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or … Since the stator assemblies contain non-originating materials, they are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and GN 11(b)(ii). Thus, we must next determine whether the lower bearing assemblies qualify under GN 11(b)(iii). The National Commodity Specialist Division has determined that the applicable subheading for the stator assemblies is 8503.00.65, HTSUS, which provides for: Parts suitable for use solely or principally with the machines of heading 8501 or 8502: The applicable rule of origin for merchandise under heading 8503 HTSUS, is in GN 11(o), HTSUS, which provides, in relevant part: A change to heading 8503 from any other heading. According to the list of the parts used in making the stator assemblies and the tariff classifications for those parts that you have submitted, there is one part which is nonoriginating, the housing which is classified in heading 8503, HTSUS, prior to the production of the stator assembly. Consequently, there is a material used to make the stator assemblies that does not undergo a change in tariff classification, and the applicable tariff shift rule set forth in GN 11(o)/ Rule 3 to Chapter 85, HTSUS is not satisfied. Although the stator assembly does not meet the applicable tariff shift rule, the good may still qualify for the tariff preference provided it satisfies the requirements of GN 11(b)(iv). This rule provides that: (b) For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a "good originating in the territory of a USMCA country" only if-- (iv) except for a good provided for in any of chapters 61 through 63— (A) the good is produced entirely in the territory of one or more USMCA countries; (B) one or more of the nonoriginating materials provided for as parts under the tariff schedule and used in the production of the good do not satisfy the requirements set forth in this note because— (1) both the good and its materials are classified under the same subheading or under the same heading that is not further subdivided into subheadings; or (2) the good was imported into the territory of a USMCA country in unassembled form or disassembled form but was classified as an assembled good pursuant to general rule of interpretation 2(a) of the tariff schedule, and (C) the regional value content of the good, determined in accordance with subdivision (c) of this note, is not less than 60 percent if the transaction value method is used, or not less than 50 percent if the net cost method is used, and such good satisfies all other applicable provisions of this note. If the good meets all the requirements in GN 11(b)(iv), including the regional value content (RVC) thresholds, then 

Eligibility for USMCA The United States-Mexico-Canada Agreement (“USMCA”) was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (GN) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states: For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a "good originating in the territory of a USMCA country" only if— 1) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries; 2) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials; 3) the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or…Since the stator assemblies contain non-originating materials, they are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and GN 11(b)(ii). Thus, we must next determine whether the lower bearing assemblies qualify under GN 11(b)(iii). The National Commodity Specialist Division has determined that the applicable subheading for the stator assemblies is 8503.00.65, HTSUS, which provides for: Parts suitable for use solely or principally with the machinesof heading 8501 or 8502:The applicable rule of origin for merchandise under heading 8503 HTS