H313371

 HQ H313371 March 30, 2021 OT:RR:CTF:VS H313371 RSD CATEGORY: Origin Mr. Jinhyeok Ha LG Electronics, Inc. 322 Gyeongmyeong-daero Seo-gu Incheon 22744 South Korea RE: Country of Origin of Rotor-Stator Assemblies for Electric Vehicle Motors for purposes of the Applicability of Trade Remedy Duties under Section 301. Dear Mr. Ha: This is in response to your request for a binding ruling dated August 14, 2020, on behalf of LG Electronics concerning the application of Section 301 trade remedy duties for your product: a rotor-stator assembly for an electric vehicle motor. FACTS: You describe the product as a stator-rotor assembly for an electrical vehicle motor. In your email of March 1, 2021, you have indicated that the ruling request was submitted for the purposes of determining whether the products under consideration would be subject to trade remedy duties under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). You have presented four different assembly scenarios of the stator and rotor assemblies for use in the production of electric vehicle motors. You submitted a bill of materials with diagrams displaying pictures of the components that are used in making the products. Based on this information, the production of the stator-rotor assemblies consists of multiple steps, where subassemblies are created and combined with each other to form other subassemblies, which in turn are all put together to make the stator-rotor. The components used in making the rotor and stator assemblies will come from various countries, as set forth below, and the assemblies will be manufactured in either China, Mexico, or Korea. 
 ISSUE: What is the country of origin of the rotor-stator assemblies for the purposes of the application of the Section 301 trade remedy duties for goods under subheading 9903.88.01, HTSUS in each of the four presented scenarios? LAW AND ANALYSIS: The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). See Section XXII, Chapter 99, Subchapter III, U.S. Note 20(r), HTSUS. The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(s)(i), HTSUS. When determining the country of origin for purposes of applying 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, 681 F.2d 778 (CCPA 1982). In deciding 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. See Belcrest Linens v. United States, 6 CIT 204, 573 F. Supp. 1149 (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. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. If the manufacturing or combining process is a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). In Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of “substantial transformation” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. Energizer involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight, under the TAA. All the components of the Generation II flashlight were of Chinese origin, except for a white LED and a hydrogen getter. The components were imported into the United States where they were assembled into the finished Generation II flashlight. The court reviewed the “name, character and use” test in determining whether a substantial transformation had occurred and reviewed various court decisions involving substantial transformation determinations. The court noted, citing Uniroyal, Inc. v. United States, that when “the post-importation processing consists of assembly, courts have been reluctant to find a change in character, particularly when the imported articles do not undergo a physical change.” Energizer at 1318. In addition, the court noted that “when the end-use was pre-determined at the time of importation, courts have generally not found a change in use.” Energizer at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. 308, 310, aff’d 989 F.2d 1201 (Fed. Cir. 1993). Furthermore, courts have considered the nature of the assembly, i.e., whether it is a simple assembly or more complex, such that individual parts lose their separate identities and become integral parts of a new article. In reaching its decision in Energizer, the court expressed the question as one of whether the imported components retained their names after they were assembled into the finished Generation II flashlights. The court found “[t]he constitutive components of the Generation II flashlight do not lose their individual names as a result [of] the post-importation assembly.” The court also found that the components had a pre-determined end-use as parts and components of a Generation II flashlight at the time of importation and did not undergo a change in use due to the post-importation assembly process. Finally, the court did not find the assembly process to be sufficiently complex as to constitute a substantial transformation. Thus, the court found that Energizer’s imported components did not undergo a change in name, character, or use because of the post-importation assembly of the components into a finished Generation II flashlight. The court determined that China, the source of all but two components, was the correct country of origin of the finished Generation II flashlights under the government procurement provisions of the TAA. In New York Ruling Letter (NYRL) N308827, dated January 21, 2020, the country of origin of three electric motors was under consideration. The stator assembly was comprised of the wound stator core and the stator housing. The rotor assembly was comprised of the laminated stack, aluminum, and the flanges. The wound stator core and rotor lamination stacks were manufactured in China, while the stator housing and flanges were sourced from France. In Hungary, the rotor lamination stack was injected with molten aluminum. In addition, a Hungarian origin shaft was inserted, and the rotor mass was machined and balanced. Once the rotor was fabricated, the motor was constructed, including inserting the stator core into the housing to form a stator assembly; attaching the flanges to the rotor to form a rotor assembly; inserting the rotor assembly into the stator assembly; making electrical connections; testing, painting, and packaging. Regarding the origin of the motors, it was noted that the assembly operations which consisted of placing the rotor and stator assemblies into a housing to produce a functioning electric motor was not a complex operation. Further, the ruling explained that no single subassembly described was dispositive in determining the

The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). See Section XXII, Chapter 99, Subchapter III, U.S. Note 20(r), HTSUS. The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(s)(i), HTSUS. When determining the country of origin for purposes of applying 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, 681 F.2d 778 (CCPA 1982). In deciding 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. See Belcrest Linens v. United States, 6 CIT 204, 573 F. Supp. 1149 (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. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. If the manufacturing or combining process is a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 3 CIT 220, 542