H315298

HQ H315298 June 15, 2021 OT:RR:CTF:VS H315298 JMV CATEGORY: Origin Jeremy R. Page Page-Fura PC 939 W. North Avenue, Suite 750 Chicago, IL 60642 RE: Country of origin of an Automotive Armrest; Section 301 Trade Remedy; Marking Dear Mr. Page: This is in response to your request, dated October 25, 2020, filed on behalf of your client Yanfeng Seating Mexico S.A. de C.V. (“YFS”). In your letter, you request a binding ruling on the applicability of Section 301 trade remedies and country of origin marking for an automotive armrest. FACTS: The product at issue is an automotive armrest that YFS will be producing to the specifications of a motor vehicle Original Equipment Manufacturer (“OEM”) customer. The production entails multiple steps involving 62 to 78 unique components exclusive of stapling, with production and associated assembly operations in all instances to occur in Mexico. Two different proposed sourcing/production scenarios are considered in this ruling. Production Scenario One Under the first production scenario proposed by YFS, the automotive armrest will be made of 62 distinct components, 47 of Chinese origin and 15 of Mexican origin. First, YFS will create the armrest main foam subassembly that will provide the internal structure of the complete armrest. This subassembly will be produced from armrest foam and a foam reinforcement pad sourced from Mexico, and a Velcro adhesive sourced from China. The second subassembly is a cupholder lid trim that will be produced from raw materials sourced from within Mexico (either leather or PVC) which will first be die cut to shape before undergoing an overcast sewing operation. The further manufactured trim will then be clad to a non-woven material also of Mexican origin. The third subassembly is the main armrest trim, which will also be produced from raw materials sourced in Mexico (either leather or PVC). The PVC or leather will be die cut to shape, then subject to an overcast sewing operation. Then, bristle and non-woven material of Mexican origin will be sewn with the main trim cover to produce the finished subassembly With those three subassemblies complete, YFS will then manufacture the main armrest assembly. YFS will combine the three subassemblies with an additional 43 distinct components of Chinese origin and two manufactured components of Mexican or Italian origin (an induction charger wrap produced in Mexico from Mexican raw materials and a cupholder trim also produced in Mexico from Italian raw materials). YFS will produce the main armrest assembly with the following steps: Wrap the lid internal plastic and lid foam with the cupholder lid trim. The cupholder inner base will then be combined with the cupholder trim and cupholder inner bottom to produce a “Cupholder Subassembly.” The induction charger panel will be wrapped with the induction trim, then assembled with the induction charger unit (further identified as the “Induction Charger Unit Subassembly”). The console storage will then be combined with the lid release latch, lid locks, springs, lid axis and dampers, which is then further assembled with the Cupholder Subassembly. Adjoin the subassembly from step 3 to the Armrest Main Trim Subassembly with metal clips. Join the Induction Charger Unit Subassembly to the Armrest Main Trim Subassembly. Affix the Cupholder Subassembly to the Armrest Main Trim Subassembly with the affixation of the Wood Deco Assembly with metal clips. An additional eight components of Chinese origin, brackets and bracket hinges that affix the armrest to the seat structure of the motor vehicle, will be combined with the Armrest Main Assembly to produce the finished armrest. Production Scenario Two Under the second production scenario proposed by YFS, 78 unique components will be combined to produce the final motor vehicle armrest, starting with the production of the same three subassemblies from Scenario 1: the armrest main foam subassembly, the cupholder lid trim subassembly and the armrest main trim subassembly. The sourcing and production steps will remain the same as in Scenario 1 except for the sourcing of the non-woven material used to produce the cupholder lid trim assembly will be from China in lieu of Mexico. Under production Scenario 2, YFS will also produce additional subassemblies in Mexico: the wood deco subassembly, and the frame and rod subassembly. Producing the wood deco subassembly will require hot melting silver trim rings of Mexican origin to a plastic decorative wood trim item of Turkish origin. The finished wood deco subassembly will form the framing for the cupholder integrated into the finished armrest. The frame and rod subassembly will provide additional structural integrity to the armrest and will consist of nine components: five of Mexican origin and four of Chinese origin. The Mexican components will include the left-hand and right-hand side frames as well as the center frame and two reinforcing pin brackets. The Chinese components consist of a center header rod, an axis bushing, an axis and a limit shaft. All of the components will be combined through a welding operation to create a single, bound subassembly. YFS will then produce the armrest main assembly. In addition to the subassemblies above, 43 discrete components (17 components of Mexican origin and 26 of Chinese origin) are required to produce the armrest main assembly. Included among the Mexican components are the foam and internal plastic to complete the cupholder lid trim assembly, and the main body assembly that forms the internal skeleton of the armrest overall. Key components of Chinese origin include the internal tray, latching components, and a mini-drive actuator that consists of a direct current motor and transmission mechanism that provides rotational motion to the transmission which, in turn, pulls the Armrest control cable to release the Armrest from its locked position to free rotation. By changing the input current direction, the actuator can release the cable and relock the Armrest. Concurrent with production of the armrest main assembly, YFS will also produce a hinge bracket assembly that will secure the armrest to the motor vehicle seat while also enabling the vehicle passenger to engage/disengage armrest usage. That Assembly will consist of seven components (four of Mexican origin and three of Chinese origin), which will be welded together. The Mexican components will include the hinge bracket, a gas spring bracket, and a tether wire. The Chinese components will include the console pivot bracket and several fasteners. Finally, five components of Mexican origin (including the hinge bracket assembly) and three of Chinese origin, will be assembled with the armrest main assembly to produce the finished armrest. These remaining components consist primarily of the brackets and bracket hinge that are used to affix the armrest to the seat structure of the underlying motor vehicle. In both scenarios, the finished automotive armrest will be classified under subheading 9401.90.10 of the Harmonized Tariff Schedule of the United States (“HTSUS”). In Scenario 1, 19 components of foreign origin will also be classified in 9401.90.10, HTSUS. In Scenario 2, six components of foreign origin will also be classified in 9401.90.10, HTSUS. ISSUE: What is the country of origin of the automotive armrest for purposes of applying Section 301 trade remedies? What is the country of origin of the automotive armrest for marking purposes? LAW AND ANALYSIS: Section 301 Duties The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 7.5% 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”). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(s), HTSUS. Among the subheadings listed in U.S. Note 20(s) of Subchapter III, Chapter 99, HTSUS, is 9401.9

Section 301 DutiesThe United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 7.5% 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”). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(s), HTSUS. Among the subheadings listed in U.S. Note 20(s) of Subchapter III, Chapter 99, HTSUS, is 9401.90.10, 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, 69 C.C.P.A. 151 (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. 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. 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 occ