H321354

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H321354 July 21, 2022 OT:RR:CTF:VS H321354 MJD CATEGORY: Origin Lawrence R. Pilon Rock Trade Law LLC 134 North LaSalle Street Suite 1800 Chicago, IL 60602 RE: U.S. Government Procurement; Title III, Trade Agreements Act of 1979 (19 U.S.C. § 2511); Subpart B, Part 177, CBP Regulations; Country of Origin of Surgical Gowns Dear Mr. Pilon: This is in response to your request of October 11, 2021, on behalf of your clients, Global Resources International, Inc. (“GRI”) and Santé USA, LLC (“Santé USA”), for a final determination regarding the country of origin of surgical gowns pursuant to Title III of the Trade Agreements Act of 1979 (“TAA”), as amended (19 U.S.C. § 2511 et seq.), and subpart B of Part 177, U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. § 177.21, et seq.). GRI and Santé USA are parties-at-interest within the meaning of 19 C.F.R. §§ 177.22(d) and 177.23(a) and are therefore entitled to request this final determination. A meeting was held with counsel for GRI and Santé USA by videoconference on April 12, 2022. FACTS: GRI and Santé USA are manufacturers, importers, exporters, and distributors of medical devices and supplies for the healthcare industry. The subject merchandise consists of the Association for the Advancement of Medical Instrumentation (“AAMI”) Level 3 and Level 4 disposable surgical gowns for use in hospitals, surgical centers, and similar healthcare settings. The surgical gowns are made from nonwoven synthetic spun-melt-spun (“SMS”) textile material and plastic film made in the United States. The SMS textile material forms the exterior of the gown, while the plastic film material is glued to the interior of the gown as reinforcement for the SMS textile material. According to GRI and Santé USA, the SMS textile material is the most expensive material in the finished product, accounting for 30% of the finished gown’s value, and makes up 100% of the gown’s exterior. The SMS textile material and plastic film are transferred in rolls to the Dominican Republic where they are cut into component parts, which are in turn assembled into two sleeve subassemblies and the gown body subassembly. The sleeve subassemblies and body gown subassemblies are then returned to the United States for final assembly consisting of principally attaching the sleeve subassemblies to the gown body subassembly and attaching the neck binding to the neck opening of the gown. A more detailed account of the manufacturing process of the surgical gowns is as follows: United States: Production of the SMS textile material. Manufacture of plastic film. Dominican Republic: The SMS textile material and plastic film are cut into the main gown body, sleeve, and reinforcement pieces using electric scissors. The SMS textile material is converted to waist ties using a tie-making machine. The sleeve cut piece is folded and its seam sealed by a bar heat sealer and ultrasonic welder sewing machine. The knit cuff is sewn to the formed sleeve piece using a sewing machine. The item number, level of performance claim, and brand information are stamped onto the main gown body piece. The hook and loop fastener material is sewn to the gown body using a sewing machine. The ties are attached to the gown body subassembly by glue and ultrasonic welding. Glue is applied evenly to the plastic film reinforcement piece and applied to the inner face of the gown body subassembly. United States: The sleeve subassemblies are attached to the main gown body subassembly with an ultrasonic welder sewing machine. The neck binding is attached to the neck opening of the gown using a binding machine. Each gown is inspected for visible defects and conformity to required dimensions for size. The gowns are also tested for conformity to applicable AAMI Level 3 and Level 4 strength and permeability standards. Gowns are packaged and sterilized with ethylene oxide. GR and Santé USA state that the SMS textile material is classified in heading 5603, Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for “[n]onwovens, whether or not impregnated, coated, covered or laminated.” The finished surgical gowns are classified under subheading 6210.10.5010, HTSUSA, which provides for “[g]arments, made up of fabrics of heading 5602, 5603, 5903, 5906 or 5907: Of fabrics of heading 5602 or 5603: Other: Nonwoven disposable apparel designed for use in hospitals, clinics, laboratories or contaminated areas: Surgical or isolation gowns.” ISSUE: What is the country of origin of the surgical gowns for purposes of U.S. Government procurement? LAW AND ANALYSIS: CBP issues country of origin advisory rulings and final determinations as to whether an article is or would be a product of a designated country or instrumentality for the purpose of granting waivers of certain “Buy American” restrictions in U.S. law or practice for products offered for sale to the U.S. Government, pursuant to subpart B of Part 177, 19 C.F.R. § 177.21 et seq., which implements Title III, Trade Agreements Act of 1979, as amended (19 U.S.C. §§ 2511-2518). The rule of origin set forth in 19 U.S.C. § 2518(4)(B) states: An article is a product of a country or instrumentality only if (i) it is wholly the growth, product, or manufacture of that country or instrumentality, or (ii) in the case of an article which consists in whole or in part of materials from another country or instrumentality, it has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. See also 19 C.F.R. § 177.22(a). In rendering advisory rulings and final determinations for purposes of U.S. Government procurement, CBP applies the provisions of subpart B of Part 177 consistent with the Federal Acquisition Regulation. See 19 C.F.R. § 177.21. In this regard, CBP recognizes that the Federal Acquisition Regulation restricts the U.S. Government’s purchase of products to U.S.-made or designated country end products for acquisitions subject to the TAA. See 48 C.F.R. § 25.403(c)(1). The Federal Acquisition Regulation defines “U.S.-made end product” as: . . . an article that is mined, produced, or manufactured in the United States or that is substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. See 48 C.F.R. § 25.003. The Federal Acquisition Regulation, 48 C.F.R. § 25.003 defines “designated country end product” as a: WTO GPA [World Trade Organization Government Procurement Agreement] country end product, an FTA [Free Trade Agreement] country end product, a least developed country end product, or a Caribbean Basin country end product. Section 25.003 provides that a “Free Trade Agreement country end product” means an article that- (1) Is wholly the growth, product, or manufacture of a Free Trade Agreement (FTA) country; or (2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in an FTA country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product, includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself. “Free Trade Agreement country” means Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco, Nicaragua, Oman, Panama, Peru, or Singapore. See 48 C.F.R. § 25.003. Thus, the Dominican Re

CBP issues country of origin advisory rulings and final determinations as to whether an article is or would be a product of a designated country or instrumentality for the purpose of granting waivers of certain “Buy American” restrictions in U.S. law or practice for products offered for sale to the U.S. Government, pursuant to subpart B of Part 177, 19 C.F.R. § 177.21 et seq., which implements Title III, Trade Agreements Act of 1979, as amended (19 U.S.C. §§ 2511-2518).The rule of origin set forth in 19 U.S.C. § 2518(4)(B) states:An article is a product of a country or instrumentality only if (i) it is wholly the growth, product, or manufacture of that country or instrumentality, or (ii) in the case of an article which consists in whole or in part of materials from another country or instrumentality, it has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed.See also 19 C.F.R. § 177.22(a). In rendering advisory rulings and final determinations for purposes of U.S. Government procurement, CBP applies the provisions of subpart B of Part 177 consistent with the Federal Acquisition Regulation. See 19 C.F.R. § 177.21. In this regard, CBP recognizes that the Federal Acquisition Regulation restricts the U.S. Government’s purchase of products to U.S.-made or designated country end products for acquisitions subject to the TAA. See 48 C.F.R. § 25.403(c)(1). The Federal Acquisition Regulation defines “U.S.-made end product” as: . . . an article that is mined, produced, or manufactured in the United States or that is substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. See 48 C.F.R. § 25.003. The Federal Acquisition Regulation, 48 C.F.R. § 25.003 defines “designated country end product” as a:WTO GPA [W