H326574

HQ H326574 June 21, 2023 OT:RR:CTF:VS H326574 AMW CATEGORY: Origin Mr. Josh Beker, Esq. Roberts & Kehagiaras LLP 2339 Commerce St. Suite 162 Houston, TX 77003 RE: Country of Origin; CATV Amplifiers; Section 301 trade remedy Dear Mr. Beker: This is in response to your request dated March 21, 2022, on behalf of your client, Applied Optoelectronics, Inc. (“AOI”), regarding the country of origin of several models of cable television broadband (“CATV”) amplifiers for purposes of Section 301 measures. Your request, originally submitted as an electronic ruling request to the National Commodity Specialist Division, was forwarded to this office for review. A meeting with counsel was held on April 6, 2023. FACTS: The following facts are based on the information provided in your March 21, 2022, submission and follow-up submissions transmitted on July 12, 2022, May 12, 2023, June 13, 2023, as well as the April 6, 2023, meeting. AOI is a manufacturer and provider of fiberoptic network products servicing a wide range of end markets. The current request relates to three different foreign-manufactured articles: ATX GigaXtend™ GMC 1.2 GHz High Gain Balanced Triple System Amplifier (“HGBT”) ATX GigaXtend™ GMC 1.2 GHz High Gain Dual System Amplifier (“HGD”) ATX GigaXtend™ GMC 1.2 GHz Line Extender The HGBT and HGD are system amplifiers used by cable operators to optimize hybrid fiber-coaxial networks. The line extender, meanwhile, is a broadband amplifier designed to assist cable operators in evolving their HFC networks to meet subscriber demand. The HGBT offers three radio frequency (“RF”) outputs while the HGD provides two high-level outputs with an option to create a third RF output by using the optional plug-in auxiliary path signal director. Both devices are factory configured with reverse amplifiers, diplex filters, thermal compensation circuits, forward interstate pads, and equalizers to promote optimal performance. The line extender only offers one high-level RF output. Your request indicates that the subject system amplifiers (the HGBT and HGD) and the line extender have almost identical production processes with slightly different processing times and components used. The devices are each comprised of a printed circuit board assembly (“PCBA”) and other structural component parts. The subject system amplifiers and line extender are manufactured in a series of approximately nine steps occurring in both China and Taiwan. In addition to describing the manufacturing steps, AOI also provided information concerning the time it takes to conduct the various operations. The steps are as follows: Step One – Preliminary PCB Priming (China): the PCBA is manufactured using a two-step surface mount technology (“SMT”) and dual-in-line package (“DIP”) process. First, solder paste is applied onto the topside of a raw printed circuit board (“PCB”) and various electrical and electronic components are mounted and soldered onto the PCB to create a surface mount device (“SMD”) assembly. The SMD assembly is then inspected for imperfections and passed down the assembly line. Additional components are added to the SMD assembly via the DIP process to create the “generic” PCBA (i.e., one capable of use in a variety of amplifiers). The request indicates that the components added to the PCBA of each device type at this stage varies slightly. For the line extender, seven types of components are added: resistors, capacitors, an inductor, an RF connector, fuses, amplifier chips, wires, and power connector. For the HGD, eight component types are added: resistors, capacitors, an inductor, an RF connector, fuses, amplifier chips, wires, and power connectors. For the HGBT, seven component types are added: resistors, capacitors, an RF connector, fuses, amplifier chips, wires, and power connectors. Step Two – PCBA Setup (China): An AOI employee solders the RF connectors, feed-through capacitors, and AC wires onto the PCBA. The PCBA is then mounted in the chassis using screws and is soldered onto the chassis. The employee then places the reverse amplifier PCBA into the bottom of the chassis using a screwdriver and attaches the PCBA with screws. At this stage and in the next, AOI employees will also add press-fit holes where components can be added during later assembly stages. Step Three – PCBA Burn-In (China): AOI tests the product’s power consumption with a 60-volt AC power input at 50 degrees Celsius. The power test is intended to create a baseline reading for the assembled PCBA. The test is run at an elevated temperature to allow time for minor changes in electrical values to settle close to their final values. Following this step, the units are exported from China to Taiwan for further assembly. Step Four – Signal Path Setup (Taiwan): An employee attaches the metal cover to the housing with screws. Following this, an employee will open the chassis to access the PCBA and will add additional components via a pushpin assembly. For the HGBT and HGD, the additional components include the following: non-mirrored diplexer, mirrored diplexer, reverse input pads, FISC, RISC, forward I/S EQ, forward I/S pad, system trim jumper, and forward output pads. With respect to the line extender, the additional components include the following: non-mirrorred diplexer, mirrored diplexer, reverse input pads, HPFT, LPFT, forward IS/EQ, forward I/S pad, system trim jumper, and forward output pads. Step Five – Automatic Gain Control (“AGC”) Test (Taiwan): AGC is installed on many, but not all, units based on customer specification and model number. It is used to maintain the output gain at a specified level and in an active manner. Step Six – Launch Amplifier Final Assembly, Tuning, and Testing (Taiwan): The amplifier module (reverse amplifier combined with forward amplifier) is tuned to customer specifications. During this stage, a technician may alter the physical characteristics of the PCBA assembled in Step One above. For instance, circuit traces may be modified, etched capacitors connected, and component positioning adjusted. The full extent of the changes per unit will vary by individual customer specifications. Step Seven – Full Station Assembly (Taiwan): The launch amplifier is installed in a housing along with a power supply and cables, and routed to their proper position. Step Eight – Full Station Test (Taiwan): A visual inspection is performed to ensure the device configuration is correct. The housing of the full station assembly is sealed using an electric screwdriver. Step Nine – Packaging (Taiwan): The devices are placed into cardboard boxes, labels attached, and are secured for shipment. AOI also provided a bill of materials (“BOM”) for both the system amplifier units (the HGBT and HGD) and the line extender. These documents indicate that the vast majority of components, including those added during the Taiwanese assembly, originate in China. For the system amplifier units (the HGBT and HGD), approximately 546 different component types are used (in some instances, multiple units of each component are used). Of these component types, approximately 427 originate in China and approximately nine originate in Taiwan. The remaining components are sourced from a variety of other countries. For the line extender, approximately 402 component types are used to construct each unit (once again, multiples of certain components are used). Of these component types, approximately 349 originate in China and approximately five are sourced from Taiwan. The remaining components are sourced from a variety of other countries. ISSUE: What is the country of origin of the subject HGBT, HGD, and line extender? 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, HT

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, HTSUS. The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(f), HTSUS. When determining the country of origin for purposes of applying Section 301 measures, the substantial transformation analysis applies. See, e.g., Headquarters Ruling (“HQ”) H301619, dated November 6, 2018. The substantial transformation test 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). The issue of substantial transformation is a “mixed question of technology and customs law, mostly the latter.” 681 F.2d at 783. To determine whether a substantial transformation occurs when components of various origins are assembled into completed products, U.S. Customs and Border Protection (“CBP”) considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the item’s components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, or use are primary considerations in such cases. See, e.g., HQ H311606, dated June 16, 2021. Additionally, factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process may be considered when determining whether a substantial transformation has occurred. No one factor is determinative. The Court of International Trade interpreted the meaning of “substantial transfor