H327000

HQ H327000 October 24, 2023 OT:RR:CTF:VS H327000 AP CATEGORY: Origin Mr. Han Hyun Woo LG Chem 128, Yeoui-daero Yeongdeungpo-gu, Seoul, 07336 South Korea RE: USMCA Eligibility; Section 301 Measures; Cathode Materials Dear Mr. Woo: This is in response to your ruling request dated July 28, 2022, filed on behalf of LG Chem (“importer”) and supplemented on August 26, 2022, concerning the eligibility of certain semi-finished and finished cathode materials manufactured in Canada and imported into the United States, for preferential tariff treatment under the U.S.-Mexico-Canada Agreement (“USMCA”). The importer has asked that certain information submitted in connection with this ruling be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The information contained within brackets in italics in this ruling or in the attachments to the ruling request, forwarded to our office, will not be released to the public and will be withheld from published versions of this ruling. FACTS: The importer plans to manufacture the subject cathode materials in Canada and then import them into the United States. The manufacturing of the finished good will be a three-step process. Process 1: In China, non-USMCA originating nickel sulfate, cobalt sulfate, and manganese sulfate will be dissolved and mixed. This mixture will be chemically synthesized with non-originating sodium hydroxide and liquid ammonia. Washing and dehydration processes will be performed. The resulting Cobalt Manganese Nickel Hydroxide, Chemical Abstracts Service Number (“CAS No.”) 189139-63-7 (“semi-finished good A”) classifiable in subheading 2825.90.90, Harmonized Tariff Schedule of the United States (“HTSUS”), will be evenly blended, sieved, de-ironed, packaged, and shipped to Canada. The semi-finished good A is defined as a “precursor” in the commercial market. Process 2: In Canada, the non-USMCA originating semi-finished good A will be mixed with lithium hydroxide and doping compounds under a special manufacturing process where [X] (“proprietary substance 1”) and [X] (“proprietary substance 2”) are added and then fired at high temperature. The chemical reaction will turn the mixed powder into doped Cobalt Lithium Manganese Nickel Oxide, CAS No. 182442-95-1 (“semi-finished good B”) of subheading 3824.99.39, HTSUS, which will further undergo roll smashing and crushing processes and will be sieved and de-ironed to remove impurities, washed, dehydrated, and dried. The semi-finished good B is called a “doped-cathode active material” in the commercial market. The semi-finished good B will be imported into the United States for use in lithium-ion batteries or will be put into Process 3 below. Process 3: In Canada, the semi-finished good B will be coated under a special coating process where USMCA originating or non-originating boric acid of subheading 2810.00.00, HTSUS, will be added at a high temperature to produce coated and doped Cobalt Lithium Manganese Nickel Oxide, CAS No. 182442-95-1 (“finished good”) of subheading 3824.99.39, HTSUS, which will be further de-sieved, de-ironed, and packaged. The net cost of the finished good will be approximately $[X] (1kg). The finished good is the same as the semi-finished good B except it is coated. It is the core material used in electric vehicle (“EV”) batteries that determines the voltage, energy density, lifespan, and output. The finished good will be imported into the United States. ISSUES: 1. Whether the semi-finished good B and the finished good are each eligible for preferential treatment under the USMCA when produced in Canada and imported into the United States. 2. What is the country of origin of the semi-finished good B and the finished good for purposes of Section 301 trade remedies? LAW AND ANALYSIS: Eligibility for Preferential Treatment under USMCA The 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, HTSUS, implements the USMCA and sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11, HTSUS states, in relevant part: Goods originating in the territory of a country named herein, pursuant to the United States-Mexico-Canada Agreement (USMCA), are subject to duty as provided herein, including any treatment set forth in subchapter XXIII of chapter 98 and subchapter XXII of chapter 99 of the tariff schedule. For the purposes of this note, as provided in the tariff schedule -- (i) Goods that originate in the territory of Mexico, Canada or the United States (hereinafter referred to as “USMCA country” or “USMCA countries” as further defined in subdivision (l)(xxiv) of this note) under the terms of subdivision (b) of this note and regulations issued by the Secretary of the Treasury (including Uniform Regulations provided for in the USMCA), and goods enumerated in subdivision (p) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn, followed by the symbol “S” in parentheses, are eligible for such duty rate, in accordance with section 202 of the United States-Mexico-Canada Agreement Implementation Act; …. For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country … 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 – the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries; the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials; 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)); …. GN 11(n)(iv), HTSUS, states, in relevant part: A good of any heading in chapters 28 through 38, inclusive, that satisfies one or more of the provisions enumerated in this subdivision shall be treated as an originating good, except as otherwise specified in those rules. Notwithstanding the preceding sentence, a good is an originating good if it meets the applicable change in tariff classification or satisfies the applicable value content requirement specified in subdivision (o) of this note …. If the rules of origin under GN 11(o), HTSUS, are satisfied, we do not need to consider whether the alternate rules of origin in GN 11(n)(iv), HTSUS, are also satisfied. GN 11(o), HTSUS sets forth the applicable tariff shift rules: Chapter 38 5. (A) A change to subheadings 3823.11 through 3826.00 from any other subheading, including another subheading within that group; or (B) No change in tariff classification to a good of subheadings 3823.11 through 3826.00, provided there is a regional value content of not less than: (1) 40 percent where the transaction value method is used; or (2) 30 percent where the net cost method is used. Self-produced material may be considered as a material for determining applicability of rules of origin pursuant to 19 C.F.R. Part 182, Part II, Section 3(8), which states: For the purpose of determining whether non-originating materials undergo an applicable change in tariff classification, a self-produced material may, at the choice of the producer of that material, be considered as a material used in the production of a good into which the self-produced material is incorporated. The importer will use 

Eligibility for Preferential Treatment under USMCAThe 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, HTSUS, implements the USMCA and sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA.GN 11, HTSUS states, in relevant part:Goods originating in the territory of a country named herein, pursuant to the United States-Mexico-Canada Agreement (USMCA), are subject to duty as provided herein, including any treatment set forth in subchapter XXIII of chapter 98 and subchapter XXII of chapter 99 of the tariff schedule. For the purposes of this note, as provided in the tariff schedule -- (i) Goods that originate in the territory of Mexico, Canada or the United States (hereinafter referred to as “USMCA country” or “USMCA countries” as further defined in subdivision (l)(xxiv) of this note) under the terms of subdivision (b) of this note and regulations issued by the Secretary of the Treasury (including Uniform Regulations provided for in the USMCA), and goods enumerated in subdivision (p) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn, followed by the symbol “S” in parentheses, are eligible for such duty rate, in accordance with section 202 of the United States-Mexico-Canada Agreement Implementation Act; ….For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country … 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