H329104

HQ H329104 March 28, 2024 OT:RR:CTF:VS H329104 AP CATEGORY: Origin Center Director Electronics Center of Excellence and Expertise U.S. Customs and Border Protection 301 East Ocean Blvd., Suite 600 Long Beach, CA 90802 RE: UKFTA Eligibility; Country of Origin; Section 301 Trade Remedy; SE Cables Dear Center Director: This is in response to your December 28, 2022 request and supplemental information submitted on March 17, 2023, seeking internal advice regarding the eligibility of certain Service Entry (“SE”) cables imported by Imperium Cables LLC (“importer”) for preferential tariff treatment under the United States-Korea Free Trade Agreement (“UKFTA”) and their country of origin for purposes of Section 301 remedies. We held an in-person meeting with importer’s counsel on February 8, 2023. The importer has requested that certain information submitted in connection with this internal advice request 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 and all attachments to this internal advice request, forwarded to our office, will not be released to the public and will be withheld from published versions of this decision. FACTS: The instant cables are SE cables constructed with AA-800 series aluminum alloy, compact stranded conductors. The cross-linked polyethylene insulation for the outside of the SE cables is rated for a maximum operation temperature of 90°C in wet and dry locations. The SE cables’ nominal diameters range from 0.588 to 1.95 inches; the weight per 1,000 feet varies from 128 to 1,454; and the ampacity varies from 45 to 230 under 90°C conditions. The importer imported the SE cables from a manufacturer located in South Korea. The Korean manufacturer sourced aluminum rod or rebar wire from China to make the SE cables. The aluminum rod/wire is classified in subheading 7604.29, Harmonized Tariff Schedule of the United States (“HTSUS”) and the finished SE cables are classified in subheading 8544.49.90, HTSUS. In Korea, the 9.5 mm rough aluminum rod or rebar wire (electrical purpose) was drawn to the specified diameter of wire. The aluminum rod/rebar wire was then stranded into a uniform and circular round, and/or compacted conductor (basically, compacting individual wires in a certain shape) by a series of stranding machines. A layer of a thermoplastic (thermoset) compound (like cross-linked polyethylene) was extruded over the stranded bare conductors. The insulated conductor was then placed into a steaming chamber for 10-12 hours for heat treatment. After this treatment was completed, the insulated core conductor was wound onto a processing bobbin for lay-up manufacturing. An interim quality control sparking test was performed on the insulated cores to check for damages and defects on the insulation. After this testing, multiple insulated cores were twisted together and assembled into a unit cable. A layer of sunlight resistant, flame retardant and heavy metal free polyvinyl chloride (“PVC”) was extruded over the assembled unit cable to form a jacket for the assembly. Additional testing to comply to industry standards was performed. The final SE cables were inspected for defects, packaged, and shipped to the United States. According to the submitted bill of materials, the aluminum rod/rebar wire from China was the only nonoriginating material and its total value was $[X]. The total value of the Korean-originating material was $[X]. The labor cost in Korea was $[X]. The manufacturing process involved specialized equipment including cable forming machines, extrusion machines, disc armoring machines, furnaces, rewinding machines, stranding machines, and electromagnetic stirrers with a total estimated cost of approximately $[X] million. In addition to the machines used to produce the SE cables, additional machines performed tests needed to comply to industry standards. The importer declared Korea as the country of origin. On December 20, 2021, U.S. Customs and Border Protection (“CBP”) issued a Notice of Action (CBP Form 29) changing the country of origin of the SE cables for purposes of Section 301 duties from Korea to China. The importer disagrees and argues that the fact pattern here and in New York Rulings (“NY”) N321726, dated Oct. 13, 2021, and NY N322411, dated Nov. 12, 2021, are “nearly identical,” and that similar to the aluminum ingots from Australia in those two decisions, the aluminum wire from China in this situation is substantially transformed into a new and different product in Korea enabling it to safely conduct electricity in a commercial setting, and that, therefore, the origin for purposes of Section 301 should be Korea. The importer also asserts that the SE cables qualify as originating under the UKFTA. ISSUES: Whether the SE cables imported into the United States from Korea are eligible for preferential treatment under the UKFTA. What is the origin of the SE cables for purposes of Section 301? LAW AND ANALYSIS: UKFTA Eligibility The requirements for eligibility for preferential tariff treatment under the UKFTA are set forth in General Note (“GN”) 33 of the HTSUS (19 U.S.C. § 1202). GN 33 provides in pertinent part: (b) For the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of a UKFTA country under the terms of this note if– the good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both; the good is produced entirely in the territory of Korea or of the United States, or both, and— each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or the good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o); and satisfies all other applicable requirements of this note and of applicable regulations; or the good is produced entirely in the territory of Korea or of the United States, or both, exclusively from materials described in subdivisions (i) or (ii), above. Per GN 33(c)(ii)(C)(3), a “nonoriginating good or nonoriginating material” is “a good or material, as the case may be, that does not qualify as originating under this note.” GN 33(o)/chapter 85, HTSUS states, in relevant part: 92. (A) A change to subheadings 8544.30 through 8544.49 from any other heading; or (B) A change to subheadings 8544.30 through 8544.49 from any other subheading, provided that there is also a regional value content of not less than: (1) 35 percent under the build-up method, or (2) 45 percent under the build-down method. We must determine whether the nonoriginating material undergoes the appropriate tariff shift prescribed under GN 33(o)/chapter 85/rule 92(A), HTSUS. The aluminum rod/wire from China classifiable in subheading 7604.29, HTSUS, is the nonoriginating material. As the nonoriginating aluminum rod/wire is classifiable in a heading other than 8544, HTSUS, the rule of a change to subheading 8544.49, HTSUS “from any other heading” is satisfied. Therefore, the SE cables qualify for preferential tariff treatment under the UKFTA under GN 33(b)(ii)(A) because they are produced entirely in Korea and the nonoriginating aluminum wire undergoes the tariff shift under GN 33(o)/chapter 85/rule 92(A), HTSUS. Origin for Purposes of Section 301 Trade Remedy The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 25 percent 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(b), HTSUS. 

UKFTA EligibilityThe requirements for eligibility for preferential tariff treatment under the UKFTA are set forth in General Note (“GN”) 33 of the HTSUS (19 U.S.C. § 1202). GN 33 provides in pertinent part:(b) For the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of a UKFTA country under the terms of this note if–the good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both;the good is produced entirely in the territory of Korea or of the United States, or both, and—each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; orthe good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o); and satisfies all other applicable requirements of this note and of applicable regulations; orthe good is produced entirely in the territory of Korea or of the United States, or both, exclusively from materials described in subdivisions (i) or (ii), above.Per GN 33(c)(ii)(C)(3), a “nonoriginating good or nonoriginating material” is “a good or material, as the case may be, that does not qualify as originating under this note.”GN 33(o)/chapter 85, HTSUS states, in relevant part:92. (A) A change to subheadings 8544.30 through 8544.49 from any other heading; or (B) A change to subheadings 8544.30 through 8544.49 from any other subheading, provided that there is also a regional value content of not less than: (1) 35 percent under the build-up method, or (2) 45 percent under the build-down method.We must determine whether the nonoriginating material undergoes the appropriate tariff shift prescribed under GN 33(o)/chapter 85/rule 92(A), HTSUS. The aluminum rod/wire from China classifiable in subheading 7604.29, HTS