H346632

H346632 July 10, 2026 OT:RR:CTF:VS H346632 RRB CATEGORY: Origin Kevin J. Maynard Wiley Rein LLP 2050 M St NW Washington, DC 20036 RE: U.S. Government Procurement; Title III, Trade Agreements Act of 1979 (19 U.S.C. § 2511); Subpart B, Part 177, CBP Regulations; Philips North America LLC; Country of Origin of Ultrasound System 5100 POC Series; Substantial Transformation Dear Mr. Maynard: This is in response to your request, dated April 3, 2025, on behalf of your client, Philips North America LLC (“Philips”), for a final determination concerning the country of origin of its Ultrasound System 5100 POC Series (“Philips Ultrasound System”), 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.). Philips is a party-at-interest within the meaning of 19 C.F.R. § 177.22(d)(1) and § 177.23(a) and is therefore entitled to request this final determination. FACTS: The merchandise at issue is the Philips Ultrasound System, which is used to perform diagnostic ultrasound imaging by transmitting and processing sound waves to create a visual representation of a patient’s internal organs and tissues. It consists of a number of components and major subassemblies from various countries, including the United States, all of which are assembled together and programmed with proprietary system software at Philips’ facility in Bothell, Washington. You state that each Philips Ultrasound System consists of more than 200 individual subcomponent parts (including screws and fasteners) that are from a variety 2 of different countries. You further explain that according to the costed bill of materials submitted with your request, approximately 53% to 56% of the material cost of the Philips Ultrasound System are costs of subcomponents that are manufactured in the United States or a TAA-designated country, including critical components such as the display monitor and the control panel.1 The remaining 44% to 47% of the material cost of the Philips Ultrasound System represents subcomponents from non-TAA-designated countries. Non-material costs, such as assembly, are discussed below. You state that the Philips Ultrasound System can be grouped together into the following major subassemblies: (1) an E-box, which generates electrical signals that are transmitted to the transducer to generate soundwaves for generating patient images, and then receives signals back from the transducer that are turned into diagnostic images using Philips’ proprietary software; (2) a cart subassembly, which provides the physical structure that houses all of the hardware, power supply, and electronics that comprise the finished system, allows medical professionals to transport and position the system for use, and organizes and stores cables and other accessories; (3) a transducer, which receives signals from the E-box and generates a high-pressured wave (i.e., soundwave) that is propagated toward the patient tissue medium (e.g., organ, bone) to produce a diagnostic image, and also receives echoed soundwaves that are reflected from the tissue medium while transmitting that information back to the E-box for processing into an image; (4) a display monitor, which receives signals from the E-box and displays the images for user interpretation; (5) a control panel, which allows the user to turn the system on and off, as well as a touch pad and knobs for more tactile response for viewing and modifying the imaging parameters during clinical exams; and (6) proprietary system software, which controls and unifies all of the discrete functions of the finished system, including generating and processing ultrasound waves and converting into diagnostic images. You explain that the assembly of the Philips Ultrasound System occurs in two phases. In the first phase, which takes places in Mexico, a third-party manufacturer assembles various subcomponents together to produce the E-box and cart subassemblies. In the second phase, which takes place in the United States, the E-box and cart subassemblies are assembled with the transducer and control panel (both of which are assembled in the United States) and the display monitor (sourced from a TAA country) into the finished product, which is programmed with Philips’ proprietary software. Assembly Process in Mexico E-Box and Cart Subassemblies As stated above, a third-party manufacturer in Mexico assembles and integrates the E-box and cart subassemblies. During the first step, which takes approximately 35 minutes to complete, more than 146 individual components, including the PC module, 1This exhibit consists of an Excel spreadsheet with separate tabs for the costed bill of materials for the “Standard” and “Pro” transducer configurations of the subject Philips Ultrasound System. 3 printed circuit board assemblies (“PCBAs”), and various hardware components, are assembled together to produce the E-box. During the second step, which also takes approximately 35 minutes to complete, 35 different hardware components, including screws, clamps, and brackets, are assembled together to produce the cart subassembly. During the third step, which also takes approximately 35 minutes to complete, the E-box and cart are assembled and wired together. Once this is completed, a test version of Philips’ proprietary software, which was compiled into object code in the United States, is loaded onto the subassemblies. This test version of the software is only valid for a set duration to allow for testing, after which it will no longer launch to the ultrasound application. The hard drives are re-formatted during the next phase. You state that in total, the assembly operations in Mexico involve approximately 200 components and will take approximately 450 minutes to complete, consisting of 105 minutes of assembly, 100 minutes for loading the test version software, 110 minutes for testing, and 135 minutes for material handling and packaging. You further state that the E-box and cart subassemblies, which have been assembled and wired together, are unable to function as an ultrasound system prior to the final assembly and programming operations that will be performed in the United States. Assembly Process in the United States Transducer Subassembly Assembly operations in the United States are performed at two separate Philips facilities in Reedsville, Pennsylvania, and Bothell, Washington. At the Pennsylvania facility, the transducer subassembly is assembled from various components, including a sensor from a non-TAA-designated country and a cable assembly from the United States. This is followed by various testing operations on each transducer subassembly. In total, the transducer assembly and testing operations performed at the Pennsylvania facility take approximately 90 minutes to complete (approximately 20 minutes of assembly plus approximately 70 minutes of testing).2 You provided our office with a confidential and proprietary list of assembly steps that occur in the United States. Final Assembly The next stage of assembly operations in the United States moves to Philips’ facility in Washington. Assembly operations here include final assembly, integration, and testing of the finished Philips Ultrasound System. Here, the E-box and cart are assembled together with the transducer, the display monitor (sourced from a TAA-designated country), the control panel (sourced from a third-party manufacturer in the United States), and other minor components and accessories (e.g., storage bins, gel 2 You state that there are two configurations of the Philips Ultrasound System. One configuration uses a “Standard” transducer, while the other configuration uses a “Pro” transducer. You confirm that the transducer subassembly used in both of these configurations is assembled and tested in the United States as part of the final assembly process. 4 and cable holder, probe

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). CBP’s authority to issue advisory rulings and final determinations stems from 19 U.S.C. § 2515(b)(1), which states: For the purposes of this subchapter, the Secretary of the Treasury shall provide for the prompt issuance of advisory rulings and final determinations on whether, under section 2518(4)(B) of this title, an article is or would be a product of a foreign country or instrumentality designated pursuant to section 2511(b) of this title. Emphasis added. 
5 The Secretary of the Treasury’s authority mentioned above, along with other customs revenue functions, are delegated to the Secretary of Homeland Security via Treasury Department Order (TO) 100-20 “Delegation of Customs revenue functions to Homeland Security,” dated October 30, 2024, and are subject to further delegations to CBP (see also 19 C.F.R. Part 177, subpart B). 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 pro