N332384

N332384 May 16, 2023 OT:RR:NC:N4:433 CATEGORY: Origin Mr. Jeremy Page Page Fura, P.C. 939 W. North Avenue, Suite 750 Chicago, IL 60642 RE: The United States-Mexico-Canada Trade Agreement (USMCA), country of origin marking, and the applicability of Section 301 trade remedy of an automobile seat component. Dear Mr. Page: In your letter dated April 21, 2023, on behalf of Keiper Seating Mechanisms Co., Ltd., you request a USMCA and country of origin marking binding ruling for an automobile seat recliner assembly. The request also seeks confirmation that the recliner assembly is not subject to China Section 301 duties. In lieu of samples, illustrative literature, a product description, and manufacturing processes were provided. The item subject of this ruling request is constructed of foreign sourced raw materials. A description of the item immediately follows. The “T3000 Automobile Seat Recliner Assembly” is a seat component constructed of metal and plastic that will enable the user to pivot and adjust the forward and back incline and decline of a motor vehicle seat backrest. The recliner assembly contains no upholstery, no cushions, no seat base, legs, or armrests. The recliner assembly will be incorporated into the driver and front passenger captain seat frames of motor vehicles according to Original Equipment Manufacturer (OEM) specifications. The applicable subheading for the subject merchandise will be 9401.99.1085, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Seats (other than those of heading 9402), whether or not convertible into beds, and parts thereof: Parts: Other: Of seats of a kind used for motor vehicles: Other.” Sourcing Scenario: The ruling request outlines an operation where (7) metal components (gear rim, bearing, gear wheel, clamping ring, wedges, omega spring assembly, cam ring) and (3) plastic components (cam, cover, ring) are sourced from China. In China, these components were produced through fine-blanking, bush forming, injection molding, powder metallurgy, and spring forming manufacturing operations. The components are shipped and exported to Mexico. No additional components are sourced in Mexico. Collectively, each recliner assembly unit is constructed of 10 discrete components comprising 10 total pieces. The production process follows. The first step in production involves the joinder of the gear rim to the bearing. This joinder is accomplished via a press that has been calibrated to provide the appropriate degree of pressure without causing any damage to the bearing’s Teflon layer or the overall structural integrity of the assembly itself. Once assembled, grease is added to reduce the risk of undue friction and prepare the subassembly for the next step in production. The gear wheel is attached to the subassembly, which again requires the use of a calibrated press. The clamping ring is added to the assembly; the ring acts as an external “seal” to the gear rim/bearing/gear wheel subassembly in order to secure those components in place. Once joined, the subassembly is subject to a laser welding operation in order to permanently secure the clamping ring overall. The subassembly is then put through a restriking operation to ensure uniformity of height/dimensions for purposes of its intended application. An additional bead of grease is then added to the internal ring before precision drops of additional grease are added to support insertion and placement of the wedges used to control the rotational movement of the overall assembly. The next phase of production involves the addition of another bead of grease in anticipation of the incorporation of the omega spring assembly. The spring assembly is added after first ensuring proper alignment of the wedges. Further greasing is next performed in anticipation of the addition of the cam unit subassembly. This reflects a three-stage, standalone operation through which the cam, cover and cam ring are joined together prior to integration into the subassembly. The first step in this operation is placement of the cam into a dedicated fixture to ensure proper positioning for purposes of further assembly. The cover is pressed into the cam. The cam ring is inserted into the center of the cam/cover assembly. With the cam unit subassembly complete, joinder to the larger subassembly through a further pressing operation occurs next. After confirmation through use of a displacement sensor that the cam unit assembly has been properly placed within the larger subassembly, joinder of the last component – the ring – through a pushing/pressing operation takes place. With the subassembly complete, final testing in the form of a “push out” test (to monitor stroke v. force), functional testing and a delivery position check to verify overall component placement is then performed before the recliner assembly is laser marked and prepared for packaging and onward to shipment to Keiper's customer. Each unassembled component is integrated in a specific sequence using jigs, a calibration press, displacement sensors, and other tools; each operation results in a more complex subassembly. The final article is a unified seat recliner assembly component. Information provided states, “… approximately one year of overall time was required from a R&D and product engineering perspective” and “each recliner assembly unit requires approximately 13 seconds of production time.” Eligibility for preferential treatment under the 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 Act1. General Note (GN) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. _________________________ 1 USMCA Implementation Act - Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511 (a)). GN 11(b) states: For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, 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 - i. the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries; ii. the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials; iii. 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)); or… The subject merchandise contains non-originating materials, therefore it is not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i). Moreover, under GN 11(b)(ii), the subject merchandise is not a good produced entirely in Mexico, exclusively from originating materials. Therefore, we must next determine whether the non-originating materials undergo the tariff shift and other requirements provided for in GN 11(b)(iii) and GN 11(o). The applicable rule of origin for merchandise under subheading 9401.99 HTSUS, is in GN 11(o), HTSUS, which provides, in relevant part: Chapter 94 …2. A change to subheading 9401.90 from any other heading.2 As an initial matter, the following “Compiler’s Note” is identified in part on page 2 of the General Notes (GN) of the HTSUS (2023) (Rev. 4):3 “COMPILER’S note: Multiple sets of changes to the Harmonized System have caused heading and subheading numbers and product coverage in some rules of origin for free trade agreements to be inconsistent with those in current tariff schedule chapters. Negotiations are required to enab

is applicable when determining the country of origin for purposes of applying Section 301 trade remedies.7  The test for determining whether a substantial transformation will occur 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.8  This determination is based on the totality of the evidence.9 In the instant case, the foreign Chinese components lose their identity in Mexico and undergo a substantial transformation, thereby, taking on a new name, character, and identity.  The joining, pressing, assembly, attaching, greasing, loading, laser welding, restriking, insertion and placement, alignment, and positioning of individual components into more substantial subcomponents that are then integrated into a larger more complex subassembly is distinguishable from the individual components sourced from China.  After final assembly manufacturing operations, the complete recliner assembly is then laser marked.  The recliner assembly is manufactured to an extent that none of the individual components alone can perform the pivot, incline, and recline functionality.  Only through the integration of the material components into a more substantial subassembly is the functional end product created.  In view of these facts, the recliner assembly is not subject to the additional duties under Section 301 of the Trade Act of 1974, as amended, upon importation into the United States.Duty rates are provided for your convenience and are subject to change.  The text of the most recent HTSUS and the accompanying duty rates are provided at https://hts.usitc.gov/current.This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. § 177).The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request.  This position is clearly set forth in 19 C.F.R. § 177.9(b)(1).  In the event that_____