OT:RR:CTF:VS H156919 EE
Robert Gardenier
M.E. Dey & Co., Inc.
700 W Virginia Street Suite 300
Milwaukee, WI 53204
RE: U.S. Government Procurement; Title III, Trade Agreements Act of 1979 (19 U.S.C. § 2511); Subpart B, Part 177, CBP Regulations; Patient Transport Chair
Dear Mr. Gardenier:
This is in response to your correspondence of March 14, 2011, telephone conference on June 10, 2011, and additional information you submitted on July 21, 2011, requesting a final determination on behalf of Electro Kinetic Technologies (“Electro Kinetic”), pursuant to subpart B of part 177, U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. § 177.21 et seq.). Under the pertinent regulations, which implement Title III of the Trade Agreements Act of 1979, as amended (19 U.S.C. § 2511 et seq.), 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.
This final determination concerns the country of origin of the BREEZ patient transport chair. We note that Electro Kinetic is a party-at-interest within the meaning of 19 C.F.R. § 177.22(d)(1) and is entitled to request this final determination.
FACTS:
Electro Kinetic, headquartered in Germantown, Wisconsin, designs and manufactures ergonomically focused products used to transport people and materials within the retail, healthcare, and material handling industries. The merchandise at issue is the Electro Kinetic BREEZ patient transport chair engineered and assembled in the U.S. from U.S. and foreign components.
The BREEZ transport chair is intended to transport patients or mobility impaired individuals. With the drive system integrated into the wheelchair, the patient transport chair can be maneuvered through tight or crowded hallways, elevators and rooms, transporting patients up to 750 lbs.
The patient transport chair is produced in the U.S. from approximately 481 components. All of the components are of U.S., Chinese, Canadian, or French origin. The majority of the components are assembled in the U.S. into 26 subassemblies which are ultimately assembled with the remaining components into the final product.
You submitted the costed bill of materials for the patient transport chair. The significant materials which comprise the patient transport chair include: wheels, casters, arm weldments, anti-tip weldments, swivel locks, 17 cable assemblies, a transaxle subassembly (which includes a Chinese-origin transaxle), a circuit breaker, a guard plate, a static strap subassembly, a Chinese-origin frame base weldment, a garment rod, a control box subassembly (which includes a French-origin handle circuit board, a control box, a key switch subassembly, and a forward/reverse switch subassembly), an s-drive subassembly, tire assemblies (which include wheel rims and foam filled tires), a charger subassembly (which includes a Canadian-origin charger), a control box plate, a high back flip seat, and batteries. It takes approximately six and a half hours to produce the finished patient transport chair.
You state that the production of the BREEZ patient transport chair in the U.S. begins with the production of 17 cable subassemblies which include: positive and negative battery cable subassemblies, a handle cable subassembly, an emergency stop switch subassembly, a horn potentiometer subassembly, a speed potentiometer subassembly, a brake cable subassembly, a black horn cable subassembly, a controller cable subassembly, a brown horn cable subassembly, a charger cable subassembly, a motor cable subassembly, and a battery jumper subassembly.
Next, the s-drive, which is part of s-drive subassembly, is programmed for acceleration, deceleration, and speed profiles. The transaxle subassembly, static strap subassembly, control box subassembly, keyswitch subassembly, forward/reverse switch subassembly, s-drive subassembly, tire assemblies, and charger assembly are produced. The wheels are added to the transaxle subassembly and assembled onto the frame. The control box subassembly, circuit breaker, charger assembly, horn and battery subassemblies are then installed onto the frame.
In the final assembly stage, the rear casters, front anti-tip casters, seat, seat belt, headrest, arm rests, foot rests and the IV pole are installed.
You provided a copy of the product brochure for the BREEZ patient transport chair.
ISSUE:
What is the country of origin of the BREEZ patient transport chair for the purpose of U.S. government procurement?
LAW AND ANALYSIS:
Pursuant to subpart B of part 177, 19 C.F.R. § 177.21 et seq., which implements Title III of the Trade Agreements Act of 1979, as amended (19 U.S.C. § 2511 et seq.), 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 purposes of granting waivers of certain “Buy American” restrictions in U.S. law or practice for products offered for sale to the U.S. Government.
Under the rule of origin set forth under 19 U.S.C. § 2518(4)(B):
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 provisions of subpart B of part 177 consistent with the Federal Acquisition Regulations. See 19 C.F.R. § 177.21. In this regard, CBP recognizes that the Federal Acquisition Regulations restrict the U.S. Government’s purchase of products to U.S.-made or designated country end products for acquisitions subject to the TAA. See 48 C.F.R. § 25.403(c)(1). The Federal Acquisition Regulations define “U.S.-made end product” as:
…an article that is mined, produced, or manufactured in the United States or that is substantially transformed in the United States 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 transformed.
48 C.F.R. § 25.003.
In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, 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, and use are primary considerations in such cases. Additionally, factors such as the resources expended on product design and development, extent and nature of post-assembly inspection and testing procedures, and the degree of skill required during the actual manufacturing process may be relevant when determining whether a substantial transformation has occurred. No one factor is determinative.
In Headquarters Ruling Letter ("HQ") H095239, dated June 2, 2010, CBP held that certain upright and recumbent exercise bikes, assembled in the U.S., were products of the U.S. for purposes of U.S. government procurement. The exercise bikes were assembled from a range of U.S. and foreign components and subassemblies. With the exception of the standard console assembly, all of the subassemblies, which were ultimately assembled to produce the final product, were produced in the U.S. In finding that the imported components were substantially transformed in the U.S., CBP stated that the assembly process that occurred in the U.S. was complex and meaningful, required the assembly of a large number of components, and rendered the final article with a new name, character, and use.
As in HQ H095239, the BREEZ patient transport chair comprises the assembly of a large number of components, namely, 481 components. The majority of the components are assembled in the U.S. into 26 subassemblies which are then assembled with the remaining components into the finished patient transport chair. It takes approximately six and a half hours to produce the finished patient transport chair. We find that under the described assembly process, the foreign components lose their individual identities and become an integral part of the article, the patient transport chair, possessing a new name, character and use. The assembly process that occurs in the U.S. is complex and meaningful, involving the assembly of components into subassemblies which are then made into the final product. Therefore, based upon the information before us, we find that the imported components that are used to manufacture the patient transport chair are substantially transformed as a result of the assembly operations performed in the U.S. and that the country of origin of the patient transport chair for government procurement purposes is the U.S.
HOLDING:
The imported components that are used to manufacture the BREEZ patient transport chair are substantially transformed as a result of the assembly operations performed in the U.S. Therefore, we find that the country of origin of the BREEZ patient transport chair for government procurement purposes is the U.S.
Notice of this final determination will be given in the Federal Register, as required by 19 C.F.R. § 177.29. Any party-at-interest other than the party which requested this final determination may request, pursuant to 19 C.F.R. § 177.31, that CBP reexamine the matter anew and issue a new final determination. Pursuant to 19 C.F.R. § 177.30, any party-at-interest may, within 30 days after publication of the Federal Register notice referenced above, seek judicial review of this final determination before the Court of International Trade.
Sincerely,
Sandra L. Bell
Executive Director
Regulations and Rulings
Office of International Trade