CLA-02 RR:CR:SM 561823 BLS
RE: Tariff treatment and country of origin marking of galvanized coil imported
from Canada
Mr. Dwaine Odinson, Controller
R & R Trading Co. LTD.
7449 River Road
Delta, B.C. Canada V4G 1B9
Dear Mr. Odinson:
This is in reference to your letter received in this office on July 19, 2000, concerning the tariff treatment of certain galvanized coil imported from Canada.
FACTS:
You state that R & R Trading (“R & R”), located in Vancouver, British Columbia (Canada), imports 48” wide galvanized coil from Korea. Your office advised on August 21 that the coil is a zinc coated non-alloy steel. In Canada, the coil is cut into sheets 72” long. The 48” coil may also be slit into three coils, each 16” wide. The coil is then imported into the United States.
ISSUES:
Whether the goods will be eligible for preferential tariff treatment provided under the North American Free Trade Agreement (NAFTA) upon importation.
Whether, for purposes of Customs duties and antidumping duties, the country of origin of the imported coils will be Korea.
LAW AND ANALYSIS:
NAFTA Preferential Treatment
General Note 12 of the Harmonized Tariff Schedule of the United States Annotated (HTSUS) incorporates Article 401 of the NAFTA into the HTSUS. Note 12(b) provides in pertinent part:
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For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if--
(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or
(ii) they have been transformed in the territory of Canada, Mexico and/or
the United States so that--
(A) except as provided in subdivision (f) of this note, each of the
non-originating materials used in the production of such goods
undergoes a change in tariff classification described in
subdivisions (r), (s) and (t) of this note or the rules set forth
therein, or,
(B) the goods otherwise satisfy the applicable requirements of
subdivisions (r), (s) and (t) where no change in tariff
classification is required, and the goods satisfy all other
requirements of this note; or
(iii) they are goods produced entirely in the territory of
Canada, Mexico and/or the United States exclusively from
originating materials.
Since the galvanized coil entering Canada is considered a non-originating material, we must examine whether the coil undergoes the required transformation in Canada pursuant to General Note 12(b)(ii)(A), HTSUS. To become an originating good, the non-originating coil from Korea must satisfy the tariff shift rule applicable to the coil when imported into the U.S. From the information furnished, it appears that upon importation into the U.S., the galvanized coil is classifiable in heading 7212, Harmonized Tariff Schedule of the United States (HTSUS), as "Flat-rolled products of iron or nonalloy steel, of a width of less than 600 mm, clad, plated or coated…” As imported into Canada from Korea, the coil appears to be classifiable in heading 7210, HTSUS, "Flat- rolled products of iron or nonalloy steel, of a width of 600 mm or more, clad plated or coated...” The applicable rule for the good is found under General Note 12(t)/72, HTSUS, which provides as follows:
A change to headings 7208 through 7216 from any heading
outside that group.
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As the Korean-origin galvanized coil will not undergo the requisite tariff shift in Canada, it will not be considered an originating good upon importation into the U.S. Thus, the imported coil will not be eligible for NAFTA preferential tariff treatment upon importation.
Country of Origin
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. §1304), provides that unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a
manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. §1304 was "that the ultimate purchaser should be able to know by an inspection
of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of
purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should
influence his will." United States v. Friedlander & Co. , 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940). Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. §1304.
The country of origin marking requirements for a “good of a NAFTA country” are also determined in accordance with Annex 311 of the NAFTA, as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057) (December 8, 1993) and the regulations set forth in 19 CFR Parts 102, 134.
Section 134.1(b) of the regulations defines "country of origin" as:
the country of manufacture, production, or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the ‘country of origin’ within this part; however, for a good of a NAFTA country, the NAFTA marking rules will determine the country of origin.
Section 134.1(j) provides that the “NAFTA Marking Rules” are the rules
promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) defines a “good of a NAFTA country” as an article
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for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules.
Part 102 of the regulations sets forth the NAFTA Marking Rules for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a) provides that “[t]he country of origin of a good is the country in which:
(1) The good is wholly obtained or produced;
(2) The good is produced exclusively from domestic
materials; or
(3) Each foreign material incorporated in that good undergoes
an applicable change in tariff classification set out in section
102.20 and satisfies any other applicable requirements of that
section, and all other requirements of these rules are satisfied.”
“Foreign Material” is defined in section 102.1(e) of the regulations as “a
material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.”
Since the finished articles are neither wholly obtained or produced in a single country nor produced exclusively from domestic (Canadian) materials, section 102.11(a)(1) and (2) are not applicable. Therefore, we must determine whether, pursuant to section 102.11(a)(3), the Korean origin coil undergoes the change in tariff classification under the specific rule set forth in section 102.20.
As noted above, the articles imported into the U.S. appear to be classified in heading 7212, HTSUS. The coil imported into Canada appears to be classifiable in heading 7210, HTSUS. The applicable change in tariff classification set out in section 102.20(n), Section XV, Chapters 72 through 83, provides:
7212 .... A change to heading 7212 from any other heading, except
from heading 7208 through 7211.
As there is no tariff change under this rule, section 102.11(b) of the hierarchal rules must be applied next to determine the country of origin of the steel products.
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Section 102.11(b) provides in pertinent part that where the country of origin cannot be determined under section 102.11(a), and the good is not specifically designated as a set pursuant to the Harmonized System nor classified as a set under General Rule of Interpretation 3, the country of origin of the article is "the country or countries of origin of the single material that imparts the essential character of the good. . .."
The rule of interpretation which determines the "essential character" of the imported products is found in section 102.18(b)(2) of the Customs Regulations. This rule provides that only materials that do not undergo a tariff shift are to be taken into consideration in determining the essential character of
a good. In this case, the galvanized coil imported into Canada from Korea is the material that does not undergo the applicable tariff shift, and thus imparts the essential character to the steel product imported into the U.S. Therefore, for country of origin marking purposes, the country of origin of the galvanized coil imported into the U.S. is Korea, and the coil must be so marked.
We note that the applicability of antidumping duties to imported merchandise is solely within the jurisdiction of the Department of Commerce. Therefore, we suggest that you contact that agency to determine whether the imported product may be subject to antidumping duties.
HOLDING:
1) As the Korean-origin galvanized coil will not undergo the requisite tariff shift in Canada, it will not be considered an originating good upon importation into the U.S. Thus, the imported coil will not be eligible for NAFTA preferential tariff treatment upon importation.
2) The country of origin of the galvanized coil imported into the U.S. is Korea, and the coil must be so marked.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division