OT:RR:CTF:VS H332525 AMW
Ms. Allison Kepkay, Esq.
White & Case LLP
701 Thirteenth Street, NW
Washington, DC 20005
RE: Country of Origin; Refrigerated and Non-Refrigerated Trailers; Section 301 Measures;
Country of Origin Marking
Dear Ms. Kepkay:
This is in response to your correspondence, dated May 11, 2023, on behalf of your client,
CIMC Refrigerated Trailer Co., Ltd., (“CIMC”), regarding the country of origin of certain
refrigerated and non-refrigerated truck trailers imported into the United States from Canada for
purposes of Section 301 measures and for marking. Your request, originally submitted as an
electronic ruling request to the National Commodity Specialist Division, was forwarded to this
office for review.
FACTS:
The products at issue are certain refrigerated and non-refrigerated truck trailers classified
under subheading 8716.39.00, Harmonized Tariff Schedule of the United States (“HTSUS”),
which provides for: “Trailers and semi-trailers…; Other trailers and semi-trailers for the
transport of goods; Other; Other; Other; Other.”
You state that the subject truck trailers are detachable, non-motorized trailers intended to
be pulled by motorized truck units to transport merchandise. The refrigerated and non-
refrigerated trailers consist of a trailer body, with components from China, and an undercarriage,
which is referred to as a “bogie,” with components from the United States. The refrigerated
trailers also contain a refrigeration unit with components from the United States. Additional
components and subassemblies from China and the United States are imported into Canada for
final assembly in Canada. The bogie is the assembly that provides the movement-related
functions of the trailer. Specifically, the bogie contains the trailer’s suspension (e.g., the brakes
system, shock absorption), rack, axles (which function to rotate the wheels and support weight),
wheels, and tires. The “box,” meanwhile, consists of the enclosed upper portion of the trailer
that is used to contain material for transportation. You state that the refrigerated and non-
refrigerated trailers are almost exactly alike aside from the presence of a United States-origin
refrigeration unit in the former that enables transportation of temperature-sensitive merchandise.
The trailer components are imported into Canada where they are assembled into the
complete trailers. This process occurs via two stages, both of which contain several steps: (1)
assembly of the “bogie”; and (2) final assembly.
The first stage of the Canadian assembly is the completion of the “bogie” subassembly.
The bogie provides the ability for the trailer to move. All bogie components are imported from
the United States, including the suspension assembly, which consists of the axle, frame, air
spring, hangar, and other components. Once in Canada, the remaining bogie components are
combined with the suspension to create the complete bogie. Specifically, you state that the bogie
subassembly production includes the following steps:
1. Installation of brake system: attach air chamber, auto slack adjuster, brake kits, and air
tank;
2. Installation of antilock brake system (“ABS”) and plumbing: screw ABS valve onto the
air tank, tighten brake hoses on the ABS connectors, bolt height control valve onto
suspension, bolt TireMaax CP pressure control system onto suspension and push air
tubing to connector, bolt on air tank (including ABS valve and brake hose) and air
chamber to the suspension, push seal, ABS sensor, sensor spring clip, and bearing onto
the suspension;
3. Installation of wheel-end system: push hub and drum assembly, screw on spindle nut,
tighten spindle nut, screw on cap screw with cap washer and tighten;
4. Installation of lubrication: inject lubrication as needed; and
5. Installation of wheels and tires: push tire on wheel and inflate tire, put separator plate
between steel wheel and aluminum wheel, and bolt on wheels with wheel nuts.
The second stage is the final assembly of the trailer units. In this stage, the bogie is
attached to the remaining components of the trailer, and the trailer box is constructed. You state
that this stage occurs at ten different assembly stations over approximately 12 steps:
1. Station One: The trailer floor is attached to an upper coupler. Wires and air tubing are
run along the side of the floor for the purposes of electrical and air brake connections.
2. Station Two: The trailer walls are moved into position and riveted to the floor assembly.
The front wall is put into place and riveted into a solid connection.
3. Station Three: The rear frame and door assembly are moved into place and riveted to the
sidewalls. The roof assembly is then moved and tacked into place.
4. Station Four: Automatic drilling equipment is used to drill holes through the top of the
wall and roof assemblies. The roof is riveted to fasten the wall and roof assemblies.
5. Station Five: Landing gear assemblies and bumper tubes are then attached to the trailer
“box.”
6. Station Six: An automated weld machine welds the floor to the sidewall assemblies for
the length of the trailer.
7. Station Seven: For refrigerated trailers, the refrigeration unit is attached to the front wall
of the trailer.
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8. Optional stations: Work to implement specific interior options or other work is
performed in this station.
9. Station Eight: The bogie subassembly is placed under the trailer and attached to the
underside of the trailer.
10. Station Nine: The bogie axles are attached, and workers check the air and electrical
system on a machine to ensure brake timing and electrical connections function correctly.
11. Optional Station: Optional equipment (e.g., aerodynamic side skits) is installed.
12. Station Ten: The trailer is inspected and specified decals installed.
You state that the entire production process requires approximately 90 professionally
trained workers, including engineers, quality inspectors, welders, truck drivers, and forklift
drivers.
You provided a list of the components used in the refrigerated and non-refrigerated
trailers as well as the cost and sourcing information.
ISSUE:
What is the country of origin of the subject trailers imported from Canada for purposes of
the application of Section 301 measures and marking?
LAW AND ANALYSIS:
Section 301 Measures
The United States Trade Representative (“USTR”) has determined that an additional ad
valorem duty of 25% will be imposed on certain Chinese imports pursuant to its authority under
Section 301(b) of the Trade Act of 1974 (“Section 301”). The Section 301 measures apply to
products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(b) and
(f), HTSUS. Among the subheadings listed in U.S. Note 20(f) of Subchapter III, Chapter 99,
HTSUS is subheading 8716.39.00, HTSUS, under which the subject trailers are classified.
When determining the country of origin for purposes of applying current trade remedies
under Section 301, the substantial transformation analysis is applicable. 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.
See Texas Instruments, Inc. v. United States, 681 F.2d 778 (C.C.P.A. 1982). The substantial
transformation determination is based on the totality of the evidence. See Nat’l Hand Tool Corp.
v. United States, 16 CIT 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993).
In deciding whether the combining of parts or materials constitutes a substantial
transformation, the determinative issue is the extent of the operations performed and whether the
parts lose their identity and become an integral part of the new article. See Belcrest Linens v.
United States, 6 CIT 204 (1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations
that are minimal or simple, as opposed to complex or meaningful, will generally not result in a
substantial transformation. Factors, which may be relevant in this evaluation, may include the
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nature of the operation (including the number of components assembled), the number of different
operations involved, and whether a significant period of time, skill, detail, and quality control are
necessary for the assembly operation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D.
89-118, C.S.D. 90-51, and C.S.D. 90-97. If the manufacturing or combining process is a minor
one, which leaves the identity of the article intact, a substantial transformation has not occurred.
See Uniroyal, Inc. v. United States, 3 CIT 220 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983)
(holding that imported shoe uppers added to an outer sole in the United States were the “very
essence of the finished shoe” and were not substantially transformed into a product of the United
States).
HQ H022169, dated May 2, 2008, concerned the country of origin of a “mini-truck
glider” imported from India that was combined with additional components in the United States
to produce an electric mini-truck. The glider, which consisted of a frame, finished cable axles,
and wheels, was non-functional at the time of importation, but was combined in the United
States with 68 additional U.S.-origin components, including a battery, which transformed the
product into a functional electrical truck. In finding that the U.S. assembly operations
substantially transformed the Indian-origin glider, CBP reasoned that under the described
assembly process, the imported glider lost its individual identity and became an integral part of a
new article possessing a new name, character and use. In addition, a substantial number of the
components added to the imported glider were of U.S. origin.
HQ H118435, dated October 13, 2010, concerned the country of origin of electric golf
and recreational vehicles that were assembled in the United States from Chinese-origin chassis,
plastic body parts and trim, and U.S.-origin battery packs, motors, electronics, wiring assemblies,
seats, and chargers. Again, CBP determined that the Chinese-origin chassis, plastic body parts
and plastic pieces of trim were substantially transformed by the assembly operations performed
in the United States to produce electric vehicles. Further, the critical components to making an
electric vehicle – battery pack, motor, electronics, wiring assemblies, and charger – were of U.S.-
origin.
Based on the information provided, we find that the Canadian production process
substantially transforms the individual components into an article with a new name, character,
and use—the subject refrigerated and non-refrigerated trailers. Importantly, the manufacturing
process in Canada is complex and meaningful. As outlined in your request, the Canadian
assembly process occurs in two stages (i.e., the production of the bogie and the “box”) and
involves approximately 17 individual steps. The Canadian production, furthermore, requires
dozens of skilled and specially trained employees and the use of various types of specialized
equipment, including cranes, forklifts, and welding machines. The production also involves
several extensive processes, including bolting, riveting, welding, and wiring. As a result of the
Canadian operations, the underlying components undergo a change in name, first to either the
bogie or the box, and then to the trailer itself. The components also undergo a change in
character, from discrete objects into a fully functioning trailer. Finally, the components undergo
a change in use, from a wide array of automotive or transportation uses, to a specific trailer unit
intended to transport cargo.
As a result, we conclude that the assembly in Canada results in a product with a new
name, character, and use, i.e., the trailers capable of containing and transporting both refrigerated
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and non-refrigerated cargo. Accordingly, we determine that the country of origin of the trailers
is Canada and Section 301 measures do not apply.
Goods Imported from Canada and Mexico
Section 304(a) of the Tariff Act of 1930, as amended (19 U.S.C. § 1304(a)), provides
that, unless excepted, every article of foreign origin imported into the United States “shall be
marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article
(or container) will permit in such manner as to indicate to an ultimate purchaser in the United
States 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. Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940).
Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate
quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR
35566), the rules set forth in §§ 102.1 through 102.18 and 102.20 determine the country of origin
for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11
provides a required hierarchy for determining the country of origin of a good for marking
purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. §
102.21. See 19 C.F.R. § 102.11. Applied in sequential order, the required hierarchy establishes
that the country of origin of a good is the country in which:
(a)(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 § 102.20 and satisfies any other applicable
requirements of that section, and all other applicable requirements of these rules
are satisfied.
...
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case
because the subject trailers are neither wholly obtained or produced or produced exclusively
from domestic materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does
not yield a country of origin determination, we look to section 102.11(a)(3). “Foreign material”
is defined in section 102.1(e) 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.” Pursuant to Section
102.20(p), the tariff-shift rule for merchandise classified under subheading 8716.39, HTSUS, is
as follows:
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8716.10 – 8716.80: A change from subheading 8716.10 through 8716.80 from
any other heading, or from subheading 8716.90 except when that change is
pursuant to General Rule of Interpretation 2(a).
Since the refrigeration unit from the United States is classified in heading 8418, HTSUS,
it meets the tariff shift rule. The rest of the components imported into Canada are classified
under subheading 8716.90, HTSUS. Since the trailers will be complete trailers upon importation
to the United States, General Rule of Interpretation 2(a) does not apply, the tariff shift rule is
met.
Based on the foregoing, we determine that the relevant country of origin for marking
purposes is Canada.
HOLDING:
Based on the information provided, we find that the country of origin of the subject
refrigerated and non-refrigerated trailers for Section 301 purposes is Canada. The country of
origin for the purposes of marking is also Canada.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the
assumption that all of the information furnished in connection with the ruling request and
incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and
complete in every material respect. The application of a ruling letter by [CBP] field office to the
transaction to which it is purported to relate is subject to the verification of the facts incorporated
in the ruling letter, a comparison of the transaction described therein to the actual transaction,
and the satisfaction of any conditions on which the ruling was based.”
A copy of this ruling letter should be attached to the entry documents filed at the time this
merchandise is entered. If the documents have been filed without a copy, this ruling should be
brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch
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