OT:RR:CTF:VS H345343 ACH
Mr. Joaquín J. Barragán
R.L. Jones Customhouse Brokers, Inc.
1610 Land Mark
San Diego, CA 92154
RE: Origin; USMCA Eligibility; Section 301 Measures; Plastic Chairs
Dear Mr. Barragán:
This is in response to your ruling request dated January 13, 2025, filed on behalf of SO
Products, LLC (“importer”) 1 concerning the eligibility of certain plastic chairs manufactured in
Mexico and imported into the United States, for preferential tariff treatment under the U.S.-
Mexico-Canada Agreement (“USMCA”), and country of origin for purposes of marking and
Section 301 Trade Remedies.
FACTS:
Item 10364-SF, the “Stack Chair 14,” is a metal and plastic stacking seat. The Stack
Chair is classifiable under subheading 9401.79.00, Harmonized Tariff Schedule of the United
States (HTSUS). Seating is provided for one person. The seat’s metal legs are constructed of
stainless steel; the seat foundation and the seat backrest are constructed of polyolefin plastic. The
plastic seat foundation and the plastic seat backrest form a unitary whole and are affixed to the
metal legs. Collectively, the metal legs and the plastic seat foundation and backrest components
comprise the seat’s structural frame. The seat is not upholstered and contains no armrests. The
seat will be available in different colors that correspond to different model and item numbers.
The metal leg assembly, classifiable under subheading 9401.99, HTSUS, leg post swivel
glides, washers, and rivets for the plastic chairs will be sourced from China. The plastic seat
foundation and backrest shell, classifiable under subheading 9401.99, HTSUS, corrugated
fanfold, and labels will be sourced from the United States. Glue will be sourced from Portugal.
The seating components and materials will be shipped and exported to Mexico, and additional
1
The initial prospective ruling request was filed on behalf of Factory Direct Partners, but R.L. Jones has since asked
that CBP issue this ruling for SO Products, LLC. The materials provided to CBP are addressed to SO Products,
LLC.
labels will be locally sourced. In Mexico, the incomplete, unassembled, and unfinished seating
components will undergo manufacture, inspection, packaging, and then be exported to the United
States.
ISSUES:
I. Whether the chairs are eligible for preferential treatment under the USMCA.
II. What is the country of origin of the chairs for purposes of marking and Section 301
trade remedies.
LAW AND ANALYSIS:
1. Eligibility for Preferential Tariff 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 and enacted on
January 29, 2020 with the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19
U.S.C. § 4511(a)). General Note (“GN”) 11, HTSUS, implements the USMCA and sets forth the
criteria for determining whether a good is an originating good for purposes of the USMCA.
GN 11, HTSUS states, in relevant part:
(b) For the purposes of this note, a good imported into the customs territory of the
United States from the territory of a USMCA country … 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)); ….
The plastic chairs contain nonoriginating materials; therefore, they are not goods 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, CBP must determine whether the non-originating materials
meet the requirement of GN 11(b)(iii) and GN 11(o).
The plastic chairs are classifiable under subheading 9401.79.00, HTSUS. The applicable
rule of origin for the subject merchandise under GN 11(o) provides, in relevant part:
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Change in tariff classification rules.
Chapter 94
…1. (A) A change to subheading 9401.10 through 9401.80 from any other chapter; or
(B) A change to subheadings 9401.10 through 9401.80 from subheading 9401.90,
whether or not there is also a change from any other chapter, provided there is a
regional value content of not less than:
(1) 60 percent where the transaction value method is used; or
(2) 50 percent where the net cost method is used.
Under GN 11(o), Rule 1(A) of Chapter 94, HTSUS, while the nonoriginating Portuguese
glue undergoes the permissible tariff shift from another chapter to subheading 9401.79, HTSUS
(2012), 2 the nonoriginating Chinese leg assemblies and other Chinese frames of these chairs do
not undergo the permissible tariff shift because they are still classified in subheading 9401.90,
HTSUS (2012), as parts of chairs. Accordingly, section A is not satisfied. Therefore, under
section B, regional value content (“RVC”) must be analyzed.
GN 11(c)(ii)-(iii) governs the calculation of regional content value:
(ii) Transaction value method.--- An importer, exporter or producer of a good may
calculate the regional value content of the good on the basis of the following
transaction value method:
RVC = ((TV-VNM)/TV) X 100
where RVC means the regional value content of the good, expressed as a
percentage; TV means the transaction value of the good adjusted to exclude any
costs incurred in the international shipment of the good; and VNM means the
value of nonoriginating materials, including materials of undetermined origin,
used by the producer in the production of the good.
(iii) Net cost method.-- An importer, exporter or producer of a good may calculate
the regional value content of a good on the basis of the following net cost method:
RVC = ((NC - VNM)/NC) X 100
where NC means the net cost of the good; RVC means the regional value content,
expressed as a percentage; and VNM is the value of nonoriginating materials,
2
The USMCA was drafted under the 2012 HS. “Some tariff items do not have product-specific rules of origin
because the USMCA was negotiated using the 2012 HS. If the good in question corresponds to a tariff item without
a product-specific rule, until a rule is implemented, the analysis should be performed using the 2012 HTSUS tariff
item and its corresponding product-specific rule.” https://www.cbp.gov/trade/priority-issues/trade-agreements/free-
trade-agreements/USMCA/FAQs. Since subheading 9401.90, HTSUS has been moved to subheading 9401.91,
HTSUS, CBP is using the 2012 version of the HTSUS for this portion of the ruling.
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including materials of undetermined origin, used by the producer in the
production of the good.
Here, based on information provided by the customs broker, including information on the
cost of materials and labor, the regional value content under the transaction method is only 45
percent, and the regional value content under the net cost method is only 43 percent. However,
period costs and the cost of indirect materials used in the production of the chairs have not yet
been provided. Therefore, we cannot definitively rule on whether the chairs qualify for duty-free
entry under the USMCA.
2. Country of Origin Marking
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 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 a 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 markings on
the imported goods the country of which the good is the product. "The evident purpose is to
mark the goods so 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 at 302 (1940).
Part 134, Customs and Border Protection (CBP) Regulations (19 CFR 134), implements
the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b)
defines “country of origin” as “the country of manufacture, production, or growth of any article
of foreign origin entering the United States. 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 the meaning of [the marking laws and regulations].”
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 hierarchy for determining the country of origin of a good for marking purposes. See
19 C.F.R. § 102.11(a). Since the plastic chairs will be imported from Mexico, section 102 will
govern the determination of whether the chairs are products of Mexico.
Section 102.11(a) provides a hierarchy for determining the country of origin of a good for
marking purposes. Applied in sequential order, the hierarchy establishes the 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 Part 102.20 and satisfies any other applicable
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requirements of that section, and all other applicable requirements of these rules are
satisfied.
19 C.F.R. § 102.11(a)(1) is inapplicable because the plastic chairs are not wholly
obtained or produced in a single country. 19 C.F.R. § 102.11(a)(2) is also inapplicable since the
plastic chairs are not produced exclusively from domestic materials. Therefore, the foreign
materials must undergo the applicable tariff shift under 19 C.F.R. § 102.20 to be considered
products of Mexico.
The plastic chairs are classifiable under subheading 9401.79.00, HTSUS. Section 102.20
sets forth specific rules based on an article’s tariff classification. The pertinent tariff shift rule for
subheading 9401.79, states:
A change to subheading 9401.10 through 9401.80 from any other subheading outside that
group, except from subheading 9403.10 through 9403.89, and except from subheading 9401.91
through 9401.99 or 9403.91 through 9403.99, when that change is pursuant to General Rule of
Interpretation 2(a).
General Rule of Interpretation 2(a) (“GRI 2(a)”) states:
Any reference in a heading to an article shall be taken to include a reference to
that article incomplete or unfinished, provided that, as entered, the incomplete or
unfinished article has the essential character of the complete or finished article. It
shall also include a reference to that article complete or finished (or falling to be
classified as complete or finished by virtue of this rule), entered unassembled or
disassembled.
GRI 2(a) does not apply because the plastic chairs will be assembled in Mexico and will
not be imported in an unfinished state. The manufacturer will add additional components that
give the seats their essential character, namely, the plastic moldings. Further, the applicable tariff
shift will occur as a result of the production in Mexico. Both the metal leg assembly and the
plastic molding will undergo the applicable tariff shift from subheadings 9401.91-9401.99,
HTSUS, providing for parts of chairs, to subheading 9401.79, HTSUS, providing for other seats,
with metal frames. The country of origin of the “Stack Chair 14” is Mexico.
3. Section 301 Measures
The United States Trade Representative (“USTR”) has determined that an additional ad
valorem duty of 25 percent will be imposed on certain Chinese imports pursuant to USTR’s
authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). The Section
301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter
III, U.S. Note 20, HTSUS.
When determining the country of origin for purposes of applying current trade remedies
under Section 301 or other additional duties, the substantial transformation analysis applies.
Headquarters Ruling Letter (“HQ”) H301619, dated November 6, 2018. The test for determining
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whether a substantial transformation occurs 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.
Texas Instruments Inc. v. United States, 681 F.2d 778 (C.C.P.A. 1982). This determination is
based on the totality of the evidence. National Hand Tool Corp. v. United States, 16 C.I.T. 308
(1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). “When processing consists primarily of assembly,
CBP is hesitant to find that a substantial transformation occurred.” HQ H315298, dated June 15,
2021.
In order to determine whether a substantial transformation occurs when components of
various origins are assembled into completed products, the determinative issue is the extent of
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). 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. HQ H215657, dated April 29, 2013. 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. Id. No one factor is determinative. Id.
In Carlson Furniture Industries v. United States, 65 Cust. Ct. 474 (1970), the U.S.
Customs Court ruled that U.S. operations on imported chair parts constituted a substantial
transformation, resulting in the creation of a new article of commerce. The court determined that
because the importer had to perform additional work on the imported chair parts and add
materials to create a functional article of commerce, the imported parts were not chairs in an
unassembled or knocked-down condition. Id. at 478. After importation, the importer assembled,
fitted, and glued the wooden parts together, inserted steel pins into the key joints, cut the legs to
length and leveled them, and in some instances, upholstered the chairs and fitted the legs with
glides and casters. Consequently, the court found that the operations were substantial in nature,
and that the processing performed in the United States constituted more than the mere assembly
of finished parts. Id.
Courts have considered “the ‘essence’ of a completed article to determine whether an
imported article has undergone a change in character as a result of post importation processing.”
Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1318 (2016) (citing Uniden
America Corp. v. United States, 120 F. Supp. 2d 1091, 1095-1098 (Ct. Int’l Trade 2000) and
Uniroyal, Inc., 542 F. Supp. 1030 (Ct. Int’l Trade 1982)). In Uniroyal, Inc., 542 F. Supp. at
1029-1030, the court determined that the shoe upper was “the very essence of the completed
shoe” and that the attachment of the imported shoe uppers to an outer sole in the United States
was a “minor manufacturing or combining process which leaves the identity of the upper intact,”
therefore, the shoe upper was not substantially transformed in the United States. The court also
noted that the minor assembly operation in the United States “require[d] only a small fraction of
the time and cost involved in producing the uppers.” Id. at 1030.
In NY I83901, dated July 8, 2002, CBP addressed the country of origin of a chair made
through similar processing:
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The chair will be manufactured as follows: The master coils of steel will be
imported to China from Taiwan and processed into tubing. The factory in China
will process the tubing into the chair parts, assemble the metal chair parts into a
chair frame sub assembly, and then powder coat the metal chair frame sub
assembly. The frame will then be exported to Taiwan where another factory will
blow mold the plastic, assemble the plastic seat and back onto the chair, and put
the chair into retail packaging. Since the chair frames (furniture parts) are made in
China but the chair is completed (seats and backs) in Taiwan, the chair is
considered a product of Taiwan and must be marked to reflect Taiwan as the
country of origin.
Here, the assembly of the plastic chairs in Mexico is not a substantial transformation. The
assembly consists of screwing together the frame and the seat mold. No machining is done in
Mexico, and no specialized training, skill, or equipment would be required to finish these chairs.
Further and more importantly, the components do not emerge with a new name, character, or
use. The components are chair legs, chair backs, and chair swivels before and after the assembly
in Mexico. Their use is predetermined when they were made. Unlike in Carlson Furniture, the
Mexican manufacturer does not modify the components of these chairs. The parts are not altered;
they are simply assembled as they are received. Therefore, we find no substantial transformation
is performed in Mexico.
Since a substantial transformation does not occur in Mexico, CBP must determine
whether the chair frames, manufactured in China, or the chair seats and backs, manufactured in
the United States, represent the character of the chairs.
NY I83901 indicates that chair seats and backs are the “essence” of chairs. That case also
involved a simple assembly of chair frames and backs, and CBP determined that the country of
assembly and production of the chair seats and backs was the country in which substantial
transformation occurred. CBP believes the character of the chairs at issue are also imparted by
the chair seats and backs, not the chair frames. Therefore, for substantial transformation and
section 301 duty purposes only, the country of origin will be the United States, since that is
where the chair seats and backs are manufactured and a substantial transformation does not occur
in Mexico. The country of origin for marking purposes is still Mexico under 19 C.F.R. §
134.1(b) and 19 C.F.R. § 102.11.
HOLDING:
The plastic chairs do not qualify for preferential treatment under the USMCA when
imported into the United States from Canada.
The country of origin of the chairs will be Mexico, and Section 301 duties will not apply.
The country of origin of the chairs will be Mexico for marking purposes.
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
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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 a [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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