Neil Helfand, Esq.
Grunfeld, Desiderio, Lebowitz, Silverman, Klestadt LLP
599 Lexington Avenue
New York, NY 10022
RE: The Country of Origin and United States-Mexico-Canada Agreement Eligibility of Ghee Butter
Dear Mr. Helfand:
In your letter, dated October 6, 2022, you requested a country of origin and United States-Mexico-Canada Agreement eligibility (USMCA) determination for Ghee Butter on behalf of your client, Bioriginal Food & Science Corp. (Saskatoon, SK, Canada).
You have outlined a scenario in which unsalted butter of United States origin will be imported to Canada. In Canada, the butter will be processed into ghee butter via heating, straining, and filtering to remove water and caramelized milk solids. The resulting ghee butter will be packed in, and shipped from, Canada for import to the United States. The ghee butter under consideration will thus result from separating milk solids and butterfat in processed butter and cooking out water. You state that for purposes of this ruling, you are only interested in ghee butter that will enter the United States outside of quota.
You seek a determination of the origin and USMCA eligibility of the above-described ghee butter.
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) 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.
The "country of origin" is defined in 19 C.F.R. 134.1(b) 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 this part; however, for a good of a NAFTA or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin."
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, 19 C.F.R. 102.11(a) provides that 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 requirements of that section, and all other applicable requirements of these rules are satisfied.
Because the ghee butter is produced in Canada from U.S.-origin butter, it is neither "wholly obtained or produced" nor "produced exclusively from domestic materials." Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of the ghee butter and paragraph (a)(3) must be applied next. The ghee butter is classified in subheading 0405.90 of the Harmonized Tariff Schedule of the United States (HTSUS). The applicable rule in Part 102.20 for the ghee butter is, "[a] change to subheading 0405.90 from any other heading." Since the butter from the United States is also classified in heading 0405, HTSUS, the tariff shift rule is not met, and country of origin cannot be determined by paragraph (a)(3). When country of origin cannot be determined under paragraph (a), 19 C.F.R. 102.11(b) applies. Section 102.11(b)(1) provides:
1) The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good...
In determining the "essential character" of the finished good, Section 102.18(b)(1) provides, in relevant part:
1) For purposes of identifying the material that imparts the essential character to a good under 102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under 102.20 specific rule or other requirements applicable to the good...
In this instance, the ghee is produced from only one material, butter from the United States. The butter is the single component classified in a tariff provision from which a change in tariff classification is not allowed. Accordingly, the butter imparts the essential character to the ghee and the country of origin of the ghee is the United States.
Moreover, since in this instance the ghee butter is of United States origin due to the essential character imparted by the originating United States butter, the ghee butter will satisfy note 3(a) to subchapter XXIII of Chapter 98, HTSUS and be eligible for USMCA tariff treatment under subheading 9823.03.01.
Please note that the question of whether the merchandise at issue may be marked with a phrase such as "Product of U.S.A." is under the jurisdiction of the U.S. Federal Trade Commission, Bureau of Consumer Protection, Division of Enforcement, which may be contacted for advice at 600 Pennsylvania Avenue N.W., Washington, D.C. 20580, or through the FTC's website at http://www.ftc.gov.
Importations of this merchandise are subject to regulations administered by various United States agencies. Requests for information regarding applicable regulations administered by the U.S. Department of Agriculture (USDA) may be addressed to that agency at the following:
APHS, VS, NCIE Products Program
4700 River Road, Unit 40
Riverdale, MD 20737-1231
This merchandise is subject to The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism Act), which is regulated by the U.S. Food and Drug Administration (FDA). Information on the Bioterrorism Act can be obtained by calling the FDA at 301.575.0156, or at the Web site www.fda.gov/oc/bioterrorism/bioact.html.
This ruling is being issued under the provisions of Part 177 of Title 19 of the Code of Federal Regulations (19 C.F.R. Part 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have questions regarding the ruling, contact National Import Specialist Ekeng Manczuk at [email protected]
Steven A. Mack
National Commodity Specialist Division