Mr. Kim Tao
Room 1902, Easey Commercial Building
253-261 Hennessy Road
Wanchai, HONG KONG
RE: The marking and trade agreement eligibility under USMCA of truck bed flooring panels
Dear Mr. Tao:
In your letter, dated November 16, 2022, you requested a binding ruling on the marking and eligibility under the United States-Mexico-Canada Agreement (USMCA) of truck flooring. Product information and photos were provided for our review.
The request concerns red oak, edge-glued, truck bed flooring panels. The panels measure approximately 1.06m to 15.9m in length, 103mm to 350mm in width, and 28mm to 35mm in thickness. The panels are constructed of edge-glued red oak wood (a nonconiferous wood) and are continuously shaped along their edges with a shiplap profile. The backs of the panels will be coated with a black hot-melt polyurethane coating, while the panel faces will be coated with a clear, UV-cured protective coating.
The flooring panels were previously ruled upon for classification in ruling number N328764, issued November 14, 2022. The applicable subheading is 4421.99.9880, Harmonized Tariff Schedule of the United States (HTSUS).
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at https://hts.usitc.gov/current.
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 with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. 4511(a)). General Note ("GN") 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, 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 non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o));
In your letter, you describe a scenario wherein rough, red oak, edge-glued boards from China are sent to Canada, where they will be planed, sanded, profiled, coated, finished, and packaged.
Since the flooring panels begin with materials from China, the goods are not a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i), nor are the products produced exclusively from originating materials per GN 11(b)(ii). Thus, we must determine whether the product qualifies under GN 11(b)(iii). As previously noted, the edge-glued lumber boards are classified under heading 4421, HTSUS. The applicable rule of origin for goods classified under heading 4421, HTSUS, is in GN 11(o), HTSUS, which provides in relevant part:
A change to heading 44.01 through 44.21 from any other heading, including another heading within that group.
At the time the edge-glued lumber enters Canada, it is a product that would be classifiable in heading 4421, HTSUS, as "edge-glued lumber." When the finished panels enter the United States, they remain classified in heading 4421, HTSUS, as "Other" articles of wood. Therefore, the tariff shift rule is not met. Accordingly, the finished truck flooring panels classified under 4421.99.9880, HTSUS, do not satisfy the tariff shift rule under GN 11(o). Based on the facts provided, the goods described above do not qualify for USMCA preferential tariff treatment.
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 CFR 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, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), and revised in the Federal Register published November 15, 2022 (87 FR 68349), 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.
19 CFR Part 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.
The finished truck bed flooring panels are 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 panels and paragraph (a)(3) must be applied next to determine the origin of the finished article.
Section 102.20 (19 CFR 102.20) sets forth the applicable tariff change rules that address the current scenario. The truck bed flooring panels are classifiable in heading 4421. Goods classified in heading 4421 must undergo a change as follows: "A change to any other good of heading 4413 through 4421 from any other heading, including another heading within that group." The edge-glued lumber from China is classifiable in heading 4421. After manufacturing in Canada, the flooring panels are still classifiable in heading 4421. Therefore, the tariff shift rule has not been met.
Since an analysis of section 102.11(a) has not produced a country of origin determination, we turn to section 102.11(b) of the regulations.
Section 102.11(b) states, in relevant part:
Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section:
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:
(b)(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 the 102.20 specific rule or other requirements applicable to the good. For purposes of this paragraph (b)(1):
(ii) Materials that may be considered include materials produced by the producer of the good and incorporated in the good. For example, if a producer of a good purchases raw materials and converts those raw materials into a component that is incorporated in the good, that component is a material that may be considered for purposes of identifying the materials that impart the essential character to the good, provided that the component is classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule...
The material that does not undergo the applicable tariff shift in 19 C.F.R. 102.20(d) is the edge-glued lumber from China. Therefore, for marking purposes, the country of origin of the truck bed flooring panels will be China. The truck bed flooring panels should marked accordingly with their country of origin in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 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 any questions regarding the ruling, contact National Import Specialist Charlene Miller at [email protected]
Steven A. Mack
National Commodity Specialist Division