The tariff classification, and status under the North American Free Trade Agreement (NAFTA), of automobile wiring harnesses from Mexico; Article 509

N058639 May 13, 2009 CLA-2-85:OT:RR:E:NC:NI:112 CATEGORY: Classification TARIFF NO.: 8544.30.0000 Mr. Jorge Alberto Torres President/U.S. Licensed Customs Broker Interlink Trade Services 10601 South Jackson Road Suite 200 Pharr, TX 78577 RE: The tariff classification, and status under the North American Free Trade Agreement (NAFTA), of automobile wiring harnesses from Mexico; Article 509 Dear Mr. Torres: In your letter dated April 25, 2009, you requested a ruling on the status of automobile wiring harnesses from Mexico under the NAFTA. The merchandise concerned is referred to as the KSK wire harness. The KSK wire harness is basically a group of wire harness sub-assemblies that provide all of the electrical connections for the BMW X5 SUV vehicle. The KSK consists of various components such as wire, connectors, terminals, rubber gaskets, plastic tubing, etc. A complete list of components was submitted with the ruling request. These components have various countries of origin with the majority of them being from Mexico, Germany, United States and Nicaragua. These components are assembled in Mexico into the finished KSK wire harness and imported into the United States. The applicable tariff provision for the KSK wire harness will be 8544.30.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Insulated wire, cable and other insulated electric conductors…: Ignition wiring sets and other wiring sets of a kind used in vehicles, aircraft, or ships.” The general rate of duty will be 5%. 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 http://www.usitc.gov/tata/hts/. General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that 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; or (iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for “parts” and used in the production of such goods does not undergo a change in tariff classification because-- (A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or (B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts, provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note. Based on the facts provided, the goods described above do not qualify for preferential treatment under the NAFTA because none of the above requirements are met. In your ruling request, you state that your merchandise will qualify for NAFTA preferential treatment, because it will meet the requirements of HTSUS General Note 12(b)(ii)(A). You show all of the regional value content information and how your merchandise qualifies for NAFTA based on the results of the RVC calculations. Prior to determining the RVC, all of the non-originating material used in the manufacture of the KSK wire harness needs to undergo a tariff shift. The automotive wiring harness from Nicaragua does not undergo the require tariff shift, as such we would not need to make an RVC determination. The failure of the wire harness from Nicaraqua to undergo the required tariff shift keeps the KSK wire harness from qualifying for NAFTA. 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. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and 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 North American Free Trade Agreement ("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 appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations. 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. (Emphasis added). Section 134.1(j) of the regulations, 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) of the regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. Section 134.45(a)(2) of the regulations, provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish. You state that the imported KSK wire harness is processed in a NAFTA country "Mexico" prior to being imported into the U.S. Since "Mexico" is defined under 19 CFR 134.1(g), as a NAFTA country, we must first apply the NAFTA Marking Rules in order to determine whether the imported wire harness is a "good of a NAFTA country", and thus subject to the NAFTA marking requirements. 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. Based on the information provided, neither 19 C.F.R. 102.11 (a) (1) or 102.11 (a) (2) may be used to determine the origin of the finished article so analysis must continue to 19 C.F.R. 102.11 (a) (3). Pursuant to 19 C.F.R. 102.11 (a) (3), the country of origin of a good is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 C.F.R. 102.20, and satisfies any other applicable requirements of that section. In this case, the wire harness imported into the United States from Mexico is classified under subheading 8544.30.0000, Harmonized Tariff Schedule of the United States (HTSUS), the change in tariff must be made in accordance with section 102.20(o), Section XVI: Chapters 84 through 85, heading 8544.11-8544.70, HTSUS, which requires “A change to subheading 8544.11 through 8544.70 from any other subheading, including another subheading within that group, except when resulting form simple assembly.” The KSK wiring harness from Mexico incorporates a wiring harness from Nicaragua. The wiring harness from Nicaragua is classifiable under 8544.30.0000, Harmonized Tariff Schedule of the United States (HTSUS), it does not undergo the required tariff shift as a result of the processing in Mexico, as such, the country of origin of the KSK harness may not be determined in accordance with this provision. Since 19 C.F.R. 102.11(a) (incorporating section 102.20), is not determinative of origin, the next step is section 102.11(b), Customs Regulations, which states, in part: Except for a good that is specifically described in the Harmonized Tariff Schedule 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 the single material that imparts the essential charter to the good, … Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the KSK wiring harness is not a good of Mexico for marking purposes. Based upon the above factors, we find that the wiring harness from Nicaragua is the single component that imparts the essential character to the KSK wiring harness. Accordingly, the country of origin of the finished KSK wiring harness, pursuant to section 102.11(b) (1) of the Customs Regulations, is Nicaragua. This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181). 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 Steve Pollichino at (646) 733-3008. Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs and Border Protection, Regulations & Rulings, 799 9th Street N.W. - 7th floor, Washington, DC 20229-1177. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division