The country of origin of bottle grade polyethylene terephthalate (PET) resin chips from South Korea

N332069 May 3, 2023 OT:RR:NC:N:1:137 CATEGORY: Origin Jin Kim ACI Law Group PC 6 Centerpointe Dr ,Ste 630La Palma, CA 90623 RE: The country of origin of bottle grade polyethylene terephthalate (PET) resin chips from South Korea Dear Mr. Kim: In your letter dated April 7, 2023, you requested a country of origin ruling on bottle grade PET resin chips on behalf of your client, SK Chemicals Co., Ltd. The merchandise at issue consists of semi-crystalline bottle grade PET resin chips, or PET resin chips with an intrinsic viscosity 78 ml/g or higher. Amorphous PET (AMPET) chips with a low intrinsic viscosity are imported from China to South Korea. The AMPET chips undergo solid-state polymerization in South Korea. Solid-state polymerization is carried out by heating the low molecular weight prepolymer at temperatures below its melting point but above its glass transition temperature. The solid-state polymerization process at SK’s plant consists of the following steps: 1) Raw material injection 2) First Crystallization 3) Second Crystallization 4) First Solid-State Polymerization 5) First Quality Monitoring Inspection 6) Second Solid-State Polymerization 7) Cooling 8) Second Quality Monitoring Inspection 9) Packaging 10) Final Quality Monitoring Inspection In the first and second crystallization stages, processes are performed to prevent fusion between the AMPET chips and to equalize crystallization levels. In the first solid-state polymerization stage, hot dry nitrogen is inserted for heating the chips to the temperature required for the second solid-state polymerization stage in which more nitrogen is inserted to heat the chips to cause the chemical reaction. During this chemical reaction, water, ethylene glycol and acetaldehyde are removed.  The cooling stage then cools the chips to prevent further solid-state polymerization. Through this solid-state polymerization process, the materials are manufactured from transparent amorphous chips with low viscosity to semi-crystalline opaque bottle grade PET resin chips with high viscosity. 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." 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, 69 C.C.P.A. 151 (1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993). The solid-state polymerization process transforms the transparent amorphous PET resin chips into opaque bottle grade PET resin chips.  This process also increases the molecular weight and intrinsic viscosity of the chips.  This process qualifies the product for use in bottle production.  It is the opinion of this office that the solid-state polymerization process to transform the AMPET into bottle grade PET results in a substantial transformation.  Therefore, the country of origin of the bottle grade PET will be South Korea. United States-Korea Free Trade Agreement (UKFTA) Originating Status of the bottle grade PET resin chips The requirements for eligibility for preferential tariff treatment under the UKFTA are set forth in General Note (“GN”) 33 of the HTSUS (19 U.S.C. § 1202). GN 33 provides in pertinent part: For the purposes of this note subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported ... is eligible for treatment as an originating good of a UKFTA country under the terms of this note if-(i) the good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both; (ii) the good is produced entirely in the territory of Korea or of the United States, or both, and-- (A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or (B) the good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o); and satisfies all other applicable requirements of this note and of applicable regulations; or (iii) the good is produced entirely in the territory of Korea or of the United States, or both, exclusively from materials described in subdivisions (i) or (ii), above. GN 33 (n) (vii) provides that: For purposes of applying this note to goods of chapters 27 through 40, inclusive (except a good of heading 3823), of the tariff schedule, a good that undergoes a chemical reaction as defined herein shall be treated as an originating good for purposes of this note, notwithstanding any product-specific rules enumerated in this note, provided all other applicable requirements are satisfied. A “chemical reaction” is a process (including a biochemical process) which results in a molecule with a new structure by breaking intramolecular bonds and by forming new intramolecular bonds, or by altering the spatial arrangement of atoms in a molecule. It is the opinion of this office that the solid-state polymerization process used to transform the AMPET chips to bottle grade PET chips is defined as a chemical reaction per GN 33 (n) (vii).  Therefore, the bottle grade PET resin chips are considered to be originating goods under UKFTA. This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Christina Allen at julie.c.allen@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division