The country of origin of a yacht

N345287 February 19, 2025 OT:RR:NC:N2:206 CATEGORY: Origin Peter Quinter Gunster 4855 Technology Way, Suite 630Boca Raton, FL 33431 RE:  The country of origin of a yacht Dear Mr. Quinter: In your letter dated January 21, 2025, filed on behalf of Pacific Asian Enterprises, Inc., you requested a ruling on the applicability of Section 301 trade remedies and country of origin marking for a Nordhavn 80 yacht.  The article under consideration is the Norhavn 80 yacht, built in Taiwan and China. The hull or superstructure of the yacht is manufactured in Taiwan of fiberglass reinforced plastic or “FRP.” The construction of a FRP yacht uses a series of molds for the hull, the decks, the fuel tanks, waste tanks, and water tanks. These molds are an actual sized construction of the yacht that are female, made from tooling which is an actual size wood frame of the Nordhavn yacht. The molds are prepared for construction with a machine buffing, and layers of wax are applied to the surface to ease the eventual release of the part from the mold. After this, many layers of laminate, which is fiberglass that has been wetted with resin, is then laid by hand into the mold and rolled out. The layers are added according to a schedule to engineer in the appropriate strength. The hull of a Nordhavn consists of the bow, the bulbous bow, the hull, the keel, the rudder shoe, and the stern. This is considered or referred to the ‘stem to stern’ of a yacht. While the hull is in the mold, there are engineered stringers that are added into the hull by laminating them to the hull structure to provide additional strength. Once the stringers are added bulkheads will be laminated into the hull structure at the specified (engineered) locations. The tanks and the decks are laminated using molds and the same procedure as above. Once the hull, the tanks and decks are cured the tanks are added into the hull, and further parts are added into the hull. The next step is joining the decks to the hull. The main decks are a continuous fiberglass laminate, stem to stern, adding to the strength and level of finish. The wheelhouse, Portuguese bridge, salon and bulwarks are also crated in a single mold for a strong joint-free structure. You state in your letter and then confirmed in your correspondence, dated February 12, 2025, that when the yacht departs Taiwan for China, the engines from the United States and the stabilization system have already been installed. The labor performed in China is to finish the interior woodwork, install the cabinetry, the stone counter tops, the stone floors, finish painting the interior, finish the plumbing and wiring, and install the appliances, such as a washer, dryer, stove, oven, refrigerator, coffee maker, and a wine cooler, parts, and accessories. The vessel’s pre-wiring and plumbing was already performed in Taiwan. The shafts and propellors were made in the USA and installed in China. After arrival in the United States, the yachts undergo further processing including the installation of USA made helm chairs and fly bridge helm chairs, installation of navigation equipment, radars, auto pilots, radios, GPS, chart plotters, screens, TV and stereo equipment, carpets, drapes and curtains, more appliances, dingys, tenders, and life rafts, all safety equipment (fire extinguishers, flares, and life vests), all galley components (pots, pans, dishes, glasses, cups and silverware), final interior lamps and lights, boat name, and exterior canvas covers. When determining the country of origin for both Section 301 trade remedy and marking purposes, the substantial transformation analysis is applicable. See, e.g., Headquarters Ruling Letter (“HQ”) H301619, dated November 6, 2018. 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, 681 F.2d 778 (C.C.P.A. 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). 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 its container) will permit, in such a manner as to indicate to the 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 marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that 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.” See United States v. Friedlander & Co., 27 C.C.P.A. 297, 302 (1940). Part 134 of the U.S. 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), CBP Regulations (19 CFR 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. Based on the information provided, the processes performed in China do not transform the yacht into a new and different article. The installation of the cabinetry, appliances, etc., and painting are finishing operations to enhance the yacht. As a result, no substantial transformation occurs in China. Therefore, the country of origin of the Nordhavn 80 yacht will be Taiwan for Section 301 and marking purposes. Therefore, trade remedies under Section 301, as amended, from China will not apply. Please note, the appliances, such as the washer, dryer, stove, oven, refrigerator, coffee maker, and wine cooler will retain their country of origin where they underwent a production. Trade remedies and other restrictions may apply to the appliances, when imported installed into the Nordhavn 80 yacht. Generally, the coastwise laws prohibit the transportation of merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. Such a vessel, after it has obtained a certificate of documentation with a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise-qualified.” The coastwise law applicable to the transportation of merchandise, often referred to as “the Jones Act,” is found at 46 U.S.C. § 55102. Inquiries regarding the applicability of the Jones Act to your case can be sent to the Commissioner of Customs and Border Protection, Attention: Regulations and Rulings, Office of Trade, Washington, DC 20229, or by emailing hqrulings@cbp.dhs.gov or jonesactwaiverrequest@cbp.dhs.gov The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP. 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 Liana Alvarez at liana.alvarez@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division