HQ 0084538 - Cold Finished Steel Bar Processed in Canada From Hot Rolled Bar and Wire Rod; Country of Origin. - United States International Trade Commision Rulings

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HQ 084538

July 26, 1989

CLA-2:CO:R:C:G 084538 JAS

CATEGORY: COUNTRY OF ORIGIN

TARIFF NO.: None

Alexander W. Sierck, Esq.
Beveridge & Diamond, P.C.
1333 New Hampshire Avenue, N.W.
Washington, D.C. 20036

RE: Cold Finished Steel Bar Processed in Canada From Hot Rolled Bar and Wire Rod; Country of Origin.

Dear Mr. Sierck:

In your letter of January 4, 1989, as supplemented, on behalf of Laurel Steel Products, Burlington, Ontario, you inquire as to the country of origin of cold finished carbon steel bars. There is no issue of tariff classification. The questions you have raised concerning country of origin marking are the subject of a separate response.

This ruling is confined to cold finished bars in square and hexagonal dimensions. The tariff status of Laurel's cold finished round bars addressed in our rulings 083236 and 084538, both dated May 16, 1989..

FACTS:

The cold finished steel bars at issue here are made from hot rolled carbon steel bars and shipped to Canada from various EC countries. This is leaded, free machining steel which conforms to ASTM designations A-575 and A-576 (consolidated in designation A-29), and contains the required percentages of carbon, manga- nese, phosphorus, sulfur, and lead specified in AISI series 1211 through and including 12L14.

In Canada the steel is acid cleaned, rinsed, dipped in lime and baked. This is equivalent to mechanical descaling. It is then uncoiled and drawn once through a tungsten carbide die, after which it is magnetic tested for surface defects, straight- ened, and cut to customer-ordered lengths, typically 12 feet.

Your submissions of January 6 and 24, and March 14, 1989, indicate the processing increases the tensile strength of the bars from approximately 75,000 psi. to between 85,000 and 100,000 psi., with the actual drawing taking about 1 minute per bar. The Canadian processing adds approximately 25 percent to the cost of the hot rolled bar and reduces its cross-sectional area between 4 to 21 percent.

Standard quality cold finished carbon steel bars resulting from this processing conform to ASTM designation A-108. They are suitable for machining into cogs, gears, fasteners, automotive parts, plumbing fixtures, and other parts, as well as for subsequent heat treatment and for use in as-finished condition in the construction industry.

ISSUE:

What is the country of origin of the cold finished steel bar?

LAW AND ANALYSIS:

In order for the hot rolled bar entering Canada to have been considered substantially transformed there, the record must establish that the processing in Canada resulted in a product other than or materially different from the merchandise that entered Canada. A new and different article must emerge from the processing, one having a new name, character or use. Anheuser- Busch Brewing Association v. United States, 207 U.S. 556 (1908), and subsequent cases.

In this case, the reduction in cross-sectional area is minimal and is in the nature of a finishing process which imparts the final dimensional tolerances and consistency of mechanical properties. This processing does not dedicate the product to a use or uses for which it was unsuited in its condition as hot rolled bar. In addition, the value added is relatively small. While the processing increases the tensile strength of the cold finished bar, the parameters of the strength increase were metallurgically predetermined in the creation of the steel billet and very specifically through the fabrication of the hot rolled bar.

The record here supports a finding that no significant or material change in character or use occurs in the hot rolled bar as a result of the drawing operation.

HOLDING:

Cold finished steel bars imported 0.1590 through and including 2.5000 inches in cross-sectional diameter, processed as described in the facts from 0.218 inch to 2.562 inch hot rolled bar, are not substantially transformed in Canada and are products of the EC countries where the hot rolled bar originated.

This ruling applies both for country of origin marking purposes and for purposes of the steel restraints. Moreover, we note that the cold finished steel bars processed as indicated are not originating goods under the origin rules of the United States-Canada Free-Trade Agreement.

Sincerely,

John Durant, Director

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