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HQ 086826


July 16, 1990

CLA-2 CO:R:CV:G 086826 JLV

CATEGORY: CLASSIFICATION

TARIFF NO.: 7326.20.00

Richard M. Belanger, Esq.
Powell, Goldstein, Frazer & Murphy
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004

RE: Single loop bale ties; substantial transformation; cutting to length and looping ends of galvanized wire

Dear Mr. Belanger:

In a letter of March 16, 1990, on behalf of your client, Florida Wire Products Corporation, you request a ruling on the country of origin of single loop bale ties that are made from galvanized steel wire. A sample of the bale tie (looped end only) has been submitted. This is our decision on the origin issue.

FACTS:

Your client proposes to obtain galvanized steel wire from a manufacturer in a country whose steel wire is subject to a Voluntary Restraint Arrangement (VRA). The galvanized wire will be shipped to Costa Rica (or possibly Aruba, Honduras or other country) for processing into single loop bale ties. The processing, to be performed on a "bale tie" machine, will consist of the following:

1. Straighten the wire and cut to specified lengths ranging from 6 to 21 feet.

2. Bend one end of each length to form a loop (approximately 3.5 inches from the end).

3. Twist the looped end (approximately two complete turns) to form a closed loop measuring approximately 0.5 inch in diameter.

4. Package the completed bale ties in bundles of 150 to 250 ties.

You conclude that the processing results in a product of Costa Rica (or other country in which the single loop bale ties are formed from the galvanized wire) because the processing results in an article which has a new name, character, and use. You note that the name changes from "wire" to "bale ties." This change in name is also reflected in a change in tariff classification from heading 7217 to heading 7326, Harmonized Tariff Schedule of the United States (HTSUSA). Furthermore, you note that the use of a multipurpose galvanized wire is narrowed to a single use article, a bale tie. Finally, you point out that the change in use and the 30 to 40 percent value added by the processing are evidence of a change that results in a product with a new character, i.e., a recognizable finished wire product.

ISSUE:

Is the manufacture of single loop bale ties from galvanized wire a substantial transformation of the wire into a new and different article which, therefore, becomes a product of the country in which the manufacture takes place?

LAW AND ANALYSIS:

The test for a substantial transformation is whether or not the processing changes a material or article into a different article which has a new name, character, or use. In this case, the bale ties are different in name, character, and use from the galvanized wire. The cutting and looping is a process that changes a multi-use material (galvanized wire in coil) into an identifiable article of commerce (single loop bale tie).

HOLDING:

The processing of galvanized wire into single loop bale ties is a substantial transformation which results in new and different articles, i.e., single loop bale ties, which are products of the country (in this case, Costa Rica) in which the process takes place. Bale ties of wire are classified in subheading 7326.20.00, HTSUSA.

The Office of Agreements Compliance, International Trade Administration, Department of Commerce, has the responsibility for interpreting the coverage of the VRA's. In this case, galvanized wire from a VRA country would be substantially transformed in Costa Rica into single loop bale ties. At the time of entry for consumption in the United States, the bale
ties would be products of Costa Rica. Therefore, we suggest that you seek the advice of the Office of Agreements Compliance on the application of the VRA to VRA wire which is substantially transformed in a non-VRA country prior to entry into the United States.

Sincerely,

John Durant, Director

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