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HQ 086510


September 19, 1990

CLA-2 CO:R:C:G 086510 MBR

CATEGORY: CLASSIFICATION

TARIFF NO.: 8516

Frank M. Murphy
John V. Carr & Son, Inc.
P.O. Box 33479
Detroit, Michigan 48232-5479

RE: United States-Canada Free-Trade Agreement; Hot water kettle power supply cords with third country components; Originating goods

Dear Mr. Murphy:

This is in reply to your letters of December 6, 1989 and February 1, 1990, on behalf of NOMA Industrial Cords Co. of Scarborough, Ontario, requesting origin status, under the United States-Canada Free-Trade Agreement (FTA), of hot water kettle power supply cords containing U.S., Canadian and third country components.

FACTS:

You represent that all materials used in the manufacture of the power supply cords are entirely of U.S. or Canadian origin except: 1) a resistor used to regulate amperage in the indicator light bulb, and 2) certain stabilizers used in the molding compound used in the manufacture of the PVC plugs.

ISSUE:

Does the completed power supply assembly qualify for the benefits of the FTA as an originating good?

LAW AND ANALYSIS:

The FTA rules for determining whether goods, when imported into the United States, are originating in the territory of Canada are set forth in General Note 3(c)(vii), Harmonized Tariff Schedule of the United States Annotated (HTSUSA).

General Note 3(c)(vii)(B) states:

(B) For the purposes of subdivision (c)(vii) of this note, goods imported into the customs territory of the United States are eligible for treatment as "goods originating in the territory of Canada" only if--

(1) they are goods wholly obtained or produced in the territory of Canada and/or the United States, or

(2) they have been transformed in the territory of Canada and/or United States, so as to be subject--

(I) to a change in tariff classification as described in the rules of subdivision (c)(vii)(R) of this note, or

(II) to such other requirements subdivision (c)(vii)(R) of this note may provide when no change in tariff classification occurs, and they meet the other conditions set out in subdivisions note.

The power supply cords at issue are not "goods wholly obtained or produced in the territory of Canada and/or the United States," as required by General Note 3(c)(vii)(B)(1), because of the use of third country components (molding compound stabilizers and a resistor). The definition of goods "wholly obtained or produced" is enumerated in General Note 3(c)(vii)(L), which states:

(L) As used in subdivision (c)(vii)(B) of this note, the phrase "goods wholly obtained or produced in the territory of Canada and/or the United States" means-- (1) mineral goods extracted in the territory of Canada and/or the United States, (2) goods harvested..., (3) live animals..., (4) fish..., (5) goods produced on factory ships..., (6) goods taken...from seabed..., (7) goods taken from space..., (8) waste and scrap derived from manufacturing..., (9) goods produced in the territory of Canada and/or the United States exclusively from goods referred to in subparagraphs (1) to (8), inclusive, or from their derivatives, at any stage of production.

Therefore, the question arises whether the goods have been transformed in the territory of Canada and/or the United States, so as to be subject to a change in tariff classification, as required by General Note 3(c)(vii)(B)(2)(I). The resistors are first imported into the U.S. and are classifiable under subheading 8533.10.00, HTSUSA, which provides for fixed carbon resistors. The final bulb assembly is exported to Canada under subheading 8531, HTS, which provides for electric sound or visual signaling apparatus. General Note 3(c)(vii)(R) provides for the requisite change in tariff classification rules. Paragraph (16) provides for changes in classification required for Section XVI: Chapters 84 through 85. Rule (bb) requires: "A change from one heading (other than a parts heading) to another heading, other than heading 8528 or 8529." The change in classification from heading 8533 (not a parts heading) to heading 8531 meets this requirement.

Stabilizers of rubber or plastics are imported into Canada under 3812.30, HTS, from a third country. The final assembly would be imported under 8516, HTSUSA, which provides for: "electric instantaneous or storage water heaters and immersion heaters; other electrothermic appliances of a kind used for domestic purposes; parts thereof." General Note 3(c)(vii)(R), Paragraph 16, Rule (aa) requires: "[a] change from one chapter to another, other than a change to heading 8544." The change in classification of the stabilizers from chapter 38 to chapter 85 satisfies this requirement of change. Therefore, under the FTA, the stabilizers are considered goods of Canadian origin.

In the instant case, the rules of General Note 3(c)(vii)(B) and subdivision (c)(vii)(R) are met since the requisite changes in classification have taken place in Canada or the U.S.

HOLDING:

The hot water kettle power supply cords at issue are originating goods of Canada and the United States, for purposes of the U.S.-Canada FTA, because the components meet the requisite changes in classification of General Note 3(c)(vii)(R).

Sincerely,

John Durant, Director

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