[Federal Register Volume 68, Number 160 (Tuesday, August 19, 2003)]
[Notices]
[Pages 49788-49791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-21010]
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DEPARTMENT OF HOMELAND SECURITY
Bureau of Customs and Border Protection
Notice of Issuance of Final Determination Concerning Fiber Optic
Cable Products
AGENCY: Customs and Border Protection, Department of Homeland Security.
ACTION: Notice of final determination.
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SUMMARY: This document provides notice that the Bureau of Customs and
Border Protection (CBP) has issued a final determination concerning the
country of origin of certain fiber optic cable products to be offered
to the United States Government under an undesignated government
procurement contract. The final determination found that based upon the
facts presented, the countries of origin of products referred to as
Glass, Glass Polymer patch cords, Fiber Interconnect Product cable
assemblies and Multimode (ST MM) epoxy connectors are the United
States, the United States, and Japan, respectively.
DATES: The final determination was issued on August 11, 2003. A copy of
the final determination is attached. Any party-at-interest, as defined
in 19 CFR 177.22(d), may seek judicial review of this final
determination within 30 days of August 19, 2003.
FOR FURTHER INFORMATION CONTACT: Craig Walker, Special Classification
and Marking Branch, Office of Regulations and Rulings (202-572-8836).
SUPPLEMENTARY INFORMATION: Notice is hereby given that on August 11,
2003, pursuant to Subpart B of Part 177, Customs Regulations (19 CFR
part 177, subpart B), CBP issued a final determination concerning the
country of origin of certain fiber optic cable products to be offered
to the United States Government under an undesignated government
procurement contract. The CBP ruling number is HQ 562754. This final
determination was issued at the request of 3M Company under procedures
set forth at 19 CFR part 177, subpart B, which implements Title III of
the Trade Agreements Act of 1979, as amended (19 U.S.C. 2511-18).
The final determination concluded that, based upon the facts
presented, the assembly in China of U.S.-origin fiber optic cable and
Chinese-origin connectors to create Glass, Glass Polymer (``GGP'')
patch cords does not result in a substantial transformation of the
components into a product of China. Therefore, the country of origin of
the product is the United States. The final determination also
concluded that neither the assembly in China of a Japanese-origin
ceramic ferrule with U.S.-origin components to create connectors nor
the subsequent assembly in China of the connectors with U.S.-origin
fiber optic cable to produce Fiber Interconnect Product (``FIP'') cable
assemblies results in a substantial transformation of the components
into products of China. Accordingly, the origin of the FIB cable
assemblies is the United States. Finally, the final determination
concluded that the assembly in China of a Japanese-origin ceramic
ferrule with U.S., Canadian and Chinese components to produce Multimode
(ST MM) epoxy connectors does not result in a substantial
[[Page 49789]]
transformation of the components into products of China. Therefore, the
country of origin of the ST MM epoxy connectors is Japan.
Section 177.29, Customs Regulations (19 CFR 177.29), provides that
notice of final determinations shall be published in the Federal
Register within 60 days of the date the final determination is issued.
Section 177.30, Customs Regulations (19 CFR 177.30), states that any
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial
review of a final determination within 30 days of publication of such
determination in the Federal Register.
Any party-at-interest, as defined in 19 CFR 177.22(d), may seek
judicial review of this final determination within 30 days of August
19, 2003.
Dated: August 13, 2003.
Myles B. Harmon for Michael T. Schmitz,
Assistant Commissioner, Office of Regulations and Rulings.
MAR-2 RR:CR:SM 562754 CW
CATEGORY: Marking
Mr. Robert E. Burke
Counsel, Barnes, Richardson & Colburn, 303 East Wacker Drive, Suite
1100, Chicago, Illinois 60601
Re: Country of Origin of fiber optic cable products; government
procurement; final determination
Dear Mr. Burke: This is in response to your letter dated May 9,
2003, on behalf of your client 3M Company (``3M'') requesting a
ruling on fiber optic cable products. 3M requests a country of
origin determination for the fiber optic cable products in order to
comply with the Federal Acquisition Regulations, 48 CFR 25.000 et
seq., and the ``Trade Agreements Act,'' 19 U.S.C. 2501 et seq.
Specifically, this ruling concerns the following three products:
Glass, Glass Polymer (``GGP'') patch cords; Fiber Interconnect
Product (``FIP'') cable assemblies (also referred to as ``FIP patch
cords''); and Multimode (ST MM) epoxy connectors. In accordance with
your request, this response constitutes a final determination issued
in accordance with 19 CFR 177.22(c).
FACTS
GGP Patch Cord
3M manufactures optical fiber, and further manufactures the
fiber into optical fiber cable. These processes, all of which take
place in the United States, begin with an imported fiber optic
``seed,'' which 3M uses as raw material in manufacturing the optical
fiber. The optical fibers, in turn, are made into optical fiber
cable in the United States. Once the optical fiber cable is
completed, 3M expects to send the cable to China, where it is to be
cut and fitted with connectors. A description of the steps in the
production process, beginning with the imported ``seed,'' is as
follows:
1. 3M produces optical fiber in the United States from an optic
core, called a ``seed,'' which is imported into the U.S. from the
Netherlands. The seed is a multi-layered glass rod. The rings, or
layers, or glass that comprise the seed are melded together and
light travels through the layers of glass, all of which have
different refractive indexes.
2. After importation, 3M adds a glass ``sleeve'' to the core.
This process is known as ``cladding.'' The seed and the sleeve
comprise an optical fiber ``preform,'' measuring approximately 2\1/
2\ inches in diameter by one meter.
3. 3M then draws the preform, via a drawing tower, into an
extremely thin o ptical glass fiber. The resulting diameter of the
optical fiber is 0.004 inches. The drawing also melds the core and
glass sleeve into one integrated product, giving the optical fibers
required optical properties. 3M refers to this optical fiber as
``glass, glass, polymer,'' or ``GGP''. 3M owns a patent, in the U.S.
and in several other countries, on the GGP process.
4. 3M then sends the optical fiber to another U.S. company,
which adds a thermoplastic jacket and aramid fibers to the final
optical fiber. The jacket and the fibers are added solely for the
protection of the delicate optical fiber. After jacketing, this
company winds the finished optical fiber cable onto spools and sends
it to China.
5. In China, the U.S. optical fiber cable in spools is cut to
length and molded plastic connectors made in China are applied to
the optical fiber cable using the following steps:
a. The spooled cable is cut to length;
b. Each end of the cut cable is threaded through a plastic
holder where about two inches of sheathing are removed from each end
of the cable and any exposed Kevlar fiber is cut away and the
plastic jacketing of the optical fiber is removed;
c. The exposed fiber is cleaned with alcohol and measured;
d. The fiber is threaded through a connector, glued to the
connector and excess fiber is trimmed;
e. The connectors are placed into a finishing machine, where the
fiber ends are automatically beveled and polished;
f. The metal springs, sourced from the United States, are
inserted into a connector and ultrasonically welded into place;
g. The connectors are ultrasonically cleaned and tested and a
protective plastic shroud is snapped onto the connector.
FIP Cable Assembly
1. 3M purchases optical fiber cable from an unrelated company in
the U.S. This cable is a standard fiber optic cable, and consists of
one or more fiber optic fibers, aramid (Kevlar TM) for
strength, and a thermoplastic coating that provides protection for
the very thin fiber(s).
2. 3M purchases a ceramic ferrule in Japan. This ferrule, a
hollow cylinder, is used to align the ends of the optical fibers as
the fibers are inserted into the connectors. The hollow center of
the ferrule contains one channel that is designed to fit the optical
fiber and to align the fiber ends, enabling light to pass through
the connection.
3. 3M purchases or self-produces plastic parts to be used in the
cable connectors. All self-produced parts are molded in the United
States.
4. 3M sends the spooled fiber optic cable and plastic parts,
along with a small metal ring from the U.S., and the ferrule from
Japan, to China.
5. In China, the ceramic ferrule, the metal ring, and the
plastic parts are assembled into a connector for the ends of the
cable assemblies. The fiber optic cable is also cut-to-length and
assembled with the connectors. Specifically, the steps involved in
the assembly process are as follows:
a. The spooled cable is cut to length;
b. Each end of the cut cable is threaded through a respective
plastic boot and the metal ring;
c. After removing about two inches of sheathing, Kevlar
TM fiber, and plastic jacketing of the cable, the exposed
fiber is cleaned with alcohol and measured;
d. The fiber is threaded through the ferrule and fastened by
adhesive;
e. The metal ring is attached, by crimping, and the fiber is
trimmed;
f. The exposed ends of the fiber are scored, machine-polished,
and cleaned;
g. The unit is inspected and tested, and a plastic protective
dust cap is placed on it.
ST MM Epoxy Connector
3M also separately imports a connector, called an ``ST MM Epoxy
Connector'' from China. This connector is similar to the connector
used on the FIP Cable Assemblies described above, and the component
source and assembly process is also substantially similar. In this
case, the assembly consists of the following components:
1. 3M purchases a Japanese made ceramic ferrule which it
provides to the assembler. This ferrule is a hollow cylinder, used
to align the ends of the optical fibers as the fibers are inserted
into the connectors. The hollow center of the ferrule contains one
channel that is highly engineered to fit the optical fibers exactly
and to provide a precise alignment of the optical fiber ends to
minimize the loss of light in the connection.
2. 3M supplies the assembler with an epoxy ring, a spring, a c-
clip and tygon tubes from the United States. 3M also supplies the
assembler with a small, metal ``backbone'' and a metal ``bayonet''
from Canada. Packing materials and labels are from China.
3. 3M supplies the assembler with a plastic dust cap and a boot,
made in China.
The assembly process is as follows:
1. The backbone and epoxy ring are assembled and glued with the
ceramic ferrule, bayonet, spring and c-clip to form the ST MM Epoxy
Connector.
2. The dust cap is then put over the assembly. This cap is only
used for protection of the connector during transit; it is removed
before final use.
3. The capped connector is put into the plastic bag, along with
the tygon tube and the boot. The boot and tygon tubing is added to
the connector by the final user to provide strain relief. (The Tygon
tubing is used to protect the fiber when the connector is terminated
onto 900 um fiber. It is not used 100% of the time). The end user
determines if the assembly needs the tygon tubing.
ISSUES
For purposes of government procurement, what is the country of
origin of the patch
[[Page 49790]]
cords, FIP Cable Assembly and ST MM Epoxy Connector processed as
described above?
LAW AND ANALYSIS:
Under Subpart B of Part 177, 19 CFR 177.21 et seq., which
implements Title III of the Trade Agreements Act of 1979, as amended
(19 U.S.C. 2511 et seq.), the Bureau of Customs and Border
Protection (CBP) issues country of origin advisory rulings and final
determinations on whether an article is or would be a product of a
designated country or instrumentality for the purposes of granting
waivers of certain ``Buy American'' restrictions in U.S. law or
practice for products offered for sale to the U.S. Government.
In regard to determining the country of origin of goods intended
for government procurement, section 177.22(a), Customs Regulations
(19 CFR 177.22(a)), provides, in pertinent part, as follows:
For the purpose of this subpart, an article is a product of a
country or instrumentality only if (1) it is wholly the growth,
product, or manufacture of that country or instrumentality, or (2)
in the case of an article which consists in whole or in part of
materials from another country or instrumentality, it has been
substantially transformed into a new and different article of
commerce with a name, character, or use distinct from that of the
article or articles from which it was so transformed.
19 CFR 177.22(a)(1) does not apply in the instant case because
the fiber optic cable products are not wholly produced in the United
States. Therefore, 19 CFR 177.22(a)(2) is applicable.
An article that consists in whole or in part of materials from
more than one country is a product of the last country in which it
has been substantially transformed into a new and different article
of commerce with a name, character, and use distinct from that of
the article or articles from which it was so transformed. See United
States v. Gibson-Thomsen, 27 C.C.P.A. 267 (1940); Uniroyal Inc. v.
United States, 542 F. Supp. 1026 (Ct. Int'l Trade 1982), aff'd, 702
F.2d 1022 (Fed. Cir. 1983); Koru North America v. United States, 701
F. Supp 229 (Ct. Int'l Trade 1988); National Juice Products Ass'n v.
United States, 628 F. Supp. 978 (Ct. Int'l Trade 1986); Coastal
States Marketing Inc. v. United States, 646 F. Supp. 255 (Ct. Int'l
Trade 1986), aff'd, 818 F.2d 860 (Fed. Cir. 1987); Ferrostaal Metals
Corp. v. United States, 664 F. Supp. 535 (Ct. Int'l Trade 1987).
If the manufacturing or combining process is a minor one which
leaves the identity of the imported article intact, a substantial
transformation has not occurred. See Uniroyal Inc. v. United States,
3 CIT 220, 542 F. Supp. 1026 (CIT 1982). Assembly operations which
are minimal or simple, as opposed to complex or meaningful, will
generally not result in a substantial transformation. See C.S.D. 80-
111, C.S.D. 85-25, and C.S.D. 90-97.
GGP Patch Cords
In the case of the patch cords, a foreign ``seed'' is used in
the U.S. in the manufacture of optical fiber cable. The first issue
is whether the processing in the United States performed on this
imported ``seed'' results in a substantial transformation. In
Headquarters' Ruling Letter (``HRL'') 561774 dated January 29, 2001,
Customs addressed a similar situation. In HRL 561774, the issue
involved the country of origin marking of imported glass rod
(``cane'') used in the production of optical fiber preforms in the
U.S. The imported cane was subjected to a ``overcladding'' process
to create the fiber preform. According to the facts in HRL 561774,
[t]he fiber itself consists of two different types of glass--one
making up the ``core'' [of the preform, i.e., cane], and the other
making up the ``cladding'' surrounded by a protective acrylate
coating. The core is the light-guiding region of the fiber, while
the cladding, which has a different index of refraction than the
core, ensures that the light signal remains within the core as it is
carried along the fiber's length.
Customs held that, as the optical properties are imparted at the
preform stage of production, the ``essence'' or character of the
preform does not derive from the cane, but from the added cladding
and its interaction with the core (cane). Therefore, we found that
the production of the fiber preform resulted in a substantial
transformation of the imported cane.
In the present case, an imported multi-layered glass rod
(referred to as a ``seed'') is subjected to a ``cladding'' process
in the U.S., involving the addition of a glass ``sleeve'' to the
core. The preform is then drawn into optical glass fiber which, in
turn, is made into optical fiber cable. Consistent with the holding
in HRL 561774, we find that the above processing in the U.S.
(specifically, the operations resulting in the preform)
substantially transforms the foreign-origin ``seed'' into a
``product of'' the United States.
The second issue involving this first product is whether the
operations performed in China result in a substantial transformation
of the U.S.-origin optical fiber cable into a ``product of'' China.
The U.S.-origin optical fiber cables are sent to China. In China,
the optical fiber cable is cut-to-length, two inches of sheathing is
removed from each end of the cable, and plastic connectors of
Chinese origin are attached to each end of the cable.
In C.S.D. 85-25 (HRL 561392) dated September 25, 1984, Customs
held that an assembly does not constitute a substantial
transformation unless the operation is ``complex and meaningful.''
The Bureau of Customs and Border Protection (CBP) criteria for
determining whether an operation is ``complex and meaningful''
depends upon the nature of the operation, including the number of
components assembled and number of different operations involved.
Prior CBP rulings raise additional considerations such as processing
time, costs, visibility of the imported article after processing,
and skill required by the assembly operation.
In HRL 561392 dated June 21, 1999, Customs considered the
country of origin marking requirements of an insulated electric
conductor which is an electrical cable with pin connectors at each
end used to connect computers to printers or other peripheral
devices. The cable and connectors were made in Taiwan. In China, the
cable was cut to length and connectors were attached to the cable.
Customs held that the cutting of the cable to length and assembly of
the cable to the connectors in China did not result in a substantial
transformation. In HRL 560214 dated September 3, 1997, Customs held
that where wire rope cable was cut to length, sliding hooks were put
on the rope, and end ferrules were swaged on in the U.S., the wire
rope cable was not substantially transformed. Customs concluded that
the wire rope maintained its character and did not lose its identity
and become an integral part of a new article when attached with the
hardware. In HRL 555774 dated December 10, 1990, Customs held that
Japanese wire cut to length and electrical connectors crimped onto
the ends of the wire was not a substantial transformation.
In the case of the GGP patch cords in this case, it is our
opinion that the cutting of the cable to length and assembly of the
cable to the Chinese-origin connectors in China does not result in a
substantial transformation of the cable. Therefore, as the
connectors lose their separate identity when combined with the fiber
optic cable, the country of origin of the imported optical fiber
cable is the United States.
FIP Cable Assemblies
In the case of the FIP cable assembly, a Japanese-origin ceramic
ferrule and fiber optic cable (purchased from an unrelated company
in the U.S.), metal ring (purchased in the U.S.), and plastic parts
(purchased in the U.S. or self-produced by 3M in the U.S.) are used
during the assembly operation in China. First, the connectors are
assembled using the ferrule, adhesive, plastic covers, and a metal
ring. The ferrule gives the connector its form and function. The
connectors are then attached to each end of the fiber optic cable.
For purposes of this ruling, we are assuming that those components
said to be purchased in the U.S. for use in making the FIP cable
assembly are of U.S. origin.
In your submission, you state that the assembly operation for
the FIP cable assembly is substantially similar to that described
above for the GGP patch cord. You mention that the only major
difference is that the FIP connectors include the Japanese-origin
ferrule, which provides the structure and the enclosure for the
cable at the point of connectivity. According to your submission,
the ceramic ferrule is precisely designed to allow the joining of
hair-thin fiber optic cables. The other parts of the connector are
simply a means of affixing the ferrule in place. You assert that the
assembly operation performed in China does not result in a
substantial transformation of either the ferrule or the fiber optic
cable. Therefore, you contend that the country of origin of the
imported FIP cable assembly is the U.S. as the fiber optic cable
imparts the essential character to the cable assembly or,
alternatively, that the country of origin of the fiber optic portion
of the assembly is the U.S. and the origin of the connector portion
is Japan.
In HRL 556020 dated July 1, 1991, Customs addressed the issue of
whether electrical
[[Page 49791]]
connectors produced in a designated beneficiary developing country
under the Generalized System of Preferences (GSP) qualified as
substantially transformed constituent materials of the electrical
cable to which they were attached for purposes of the 35% value-
content requirement under the GSP. The production of the connectors
involved machining brass rod into contact pins and then joining the
contact pins with plastic connector housings. Customs held that,
while the initial fabrication of the contact pins from brass rod
resulted in a substantial transformation, neither the subsequent
assembly of the contact pins with connector housings to create the
electrical connectors nor the later assembly of the electrical
connectors with the cable resulted in a second substantial
transformation. We stated that these are considered simple assembly
operations which will not result in a substantial transformation, as
they involve a small number of components and do not appear to
require a considerable amount of time, skill, attention-to-detail,
or quality control.
Similarly, in the instant case, we find that neither the U.S.-
origin fiber optic cable nor the Japanese-origin ferrule undergoes a
substantial transformation in China as a result of the assembly
operations performed there to create the FIP cable assemblies. These
are considered simple assembly operations involving only a small
number of components. In considering the last country in which the
FIP cable assembly underwent a substantial transformation, it is our
opinion that the cable assembly's characteristics are primarily
imparted at the time that the fiber optic cable is manufactured in
the U.S. The fibers making up the cable serve as the transmission
medium through which light signals travel. Therefore, the country of
origin of the imported FIP cable assemblies is the U.S.
ST MM Epoxy Connector
In your submission, you state that the assembly operation for
the ST MM Epoxy Connector is substantially similar to that described
above for the FIP cable assembly connector. Based on the reasoning
cited above and as found in HRL 556020, it is our opinion that the
assembly is relatively simple and only involves a small number of
components. Therefore, in considering the last country in which the
connectors underwent a substantial transformation, we believe that
the connector's characteristics are primarily imparted by the
ferrule which provides the structure and enclosure for the fiber
optical cable at the point of connectivity. Therefore, the country
of origin of the MM Epoxy Connector is Japan.
HOLDING
Based on the facts presented, joining the Chinese-origin
connectors to the U.S.-origin fiber optic cable in China to create
the GGP patch cords does not constitute a substantial
transformation. As a result, the imported GGP patch cord is a
product of the United States for government procurement purposes
under 19 CFR Part 177, Subpart B.
Based on the facts presented, the assembly of the connectors and
the subsequent assembly of the connectors to the fiber optic cable
in China to produce the FIP cable assembly does not result in a
substantial transformation. Therefore, as the very essence of the
cable is imparted by the fiber optical cable, the FIP cable assembly
is a product of the United States for government procurement
purposes.
Based on the facts presented, the assembly of the ST MM epoxy
connector in China does not result in a substantial transformation.
Therefore, as the very essence of the connector is imparted by the
ferrule, the connector is a product of Japan for government
procurement purposes.
Notice of this final determination will be given in the Federal
Register as required by 19 CFR 177.29. Any party-at-interest other
than the party which requested this final determination may request,
pursuant to 19 CFR 177.31, that CBP reexamine the matter anew and
issue a new final determination.
Any party-at-interest may, within 30 days after publication of
the Federal Register notice referenced above, seek judicial review
of this final determination before the Court of International Trade.
Sincerely,
Michael T. Schmitz,
Assistant Commissioner, Office of Regulations and Rulings
[FR Doc. 03-21010 Filed 8-18-03; 8:45 am]
BILLING CODE 4820-02-P