[Federal Register Volume 83, Number 140 (Friday, July 20, 2018)]
[Notices]
[Pages 34603-34605]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15536]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Certain 
Insufflation Tubing

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: Notice of final determination.

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SUMMARY: This document provides notice that U.S. Customs and Border 
Protection (``CBP'') has issued a final determination concerning the 
country of origin of certain insufflation tubing. Based upon the facts 
presented, CBP has concluded that the country of origin of the 
insufflation tubing in question is China, for purposes of U.S. 
Government procurement.

DATES: The final determination was issued on July 13, 2018. 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 August 20, 2018.

FOR FURTHER INFORMATION CONTACT: Yuliya A. Gulis, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of Trade, at (202) 
325-0042.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on July 13, 
2018, pursuant to subpart B of Part 177, U.S. Customs and Border 
Protection Regulations (19 CFR part 177, subpart B), CBP issued a final 
determination concerning the country of origin of certain insufflation 
tubing imported by Global Resources International, Inc. from the 
Dominican Republic, which may be offered to the U.S. Government under 
an undesignated government procurement contract. This final 
determination, HQ H298148, was issued 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). In the final 
determination, CBP concluded that the country of origin of the 
insufflation tubing is China for purposes of U.S. Government 
procurement.
    Section 177.29, CBP Regulations (19 CFR 177.29), provides that a 
notice of final determination shall be published in the Federal 
Register within 60 days of the date the final determination is issued. 
Section 177.30, CBP Regulations (19 CFR 177.30), provides 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.

    Dated: July 13, 2018.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.

HQ H298148

July 13, 2018

OT:RR:CTF:VS H298148 YAG

CATEGORY: Origin

Ms. Christi Roos, LCB

M-PACT Solutions
P.O. Box 30209
4294 Swinnea Road
Memphis, TN 38118

RE: U.S. Government Procurement; Country of Origin of Insufflation 
Tubing; Title III, Trade Agreements Act of 1979 (19 U.S.C. Sec.  
2511 et seq.); Subpart B, Part 177, CBP Regulations

Dear Ms. Roos:

    This is in response to your correspondence dated March 26, 2018, 
requesting a final determination, on behalf of Global Resources 
International, Inc. (``Global Resources''), concerning the country 
of origin of certain

[[Page 34604]]

insufflation tubing, pursuant to subpart B of Part 177 of the U.S. 
Customs and Border Protection (``CBP'') Regulations (19 C.F.R. Sec.  
177.21 et seq.).
    We note that Global Resources is a party-at-interest within the 
meaning of 19 C.F.R. Sec.  177.22(d)(1) and is entitled to request 
this final determination.

FACTS:

    Global Resources is the importer of insufflation tubing. 
Insufflation tubing is used to interconnect and deliver carbon 
dioxide gas (``CO2'') from the insufflator machine 
(CO2 ``gas pump'' or insufflator) to the patient during 
laparoscopic surgery. Insufflation tubing is typically 3 meters 
(around 10 feet) in length, composed of a long clear plastic tubing 
and a short blue plastic tubing, with a filter attached about 30 
centimeters (12 inches) from one end. The purpose of the filter is 
to prevent fluid backflow into the insufflator and to help prevent 
contaminants from entering the patient's abdominal cavity. One end 
of the tubing is comprised of a male Luer lock fitting, which always 
connects to an instrument that is inserted into the patient's 
abdomen. The other end connects to the insufflator, which may 
contain any number of types of fittings.
    The country of origin of the clear tubing, blue tubing, filter 
assembly, and fittings is China. The insufflation tubing is 
assembled, sterilized, packed, and labeled in the Dominican 
Republic.

ISSUE:

    What is the country of origin of the insufflation tubing for 
purposes of U.S. Government procurement?

LAW AND ANALYSIS:

    CBP issues country of origin advisory rulings and final 
determinations as to 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, 
pursuant to subpart B of Part 177, 19 C.F.R. Sec.  177.21 et seq., 
which implements Title III of the Trade Agreements Act of 1979 
(``TAA''), as amended (19 U.S.C. Sec.  2511 et seq.).
    Under the rule of origin set forth under 19 U.S.C. Sec.  
2518(4)(B):
    An article is a product of a country or instrumentality only if 
(i) it is wholly the growth, product, or manufacture of that country 
or instrumentality, or (ii) 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.
See also 19 C.F.R. Sec.  177.22(a).
    In rendering advisory rulings and final determinations for 
purposes of U.S. Government procurement, CBP applies the provisions 
of subpart B of Part 177 consistent with the Federal Procurement 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Acquisition Regulations restrict the 
U.S. Government's purchase of products to U.S.-made or designated 
country end products for acquisitions subject to the TAA. The 
regulations define a ``designated country end product'' as:
    WTO GPA [World Trade Organization Government Procurement 
Agreement] country end product, an FTA [Free Trade Agreement] 
country end product, a least developed country end product, or a 
Caribbean Basin country end product.
    A ``WTO GPA country end product'' is defined as an article that:
    (1) Is wholly the growth, product, or manufacture of a WTO GPA 
country; or
    (2) In the case of an article that consists in whole or in part 
of materials from another country, has been substantially 
transformed in a WTO GPA country 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 transformed. The term refers 
to a product offered for purchase under a supply contract, but for 
purposes of calculating the value of the end product includes 
services (except transportation services) incidental to the article, 
provided that the value of those incidental services does not exceed 
that of the article itself.

See 48 C.F.R. Sec.  25.003.
    The Dominican Republic is a WTO GPA country. China is not. You 
assert that the insufflation tubing at issue is a product of the 
Dominican Republic for U.S. Government procurement purposes because 
all of the components of insufflation tubing, sourced from China, 
meet the requisite tariff shift rules under the Dominican Republic-
Central America-United States Free Trade Agreement (``DR-CAFTA''). 
Please note that this is an incorrect analysis to apply to determine 
the country of origin for U.S. Government procurement purposes. 
Rather, as set forth below, the relevant test is ``substantial 
transformation.''
    In the Court of International Trade's decision in Energizer 
Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the 
court interpreted the meaning of substantial transformation as used 
in the Trade Agreements Act of 1979 for purposes of government 
procurement. Energizer involved the determination of the country of 
origin of a flashlight, referred to as the Generation II flashlight, 
under the TAA. Other than a white LED and a hydrogen getter, all of 
the components of the Generation II flashlight were of Chinese 
origin. The components were imported into the United States where 
they were assembled into the finished Generation II flashlight.
    The court reviewed the ``name, character and use'' test in 
determining whether a substantial transformation had occurred, and 
reviewed various court decisions involving substantial 
transformation determinations. The court noted, citing Uniroyal, 
Inc. v. United States, 3 CIT 220, 226, 542 F. Supp. 1026, 1031, 
aff'd, 702 F.2d 1022 (Fed. Cir. 1983), that when ``the post-
importation processing consists of assembly, courts have been 
reluctant to find a change in character, particularly when the 
imported articles do not undergo a physical change.'' Energizer at 
1318. In addition, the court noted that ``when the end-use was pre-
determined at the time of importation, courts have generally not 
found a change in use.'' Energizer at 1319, citing as an example, 
National Hand Tool Corp. v. United States, 16 CIT 308, 310, aff'd 
989 F.2d 1201 (Fed. Cir. 1993). Furthermore, courts have considered 
the nature of the assembly, i.e., whether it is a simple assembly or 
more complex, such that individual parts lose their separate 
identities and become integral parts of a new article.
    In reaching its decision in Energizer, the court examined 
whether the imported components retained their names after they were 
assembled into the finished Generation II flashlights. The court 
found ``[t]he constitutive components of the Generation II 
flashlight do not lose their individual names as a result [of] the 
post-importation assembly.'' The court also found that the 
components had a pre-determined end-use as parts and components of a 
Generation II flashlight at the time of importation and did not 
undergo a change in use due to the post-importation assembly 
process. Finally, the court did not find the assembly process to be 
sufficiently complex as to constitute a substantial transformation. 
Thus, the court found that Energizer's imported components did not 
undergo a change in name, character, or use as a result of the post-
importation assembly of the components into a finished Generation II 
flashlight. The court determined that China, the source of all but 
two components, was the correct country of origin of the finished 
Generation II flashlights under the government procurement 
provisions of the TAA.
    The assembly process of insufflation tubing is similar to that 
of the Generation II flashlight in Energizer. All of the components 
are sourced from China, and there is no evidence of a change in the 
shape or material composition of the components. See also 
Headquarters Ruling Letter (``HQ'') H035441, dated September 11, 
2008; and HQ 734214, dated November 18, 1991. In other words, the 
individual components do not lose their separate identities as a 
result of the assembly process in the Dominican Republic and do not 
undergo a change in their pre-determined uses. Considering the 
totality of the information provided to CBP, and relying upon the 
court's application of substantial transformation in Energizer, we 
find that the country of origin of the assembled insufflation 
tubing, produced as described herein, is China.

HOLDING:

    Based on the facts provided, insufflation tubing will be 
considered a product of China for purposes of U.S. Government 
procurement.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec.  177.31, that 
CBP reexamine the matter anew and issue a new final determination. 
Pursuant to 19 C.F.R. Sec.  177.30, any party-at-interest may, 
within 30 days of publication of the Federal Register Notice 
referenced above, seek judicial review of this final determination 
before the Court of International Trade.


[[Page 34605]]


Sincerely,
Alice A. Kipel,

Executive Director Regulations and Rulings Office of Trade.

[FR Doc. 2018-15536 Filed 7-19-18; 8:45 am]
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