[Federal Register Volume 87, Number 143 (Wednesday, July 27, 2022)]
[Notices]
[Pages 45120-45122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-16073]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Certain 
Surgical Gowns

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 surgical gowns. Based upon the facts 
presented, CBP has concluded in the final determination that the 
country of origin of the surgical gowns in question is the Dominican 
Republic for purposes of U.S. Government procurement.

DATES: The final determination was issued on July 21, 2022. 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 26, 2022.

FOR FURTHER INFORMATION CONTACT: Marie Duran[eacute], Food, Textiles 
and Marking Branch, Regulations and Rulings, Office of Trade, at (202) 
325-0984.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on July 21, 
2022, U.S. Customs and Border Protection (CBP) issued a final 
determination concerning the country of origin of certain surgical 
gowns (Association for the Advancement of Medical Instrumentation 
(AAMI) Level 3 and Level 4 sterile disposable surgical gowns) for 
purposes of Title III of the Trade Agreements Act of 1979. This final 
determination, HQ H321354, was issued at the request of Global 
Resources International, Inc. (GRI) and Sant[eacute] USA, LLC 
(Sant[eacute] USA), 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 
has concluded that, based upon the facts presented, the country of 
origin of the surgical gowns is the Dominican Republic for purposes of 
U.S. Government procurement.
    Section 177.29, CBP 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, 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 21, 2022.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.

HQ H321354

July 21, 2022

OT:RR:CTF:VS H321354 MJD

CATEGORY: Origin

Lawrence R. Pilon, Rock Trade Law LLC, 134 North LaSalle Street, 
Suite 1800, Chicago, IL 60602.

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

Dear Mr. Pilon:

    This is in response to your request of October 11, 2021, on 
behalf of your clients, Global Resources International, Inc. 
(``GRI'') and Sant[eacute] USA, LLC (``Sant[eacute] USA''), for a 
final determination regarding the country of origin of surgical 
gowns pursuant to Title III of the Trade Agreements Act of 1979 
(``TAA''), as amended (19 U.S.C. 2511 et seq.), and subpart B of 
Part 177, U.S. Customs and Border Protection (``CBP'') Regulations 
(19 CFR 177.21, et seq.). GRI and Sant[eacute] USA are parties-at-
interest within the meaning of 19 CFR 177.22(d) and 177.23(a) and 
are therefore entitled to request this final determination. A 
meeting was held with counsel for GRI and Sant[eacute] USA by 
videoconference on April 12, 2022.

Facts

    GRI and Sant[eacute] USA are manufacturers, importers, 
exporters, and distributors of medical devices and supplies for the 
healthcare industry. The subject merchandise consists of the 
Association for the Advancement of Medical Instrumentation 
(``AAMI'') Level 3 and Level 4 disposable surgical gowns for use in 
hospitals, surgical centers, and similar healthcare settings. The 
surgical gowns are made from nonwoven synthetic spun-melt-spun 
(``SMS'') textile material and plastic film made in the United 
States. The SMS textile material forms the exterior of the gown, 
while the plastic film material is glued to the interior of the gown 
as reinforcement for the SMS textile material. According to GRI and 
Sant[eacute] USA, the SMS

[[Page 45121]]

textile material is the most expensive material in the finished 
product, accounting for 30% of the finished gown's value, and makes 
up 100% of the gown's exterior. The SMS textile material and plastic 
film are transferred in rolls to the Dominican Republic where they 
are cut into component parts, which are in turn assembled into two 
sleeve subassemblies and the gown body subassembly. The sleeve 
subassemblies and body gown subassemblies are then returned to the 
United States for final assembly consisting of principally attaching 
the sleeve subassemblies to the gown body subassembly and attaching 
the neck binding to the neck opening of the gown. A more detailed 
account of the manufacturing process of the surgical gowns is as 
follows:

United States

     Production of the SMS textile material.
     Manufacture of plastic film.

Dominican Republic

     The SMS textile material and plastic film are cut into 
the main gown body, sleeve, and reinforcement pieces using electric 
scissors.
     The SMS textile material is converted to waist ties 
using a tie-making machine.
     The sleeve cut piece is folded and its seam sealed by a 
bar heat sealer and ultrasonic welder sewing machine.
     The knit cuff is sewn to the formed sleeve piece using 
a sewing machine.
     The item number, level of performance claim, and brand 
information are stamped onto the main gown body piece.
     The hook and loop fastener material is sewn to the gown 
body using a sewing machine.
     The ties are attached to the gown body subassembly by 
glue and ultrasonic welding.
     Glue is applied evenly to the plastic film 
reinforcement piece and applied to the inner face of the gown body 
subassembly.

United States

     The sleeve subassemblies are attached to the main gown 
body subassembly with an ultrasonic welder sewing machine.
     The neck binding is attached to the neck opening of the 
gown using a binding machine.
     Each gown is inspected for visible defects and 
conformity to required dimensions for size.
     The gowns are also tested for conformity to applicable 
AAMI Level 3 and Level 4 strength and permeability standards.
     Gowns are packaged and sterilized with ethylene oxide.
    GR and Sant[eacute] USA state that the SMS textile material is 
classified in heading 5603, Harmonized Tariff Schedule of the United 
States (``HTSUS''), which provides for ``[n]onwovens, whether or not 
impregnated, coated, covered or laminated.'' The finished surgical 
gowns are classified under subheading 6210.10.5010, HTSUSA, which 
provides for ``[g]arments, made up of fabrics of heading 5602, 5603, 
5903, 5906 or 5907: Of fabrics of heading 5602 or 5603: Other: 
Nonwoven disposable apparel designed for use in hospitals, clinics, 
laboratories or contaminated areas: Surgical or isolation gowns.''

Issue

    What is the country of origin of the surgical gowns 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 purpose 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 CFR 177.21 et seq., which 
implements Title III, Trade Agreements Act of 1979, as amended (19 
U.S.C. 2511-2518).
    The rule of origin set forth in 19 U.S.C. 2518(4)(B) states:
    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 CFR 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 Acquisition 
Regulation. See 19 CFR 177.21. In this regard, CBP recognizes that 
the Federal Acquisition Regulation restricts the U.S. Government's 
purchase of products to U.S.-made or designated country end products 
for acquisitions subject to the TAA. See 48 CFR 25.403(c)(1). The 
Federal Acquisition Regulation defines ``U.S.-made end product'' as:
    . . . an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States 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.
    See 48 CFR 25.003.
    The Federal Acquisition Regulation, 48 CFR 25.003 defines 
``designated country end product'' as a:
    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.
    Section 25.003 provides that a ``Free Trade Agreement country 
end product'' means an article that-
    (1) Is wholly the growth, product, or manufacture of a Free 
Trade Agreement (FTA) 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 an FTA 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.
    ``Free Trade Agreement country'' means Australia, Bahrain, 
Canada, Chile, Colombia, Costa Rica, Dominican Republic, El 
Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco, 
Nicaragua, Oman, Panama, Peru, or Singapore. See 48 CFR 25.003. 
Thus, the Dominican Republic is an FTA country for purposes of the 
Federal Acquisition Regulation.
    The Secretary of the Treasury's authority to issue advisory 
rulings and final determinations is set forth in 19 U.S.C. 
2515(b)(1), which states:
    For the purposes of this subchapter, the Secretary of the 
Treasury shall provide for the prompt issuance of advisory rulings 
and final determinations on whether, under section 2518(4)(B) of 
this title, an article is or would be a product of a foreign country 
or instrumentality designated pursuant to section 2511(b) of this 
title.

Emphasis added.
    The Secretary of the Treasury's authority mentioned above, along 
with other customs revenue functions, are delegated to CBP in the 
Appendix to 19 CFR part 0--Treasury Department Order No. 100-16, 68 
FR 28, 322 (May 23, 2003).
    With regard to the surgical gowns at issue, GRI and Sant[eacute] 
USA's request involves the issue of whether the article is a U.S.-
made end product or a product of the Dominican Republic. This 
determination addresses the latter point, whether the article is a 
product of the Dominican Republic and not whether the article is a 
U.S.-made end product. Because the articles at issue are not wholly 
the growth, product, or manufacture of the Dominican Republic, our 
analysis must apply the substantial transformation standard, as set 
forth in 19 U.S.C. 2518(4)(B)(ii).
    The information submitted indicates that the surgical gowns are 
made chiefly from non-woven textile material. GRI and Sant[eacute] 
USA also indicate that the goods are classified in subheading 
6210.10.50, HTSUS, as an apparel product. The rules of origin for 
textile and apparel products for purposes of the customs laws and 
the administration of quantitative restrictions are governed by 19 
U.S.C. 3592, unless otherwise provided for by statute. These 
provisions are implemented in the CBP Regulations at 19 CFR 102.21. 
Section 3592 has been described as Congress's expression of 
substantial transformation as it relates to textile and apparel 
products. Therefore, the country of origin of the surgical gowns for 
Government procurement purposes is determined by a hierarchy of 
rules set forth in paragraphs (c)(1) through (c)(5) of Section 
102.21.
    As the finished surgical gowns are produced by processing in 
more than one country, their origin cannot be determined by 
application of the 19 CFR 102.21(c)(1), wholly obtained or produced 
rule, and resort must be made to 19 CFR 102.21(c)(2). Section 
102.21(c)(2) states that the origin of a good is the country ``in 
which each foreign material incorporated in that good underwent an 
applicable change in tariff classification,

[[Page 45122]]

and/or met any other requirement, specified for the good in 
paragraph (e) of [102.21].'' Section 102.21(e)(1) provides in 
pertinent part:
    The following rules will apply for purposes of determining the 
country of origin of a textile or apparel product under paragraph 
(c)(2) of this section:
    6210-6212 (1) If the good consists of two or more component 
parts, a change to an assembled good of heading 6210 through 6212 
from unassembled components, provided that the change is the result 
of the good being wholly assembled in a single country, territory, 
or insular possession.
    The subject merchandise is classifiable in heading 6210, HTSUS. 
Section 102.21(b)(6) defines wholly assembled as: ``the term `wholly 
assembled' when used with reference to a good means that all 
components, of which there must be at least two, preexisted in 
essentially the same condition as found in the finished good and 
were combined to form the finished good in a single country, 
territory, or insular possession. Minor attachments and minor 
embellishments (for example, appliques, beads, spangles, embroidery, 
buttons) not appreciably affecting the identity of the good, and 
minor subassemblies (for example, collars, cuffs, plackets, 
pockets), will not affect the status of a good as ``wholly 
assembled'' in a single country, territory, or insular possession.''
    The surgical gowns at issue are assembled in both the Dominican 
Republic and the United States. Therefore, the surgical gowns are 
not ``wholly assembled in a single country, territory, or insular 
possession,'' and as a result, 19 CFR 102.21(c)(2) is inapplicable.
    19 CFR 102.21(c)(3) states in pertinent part,
    Where the country of origin of a textile or apparel product 
cannot be determined under paragraph (c)(1) or (2) of this section:
    (i) If the good was knit to shape, the country of origin of the 
good is the single country, territory, or insular possession in 
which the good was knit;
    (ii) Except for fabrics of chapter 59 and goods of heading 5609, 
5807, 5811, 6213, 6214, 6301 through 6306, and 6308, and subheadings 
6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was not 
knit to shape and the good was wholly assembled in a single country, 
territory, or insular possession, the country of origin of the good 
is the country, territory, or insular possession in which the good 
was wholly assembled.
    As the subject surgical gowns are neither knit to shape, nor 
wholly assembled in a single country, section 102.21(c)(3) is 
inapplicable.
    Section 102.21(c)(4) states, ``Where the country of origin of a 
textile or apparel product cannot be determined under paragraph 
(c)(1), (2) or (3) of this section, the country of origin of the 
good is the single country, territory or insular possession in which 
the most important assembly or manufacturing process occurred.''
    GRI and Sant[eacute] USA assert that the most important assembly 
or manufacturing process is the assembly of the sleeves to the main 
body piece of the gown in the United States. In support of their 
argument, they assert that the sleeves and the body are the 
essential components of the gown and provide the protective surfaces 
that are the purpose of the finished surgical gowns; attaching the 
sleeves to the main body of the gown gives the gown its finished 
shape; and attaching the sleeves to the main body of the gown 
requires a high degree of skill and is the most time consuming step 
in manufacturing the gowns. Moreover, GRI and Sant[eacute] USA argue 
that 19 CFR 102.21(c)(4) only allows for a single assembly or 
manufacturing process to be the most important assembly or 
manufacturing process. We disagree.
    The most important assembly or manufacturing processes of the 
surgical gowns consist of cutting the SMS textile material to make 
the main body and sleeve pieces, the assembly of the sleeves, the 
assembly of the gown body, and the application of the plastic film 
to the inner face of the gown body. All these steps combined create 
the main pieces of the surgical gown, i.e., the sleeves and the 
body. They are the parts of the surgical gown that make the surgical 
gown a surgical gown. As a result, when the sleeve subassemblies and 
the surgical gown body are exported to the United States, they are 
clearly recognizable as an unfinished surgical gown. All that is 
left to do in the United States is to attach the sleeves to the gown 
and the neck binding to the neck opening of the gown to form the 
finished surgical gown.
    In New York Ruling Letter (``NY'') K88449, dated August 17, 
2004, CBP found that the most important assembly processes for a 
woman's knitted jacket in Version A were sewing the collar to the 
front of the jacket; assembling the sleeve parts; attaching the 
cuffs; sewing the side seams; sewing the pockets to the front 
panels; attaching the bottom band; and sewing the zipper and placket 
to the garment; all of which occurred in China. The final assembly 
processes of a woman's knitted jacket, such as attaching the rib 
knit collar to the back of the jacket and sewing the sleeves to the 
jacket, that occurred in the Commonwealth of the Northern Mariana 
Islands, were not determinative of the country of origin. 
Consequently, while GRI and Sant[eacute] USA argue that attaching 
the sleeve subassemblies to the gown body subassembly requires a 
high degree of skill and time, we find that, in the aggregate, the 
cutting of the SMS textile material for the gown body subassembly 
and sleeve subassembly, the assembly of the sleeves, the assembly of 
the gown body, and applying the plastic film to the inner face of 
the gown body subassembly are the most important assembly or 
manufacturing processes in the production of the surgical gowns.
    Moreover, CBP has a longstanding practice of interpreting 19 CFR 
102.21(c)(4) to include more than one assembly or manufacturing 
process as the most important assembly or manufacturing process for 
purposes of a country of origin determination, as we have 
demonstrated above in NY K88449. See also Headquarters Ruling Letter 
(``HQ'') H308753, dated March 11, 2021; NY N308451, dated January 9, 
2020; NY N302230, dated February 8, 2019; NY N174035, dated August 
5, 2011; NY N091836, dated February 12, 2010; NY N026921, dated May 
2, 2008; NY N033021, dated July 14, 2008; NY N019414, dated December 
3, 2007; NY L81685, dated January 31, 2005; NY L87413, dated 
September 1, 2005; NY L81143, dated December 30, 2004; NY C85697, 
dated April 23, 1998; HQ 960991, dated December 9, 1997; HQ 960884, 
dated November 10, 1997; HQ 958668, dated May 15, 1996.
    Therefore, we find, in accordance with 19 CFR 102.21(c)(4), the 
country of origin of the surgical gowns is the Dominican Republic.
    Accordingly, the instant surgical gowns would be products of a 
foreign country or instrumentality designated pursuant to 19 U.S.C. 
2511(b)(1). As to whether they qualify as ``U.S.-made end product,'' 
we encourage GRI and Sant[eacute] USA to review the court decision 
in Acetris Health, LLC v. United States, 949 F.3d 719 (Fed. Cir. 
2020), and to consult with the relevant government procuring agency.

Holding

    Based on the facts and analysis set forth above, the country of 
origin of the surgical gowns at issue is the Dominican Republic.
    GRI and Sant[eacute] USA should consult with the relevant 
government procuring agency to determine whether the surgical gowns 
qualify as ``U.S.-made end products'' for purposes of the Federal 
Acquisition Regulation implementing the TAA.
    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. Pursuant to 19 CFR 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 U.S. Court of International Trade.
    Sincerely,

Alice A. Kipel, Executive Director

Regulations and Rulings Office of Trade

[FR Doc. 2022-16073 Filed 7-26-22; 8:45 am]
BILLING CODE 9111-14-P