CLA-2 CO:R:C:G 081888 KK
Margaret H. Sachter, Esq.
Soller, Singer & Horn
No. 10, The Mews
421 Hudson Street
New York, New York 10014
RE: Substantial transformation of wire rods fabricated into
chain link fencing fabric
Dear Ms. Sachter:
This is our ruling in response to your letter of March 1,
1988, requesting a binding ruling as to the country of origin of
chain link fencing to be imported from the Bahamas.
FACTS:
Wire rod from Trinidad and Tobago is transported to the
Bahamas where it is drawn to wire and then cut, twisted and woven
into steel wire chain link fencing fabric. Each fifty-foot
length of fencing, with widths varying from 26 to 144 inches, is
rolled and tied for shipping. The fencing is then galvanized
either in the Bahamas or in the United States.
ISSUES:
Whether the manufacturing process to which the wire rod will
be subjected in the Bahamas to produce chain link fencing
satisfies the criteria for substantial transformation of the wire
rod into a product of the Bahamas.
Whether the galvanization of the fencing is a second
substantial transformation.
LAW AND ANALYSIS:
The fundamental test for determining a substantial trans-
formation is whether the processing, which must be a manufac-
turing process, results in a change in name, character or use.
Anheuser-Busch Brewing Ass'n v. United States, 207 U.S. 556,
(1908).
-2-
In our ruling letter dated July 25, 1986 (file 554164), we
ruled that the processing of wire into non-galvanized chain link
fence changes the wire in name, character or use, thereby
constituting a substantial transformation. The facts in that
ruling are similar to the facts under consideration at this time.
In this case, the material is wire rod from Trinidad and
Tobago. The initial process by which the wire rod is drawn into
wire is not a substantial transformation. See the court's
decision in Superior Wire v. United States, 669 F. Supp. 472 (CIT
1987), appeal docketed No. 88-1-20. However, the subsequent
twisting and weaving of the wires into a fencing fabric results
in article with a new name, character, and use. See our ruling
of July 25, 1986, (file 554164).
Galvanizing does not, in and of itself, constitute a
substantial transformation. In Ferrostaal Metals Corp.v. United
States, 664 F. Supp. 535 (CIT 1987), the court ruled that the
heat treatment (annealing) and hot-dip galvanizing of full hard
cold rolled steel resulted in a new and different article. Both
the mechanical and chemical properties were changed, as noted by
the court. Id., page 540. In this case, the coating of fencing
by galvanizing is merely a finishing operation performed on a
fabricated article. The change, i.e., adding a corrosion-
resistant feature to the fencing, does not constitute a
manufacture that results in a change in name, character, or use.
Galvanizing may be necessary for the effective, long-term use of
the fencing, but it does not change the fact that the uncoated
article has but one use, i.e., fencing.
HOLDING:
In view of the foregoing, the processing of the wire rod in
the Bahamas into chain link fencing for export to the United
States constitutes a substantial transformation of the wire rod
into a product of the Bahamas. Because the fencing is a product
of the Bahamas, it would not be subject to the export licensing
requirements for certain steel products of Trinidad and Tobago
imported into the United States. The additional galvanizing
process does not result in a second substantial transformation.
Sincerely,
John Durant, Director
Commercial Rulings Division
KKeefe:tj:typed 07/22/88