HQ 087869
DEC 7 1990
CLA-2:CO:R:C:G 087869 JAS
L. H. Skoropat
Canadian Wire Products
989 Price Road
Parksville, B.C. V9P 2C9
RE: Commercial Trolling Line on Reels; Stranded
Wire Fitted With Fittings; Fishing Line Processed
in Canada from Stainless Steel Stranded Wire of
Korean Origin; Substantial Transformation
Dear Mr. Skoropat:
In your letter of May 23, 1990, supplemented on June 27,
1990, you inquire as to the tariff status of commercial
trolling line processed in Canada from stranded wire from the
Republic of Korea (ROK). Samples were submitted. Our ruling
follows.
FACTS:
The product entering Canada from the ROK is 1/16 in.
diameter 1 x 7 stainless steel type 304 strand in 10,800 ft.
reels. In Canada, you respool the strand onto 3,600 ft. reels
then crimp on brass marks in twos, at regular intervals. Their
purpose is to keep leadered fishing hooks properly spaced and
to prevent sliding and bunching. These are marks made in
Canada on a screw machine lathe which you furnace anneal at
1000 degrees F to soften them and increase their formability.
They are then dipped in nitric acid to remove black scale and
rinsed. This imparts their bright finish. After crimping on
the marks, the line is wound onto 10 in. diameter wooden spools
in 300, 450, 600 and 900 ft. lengths as the customer desires.
This is the condition of the fishing line as imported. The
spools themselves are made in your shop from 1/4 in. hardboard
and 1 1/2 in. cedar planks both of Canadian origin. After
importation, the leadered hooks are attached and the line payed
out on power winches aboard commercial salmon fishing boats
either in entire lengths or cut-to-length.
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ISSUE:
Whether the merchandise is a product of Canada for tariff
purposes.
LAW AND ANALYSIS:
Merchandise is classifiable under the Harmonized Tariff
Schedule of the United States Annotated (HTSUSA) in accordance
with the General Rules of Interpretation (GRIs). GRI 1 states
in part that for legal purposes, classification shall be
determined according to the terms of the headings and any
relative section or chapter notes and, provided the headings or
notes do not require otherwise, according to GRIs 2 through 6.
Heading 7312 covers stranded wire, ropes, cables, plaited
bands, slings and the like, of iron or steel, not electrically
insulated. The Explanatory Notes provide a commentary on the
scope of each heading to the HTS and are useful in ascertaining
the classification of goods under the HTS. Relevant notes
indicate heading 7312 includes wire and ropes fitted with
hooks, spring hooks, swivels, rings, thimbles, clips, sockets,
etc., or made up into single or multiple slings, strops, etc.
Goods of heading 7312 are used, among other things, for
hoisting, hauling or towing, as rigging or guying for masts,
pylons, etc. The brass marks facilitate the lifting function
which the fishing line performs and are therefore "fittings" of
a like kind to the examples enumerated in the notes. Under the
authority of GRI 1, the fishing line in issue here is provided
for in heading 7312. Actual classification is is subheading
7312.10.0500, HTSUSA, stranded wire of stainless steel, fitted
with fittings or made up into articles.
The fishing line entering the Customs territory is not
eligible for a reduced rate of duty under the United States-
Canada Free-Trade Agreement Implementation Act of 1988
(USCFTA). This is because "goods originating in the territory
of Canada" means those that have been transformed in the
territory of Canada so as to be subject to a change in tariff
classification from one HTS heading to another such heading.
Both the stranded wire from Korea and the wire with brass marks
would be classified in appropriate subheadings of heading 7312.
In order for the stranded wire of Korean origin to be
considered a product of Canada for purposes of the steel
arrangements, a substantial transformation must occur in
Canada. The processing in Canada must result in a product
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other than or materially different from the product entering
Canada. That is, a new and different article of commerce must
emerge from Canada, one having a new name, character or use.
In our opinion, no significant or material change in character
or use results from the processing of the Korean wire in
Canada. The physical properties of the stranded wire remain
unchanged by the addition of the brass marks. The processing
in Canada merely narrows the use of the stranded wire but does
not give it a new use for which the wire was previously
unsuited. We conclude that the identity of the stranded wire
that enters Canada remains fundamentally unchanged and is the
very essence of the fishing line that enters the Customs
territory. The fishing line entering the Customs territory is
therefore a product of the Republic of Korea for steel
arrangement purposes.
Goods from the Republic of Korea classifiable in heading
7312 do not appear covered by applicable steel arrangements.
However, you may confirm this by writing to the Office of
Agreements Compliance, International Trade Administration,
Department of Commerce, Washington, D.C. 20230.
HOLDING:
The commercial trolling line is classified in subheading
7312.10.05000, HTSUSA, for the reasons stated. The rate of
duty is 5.7 percent ad valorem. It is not an originating good
for USCFTA purposes. For purposes of the steel arrangements,
the trolling line is considered a product of the Republic of
Korea.
Sincerely,
John Durant, Director
Commercial Rulings Division