MAR-2 RR:CR:SM 562754 CW
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:
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.
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 ½ inches in diameter by one meter.
3M then draws the preform, via a drawing tower, into an extremely thin optical 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.
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.
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:
The spooled cable is cut to length
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;
The exposed fiber is cleaned with alcohol and measured;
The fiber is threaded through a connector, glued to the connector and excess fiber is trimmed;
The connectors are placed into a finishing machine, where the fiber ends are automatically beveled and polished;
The metal springs, sourced from the United States, are inserted into a connector and ultrasonically welded into place;
The connectors are ultrasonically cleaned and tested and a protective plastic shroud is snapped onto the connector.
FIP Cable Assembly
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™) for strength, and a thermoplastic coating that provides protection for the very thin fiber(s).
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.
3M purchases or self-produces plastic parts to be used in the cable connectors. All self-produced parts are molded in the United States.
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.
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:
The spooled cable is cut to length;
Each end of the cut cable is threaded through a respective plastic boot and the metal ring;
After removing about two inches of sheathing, Kevlar™ fiber, and plastic jacketing of the cable, the exposed fiber is cleaned with alcohol and measured;
The fiber is threaded through the ferrule and fastened by adhesive;
The metal ring is attached; by crimping, and the fiber is trimmed;
The exposed ends of the fiber are scored, machine-polished, and cleaned;
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:
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.
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.
3M supplies the assembler with a plastic dust cap and a boot, made in China.
The assembly process is as follows:
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.
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.
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 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 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