CLA-2-39:OT:RR:NC:N1:421
Vincent Bowen
700 Beach Drive NE, PH #2
St. Petersburg, FL 33701
RE: The tariff classification and status under the United States-Korea Free Trade Agreement of a compounded ethylene tetrafluoroethylene fluoropolymer from Korea
Dear Mr. Bowen:
In your letter dated March 22, 2017, on behalf of your client, AGC Chemicals Americas, Inc., you requested a ruling on the tariff classification and status under the United States-Korea Free Trade Agreement (UKFTA).
The merchandise under consideration, identified as EC1378, is a compounded ethylene tetrafluoroethylene (ETFE) fluoropolymer, in pellet form, used in the production of synthetic fuel lines for certain automobiles. This product is a blend consisting of two different ETFE polymers (C-88AXMB-HT and AH-2000) mixed with carbon black.
Based on the information provided, the manufacturing process is described as follows: C-88-AXMB-HT (CAS 68258-85-5), sourced from the UK, is a high temperature standard ETFE in bead form. This polymer is mixed in a drum tumbler with AH-2000 (CAS 460314-45-8), an adhesive ETFE polymer from Japan which has been modified with a third undisclosed monomer.
The resulting blended polymer, referred to as an intermediate, is then mixed together with carbon black (CAS 1333-86-4) of Belgian origin. Next, in a continuous closed process, these component materials are mixed in a twin screw extruder machine resulting in a uniform particle size. These particles are then pressurized, heated and extruded into thin cylindrical lines which are subsequently water quenched and cut into uniform pellets.
The EC1378 is specifically formulated to have the physical properties needed to serve as the inner layer of automotive multi-layer fuel hose. Based on the information provided, the C-88-AXMB-HT, which accounts for the majority of the subject polymer, is needed for this elevated temperature application and its superior resistance to chemicals in fuel. The AH-2000 creates a sticky, gummy surface upon tubular formation which is bonded to the middle layer of the fuel hose. The carbon black is crucial, as it prevents static build-up in the fuel line.
The applicable subheading for the compounded ethylene tetrafluoroethylene fluoropolymer ( EC1378) will be 3904.69.5000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Polymers of vinyl chloride or of other halogenated olefins, in primary forms: Fluoropolymers: Other: Other. The general rate of duty will be 6.5 percent ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at https://hts.usitc.gov/current.
In addition, you request a determination on the eligibility of the compounded ethylene tetrafluoroethylene fluoropolymer (EC1378) for preferential treatment under the United States-Korea Free Trade Agreement (UKFTA). The requirements of the UKFTA are described in General Note 33 of the HTSUS.
General Note 33(b) indicates that, for the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of a UKFTA country if-
(i) the good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both.
(ii) the good is produced entirely in the territory of Korea or of the United States, and –
(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or
(B) the good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o) and satisfies all other applicable requirements of this note and of applicable regulations; or
(iii) the good is produced entirely of the territory of Korea or the United States, or both, exclusively from materials described in subdivisions (i) or (ii), above.
As noted above, General Note 33(b)(ii) indicates that a good can be considered an originating good of a UKFTA country if the good is produced entirely in the territory of Korea or of the United States, and each of the nonoriginating materials used in its production undergoes an applicable change in tariff classification.
While the product at issue is manufactured entirely in Korea, it does not meet the tariff shift rule requirement. For goods classified in heading 3904, General Note 33(o) indicates that, in pertinent part, a change to headings 3901 through 3915 from any other heading is required. Although the carbon black of heading 2803 meets the tariff shift requirement, both of the ETFE polymers (C-88AXMB-HT and AH-2000) of heading 3904 do not.
You suggest that the EC1378 qualifies as an originating good of a UKFTA country in accordance with the terms of General Note 33(n)(viii)(B), which states that “a good of Chapters 30, 31, or 33 through 40 (except for heading 3808) shall be treated as an originating good if the deliberate and proportionally controlled mixing or blending (including dispersing) of materials to conform to predetermined specifications, resulting in the production of a good having different essential physical or chemical characteristics that are relevant to the purposes or uses of the good and are different from the input materials, occurs in the territory of Korea or of the United States, or both.
You state that the subject ETFE fluoropolymer compound is “produced through deliberate proportionally controlled mixing or blending to conform to predetermined specifications”. During both mixing phases, each ingredient is added in exact amounts (specified in pounds) and in strict proportion to the other ingredients in the formula. EC1378 is formulated to meet the predetermined specifications for its use as the innermost layer of automobile fuel lines. The mixing and blending of the component materials results in a finished product, EC1378 (in pellet form), having new physical characteristics that are different from the starting materials (two ETFE polymers and carbon black). In addition, you indicate that the mixing of the two polymers and the carbon black substantially changes the melt flow rate, tensile strength and tensile elongation of the input polymer resins.
Based on the information outlined above, this office finds that the finished product meets the definition of an originating good of a UKFTA country in accordance with General Note 33(n)(viii)(B). As a result, EC1378 produced in Korea will qualify for duty-free treatment under the UKFTA upon compliance with all applicable laws, regulations, and agreements.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist April Cutuli at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division