CLA-1-34:OT:RR:NC:N3:136
Lisa Gouthro
BDO Canada
60 Columbia Way
Markham, LR3 0C9
Canada
RE: The tariff classification and country of origin of Polyacrylamide Type A and Polyacrylamide Type B from Canada; Applicability of USMCA
Dear Ms. Gouthro:
In your ruling request dated March 29, 2021, on behalf of your client, Hosen Holdings Canada Corp., you requested a tariff classification, country of origin, and applicability of USMCA ruling on Polyacrylamide Type A and Polyacrylamide Type B.
You indicate that Polyacrylamide Type A and Polyacrylamide Type B are produced in Canada with raw materials from China, Oman, Canada, and the United States. You state that the subject products are lubricating preparations and serve as friction reducers for fracturing activities. They help to reduce pressure during the fracking process and improve lubricity during pumping. These products are designed to work with produced water to avoid freshwater usage without compromising effectiveness nor the economics.
Your submission indicates that Polyacrylamide Type A is a dry powder with a salt-like granular appearance. This product is comprised of:
Finished product A formula
Origin - Subheading
Anionic polymer A
China - 3906.90
Cationic polymer B
China - 3906.90
AMPS polymer C
Oman/China -3906.90
Thiourea
Canada - 2930.90
Sodium Chloride
Canada - 2501.00
You indicate that Polyacrylamide Type B, is a slurry liquid mix. This product is comprised of:
Finished product B formula
Origin - Subheading
Anionic polymer A
China - 3906.90
Anionic polymer B
China - 3906.90
Oil polymer C
U.S. - 3906.90
Mineral oil A
U.S. - 2710.19
Mineral oil B
U.S. - 2710.19
Surfactant
U.S. - 3402.90
The applicable subheading for Polyacrylamide Type A will be 3403.99.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Lubricating preparations (including cutting-oil preparations, bolt or nut release preparations, antirust or anticorrosion preparations and mold release preparations, based on lubricants) and preparations of a kind used for the oil or grease treatment of textile materials, leather, furskins or other materials, but excluding preparations containing, as basic constituents, 70 percent or more by weight of petroleum oils or oils obtained from bituminous minerals: Other: Other. The general rate of duty will be 6.5 percent ad valorem.
The applicable subheading for Polyacrylamide Type B will be 3403.19.5000, HTSUS, which provides for Lubricating preparations (including cutting-oil preparations, bolt or nut release preparations, antirust or anticorrosion preparations and mold release preparations, based on lubricants) and preparations of a kind used for the oil or grease treatment of textile materials, leather, furskins or other materials, but excluding preparations containing, as basic constituents, 70 percent or more by weight of petroleum oils or oils obtained from bituminous minerals: Containing petroleum oils or oils obtained from bituminous minerals: Other: Other. The general rate of duty will be 5.8 percent ad valorem.
Country of Origin
In addition to the tariff classification, you are requesting a country of origin determination for the subject products. To allow for a more seamless transition period, at this time, CBP continues to utilize the marking rules set forth in 19 C.F.R. Part 102, with the exception of 19 C.F.R. § 102.19, for purposes of country of origin marking with respect to goods from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. See 19 C.F.R. § 102.11. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which: (a)(1) The good is wholly obtained or produced; (a)(2) The good is produced exclusively from domestic materials; or (a)(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in §102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied. Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the imported products are neither wholly obtained or produced or produced exclusively from “domestic” materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). Pursuant to 19 C.F.R. §102.11(a)(3), the country of origin of a good is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 C.F.R. §102.20, and satisfies any other applicable requirements of that section.
Polyacrylamide Type A is imported into the U.S. from Canada and classified in subheading 3403.99, HTSUS, the change in tariff classification must be made in accordance with section 102.20(f), Section XI: Chapters 28 through 38, subheadings 3403.91-3403.99, HTSUS, which requires “A change to subheadings 3403.91 through 3403.99 from any other subheading, including another subheading within that group.” Polyacrylamide Type A is produced in Canada with raw materials from China, Oman, and Canada, which are classified as indicated in the above chart. Upon importation into the U.S., the subject product is classified in subheading 3403.99, HTSUS. As such, the tariff shift requirement of section 102.11(a)(3) is met. The country of origin for marking purposes is Canada.
Polyacrylamide Type B is imported into the U.S. from Canada and classified in subheading 3403.19, HTSUS, the change in tariff classification must be made in accordance with section 102.20(f), Section XI: Chapters 28 through 38, subheadings 3403.11-3403.19, HTSUS, which requires “A change to subheadings 3403.11 through 3403.19 from any other subheading, including another subheading within that group, except from heading 2710 or 2712.” Polyacrylamide Type B is produced in Canada with raw materials from China and the U.S., which are classified as indicated in the above chart. Upon importation into the U.S., the subject product is classified in subheading 3403.19, HTSUS. As such, the tariff shift requirement of section 102.11(a)(3) is met for the Chinese raw material, but not met for the U.S. raw material. Accordingly, we look to 102.11(b)(1), “The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good…” Pursuant to 19 C.F.R. §102.18(b)(iii), If there is only one material that is classified in a tariff provision from which a change in tariff classification is not allowed under the §102.20 specific rule or other requirements applicable to the good, then that material will represent the single material that imparts the essential character to the good under §102.11. Therefore, for marking purposes, the country of origin for Polyacrylamide Type B is the U.S., which has no marking requirement per 19 USC 1304.
Trade Agreement (USMCA)
The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (“GN”) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if—
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or …
Based on the facts provided, Polyacrylamide Type A and Polyacrylamide Type B described above qualify for USMCA preferential treatment, because they will meet the requirements of HTSUS General Note 11(b)(iii), Chapter 34, 2. (A) “A change to subheadings 3402.11 through 3404.90 from any other subheading, including another subheading within that group.” The goods will therefore be entitled to preferential treatment under USMCA upon compliance with all applicable laws, regulations, and agreements.
This merchandise may be subject to the requirements of the Toxic Substances Control Act (TSCA), which are administered by the U.S. Environmental Protection Agency. Information on the TSCA can be obtained by contacting the EPA at 1200 Pennsylvania Avenue, N.W., Mail Code 70480, Washington, D.C., by telephone at (202) 554-1404, or by visiting their website at www.epa.gov.
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.
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 Nuccio Fera at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division