CLA-2-87:OT:RR:NC:N2: 206
James Jeffries
IBX Inc.
2240 N. Alliance Ave. Springfield, MO 65803
RE: The tariff classification and eligibility of the United States-Mexico-Canada Agreement (USMCA) of a truck cargo rack from Mexico
Dear Mr. Jeffries:
In your letter dated December 20, 2023, you requested a binding ruling on the tariff classification and eligibility of a truck cargo rack under the United States-Mexico-Canada Agreement (USMCA).
The product under consideration has been identified as a Truck Cargo Rack, which is used to carry cargo, such as roof tents, kayaks, canoes, ladders, water or gas tanks, jacks, and shovels. The rack clamps to the side walls of the truck bed. The product is comprised of two side frames and two crossbars. Each side frame is formed from aluminum extrusions and die-cast aluminum corner pieces. Each die-cast corner piece has a die-cast corner and a die-cast corner cap.
The ends of the two crossbars attach to the top edge of the opposing side frames. The crossbars consist of several aluminum extrusions and a die-cast end cap on each end of the crossbar. The crossbar end caps are bolted to the extrusions of the side frames. During the use of the product, each side frame is clamped onto the top edge of a side wall of the truck bed.
You state that the die-cast components (corners, corner caps, and crossbar end caps) will be made in China and imported into Mexico. The aluminum extrusions, general hardware, and retail packaging will be of Mexican origin. The aluminum extrusion profiles are specifically designed and manufactured for this product. Manufacturing operations on the extrusions, final assembly, and retail packaging will take place in Mexico prior to importation into the US.
Classification:
You suggested classifying the truck cargo rack in subheading 8708.99.8180, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other parts of vehicles. We disagree.
Classification of merchandise under the Harmonized Tariff Schedule of the United States (HTSUS) is, in accordance with the General Rules of Interpretation (GRIs), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes. The Explanatory Notes (ENs) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and the GRIs. ENs to heading 8708 list exterior luggage racks as parts of bodies. It states, “(B) Parts of bodies and associated accessories, for example, …exterior luggage racks….” Therefore, it will be classified as such.
The applicable subheading for the Truck Cargo Rack will be 8708.29.5160, HTSUS, which provides for “Parts and accessories of the motor vehicles of heading 8701 to 8705: Other parts and accessories of bodies (including cabs): Other: Other: Other.” The general rate of duty will be 2.5% 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 at https://hts.usitc.gov/current.
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(a)(i) provides that:
(a) Goods originating in the territory of a country named herein, pursuant to the United States-Mexico-Canada Agreement (USMCA), are subject to duty as provided herein, including any treatment set forth in subchapter XXIII of chapter 98 and subchapter XXII of chapter 99 of the tariff schedule. For the purposes of this note, as provided in the tariff schedule—
(i) Goods that originate in the territory of Mexico, Canada or the United States (hereinafter referred to as “USMCA country” or “USMCA countries” as further defined in subdivision (l)(xxiv) of this note) under the terms of subdivision (b) of this note and regulations issued by the Secretary of the Treasury (including Uniform Regulations provided for in the USMCA), and goods enumerated in subdivision (p) of this note, when such goods are imported into the customs territory of [sic] the United States and are entered under a subheading for which a rate of duty appears in the “Special” sub-column, followed by the symbol “S” in parentheses, are eligible for such duty rate, in accordance with section 202 of the United States-Mexico-Canada Agreement Implementation Act; and . . .
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:
(b) 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-
(i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
(ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
(iii) the good is a good produced entirely in the territory of one or more USMCA countries using non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o));
In this instance, the truck cargo rack will be produced in Mexico using originating and non-originating materials. Therefore, it is not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i), nor are the products produced exclusively from originating materials per GN 11(b)(ii). Thus, we must determine whether the product qualifies under GN 11(b)(iii). As previously noted, the rack is classified under subheadings 8708.29, HTSUS. The applicable rule of origin for goods classified under subheading 8708.29, HTSUS, is in GN 11(o)/87.08 is underscored and requires:
25. For any other good of subheading 8708.29 for use in a passenger vehicle, light truck or heavy truck:
(A) A change to subheading 8708.29 from any other heading; or
(B) No change in tariff classification to a good of subheading 8708.29, provided there is a regional value content of not less than 70 percent under the net cost method.
Subheading rule: The underscoring of the designations in subdivisions 24 through 26 pertain to goods provided for in heading 8708.29. …If the good is any other good for use in a passenger vehicle or light truck, Article 3.4 of the automotive appendix applies…
GN 11(k) provides special rules for automotive goods. GN 11(k)(i) provides that:
An automotive good and other motor vehicles and parts described herein shall be subject to applicable requirements set forth in this paragraph, including, with respect to a passenger vehicle or light truck that has been authorized to use the alternative staging regime described under subparagraph (viii), applicable requirements for the duration of the alternative staging period specified in the approval.
GN 11(k)(ii)(E)(2) includes in the definition of an “automotive good” any “part, component or material listed in table A.1, A.2, B, C, D, or E of the automotive appendix, subject to any provisions that may be included in regulations issued by the Secretary of the Treasury.” GN 11(k)(ii)(D) defines “automotive appendix” as “. . . the Appendix to Annex 4-B of the USMCA (relating to the product-specific rules of origin for automotive goods, as reflected in subdivision (o) of this note).”
Examining Table B of the automotive appendix, entitled “Principal Parts for Passenger Vehicles and Light-Trucks,” the subject merchandise is listed (8708.29, other parts and accessories of bodies) and is for use in a light truck. The Note to Table B in the automotive appendix provides that “[t]he Regional Value Content requirements set out in Article 3 of this Appendix apply to a good for use in a passenger vehicle or light truck.”
Article 3.4 of the automotive appendix states that:
Notwithstanding Article 2 (Product-Specific Rules of Origin for Vehicles) and the Product-Specific Rules of Origin in Annex 4-B, each Party shall provide that the regional value content requirement for a part listed in Table B of this Appendix that is for use in a passenger vehicle or light truck is:
(d) 70 percent under the net cost method or 80 percent under the transaction value method, if the corresponding rule includes a transaction value method, beginning on January 1, 2023 or three years after the date of entry into force of this Agreement, whichever is later, and thereafter.
In addition to the provisions of the automotive appendix and GN 11, as indicated in GN 11(a)(i), the trilaterally agreed USMCA Uniform Regulations in Appendix A of 19 C.F.R. Part 182 provide further guidance on the interpretation and application of the USMCA rules of origin. The Note to Table B in the Uniform Regulations clarifies that:
The Regional Value Content requirements set out in sections 13 or 14 or Schedule I (PSRO Annex) apply to a good for use as original equipment in the production of a passenger vehicle or light truck. For an aftermarket part, the applicable product-specific rule of origin set out in section 13 or 14 or Schedule I (PSRO Annex) is the alternative that includes the phrase “for any other good.”
Accordingly, the Uniform Regulations draw a distinction between aftermarket parts and automotive parts that are used as original equipment in the production of a vehicle. See Section 12(1) (“aftermarket part means a good that is not for use as original equipment in the production of passenger vehicles, light trucks or heavy trucks as defined in these Regulations.”). Here, the light truck cargo rack is an aftermarket good. In accordance with the Note to Table B, when the merchandise is used as an aftermarket part, the applicable product-specific rule of origin is the rule in section 13 or 14 or Schedule I (PSRO Annex) of the Uniform Regulations that includes the phrase “for any other good.” Schedule I provides that “[t]his schedule is deemed to be the contents of Sections A, B and C of Annex 4-B of the Agreement, as implemented in General Note 11 of the Harmonized Tariff Schedule of the United States…” Here, Section 13 of the Uniform Regulations contains the following product-specific rules of origin for goods of 8708.29., HTSUS:
For any other good of subheading 8708.29 for use as original equipment in any other vehicle or as an aftermarket part:
(6) A change to subheading 8708.29 from any other heading; or
(7) No required change in tariff classification to subheading 8708.29, provided there is a regional value content of not less than 50 percent under the net cost method.
According to the information provided, the non-originating corners, corner caps, and crossbar end caps are classified in heading 7616, HTSUS. Section 13 of the Uniform Regulations, rule (6) for use as an aftermarket part require “A change to subheading 8708.29 from any other heading.” Based on the information provided, no non-originating materials are classified in the same heading as the truck cargo rack. Accordingly, provided that all other requirements are met, the light truck cargo rack will be eligible for preferential tariff treatment under the USMCA when used as an aftermarket part.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Liana Alvarez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division