MAR-2:OT:RR:NC:N3: 139

Patrick de Laperouse
Baker McKenzie LLP
815 Connecticut Ave NW Washington, DC 20006

RE: The country of origin and eligibility of the United States-Mexico-Canada Agreement (USMCA) of Sika ViscoCrete-2100.

Dear Mr. de Laperouse:

This is in response to your letter filed on behalf of your client, the Sika Corporation, dated August 26, 2024, plus two prior submissions, requesting a ruling on the country of origin of a concrete admixture for purposes of applying trade remedies under Section 301 of the Trade Act of 1974, as amended, from China and its eligibility for preferential tariff treatment under the United States Mexico Canada Agreement (USMCA).

The merchandise in question is a concrete admixture with the product name of ViscoCrete-2100. In your submission you state that ViscoCrete-2100 is a high-range water reducing admixture that is added to concrete containing Portland Limestone Cement to create high slump/flow concrete with excellent workability.

You state that the process of making ViscoCrete-2100 occurs entirely within Canada. The ingredients processed in Canada are sourced from a variety of suppliers, both United States and foreign, as follows:

Material Description Country of Origin Classification Water Canada 2201.90.0000 Polycarboxylate ether-based polymer (PCE) China 3907.29.0000 Defoamer United States 3824.99 Antifoam Germany 2919.90.5010 Blue Colorant Canada 3204.12.5090 Biocide United States 3808.99.3000

The production process that occurs in Canada is described as follows:

The manufacturing process commences with the introduction of water into a mixer. The PCE is added into the mixer in specific, predetermined quantities and agitated to create a uniform blend. The defoamer and antifoam agents are then added to the mixer in specific, predetermined quantities and agitated to continue the blending process. The blue colorant is then added to the mixture and agitated. Finally, the biocide is added and mixed until the end product is homogeneous. The quantities of the materials added to the mixer and time of the blending operation is predetermined to achieve required solids content in the final product. The blending process results in the finished product, ViscoCrete-2100, which has defined quality control values (pH, solids content, specific gravity color and IR spectra).

In your submissions, while you do not ask for a classification determination for ViscoCrete-2100, you state that you believe it would be classified under 3824.40.5000 Harmonized Tariff Schedule of the United States (HTSUS) which provides for Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included: Prepared additives for cements, mortars or concretes: Other. Based on the description of ViscoCrete-2100 included in your submissions, we agree.

Regarding the applicability of Section 301 trade remedies to the ViscoCrete-2100, CBP relies on the substantial transformation analysis when determining the country of origin for purposes of applying Section 301 trade remedies. The courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff'd, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982).

However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983) (Uniroyal). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987).

CBP has generally held that mere mixing of two substances in another country, not involving a chemical reaction and without additional processing, does not result in a product of such other country. See HQ 561986. However, as pointed out in your submission and discussed in HQ 562468, certain types of blending operations where the finished product could be considered to have a new name, character, or use over its constituent inputs could lead to a finding of substantial transformation. Your submission also included the example of N127337, where the ingredients of a fluid loss cement additive that was also classified under subheading 3824.40.5000 HTSUS while being blended in Canada also underwent a substantial transformation as the finished product had a distinct identity over its ingredients.

Regarding the applicability of Section 301 remedies for ViscoCrete-2100, it is the decision of this office that the blending operations described, in sum, do substantially transform the individual components into a new and different article of commerce with a changed name, character, and use. Therefore, it is the opinion of this office that the processes performed in Canada result in a substantial transformation of the non-Canadian components and that ViscoCrete-2100 is a product of Canada. Therefore, ViscoCrete-2100 will not be subject to the additional duties under Section 301 of the Trade Act of 1974, as amended, upon importation.

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:

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 the United States and are entered under a subheading for which a rate of duty appears in the Special subcolumn, 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:

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

Since ViscoCrete-2100 contains non-originating materials, it is not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i), nor is the product 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 discussed, the classification of ViscoCrete-2100 would be 3824.40.5000 The applicable rule of origin for goods classified under subheading 3824.40.5000, HTSUS is in GN 11(o)/38.5 which provides, in relevant part:

5. (A) A change to subheadings 3823.11 through 3826.00 from any other subheading, including another subheading within that group; or

(B) No change in tariff classification to a good of subheadings 3823.11 through 3826.00, provided there is a regional value content of not less than: (1) 40 percent where the transaction value method is used; or (2) 30 percent where the net cost method is used.

ViscoCrete-2100 satisfies the requirements of 38.5(A) Therefore, based on the facts provided, ViscoCrete-2100 will qualify for USMCA preferential tariff treatment, because it will meet the requirements of HTSUS General Note 11(b)(iii). The good will therefore be entitled to a free rate of duty under the USMCA upon compliance with all applicable laws, regulations, and agreements.

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 John Bobel at [email protected].

Sincerely,

Steven A. Mack
Director
National Commodity Specialist Division