[Federal Register Volume 87, Number 143 (Wednesday, July 27, 2022)]
[Notices]
[Pages 45120-45122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-16073]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Certain
Surgical Gowns
AGENCY: U.S. Customs and Border Protection, Department of Homeland
Security.
ACTION: Notice of final determination.
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SUMMARY: This document provides notice that U.S. Customs and Border
Protection (CBP) has issued a final determination concerning the
country of origin of certain surgical gowns. Based upon the facts
presented, CBP has concluded in the final determination that the
country of origin of the surgical gowns in question is the Dominican
Republic for purposes of U.S. Government procurement.
DATES: The final determination was issued on July 21, 2022. A copy of
the final determination is attached. Any party-at-interest, as defined
in 19 CFR 177.22(d), may seek judicial review of this final
determination within August 26, 2022.
FOR FURTHER INFORMATION CONTACT: Marie Duran[eacute], Food, Textiles
and Marking Branch, Regulations and Rulings, Office of Trade, at (202)
325-0984.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on July 21,
2022, U.S. Customs and Border Protection (CBP) issued a final
determination concerning the country of origin of certain surgical
gowns (Association for the Advancement of Medical Instrumentation
(AAMI) Level 3 and Level 4 sterile disposable surgical gowns) for
purposes of Title III of the Trade Agreements Act of 1979. This final
determination, HQ H321354, was issued at the request of Global
Resources International, Inc. (GRI) and Sant[eacute] USA, LLC
(Sant[eacute] USA), under procedures set forth at 19 CFR part 177,
subpart B, which implements Title III of the Trade Agreements Act of
1979, as amended (19 U.S.C. 2511-18). In the final determination, CBP
has concluded that, based upon the facts presented, the country of
origin of the surgical gowns is the Dominican Republic for purposes of
U.S. Government procurement.
Section 177.29, CBP Regulations (19 CFR 177.29), provides that
notice of final determinations shall be published in the Federal
Register within 60 days of the date the final determination is issued.
Section 177.30, CBP Regulations (19 CFR 177.30), provides that any
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial
review of a final determination within 30 days of publication of such
determination in the Federal Register.
Dated: July 21, 2022.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.
HQ H321354
July 21, 2022
OT:RR:CTF:VS H321354 MJD
CATEGORY: Origin
Lawrence R. Pilon, Rock Trade Law LLC, 134 North LaSalle Street,
Suite 1800, Chicago, IL 60602.
RE: U.S. Government Procurement; Title III, Trade Agreements Act of
1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; Country
of Origin of Surgical Gowns
Dear Mr. Pilon:
This is in response to your request of October 11, 2021, on
behalf of your clients, Global Resources International, Inc.
(``GRI'') and Sant[eacute] USA, LLC (``Sant[eacute] USA''), for a
final determination regarding the country of origin of surgical
gowns pursuant to Title III of the Trade Agreements Act of 1979
(``TAA''), as amended (19 U.S.C. 2511 et seq.), and subpart B of
Part 177, U.S. Customs and Border Protection (``CBP'') Regulations
(19 CFR 177.21, et seq.). GRI and Sant[eacute] USA are parties-at-
interest within the meaning of 19 CFR 177.22(d) and 177.23(a) and
are therefore entitled to request this final determination. A
meeting was held with counsel for GRI and Sant[eacute] USA by
videoconference on April 12, 2022.
Facts
GRI and Sant[eacute] USA are manufacturers, importers,
exporters, and distributors of medical devices and supplies for the
healthcare industry. The subject merchandise consists of the
Association for the Advancement of Medical Instrumentation
(``AAMI'') Level 3 and Level 4 disposable surgical gowns for use in
hospitals, surgical centers, and similar healthcare settings. The
surgical gowns are made from nonwoven synthetic spun-melt-spun
(``SMS'') textile material and plastic film made in the United
States. The SMS textile material forms the exterior of the gown,
while the plastic film material is glued to the interior of the gown
as reinforcement for the SMS textile material. According to GRI and
Sant[eacute] USA, the SMS
[[Page 45121]]
textile material is the most expensive material in the finished
product, accounting for 30% of the finished gown's value, and makes
up 100% of the gown's exterior. The SMS textile material and plastic
film are transferred in rolls to the Dominican Republic where they
are cut into component parts, which are in turn assembled into two
sleeve subassemblies and the gown body subassembly. The sleeve
subassemblies and body gown subassemblies are then returned to the
United States for final assembly consisting of principally attaching
the sleeve subassemblies to the gown body subassembly and attaching
the neck binding to the neck opening of the gown. A more detailed
account of the manufacturing process of the surgical gowns is as
follows:
United States
Production of the SMS textile material.
Manufacture of plastic film.
Dominican Republic
The SMS textile material and plastic film are cut into
the main gown body, sleeve, and reinforcement pieces using electric
scissors.
The SMS textile material is converted to waist ties
using a tie-making machine.
The sleeve cut piece is folded and its seam sealed by a
bar heat sealer and ultrasonic welder sewing machine.
The knit cuff is sewn to the formed sleeve piece using
a sewing machine.
The item number, level of performance claim, and brand
information are stamped onto the main gown body piece.
The hook and loop fastener material is sewn to the gown
body using a sewing machine.
The ties are attached to the gown body subassembly by
glue and ultrasonic welding.
Glue is applied evenly to the plastic film
reinforcement piece and applied to the inner face of the gown body
subassembly.
United States
The sleeve subassemblies are attached to the main gown
body subassembly with an ultrasonic welder sewing machine.
The neck binding is attached to the neck opening of the
gown using a binding machine.
Each gown is inspected for visible defects and
conformity to required dimensions for size.
The gowns are also tested for conformity to applicable
AAMI Level 3 and Level 4 strength and permeability standards.
Gowns are packaged and sterilized with ethylene oxide.
GR and Sant[eacute] USA state that the SMS textile material is
classified in heading 5603, Harmonized Tariff Schedule of the United
States (``HTSUS''), which provides for ``[n]onwovens, whether or not
impregnated, coated, covered or laminated.'' The finished surgical
gowns are classified under subheading 6210.10.5010, HTSUSA, which
provides for ``[g]arments, made up of fabrics of heading 5602, 5603,
5903, 5906 or 5907: Of fabrics of heading 5602 or 5603: Other:
Nonwoven disposable apparel designed for use in hospitals, clinics,
laboratories or contaminated areas: Surgical or isolation gowns.''
Issue
What is the country of origin of the surgical gowns for purposes
of U.S. Government procurement?
Law and Analysis
CBP issues country of origin advisory rulings and final
determinations as to whether an article is or would be a product of
a designated country or instrumentality for the purpose of granting
waivers of certain ``Buy American'' restrictions in U.S. law or
practice for products offered for sale to the U.S. Government,
pursuant to subpart B of Part 177, 19 CFR 177.21 et seq., which
implements Title III, Trade Agreements Act of 1979, as amended (19
U.S.C. 2511-2518).
The rule of origin set forth in 19 U.S.C. 2518(4)(B) states:
An article is a product of a country or instrumentality only if
(i) it is wholly the growth, product, or manufacture of that country
or instrumentality, or (ii) 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.
See also 19 CFR 177.22(a).
In rendering advisory rulings and final determinations for
purposes of U.S. Government procurement, CBP applies the provisions
of subpart B of Part 177 consistent with the Federal Acquisition
Regulation. See 19 CFR 177.21. In this regard, CBP recognizes that
the Federal Acquisition Regulation restricts the U.S. Government's
purchase of products to U.S.-made or designated country end products
for acquisitions subject to the TAA. See 48 CFR 25.403(c)(1). The
Federal Acquisition Regulation defines ``U.S.-made end product'' as:
. . . an article that is mined, produced, or manufactured in the
United States or that is substantially transformed in the United
States 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 transformed.
See 48 CFR 25.003.
The Federal Acquisition Regulation, 48 CFR 25.003 defines
``designated country end product'' as a:
WTO GPA [World Trade Organization Government Procurement
Agreement] country end product, an FTA [Free Trade Agreement]
country end product, a least developed country end product, or a
Caribbean Basin country end product.
Section 25.003 provides that a ``Free Trade Agreement country
end product'' means an article that-
(1) Is wholly the growth, product, or manufacture of a Free
Trade Agreement (FTA) country; or
(2) In the case of an article that consists in whole or in part
of materials from another country, has been substantially
transformed in an FTA country 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 transformed. The term refers
to a product offered for purchase under a supply contract, but for
purposes of calculating the value of the end product, includes
services (except transportation services) incidental to the article,
provided that the value of those incidental services does not exceed
that of the article itself.
``Free Trade Agreement country'' means Australia, Bahrain,
Canada, Chile, Colombia, Costa Rica, Dominican Republic, El
Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco,
Nicaragua, Oman, Panama, Peru, or Singapore. See 48 CFR 25.003.
Thus, the Dominican Republic is an FTA country for purposes of the
Federal Acquisition Regulation.
The Secretary of the Treasury's authority to issue advisory
rulings and final determinations is set forth in 19 U.S.C.
2515(b)(1), which states:
For the purposes of this subchapter, the Secretary of the
Treasury shall provide for the prompt issuance of advisory rulings
and final determinations on whether, under section 2518(4)(B) of
this title, an article is or would be a product of a foreign country
or instrumentality designated pursuant to section 2511(b) of this
title.
Emphasis added.
The Secretary of the Treasury's authority mentioned above, along
with other customs revenue functions, are delegated to CBP in the
Appendix to 19 CFR part 0--Treasury Department Order No. 100-16, 68
FR 28, 322 (May 23, 2003).
With regard to the surgical gowns at issue, GRI and Sant[eacute]
USA's request involves the issue of whether the article is a U.S.-
made end product or a product of the Dominican Republic. This
determination addresses the latter point, whether the article is a
product of the Dominican Republic and not whether the article is a
U.S.-made end product. Because the articles at issue are not wholly
the growth, product, or manufacture of the Dominican Republic, our
analysis must apply the substantial transformation standard, as set
forth in 19 U.S.C. 2518(4)(B)(ii).
The information submitted indicates that the surgical gowns are
made chiefly from non-woven textile material. GRI and Sant[eacute]
USA also indicate that the goods are classified in subheading
6210.10.50, HTSUS, as an apparel product. The rules of origin for
textile and apparel products for purposes of the customs laws and
the administration of quantitative restrictions are governed by 19
U.S.C. 3592, unless otherwise provided for by statute. These
provisions are implemented in the CBP Regulations at 19 CFR 102.21.
Section 3592 has been described as Congress's expression of
substantial transformation as it relates to textile and apparel
products. Therefore, the country of origin of the surgical gowns for
Government procurement purposes is determined by a hierarchy of
rules set forth in paragraphs (c)(1) through (c)(5) of Section
102.21.
As the finished surgical gowns are produced by processing in
more than one country, their origin cannot be determined by
application of the 19 CFR 102.21(c)(1), wholly obtained or produced
rule, and resort must be made to 19 CFR 102.21(c)(2). Section
102.21(c)(2) states that the origin of a good is the country ``in
which each foreign material incorporated in that good underwent an
applicable change in tariff classification,
[[Page 45122]]
and/or met any other requirement, specified for the good in
paragraph (e) of [102.21].'' Section 102.21(e)(1) provides in
pertinent part:
The following rules will apply for purposes of determining the
country of origin of a textile or apparel product under paragraph
(c)(2) of this section:
6210-6212 (1) If the good consists of two or more component
parts, a change to an assembled good of heading 6210 through 6212
from unassembled components, provided that the change is the result
of the good being wholly assembled in a single country, territory,
or insular possession.
The subject merchandise is classifiable in heading 6210, HTSUS.
Section 102.21(b)(6) defines wholly assembled as: ``the term `wholly
assembled' when used with reference to a good means that all
components, of which there must be at least two, preexisted in
essentially the same condition as found in the finished good and
were combined to form the finished good in a single country,
territory, or insular possession. Minor attachments and minor
embellishments (for example, appliques, beads, spangles, embroidery,
buttons) not appreciably affecting the identity of the good, and
minor subassemblies (for example, collars, cuffs, plackets,
pockets), will not affect the status of a good as ``wholly
assembled'' in a single country, territory, or insular possession.''
The surgical gowns at issue are assembled in both the Dominican
Republic and the United States. Therefore, the surgical gowns are
not ``wholly assembled in a single country, territory, or insular
possession,'' and as a result, 19 CFR 102.21(c)(2) is inapplicable.
19 CFR 102.21(c)(3) states in pertinent part,
Where the country of origin of a textile or apparel product
cannot be determined under paragraph (c)(1) or (2) of this section:
(i) If the good was knit to shape, the country of origin of the
good is the single country, territory, or insular possession in
which the good was knit;
(ii) Except for fabrics of chapter 59 and goods of heading 5609,
5807, 5811, 6213, 6214, 6301 through 6306, and 6308, and subheadings
6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was not
knit to shape and the good was wholly assembled in a single country,
territory, or insular possession, the country of origin of the good
is the country, territory, or insular possession in which the good
was wholly assembled.
As the subject surgical gowns are neither knit to shape, nor
wholly assembled in a single country, section 102.21(c)(3) is
inapplicable.
Section 102.21(c)(4) states, ``Where the country of origin of a
textile or apparel product cannot be determined under paragraph
(c)(1), (2) or (3) of this section, the country of origin of the
good is the single country, territory or insular possession in which
the most important assembly or manufacturing process occurred.''
GRI and Sant[eacute] USA assert that the most important assembly
or manufacturing process is the assembly of the sleeves to the main
body piece of the gown in the United States. In support of their
argument, they assert that the sleeves and the body are the
essential components of the gown and provide the protective surfaces
that are the purpose of the finished surgical gowns; attaching the
sleeves to the main body of the gown gives the gown its finished
shape; and attaching the sleeves to the main body of the gown
requires a high degree of skill and is the most time consuming step
in manufacturing the gowns. Moreover, GRI and Sant[eacute] USA argue
that 19 CFR 102.21(c)(4) only allows for a single assembly or
manufacturing process to be the most important assembly or
manufacturing process. We disagree.
The most important assembly or manufacturing processes of the
surgical gowns consist of cutting the SMS textile material to make
the main body and sleeve pieces, the assembly of the sleeves, the
assembly of the gown body, and the application of the plastic film
to the inner face of the gown body. All these steps combined create
the main pieces of the surgical gown, i.e., the sleeves and the
body. They are the parts of the surgical gown that make the surgical
gown a surgical gown. As a result, when the sleeve subassemblies and
the surgical gown body are exported to the United States, they are
clearly recognizable as an unfinished surgical gown. All that is
left to do in the United States is to attach the sleeves to the gown
and the neck binding to the neck opening of the gown to form the
finished surgical gown.
In New York Ruling Letter (``NY'') K88449, dated August 17,
2004, CBP found that the most important assembly processes for a
woman's knitted jacket in Version A were sewing the collar to the
front of the jacket; assembling the sleeve parts; attaching the
cuffs; sewing the side seams; sewing the pockets to the front
panels; attaching the bottom band; and sewing the zipper and placket
to the garment; all of which occurred in China. The final assembly
processes of a woman's knitted jacket, such as attaching the rib
knit collar to the back of the jacket and sewing the sleeves to the
jacket, that occurred in the Commonwealth of the Northern Mariana
Islands, were not determinative of the country of origin.
Consequently, while GRI and Sant[eacute] USA argue that attaching
the sleeve subassemblies to the gown body subassembly requires a
high degree of skill and time, we find that, in the aggregate, the
cutting of the SMS textile material for the gown body subassembly
and sleeve subassembly, the assembly of the sleeves, the assembly of
the gown body, and applying the plastic film to the inner face of
the gown body subassembly are the most important assembly or
manufacturing processes in the production of the surgical gowns.
Moreover, CBP has a longstanding practice of interpreting 19 CFR
102.21(c)(4) to include more than one assembly or manufacturing
process as the most important assembly or manufacturing process for
purposes of a country of origin determination, as we have
demonstrated above in NY K88449. See also Headquarters Ruling Letter
(``HQ'') H308753, dated March 11, 2021; NY N308451, dated January 9,
2020; NY N302230, dated February 8, 2019; NY N174035, dated August
5, 2011; NY N091836, dated February 12, 2010; NY N026921, dated May
2, 2008; NY N033021, dated July 14, 2008; NY N019414, dated December
3, 2007; NY L81685, dated January 31, 2005; NY L87413, dated
September 1, 2005; NY L81143, dated December 30, 2004; NY C85697,
dated April 23, 1998; HQ 960991, dated December 9, 1997; HQ 960884,
dated November 10, 1997; HQ 958668, dated May 15, 1996.
Therefore, we find, in accordance with 19 CFR 102.21(c)(4), the
country of origin of the surgical gowns is the Dominican Republic.
Accordingly, the instant surgical gowns would be products of a
foreign country or instrumentality designated pursuant to 19 U.S.C.
2511(b)(1). As to whether they qualify as ``U.S.-made end product,''
we encourage GRI and Sant[eacute] USA to review the court decision
in Acetris Health, LLC v. United States, 949 F.3d 719 (Fed. Cir.
2020), and to consult with the relevant government procuring agency.
Holding
Based on the facts and analysis set forth above, the country of
origin of the surgical gowns at issue is the Dominican Republic.
GRI and Sant[eacute] USA should consult with the relevant
government procuring agency to determine whether the surgical gowns
qualify as ``U.S.-made end products'' for purposes of the Federal
Acquisition Regulation implementing the TAA.
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. Pursuant to 19 CFR 177.30, any
party-at-interest may, within 30 days of publication of the Federal
Register Notice referenced above, seek judicial review of this final
determination before the U.S. Court of International Trade.
Sincerely,
Alice A. Kipel, Executive Director
Regulations and Rulings Office of Trade
[FR Doc. 2022-16073 Filed 7-26-22; 8:45 am]
BILLING CODE 9111-14-P