June 21, 2006 CBP Bulletin Notice on NAFTA Eligibility of Certain Wire Harnesses
In the June 21, 2006 issue of the U.S. Customs and Border Protection Bulletin (CBPBulletin) (Vol. 40, No. 26), CBP issued a notice proposing to modify two rulings regarding certain wire harnesses and their eligibility as originating goods under NAFTA. CBP states that it is also proposing to revoke any treatment it has previously accorded to substantially identical transactions.
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CBP states that any party who has received an interpretative ruling or decision on the merchandise that is subject to this notice, or any person involved with substantially identical transactions, should advise CBP by July 21, 2006, the date that written comments on the proposed rulings are due. Furthermore, CBP states that an importer's failure to advise CBP of such rulings, decisions, or substantially identical transactions may raise issues of reasonable care on the part of the importer or its agent for importations subsequent to the effective date of the final decision in this notice.
Proposed Modifications of NAFTA Eligibility Rulings
Certain wire harnesses. At issue are various wire harnesses-which are classified in HTS 8544.30.0000 as ignition wiring sets and other wiring sets of a kind used in vehicles, aircraft or ships-produced in Mexico of various originating and non-originating materials and exported to the U.S. (See CBP's notice for complete descriptions of the subject wire harnesses.)
CBP is proposing to issue HQ 968072 and HQ 968074 in order to modify HQ 546674 and HQ 957188, respectively, in order to reflect the proper tariff shift analysis requirements, and NAFTA eligibility conclusion, for the subject wire harnesses.
In HQ 957188 and HQ 546674, CBP stated that the proper interpretation of the tariff shift requirement of General Note (GN) 12(t)/85.147(B), was that the non-originating materials must change to HTS subheadings 8544.11 through 8544.60, from any other subheading within that group or headings 7408, 7413, 7605, or 7614, whether or not there was a change from any other subheading, provided the regional value content (RVC) requirement is met.
Based on CBP's review of HQ 957188, HQ 546674, and GN 12(t)/85.147(B), it has determined that the tariff shift analysis in HQ 957188 and HQ 546674 performed pursuant to GN 12(t)/85.147(B) is incorrect.
It is now CBP's position that GN 12(t)/85.147(B) requires that, in order for a transformation/tariff shift to occur there must be a change in the tariff classification of a good to HTS subheadings 8544.11 through 8544.60, from heading 7408, 7413, 7605, or 7614 and the good must also have a RVC of not less than 60% where the transaction value method is used, or 50% where the net cost method is used. Furthermore, a change to HTS 8544.11 through 8544.60 from any other subheading, including subheadings within 8544.11 through 8544.60, may only take place if there is also a change in classification of the good from heading 7408, 7413, 7605, or 7614.
By application of GN 12(t)/85.147 and GN 12(f), the non-originating materials described in the proposed rulings have not been transformed pursuant to the requirements of GN 12(b)(ii)(A).
Therefore, for these situations, CBP finds that the wire harnesses produced in Mexico for export to the U.S. are not eligible for the tariff treatment accorded goods originating in the territory of a NAFTA party (in this case Mexico).
June 21, 2006 CBP Bulletin (Vol. 40, No. 26) available at http://www.cbp.gov/xp/cgov/toolbox/legal/bulletins_decisions/bulletins_2006/vol40_06212006_no26/