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CBP Says Software Downloading onto Devices Not Programming for Origin Purposes

Wednesday, December 11, 2013
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection has issued a final determination concerning the country of origin of certain Ethernet switches that may be offered to the U.S. government under an undesignated government procurement contract. 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 purposes of granting waivers of certain “Buy American” restrictions in U.S. law or practice for products offered for sale to the U.S. government.

Each of the switches at issue, which are designed to interconnect servers and storage appliances in data centers, consists of one or more printed circuit board assemblies, chassis, top cover, power supply and fans. The switches operate using specific software designed to provide switching functionality, secure administration, increase reliability and optimize network management. Manufacturing operations are performed in China, Malaysia and Singapore and the software is developed in the U.S. and then downloaded onto the switches in Singapore.

CBP states that while the programming of a device that defines its use generally constitutes substantial transformation, in this case the software downloading in Singapore does not amount to programming. Instead, the last substantial transformation occurs in Malaysia, where the major assembly processes are performed. As a result, Malaysia is the country of origin of the switches for purposes of U.S. government procurement.

This determination was issued Dec. 3 and any party-at-interest may seek judicial review of it by Jan. 10.

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