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Assembly Process Not Enough to Substantially Transform Imported Parts, CBP Says

Saturday, April 22, 2017
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection has issued a final determination concerning the country of origin of network tap products that may be offered to the U.S. government under an undesignated government procurement contract. Any party-at-interest may seek judicial review of this determination by May 24. 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.

A network tap is a fiber optic device that provides a physical connection or access to a network. Network taps enable users to physically connect a computer or other monitoring device to a network for the purpose of evaluating, monitoring, or checking network issues.

The network tap at issue consists of three adapters from Taiwan, two splitters from China, and a chassis, tamper-proof labels, and other items from the U.S. These parts are assembled into the finished product in the U.S. by specially trained technicians and then tested, processes that combined take about 15 minutes.

CBP finds that the foreign adapters and splitters are not substantially transformed as a result of the post-importation processing because they do not lose their individual names, remain physically recognizable as adapters and splitters, and do not change in material composition or use. In addition, the assembly process is not sufficiently complex or meaningful to render a substantial transformation.

CBP concludes that the country of origin of this network tap for purposes of U.S. government procurement is China. CBP explains that this product allows data from a single source to be used on multiple analyzing tools and that it is the splitter from China that enables this functionality and therefore constitutes the essence of the product.

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