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U.S. Processing Not Sufficient to Confer Origin for Printers and Toner Cartridges, CBP Rules

Friday, March 23, 2018
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection has issued a final determination concerning the country of origin of monochrome laser printers and replacement toner cartridges that may be offered to the U.S. government under an undesignated government procurement contract. Any party-at-interest may seek judicial review of these determinations by April 23. 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.

The printers at issue are composed of approximately 1,100 parts and components from several countries combined into eight main subassemblies: the main printed circuit board assembly (motherboard), which is assembled in Japan; the firmware that provides the control program for the printers, which is largely designed and developed in Japan; the fuser unit that applies pressure and heat to the printed page, which is assembled in Vietnam; the automatic document feeder, which is assembled in Vietnam; the organic photo conductor drum unit that attracts toner that is transferred to the paper, which is assembled in Vietnam; the toner cartridge, which is assembled in Vietnam; the operation panel unit that controls printer functions, which is assembled in Vietnam; and the body unit (cover, frame, paper tray, power supply boards, etc.), which is assembled in Vietnam.

The petitioner argues that the country of origin of the printers is the U.S. because the printers are assembled there in a process that involves complex post-importation assembly operations, the installation of the main PCB assembly and a firmware verification and download, and a customized testing and inspection process. However, in ruling HQ H287548 CBP concludes that the assembly process in the U.S., which is concluded in just 40 minutes, is not sufficiently complex for the last substantial transformation to occur in the U.S. Instead, CBP states, the firmware and main PCB serve major functions and are high in value and thus constitute the essential character of the printers. Since the last substantial transformation of these items takes place in Japan, that is the country of origin of the printers.

The replacement toner cartridges are assembled in Japan from 29 parts made in Japan, Vietnam, China, the Philippines, Malaysia, and Indonesia. The most expensive parts are the toner powder, which is manufactured in Japan; the developer roller, which is manufactured in Japan and the Philippines; and the supply roller and blade, which are manufactured in China. Citing ruling HQ H251592, CBP determines that the processing in Japan substantially transforms the non-Japanese components and that Japan is thus the country of origin of the toner cartridges.

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