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Practice Areas

Video Teleconferencing Server Assembled in U.S. is Product of China, CBP Says

Thursday, September 19, 2013
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection has issued a final determination concerning the country of origin of a video teleconferencing server 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. This determination was issued Sept. 11 and any party-at-interest may seek judicial review of it by Oct. 21.

The basic functionality of the server at issue is to capture motion picture images and sound and send them digitally to a similar unit at a different location, where the digital data is reconstructed into motion picture and sound. The server also ensures that this data is sent securely between the two units, making the ability to infiltrate the unit via eavesdropping or malware through the network connection more difficult.

The server is composed of a video processing electronic circuit board, a network filter electronic circuit board, a housing case, a power supply circuit board, minor components (including a heat sink, standoff hardware and screws, network cables and wire harnesses), and proprietary firewall software. The key hardware components are the video board, which is manufactured in China and occasionally fitted after importation with LAN connector hardware produced in the U.S., and the filter board, which is made from a unit manufactured in China that is modified after importation. The power supply and metal case are produced in China and the heat sink is produced in the U.S. The components are assembled into finished products in the U.S.

CBP finds that the video board and filter board impart the essential character to the finished server because they give it the ability to fulfill its main function of capturing and transmitting sound and image. The addition of the U.S.-developed software may add 40% to the server’s value but does not change its main function. CBP thus holds that the server is considered a product of China for government procurement purposes.

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