U.S. Customs and Border Protection has issued a final determination concerning the country of origin of two pieces of exercise equipment 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 June 15. 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.
There are two scenarios for assembling the exercise equipment, which consists of component parts produced in China from Chinese materials, in the U.S. The first scenario applies to both pieces of equipment and involves importing all component parts from China and welding, painting and assembling them in the U.S. The second scenario only applies to one piece and is similar to the first except that some of the sub-assemblies would be welded together in China.
CBP holds in ruling HQ H270580 that in the first scenario the extent of U.S. assembly operations – which include welding, cleaning, degreasing, grinding down and spraying with paint as well as assembly – is sufficiently complex and meaningful to result in a substantial transformation. In addition, those who will perform these operations will require significant education, skill and attention to detail. As a result, the country of origin of the exercise equipment in this scenario is the U.S.
In the second scenario, however, components that together impart the very essence of the finished product will be imported as pre-assembled components. As a result, the processing in the U.S. does not result in a substantial transformation and the country of origin of the equipment is China.