HQ 085535: Substantial transformation; country of origin of nails manufactured from wire rod

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                                        HQ 085535

                                    December 28, 1989

             CLA-2 CO:R:CV:G:  085535 JLV; 844942

             CATEGORY:  Classification

             TARIFF NO.:

             Mr. Rober J. Glader
             C & B Inc.
             407 N. Beverly
             Arlington Heights, IL 60004

             RE:  Substantial transformation; country of origin of nails
                  manufactured from wire rod

             Dear Mr. Glader:

                  In a letter of August 25, 1989, you requested a ruling on
             whether nails, produced in St. Kitts and Jamaica from wire rod
             produced in one or more foreign countries (steel products of
             which are subject to export certification requirements at
             entry), would be subject to export certification at the time
             of importation into the United States.

             FACTS:

                  The merchandise to be produced in St. Kitts and Jamaica
             consists of various types of nails.  These nails are called
             "construction nails and galvanized nails" in your letter.  The
             nails will be produced from low carbon wire rod.  Because you
             did not state otherwise, we assume that all of the processing
             operations will be performed in either St. Kitts or in
             Jamaica.  No samples or descriptive literature were submitted.

                  You state that the wire rod will be sourced from one or
             more foreign countries.  The processing operations in St.
             Kitts or Jamaica are as follows:

                  1.    Draw the wire rod into wire.

                  2.    Convert the wire into nails.

                  3.    Finish the nails by deburring, cleaning, coating
                        (in some cases), and packaging.













                                          - 2 -

             ISSUE:

                  Whether the processing of wire rod into nails is a
             substantial transformation so as to result in a product of the
             country in which the processing takes place?

                  Does the country of origin of the nails, in this case,
             determine the status of the nails for purposes of the export
             certification requirements of the steel voluntary restraint
             arrangements (VRAs)?

             LAW AND ANALYSIS:

                  Country of origin of an article which has been processed
             in more than one country is that country in which the last
             substantial transformation takes place.  A substantial trans-
             formation takes place when the processing of a material or
             article results in a new and different article having a
             distinct name, character, or use.  Anheuser-Busch Brewing
             Association v. United States, 207 U.S. 556 (1908); Ferrostaal
             Metals v. United States, 664 F.Supp 535 (CIT 1987).

                  The nails, whether or not galvanized, are distinct in
             name, character, and use from the wire rod material used in
             the manufacture of the nails.  A nail is defined in Webster's
             Third New International Dictionary Unabridged, 1965, page
             1500, as a slender and usually pointed and headed fastener
             designed for impact insertion.  The low carbon wire rod is a
             semifinished hot rolled steel material that is used, in some
             cases, as reinforcing material for concrete, and in most cases
             for drawing into various sizes of wire.  We conclude,
             therefore, that the wire rod is substantially transformed into
             a new and different article, nails, and that the nails are
             products of the country in which this processing takes place.

                  VRA steel, under the expired VRAs, if processed in a non-
             VRA country before exportation to the United States, remained
             subject to the VRA unless the processing resulted in a
             substantial transformation.  In this case, the nails produced
             in either St. Kitts or Jamaica from VRA wire rod would not
             have been subject to the steel VRAs which expired on September
             30, 1989.  On December 12, 1989, the Office of the United
             States Trade Representative announced that VRAs had been
             agreed upon with the European Community and 16 other
             countries.  These VRAs, however, are not yet in effect, nor
             are we aware of any changes in the coverage or criteria for
             determining whether steel products, processed in a non-VRA
             country, remain subject to the VRA.














                                          - 3 -

             HOLDING:

                  Low carbon wire rod, produced in one country, is
             substantially transformed when processed by drawing and then
             converting into nails in a second country.  Therefore, nails,
             produced in St. Kitts or Jamaica from low carbon wire rod of
             foreign origin, are products of the country in which the
             processing takes place.

                  Although the nails would not have been subject to
             restraints under the recently expired VRAs because the wire
             rod is substantially transformed in a non-VRA country, we
             cannot advise you as to the VRA status of the nails under the
             renegotiated VRAs.  You should contact the Office of the
             United States Trade Representative, 600 17th Street NW,
             Washington, D.C. 20506 (202-395-3230), or the Director, Office
             of Agreements Compliance, International Trade Administration,
             Department of Commerce, Washington, D.C. 20230 (202-377-3793),
             for information on the status of the VRAs and the changes, if
             any, in the criteria for determining what products are subject
             to the VRAs.

                                          Sincerely,




                                          John Durant, Director
                                          Commercial Rulings Division







































































             6cc:  AD NY Seaport
             1cc:  NIS John Fitzgerald
             2cc:  Chief, CIE
             1cc:  AC, CO
             1cc:  Director, Trade Ops
             1cc:  Durant                 LIBRARY:        valentine
             1cc:  Reading File           FILE NAME:      085535