HQ 085894: Reconsideration of HQ 084856, dated August 31, 1989,regarding the U.S.-Canada FTA origin status of U.S./third countrymotherboards completed in Canada with power supply and cabinet

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 085894


                        February 14, 1990


CLA-2 CO:R:C:G  085894 MBR

CATEGORY:,  Classification

TARIFF NO.:,  8471.91.00

Mr. William J. LeClair
Trans-Border Customs Services, Inc.
One Trans-Border Drive, P.O. Box 800
Champlain, New York 12919

RE:  Reconsideration of HQ 084856, dated August 31, 1989,
regarding the U.S.-Canada FTA origin status of U.S./third country
motherboards completed in Canada with power supply and cabinet

Dear Mr. LeClair:

  This is in reply to your letter of October 16, 1989 requesting
reconsideration of the origin status of certain motherboards, of
third country components, exported to Canada from the United
States, assembled with a power supply and cabinet of Canadian
origin and imported back to the United States.

FACTS:

  A "motherboard" is the main interconnecting circuit board in
an electronic device, to which the various subassemblies, as
printed circuit boards, are plugged or wired.  See Webster's New
World Dictionary, Third College Edition (1988), page 886.

  The instant assembly import/export practice is as follows: 1)
the motherboard is assembled in the U.S. with U.S. and third
country components, 2) the motherboard is exported to Canada
where it is assembled with a power supply and a cabinet of
Canadian origin, and lastly, 3) the completed assembly is
imported into the U.S.

  Thus, although the completed assembly consists of components
that are stated to be originating materials for purposes of the
U.S.-Canada Free Trade Agreement (FTA), it is not "wholly
obtained or produced" as defined in the FTA.

ISSUE:

  Does the completed assembly qualify for the benefits of the FTA
as an originating good?

LAW AND ANALYSIS:

  The FTA rules for determining whether goods, when imported into
the United States, are originating in the territory of Canada are
set forth in General Note 3(c)(vii), Harmonized Tariff Schedule
of the United States Annotated (HTSUSA).

  General Note 3(c)(vii)(B) states:

     (B) For the purposes of subdivision (c)(vii) of this note,
     goods imported into the customs territory of the United
     States are eligible for treatment as "goods originating in
     the territory of Canada" only if--

          (1) they are goods wholly obtained or produced in the
          territory of Canada and/or United States, or

          (2) they have been transformed in the territory of
          Canada and/or United States, so as to be subject--

               (I) to a change in tariff classification in Canada
               as described in the rules of subdivision
               (c)(vii)(R) of this note, or

               (II) to such other requirements subdivision
               (c)(vii)(R) of this note may provide when no
               change in tariff classification occurs, and they
               meet the other conditions set out in subdivisions
               (c)(vii)(F), (G), (H), (I), (J), and (R) of this
               note.

  The motherboards at issue are not "goods wholly obtained or
produced in the territory of Canada and/or United States," as
required by General Note 3(c)(vii)(B)(1), because of the use of
third country components.  The definition of goods "wholly
obtained or produced" is enumerated in General Note 3(c)(vii)(L),
which states:

     (L) As used in subdivision (c)(vii)(B) of this note, the
     phrase "goods wholly obtained or produced in the territory
     of Canada and/or the United States" means-- (1) mineral
     goods extracted in the territory of Canada and/or the United
     States, (2) goods harvested..., (3) live animals..., (4)
     fish..., (5) goods produced on factory ships..., (6) goods
     taken...from seabed..., (7) goods taken from space..., (8)
     waste and scrap derived from manufacturing..., (9) goods
     produced in the territory of Canada and/or the United States
     exclusively from goods referred to in subparagraphs (1) to
     (8), inclusive, or from their derivatives, at any stage of
     production.

  Therefore, the question arises whether there has been a change
in tariff classification, as required by General Note
3(c)(vii)(B)(2)(I).  "Motherboards" are classifiable under
subheading 8471.91.00, HTSUSA, which provides for digital
processing units.  The addition of a power supply and cabinet in
Canada would result in absolutely no change in tariff
classification in Canada, of the motherboards, as is required for
the FTA to apply.  Therefore, the rules of General Note
3(c)(vii)(B) and subdivision (c)(vii)(R) are not met since there
is no change in tariff classification in Canada, of the
motherboards.

  We agree with Item 41 of "Memorandum D11-4-12" which you have
submitted for our reconsideration.  However, this issue is never
reached.  Although the motherboard is a "U.S. product" it still
is not wholly obtained or produced in the U.S., nor does it
change classification in Canada, as required by the U.S.-Canada
FTA.

HOLDING:

  Motherboards produced in the U.S., containing components of
third country origin, that do not change classification in
Canada, are not an originating good of Canada, for purposes of
the U.S.-Canada FTA.

                              Sincerely,




                              John Durant, Director
                              Commercial Rulings Division