Notice of Issuance of Final Determination Concerning Trimble GNSS R12i Receiver, 48908-48911 [2024-12617]

Agencies

• DEPARTMENT OF HOMELAND SECURITY
• U.S. Customs and Border Protection

[Federal Register Volume 89, Number 112 (Monday, June 10, 2024)]
[Notices]
[Pages 48908-48911]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-12617]



[[Page 48908]]

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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Trimble GNSS 
R12i Receiver

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: Notice of final determination.

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SUMMARY: This document provides notice that U.S. Customs and Border 
Protection (CBP) has issued a final determination concerning the 
country of origin of the Trimble GNSS R12i Receiver. Based upon the 
facts presented, CBP has concluded that the GNSS R12i Receiver is a 
product of the United States for purposes of U.S. Government 
procurement and does not undergo a substantial transformation during 
its final assembly in Thailand.

DATES: The final determination was issued on June 4, 2024. A copy of 
the final determination is attached. Any party-at-interest, as defined 
in 19 CFR 177.22(d), may seek judicial review of this final 
determination no later than July 10, 2024.

FOR FURTHER INFORMATION CONTACT: Mitchell Emery, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of Trade, at (202) 
325-0321.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on June 4, 2024, 
U.S. Customs and Border Protection (CBP) issued a final determination 
concerning the country of origin of Trimble GNSS R12i Receivers for 
purposes of title III of the Trade Agreements Act of 1979. This final 
determination, HQ H338116, was issued at the request of Trimble, Inc. 
under procedures set forth at 19 CFR part 177, subpart B, which 
implements title III of the Trade Agreements Act of 1979, as amended 
(19 U.S.C. 2511-18). In the final determination CBP has concluded that 
the GNSS R12i Receiver is a product of the United States and does not 
undergo a substantial transformation during its final assembly in 
Thailand. The final determination also finds that the GNSS R12i 
Receiver is exempt from the country of origin marking requirements of 
19 CFR 134.32(m).
    Section 177.29, CBP Regulations (19 CFR 177.29), provides that a 
notice of final determination shall be published in the Federal 
Register within 60 days of the date the final determination is issued. 
Section 177.30, CBP Regulations (19 CFR 177.30), provides that any 
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial 
review of a final determination within 30 days of publication of such 
determination in the Federal Register.

Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.

HQ H338116

June 4, 2024

OT:RR:CTF:VS H338116 ME

Category: Origin

John McKenzie
Baker & McKenzie LLP
Two Embarcadero Center, 11th Floor
San Francisco, CA 94111-3802

Re: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; Country of 
Origin of Global Navigation Satellite System R12i Receivers; Country of 
Origin Marking 134.32(d); 19 CFR 134.32(m).

Dear Mr. McKenzie,

    This is in response to your March 1, 2024 request, on behalf of 
Trimble, Inc. (``Trimble''), for a final determination concerning the 
country of origin of certain Global Navigation Satellite System 
(``GNSS'') R12i Receivers, pursuant to Title III of the Trade 
Agreements Act of 1979 (``TAA''), as amended (19 U.S.C. 2511 et seq.), 
and subpart B of Part 177, U.S. Customs and Border Protection (``CBP'') 
Regulations (19 CFR 177.21, et seq.). Trimble is a party-at-interest 
within the meaning of 19 CFR 177.22(d)(1) and 177.23(a) and is 
therefore entitled to request this final determination. You also 
requested a determination on whether the product is exempt from country 
of origin marking requirements under Section 134.32(m) of the CBP 
Regulations (19 CFR 134.32(m)).

Facts

    Trimble is a Delaware corporation based in Colorado, specializing 
in the production and design of industrial technology for the 
agricultural, construction, and geospatial transportation industries. 
At issue in this case is the GNSS R12i Receiver, which you describe as 
designed for ``surveying and mapping in challenging environments.''
    You state that the GNSS R12i Receiver consists of seven primary 
components, which undergo final assembly into a chassis in Thailand:

 Main Board Assembly
 Power Supply and Communications Board Assembly
 Antenna Element Assembly
 Radio Interface
 Antenna Low Noise Amplifier
 Battery SIM
 450MHz Radio

    Four of these components, the main board assembly, the power supply 
and communications board assembly, the antenna element assembly, and 
the radio interface are manufactured in the United States. Notably, you 
characterize three of these U.S.-origin components as Printed Circuit 
Board Assemblies (``PCBAs''). You state that the main board assembly is 
the primary PCBA, which provides the ``essential character'' of the 
GNSS R12i Receiver, including the central processing unit (``CPU''), 
random access memory (``RAM''), Flash memory module, RF processor, 
baseband processer, and Global Positioning System (``GPS'') Components. 
These components are assembled onto the board using Surface Mount 
Technology (``SMT'') in the United States. You additionally state that 
the Radio Interface is a separate PCBA with 74 components assembled 
onto the bare circuit board with SMT. You also state that the power 
supply and communications board assembly is a PCBA with 526 components 
assembled onto a circuit board using SMT and includes all 
communications functions of the GNSS R12i Receiver.
    Two of the main components, the antenna low noise amplifier and 
battery SIM, are produced in Thailand. You state that these ``perform 
subsidiary roles with respect to the GNSS R12i device.'' You describe 
the antenna low noise amplifier as a PCBA with 142 components assembled 
onto a bare printed circuit board using SMT, which is then shipped to 
the United States and built into the Antenna Element Assembly. 
Additionally, you describe the battery SIM as a PCBA produced by 
assembling five components onto a bare printed circuit board.
    The final main component is a 450MHz Radio, which is produced in 
China. This component is optional; however, you have included it for 
the purpose of determining the country of origin of the GNSS R12i 
Receiver. You provide no details about the production process of this 
component.
    You describe the final assembly operations in Thailand as ``simple 
assembly,'' consisting ``primarily of inserting and fastening [PCBAs] 
into a chassis.'' The final assembly includes the following steps:
    1. The primary PCBA, radio interface PCBA, and communications and 
power supply PCBA are screwed onto a ``hot box'' subassembly by 
fastening with two to three screws. They are then subject to a series 
of sensor tests.
    2. The antenna assembly is fastened to the ``hot box'' with two 
screws, the

[[Page 48909]]

radio module is installed onto the ``hot box'' with four screws, and 
then the ``hot box'' assembly is subject to a series of signal tests.
    3. The keypad is installed onto the chassis with glue and two 
screws.
    4. The battery compartment floor, and battery compartment are 
assembled and affixed to the chassis with two and four screws 
respectively.
    5. The battery SIM is attached to the chassis with four screws.
    6. The ``hot box'' subassembly with the PCBAs and antenna element 
are affixed to the chassis with four screws.
    7. The battery compartment door is installed to the outside of the 
chassis with two screws.
    8. Various mechanical parts are installed into the chassis.
    9. Four compliance labels, overlays and serial number labels are 
attached to the exterior of the chassis.
    10. A series of functional tests are conducted (Leak Test; 
Calibration Confirmation; Unit input/output Testing; Unit Gyroscope 
Testing).
    On top of this, you state that various subcomponents are used at 
all stages to produce the main components of the GNSS R12i Receiver. 
You also state that small mechanical parts and additional subcomponents 
are added to the product during final assembly. For all these 
subcomponents, you provide charts showing that the parts originate from 
over 20 different countries, and you state that no ``single country 
predominates as the source country.'' We note that several of these 
``subcomponents'' cost more than items which you have designated as 
``primary components.'' However, the most expensive subcomponents 
largely relate to GNSS R12i Receiver's outer shell and are not central 
to the device's functionality.
    Furthermore, you state that the GNSS R12i Receiver would not be 
functional without Trimble's proprietary software. You estimate that 
software development ``involved more than 1 million developer hours,'' 
and that 67 percent of the code was written by developers in the United 
States and 33 percent by developers in Germany. You state that this 
proprietary software has further undergone ``software build'' in the 
United States, where it was compiled from its constituent source code 
into machine readable binaries. You state that this software will be 
flashed onto a memory component in the United States and assembled onto 
the primary PCBA as part of the manufacturing process. In total, you 
estimate that 70 percent of the GNSS R12i Receiver's value is the 
result of this proprietary software.

Issues

    1. What is the country of origin of the GNSS R12i Receiver for the 
purposes of U.S. Government procurement?
    2. Is the GNSS R12i Receiver excepted from country of origin 
marking requirements under 19 CFR 134.32(m)?

Law and Analysis

Country of Origin Determination

    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, pursuant 
to subpart B of Part 177, 19 CFR 177.21-177.31, which implements Title 
III of the TAA, as amended (19 U.S.C. 2511-2518).
    CBP's authority to issue advisory rulings and final determinations 
is set forth in 19 U.S.C. 2515(b)(1), which states:

    For the purposes of this subchapter, the Secretary of the 
Treasury shall provide for the prompt issuance of advisory rulings 
and final determinations on whether, under section 2518(4)(B) of 
this title, an article is or would be a product of a foreign country 
or instrumentality designated pursuant to section 2511(b) of this 
title (Emphasis added).

    The Secretary of the Treasury's authority mentioned above, along 
with other customs revenue functions, are delegated to CBP in the 
Appendix to 19 CFR part 0--Treasury Department Order No. 100-16, 68 FR 
28,322 (May 23, 2003).
    The rule of origin set forth under 19 U.S.C. 2518(4)(B) states:

    An article is a product of a country or instrumentality only if 
(i) it is wholly the growth, product, or manufacture of that country 
or instrumentality, or (ii) in the case of an article which consists 
in whole or in part of materials from another country or 
instrumentality, it has been substantially transformed into a new 
and different article of commerce with a name, character, or use 
distinct from that of the article or articles from which it was so 
transformed.

See also 19 CFR 177.22(a).
    In rendering advisory rulings and final determinations for purposes 
of U.S. Government procurement, CBP applies the provisions of subpart B 
of Part 177 consistent with the Federal Procurement Regulation 
(``FAR''). See 19 CFR 177.21. In this regard, CBP recognizes that the 
FAR restricts the U.S. Government's purchase of products to U.S.-made 
or designated country end products for acquisitions subject to the TAA. 
See 48 CFR 25.403(c)(1).
    The FAR, 48 CFR 25.003, defines ``U.S.-made end product'' as:

. . . an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States into a new and different article of commerce with a name, 
character, or use distinct from that of the article or articles from 
which it was transformed.

    Section 25.003 defines ``designated country end product'' as:

a WTO GPA [World Trade Organization Government Procurement 
Agreement] country end product, an FTA [Free Trade Agreement] 
country end product, a least developed country end product, or a 
Caribbean Basin country end product.

    Section 25.003 defines ``WTO GPA country end product'' as an 
article that:

    (1) Is wholly the growth, product, or manufacture of a WTO GPA 
country; or
    (2) In the case of an article that consists in whole or in part 
of materials from another country, has been substantially 
transformed in a WTO GPA country into a new and different article of 
commerce with a name, character, or use distinct from that of the 
article or articles from which it was transformed. The term refers 
to a product offered for purchase under a supply contract, but for 
purposes of calculating the value of the end product includes 
services (except transportation services) incidental to the article, 
provided that the value of those incidental services does not exceed 
that of the article itself.

    Thailand is not a ``designated country,'' and products of Thailand 
are not eligible for U.S. Government procurement.
    In order to determine whether a substantial transformation occurs 
when components of various origins are assembled into completed 
products, CBP considers the totality of the circumstances and makes 
such determinations on a case-by-case basis. The country of origin of 
the item's components, extent of the processing that occurs within a 
country, and whether such processing renders a product with a new name, 
character, and use are primary considerations in such cases. 
Additionally, factors such as the resources expended on product design 
and development, the extent and nature of post-assembly inspection and 
testing procedures, and worker skill required during the actual 
manufacturing process will be considered when determining whether a 
substantial transformation has occurred. No one factor is 
determinative.
    You argue that because the key components of the GNSS R12i Receiver 
are manufactured in the United States, it is a product of the United 
States. You further argue that the final production in Thailand is 
``simple assembly'' and

[[Page 48910]]

does not result in a substantial transformation. In support of this, 
you cite the U.S. Court of International Trade's opinion in Energizer 
Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016). Energizer 
involved the manufacture of a flashlight, where all of the components 
of the flashlight were of Chinese origin, except for a white LED and a 
hydrogen getter. The components were imported into the United States 
and assembled into the finished Generation II flashlight. The Energizer 
Battery court reviewed the ``name, character and use'' test utilized in 
determining whether a substantial transformation had occurred and 
noted, citing Uniroyal, Inc. v United States, 542 F. Supp. 1026, 1031 
(Ct. Int'l Trade 1982), that when ``the post-importation processing 
consists of assembly, courts have been reluctant to find a change in 
character, particularly when the imported articles do not undergo a 
physical change.'' Energizer Battery at 1318. In addition, the court 
noted that ``when the end-use was pre-determined at the time of 
importation, courts have generally not found a change in use.'' 
Energizer Battery at 1319, citing as an example, National Hand Tool 
Corp. v. United States, 16 C.I.T. 308, 312 (1992), aff'd, 989 F.2d 1201 
(Fed. Cir. 1993). Furthermore, courts have considered the nature of the 
assembly, i.e., whether it is a simple assembly or more complex, such 
that individual parts lose their separate identities and become 
integral parts of a new article.
    With regards to electronic equipment, CBP has found that circuit 
boards undergo a substantial transformation into PCBAs when various 
components are assembled onto the board via SMT. See C.S.D. 85-25, 19 
Cust. Bull. 844 (1985) (determining that the assembly of the PCBA 
involved a very large number of components and a significant number of 
different operations, required a relatively significant period of time 
as well as skill, attention to detail, and quality control, and 
resulted in significant economic benefit to the beneficiary developing 
country from the standpoint of both value added to the PCBA and the 
overall employment generated thereby). Additionally, CBP has found that 
the mere attachment of wires to a PCBA and installation into a case, 
along with minor tuning processes, does not result in a substantial 
transformation. See Headquarters Ruling (``HQ'') 561232, dated April 
20, 2004.
    As you further highlight, the programing of a device may also 
affect its country of origin. In Data General v. United States, 4 
C.I.T. 182 (1982), the court determined that the programming of a 
foreign PROM (``Programmable Read-Only Memory'' chip) in the United 
States substantially transformed the PROM into a U.S. article. In the 
United States, the programming bestowed upon each integrated circuit 
its electronic function, that is, its ``memory'' which could be 
retrieved. A distinct physical change was affected in the PROM by the 
opening or closing of the fuses, depending on the method of 
programming. The essence of the article, its interconnections or stored 
memory, was established by programming. Texas Instruments v. United 
States, 681 F.2d 778, 782 (CCPA 1982) (stating the substantial 
transformation issue is a ``mixed question of technology and customs 
law'').
    Accordingly, the programming of a device that defines its use 
generally constitutes substantial transformation. See HQ 735027, dated 
September 7, 1993 (programming blank media (EEPROM) with instructions 
that allow it to perform certain functions that prevent piracy of 
software constitutes a substantial transformation); but see HQ 734518, 
dated June 28, 1993 (motherboards are not substantially transformed by 
the implanting of the central processing unit on the board because, 
whereas in Data General use was being assigned to the PROM, the use of 
the motherboard had already been determined when the importer imported 
it).
    CBP has elaborated that mere downloading of software onto a device 
alone is typically not enough to show a substantial transformation, as 
``[p]rogramming involves writing, testing and implementing code 
necessary to make a computer function in a certain way.'' See HQ 
H241177, dated December 3, 2013 (holding that the downloading of U.S.-
origin software in Singapore did not constitute a substantial 
transformation in Singapore or the United States, and therefore the 
country of origin was Malaysia where the final assembly of the hardware 
took place); see also HQ H240199, dated March 10, 2015 (holding that 
the notebook computer was not substantially transformed when the 
computer was assembled in Country A, imported into Country F, and 
Country D-origin BIOS was downloaded). However, in cases where the 
downloading of software onto a PCBA is combined with more complex 
operations to its firmware and hardware, which are essential to the 
device's operation, CBP has determined that a substantial 
transformation has occurred. See HQ 563012, dated May 4, 2004 (holding 
that the PCBA and casing that were manufactured for a switch in China, 
were substantially transformed in the United States or Hong Kong, where 
U.S.-origin software was loaded, and the PCBA was further assembled 
with a power supply, fans, and an A/C filter of various origins to form 
the final fabric switch, as the switch was transformed into a 
functional device).
    You also argue that the main PCBA, once fully assembled and 
programmed, contains the ``essential character'' of the GNSS R12i 
Receiver. CBP has issued multiple opinions addressing this issue. For 
instance, in HQ H301910, dated August 5, 2019, which concerned mailing 
machine engines, CBP determined that the main PCBA, the print control 
firmware, and the print head constituted the primary and fundamental 
essence of the mailing machine engine because these components 
controlled the engine's function, operations, and enabled the printing 
of the correct postage. In particular, the main PCBA was composed of 
components essential to the fundamental function and primary purpose of 
the engine, including the CPU, the memory, and the Field-Programmable 
Gate Array, which combined to form the ``brain'' of the device. CBP 
held that, inasmuch as the main PCBA, the print control firmware, and 
the print head were all produced in Japan, the country of origin of the 
mailing engine machine was Japan.
    In HQ H302801, dated October 3, 2019, CBP considered the country of 
origin of certain ``Fitbit'' smart watches. The case involved multiple 
PCBAs from Taiwan or the Philippines, which were assembled together 
into a final product in China by installing PCBAs into a housing with a 
vibration motor, battery, display, and wristband. The assembly did not 
alter the PCBAs' functional or physical attributes, and the PCBAs had a 
predetermined end-use as the electronic ``brain'' of the device. 
Additionally, the final assembly in China was neither complex nor time 
intensive, whereas the assembly of the PCBAs required complex equipment 
for SMT, a high level of expertise, and involved more components and 
subassemblies than the final assembly in China. Therefore, the country 
of origin was where the PCBAs were manufactured, in Taiwan or the 
Philippines.
    However, in HQ H304677, dated April 21, 2023, CBP found that the 
country of origin of laser printers was China, even though the main 
PCBAs were manufactured and installed into the final product in Mexico. 
In that case, the printer transports which included all the mechanical 
components of the device, such as the housing, scanner, power supply, 
and fuser, were

[[Page 48911]]

manufactured in China. The PCBAs were manufactured in Mexico, where 
components were added to the board with SMT, and U.S. and Philippine-
origin firmware was downloaded onto the PCBA. The PCBAs were then 
installed into the printers and the devices underwent a series of 
tests. CBP determined that the PCBAs were not the only fundamental 
functioning component of the printer, as the Chinese printer transports 
also provided character to the final article. Furthermore, since all of 
the mechanical printing functions were imparted by the Chinese 
transports, the country of origin was China.
    In the instant case, based on the totality of the circumstances and 
consistent with the pertinent authorities, we find that the country of 
origin of the GNSS R12i Receiver is the United States. We agree that 
the U.S.-origin primary PCBA contains the ``essential character'' of 
the GNSS R12i Receiver. Like in HQ H302801, the PCBA originates from 
the United States, where most of the required production took place. 
This production process included assembling hundreds electronic of 
components onto the PCBA using SMT, including the CPU, RAM, GPS 
components, and communications components, which are central to the 
device's operation. Furthermore, it involved programing and configuring 
the primary PCBA with Trimble's proprietary U.S.-origin software, which 
is required in order for the device to function and defines it use. 
This case is unlike HQ H304677, which involved U.S.-origin software 
programmed onto a Mexican-origin PCBA, because here both the software 
and the primary PCBA originate from the same country. Additionally, in 
that case all other fundamental functional components of the printer 
were produced in China, whereas in this instance, most of the primary 
components of the GNSS R12i Receiver were assembled in the United 
States. Furthermore, once they are fully assembled, all U.S.-origin 
components have a predetermined end-use in the GNSS R12i Receiver when 
exported to Thailand and installed into the device.
    Furthermore, we agree that the assembly in Thailand is simple 
assembly that does not result in a substantial transformation. It 
primarily involves placing the PCBAs into a ``hot box'' subassembly and 
then affixing the ``hot box,'' antenna, battery, and keypad to the 
chassis, in contrast to the complex SMT performed in the United States. 
While the two Thai-origin main components are also PCBAs and are 
produced using complex SMT, they play a subsidiary role within the 
device. They do not undergo any programming, or process any 
communications or navigational information, which is required for the 
GNSS R12i Receiver to function. The U.S.-origin components are notably 
more complex, which is why more worker hours are required to produce 
the U.S.-origin components than all Thailand operations combined. 
Therefore, based on the totality of the circumstances, we determine 
that the final assembly in Thailand does not result in a substantial 
transformation.
    Accordingly, we find that the country of origin of the finished 
GNSS R12i Receiver for the purpose of U.S. Government procurement is 
the United States.

Country of Origin Marking

    Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), 
provides that unless excepted, every article of foreign origin imported 
into the United States shall be marked in a conspicuous place as 
legibly, indelibly, and permanently as the nature of the article (or 
its container) will permit, in such a manner as to indicate to an 
ultimate purchaser in the United States, the English name of the 
country of origin of the article. See also 19 CFR 134.11. Section 
134.32(m) of the CBP Regulations provides several exceptions to the 
marking requirement. Specifically, ``products of the United States 
exported and returned'' are exempt from the country of origin marking 
requirement. 19 CFR 134.32(m).
    For the purposes of the marking requirement, the term ``country of 
origin'' is defined under 19 CFR 134.1(b), which adopts the same 
``substantial transformation'' rule as the TAA and the FAR. See 19 
U.S.C. 2518(4)(B); FAR, 48 CFR 25.003. Specifically, Section 134.1(b) 
of the CBP Regulations states that:

    ``Country of origin'' means the country of manufacture, 
production, or growth of any article of foreign origin entering the 
United States. Further work or material added to an article in 
another country must effect a substantial transformation in order to 
render such other country the ``country of origin'' within the 
meaning of this part;

    As a discussed above, for the purposes of Section 308(4)(B) of the 
TAA, the GNSS R12i Receiver is a product of the United States, where 
the PCBAs are produced, and it does not undergo a substantial 
transformation during the final assembly in Thailand. Having already 
reached this determination, we also find that the GNSS R12i Receiver is 
a product of the United States for the purpose of country of origin 
marking. Furthermore, the GNSS R12i Receiver is ``exported and 
returned'' within the meaning of 19 CFR 134.32(m) and is therefore 
excepted from the country of origin marking requirement.

Holding

    Based on the information outlined above, for the purposes of U.S. 
Government procurement and country of origin marking, the GNSS R12i 
Receiver is a product of the United States and is not substantially 
transformed by its final assembly in Thailand. Furthermore, as a 
product of the United States, it is excepted from the country of origin 
marking requirement when exported and returned to the United States, 
under 19 CFR 134.32(m).
    Notice of this final determination will be given in the Federal 
Register, as required by 19 CFR 177.29. Any party-at-interest other 
than the party which requested this final determination may request, 
pursuant to 19 CFR 177.31, that CBP reexamine the matter anew and issue 
a new final determination. Pursuant to 19 CFR 177.30, any party-at-
interest may, within 30 days of publication of the Federal Register 
Notice referenced above, seek judicial review of this final 
determination before the U.S. Court of International Trade.

    Sincerely,

Alice A. Kipel,

Executive Director, Regulations and Rulings, Office of Trade.

[FR Doc. 2024-12617 Filed 6-7-24; 8:45 am]
BILLING CODE 9111-14-P