Preferential Tariff Treatment of aquaSAVE under the Trade Agreement between the United States and Japan

HQ H312427 September 9, 2020 OT:RR:CTF:VS H312427 JMV CATEGORY: Origin Masato Onoe Mitsubishi Chemical Corporation 1-1, 1-Chome Marunouchi Chiyoda-ku, Tokyo 100-8251 Japan RE: Preferential Tariff Treatment of aquaSAVE under the Trade Agreement between the United States and Japan Dear Mr. Onoe: This is in response to your request dated June 19, 2020, on behalf of Mitsubishi Chemical Corporation (“Mitsibishi”), in which you request a ruling, pursuant to 19 C.F.R. Part 177, regarding the country of origin and tariff treatment of an antistatic agent named aquaSAVE under the Trade Agreement between the United States and Japan (“JP”). Your request, submitted as an electronic ruling request, was forwarded to this office from the National Commodity Specialist Division for response. Our ruling is set forth below. FACTS: Mitsubishi exports an antistatic agent named aquaSAVE for the semiconductor manufacturing process from Japan to the United States. The Mitsubishi Chemical’s website describes the product as follows: “This antistatic agent is used to prevent electrons from accumulating on the resist surface during electron beam lithography. This material is used in advanced photomask manufacturing to help prevent charge-up failures.” You state that aquaSAVE is classified in subheading 3824.99.92 of the Harmonized Tariff Schedule of the United States (“HTSUS”). You state that aquaSAVE is comprised of approximately 2% of the compound polyaniline sulfonic acid, 4% isopropyl alcohol, and 94% water, by weight, and is combined in a process in Japan. You state that the water is added solely to act as a solvent to dilute the other ingredients. You also state that all the ingredients are not of U.S. or Japanese origin (non-originating). The water is classified in 2201.90, HTSUS; the polyaniline sulfone acid in 3911.90, HTSUS; and the isopropyl alcohol in 2905.12, HTSUS. ISSUE: Whether aquaSave, classified under subheading 3824.99.92, HTSUS, imported into the United States from Japan, is an originating good under the terms of the Trade Agreement between the United States and Japan. LAW AND ANALYSIS: The Trade Agreement between the United States and Japan (“JP”) was signed by the Governments of the United States and Japan on October 7, 2019. On December 26, 2019, Proclamation 9974 set forth modifications to the Harmonized Tariff Schedule by inserting General Note 36 and to the tariffs with respect to certain goods to carry out the JP, effective on January 1, 2020. 84 FR 72187 (December 30, 2019). General Note (“GN”) 36(a) of the HTSUS provides: Originating goods under the terms of the Trade Agreement between the United States and Japan, entered into on October 7, 2019, are subject to duty as provided herein and in subchapter XXI of chapter 99 of the tariff schedule. For the purposes of this note, originating goods of Japan, as defined in Annex II of the Trade Agreement between the United States and Japan, that are imported into the customs territory of the United States and entered under a provision for which a rate of duty appears in the “Special” subcolumn of column 1 followed by the symbol “JP” in parentheses are eligible for the tariff treatment, and any applicable quantitative limitations, set forth in the “Special” subcolumn of Rates of Duty column 1. AquaSAVE is classified under subheading 3824.99.92, HTSUS, which has a 2% duty rate for goods originating under the JP. The JP Rules of Origin and Origin Procedures (“ROO”) are set out in Annex II. https://ustr.gov/countries-regions/japan-korea-apec/japan/us-japan-trade-agreement-negotiations/us-japan-trade-agreement-text. The ROO set forth the criteria for determining whether a good is an originating good for purposes of the JP. Paragraph 2 of the ROO states: For a good listed in the Tariff Schedule of the United States, the United States shall provide that a good is originating from Japan, except as otherwise provided in these Rules of Origin and Origin Procedures, if it is: (a) wholly obtained or produced entirely in one or both of the Parties, as defined in paragraph 3; (b) produced entirely in one or both of the Parties, exclusively from originating materials; or (c) produced entirely in one or both of the Parties, using non-originating materials provided such materials satisfy the applicable change in tariff classification requirement under the Product-Specific Rules of Origin set forth in paragraphs 17 through 19 and the table below, and the good satisfies all other applicable requirements of these Rules of Origin and Origin Procedures. Since aquaSAVE contains non-originating materials, it is not considered a good wholly obtained or produced entirely in a JP party under subparagraphs (a) or (b). We must then determine whether the aquaSAVE qualifies under subparagraph (c). The product specific rules of origin are set out in the table of Annex II, and paragraph 19 of the ROO defines the terms used in the product specific rules of origin. The applicable rule of origin in Annex II for products classified under 3824.99.92, HTSUS is “CTSH provided that no more than 60 percent by weight of the good classified in this subheading is attributable to one substance or compound.” Paragraph 19 states that “CTSH” means “that all non-originating materials used in the production of the good have undergone a change in tariff classification at the 6-digit level.” Since the non-originating components, water, classified in 2201.90, HTSUS, polyaniline sulfone acid, classified in 3911.90 HTSUS, and the isopropyl alcohol, classified in 2905.12, HTSUS, are classified in a subheading other than 3824.99, HTSUS, the first requirement under the rule is met. For purposes of calculating the 60 percent requirement, we will only consider the percentage on the dry weight of the merchandise. Since the addition of water only serves to dilute the mixture, the water content in the solution will be disregarded. As over 60% of the remaining materials in the product is attributable to one substance, namely the isopropyl alcohol, part two of JP rule of origin is not satisfied. Accordingly, the AquaSave, classified under subheading 3824.99.92, HTSUS, does not qualify as originating under the JFTA. HOLDING: Based on the information provided, the AquaSave, classified under subheading 3824.99.92, HTSUS, does not qualify as originating under the JFTA, and is therefore not eligible for preferential tariff treatment. Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction. Sincerely, Monika R. Brenner, Chief Valuation and Special Programs Branch