In ruling NY N324862 (March 31, 2022), Customs and Border Protection (CBP) discussed the country of origin of , known as the Sense Asset+ device. The device is attached to an object and relays information regarding the location and movement of that object to a smartphone application. It can be used in a variety of settings, including construction yards, manufacturing facilities, and hospitals.

The manufacturing process begins with a printed circuit board assembly (PCBA) that is manufactured in the Philippines. The Philippines-origin PCBA accounts for the majority of the device’s total manufacturing cost. In addition, a South Korean GPS is installed using surface mount technology (SMT) onto the PCBA in the Philippines. The device is then programmed in the Philippines with its code and tested to make sure it can perform its locating and tracking functions before it leaves the Philippines for China. Once in China, the PCBA is assembled into the final product using China-origin plastic cases and other minor components. Lastly, the device is tested for functionality before it is imported into the United States.

CBP noted that, as defined under 19 CFR 134.1(b), the country of origin is “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 to render such other country the ‘country of origin’ within the meaning of this part.” CBP also established substantial transformation takes place “when an article emerges from a process with a new name, character or use different from that possessed by the article before processing.” However, if the manufacturing or combining process is minor and leaves the identify of the article intact, a substantial transformation has not occurred.

For its determination, CBP stated that the manufacturing process of the PCBA – the dominant component – that takes place in the Philippines is substantial and complex. This is because the various electrical elements used to create the PCBA are transformed in the Philippines into an article with a new name, character, and use. As such, CBP determined that the country of origin of the Sense Asset+ device would be the Philippines.

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Photo of Frances P. Hadfield Frances P. Hadfield

Frances P. Hadfield is a counsel in Crowell & Moring’s International Trade Group in the firm’s New York office. Her practice focuses on forced labor and withhold release orders (WRO), import regulatory compliance, and customs litigation. She regularly advises corporations on matters involving…

Frances P. Hadfield is a counsel in Crowell & Moring’s International Trade Group in the firm’s New York office. Her practice focuses on forced labor and withhold release orders (WRO), import regulatory compliance, and customs litigation. She regularly advises corporations on matters involving customs compliance, audits, customs enforcement, as well as import penalties.

Frances represents clients before the U.S. Court of International Trade and the U.S. Court of Appeals for the Federal Circuit, as well as in proceedings at the administrative level. She advises corporations on both substantive federal and state regulatory issues that involve U.S. Customs and Border Protection, the Federal Trade Commission, Food and Drug Administration, and U.S. Fish & Wildlife in matters pertaining to product admissibility, audits, classification, import restrictions, investigations, marking, licenses, origin, penalties, and tariff preference programs.

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Photo of Martín Yerovi Martín Yerovi

Martín Yerovi is an international trade analyst in Crowell & Moring’s Washington, D.C. office. He provides practice support to the International Trade Group on import regulatory matters pending before the Office of the U.S. Trade Representative (USTR) and U.S. Customs and Border Protection…

Martín Yerovi is an international trade analyst in Crowell & Moring’s Washington, D.C. office. He provides practice support to the International Trade Group on import regulatory matters pending before the Office of the U.S. Trade Representative (USTR) and U.S. Customs and Border Protection (CBP). He works closely with attorneys developing courses of action for clients impacted by investigations under Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962. He also supports unfair trade investigations, including antidumping (AD) and countervailing duty (CVD) investigations, sunset reviews, and changed circumstance reviews before the Department of Commerce and the International Trade Commission (ITC).

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