4 June 2019
CBP Confirms U.S. Origin of Certain Medical Equipment Despite Assembly Work in Mainland China
U.S. Customs and Border Protection has issued a final determination concerning the country of origin of certain electroenceplogram (EEG) cutaneous electrodes that may be offered to the U.S. government under undesignated government procurement contracts. Any party-at-interest may seek judicial review of this determination by 1 July. 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.
The fully assembled and packaged end product for medical use consists of five elements: a cutaneous electrode, a lead wire, a miniscule amount of crimp or glue, a heat shrink tube and packaging. The engineering and design of the EEG electrodes takes place in the United States while the actual production of the cutaneous electrodes is outsourced to a third-party subcontractor also located in the United States.
The cutaneous electrodes are shipped from the United States to mainland China where a lead wire that acts as an electrical conductor that transfers low voltage electrical signals from the electrode to medical diagnostic equipment is attached. The South Korean supplier of this wire cuts the wire, crimps a socket pin, and attaches a connector to one end of the wire and then ships the wire to mainland China. In the mainland, the EEG electrodes are attached to the lead wire of South Korean origin either using a crimp produced in the United States or mainland China or by means of a conductive adhesive glue made in Germany.
Next, a heat shrink from either the United States or Japan is used to cover the joint. The product is ultrasonically cleaned and dried (spin and convention drying), a heat shrink cover is added, and the product is inserted into a plastic pouch and cardboard packaging. After the EEG electrodes are shipped back to the United States, they are subjected to randomised testing and sampling for quality control purposes.
CBP has previously held that for products used in medical-related applications no substantial transformation occurs when the critical components which impar the essential character of the product subsequently undergo simple assembly and processing. In the case at hand, the product’s main function is provided by the EEG cutaneous electrode, which allows for a physical connection between a patient and the medical diagnostic equipment when the electrode is applied directly to a patient’s skin to record physiological signals. Attaching the lead wire to the EEG electrode allows the EEG to be used, but the EEG electrode does not lose its individual identity by the simple assembly in mainland China. Accordingly, the U.S. cutaneous EEG electrodes, rather than the South Korean-origin lead wire, determine the essence of the finished product.