Comments on MCO Non-paper JSTC 1

JSTC’s Key Points for Governments/Authorities on MCO Non-paper -- Paragraph 1 JSTC believes the agreement should focus on tariff free treatment of products meeting the MCO definition rather products falling under a list of HS headings. The GAMS MCP Agreement states “This Agreement shall apply to all MCPs, regardless of where such products are classified in the Harmonized System.” While the MCP agreement changed 8542 and the MCO agreement would apply to many HS headings, similar “regardless of where such products are classified” words provide flexibility for future product innovations.   A footnote with an “including but not limited to” list of HS headings can provide examples of where MCOs fall, and provide guidance for customs to establish new HS subheadings for MCOs in order to implement a tariff elimination agreement. (e.g. 8536.90.xx) JSTC 2

JSTC’s Key Points for Governments/Authorities on MCO Non-paper – Paragraph 2 WSC has been a strong supporter of free trade and eliminating tariffs on the products we produce and sell to customers around the world. We thus support the removal of brackets wherever it has the effect of broadening the coverage of any tariff elimination agreement and eliminating the language within brackets in those cases where the language has the effect of narrowing coverage. JSTC recommends deleting the words “discrete” before components because it does not clarify “components.” JSTC recommends deleting the words “, but no other components” as unnecessary. We believe there are other ways to limit the scope of the definition. Further, an MCO will always have a number of other components, e.g. the package itself, lead frames, interconnect wires, adhesives, etc., which may or may not be considered a part under 8541 or 8542. JSTC 3

JSTC’s Key Points for Governments/Authorities on MCO Non-paper – paragraph 2 JSTC recommends deleting the words “permanent (?)” so both permanent and electromagnets are included. RE: MEMS, JSTC recommends adding the words “or insulating substrates” after the words “build on semiconductor chips”. And removing the brackets because MEMS should be defined. JSTC would advise against a specific dimension limiting how large a MCO should be. Package sizes might depend on relatively large die size of ICs that may be within an MCO. Interface issues – e.g. pin counts – and heat dissipation are other factors that may determine package size. The other words in the non-paper, such as “indivisibly into a single package” and “for assembly onto a printed circuit board or other carrier” should provide sufficient limitations to prevent the scenario of a truck being considered an MCO merely because there are ICs in the truck.   JSTC 4