PhoneMex is planning to set up a telephone repair and production facility in Mexico. PhoneMex will return all the telephones repaired or produced directly to the U.S. The returning telephones are not entitled to duty-free entry as “originating goods” under the North American Free Trade Agreement (NAFTA). Which PhoneMex operation(s) would NOT qualify as “repairs or alterations,” entitling the returned telephones to duty-free treatment under 9802.00.50?
A. Fully functional, used telephones would be exported from the U.S. to Mexico, where they would be modified slightly by adding a “redial” capability.
B. Telephone subassemblies would be exported from the U.S. to Mexico for assembly into completed telephones.
C. Nonfunctional used telephones would be exported from the U.S. to Mexico, where they would be restored to their original condition.
D. Black and beige telephones would be exported from the U.S. to Mexico for repainting in more popular colors.
E. Telephones having defective or unacceptable ringer tones will be exported to Mexico from the U.S. to install an inexpensive, more pleasant and appealing sounding device.
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The Answer is: B
Citation: 19 CFR 181.64(a) and (b)
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