From: FierceGovernmentIT

Programming can occur anywhere, CBP advisory ruling  says

By David Perera

A software application’s country of origin for purposes of government  procurement depends on the location where the software build occurs and not on where the source code was written, Customs and Border Protection says in an advisory ruling issued earlier this year.

The ruling (.pdf) is dated June 8, but the company that asked for it – open source integrator Talend of Burlington, Mass. – made it available publicly Dec. 6.

Although the ruling is an advisory one, meaning that it’s non-binding, its effects could be far reaching since it clarifies an issue previously the subject of more speculation than transparency. That’s especially been the case since  commercial software companies mostly have lacked motivation to seek a CBP ruling, dependent as they are on coders residing in countries such as China and  India – countries whose products the federal government is mostly banned from  procuring under law known as the Trade Agreements Act.

CBP’s Office of International Trade makes rulings both advisory and binding only in response to company requests. The government standard that CBP applies is substantial transformation, which holds that a product made of parts manufactured in different countries ultimately comes from the country in which those components were made into a new and  different article having a distinctive name, character, or use.

For purposes of the ruling, Talend presented CBP with a seven step breakdown of the software development process:

  1. Research (estimated 20 percent of workload);
  2. development of graphical user interface (20 percent);
  3. specifications and architecture developed and written (10 percent);
  4. source code programing (15 percent);
  5. software build (20 percent);
  6. testing and validation (10 percent);
  7. Burning the software product onto the server media from which it will be  downloaded when purchased (5 percent).

In the scenario Talend asked CBP to consider, company officials said step 4 would occur wholly or partially in China and step 6 could occur in China, while step 5 would occur in the Trade Agreements Act-permitted countries of France or Germany.

It’s step 5 that matters the most, the ruling says, since it’s there that  source code files are converted into software object code that can be run by a computer. In making its ruling, CBP cites a landmark 1982 court case, Data General v. United States, in which U.S. Court of International Trade ruled that the country of origin of a programmable read-only memory chip depends on where it is programmed and not on where the chip itself is made.

In a statement, Talend says the ruling should be beneficial for federal  adoption of open source software, since country of origin has “been used as a  pretext to make a case against” it.

For more: – download  the CBP advisory ruling, HQ H192146 (.pdf) – read a Talend press release on the ruling