NC1430E1a COMMITTEE - 43 rd Session O. Eng. - CLASSIFICATION OF A CELLULAR PHONE WITH TV RECEIVER (REQUEST BY KOREA (REP. OF)) (Item XII.

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1 WORLD CUSTOMS ORGANIZATION ORGANISATION MONDIALE DES DOUANES Established in 1952 as the Customs Co-operation Council Créée en 1952 sous le nom de Conseil de coopération douanière HARMONIZED SYSTEM NC1430E1a COMMITTEE - 43 rd Session O. Eng. - Brussels, 11 February CLASSIFICATION OF A CELLULAR PHONE WITH TV RECEIVER (REQUEST BY KOREA (REP. OF)) (Item XII.1 on Agenda) I. BACKGROUND 1. On 15 January 2009, the Secretariat received a Note from the Korean Administration, requesting that the Committee consider the classification of a certain cellular telephone receiver which was combined with a television receiver in the same housing. The Korean request to the Committee followed an initial Korean request to the Secretariat for classification advice, the Secretariat s demurral on the basis of Article 10 of the HS Convention, and further consultations between the two countries which were involved in an ongoing classification dispute concerning the article. 2. The Korean Administration s 15 January letter stated that after the 42 nd Session of the HS Committee, the two parties to the classification dispute discussed the issue in depth at (1) a meeting of senior classification officials and (2) a meeting of the Joint Customs Cooperation Committee (vice-ministerial level), and Korea concluded that the positions of both sides on the classification of the pending item were still quite disparate. Korea expected that both parties to the dispute will attempt to narrow the gap between their respective positions during a joint meeting in Seoul in February However, Korea felt that it will not be easy to make substantial progress on the issue at that meeting, and that the expected delay was inflicting grave damage on the Korean exporters involved. 3. The Korean Administration noted that they were continuing to classify the subject article in heading 85.17, while the other Contracting Party classified it in heading The Korean government requested that the classification issue be put on the Agenda for the 43 rd HS Committee Session. 4. The product descriptions and technical information submitted by the Korean Administration are reproduced below. File No For reasons of economy, documents are printed in limited number. Delegates are kindly asked to bring their copies to meetings and not to request additional copies. Copyright 2009 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org.

II. INFORMATION FROM THE KOREAN ADMINISTRATION DESCRIPTION OF THE ITEM 5. Name : Mobile cellular phone with TV receiver, MP3 player and camera. 6. Appearance and Structure : 7.

2 II. INFORMATION FROM THE KOREAN ADMINISTRATION DESCRIPTION OF THE ITEM 5. Name : Mobile cellular phone with TV receiver, MP3 player and camera. 6. Appearance and Structure : 7. Composition and Functions : - Based on GSM, UMTS and Bluetooth transmitter and receiver module, processor, memory, camera, MPEG decoder/encoder, microphone, audio frequency amplifier and loudspeaker and a digital video tuner are incorporated in a clamshell casing (dimensions : mm) with two displays, keyboard, micro SD card slot, headset connector and pull-out DVB-T antenna. - Not yet built together with accumulator. - Available to have access to digital terrestrial TV services (DVB-T), to send and receive information via GSM and UMTS network and to record, save and play audio, image and video files in different formats. - Packaged with an accessory kit (travel adapter, headset, data cable, CD, user guide) in single sales box. 8. Specifications : Networks GSM/GPRS/EDGE/UMIS/HDSPA3.6 Bands GSM - 900/1800/1900; UMTS Battery Dimension Main screen Sub screen Li-ion 1000 mah mm 2.0-inch, QVGA 262K, Landscape 1-line simple LCD 2.

3 Camera Memory Bluetooth USB Audio Codecs Video Codecs Browser Messaging 2.0MP + VGA for VT, 4xDigital zoom, Fixed Focus 128MB (TBD), Micro SD (up to 4GB) V1.2, A2DP, AVRCP V2.0 FS, Mass Storage MP3/AAC/AAC+/eAAC+/WMA/MIDI/SMAF MPEG4/H.264/WMV WAP 2.0 /xhtml SMS, EMS, MMS, IM, Chipset MSM 6280 Mobile XD Engine, Multi-Tasking Other Wi-Fi Flight mode Speaker phone None POINT IN DISPUTE 9. The issue is whether the subject item is classifiable in heading as a telephone for a cellular network, or heading as reception apparatus for television. CLASSIFICATION OPINION (A) Heading General features of the Item at issue : 10. Functions : The item at issue is a telecommunication gadget employing a cellular network - meaning a cellular phone - which also functions as an MP3 player, a digital camera and a TV receiver at the same time. The functions other than telecommunication are added to mobile phones in order to meet the increased needs from the customers who are eager to enjoy their phones at times when they don't use the gadget for its primary function of communication. 11. Mechanical Components : Its mechanical components and technical base are equal to those of a cellular phone. Its main chipset is MSM (mobile station modem) 6280 produced by QualComm, the leading manufacturer of products in the field of the wireless telecommunication equipment, especially cellular (mobile) phones. 12. The chipset has the features of the best quality and efficiency in telecommunication so that it enables the item at issue to satisfy the up-to-date standards in the wireless mobile communication industry and to provide the various additional functions at the same time 3.

4 13. The components that are designed exclusively for telecommunication take up over 80 percent. 14. Television Receiver function : As for the television receiver function, the basic composition of common mobile phone now takes additional components of a tuner chip and some others which enable the item to receive the television signal and occupy around 8 percent of all manufacture costs. 15. The portion of components designed to receive the television signal is limited, and the television receiver function is put into effect through mobile phone components which are already present in the phone; the received television graphic signal is reproduced on the main LCD display of the mobile phone, and the sound signal is reproduced through the speaker with which a common mobile phone is already equipped. In this context, the television receiver function is a mere part of this product and cannot be regarded as a main function. Applicability of Note 3 to Section XVI : 16. As mentioned above, the item at issue can function as a telephone for a cellular network in a primary fashion, and work as an MP3 player, a digital camera and a reception gadget together with the function as television. Therefore, it is reasonable to apply Note 3 to Section XVI to this product as a machine designed for the purpose of performing two or more complementary or alternative functions. 17. The Note 3 to Section XVI prescribes as follows : 3. Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. 18. To determine its principal function, the following factors are to be taken into consideration : 19. History of development : In recent days, every single individual has a mobile phone, and every gadget offers a quite desirable quality in telecommunication. It is in this context that the simple communicating function no longer appeals to customers, and customers now expect a variety of additional functions from the mobile gadget. 20. Under the circumstances, most phones now offer more than one basic function. The item at issue was also developed in this context, according to the manufacturer: the additional functions (mp3 player, a digital camera, and a TV receiver to name a few), were added to the traditional mobile phones. 21. General Features in Physical Terms : The item at issue has the typical form of the mobile phone with the vertical-folding case, an internal speaker, microphone and a key pad. 22. Main Usage : Once the item at issue is turned on, the telephone stand-by mode is activated in a prompt fashion while the other functions such as an MP3 player, a digital camera and a television receiver are activated only after the appropriate menu buttons are selected. 4.

5 23. The item at issue runs on battery power. Once being charged, the lithium-ion battery of this product lasts 220 hours in case the telephone is on the stand-by mode, 3.3 hours on the continuous telephone call and 2 hours on the television-receiving mode. 24. Therefore, the main usage of the item at issue should be regarded as a mobile phone, not a television receiver. 25. Expectations of Customers : The item at issue targets the cellular phone buyers who want to use "special" features of a mobile phone. To customers, telecommunication is the main function of the product while the other functions are subordinate. 26. To maximize marketing effects, the manufacturer makes much of media such as mobile phone-related magazines as an advertisement tool aiming for the mobile phone users. On the advertisements, TV receiver function is emphasized to differentiate this product from other phones. Still, it is certain that all purchasers recognize this as a telephone not as a television receiver. 27. Sales Environments : The importers of this product are the major mobile telecommunication operations such as T-Mobile of Germany, SFR of France, TMA, Mobicom of Austria and TIM of Italy. Also they distribute this item to the wholesalers who deal with mobile phones. 28. Plus, the item is sold as a personal and mobile gadget for wireless telecommunication, not as a home appliance. 29. Considering all the factors mentioned above, the item at issue is a product whose primary function is telecommunication. In this regard, the item at issue should be classified in heading (B) Heading The Legal Text of Heading 8517 prescribes as follows (emphasis added) : Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 84.43, 85.25, or The item at issue can function as reception apparatus of heading 85.28, and thus, should be excluded from heading The General Explanatory Note to Section XVI (Page XVI-6) provides as follows : Where it is not possible to determine the principal function, and where, as provided in Note 3 to Section, the context does not otherwise require, it is necessary to apply General Interpretative Rule 3 (c); 33. The item at issue is composed of a mobile phone, television receiver, MP3-player and digital camera, with no single character-determining component. A mobile phone with television receiver, MP3-player and camera determines the character of the whole product. 34. Therefore, the item at issue is classifiable in heading by applying General Interpretative Rule 3 (c). 5.

6 III. SECRETARIAT COMMENTS 35. The Korean Administration submitted a ruling from another administration, designated as reference materials, in which the article at issue was classified in subheading The Secretariat is unable to make it available to the Committee because it is was provided in an unofficial language of the Committee. 36. The Secretariat offers the following legal description ( boxed text ) for the article described by the Korean Administration, and invites the Committee to consider whether the description is sufficient to classify the article in question. Apparatus consisting of a cellular telephone combined in the same housing with a television receiver, MP3 player and camera. In addition to the services accessible to the user over cellular telephone networks (GSM and UMTS), the apparatus can receive DVB-T (digital terrestrial video broadcasts). It can record, save and reproduce audio, image and video files complying with the standards listed below. The apparatus includes the following components and capabilities : - Networks : GSM, GPRS, EDGE, UMIS, HDSPA3.6 - Bands : (GSM) 900/1899/1900 (UMTS) Battery : Li-ion 1,000 mah. As a cell phone, provides up to 220 hours standby and 3.3 hours continuous telephone transmission. As a DVB-T receiver, provides up to 2 hours of continuous reception - Dimensions : 87 mm x 54 mm x 17.9 mm - Primary screen : 2.0, QVGA, 262K, landscape - Secondary ( Sub ) screen : 1 line LCD - Camera : 2.0 Megapixels, VGA, 4x digital zoom, fixed focus - Bluetooth Ver. 1.2, A2DP, AVRCP - USB Ver. 2.0 FS, mass storage - Audio Codecs : MP3, AAC, AAC+, WMA, MIDI, SMAF - Video Codecs : MPEG4, H.264, WMV - Browser : WAP 2.0, xhtml - Messaging : SMS, EMS, MMS, IM, - Chipset : MSM Mobile XD Engine, Multi-tasking - Flight mode - Speaker phone - No Wi-Fi ability The apparatus is packaged with a travel power adaptor, headset, data cable, software CD and paper user guide. 37. Since the classification of the device under consideration by the Committee is under dispute, the Secretariat refrains from providing advice as to its classification. 38. The Committee may wish to request further specifications on the subject article from the Korean Administration, including some or all of the following : (a) (b) (c) Identifying name, model number and manufacturer. Partition (allocation) of internal memory (relevant to classification in heading or 85.21) The Secretariat understands that the MSM 6280 chipset can be programmed to receive DVB-H transmissions, which require less power 6.

7 than DVB-T. If DVB-H reception is available, it may be useful to know the battery charge life when receiving DVB-H transmissions (relevant to classification in heading 85.28). IV. CONCLUSION 39. The Secretariat invites the Committee to consider the request by Korea for classification of the cellular phone with a television receiver, taking into consideration the history of the current classification dispute (presented in paragraphs 1 to 3 above, the Korean Administration comments (reproduced in paragraphs 5 to 34 above) and the Secretariat s comments (set forth in paragraphs 35 to 38 above). Following a classification decision, the Committee may decide to produce a Classification Opinion and/or modification to the Explanatory Notes, which could be prepared by the Secretariat for examination, in the first instance, by a subsequent Working Party or by the Committee, as appropriate. 7.

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