In Brief TARIFF CLASSIFICATION OF CERTAIN ARTICLES USING BLUETOOTH TECHNOLOGY

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1 Ottawa, June 16, 2009 MEMORANDUM D In Brief TARIFF CLASSIFICATION OF CERTAIN ARTICLES USING BLUETOOTH TECHNOLOGY This memorandum explains the Canada Border Services Agency administrative policy for the tariff classification of certain articles using Bluetooth technology. The Guidelines and General Information outline the Bluetooth protocol, and list several types of Bluetooth adapters and Bluetooth -enabled devices. The memorandum provides examples of Bluetooth adapters and Bluetooth -enabled devices and suggests appropriate tariff classifications.

2 Ottawa, June 16, 2009 MEMORANDUM D TARIFF CLASSIFICATION OF CERTAIN ARTICLES USING BLUETOOTH TECHNOLOGY This memorandum explains the Canada Border Services Agency (CBSA) administrative policy for the tariff classification of certain articles using Bluetooth technology. Customs Tariff Legislation 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 (+). -Telephone sets, including telephones for cellular networks or for other wireless networks: Telephones for cellular networks or for other wireless networks -Other apparatus for 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): Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus Parts Bluetooth GUIDELINES AND GENERAL INFORMATION 1. Bluetooth is a communications protocol primarily designed for low power consumption, with a range of up to 100 meters, based on low-cost transceiver microchips in each device. Bluetooth enables these devices to communicate with each other when they are in range. The devices use a radio communications system, so they do not have to be in line of sight of each other, and can even be in other rooms, as long as the received transmission is powerful enough. The Bluetooth Special Interest Group developed standards. The present Promoter members of the Group are Ericsson Mobile Communications, Lenovo (formerly part of IBM Corp.), Intel Corp., Microsoft Corp., Motorola Inc., Nokia Mobile Phones and Toshiba Corp. Bluetooth is continuously evolving. 2. One supplier puts it this way: Bluetooth is a wireless communications protocol primarily designed to replace cables that connect devices. It features low power consumption, a range of up to 100 meters, and low-cost transceiver microchips in each device. Bluetooth enables devices to communicate with each other when they are in range. Description of the Goods 3. The following goods are common Bluetooth -enabled devices: adapters for Bluetooth, audio speakers, cameras, compact disc players, headsets, global positioning system terminals, home theatre systems, data keyboards, computer mice, personal computers, printers, telephones, video games, video monitors and video projectors. 4. The Bluetooth transceiver is quite complex. A Bluetooth transmitter or electromagnetic radiator needs at least a power supply, an oscillator, a modulator, amplifiers and an antenna. A Bluetooth receiver or captor of electromagnetic radiation requires at least a power supply, a demodulator, electronic filters, amplifiers and an antenna. 5. In addition, Bluetooth, like cordless telephones, cellular radios (cell phones) and Wi-Fi, uses a spread spectrum technique. For Bluetooth, it is called Gaussian frequency shift keying (GFSK) which permits frequency hopping between 75 different frequencies. The frequency is in the same range as at least some of these types of devices, that is from GHz. 6. Bluetooth -enabled devices come in three power classes with maximum permitted power, approximate range as follows: Class 1, 100 mw, 100 meters; Class 2, 2.5 mw, 10 meters; Class 3, 1 mw, 1 meter. 7. Bluetooth -enabled devices can connect with several other such devices, forming a piconet. The original device can bring up to 255 further inactive devices into active status at any time. 8. Bluetooth devices have five core protocols and may also have any of the following protocols: Cable replacement protocol; Telephony control protocol; Point-to-Point Protocol (PPP); transmission control protocol/internet protocol/user datagram protocol (TCP/IP/UDP Foundation Protocols for TCP/IP protocol suite; Object

3 2 Exchange Protocol (OBEX); Wireless Application Environment/Wireless Application Protocol (WAE/WAP) among others. 9. Bluetooth -enabling devices are very complex and adding Bluetooth to a device may add significantly to its complexity. Nevertheless, due to the effectiveness of modern electronics, the cost of adding Bluetooth capability to a device is only about three dollars per chip or about six dollars for a device containing two Bluetooth transceivers. Tariff Classification Policy 10. Bluetooth adapters are classified under tariff item as Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus. Administrative Guidelines 11. There are five principal ways to classify a Bluetooth enabled device: (a) As a Bluetooth enabler; (b) as the device enabled by Bluetooth regarded as a composite machine using Note 3 to Section XVI; (c) as the device enabled by Bluetooth regarded as machine with individual components intended to contribute together to a clearly defined function using Note 4 to Section XVI; (d) for Bluetooth enabled devices classified outside Section XVI, such as a video game, they should be classified under their appropriate headings in accordance with GRI 1 using other GRIs as necessary. (e) a special case is the Bluetooth -enabled headset. It conforms to wording of subheading in accordance with GRI 1 and VI. Examples 12. A mobile headset with Bluetooth, or a Bluetooth enabled headset, is one designed for pairing with another Bluetooth -enabled device, such as a mobile phone or a music device. Because mobile phones are monaural devices, the headset often has just one earphone as well as the microphone. Those intended for music often have two earphones. Some versions have a loudspeaker instead of, or in addition to, an earphone. Any of these types can be paired with up to seven other Bluetooth -enabled devices (or in some instances, more). A Bluetooth -enabled headset may be considered as a composite good, a combination of the headset and the Bluetooth transceiver. The headset is classified under subheading and the Bluetooth transceiver under subheading However, there already is a classification for this combination, subheading , telephones for cellular networks or for other wireless networks. Consequently, a mobile headset with Bluetooth is classified under subheading as in method (v). 13. A Bluetooth enabled headset, similar to those in the previous paragraph, incorporated eyewear, is also classified under subheading The devices in paragraphs 10 and 11 include car kits. They differ from other Bluetooth -enabled headsets in that they take their power from the car battery. They can be connected through the cigar lighter or other suitable socket or they can be a permanent installation which may still have removable components. Some car kits can mute the car radio and music player and most can allow listening to music from a music (MP3 or similar) player. 15. Subheading Explanatory Note to heading states This subheading includes cordless handsets or base units, when presented separately. At first glance, this might seem to apply to Bluetooth -enabled headsets. That it refers to handsets rather than headsets is conceivably insufficient reason to ignore the note. 16. Cordless handsets for line telephones, however, work differently from Bluetooth devices. They normally communicate with only one cradle; the ability to select another cradle when available is inflexible. Cordless telephones that also act as cellular telephones are a different type of apparatus and are not discussed here. 17. A Bluetooth -enabled headset is able to select from all compatible Bluetooth devices within range, and thus may work independently of any device connected to a telephone line or a cellular network. Because it can connect with any compatible device within range in the Bluetooth network and allows one to talk and listen, it is a telephone for a wireless network. A Bluetooth -enabled headset receives and emits radio waves which are received and retransmitted by base stations. Please refer to the Explanatory Notes to under (B). Bluetooth -enabled headsets have a reciprocity that cordless handsets do not have. 18. A Bluetooth adapter to allow wireless connection between personal computers or similar apparatus and other Bluetooth -enabled devices, such as other computers, printers, external hard drives, cellular telephones, and LAN access points, should be classified under subheading The Explanatory Notes to heading at (3) under B exclude them from heading in accordance with Note 5(E) to Chapter 85. Such adapters may have a USB connector or they may be in the form of an electronic card that fits in a slot. Bluetooth adapters are sometimes known as Bluetooth antennas and remain classified under subheading ; if they really are just antennas, they are classified under subheading if they are parts for use principally with point-to-point telecommunications apparatus and subheading if they for use principally with the apparatus of headings to Please refer to the Explanatory Notes to heading under parts and to heading at (1).

4 3 19. Pairs of Bluetooth -enabled devices often behave as radio remote control apparatus. Radio apparatus for the remote control of ships, pilotless aircraft, rockets, missiles, toys, model ships or aircraft, etc., is classified under subheading This tariff classification should only be used for apparatus that controls equipment capable of autonomous motion, as opposed to controlling images or computer programs, for example. 20. Bluetooth -enabled printers are normally classified under heading Bluetooth -enabled automatic data processing machines, including personal computers, laptop computers, and certain personal digital assistants are normally classified under heading 84.71, especially subheadings , and Bluetooth -enabled keyboards, mice and similar input units are normally classified under subheading Bluetooth -enabled hard drives and other storage units are normally classified under subheading Bluetooth -enabled media viewer might describe several types of equipment; certain examples are normally classified under heading Bluetooth -enabled radio receivers for public broadcasts are normally classified under heading Note that when an article is classified under heading because of its Bluetooth capabilities, it does not need to do all the things that a cell phone does, such as dialling a telephone number. The article is classified there in its capacity as a Bluetooth device and not, for example, as a cellular phone. 27. These examples are general, and the descriptions may apply to goods which should be classified elsewhere. Certain goods such as keyboards, computer mice and radios have a wide range of prices, so when low-priced versions are Bluetooth -enabled, they should be classified under heading 85.17, where their principal function requires.

5 4 REFERENCES ISSUING OFFICE Tariff Policy Division Trade Policy Directorate Admissibility Branc HEADQUARTERS FILE HS LEGISLATIVE REFERENCES Customs Tariff General Rules for the Interpretation of the Harmonized System Explanatory Notes to the Harmonized Commodity Description and Coding System OTHER REFERENCES N/A SUPERSEDED MEMORANDA D N/A Services provided by the Canada Border Services Agency are available in both official languages.

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