Thursday, May 13, 2010
The Straw that Broke the Camelbak
For my buddy Lowell, I am tagging this entry as "Cycling."
The Court of International Trade has ruled that a hydration system worn on the back while engaged in physical activity such as cycling is, for all intents and purposes, a backpack. Let's see how it got there.
The merchandise consisted of Camelbak-brand hydration systems. These clever products are liquid reservoirs and a delivery tube mounted in a backpack. Here is an example, which may not have been involved in the actual case. The thirsty cyclist or other athlete can sip fluids from the reservoir via the tube and a valve. As you can see, the hydration system also holds cargo, as would an ordinary backpack.
The question in Camelbak Products v. United States, was whether for tariff classification purposes the hydration systems are "traveling bags" or "sport bags," on the one hand, or are "insulated food or beverage bags" on the other hand. Both possible classifications are in HTSUS heading 4202. Thus, the General Rules of Interpretation are applied at the subheading level in this case. If that does not make sense to you, see GRI 6.
I'm going to cut through a lot of stuff and get to the point. The Government contends that the Camelbak is a fancy backpack and that adding a possibly insulated bladder [note: there is a question regarding insulation] does not make it something else. Camelbak contends that the tariff item for sports bags does not fully describe the hydration system because it fails to take into account the insulated bladder. According to Camelbak, the proper analysis is to treat the product as a composite good (GRI 3) and determine the essential character. Camelbak thinks the essential character is the hydration portion, not the cargo portion.
The Court agreed with the Government that the Camelbak is just a fancy backpack. The Court drew an analogy to a car and noted that fancy cars remain classifiable as cars, which is unimpeachable. A car is no less a car because it contains an air conditioner, a radio, and a DVD entertainment system. The question is why is that the case? I think that if we really think hard about that question, it is not simply that the machine is fully described as a car. Rather, it strikes me that we all intuitively know that neither the air conditioner nor DVD player impart the essential character to the car. The ultimate function of the car is to provide transportation. Anything else is non-essential.
I don't think it is as easy to dismiss the bladder in a Camelbak. If I wanted to buy a backpack, I would go buy one. If I want a hydration system, on the other hand, I would go buy a Camelbak. In that case, the cargo carrying components of the Camelbak might be incidental (or at least non-essential). I don't know how that question would turn out. It would, however, be interesting to know the relative value of the components and whether there is any evidence relating to the use of each part by the end consumer. Then, we could do an explicit GRI 3 analysis and see where we end up.