USTR issues List 3 product exclusion list

On November 7, 2019 the Office of the U.S. Representative (USTR) released a notice granting and additional 36 exclusions from the 301 China duties.

Prior, on October 28, 2019, the Federal Register notice (84 FR 57802) was issued notating that these exclusions would be retroactive to September 24, 2018 and extends through August 7, 2020.

CBP also issued CSMS #40564257, dated November 8th, 2019, providing guidance on filing List 3 product exclusions. Per the CSMS, the exclusions are available for any product that meets the description as set out in Annex A to Federal Register Notice 84 FR 57803, regardless of whether the importer filed an exclusion request.  Further, the scope of each exclusion is governed by the scope of the Harmonized Tariff Schedule of the United States (HTSUS) 10-digit headings and product descriptions in the Annex; not by the product descriptions set out in any particular request for exclusion.

As a reminder, for refunds, post-summary correction (PSC) filings can be made by the importer directly or any licensed broker; not just party who filed the original entry.   

Contact CustomsNow – we can assist!

Section 321 entry type 86 deployed in ACE

On September 28, 2019, CBP deployed the new Entry Type 86 for Section 321 (low-valued shipments) through ACE.

Trade users will benefit from this enhancement by being able to now electronically transmit low-valued shipment data to Customs. Using entry type 86 transaction, which includes importer and/or consignee information, the entry is transmitted via the Automated Broker Interface (ABI) into ACE, and filers will receive electronic release messages back from CBP for these low value shipments.

Filing an entry type 86 to obtain release of low-valued Section 321 shipments is only a test; it is not mandatory. All current Section 321 clearance processes remain in effect.

What will change in ACE?

Technical questions about the new entry Type 86 functionality can be addressed by a Client Representative or the ACE Account Service Desk (ASD) at 1-866-530-4172 or ACE.Support@cbp.dhs.gov.

  • This new entry type will only allow one bill per entry
  • This will allow for an entry to be filed with PGA data for a shipment of $800 or less
  • Entry type 86 will be available for CBP and trade users to review via ACE Reports

A Test Notice was published in the Federal Register on August 13, 2019.

CBP Technical Resources can be found here.

CustomsNow offers this functionality.  Contact us for questions!

Update on Post Summary Corrections (PSC) for importers

With the transition to ACE over the last few years, one of the big benefits was the improvement of the Post Summary Corrections(PSC) filing process.  With that, importers were looking forward to correcting entries quickly, easily, and less-expensively, regardless of the original filer.

However, last year, CustomsNow identified a bug in ACE which was preventing importers from filing a PSC for an entry that was originated by their 3rd party broker.  We worked closely with CBP to help resolve, and finally, we’re happy to announce that this issue was recently fixed. 

Now, many of our import clients are centralizing their correction process by either self-filing PSCs directly with Customs or by using CNI consulting to file on their behalf.  This is especially helpful to manage refunds for those lucky enough to have a China Section 301 Exclusion or other refund situation.

The process is simple; run an ACE report, make corrections to the data, upload using CNI’s Import Upload Tool, and transmit to CBP.  Results are returned in seconds and ACE data is updated immediately.  There is even an “Accelerated Liquidation Requested” box for refunds to request that the entry liquidate within the 2-week cycle.  Any follow up requests for documents from CBP are simply uploaded and transmitted via DIS.  Learn more here.

If you’d like to discuss, please contact us at sales@customsnow.com.

Sincerely,  CustomsNow™

Additional broker verifications on importers

According to this Federal Register notice, CBP is proposing amendments to the current broker verification regulations, and WOW!, it’s going to be a lot of additional work for the broker.  This proposed amendment will require customs brokers to collect certain information from importers to enable the broker to verify the identity of an importer. 

CBP believes this additional scrutiny will help to prevent fraud and impede the creation of shell companies by importers looking to evade CBP laws.

The following information is what CBP is suggesting, at minimum:

  1. The client’s name;
  2. For a client who is an individual, the client’s date of birth;
  3. For a client that is a partnership, corporation, or association, the grantor’s date of birth;
  4. For a client that is a partnership, corporation, or association, the client’s trade or fictitious names;
  5. The address of the client’s physical location (for a client that is a partnership, corporation, or association, the physical location would be the client’s headquarters) and telephone number;
  6. The client’s email address and business website;
  7. A copy of the grantor’s unexpired government-issued photo identification;
  8. The client’s Internal Revenue Service (IRS) number, employer identification number (EIN), or importer of record (IOR) number;
  9. The client’s publicly available business identification number (e.g., Data Universal Numbering System (DUNS) number, etc.);
  10. A recent credit report;
  11. A copy of the client’s business registration and license with state authorities; and
  12. The grantor’s authorization to execute power of attorney on behalf of the client.

The comment period is open to the public until October 15th, 2019 and may be submitted through the Federal eRulemaking Portal here.

CPSC begins to integrate with ACE

The September Trade Support Network (TSN) monthly meeting featured speakers from the Consumer Product Safety Commission (CPSC) and our own Nic Adams, VP Client Services for CustomsNow, was there. 

The CPSC representatives announced that in late Fall, 2019, they will be deploying functionality that will link their Risk Assessment Methodology system, known as ITDS/RAM, with ACE to further coordinate efforts with CBP and the trade community regarding examination and disposition results. This represents the culmination of 2 years of work with CBP to achieve the first phase, Hold Request and Conditional Release Coordination.

This first step in integrating with ACE will allow CPSC to more effectively notify CBP of shipments that are of concern and may require an examination in order to ensure the product is safe for consumers. (Today they manually notify CBP Officers of shipments they wish held.)  They explained there are over 300 HTS numbers that they have identified as high-risk.  The list of HTS numbers is not readily available but general product categories.   Learn more details about this new program here.  TSN members strongly suggested they work with CBP to flag those HTS numbers as other PGAs generally do. 

The CPSC uses the entry data primarily to identify high-risk shipments and, therefore, their review cannot begin until the entry is filed.  They will not receive the entry details from CBP until the entry has been filed and the conveyance has been ‘arrived’ by the carrier. 

Nic asked, “If a shipment is ‘Under Review’, should the filer upload the commercials to ACE’s Digital Imaging System (DIS) right away”?  The answer was “No”, and if the CPSC believes the commercial documents may be of value, they will contact the filer and request the documents. 

This process is like the one employed today by CBP-Agriculture, who do not receive PGA data from the filer.  Rather, they review manifests for products that may cause harm to U.S. agriculture.  Please see the CPSC Participation in 1USG Notification Messaging at Import, attached, for more. 

Contact CustomsNow if you have any questions @ sales@customsnow.com.

Additional 301 tariffs start September 1st

The U.S. puts in place the latest tariff increase – here’s what you need to know…

As announced on August 30th, 2019 in a Notice of Modification of Action from the Office of the United States Trade Representatives, additional 301 tariffs are now in place. For products covered by Annex A of the August 20, 2019 Federal Register notice, the rate of additional duty will be 15 percent on the current effective date of September 1, 2019. For products covered by Annex C of the August 20 notice, the rate of additional duty will be 15 percent on the current effective date of December 15, 2019.

For questions about this action, contact Associate General Counsel Arthur Tsao, Assistant General Counsel Megan Grimball, or Director of Industrial Goods Justin Hoffmann at (202) 395–5725. For questions on Customs classification or implementation of additional duties on products identified in the Annexes to this notice, email Customs at traderemedy@cbp.dhs.gov.  

See the list of HTS numbers covered by the Sept 1st increase here.

FY2020 CBP increases MPF min and max amount

According to CBP, due to inflation the minimum and maximum amount for MPF (Merchandise Processing Fee) for CBP fiscal year 2020 will change starting October 1st.

The MPF ad valorem rate of 0.3464% will not change, however the minimum and maximum amounts on formal entries will change as follows:

  • MPF minimum as of Oct 1st will increase from $26.22 to $26.79
  • MPF maximum as of Oct 1st will increase from $508.70 to $519.76

A complete list of CBP fees for FY2020 can be found in the Federal Register Notice here.

US to delay some tariff increases

On August 13, 2019, it was announced that the US is delaying imposing tariffs on over $300 billion dollars of imports from China until Dec 15th because of “health, safety, national security and other factors” according to The Washington Post and other news sources.

The products include mobile phones, laptops, video game consoles, some toys, computer monitors, and certain footwear and clothing.  The Trump administration say’s this delay was in part to avoid hitting US shoppers this Christmas.

The USTR released additional information and has split the list of goods into  List 4A: https://ustr.gov/sites/default/files/enforcement/301Investigations/List_4A_%28Effective_September_1%2C_2019%29.pdf

and list 4B: https://ustr.gov/sites/default/files/enforcement/301Investigations/List_4B_%28Effective_December_15%2C_2019%29.pdf

Mr. Trump hinted that he was expecting something in return, suggesting that China’s failure to “buy big” from the US farmers could be about to change.

It would be beneficial to review the items on both lists to determine if any of your products will be subject to the tariffs and what the effective date will be.

For more information on this issue click here: https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/august/ustr-announces-next-steps-proposed

Acting CBP Commissioner resigns

Today, American Shipper published in their Daily Digital Magazine, the news that acting CBP Commissioner, John Sanders, is resigning effective July 5th, 2019.

Acting Commissioner Sanders was in his role for 2 1/2 months. According to various news reports, President Donald Trump is expected to name Mark Morgan, a former FBI analyst who currently serves as acting director of Immigration and Customs Enforcement, as the new acting CBP commissioner.

How are companies are softening the Trump tariff blows?

Facing the onslaught of President Trump’s China Tariffs, importers are having to get creative in order to minimize the impact these higher duty rates will have on their goods. 

Foreign Trade Zone / Bonded Warehouse / Tariff Engineering

Foreign Trade Zones (FTZ), approved by the U.S. government, can be a temporary haven for companies reducing duties on a case-by-case basis.  Trade zones are not a loophole for goods destined for the U.S. market, but they can be a way for companies to avoid duties on goods shipped to the United States and subsequently re-exported to another country.

There are different types of zone designations depending on the end use of the goods; further manufacturing, packaging, comingling, etc.  In any case, the duties are not paid out until the goods are exported out of the Trade Zone, either in-bond for re-export or destined for the U.S. market.  Companies can utilize the zones to spread out those duty payments based upon the timing of the export from the zones.  This can help manage huge import duty payments being paid at time of import to the U.S. 

Bonded warehouses are another option. Firms can store and make products in “Customs-bonded” warehouses for up to five years. Duties are only applied once products leave the facility for consumption. Companies can apply to U.S. Customs for a license to operate a bonded warehouse.

According to a paper by law firm Barnes, Richards & Colburn, Tariff engineering also is making a comeback.  Companies can tweak their design processes in order to be able the re-classify their goods under a lower duty rate.  However, importers need to be very conscious of taking this too far, since Customs tends to reject revisions to existing HTS codes when companies appear to be making a “fictional or temporary product”. 

To view the full article in Transport Topics (TTNews) “In Times of Trade War, Companies Get Creative to Avoid Tariffs”.