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.

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”.

CBP Trade Symposium announced – July 23rd-24th

CBP TRADE SYMPOSIUM IN CHICAGO – CBP sent out a formal notice that the Trade Symposium will be held in Chicago this year. The registration will open on Thursday, June 13th, at noon EST. Learn more here.

This is always a great event to get up-to-date information on current trade activities. The event sells out quickly so be sure to register early!

“The New NAFTA” – informative article from SupplyChainBrain

nafta-main

Need a good introduction to “New NAFTA”?  An article written today by Robert J. Bowman, SupplyChainBrain, called “The New NAFTA: What Does It Mean For Supply Chains?”is a great place to start.

This Q&A covers topics associated with the new agreement and the potential impact to U.S. supply chains.

Specifics about the new deal, called the United States-Mexico-Canada Agreement, or USMCA, have been published on the Office of The United States Trade Representative website, found here.

Changes (again) to CBP user fees, effective October 1, 2018

As just announced in CBP’s CSMS #18-000465, dated August 1, 2018, various changes to user fees will take effect on October 1, 2018.

The Merchandise Processing Fee (MPF) ad valorem rate of 0.3464% will NOT change.  However, note the following changes:

  • The MPF minimum and maximum for formal entries (class code 499) will change – the minimum will change from $25.67 to $26.22 and the maximum will change from $497.99 to $508.70.
  • The Informal MPF (class code 311) will change to $2.10.
  • The dutiable mail fee (class code 496) will change to $5.77.
  • The surcharge for manual entry or release will change to $3.15.

The Federal Register Notice (83 FRN 37509) can be read here.  Another CSMS will be sent when the changes are in the ACE Certification environment for trade testing.

U.S. imposes 25% tariffs on approximately $50B of Chinese goods

china us trade

On Friday June 15th, 2018, the United States Trade Representative (USTR) announced that the U.S. will follow through with 25 percent tariffs on approximately $50 billion worth of goods from China in 2018 import value (read announcement here).

The list of goods covered by the order includes mainly industrially significant technology products spread across 1,102 U.S. tariff lines.  The list of specific tariff numbers can be found here and, as announced, CBP will begin collecting these additional duties beginning July 6th.

Additionally, there is a second set of HTS numbers which have been identified by the interagency Section 301 Committee as benefiting from Chinese industrial policies.  These include the “Made in China 2025” industrial policy, and the set covers about $16 billion worth of imports from China. The second set of products will undergo a public notice and comment process, including a public hearing, after which USTR will issue a final determination on the products from the list that would be subject to the duties, the agency said.  Crowell Morning Trade Law wrote a good overview on this, here.

The USTR will “soon provide an opportunity” for the public to request exclusion of “particular products” from the duties to be imposed under Section 301 of the Trade Act of 1974, and will issue a notice in the Federal Register with details on this process within the next few weeks, USTR said.