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.
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.
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
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!
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.
Have you been asked by your Chinese partners for additional company information for new shipment into and out of China? It is our initial understanding that for US entities the information requested is the consignee or notify party’s company Employee Identification Number (EIN). The carrier OOCL provides a good overview to their customers on their website, here.
Our friends at NCBFAA are also working diligently on providing guidance on the new requirements for shipments to and from China. The regulations are confusing and in some cases contradictory. We will follow up with addition information as it becomes available.
The GACC published the original requirements in 2008 in Decree No. 172. These specific requirements were not implemented in 2008. Customs announced in Notice No. 56 that implement would begin June 1, 2018. (See links to the notices below).
Below are some additional links to the GACC notices:
As announced, the U.S. Trade Representative (Trade Representative; USTR) has determined that the acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation covered in the investigation are unreasonable or discriminatory and burden or restrict U.S. commerce. The Office of the U.S. Trade Representative (USTR) is seeking public comment and will hold a public hearing regarding a proposed determination on appropriate action in response to these acts, policies, and practices. The Trade Representative proposes an additional duty of 25 percent on a list of products from China. The list of products, defined by 8-digit subheadings of the Harmonized Tariff Schedule of the United States (HTSUS), is set out in the Annex to this Notice.
The official 301FRN notice is: OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE Docket No. USTR-2018-0005 Notice of Determination and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. Read the notice here.
Attorneys Susan Kohn Ross and Kevin Rosenbaum from MSK, published a blog article today which gives a complete overview of the situation. Read here. As they also say, “Stay tuned for more developments”.
As you know, CBP delivered ACE Deployment G, Release 4, on Saturday, February 24th, as promised. One of the critical pieces of this deployment was moving reconciliation entries into ACE, along with drawback, liquidation and other functionality. Read our prior blog on this deployment.
Now, CBP has made long-awaited ACE REPORT ENHANCEMENTSrelating to recon. On March 17th, 2018, CBP has deployed two new universes and nine new standard reports in ACE, to further support the transition of reconciliation into ACE. These enhancements are meant to provide the trade with all necessary information for reconciliation filing. Read CSMS #18-000229 – ACE Deployment G Reports Deployment – March 17, 2018 here.
For example, ACE ES-501 is a report showing all open entries flagged for recon. ES-502 provides bond information.
In fact, on April 14, 2018, the Authorized Data Extracts will be retired, and effective this date, all reports capabilities will reside in ACE Reports.
CustomsNow is an ACE-certified software vendor and compliance consulting company, whose clients are brokers, importers, exporters, forwarders, and more. We have an excellent reconciliation solution, which allows filers to upload underlying entry data from any/all various original filers to a single recon. Contact us to learn more.