Category Archives: Trade Alerts

Is Your Section 301 Documentation In Order?

Friday, October 9, 2018

Is Your Section 301 Documentation In Order?

When the United States Trade Representative (USTR) issued their three lists of products that fall under Section 301 additional tariffs, many importers scrutinized their classifications to reconfirm that the correct HTS was being applied. In some cases, their review indicated that changes were necessary to ensure proper reporting of their goods. It is important to remember that if the analysis renders a revised classification, then it may be necessary to file a prior disclosure.

As CBP begins auditing goods subject to Section 301 duties, importers may notice an increase in Requests for Information (CF 28’s).  

Having been mostly duty-free in addition to intellectual property rights, goods falling in chapters 84 and 85 will likely be the focus in the early phase.

As always, it is imperative that importers exercise reasonable care by retaining all documentation necessary to substantiate any changes made, or claims they declare.

If you have any questions or concerns be sure to contact us at 316.721.8980.

Say Good-bye to NAFTA, and Hello to USMCA!

Tuesday, October 2, 2018

Say Good-bye to NAFTA, and Hello to USMCA!

Canada and the United States have officially reached an 11th-hour deal with Mexico to modernize the North American free trade agreement.

The new trilateral pact, now known as the United States-Mexico-Canada Agreement – or USMCA won’t go into effect right away. Most of the key provisions don’t start until 2020 because leaders from the three countries have to sign it and then Congress and the legislatures in Canada and Mexico have to approve it, a process that could take several months.

What are some of the differences?

There is some substance, although nothing dramatic, as it turns out. New “Rules of Origin” will force automobile manufacturers to use more parts from the region – up 75% from 62.5%

A new wages condition states that a minimum input must be added in factories that pay workers at least $16 per hour, which may move some work from Mexico back to the U.S. Starting in 2020, cars and trucks should have at least 30% of the work on the vehicle done by workers earning $16 per hour in wages.

A new “sunset clause” states that USMCA will expire in 16 years, whereas NAFTA ran indefinitely.

Steel tariffs will remain in place for now. The U.S. and Canada continue to discuss lifting these tariffs but a senior White House official said on Sunday that this process is on a completely different track.

Other provisions include:

Canada opens up its dairy market to U.S. farmers.

Canada has complex set of milk and dairy rules to ensure that Canadian dairy farmers don’t go bankrupt, and the Canadian government restricts how much dairy can be produced and how much foreign dairy can enter to keep milk prices high. Canada will maintain most of its system but is giving greater market share to U.S. dairy farmers.

Chapter 19

Stays intact, which allows for a special dispute process. This allows the U.S., Canada, and Mexico to challenge one another’s anti-dumping and countervailing duties in front of a panel of representatives from each country.

Improved labor and environmental rights.

The USMCA makes some significant upgrades to environmental and labor regulations, especially regarding Mexico. Trucks from Mexico that cross the border into the U.S. must meet higher safety regulations and Mexican workers must have more ability to organize and form unions.

Increased intellectual property protections.

The New IP chapter contains more stringent protections for patents and trademarks for biotech, financial services and even domain names.

Chapter 11:

Giving investors a special way to fight government decisions is, for the most part, gone. The idea was that if investors put tons of money into a project the then the government changed the rules, a dispute process, outside the court system, was where investors could get their problem resolved.

For more information on USMCA click here: https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/united-states-mexico

Section 301 Update: List 3 Takes Effect

Tuesday, September 18, 2018

Section 301 Update: List 3 Takes Effect

Beginning September 24, an additional 10 percent tariff on goods from China will be imposed on 5,745 tariff lines, view list here with an import value of approximately $200 billion. As of January 1, 2019, this tariff is scheduled to increase to 25 percent.

According to the Office of the US Trade Representative (USTR) this list reflects the elimination of 297 subheadings that were originally announced. Goods such as consumer electronics, e.g., smart watches and Bluetooth devices, chemical inputs for manufactured goods, agricultural, and various health and safety products were removed from the proposed list.

Previously, the administration had announced List 1, imposing an additional 25 percent tariff on over 800 tariff lines valued at approximately $34 billion of goods from China, effective July 6, 2018. List 2 followed soon after with 25 percent tariffs levied upon 279 additional lines on $16 billion of goods from China that went into effect upon August 23.

With $267 billion more threatened, the reality of list 4 hovers.

Miscellaneous Tariff Bill Act Signed Into Law

Monday, September 17, 2018

Miscellaneous Tariff Bill Act Signed Into Law

Signed into law on September 13, 2018, the H.R. 4318 Miscellaneous Tariff Bill (MTB) becomes effective upon October 13, 2018 following a 30-day grace period. The MTB reduces tariffs on nearly 1700 products deemed by the International Trade Commission (ITC) as unattainable or inaccessible from domestic productions or sourcing through December 31, 2020.

Designed to provide relief to some manufacturers, the MTB will temporarily amend the Harmonized Tariff Schedule (HTS) to modify certain rates of duty recommended by the ITC pursuant to the new process established in the American Manufacturing and Competitiveness Act of 2016. 

A majority of the products covered by the MTB are chemicals, and includes some textiles, apparel, footwear, machinery and equipment, as well as other goods.

If your goods are from China, be aware that the MTB tariff reductions do not override Section 301 tariffs, per CSMS #18-000493, dated August 21, 2018 as follows:

TRADE PREFERENCE PROGRAMS AND TEMPORARY REDUCTIONS IN RATES OF DUTY

Products of China that are covered by the Section 301 remedy and that are eligible for special tariff treatment under general note 3(c)(i) to the tariff schedule, or that are eligible for temporary duty exemptions or reductions under subchapter II to chapter 99, shall be subject to the additional 25 percent ad valorem rate of duty imposed by headings 9903.88.01 and 9903.88.02.

Click on the link provided below for the list of goods. We recommend you review this list carefully to determine if any of the products may have an effect upon your imports and contact us with any questions.

Click Here

US-Mexico Preliminary Agreement in Principle on a New Trade Agreement

Thursday, August 30, 2018

US-Mexico Preliminary Agreement in Principle on a New Trade Agreement

The United States Trade Representative (USTR) announced on Monday August 27, 2018 that the United States and Mexico have reached a preliminary agreement in principle, subject to finalization and implementation.

Three fact sheets are available announcing the provisions.  The first sheet,  Modernizing NAFTA to be a 21st Century Trade Agreement, addresses the following:

  • Intellectual Property
  • Digital Trade
  • De Minimis
  • Financial Services
  • Labor
  • Environment

https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/august/modernizing-nafta-be-21st-century

The second fact sheet, Rebalancing NAFTA to Support Manufacturing addresses:

  • Rules of Origin and Market Access
  • Textiles

https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/august/rebalancing-nafta-support

The third fact sheet, Strengthening NAFTA for Agriculture maintains among other measures, a duty-free treatment on agricultural products. 

https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/august/strengthening-nafta-agriculture#

Canada was not part of these negotiations although the Canadian Foreign Minister, Chrystia Freeland arrived in Washington, D.C. to begin discussions with US trade representatives.  It is believed that if NAFTA does terminate, economic relations between the US and Canada would revert to the Canada-US Free Trade Agreement (CUSFTA) implemented on January 1, 1989.  It is to be noted however that a debate exists whether this trade agreement would automatically be in effect if NAFTA is terminated without an act of Congress to re-implement CUSFTA.

STEEL ARTICLES FROM THE REPUBLIC OF TURKEY

Monday, August 12, 02018

STEEL ARTICLES FROM THE REPUBLIC OF TURKEY

Another Presidential Proclamation has been signed stating that steel articles covered by Section 232  from the Republic of Turkey (Turkey) will be subject to an increased ad valorem duty rate of 50%.

The increased rates of duty on steel articles that are the product of Turkey are effective with respect to goods entered, or withdrawn from warehouse for consumption, on or after after 12:01 a.m. eastern daylight time on August 13, 2018. 

For more information, please see CSMS 18-000477 

USTR FINALIZES SECOND LIST OF TARIFFS ON CHINESE PRODUCTS

Wednesday, August 8, 2018

USTR  FINALIZES SECOND LIST OF TARIFFS ON CHINESE PRODUCTS

COLLECTION TO BEGIN AUGUST 23, 2018

The  Office of the United States Trade Representative (USTR) released a list of approximately $16 billion worth of imports from China that will be subject to a 25 percent additional tariff beginning August 23.  This second list of additional tariffs under Section 301 follows the first list of tariffs on approximately $34 billion of imports from China, which went into effect on July 6.

The list contains 279 of the original 284 tariff lines that were on a proposed list announced on June 15.  Changes to the proposed list were made after USTR and the interagency Section 301 Committee sought and received written comments and testimony during a two-day public hearing last month. 

The five tariff lines removed from the original List 2 are as follows:

Tariff Line Product Description
3913.10.00 Alginic acid, and its salts and esters, in primary forms
8465.96.00 Splitting, slicing or paring machines for working wood, cork, bone, hard rubber, hard plastics or similar hard materials
8609.00.00 Containers (including containers for transport of fluids) specially designed and equipped for carriage by one or more modes of transport
8905.90.10 Floating docks
9027.90.20 Microtomes
   

 

The USTR published a notice in the Federal Register  that officially extended the public comment period for the third list of Chinese products from August 17 to September 6.   The third list of Chinese products covers 6,031 HTSUS provisions valued at $200 billion.  The notice provides the following dates and deadlines:

 

 

 

 

 

August 13, 2018:

The due date for filing requests to appear and a summary of expected testimony at the public hearing and for filing pre-hearing submissions is extended from July 27 to August 13, 2018.

September 6, 2018:

The due date for submission of written comments is extended from August 17 to September 6, 2018.

August 20-23, 2018:

The scheduled start date of the Section 301 hearing (August 20) has not changed. The Section 301 Committee may extend the length of the hearing depending on the number of additional interested persons who request to appear. The Section 301 Committee will convene the public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436 beginning at 9:30 a.m. on August 20, 2018.

September 6, 2018:

The due date for submission of post-hearing rebuttal comments is extended from August 30 to September 6, 2018.

The President has asked the USTR to consider raising the rate of the additional duties for this third round of products from 10% to 25%.  The USTR notice states:

The possible increase in the proposed rates of the additional duty is intended to provide the Administration with additional options to obtain the elimination of the [Chinese] acts, policies, and practices covered in the investigation.

This notice indicates that the change from 10% to 25% is still a proposal, and has not been formally adopted at this time.

Section 301 Duties on China Goods

Thursday, August 2, 2018

Section 301 Duties on China Goods 

Potential Increase on List 3 from 10% to 25%

 The Office of the United States Trade Representative (USTR) announced that it is considering increasing the proposed tariffs on List 3 from 10% to 25%. This list covers approximately 6,013 items and identifies $200 billion worth of goods from China imported into the U.S.

Parties wishing to submit comments on docket number USTR-2018-0026 can click on the link provided here:

https://www.regulations.gov/searchResults?rpp=25&po=0&s=USTR-2018-0026&fp=true&ns=true

The due date for submission of all written comments, including rebuttal comments has been extended to September 5, 2018.

 

List 3 Date
Deadline for filing requests to appear at hearing and summary of expected testimony August 13, 2018
(previously July 27, 2018)
Due date for submission of written comments August 17, 2018
Hearing on List 3 products August 20-23, 2018
Post-hearing rebuttal comments due September 5, 2018
(previously August 30, 2018)
Duty effective on List 3 products TBA
Procedures to request exclusions TBA
Deadline to request exclusions TBA

 

Official notification of the extension dates will soon be published in the Federal Register.

Notice of Adjustment of the Merchandise Processing Fee in 2019

Wednesday, August 1, 2018

Notice of Adjustment of the Merchandise Processing Fee in 2019

The Consolidated Omnibus Budget Reconciliation Act (COBRA) for fiscal year 2019 will adjust and increase various user fees. Of particular note is the increase in the Merchandise Processing Fee (MPF).

The increase in MPF is reflected below:

Minimum – $26.22 up from 25.67
Maximum – $508.70 up from 497.99
Informal – $2.10 up from 2.05

The rate of 0.3464% remains unchanged

The Federal Register Notice published today states the adjusted amounts of customs COBRA user fees and their corresponding limitations set forth in this notice for Fiscal Year 2019 are required as of October 1, 2018.

HOW WILL SECTION 301 TARIFFS AFFECT YOUR BOND SUFFICIENCY?

Friday, June 15, 2018

HOW WILL SECTION 301 TARIFFS AFFECT YOUR BOND SUFFICIENCY?

The President of the United States announced plans for tariffs on imports of goods from China that may impact your continuous bond. See FHK trade alert here.

In addition to the Section 232 proclamations effective June 1, wherein importers saw a 25% increase on steel imports and a 10% increase on aluminum imports, now Section 301 imposes an additional 25% on certain goods from China.

Continuous Bond amounts are calculated on 10% of the total duties, taxes, and fees for the previous twelve month period so the need for a new bond may not be immediate. CBP actively reviews continuous bond sufficiency and may send a letter advising of insufficiency and require an increase. If CBP determines there is an egregious deficiency, the continuous bond may be rendered insufficient, causing delays and additional costs for the importer. Based upon the recent revelations regarding these additional tariffs, the new bond limits required may be significant.

Importers are ultimately responsible and must stay updated on changes that occur regarding their bonds. Be sure to run ACE reports or contact us to assist with entry reports to stay on top of your import activity.

For more information, please reach out to us at 316.721.8980 with any questions you may have.