Chinese 301 Tariffs to Restrict Exemption for US Goods Repaired, Processed, or Assembled Abroad

In a Federal Register notice published August 16th, the US Trade Representative has announced that the additional 25% duties imposed under the Chinese 301 tariffs List 1 (effective 7/6/18) and List 2 (effective 8/23/18) do not apply to goods for which entry is properly claimed under a provision of chapter 98 of the HTSUS, except for goods entered under subheadings 9802.00.40, 9802.00.50 (articles returned after being exported for repairs and alterations), 9802.00.60 (articles returned after further processing abroad), and heading 9802.00.80 (articles assembled abroad with US components). 

For subheadings 9802.00.40, 9802.00.50, and 9802.00.60, the additional duties apply to the value of repairs, alterations, or processing performed abroad, as described in the applicable subheading. 

For heading 9802.00.80, the additional duties apply to the value of the article less the cost or value of such products of the United States, as described in heading 9802.00.80. These goods were previously exempt from the 25% duties. 

This change goes into effect 8/23/18.

Please contact Vandegrift with any questions regarding the application of these provisions.

Import Restrictions Placed on Certain Imported Fish From Mexico

According to CSMS 18-000484, CBP has placed restrictions on certain fish and fish products from Mexico.  The restrictions apply to fish and fish products from Mexico that are "...caught with gillnets  deployed in the range of the vaquita, a species of porpoise endemic to northern Gulf of California waters in Mexico and listed as an endangered species under the U.S. Endangered Species Act."

Importers are urged to verify that none of their product falls under the restricted list outlined in the notice.  Confirmation and/or statements of verification that product is not from restricted sources should accompany the importation.

Please contact Vandegrift if you have any questions regarding these new restrictions or if you are unsure how your product will be impacted.

Chinese 301 Tariffs List 2 Finalized

The US Trade Representative has published the final list 2 for the Chinese 301 tariffs. The list contains 279 of the original 284 proposed items. The 25% tariff on list 2 items will go into effect on August 23rd. 

A formal notice will be published shortly in the Federal Register which will include information on filing product exclusion requests.

Please contact Vandegrift with any questions regarding the new tariffs.

MPF to Increase October 1st

According to CSMS 18-000465 the merchandise processing fee is being adjusted for inflation and will increase on October 1, 2018. 

The minimum MPF will be $26.22 (up from $25.67). The maximum MPF will be $508.70 (up from $497.99). The MPF for informal entries will increase from $2.05 to $2.10. 

The MPF rate of 0.3464% will not increase at this time.

Please contact Vandegrift with any questions regarding the upcoming increases.

Vandegrift Blog: The Calm Before the Storm by Janet Labuda

On July 12, I attended an all-day Washington DC meeting of the U.S. Fashion Industry Association. First to address the audience was Congresswoman Jackie Walorski (R-Indiana) a ranking member of the House Ways and MeansCommittee. Also, Angela Ellard, Chief International Trade Counsel for House Ways and Means Committee and Shane Warren, Chief International Trade Counsel for the Senate Finance Committee addressed the attendees. The hot topic, for the day, was the imposition of tariffs by the Trump Administration to counteract unfair trade practices by China and various other trading partners.

The take away was that it “may get worse before getting any better.” Over the years, the Congress has given ever increasing authority to the President to take unilateral action regarding harmful trade practices. These take the form of 232 cases and 301.

Section 232 of the Trade Expansion Act of 1962, as amended, gives the executive branch the ability to conduct investigations to “determine the effects on the national security of imports.” Within 270 days of initiating any investigation, the Commerce Department issues a report to the President with the investigation’s findings, including whether certain imports threaten to impair America’s national security. The President has 90 days to determine whether he concurs with the findings and, if so, to use his statutory authority under Section 232 “to adjust the imports” as necessary, including through tariffs or quotas.

Under Section 301 of the Trade Act of 1974, the U.S. Trade Representative (USTR) initiated an investigation to determine whether China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation are unreasonable, unjustifiable, or discriminatory and burden or restrict U.S. commerce.

Following a thorough analysis of available evidence, USTR, with the assistance of the interagency Section 301 committee, prepared findings showing that the acts, policies, and practices of the Chinese government related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce.

  • China uses joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to force or pressure technology transfers from American companies.
  • China uses discriminatory licensing processes to transfer technologies from U.S. companies to Chinese companies.
  • China directs and facilitates investments and acquisitions which generate large-scale technology transfer.
  • China conducts and supports cyber intrusions into U.S. computer networks to gain access to valuable business information.
  • An interagency team of subject matter experts and economists estimates that China’s policies result in harm to the U.S. economy of at least $50 billion per year.

After these conclusions, the administration announced tariffs affecting $200 billion in imports. While it appears that both the Executive and Legislative branches, bilaterally, agree that China engages in unfair trade practices there is disagreement on the imposition of the tariffs. The presenters were hard pressed to predict when and if new tariffs will be imposed and continue to monitor the effects of the current round on individual U.S. businesses and industrial sectors.

The take away recommendation is to reach out to representatives from both houses of Congress if you are adversely affected by the tariff imposition. This outreach should include any data that shows impacts to your economic viability, competitiveness, or employment strength.

The Congressional representative and staffers assured everyone that all actions taken or contemplated by the President are being monitored and assessed and that regular communication is occurring to ensure that corrective measures are helping and not harming the economy.

USTR Announces Intent to Impose Additional Duties on Chinese Goods

On July 10th, the U.S. Trade Representative (USTR) announced its intent to impose an additional 10% duties on products of China with an annual trade value of $200 billion. 

The new list contains over 6000 tariff subheadings, but does not include wearing apparel or footwear (HTS Chapters 61-64). This latest action is in response to China’s retaliation last week of 25% duties on $34 billion worth of US exports, with threats to impose tariffs on an additional $16 billion of US goods. The USTR will accept public comments until August 17th. 

A public hearing will be held August 20th-23rd, with post-hearing rebuttal comments due August 30th. The USTR notice and list of proposed items is available here.

EU Retaliatory Tariffs To Go Into Effect

Yesterday the EU issued a press release stating that the retaliation against U.S. steel and aluminum 232 tariffs will begin on Friday, June 22. This is earlier that anticipated – the target date was July 1st. The penalty tariffs will be imposed on $3.3 billion worth of U.S. exports.

The list of products, which the EU refers to as rebalancing measures includes product in chapters 07, 10, 19, 20, 22, 24, 33, 61, 62, 72, 73, 76, 87, 89 and 95.  With the exception of 10% assessed on chapter 95, a 25% tariff will be imposed on all other subjected headings imported into the EU.

Vandegrift will continue to provide new and updated information as it becomes available.

National Marine Fisheries Service Webinar Series

The National Marine Fisheries Service (NMFS) will host a series of public webinar presentations on the U.S. Seafood Import Monitoring Program (SIMP) to review the traceability data elements required for reporting, as well as recordkeeping requirements to support the inclusion of shrimp and abalone products under SIMP December 31, 2018.

Beginning January 1, 2018, SIMP has required harvest and landing data for certain seafood products. Shrimp and abalone imports will be subject to the requirements of SIMP on December 31, 2018. These webinars will provide information on how U.S. importers can comply with the requirements of SIMP. Webinars will be offered on the following dates: 

•June 19, 2018, 10:00am ET

•June 20, 2018, 2:00pm ET

•June 27, 2018, 2:00pm ET (includes Spanish translation)

Conference phone line: 866-844-9416, Participant passcode: 1579526. 

Click here to join the webinar under Upcoming Public Meetings and click on webinar date. 

In a SIMP audit, NOAA Fisheries will verify the harvest and landing information provided in entry filing, as well as chain of custody records documenting the movement of product from harvest to the point of entry into U.S. commerce to determine whether or not the imported seafood may have been harvested in violation of any foreign law or treaty. NMFS has released a Guide to Audit Requirements which provides an overview of SIMP’s audit processes and responses to industry’s frequently asked questions and is available here.

Questions about SIMP can be submitted to: simpsupport@noaa.gov or by calling the SIMP Support Line: toll free 833-440-6599 or 301-427-8301.

Section 301 Tariff List Announced

The United States Trade Representative has released the list of tariff numbers for goods from China that will be subject to an additional 25% duty effective July 6, 2018.
A second list has also been published which will undergo further review in a public notice and comment process, including a public hearing. After completion of this process, the USTR will issue a final determination on the products from this list that would be subject to the additional duties.

The USTR will provide an opportunity soon for the public to request the exclusion of particular products from the additional duties. A notice will be published in the Federal Register with details within the next few weeks.

Vandegrift is following this situation very closely and will continue to provide new information as it becomes available.

Mexico Issues List of Retaliatory Tariffs Against US

The Mexican government issued a list of retaliatory tariffs yesterday after the US imposed punitive tariffs on Mexican steel and aluminum last week.

Most of the new tariffs, on a range of US products that included pork, apples, potatoes, bourbon and different types cheese went into effect on June 5 with additional tariffs to be phased in through July 5.

According to reports, Mexico suspended NAFTA benefits for the items on the list and added tariffs of 7%, 10%, 15%, 20% or 25%. These 8-digit subheadings fall in the following chapters and headings (note that not all subheadings would necessarily be covered in the headings listed below):

· Chapter 2: 0203

· Chapter 4: 0406

· Chapter 8: 0808

· Chapter 16: 1601, 1602

· Chapter 20: 2004, 2008

· Chapter 21: 2106

· Chapter 22: 2208

· Chapter 72: 7208, 7209, 7210, 7211, 7212, 7213, 7214, 7216, 7225, 7226

· Chapter 73: 7304, 7305, 7306,

· Chapter 76: 7615

· Chapter 84: 8414

· Chapter 89: 8903

· Chapter 94: 9403, 9405

Canada Issues Notice of Intent to Impose Countermeasures Against US

After the United States inflicted punitive tariffs against steel and aluminum last week, Canada issued a notice of intent to impose surtaxes and similar countermeasures against US imports into Canada.

According to the notice published by Department of Finance Canada, the proposed countemeasures will apply to goods originating from the US and are expected to go into effect July 1, 2018.  They will remain in place until the US eliminates the additional tariffs against Canada.

The notice includes two tables listing the headings subject to the countermeasures and also indicates how to file written comments and concerns with the Department of Finance Canada.

Steel and Aluminum Tariffs Go Into Effect For Mexico, Canada and EU

The temporary exemptions that protected Mexico, Canada and the EU from additional steel and aluminum tariffs has run out and effective June 1, 2018 these countries will be subject to a 25% penalty tariff on steel and 10% penalty tariff on aluminum. 

As of midnight, June 1, 2018 steel tariffs will apply to all countries of origin except Argentina, Australia, Brazil, and South Korea.

At the same time, aluminum tariffs will apply to all countries of origin except Argentina, Australia, and Brazil.

Please contact Vandegrift with questions or concerns regarding the application of these additional tariffs.

Trade Groups Testify at Section 301 Investigation Hearings

Three days of testimony conclude today for the Office of the U.S. Trade Representative’s (USTR) hearings on the Section 301 Tariff Investigation.  The proposed tariffs are part of the U.S. response to China’s unfair trade practices related to technology transfer, intellectual property, and innovation based on the findings in USTR’s investigation of China under Section 301 of the Trade Act of 1974. 

More than 100 trade groups and business leaders representing industries from all market sectors have begun pushing for exemptions and exclusions for their imported product.

According to published reports, the groups argue that the proposed tariffs would raise most Americans' cost of living and boost inflation. Others point to supply chain disruption. Retailers decide on vendors six to 12 months in advance and stores won't be able to cancel orders of Chinese goods faced with additional duties causing them to pass on additional cost to consumers.

Almost all business sectors could be impacted by additional tariffs. Products ranging from aerospace equipment to manufacturing components to medical supplies as well as textiles and apparel are currently at risk.  

As the hearings conclude, post hearing rebuttal comments are due by May 22, 2018. Vandegrift will continue to keep you updated and provide new information as it becomes available.

VFI Track Introducing New Log In Screen

On May 7th, Vandegrift will introduce our new VFI Track log in screen. The screen offers a refreshed look but access to all of your data remains unchanged. In addition, you will still be able to access Public Shipment Tracking, our PARS check, and the US and Canada tariff lookup from the VFI Track home page without logging in.

Don't forget to register here for VFI Track Insights to start receiving your summarized entry data directly to your inbox!

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Don't forget to register here for VFI Track Insights to start receiving your summarized entry data directly to your inbox!

Vandegrift Introduces VFI Track Insights - Updated Registration Link Now Available

Vandegrift is proud to introduce our newest VFI Track upgrade known as Insights. VFI Track Insights provides a comprehensive recap of your current US or Canada Customs data. This straightforward summary can be viewed with real time data directly in VFI Track and downloaded to your computer in Excel format. Insights can also be sent to your inbox in Excel format at your desired interval with a direct link back to the live data in VFI Track.

VFI Track Insights Registration - Click Here 

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Choose from weekly, monthly, or quarterly scheduling and you will receive a concise snapshot of entries released during the previous 7 and 28 days, a view of your Customs duties due, as well as year to date data on duties, fees, entered values, and units imported. In addition, you will be able to see, at a glance, your top vendors, ports of arrival, entries by port, and HTS chapters used.

To view directly in VFI Track, click the menu button in the upper left corner of the screen, select Entry, select Insights US or Insights CA, and choose your importer from the dropdown menu.

If you would like to have VFI Track Insights automatically emailed to you please complete the form below and you will begin receiving this convenient analysis of your import demographics right away.

VFI Track Insights Registration - Click Here

Vandegrift Introduces VFI Track Insights

Vandegrift is proud to introduce our newest VFI Track upgrade known as Insights. VFI Track Insights provides a comprehensive recap of your current US or Canada Customs data. This straightforward summary can be viewed with real time data directly in VFI Track and downloaded to your computer in Excel format. Insights can also be sent to your inbox in Excel format at your desired interval with a direct link back to the live data in VFI Track.

VFI Track Insights Registration - Click Here

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Choose from weekly, monthly, or quarterly scheduling and you will receive a concise snapshot of entries released during the previous 7 and 28 days, a view of your Customs duties due, as well as year to date data on duties, fees, entered values, and units imported. In addition, you will be able to see, at a glance, your top vendors, ports of arrival, entries by port, and HTS chapters used.

To view directly in VFI Track, click the menu button in the upper left corner of the screen, select Entry, select Insights US or Insights CA, and choose your importer from the dropdown menu.

If you would like to have VFI Track Insights automatically emailed to you please complete the form below and you will begin receiving this convenient analysis of your import demographics right away.

VFI Track Insights Registration - Click Here

Blog Post - Guilty Until Proven Innocent by Janet Labuda

The legal premise of innocent until proven guilty gets turned on its head with the passage of the “Countering America’s Adversaries Through Sanctions Act” known as CAATSA. At a government meeting last week representatives from the Departments of Homeland Security, State, Labor, and Treasury participated in a panel discussion of addressing North Korean forced labor in the supply chain.

A kickoff of the two hour meeting by Assistant Secretary (Homeland Security) Michael Dougherty and Deputy Assistant Secretary (State) Scott Busby set the stage for highlighting the seriousness of this enforcement focus that is starting to descend on the import community. The government officials were joined by Greg Scarlatolu, Executive Director, Committee for Human Rights in North Korea, and Bob Mitchell, Vice President, Responsible Business Alliance.

The panel focused specifically on CAATSA Section 321(B) which provides for sanctions on goods produced by North Korean forced labor. It was stressed that these sanctions are part of the Administration’s larger strategy regarding the denuclearization of North Korea.

The State Department indicated in the last call for information on forced North Korean labor from U.S. embassies around the world, 39 countries reported the use of such labor. In the latest call for information, the number of countries reporting the use of forced Korean labor has risen to 59. China exceeds the number of laborers followed by Russia, and various Southeast Asian nations along with those in Latin America. While North Korean forced labor has been used in the countries of the Middle East and Africa it appears that here it is part of a construction labor force.

Key industries where North Korean forced labor is used include textiles and footwear, mining, seafood, logging, and pharmaceuticals.

The panel stressed the need for comprehensive due diligence by and on behalf of U.S. companies involved in importing goods. Careful consideration of, and reasonable care with respect to, the different risks presented in your supply chain should always be taken into account when importing into the United States. Failure to do so will result in seizures, penalties, and possible criminal prosecution.

The presumed prohibition of merchandise mined, produced, or manufactured with North Korean nationals or citizens may be overcome by “clear and convincing evidence.” Clear and convincing evidence is a higher standard of proof than a preponderance of the evidence. Determining that the importer has met this standard will be under the authority of U.S Customs and Border Protection. Importers will have to show clear evidence that the goods were not produced with convict labor, forced labor, or indentured labor.

You are encouraged to read the newly published FAQ document which can be found posted on the Department of Homeland Security’s website. One area to note is section 8 of the document entitled: “What steps should my company take to ensure North Korean workers are not in our supply chain?” While many questions were raised regarding the due diligence aspect, the government was adamant that when it comes to due diligence there is no such thing as one size fits all. In addition, they stressed that use of prior disclosure may mitigate the penalty, but does not exonerate one from having committed a violation.

I highly recommend intense training on this issue and that someone in the corporate legal department and someone in the import compliance department join forces to ensure that strong corporate measures are in place to address this hot burner issue.

Please contact Vandegrift if you have received a CF28 on this issue or been contacted by directly by CBP regarding North Korea forced labor.

GSP Renewal Effective Date

On Friday, March 23, 2018, the President signed into law H.R. 1625, the “Consolidated Appropriations Act, 2018,” which in addition to providing full-year federal appropriations through September 30, 2018, extended GSP with retroactivity, from January 1, 2018, through December 31, 2020.

GSP-eligible importations continue to be flagged with the SPI “A” and pay normal duty rates until the effective date of the Act which is April 22, 2018.

Shortly after April 22, 2018, CBP will begin refunding GSP duties without interest, to the importer of record, for goods on entry summaries filed with SPI "A" preceding the tariff number, during the lapse period.

Please contact Vandegrift with any questions or concerns regarding GSP refunds.

US Trade Representative Announces List of Proposed Tariffs for Additional Duties on Chinese Goods

The US Trade Representative (USTR) has published a proposed list of products imported from China that could be subject to additional tariffs. These tariffs are in response to China’s unfair trade practices related to the forced transfer of US technology and intellectual property to domestic Chinese enterprises. The tariff sectors include industries such as aerospace, information and communication technology, robotics, and machinery. 

Once the list is published in the Federal Register, there will be a 30 day period allowed for written comments. After consultation with appropriate agencies and committees, the USTR shall, as appropriate, publish a final list of products and tariff increases, if any. Should the additional tariffs go into effect, the rate will be 25% in addition to the existing duty rate. 

Any merchandise subject to the increase tariffs admitted into a US foreign trade zone on or after the effective date of the increased tariffs would have to be admitted under privileged foreign status and would be subject to the additional duty upon entry for consumption.

The complete list of tariff subheadings is available here.

 

President Signs Omnibus Trade Bill

The President has just signed the $1.3 trillion Omnibus Trade Bill into law.  The Bill includes a three year GSP extension and will provide retroactive benefits for goods normally eligble for the program after it lapsed on December 31, 2017.

Additionally, the Bill funds the federal government through FY 2018 preventing another government shutdown.

Vandegrift will follow up with details regarding retroactive GSP claims.  Please contact us with any questions concerning the filing of such claims.