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.

Omnibus Trade Bill and Trade Enforcement Tariffs Against China

The Omnibus Trade Bill, which will clear the way for GSP renewal has passed in both the House and the Senate.  However; early this morning the President threatened that he may veto the Bill over immigration issues.  

Yesterday, the President announced his plan to go through with a "series of trade enforcement actions designed to punish China for years of widespread violations of U.S. intellectual property rights" the White House said. A list of some 1,300 tariff lines on goods imported from China are expected to be subject to the additional tariffs. The list should be announced in the next 15 days.

These are both developing situations and Vandegrift will continue to provide new information as it becomes available.

Trade Groups Speak Out Against Potential 301 Tariffs

After a recent announcement from Republican lawmakers of their intention to impose punitive tariffs on a range of goods imported from China that benefit from US intellectual property, many trade groups and retailers have voiced major concerns.  

Concerned parties from the textile, apparel and footwear industries as well as technology and consumer electronics are sending letters to the President urging him to reconsider these tariffs that they say will hurt US retailers and consumers.

Under section 301 of the trade act, the government has given itself the power to unilaterally impose sanctions against countries which it decides are not trading fairly.

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

Blog Post: CBP's E-Commerce Strategy by Janet Labuda

On March 6th U.S. Customs and Border Protection (CBP) published its E-Commerce Strategy. While the synopsis provided by CBP was immediately posted on various websites, an even closer look at the strategy is warranted.

Since 2000, the number of Americans shopping online has increased nearly fourfold, up from 22 percent to 79 percent. This rapidly accelerating increase in volume is largely comprised of shipments valued under $2,500. According to the “CrossBorder Merchant Research 2016” report from market research firm Ipsos, 36 percent of U.S. online merchants are selling across borders.

Fifty-three percent of cross-border sellers use online marketplaces — with eBay and Amazon being the most common. Many of these companies have robust compliance programs in place which is not the case with individuals who are buying direct from overseas suppliers.

However, the volume of e-commerce shipments has increased exponentially, taxing existing CBP resources. At the end of Fiscal Year 2017, one port that has an express consignment hub received an estimated 25 million predominantly informal and de-minimis value shipments. In comparison, this same facility averaged 2.4 million shipments between 1997 and 1999.This is an increase of over 1000 percent in 20 years.

Similarly, the U.S. Postal Service (USPS) has experienced a significant increase in the number of international mail packages arriving in the United States. The growing volume of small shipments is also impacting operations at sea, rail, and land ports of entry. Industry projections strongly suggest that air freight traffic will only increase as the volume in online sales continues to rise over the course of the next decade.

For purposes of this strategy, CBP defines e-commerce as high-volume, low-value shipments entering the port limits of the United States. According to the agency, “this growth has increased the opportunity for illicit and dangerous products to cross our borders, placing Americans’ health and safety at risk and compromising U.S. economic security.”
The growth in e-commerce is “creating inspection challenges.”

What are these challenges?

  • E-commerce shipments pose the same health, safety, and economic security risks as containerized shipments, but the volume is higher and growing.
  • Transnational criminal organizations are shipping illicit goods to the United States via small packages due to a perceived lower interdiction risk and less severe consequences if the package is interdicted.
  • New or infrequent importers often possess less familiarity with U.S. customs laws and regulations, which can lead to the importation of non-compliant goods.

The level of information required for entry of these packages that will undoubtedly be declared under Section 321 will be minimal. CBP has recently talked about “intelligent enforcement.” This concept is based on the use of data and information. Absent the level of data for these individual e-commerce shipments CBP will be confronted with a daunting enforcement task. To correct this vulnerability, CBP must put into place new protocols that allow for effective identification, enforcement, and deterrence of trade violations in the e-commerce environment.

CBP will need to improve data collection for its targeting systems and field personnel. Without key pieces of data, CBP will most likely use more time-consuming techniques to try to uncover violations. This will require use of physical inspections along with x-ray scanning technologies, and leveraging postal, other government agency, and foreign government assets to plug information gaps.

CBP is stressing that it remains committed to facilitating legitimate trade while ensuring consumer safety and economic vitality as the volume of e-commerce shipments continues to increase. This e-commerce strategy positions CBP to properly enforce violations and address the various complexities and threats resulting from this global shift in trade. This is the crux of the e-commerce dynamic. CBP is faced with an increased workload plus increased pressure to enforce and protect while at the same time needing to facilitate trade.

It is interesting to note that CBP is seeking to enhance current wide ranging legal and regulatory authorities in order to better posture the agency and other government partners to address emerging threats. According to CBP these new authorities will “enable the agency to more easily adapt to evolving business practices and develop risk segmentation processes, improve targeting, and realign resources.”

Enhancing and adapting all affected CBP operations to respond to emerging supply chain dynamics created by the rapid growth of e-commerce is anticipated. In order to implement the necessary changes, CBP will seek additional resources, develop and utilize state-of-the-art techniques and technologies, and amend relevant staffing.

This strategy strengthens CBP’s ability to protect the health and safety of American citizens and the U.S. economy from non-compliant goods. By transforming CBP operations, driving compliance, and promoting cooperation domestically and internationally, the United States will build a strong trade posture in e-commerce, ensuring a shared economic prosperity.

The bottom line is CBP is restructuring its framework for ensuring compliance of informal entries. How this will affect the future of small package shipments and the use of Section 321 remains to be seen.

Please contact Vandegrift to discuss your e-commerce framework.

Blog Post: Spring Cleaning by Janet Labuda

Over the last few weeks the rhetoric regarding the global trade environment has increased dramatically. Less than a month after he declared to the World Economic Forum that India was open for business, Prime Minister Narendra Modi has raised import duties to their highest in three decades, setting the stage for a protracted trade war. The U.S. administration announced it would look at reciprocal tax treatment.

The administration has also announced a 25% duty on steel and aluminum products to counteract what are considered unfair trade practices affecting those industries. This has caused allied trading partners to look at various U.S. made products for retaliation.

The renegotiation of the trilateral North American Free Trade Agreement continues and the Administration is taking another look at the Trans-Pacific Partnership agreement and discussing a possible model free trade agreement with an unnamed country in Africa.

The stage was set at the State of the Union address, when President Trump reiterated his position on trade. He stated “we expect trading relationships to be fair and to be reciprocal. We will work to fix bad trade deals and negotiate new ones. And we will protect American workers and American intellectual property, through strong enforcement of our trade rules.”

The pendulum is swinging sharply toward enforcement. Customs is using terms like intelligent enforcement and consequence delivery in order to effect deterrence.

With increased enforcement just around the corner, a good spring cleaning may be needed. Now is a good time to reorganize, clean up, and ensure that all systems are in good working order.

The compliance team should be asking the following questions:

  • Are corporate compliance manuals up to date?
  • Have all training materials been refreshed and have new employees  been trained? 
  • Have all employees been trained on any compliance changes within the company?
  • When was the last time the company did an internal audit to check that compliance procedures are working effectively?
  • Are vendors and suppliers knowledgeable about the importers compliance requirements?
  • When was the last time corporate internal controls were reviewed and updated?
  • When was the last time we talked with our broker about changes in sourcing, use of trade preference programs, and the introduction of new product lines?

Clearing out the compliance cobwebs now will undoubtedly pay off in the long run.

Please contact Vandegrift to learn more about conducting an internal compliance assessment. 

New Tariffs on Steel and Aluminum

On March 8, 2018, the President of the United States signed Executive Orders imposing additional duties on certain steel and aluminum products. Mexico and Canada are exempt from these tariffs.

The steel tariff is 25%. The following HTS numbers will be subject to the additional tariff: subheadings 7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90, including any subsequent revisions to these HTS classifications.

The aluminum tariff is 10%. The following HTS numbers will be subject to the additional tariff: (a) unwrought aluminum (HTS 7601); (b) aluminum bars, rods, and profiles (HTS 7604); (c) aluminum wire (HTS 7605); (d) aluminum plate, sheet, strip, and foil (flat rolled products) (HTS 7606 and 7607); (e) aluminum tubes and pipes and tube and pipe fitting (HTS 7608 and 7609); and (f) aluminum castings and forgings (HTS 7616.99.51.60 and 7616.99.51.70), including any subsequent revisions to these HTS classifications.

HTS heading 9903 will be updated with these changes. The Orders go into effect for goods entered, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on March 23, 2018. 

A clause has been built in to each Executive Order that a directly affected party located in the United States can apply for relief from the tariffs for any steel or aluminum article determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality. Relief can also be authorized based upon specific national security considerations.

These changes will remain in effect, unless such actions are expressly reduced, modified, or terminated.

Additional information will be provided as it becomes available.  Please contact Vandegrift with any questions or concerns regarding the imposition of these new tariffs.