Customs Reauthorization Bill Includes Drawback Modernization, New Importer Database, Higher De Minimis

Drawback modernization, an increase in the de minimis level to $800, and an exemption from duties for container residue are components of the customs reauthorization bill set for inclusion in the package of trade legislation coming together in Congress, according to a summary of the draft bill from Senate Finance Committee Chairman Orrin Hatch, R-Utah (here). The customs reauthorization bill, introduced in the Senate (here), would also provide for enhanced trade enforcement, including databases of new importers and importer of record numbers, the ability for CBP to share unredacted samples of articles suspected to infringe intellectual property rights, and timelines for formal CBP investigations of antidumping and countervailing duty evasion. Highlights of the summary, which was provided by Hatch in anticipation of a markup scheduled for April 22 (see 1504200054), are as follows:

Drawback Simplification and Modernization

The bill includes provisions meant to simplify current drawback law, according to the summary. Goods of one eight-digit HTS subheading would be able to qualify for drawback when goods of the same eight-digit subheading are exported (including for Schedule B numbers). The proposal would also “standardize” time frames for filing drawback claims at no later than five years after the data on which the merchandise is imported. Other drawback provisions include the following:

• The requirement to file a certificate of delivery to evidence the transfer of merchandise would be eliminated, and “records kept in the normal course of business” would be considered evidence. Records would have to be maintained for five years, instead of the current three.
• The importer and party claiming drawback would be jointly and severally liable for the full amount of the drawback claim made.
• CBP would have to issue regulations within two years for the calculation of drawback that “would allow for no more than 99 percent of duties, taxes and fees to be refunded.”

De Minimis Raised to $800

The customs reauthorization bill would raise the de minimis exemption from $200 to $800 for shipments of merchandise imported by one person on one day. The increase would apply to merchandise entered, or withdrawn from warehouse, on or after the 15th day following enactment of the customs reauthorization bill.

Residue Exempt From Duties

General Note 3(e) of the HTS would be amended so that it includes “residue of bulk cargo contained in instruments of international traffic previously exported from the U.S., exempting residue from duties. The bill would define residue as not exceeding seven percent of the bulk cargo, with no or de minimis value.

Goods Returned

The customs reauthorization bill would amend Chapter 98 of the tariff schedule so articles returned after repair under subheadings 9802.00.40 and 9802.00.50 can be commingled, and the origin, value and classification of such articles may be accounted for using an “inventory management” method. The bill would also amend the article description for subheading 9801.00.10 so that it includes “any other products when returned within 3 years after having been exported,” and would insert a new subheading providing duty-free treatment for certain U.S. government property returned to the United States.

Penalties for Terrorist Customs Brokers

The bill would add to the list of violations for broker penalties under 19 USC 1641 the offense of committing or conspiring to commit an act of terrorism.

Country of Origin Marking for Lampposts

Lampposts, lamppost bases, and cast utility poles would be added to the list of products which must always have a country of origin marking under 19 USC 1304(e). The marking would have to be in a location that remains visible after installation.

Trade Enforcement

The customs reauthorization bill includes several mandates meant to improve CBP’s trade enforcement capabilities, including the ability to share unredacted samples of merchandise with rights holders; a database of new importers and increased bonding requirements; and “trade alerts” for high-risk merchandise.

IPR enforcement. The bill would give CBP the ability to share unredacted images or samples of suspected infringing merchandise with intellectual property rights holders if doing so would assist in determining whether the goods violate intellectual property rights. CBP would also be given the authority to seize “circumvention devices,” and take enforcement action against merchandise infringing pending copyright applications.

Importer of record numbers. CBP would have to establish an “importer of record program” that includes criteria and a process for assigning importer of record numbers, “to ensure that duplicate importer of record numbers are not assigned to the same importer, as well as to maintain and evaluate the accuracy a database of importer of record numbers.”

New importer program. CBP would also have to establish a new importer program, requiring CBP to adjust bond amounts for new importers “based on the level of risk.” CBP would also have to increase oversight of merchandise imported by new importers, and establish a database of new importers.

New targeting division. A “Commercial Targeting Division” would be required within the CBP Office of International Trade. Within the division, individual “National Targeting and Analysis Groups” (N-TAGs) would “target imports that may violate customs and trade laws, with particular focus on laws and regulations related to: 1) agriculture programs; 2) antidumping and countervailing duties; 3) import safety; 4) intellectual property rights; 5) revenue; 6) textiles and wearing apparel; and 7) trade agreements and preference programs.”

The targeting division would have the ability to issue “trade alerts,” which would direct further inspection or physical examination or testing of merchandise by the port personnel if certain risk-assessment thresholds are met. The port director would have discretion on whether or not to carry out the trade alert.

AD/CV duty evasion. The bill would adopt the ENFORCE Act’s procedures for investigating allegations of evasion of antidumping and countervailing duty orders (see 13040911), including requiring CBP to begin investigations 10 days after an allegation is submitted, and by 90 days, the CBP commissioner must make a “reasonable suspicion” determination. If affirmative, CBP may suspend liquidation. The bill also provides the CBP commissioner 270 days to complete an investigation.

Classification and valuation seminars for CBP and ICE employees. CBP would have to work with the private sector to develop educational seminars for its own employees as well as ICE personnel. The seminars would improve CBP’s ability to classify and appraise merchandise and trade enforcement efforts. CBP would also have to consider requests from domestic manufacturers for training of CBP officers on how to enforce antidumping and countervailing duty orders.

Trade Facilitation

The reauthorization bill also includes provisions on trade facilitation, including funding for ACE, outreach and consultation requirements, and mandates to ensure trusted trader programs are providing adequate benefits.

Additional ACE funding. The bill would set aside $153.7 million toward development of the Automated Commercial Environment. It would also codify deadlines for the implementation of ACE and the International Trade Data System (ITDS) by the end of 2016.

COAC. The customs reauthorization bill would set new statutory requirements for the COAC advisory committee, including that the assistant secretary of the Treasury for tax policy serve as co-chair. It would also change the name of the COAC, which is currently the “Advisory Committee on the Commercial Operations of Customs and Border Protection,” to the Customs Operations Advisory Committee.

Consultations with business. Before making any changes to policies, initiatives or actions that have an impact on CBP’s trade and revenue functions, CBP would have to “consult with the business community at least 30 days after proposing and 30 days after finalizing any policies,” and give the appropriate congressional committees at least 60 days notice.

Trusted trader benefits. The bill would direct CBP to work with the private sector and other government agencies to make sure trusted trader programs are providing “commercially significant and measurable trade benefits,” including collaborating with agencies that have hold and release authority to provide for expedited release. CBP would have to submit annual reports on the effectiveness of each trusted trader program.

(See the summary for additional provisions, including the establishment of trade facilitation priorities; CBP reports on trade enforcement, revenue protection, and in-bond merchandise; the creation of a rapid response plan; provisions on honey transshipment and the suspension of World Trade Organization concessions; the establishment of a chief intellectual property negotiator at the U.S. Trade Representative.)