Drawback Details Expected in Coming Weeks, Trade Specialists Say

BALTIMORE -- There has been a long wait for details on how drawback will work under the Trade Facilitation and Trade Enforcement Act, but Dave Corn, vice president of Comstock and Theakston, said things are going to be moving in the next month. The Office of Management and Budget is required to send the proposed rule back to CBP by July 5, and Corn said he expects CBP to release a proposed rule notification a week or two after OMB acts. A lawsuit on whether CBP's action to change accelerated payment practices was outside its authority for interim guidance should also be resolved within a few weeks, he said while speaking at the American Association of Exporters and Importers annual conference on June 8.

With all the complications of operating under interim guidance on drawback, there's another possibility that concerns trade professionals more -- that there might not be a final rule ready by late February 2019. That's when filing for drawback under the legacy rules will no longer be allowed. CBP, however, has said it's optimistic it can promulgate the rule before then, even if it chooses a 90-day comment period..

The changes to drawback rules aren't that workable when it comes to the rule of lesser, which says you can't get drawback for a more expensive input if your finished product exported is less valuable. Corn said that rule works well in many sectors, but isn't suitable for manufacturing, but the law requires its application to manufacturing. Corn said lobbyists from the National Customs Brokers & Forwarders Association of America and the American Association of Exporters and Importers expected per-unit averaging -- a drawback rule designed to limit manipulations of drawback -- to apply to all imports and exports as they talked with Congress. But when the final bill was released, it said CBP would take a hybrid approach, sticking with an invoice-based system for direct observation imports but averages in the case of substitutions. "What ultimately came out was not what we were expecting," he said, even after working on the statute for years.

While panelists were critical of some of the difficulties in the new way of calculating drawback, they also praised CBP's regulatory decisions in some respects. Matt Anderson, president of Charter Brokerage, said the agency has collaborated well with businesses that have gotten rejections of their drawback claims. Still, he said, "We’re certainly discovering daily new error messages." Corn said that "some days it feels like it’s working well, other days it feels like it’s not working at all."