Importer Compliance Rates Fall Amid Increased Workload, Complexity From Sections 232, 301 Tariffs

Measures of compliance among steel products importers are down since the imposition of sections 301 and 232 tariffs, said the American Institute for International Steel’s Customs Committee in its 2018 year-end report. CBP told the trade association that compliance measured by the letter of the law for imports in Harmonized Tariff Schedule chapters 72 and 73 was down to 96.46 percent in fiscal year 2018, and down to 97.8 percent when measured by major trade discrepancies, CBP told AIIS, the report said. “Issues with Section 232 and Section 301 entries presumably contributed to the reductions,” the report said.

A survey of CBP import specialists at ports of entry noted issues including classification changes for products now subject to Section 232 tariffs, filing errors (particularly at early stages of Section 232 implementation), entries that noted countervailing duty cases but not antidumping duty cases that were also applicable, and increased misclassification for Mexican steel imports, CBP said at a Nov. 30 meeting with members of the AIIS Customs Committee.

Nonetheless, despite some difficulties related to implementation of the trade remedies, steel importers are “for the most part” fulfilling their compliance responsibilities, and are properly paying antidumping and countervailing duties as well as the Section 232 tariffs, a CBP official told AIIS, according to the report.

A customs broker and AIIS member present at the meeting detailed those implementation challenges. The immediate concern for brokers was an increase in workload, with entries becoming more complex and automation lagging due to quick implementation deadlines, said Mary Jo Muoio of Geodis. “There were also policy issues with CBP that required clarification and/or negotiation, including entry reject period extensions, development of a uniform return policy, and the lack of needed capabilities such as a reset mechanism for quota [post summary corrections],” Muoio said, according to the report.

The exclusion process is now also creating extra work for brokers, both in information requirements and in retroactive claims filed through PSCs. Implementation dates for both the Section 232 and the Section 301 tariffs and AD/CV duty cases are also causing concern. “Date of arrival in ACE has not always been clear,” Muoio said. “In-bond dates differ for Quota and other entry types,” she said. “Problems with a release, such as an agricultural hold, may lead to a loss of the arrival date and in some cases subject the entries to substantial duty increases.”

There are also accuracy issues with CBP-generated lists of entries it believes should have been entered under Section 232 or Section 301, Muoio said. “There have also been instances where Customs skips the Request for Information Form 28 procedure and goes straight to the Notice of Action Form 29, reducing the chance for importers to explain problems or issues.”

Meanwhile, CBP also has been busy resolving issues related to tariff implementation. There was a “large increase from last year” of rulings issued on steel products in 2018, with 24 issued by the National Commodity Specialist Division in New York and two by CBP headquarters. Some of those addressed country of origin issues, with the agency’s “final position” being “that substantial transformation remains the criteria for determining Section 232 and 301 coverage, even where the origin for marking purposes under NAFTA may be different,” the report said. “One issue still under consideration at HQ concerns whether certain steel articles are parts of forklifts or steel profiles (forklift masts),” it said.

CBP’s Center of Excellence and Expertise for base metals has seen a “significant workload increase” since the tariffs were implemented, said Center Director Africa Bell at the meeting with AIIS, the report said. “Some of the original implementation issues have been improved by automation fixes, such as the increased volume of [PSCs], which are up” 228 percent since September, she said. “The Center has taken an aggressive stance on 232/301 to ensure that the additional duty revenue is collected. The Center is looking at the strategic view, working to manage the risks. A major concern is effectively administering legitimate trade, seeking to protect that trade from the effects of the bad actors,” Bell said.