CBP Hopes for Legislative Fix on Merchandise Processing Fees Before July 1 USMCA Entry Into Force

The government is considering how quickly it can get through a legislative fix to U.S.-Mexico-Canada Agreement implementation provisions that allow for duty refunds on post-importation preference claims, but not a refund of merchandise processing fees, said Maya Kumar, director of textiles and trade agreements at CBP. She said on May 22 that CBP officials “do not think that was the intent of the law.” Kumar, who was speaking at the National Association of Foreign-Trade Zones virtual conference, said that if it's at all possible, CBP would like to see that fixed by Congress before USMCA's entry into force July 1. “We’re trying to work with [the office of the U.S. Trade Representative] as well as Congress and see how quickly they can do that,” she said.

Foreign-trade zones have special issues with the transition between NAFTA and USMCA, as goods could have been entered under privileged filing status, but marked as NAFTA, but if they are exiting the zone after July 1, it's not clear if they have to comply with USMCA rules of origin rather than NAFTA.

Kumar said that for reconciliation entries, drawback and exits from bonded warehouses or FTZs, whatever trade agreement applied at the date they were imported or went to a privileged status is the one that will apply. “We’re trying to understand how ACE needs to behave,” she said, to make that work.

Kumar said that ACE will be available for test filings at least a week before July 1 -- preferably for two weeks, she hopes. She did not explicitly commit to a six-month informed compliance period for USMCA, as traders have asked for, but said, “We will have some type of transition period. We do understand we’re starting a new trade agreement in the middle of the year. We do understand the complications that go with all of this, and we will be flexible.”

Kumar said that when importers have questions and are sending them to the USMCA email address, they should expect a two- or three-day delay for a response. She said that some people are emailing again after 24 hours, and that CBP staffers' emailboxes are filling with thousands of emails asking the same thing. She said the agency and the International Trade Commission are in the final stages of forming Harmonized Tariff Schedule General Note 11, and she hopes it will be published soon.