Customs Duty

Merchandise imported in bulk and then stored in a foreign-trade zone prior to sale is not eligible for the Section 321 exemptions when the goods are withdrawn upon consumer sales, CBP said in a Sept. 18 ruling. CBP's ruling, HQ H282601, was in response to a ruling request from Sandler Travis lawyer Robert DeCamp on behalf of the American Apparel and Footwear Association. CBP's analysis in this ruling is similar to another ruling on de minimis shipments and FTZs (see 1807180022). There are efforts underway to change the treatment of such goods, on Capitol Hill (see 1808150007) and in CBP's regulations through the Commercial Customs Operations Advisory Committee (see 1810040019).

The Commercial Customs Operations Advisory Committee (COAC) approved a broad set of recommendations for updating the foreign-trade zone regulations in 19 CFR 146 during its Oct. 3 meeting. The recommendations, which came through the Trade Modernization Subcommittee, are meant to address several issues, including confusion over the application of trade remedies to goods in FTZs and Section 321 entries for small value items. "Updating our FTZ practices and regulations is overdue," said Treasury Department Deputy Assistant Secretary Timothy Skud.

The structure of the Commercial Customs Operations Advisory Committee (COAC) will be updated in order to mirror CBP's mission and to allow for quicker reaction to events, said Bradley Hayes, CBP executive director of trade relations, during the Oct. 3 COAC meeting. The number of subcommittees will go from six to four for this COAC term, he said. The four subcommittees and underlying work groups are:

Reclassifying Chinese imports into Harmonized Tariff Schedule codes for goods not exposed to Section 301 tariffs is perhaps the least understood, most underused strategy that companies can try for minimizing the duties’ impact, a UPS executive said during an Oct. 3 webinar on high-tech supply chains. “If you’re not participating in what that classification process looks like, you’re taking a risk, I would say, at a minimum,” said Ron Shepherd, vice president at UPS Trade Management Services.

Alcatel-Lucent Enterprise (ALE) through year-end will “absorb” the “significant” cost increases of the 10 percent Section 301 tariffs on Chinese imports of networking equipment and components that took effect Sept. 24, it said in a Oct. 3 news release. The Trump administration removed imports of Bluetooth headphones, smartwatches and fitness trackers under the 8517.62.00 line item from the final tariffs list, but let 10 percent duties stand on networking equipment imported under the same classification. The tariffs are scheduled to rise to 25 percent after Jan. 1. “Many vendors have chosen to pass the cost through to channel partners and customers by immediately increasing prices,” but ALE “will absorb the current 10 percent increase and give partners the opportunity to place orders before a potential need to adjust pricing in the new year,” it said. Most U.S. customers “locked in 2018 budgets long ago and are already in planning cycles for next year,” ALE said. “We recognize an unexpected price increase could aggravate a budgeting process that is often already complex for business leaders.” It vowed to give three months’ notice of any 2019 price increases.

The customs chapter for the new U.S.-Mexico-Canada Agreement, or revised NAFTA, includes some provisions aimed at customs brokers. Those provisions, included in Article 7.21, stipulate that self-filing must be permitted and that customs broker licensing requirements must be transparent. Also, "no Party shall impose arbitrary limits to the number of ports or locations that a customs broker may operate," it says. "A Party shall allow a licensed customs broker to electronically submit a customs declaration and import documentation to the electronic systems" at "any port at which it is licensed to operate."

The International Trade Commission issued Revision 12 to the Harmonized Tariff Schedule. The relatively comprehensive update implements as of Oct. 1 new provisions for wood products agreed to by the World Customs Organization, and adds new subheadings for pesticide-impregnated bed nets in Chapter 63. Other changes include new provisions for the third, $200 billion list of 10 percent Section 301 tariffs that took effect for goods from China beginning Sept. 24, as well as new exemptions for certain products from Section 201 safeguards on solar cells that took effect Sept. 19.

The Commerce Department issued a notice in the Federal Register on its recently initiated antidumping duty investigations on strontium chromate from Austria (A-433-813) and France (A-427-830).

Both Democrats and Republicans said auto tariffs aren't going to help add U.S. manufacturing, and numerous members of the Senate Finance Committee questioned the logic of the Trump administration's national security rationale for threatening them. Sen. Rob Portman, R-Ohio, noted that he has a bill that would not allow the president to act unilaterally to raise tariffs on autos or auto parts under Section 232, and that Honda North America has endorsed it. But little of the two-hour hearing focused on how Congress could take back power on trade to constrain the administration. Even committee ranking member Ron Wyden, D-Ore., who criticizes the president's trade policy as chaotic and ineffective, hedged that "perhaps" it is "time for the Congress to think about reclaiming that authority," in his opening statement.

International Trade Today is providing readers with some of the top stories for Sept.17-21 in case they were missed.