Highlights from BOC’s Port Tour and Logistics Seminar on Friday, October 19, focusing on Industry Updates and 301 Tariffs
(see previous BOC Blasts for additional details – visit www.bocintl.com to access previous BOC Blasts)
Tariff List 3 – currently at 10%; scheduled to rise to 25% on 1/1/19 (see previous BOC Blasts for additional details) – there is no intermediate tariffs at this point, until/unless something changes, ie, all products on List 3 are an additional 10% now, 25% January 1.
Tariff List 2 – the final date for filing a request for exclusion from List 2 is December 21, 2018. It is strongly recommended, if you make an exclusion request, to NOT just complete the request form, but to really make a case for why an exclusion should apply – make sure your reason fits into one of the reasons provided.
From the Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2018-09-18/pdf/2018-20246.pdf
“each request specifically must identify a particular product, and provide supporting data and the rationale for the requested exclusion. USTR will evaluate each request on a case-by-case basis, taking into account whether the exclusion would undermine the objective of the Section 301 investigation. Any exclusion will be effective starting from the August 23, 2018 effective date of the additional duties, and extending for one year after the publication of the exclusion determination in the Federal Register. In other words, an exclusion, if granted, will apply retroactively to the August 23 date of the imposition of the additional duties.”
Reasons include (in summary):
- Whether the particular product is available ONLY from China
- Whether the imposition of additional duties on the particular product would cause severe economic harm to the requestor
- Whether the particular product is strategically important or related to “made in China 2025” or other Chinese industrial programs
Tariff List 1 – the exclusionary period has closed, no more requests are being taken.
Changing country of origin to avoid additional tariffs – It is permissible to move production to another country, not China. However, if you are looking to make a country of origin change, you cannot simply move the product through another country. That is not sufficient to change the country of origin. CBP looks at where a “substantial transformation” takes place, ie, did the product change sufficiently in the other country to now make it country of origin Taiwan, instead of China.
Apply for a binding ruling if you are not sure. CBP is NOT going to look at these types of issues in the favor of the Importer making a change and avoiding the tariffs, without it being clear that another country really is the country of origin (not China).
From US CBP Information Center:
The term “substantially transformed” means, with respect to a good(s) or a material(s), changed as the result of a manufacturing or processing operation so that:
- The good(s) or material(s) is converted from a good that has multiple uses into a good or material that has a limited uses
- The physical properties of the good or material are changed to a significant extent
- The operation underdone by the good(s) or material(s) is complex by reason of the number of processes and material involved and the time and level skill required to perform those processes
- The good(s) or material(s) loses its separate identity in the manufacturing or processing operation
For further information on what constitutes a substantial transformation or to ensure your goods are eligible for the provision, contact an Import Specialist at the port through which the goods will be imported.
Time of Entry – 19 CFR § 141.68 – this is the area where there still seems to be a lot of confusion, even within CBP and among different ports; we are seeing the law being interpreted differently, with regards to the increased tariffs. Importers want their goods to have been entered prior to the September date for the new tariffs. However, some ports have used date of entry filing, but others have used actual arrival date into the first US port. BOC has seen, first-hand, entries being handled both ways. BOC will do everything we can to help clarify the situation for you, but we are not attorneys. If you have legal questions, you may want to consult your attorney.
19 CFR § 141.68 defines “Time of entry” as the following:
- When entry documentation is filed without entry summary.When the entry documentation is filed in proper form without an entry summary, the “time of entry” will be:
- The time the appropriate CBP officer authorizes the release of the merchandise or any part of the merchandise covered by the entry documentation, or
- The time the entry documentation is filed, if requested by the importer on the entry documentation at the time of filing, and the merchandise already has arrived within the port limits; or
- The time the merchandise arrives within the port limits, if the entry documentation is submitted before arrival, and if requested by the importer on the entry documentation at the time of submission.
- When entry summary serves as entry and entry summary.When an entry summary serves as both the entry documentation and entry summary, in accordance with 142.3(b) of this chapter, the time of entry will be the time the entry summary is filed in proper form with estimated duties attached except as provided in § 142.13(b).
- When merchandise is released under the immediate delivery procedure.The time of entry of merchandise released under the immediate delivery procedure will be the time the entry summary is filed in proper form, with estimated duties
- Quota-class merchandise.The time of entry for quota-class merchandise will be the time of presentation of the entry summary or withdrawal for consumption in proper form, with estimated duties attached, or if the entry/entry summary information and a valid scheduled statement date (pursuant to 24.25 of this chapter) have been successfully received by CBP via the Automated Broker Interface, without the estimated duties attached, as provided in § 132.11a of this chapter.
- When merchandise has not arrived.Merchandise will not be authorized for release, nor will an entry or an entry summary which serves as both the entry and entry summary be considered filed or presented, until the merchandise has arrived within the port limits with the intent to unlade.
BOC NOTE: “within the port limits” is where the argument/disagreement seems to be happening, and Ports are not applying this standard consistently.