OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Notice of Product Exclusions: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation
AGENCY: Office of the United States Trade Representative.
ACTION: Notice of product exclusions.
SUMMARY: Effective July 6, 2018, the U.S. Trade Representative (Trade Representative) imposed additional duties on goods of China with an annual trade value of approximately $34 billion (the $34 billion action) as part of the action in the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. The Trade Representative’s determination included a decision to establish a product exclusion process. The Trade Representative initiated the exclusion process in July 2018, and stakeholders have proceeded to submit requests for the exclusion of specific products. This notice announces the Trade Representative’s determination to grant certain exclusion requests, as specified in the Annex to this notice. The Trade Representative will continue to issue decisions on pending requests on a periodic basis.
DATES: The product exclusions announced in this notice will apply as of the July 6, 2018 effective date of the $34 billion action and will extend for one year after the publication of this notice. U.S. Customs and Border Protection will issue instructions on entry guidance and implementation.
FOR FURTHER INFORMATION CONTACT: For general questions about this notice, contact Assistant General Counsels Arthur Tsao or Megan Grimball, or Director of Industrial Goods Justin Hoffmann at (202) 395-5725. For specific questions on customs classification or implementation of the product exclusions identified in the Annex to this notice, contact firstname.lastname@example.org.
For background on the proceedings in this investigation, please see the prior notices issued in the investigation, including 82 FR 40213 (August 23, 2017), 83 FR
14906 (April 6, 2018), 83 FR 28710 (June 20, 2018), 83 FR 33608 (July 17, 2018), 83
FR 38760 (August 7, 2018), and 83 FR 40823 (August 16, 2018), 83 FR 47974
(September 21, 2018), and 83 FR 65198 (December 19, 2018).
Effective July 6, 2018, the Trade Representative imposed additional 25 percent duties on goods of China classified in 818 8-digit subheadings of the Harmonized Tariff Schedule of the United States (HTSUS), with an approximate annual trade value of $34 billion. See 83 FR 28710. The Trade Representative’s determination included a decision to establish a process by which U.S. stakeholders may request exclusion of particular products classified within an 8-digit HTSUS subheading covered by the $34 billion action from the additional duties. The Trade Representative issued a notice setting out the process for the product exclusions, and opening a public docket. See 83 FR 32181 (the July 11 notice).
Under the July 11 notice, requests for exclusion had to identify the product subject to the request in terms of the physical characteristics that distinguish the product from other products within the relevant 8-digit subheading covered by the $34 billion action. Requestors also had to provide the 10-digit subheading of the HTSUS most applicable to the particular product requested for exclusion, and could submit information on the ability of U.S. Customs and Border Protection to administer the requested exclusion. Requestors had to provide the quantity and value of the Chinese-origin product that the requestor purchased in the last three years. With regard to the rationale for the requested exclusion, requests had to address the following factors:
- Whether the particular product only is available from China and specifically whether the particular product and/or a comparable product is available from sources in the United States and/or third countries.
- Whether the imposition of additional duties on the particular product would cause severe economic harm to the requestor or other U.S. interests.
- Whether the particular product is strategically important or related to “Made in China 2025” or other Chinese industrial programs.
The July 11 notice stated that the Trade Representative would take into account whether an exclusion would undermine the objective of the Section 301 investigation.
The July 11 notice required submission of requests for exclusion from the $34 billion action no later than October 9, 2018, and noted that the Trade Representative would periodically announce decisions. The Trade Representative regularly updates the status of each pending request and posts the status at https://ustr.gov/issue- areas/enforcement/section-301-investigations/request-exclusion.
- Determination to Grant Certain Exclusions
Based on the evaluation of the factors set out in the July 11 notice, which are summarized above, pursuant to sections 301(b), 301(c), and 307(a) of the Trade Act of 1974, as amended, and in accordance with the advice of the interagency Section 301 Committee, the Trade Representative has determined to grant the product exclusions set out in the Annex to this notice. The Trade Representative’s determination also takes into account advice from advisory committees and any public comments on the pertinent exclusion requests.
As set out in the Annex to this notice, the exclusions are established in two different formats: (1) as an exclusion of an existing 10-digit subheading from within an 8- digit subheading covered by the $34 billion action, or (2) as an exclusion reflected in specially prepared product descriptions. In particular, the exclusions take the form of seven 10-digit HTSUS subheadings, and 24 specially prepared product descriptions.
In accordance with the July 11 notice, the exclusions are available for any product that meets the description in the Annex, regardless of whether the importer filed an exclusion request. Further, the scope of each exclusion is governed by the scope of the 10-digit headings and product descriptions in the Annex to this notice, and not by the product descriptions set out in any particular request for exclusion.
The exclusions in the Annex cover approximately 1,000 separate exclusion requests: the excluded 10-digit subheadings cover 918 separate requests, and the 24 specially drafted product descriptions cover approximately 66 separate requests.
As stated in July 11 Notice, the exclusions will apply as of the July 6, 2018 effective date of the $34 billion action, and extend for one year after the publication of this notice. U.S. Customs and Border Protection will issue instructions on entry guidance and implementation.
The Trade Representative will continue to issue determinations on pending requests on a periodic basis.
Stephen Vaughn General Counsel
Office of the U.S. Trade Representative.
Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on July 6, 2018, subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS) is modified:
- by inserting the following new heading 9903.88.05 in numerical sequence, with the material in the new heading inserted in the columns of the HTSUS labeled “Heading/Subheading”, “Article Description”, “Rates of Duty 1-General”, respectively:
Rates of Duty
Articles the product of China, as provided for in U.S. note 20(h) to this subchapter, each covered by an exclusion granted by the U.S. Trade Representative . . . . . . . . . . . . . . . . . . . . .
The duty provided in the applicable subheading”
- by inserting the following new U.S. note 20(h) to subchapter III of chapter 99 in numerical sequence:
“(h) The U.S. Trade Representative determined to establish a process by which particular products classified in heading 9903.88.01 and provided for in U.S. notes 20(a) and 20(b) could be excluded from the additional duties imposed by heading 9903.88.01. See 83 Fed. Reg. 28710 (June 20, 2018) and 83 Fed. Reg. 32181 (July 11, 2018). Pursuant to the product exclusion process, the U.S. Trade Representative has determined that the additional duties provided for in heading 9903.88.01 shall not apply to the following particular products, which are provided for in the enumerated statistical reporting numbers:
- Spark-ignition engines for marine propulsion, outboard, each rated at not less than
29.83 kW but not more than 44.74 kW (described in statistical reporting number 8407.21.0080)
- Welded hydraulic linear acting (cylinders) engines and motors, each with piston bore of 12.7 mm or more but not over 34.6 mm, with stroke not over 11.43 m, overall length not over 15.24 m and rod diameter not over 1.219 m (described in statistical reporting number 21.0030)
- Stretchers of stainless steel, designed to move rollers to adjust tension of paper fabric to be dried, each with a pivoting arm with an actuator, linear rail movement with an actuator, and front and back units with mounting holes for tube roll bearing housings (described in statistical reporting number 90.2000)
- Roller machines with dies for embossing paper, manually powered (described in statistical reporting number 10.9080)
- Salad spinners of plastics, with capacity of at least 2.4 liters but not more than 3.8 liters (described in statistical reporting number 19.0000)
- Nonelectric water filtration apparatus consisting of three cylinder-shaped filter cartridges, each measuring 6.35 cm by 26.67 cm, having water storage tank and plastic tubing measuring 0.63 cm or more but not over 0.95 cm, presented with installation kit (described in statistical reporting number 21.0000)
- Winches, each having a winch frame with a corrosion resistant coating and stainless steel mandrel with nylon bushings, operated manually by a worm gear mechanism (described in statistical reporting number 39.0100)
- Elevators, comprising L-shaped steel buckets bolted to a steel chain, with guide rollers and a drive system (described in statistical reporting number 32.0000)
- Belt conveyors, each comprising a frame with leveling feet, electric motor and food grade plastic conveyor belt (described in statistical reporting number 33.0000)
- Belt conveyors, each comprising a welded frame with leveling feet and casters, electric motor and food grade plastic modular conveyor belt (described in statistical reporting number 33.0000)
- Guards of stainless steel, designed to shield operators of papermaking machines from moving or rotating equipment, each with dimensions ranging from 30 cm by 30 cm by 50 cm to 50 cm by 50 cm by 4 m, weighing 30 kg or more but not over 100 kg (described in statistical reporting number 99.1000)
- Scrapers (“doctors”) of stainless steel, designed to scrape impurities from the rotating roll surface of the forming and press sections of papermaking machines, each comprising a beam with a blade of non-symmetrical cross section, long aspect ratio, and mounting journals and turning devices on either end, with dimensions ranging from 50 cm by 50 cm by 8 m to 60 cm by 6 m by 11 m, weighing 1 metric ton or more but not over 3 metric tons (described in statistical reporting number 8439.99.1000)
- Frameworks of the forming and press section of papermaking machines, of stainless steel or cladded mild steel with stainless or acid proof steel, each with dimensions ranging from 1 m by 1 m by 1 m to 2.3 m by 2.3 m by 12 m, weighing 500 kg or more but not over 40 metric tons (described in statistical reporting number 99.1000)
- Guides of stainless steel, designed for locating conveyer belts on papermaking machines, each with a moving arm with an actuator and front and back units with mounting holes for tube roll bearing houses, each with dimensions ranging from 40 cm by 50 cm by 30 cm to 1 m by 1 m by 50 cm, weighing 300 kg or more but not over 500 kg (described in statistical reporting number 99.1000)
- Rollers of steel and cast iron (“nip rollers”) with bearing journals on either end, designed for use in paper manufacturing to mechanically compress paper web to remove water or impart desired mechanical properties in paper web, each with a polymer cover, the foregoing with length of 7 m or more but not over 12 m, with diameter of 1 m or more but not over 1.5 m, weighing 15 metric tons or more but not over 30 metric tons (described in statistical reporting number 8439.99.1000)
- Open containers (“savealls”) of stainless steel, designed to catch water run off generated in the papermaking process, constructed of large square shaped plates and flat constructions with mounting holes on ends, each with dimensions ranging from 50 cm by 50 cm by 50 cm to 1.5 m by 1 m by 10 m, weighing 50 kg or more but not over 2 metric tons (described in statistical reporting number 99.1000)
- Stretchers of stainless steel, designed to move rollers of papermaking machines to adjust tension of fabric, each with a pivoting arm with an actuator, linear rail movement with an actuator and front and back units with mounting holes for tube roll bearing housings (described in statistical reporting number 99.1000)
- Suction boxes of stainless steel, which remove water from paper web or papermaking fabrics during papermaking, each with dimensions ranging from 50 cm by 50 cm by 8 m to 1 m by 1 m by 10 m, weighing 1.5 metric tons or more but not over 2 metric tons (described in statistical reporting number 99.1000)
- Rollers of stainless steel or cast iron, designed for use in paper manufacturing to support and convey papermaking cloth (i.e. fabric) or the paper web, each weighing 7 metric tons or more but not over 20 metric tons, measuring 7 m or more but not over 12 m in length, with diameter of 40 cm or more but not over 1.5 m, presented with bearing journals on either end and a polymer cover (described in statistical reporting number 99.1000)
- Workstands designed to use with miter saws, each with metal tube frame, 4 metal legs and 2 metal extension arms (described in statistical reporting number 8466.92.5010)
- Workstands designed for use with miter saws, each with wheels to make workstand mobile and with sides that fold up to extend the work area (described in statistical reporting number 92.5010)
- Angle cock handle assemblies, of iron and steel, each measuring 11.43 cm by 59 cm by 5.08 cm and weighing 0.748 kg (described in statistical reporting number 8481.90.9040)
- Radiation therapy systems, each encased by steel-based structural shell with gantry cover comprising three pairs of plastics-based panels (described in statistical reporting number 14.0000)
- Thermostats designed for air conditioning or heating systems, not designed to connect to the internet, the foregoing designed for wall mounting (described in statistical reporting number 10.0030)
- by amending the last sentence of the first paragraph of U.S. note 20(a) to subchapter III to chapter 99 by inserting after the phrase “imposed by heading 9903.88.01” the following phrase:
“, except products of China granted an exclusion by the U.S. Trade Representative and provided for in heading 9903.88.05 and U.S. note 20(h) to subchapter III of chapter 99”;
- by amending the first sentence of U.S. note 20(b) to subchapter III to chapter 99 by inserting after the phrase “the following 8-digit subheadings” the following phrase:
“, except products of China granted an exclusion by the U.S. Trade Representative and provided for in heading 9903.88.05 and U.S. note 20(h) to subchapter III of chapter 99”; and
- by amending the Article Description of heading 9903.88.01:
- by deleting: “Articles the product of China,” and, “Except as provided in heading 9903.88.05, articles the product of China,”.
A Challenge to Shippers Who Would Never Dream of Controlling the Insurance
Shippers who rely on suppliers to furnish cargo insurance or who rely on their carriers to take responsibility for losses may be in for a big surprise. Protecting your investments by insuring your goods provides peace of mind.
Buying CIF: Who’s really responsible if your product is lost or damaged in transit? According to internationally accepted trade terms, referred to as Incoterms, suppliers selling “CIF” (Cost, Insurance, Freight) are responsible for arranging cargo insurance. But just because your supplier has the obligation to arrange insurance under CIF terms, it doesn’t mean that they are ultimately responsible if your product is lost or damaged during transit. The ultimate burden of loss falls upon you, the buyer. This is why many experts recommend importers change their buying terms to EXW, FOB, FCA, CFR or similar terms in order to control the selection, and thereby the quality, of insurance coverage.
How much is that insurance really costing you? Foreign suppliers and their forwarding agents often tack on placement fees to the insurance costs. Those added fees often inflate the cost of insurance well beyond market pricing for the same coverage purchased in the United States. Find out how much you’re really paying and then compare quotes received from BOC International.
Is the coverage your supplier purchased for you adequate? Importers relying on their suppliers to arrange insurance run the risk of having inadequate insurance coverage. Cargo insurance policies can vary widely in levels of coverage, deductibles and special restrictions. Ask your supplier for a complete copy of the insurance policy or for a certificate of insurance detailing all the policy terms and conditions
What’s the financial health of your supplier’s insurance company? Recent financial and catastrophic events have exposed the vulnerability of insurance companies to sudden economic devastation. Importers are encouraged to make certain their suppliers use insurers with a favorable financial rating supplied by a respected financial rating service. A.M. Best, Standard & Poor’s and Moody’s are among some of the world’s most respected. BOC’s insurance company, underwriters at Lloyd’s of London, has an A.M. Best financial rating of A (Excellent).
How will your claim be handled? If insurance is arranged overseas, will you be forced to deal with an inexperienced, sub-contracted independent adjuster unfamiliar with the assessment of transportation related losses? Ask your supplier for a list of insurance claims adjusters contracted by the insurance company. Adjuster and surveyor networks approved by Lloyd’s of London and AIMA are among the most credible. BOC has a vested interest in your insurance needs and will directly handle cargo claim documentation requirements to ensure prompt processing and timely settlement.
Every Shipper Needs Cargo Insurance
Global trading involves risk; however, broad insurance coverage minimizes your financial risk. Don’t leave your livelihood up to chance! Statistics show that one ship sinks each day and you will experience a General Average loss every eight years. If you are depending on the carrier to cover losses, their responsibility is limited by law as follows:
Ocean Carriers $500 per shipping unit
A shipping unit may be defined as one ocean container.
Air Carriers $9.07 per pound
Truckers $.50 per pound
The insurance we offer is competitively priced and insures approved merchandise against physical loss or damage from external causes. By purchasing cargo insurance, you can avoid inconvenience and frustration. Contact your BOC Representative at 617-345-0050 for your free quote.
[Billing Code 3290-F9]
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices
Related to Technology Transfer, Intellectual Property, and Innovation
AGENCY: Office of the United States Trade Representative.
ACTION: Notice of modification of action.
SUMMARY: In accordance with the direction of the President, the U.S. Trade Representative (Trade
Representative) has determined to modify the action being taken in this Section 301 investigation by postponing the date on which the rate of the additional duties will increase to 25 percent for the products of China covered by the September 2018 action in this investigation. As set out in this notice, the rate of additional duty for the products covered by the September 2018 action will increase to 25 percent on March 2, 2019.
DATES: On March 2, 2019 at 12:01 am Eastern Standard Time, the rate of additional duty will increase to 25 percent with respect to products covered by the September 2018 action.
FOR FURTHER INFORMATION CONTACT: For questions about this notice, contact Assistant General Counsels Arthur Tsao or Megan Grimball, or Director of Industrial Goods Justin Hoffmann at (202) 395–5725. For questions on customs classification or implementation of additional duties on products covered by the September 2018 action, contact email@example.com.
If you have questions or need assistance with this matter, please contact your BOC Representative.
Deal Reached for Delay in Increase of List Three Section 301 Tariffs
Although this announcement has not been published in the Federal Register at this point, the White House has announced that there is a 90 day delay from December 1 before the tariffs may increase to 25%. Thus, there is a reprieve until March 1. We will watch for the Federal Register formal notice confirming this, and will publish it once we see it. Meanwhile, below is an announcement from Customs attorney Paula Connelly.
Please contact your BOC Representative, if you have any questions.
LAW OFFICES OF PAULA M. CONNELLY
100 Trade Center
Woburn, MA 01801
President Trump and Chinese President Xi Jinpeng reached a deal at the G20 Summit in Buenos Aires over the weekend which will suspend the proposed increase to 25% for products on “List Three” under the Section 301 investigation. The tariffs will remain at 10% after January 1 as a result of China’s agreement to start purchasing a “very substantial” amount of agricultural, energy and industrial goods.
The U.S. and China will also begin negotiations on “structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture” according to the report. The parties have agreed to try to complete the transaction within the next 90 days. If the agreement is not reached within 90 days, the 10% duties will then increase to 25%.
Thus, companies faced with a potential increase in the Section 301 duties to 25% now have a 90-day reprieve which began on December 1 and will end on March 1. Keep in mind the 10% duties remain in place.
In addition, there has been no discussion on removal of the List One and List Two tariffs which remain in place.
At this time, there has been no announcement concerning potential exclusion requests for products on List Three. According to a White House official, they do not believe an exclusion process will be allowed for List Three items while at the 10% rate of duty.
Exclusion requests for products on List Two are due by December 18. Exclusion requests for products on List One are no longer being accepted.
If you have questions or need assistance with this matter, please contact our office.
Are You Import/Export Compliant? 5 Best Practices
Importing/Exporting is a privilege – not a right. An Importer’s/Exporter’s failure to be compliant with all the U.S. rules and regulations that govern import/export business transactions can result in having those privileges immediately suspended. It does not matter if the importer, exporter, Customs Broker or freight forwarder is non-compliant because of his/her lack of industry knowledge or because of being disorganized, lazy, or apathetic towards the rules set forth, the result is the same – a loss of that privilege to import/export. To ease your concern of whether or not you are in sync with proper import/export compliance procedures, here are 5 Key Compliance Checkpoints Customs Border and Protection looks for:
Control Environment: Do you have your management’s commitment? Can you access Executives for needed resources?
This checklist component requires that a commitment to compliance is clearly demonstrated by yourself, your company’s management team, and your hired Customs Broker. This commitment is validated by having a formal statement of your corporation’s policy regarding CBP protocols. In addition, organize an actual, formal, visible Customs Group who can collaborate with your other departments as needed and who have access to your Executives (who need to be knowledgeable regarding key import statistics and suppliers).
Further, if your management is truly in sync with being compliant, your company will also have a statement from its Board of Directors that designates authority and responsibility to the Customs Group handling your import transactions.
Risk Assessment: Do you have internal goals that manage and/or reduce risks?
This factor requires you to be proactive and able to identify and analyze potential risk, as well as be able to develop internal goals to handle those risks. It is imperative that you conduct pre-entry reviews and compare them to the goals you have established to ensure any risk is reduced and/or eliminated. Have a plan to determine specifically how risk areas will be managed.
Control Activities: Do you have formal policies?
It is imperative that you conceptualize, implement, and update formal policies and procedures for your import management team so that goals are clearly established. Verify the accuracy of the internal control manual; modify controls that aren’t effective or efficient and share changes and updates with your Customs Group. Specifically and clearly define (in your job descriptions and staff expectations) who is accountable for what. In addition, another control activity encompasses developing compliance requirements for your suppliers. You will need to develop purchase agreements and controls to ensure that all transactions through CBP are accurately processed, valid, and properly authorized. When applicable, have your suppliers provide regularly reporting information. Another point under this section is establishing an organized, user-friendly recordkeeping program.
It should create a detailed audit trail commencing at production control all the way through payment to the border entry.
Information and Communication: Do you provide formal training programs?
You cannot expect the absolute best (and complete, error-free import compliance transactions) from your employees if they were never trained properly. It is your responsibility to ensure they receive current and ongoing training. In addition, you must be sure all staff members consistently receive any/all updated corporate, industry, and/or CBP information.
Monitoring: Do you conduct internal control reviews?
In order to assess the performance quality of your various import/export-related business units, you need to periodically review them through announced and unannounced audits.
To be successful (and compliant) as an Importer, encourage a team environment among all the individuals involved in the import process. Foster a sense of cooperation, communication, and collaboration with CBP Client Representatives; encourage your team to view them as partners in the whole process.
Please let your BOC Representative know if you have any questions, or need any help, with compliance. We are here to help!
Dear BOC Customer,
Due to the new US Government increased tariffs, BOC is offering its clients three options in regard to managing the new increased U.S. Customs Duties and Taxes paid on imported cargo:
- Sign up for the free ACH direct pay program with U.S. Customs. This is the most secure, compliant and economical option. It is free, and customs gives you extended monthly credit terms.
- Pre-pay BOC duties via ACH before arrival and release of the goods.
- Pay BOC an outlay fee of 5% on all duties (min $25) with NET 10 days terms.
In regard to the ACH direct pay advantages, please note the below.
- Eliminates the “pass through” person and you pay customs directly. This assures customs get paid timely and in full.
- When using US Customs’ ACH Direct along with the optional Periodic Monthly Statement (PMS) payment program, the direct importer will net longer payment terms on average than the credit terms BOC allows. ACH direct Periodic Monthly Statement gives the direct importer the ability to pay duties for goods that are released during a given month as late as the 15thworking day of the following month. This not only provides additional flexibility in the management of your working capital but provides significant cash flow advantages with some entries getting up to 45 days credit depending on the day the entry is cleared.
- 68% percent of all duty payers are utilizing Periodic Monthly Statement as it is now an industry “best practice”.
- Most custom brokers are now charging a fee on duties because of the large percent increases on the monies being outlaid due to the new import tariffs. BOC will also be implementing an outlay fee program in 2019. Starting January 1, 2019, all customers will be charged a 5% outlay fee for any duty outlay unless duties are prepaid before arrival or the customer has joined US Customs’ ACH direct program.
Thank you for all your support and the partnership to date. We appreciate you considering to join the US Customs ACH Direct and PMS programs. Please contact your local BOC Office or Sales Representative with any questions.
BOC International, Inc
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.
President Signs Miscellaneous Tariff Bill (MTB) Act of 2018 – Cuts or Eliminates Tariffs on 1,660 Items
By John Brew, Frances Hadfield, Aaron Marx & Edward Goetz on September 14, 2018
On September 13, 2018, President Trump signed the Miscellaneous Tariff Bill (MTB) Act of 2018 (MTB), which temporarily reduces or eliminates import duties on specified raw materials and intermediate products used in manufacturing that are not produced or available domestically. It is intended to ensure that U.S. manufacturers are not at a disadvantage to their foreign competitors when sourcing manufacturing components.
The American Manufacturing Competitiveness Act of 2016 (AMCA) directed the International Trade Commission (ITC) to establish a process for the submission and consideration of MTB petitions for duty suspensions and reductions. It required the ITC to submit preliminary and final reports on the petitions to the House Committee on Ways and Means and the Senate Committee on Finance (Committees). The ITC’s preliminary report was submitted on June 9, 2017 and the final report was submitted on August 8, 2017. On September 4, 2018, the House agreed to Senate amendments, moving the legislation to the president for signature. The current MTB petition cycle is now complete. The next MTB petition cycle, for 2021 through 2023, will begin not later that October 15, 2019.
The duty suspensions and reductions are effective for goods entered or withdrawn from a warehouse for consumption on or after October 13, 2018, which is 30 days after the date of the enactment. The suspensions and reductions will last until December 31, 2020. All of the MTB provisions are in subchapter II to chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS). This language was added in a Federal Register Notice on August 16, 2018 (83 Fed Reg 40,823 at page 40,825). The notice also created a new U.S. Note 20(c) to Subchapter II of Chapter 99, HTSUS.
Of the 1,660 items are covered by the new law, roughly half are produced in China. Therefore, overlap between the MTB list and the Section 301 tariffs in effect, and those being considered exists. Goods originating in China are still subject to relevant Section 301 tariffs. On August 21, 2018, U.S. Customs and Border Protection (CBP) issued a message stating, “Products of China that are covered by the Section 301 remedy and that are eligible for special tariff treatment…or that are eligible for temporary duty exemptions or reductions under subchapter II to chapter 99, shall be subject to the additional 25 percent ad valorem rate of duty imposed by headings 9903.88.01 and 9903.88.02.
Hurricane Michael Update
Rail Advisory – CSX Taking Precautions Ahead of Hurricane Michael
CSX continues to take measures to protect employees, rail traffic and infrastructure as Hurricane Michael approaches the U.S. mainland as a major hurricane. The storm is projected to make landfall Wednesday as a Category 3 hurricane, bringing the potential of storm surge along low lying areas. At this time, we do not know the extent to which the storm will impact CSX operations, but we are closely monitoring its path and intensity and taking steps to prepare for any potential effects on our network.
Please be advised that, until further notice, CSX is curtailing operations along the Florida Panhandle and into southeastern Georgia. All shipments traveling between Pensacola, Fla. and Baldwin, Fla., and between Dothan, Ala. and Valdosta, Ga. will experience delays.
We will continue to provide updates as we monitor the storm. Intermodal customers should refer to Real-Time Service Advisories for intermodal-specific operational actions, though there are no intermodal impacts at this time.
US Gulf Coast ports close ahead of Hurricane Michael
Janet Nodar | Oct 09, 2018 1:27PM EDT
Wednesday, Oct. 10, 2018
8:30 a.m. EDT UPDATE:
Hurricane Michael strengthened to a Category 4 hurricane overnight, with winds of 145 miles per hour. The storm is now 90 miles SW of Panama City and expected to make landfall by Wednesday afternoon, with hurricane-force winds reaching the Florida panhandle coast by noon. Storm surge could reach 11 to 14 feet in some areas.
Tuesday, Oct. 9, 2018
2:15 p.m. EDT UPDATE:
According to the Florida Ports Council, the ports of Pensacola and Panama City are now under port status Zulu, closed to all inbound and outbound traffic, as hurricane force winds of 73 miles per hour or higher could arrive within 12 hours.
For port status updates, check the US Coast Guard port directory. Pensacola and Panama City are in the Mobile district.
|Storm surges from Hurricane Michael could reach 12 feet. While a few beach communities are densely populated, much of the region is rural and sparsely populated.|
The National Hurricane Center estimated that as of 10 a.m. EDT Tuesday, Hurricane Michael was likely to make landfall in the Florida panhandle Tuesday night/Wednesday morning, possibly as a Category 3 storm with winds as high as 120 miles per hour.
Storm surges could reach 12 feet. While a few beach communities are densely populated, much of the region is rural and sparsely populated.
As of Tuesday at midday, Michael was located 360 miles south of Panama City, Florida, and moving north at 12 miles per hour with winds up to 110 miles per hour.
Up to 12 inches of rain expected
The northeastern US Gulf Coast could see up to 12 inches of rain. As the storm moves inland across the Florida panhandle and Georgia on Wednesday and early Thursday, six to 10 inches of rain is expected during that period.
The US Coast Guard has declared Condition Yankee for the eastern US Gulf of Mexico ports including Panama City, Pensacola, Mobile, Pascagoula, and Gulfport. Under Yankee, gale force winds are expected within 24 hours, ports are closed to inbound and outbound traffic, and vessel movements within ports are subject to traffic control measures.