BCMEA – ILWU-Canada Tentative Agreement Reached

Turkey Eliminated from Generalized System of Preferences (GSP)
 
The Federal Register has published the official notification that the designation of Turkey as a beneficiary developing country is terminated, effective May 17, 2019.
Please see the link, below, and the attached PDF for the full language.
 
The BOC Blast 314 5-21-2019 Turkey Terminated from Generalized System of Preferences – GSP Federal Register PDF
 
https://www.federalregister.gov/documents/2019/05/21/2019-10761/to-modify-the-list-of-beneficiary-developing-countries-under-the-trade-act-of-1974
 

List 4 Proposed Tariffs Published
 
On May 13, 2019 the USTR proposed a 25% tariff on a fourth listing of products. This listing, estimated at $300 billion in trade value, will cover almost all remaining import products from China including textiles, shoes, and many of the “other” classifications that had not been included previously.
 
The due date for written comments is June 17th, with public hearings scheduled for the same day. There is no proposed effective date for the new tariffs in the publication.
 
Please go to the following link for full Office of the US Trade Rep posting:
https://ustr.gov/sites/default/files/enforcement/301Investigations/May_2019_Proposed_Modification.pdf

British Columbia longshore workers move closer to strike
Nate Tabak, Canada Correspondent  | www.freightwaves.com

ILWU members vote to authorize walk-outs “if necessary,” threatening to disrupt operations at Canada’s largest port, Vancouver.

The Port of Vancouver handles the largest volume of cargo in Canada. Photo: Vancouver Fraser Port Authority/Colin Jewell Photography

Longshore workers in British Columbia overwhelmingly voted to authorize a strike, raising the specter of a disruption at the Port of Vancouver, Canada’s busiest port.

The International Longshore and Warehouse Union (ILWU) Canada announced on May 10 that 98.4 percent of local members voted “in favor of supporting strike action if necessary.” A work stoppage could come at any time during the next 60 days, with 72 hours notice.

It significantly raises the stakes in contract negotiations between ILWU Canada and the British Columbia Maritime Employers’ Association (BCMEA), which represents companies operating at the ports. A contract for the longshore workers expired in March 2018.

The ILWU and the BCMEA agreed on their previous contract in 2010 after the longshoremen authorized a strike.

About 2,700 ILWU longshoremen work at British Columbia’s ports, which handled 3.6 million 20-foot-equivalent units (TEUs) of cargo in 2018. Most went to Vancouver, whose volumes hit a record 3.4 million TEUs and 147 million metric tons in 2018.

A federal mediator has been attempting to bring get the two sides to reach an agreement. Neither the union or BCMEA has disclosed their areas of contention.

The average unionized longshore worker earned about C$119,000 per year in 2018 (a Canadian dollar equals US$0.75), according to the BCMEA. Their pay lags behind longshore workers at major U.S. ports on the West Coast, who earned about US$171,000 per year on average in 2018, according to the Pacific Maritime Association.

About C$200 billion in trade goes through the Port of Vancouver each year, and it serves as Canada’s main gateway for Asia.

The Canadian International Freight Forwarders Association warned in April that a strike would hurt Canada’s supply chain, and could result in cargo permanently being redirected to ports in the U.S.

Nate Tabak, Canada Correspondent

Nate Tabak is a journalist, editor and producer in Toronto. He covers Canada for FreightWaves, with a keen interest on the cross-border economic relationship with the United States. Nate spent seven years working as an investigative editor and reporter based in Kosovo. He covered everything from corruption to the country’s emerging wine industry. He also reported across the Balkans and investigated Albania’s multibillion-dollar marijuana industry with a grant from the Pulitzer Center on Crisis Reporting. Nate grew up in Berkeley, Calif. He enjoys exploring Toronto with his wife and is always looking forward to his next meal.

 
[Billing Code 3290-F9]  
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
 
Implementing Modification to 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 implementing modification.
 
 
SUMMARY: In a notice published on May 9, 2019 (May 9 Notice), the U.S. Trade Representative (Trade Representative) increased the rate of additional duty from 10 percent to 25 percent for the products of China covered by the September 2018 action that are (i) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and (ii) exported to the United States on or after May 10, 2019. This notice provides that products of China that are covered by the September 2018 action and that were exported to the United States prior to May 10, 2019, are not subject to the additional duty of 25 percent, as long as such products are entered into the United States prior to June 1, 2019. Such products remain subject to the additional duty of 10 percent for this interim period.
 
DATES: HTSUS heading 9903.88.09, which is set out in the Annex to this notice, applies to products of China covered by the September 2018 action that were exported before May 10, 2019, and entered into the United States on or after May 10, 2019, and before June 1, 2019.
 
FOR FURTHER INFORMATION CONTACT: For questions about this notice, contact Associate General Counsel Arthur Tsao or Assistant General Counsel Juli Schwartz, or Director of Industrial Goods Justin Hoffmann at (202) 395-5725. For questions on customs classification or implementation of additional duties on products covered in the supplemental action, contact traderemedy@cbp.dhs.gov.
 
SUPPLEMENTARY INFORMATION:
 
In the May 9 Notice, the Trade Representative modified the action being taken in the Section 301 investigation by increasing the rate of additional duty from 10 percent to 25 percent for the products of China covered by the September 2018 action in this investigation. The “September 2018 action” refers to the additional duties on products of China with an annual trade value of approximately $200 billion, published at 83 FR 47974 (Sep. 21, 2018), as subsequently modified by the notice published at 83 FR 49153 (September 28, 2018). The increase in the rate of additional duty became effective on May 10, 2019.
 
Under this implementing modification, and as specified in the Annex to this notice, products of China that are covered by the September 2018 action that were exported prior to May 10, 2019, are not subject to the additional duty of 25 percent as long as such products are entered into the United States prior to June 1, 2019. Such products remain subject to the additional duty of 10 percent for a transitional period of time before June 1, 2019. The covered products of China that are entered into the United States on or after June 1, 2019, are subject to the 25 percent rate of additional duty.
 
To distinguish between covered products of China subject to the 10 percent rate of additional duty from those subject to the 25 percent rate, the Annex to this notice creates a new heading in Chapter 99 of the HTSUS (9903.88.09) for products of China covered by the September 2018 action that were exported before May 10, 2019, and entered into the United States on or after May 10, 2019 and before June 1, 2019. HTSUS heading 9903.88.09 is limited to covered products of China entered into the United States during this period of time to account for customs enforcement factors and the average transit time between China and the United States by sea.
 
The products of China covered by the September 2018 action that are admitted into a foreign-trade zone (FTZ) in “Privileged Foreign” status shall retain that status consistent with 19 CFR 146.41(e) and will be subject, at the time of entry for consumption, to the additional duty rate that was in effect at the time of FTZ admission of said product.
 
U.S. Customs and Border Protection will issue instructions on entry guidance and implementation.
 
 
Joseph Barloon
General Counsel
Office of the U.S. Trade Representative.
 
 
 
ANNEX
 
 
Effective with respect to goods: (1) exported to the United States before May 10, 2019; and (2) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. eastern daylight time on June 1, 2019, subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS) is modified:
 
 

1. by inserting the following new heading 9903.88.09 in numerical sequence, with the material in the new heading inserted in the columns of the HTSUS labeled “Heading/Subheading”, “Article Description”, and “Rates of Duty 1-General”, respectively:

2. by inserting the following new U.S. note 20(l) to subchapter III of chapter 99 in numerical sequence:

 
“(l) For the purposes of heading 9903.88.09, products of China, as provided for in this note, shall be subject to an additional 10 percent ad valorem rate of duty. The products of China that are subject to an additional 10 percent ad valorem rate of duty under heading 9903.88.09 are products of China that are classified in the subheadings enumerated in U.S. notes 20(f) or 20(g) to subchapter III. All products of China that are classified in the subheadings enumerated in U.S. notes 20(f) or 20(g) to subchapter III are subject to the additional 10 percent ad valorem rate of duty imposed by heading 9903.88.09.
 
For the purposes of heading 9903.88.09, the products of China that are subject to an additional 10 percent ad valorem rate of duty are products that are: (1) exported to the United States before May 10, 2019; and (2) entered for consumption, or withdrawn from warehouse for consumption on or after May 10, 2019, and before June 1, 2019.
 
Notwithstanding U.S. note 1 to this subchapter, all products of China that are subject to the additional 10 percent ad valorem rate of duty imposed by heading 9903.88.09 shall also be subject to the general rates of duty imposed on products of China classified in the subheadings enumerated in U.S. notes 20(f) or 20(g) to subchapter III.
 
Products of China that are classified in the subheadings enumerated in U.S. note 20(f) or 20(g) to subchapter III and that are eligible for special tariff treatment under general note 3(c)(i) to the tariff schedule, or that are eligible for temporary duty exemptions or reductions under subchapter II to chapter 99, shall be subject to the additional 10 percent ad valorem rate of duty imposed by heading 9903.88.09.
 
The additional duties imposed by heading 9903.88.09 do not apply to goods for which entry is properly claimed under a provision of chapter 98 of the HTSUS, except for goods entered under subheadings 9802.00.40, 9802.00.50, and 9802.00.60, and heading 9802.00.80. For subheadings 9802.00.40, 9802.00.50, and 9802.00.60, the additional duties apply to the value of repairs, alterations, or processing performed abroad, as described in the applicable subheading. For heading 9802.00.80, the additional duties apply to the value of the article less the cost or value of such products of the United States, as described in heading 9802.00.80.
 
Products of China that are provided for in heading 9903.88.09 and classified in one of the subheadings enumerated in U.S. notes 20(f) or 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees, exactions and charges that apply to such products, as well as to the additional 10 percent ad valorem rate of duty imposed by heading 9903.88.09.”
 

This document is scheduled to be published in the Federal Register on 05/09/2019 and available online at https://federalregister.gov/d/2019-09681, and on govinfo.gov

  
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 increasing the rate of additional duty from 10 percent to 25 percent for the products of China covered by the September 2018 action in this investigation. The Trade Representative has further determined to establish a process by which interested persons may request that particular products classified within a tariff subheading covered by the September 2018 action be excluded from the additional
duties.
 
DATES: The rate of additional duty will increase to 25 percent with respect to products covered by the September 2018 action on May 10, 2019.
 
FOR FURTHER INFORMATION CONTACT: For questions about this notice, contact Associate General Counsel Arthur Tsao, Assistant General Counsel Philip Butler, 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 traderemedy@cbp.dhs.gov.
 
SUPPLEMENTARY INFORMATION:
 

1. September 2018 Action

 
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).
 
In a notice published on September 21, 2018 (83 FR 47974), the Trade Representative, at the direction of the President, announced a determination to modify the action being taken in the investigation by imposing additional duties on products of China with an annual trade value of approximately $200 billion. The rate of additional duty initially was 10 percent. Those additional duties were effective starting on September 24, 2018, and currently are in effect. Under Annex B of the September 21 notice, the rate of additional duty was set to increase to 25 percent on January 1, 2019. In the September 21 notice, the Trade Representative stated that he would continue to consider the actions taken in this investigation, and if further modifications were appropriate, he would take into account the extensive public comments and testimony previously provided in response to the notices published on July 17, 2018 (83 FR 33608) and August 7, 2018 (83 FR 38760).
 
On September 28, 2018 (83 FR 49153), the Trade Representative issued a conforming amendment and modification of the September 21 notice. The current notice refers to the September 21 notice, as modified by the September 28 notice, as the ‘September 2018 action.’
 
On December 19, 2018 (83 FR 65198), in accordance with the direction of the President, the Trade Representative determined to modify the September 2018 action by postponing until March 2, 2019, the increase in the rate of additional duty to 25 percent.
 
The Annex to the December 19 notice, which superseded Annex B to the September 21 notice, amended the Harmonized Tariff Schedule of the United States (HTSUS) to reflect this postponement of the increase in the rate of duty applicable to the September 2018 action.
 
On March 5, 2019 (84 FR 7699), in accordance with the direction of the President, the Trade Representative determined to modify the September 2018 action by postponing until further notice the increase in the rate of additional duty to 25 percent.
 
Annex B of the September 21 notice (83 FR 47974) and the Annex to the December 19 notice (83 FR 65198) were rescinded. In accordance with Annex A of the September 21 notice, the rate of additional duty under the September 2018 action remained at 10 percent until further notice.
 

1. Determination to Further Modify September 2018 Action

 
The United States is engaging with China with the goal of obtaining the elimination of the acts, policies, and practices covered in the investigation. The leaders of the United States and China met on December 1, 2018, and agreed to hold negotiations on a range of issues, including those covered in this Section 301 investigation.
See https://www.whitehouse.gov/briefings-statements/statement-press-secretary-regarding- presidents-working-dinner-china/. Since the meeting on December 1, the United States and China have engaged in additional rounds of negotiation on these issues, including meetings in March, April, and May of 2019. In the most recent negotiations, China has chosen to retreat from specific commitments agreed to in earlier rounds. In light of the lack of progress in discussions with China, the President has directed the Trade Representative to increase the rate of additional duty to 25 percent.
 
Section 301(b) of the Trade Act of 1974, as amended (Trade Act), provides that the Trade Representative “shall take all appropriate and feasible action authorized under [Section 301(c)] to obtain the elimination of [the] act, policy, or practice [under investigation].” Section 307(a)(1) of the Trade Act authorizes the Trade Representative to modify or terminate any action being taken under Section 301, subject to the specific direction, if any, of the President if “the burden or restriction on United States commerce . . . of the acts, policies, and practices, that are the subject of such action has increased or decreased, or such action is being taken under Section [301(b)] of this title and is no longer appropriate.” In light of the lack of progress in the additional rounds of negotiations since March 2019, and at the direction of the President, the Trade Representative has determined that it is appropriate for the rate of additional duty under the September 2018 action to increase to 25 percent on May 10, 2019.
 
The Trade Representative’s decision to modify the September 2018 action takes into account the extensive public comments and testimony, as well as advice from advisory committees, concerning the actions proposed in the notices issued in advance of the September 2018 action (83 FR 33608 and 83 FR 38760). Those notices, among other things, requested comments on whether the rate of additional duties should be 10 percent or 25 percent. The Trade Representative’s decision also reflects the advice of the interagency Section 301 Committee.
 
The Annex to this notice amends the Harmonized Tariff Schedule of the United States to provide that the rate of additional duties for the September 2018 action will increase to 25 percent on May 10, 2019.
 
Pursuant to Sections 301(b), 301(c), 304(a), and 307(a) of the Trade Act, the Trade Representative has determined that the Office of the United States Trade Representative (USTR) will establish a process by which interested persons may request that particular products classified within an HTSUS subheading covered by the September 2018 action be excluded from the additional duties. USTR will publish a separate notice describing the product exclusion process, including the procedures for submitting exclusion requests, and an opportunity for interested persons to submit oppositions to a request.
 
ANNEX
 
Effective with respect to goods (i) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and (ii) exported to the United States on or after May 10, 2019, subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States is modified:
 

1. by amending U.S. Note 20(e) to subchapter III of chapter 99 by deleting “10 percent” each place that it appears, and inserting “25 percent” in lieu thereof;

2. by amending U.S. Note 20(g) to subchapter III of chapter 99 by deleting “10 percent” each place that it appears, and inserting “25 percent” in lieu thereof;

3. by amending the Rates of Duty 1-General column of heading 9903.88.03 by deleting “10%”, and inserting “25%” in lieu thereof; and

4. by amending the Rates of Duty 1-General column of heading 9903.88.04 by deleting “10%”, and inserting “25%” in lieu thereof.

 
Joseph Barloon
General Counsel
Office of the U.S. Trade Representative.

Certain China Duties to Increase Friday May 10, 2019
 
Although nothing official has been issued by the government, President Trump announced yesterday that effective Friday, May 10, the tariffs for products covered by List 3 of the Section 301 program will increase from 10% to 25%.  This is a result of what appears to be stalled negotiation talks with China, although it appears that the Chinese delegation will come to Washington for continued talks this week.
 
In addition, he has threatened to impose the 25% tariffs on all products from China.
 
As many may recall, these duties were to be implemented in March.  However, President Trump issued an executive order stating that implementation was delayed until further notice.  The two countries have been working on a trade agreement to address China’s unfair trade practices.
 
Additionally, last Friday US Trade Representative Lighthizer announced that his office is in the process of establishing an exclusion process for goods on List 3.  According to his statement, the office hopes to have the process in place by the end of May. It appears at this time the process will be allowed for the products whether or not the tariffs increase to 25%.
 
Potential options for avoiding or reducing the increased tariff, include the following:

1. Tariff Classification – although many companies have reviewed this with the previous two lists, verifying the classification should still be considered as a potential option.
2. Country of origin – companies should look closely at the supply chain. It may be time to consider sourcing products elsewhere.  However, careful consideration should be given to making moves to a third country, particularly if your China supplier is involved and/or there would be China content included in the product.  Companies need to ensure that the product is being substantially transformed in the third party country.
3. Use of Chapter 98 provisions, duty drawback, bonded warehouses and Foreign Trade Zones also provide options in certain situations, particularly if products will be later exported from the U.S.
4. Value strategies – companies can consider legitimate means of lowering the transaction value. Options include potential discounts, and use of the “first sale” rule if there is a multi-tiered transaction involving a middleman.
5. Exclusion Requests – Exclusion requests may be granted when a company can substantiate to the government that the product in question cannot be sourced in the U.S. or third party countries, there would be severe economic hardship to the requestor or other US interests and the product is not part of the “Made in China 2025” or other industrial programs.

 
It appears that talks between the two countries scheduled for this Wednesday will continue and hopefully the announced increase will not take place.
If you have questions, please contact your BOC Representative, or Paula Connelly, Esq.
 
Information for this BOC Blast provided by The Law Offices of Paula M. Connelly