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March 18, 2016 /  Volume 2016, Issue 20

Summary of Recent Trade Developments

Dear Valued Customer:
There have been a number of developments in the Trade industry that may be of interest to our customers, so we would like to provide with a brief summary on some of them.

Customs Reauthorization Bill
(Trade Facilitation and Trade Enforcement Act of 2015)

This bill (here) was signed into law by President Obama on Feb. 24. Highlights are as follows:
  • Importer of Record and Risk Assessment Programs (Sec. 114, 115): CBP must establish a new program by Aug. 2016 to assign and maintain importer of record numbers, including criteria importers must meet to obtain an importer of record number.
  • Customs Broker Importer ID Requirements (Sec. 116): CBP is required to issue regulations setting minimum standards for customs brokers to collect and maintain information on their importer clients, including non-resident importers. At a minimum, identify the information the importer is required to submit to the broker and that the broker is required to collect in order to verify the identity of the importer; identify procedures the broker must follow to verify the authenticity of the information; and require the broker to maintain records of the information collected to verify the identity of the importer. Brokers that fail to collect the information will be subject to a $10,000 penalty under 19 USC 1641, and license suspension or revocation. 
  • Improvement of Trusted Trader programs (Sec. 101): CBP must work to improve its trusted trader programs, including the C-TPAT, and ensure they are providing commercially significant and measurable trade benefits, including preclearance. 
  • Intellectual Property Rights Enforcement (Sec. 302, 303, 304) Includes sharing of information with rights holders and the extension of protections against violative imports to circumvention devices and works with copyrights pending. 
  • AD/CVD Enforcement (Title IV) establishes under CBP's authority a new procedure for investigating allegations of antidumping and countervailing duty evasion. If importers or foreign exporters fail to respond to CBP questionnaires that may be sent as part of the investigation, they may automatically be found to be evading duties and could face high AD/CV duty rates. 
  • Honey transshipment (Sec. 608): CBP is required to consult with private industry, foreign coun­tries and the Food and Drug Administration to compile a database of the characteristics of honey produced in different countries, for use in verification of country of origin markings of imported honey. It also con­veys the sense of Congress that FDA should establish a national standard of identity for honey. 
  • Special 301 Action Plan (Sec. 610): Requires USTR to develop action plans for countries that have spent at least one year on the Special 301 Priority Watch List for serial violators of intellectual property rights. The president is authorized to take appropriate action if these countries don't meet bench­marks outlined in the plans. 
  • Currency Exchange Rate and Economic Policies (Sec. 701): Includes new provisions meant to address currency manipulation. The law would require a report on the currency exchange rate policies of each major U.S. trading partner, and engage with each country found to have policies with adverse effects on the U.S. If consulta­tions don't bear fruit, the president would be authorized to take remedial action. 
  • De Minimis Increased to $800 (Sec. 901): Includes a much-anticipated increase in the de minimis level, below which imports are not dutiable, from $200 to $800. The increase took effect March 10 and applies to miscellaneous imports, such as Section 321 clearances. 
  • Amendments to HTS Chapter 98 for Goods Returned (Sec. 904): Chapter 98 of the tariff schedule is amended so articles returned after repair under subheadings 9802.00.40 and 9802.00.50 can be commingled, and the origin, value and classification of such articles may be accounted for using an "inventory management" method. The new law also amends the article descrip­tion for subheading 9801.00.10 so that it includes "any other products when returned within 3 years after having been exported," and inserts a new subheading providing duty-free treatment for certain U.S. govern­ment property returned to the United States. These provisions take effect April 24. 
  • Container Residue Exempt From Duties (Sec. 905): General Note 3(e) of the HTS is amended so that it includes "residue of bulk cargo contained in instruments of international traffic" previously exported from the U.S., exempting residue from duties. The bill would define residue as not exceeding 7 percent of the bulk cargo, with no or de minimis value. The exemption takes effect for containers imported on or after Feb. 24. 
  • Drawback (Sec. 906): Includes several important updates to drawback, including substitution drawback at the eight-digit HTS level, an extension of the deadline for draw­back claims to five years from date of import, and changes to how drawback is calculated. The drawback provisions take effect two years after enactment, i.e., Feb. 24, 2018, and allow for an additional grace period of one year, until Feb. 24, 2019, during which drawback claims may either be made under the old or the new statute. 
  • Reliquidation Deadline (Sec. 911): CBP may only reliquidate within 90 days of the actual date of liquidation. 
  • Miscellaneous Tariff Bill (Sec. 919): Conveys the sense of Congress that, to remove the competitive disadvantage to United States manufacturers and consumers resulting from the imposition of such duties and to promote the competitiveness of United States manufacturers, the Commit­tee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives are urged to advance, as soon as possible, after consultation with the public and Members of the Senate and the House of Representatives, a regular and predictable legislative process for the temporary suspension and reduction of duties that is consistent with the rules of the Senate and the House.

Transpacific Partnership Agreement (TPP)

The final legal text that was released by the host nation of New Zealand (here), which all 12 countries signed on Feb 4 as a mostly symbolic gesture since each member nation must still convince their own governments to approve TPP. Member nations besides the United States include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. This text supersedes the text that was released on November 5, 2015. U.S. Congress is reviewing the text of the TPP, which is a time-consuming process and Congress is not expected to submit anything to President Obama until the end of this year. There is opposition by many in Congress so approval of TPP by the U.S. still hangs in the balance. In addition, it is expected that even if the President approves TPP, it will take another couple of years before many laws and regulations can be revised so that TPP can be implemented. The same can be said of the other member nations.

With 30 chapters and over 2,000 pages, the text of the TPP is not something that can be easily digested. The official text outlines a 45-percent regional value content for automobiles manufactured in member countries, a "yarn forward" rule of origin for textile production, and a possible change of the merchandise processing fee (MPF) from an ad valorem to a flat-fee rate within 3 years after TPP is implemented.
Congress and the Executive Branch of the Obama Administration are considering the idea of a tiered MPF structure to satisfy this requirement. The early stage proposal, which is subject to change, calls for importers to pay $30 on entries valued between $2,500 and $20,000, $120 for entries valued between $20,001 and $55,000, $260 for entries valued between $55,001 and $130,000, and $500 for entries valued above $130,000. These numbers will apply to all formal entries.

Within the United States, industries are divided as to whether the TPP deal is good for America. Industries that support TPP include the Technology, Agriculture, Electrical, Footwear, Machinery and Plastics industries. Industries that have voiced opposition to TPP include the Automotive, Apparel, Dairy, Beef, Pharmaceutical, Poultry and Steel industries.

It is thought by some that Vietnam will benefit in almost every sector due to a jolt from external competition and Japan will receive a jolt in the agricultural and service sectors, such as retailing, education, and insurance, in addition to manufacturing. Free market economies like Singapore, Australia and New Zealand are likely to have the smallest gains in relation to GDP.

The Tufts University Global Development and Environment Institute distributed a policy brief (here) on Feb. 25  claiming that U.S. exports and GDP will underperform, and developing economies will grow only marginally when the TPP enters into force. The brief concludes that, compared with a non-TPP baseline, the U.S. will post a 0.5-percent lower GDP and Japan's GDP will grow 0.1 percent less than it would. Furthermore, after a decade, Chile's and Peru's GDPs will generate a combined gain of only 2.8 percent over the non-TPP scenario. The brief goes on to suggest that TPP skeptics, concerned about the agreement's impacts on growth, labor incomes, employment and inequality, have good reason to doubt optimistic projections and that the results show negative impacts in all these areas, particularly in the United States. It recommends that legislatures in TPP countries should carefully consider these findings and their implications before approving the agreement.

We will continue to monitor TPP developments and will endeavor to provide updates in the future.

Customs Mandatory ACE Entry Filing Effective March 31, 2016

Customs and Border Protection's ACE (Automated Commercial Environment) system of record will replace the aging legacy system known as ACS (Automated Commercial System) and ACE will become the "Single Window to the Government" through which the Trade will interact with all regulating government agencies including CBP.

Originally, CBP had a goal of requiring all Customs entry filers (Customs Brokers) to submit entries in ACE by November 1, 2015. However, the Trade and CBP themselves were unable to meet this aggressive timeline due to voluminous system programming changes that both the government and the Trade needed to iron out. The mandatory ACE entry filing date was postponed to February 28, 2016; and then postponed again to March 31, 2016 and it appears this date will stick.
Due to the fact that most of the ACE entry filing changes primarily affects the Customs entry software providers and Customs entry filers (Customs Brokers), most of the new processes are transparent to Importers. Therefore there are very few "new" Importer requirements as the result of the transition to ACE, but since ACE is intended to become a 100% non-paperless environment, we have found that there were some pre-existing requirements that may have been provided later in the process, such as a paper submission of a required document or certificate, which will now need to be provided up front as part of the electronic PGA dataset, or via CBP's Document Imaging System (DIS). In other instances, some data that may have been optional in ACS may now be mandatory in ACE. As such, it may require some slight modifications to how the Importers will need to provide such data. We have attempted to summarize some of these changes below:
  1. 1. Since ACE is an electronic environment, paper CBP entry forms 3461 and 7501 will no longer be required except for miscellaneous manual clearances. Filers may be able to continue to print a 7501 for importers that need it for accounting and recordkeeping purposes.
  3. 2. FDA will require the manufacturer's lot numbers for infant formula, acidified foods, and low-acid canned food (LACF) products at the time of Customs entry. These were required in the past but were not enforced, but will now need to be provided to us as part of your commercial invoice documentation.
  5. 3. FDA also requires a National Drug Code, Drug Registration Number and Drug Listing Number be provided for chemical products that are considered a drug (this is not a new requirement but is often missing from commercial documents) and must be provided at time of entry.
  7. 4. National Oceanic and Atmospheric Administration (NOAA) certificates can no longer be mailed after the shipment arrives and will need to be provided to us up front so that we can submit it via DIS at the time of entry.
  9. 5. USDA/APHIS will require all permits and certificates, such as veterinary or phytosanitary certificates, at time of entry as a condition of release for any commodities that are subject to APHIS admissibility requirements.
  11. 6. The Alcohol Tax and Trade Bureau (TTB) will require all Importer permit numbers, licenses and Certificates of Label Approval (COLA) to be as part of the electronic dataset at the time of entry, so these will need to be accurately provided with your commercial documentation.
  13. 7. The Dept. of Transportation (DOT) requires the fabricating manufacturer's name be provided for commodities related to all vehicles so that the proper manufacturer code can be submitted.
  15. 8. Participating Government Agencies will require the Importer's point of contact name, phone, email and address be provided as the party having knowledge about the merchandise at time of entry so we may be reaching out to you for this information if we don't already have it on file.
Unfortunately, we are finding that the ACE entry processing requirements have substantially increased our level of effort to process Customs entries, especially for those involving FDA and other PGA requirements. At James J. Boyle & Co. we are doing our very best to program ways to improve efficiencies in order to reduce the amount of manual keystrokes required for each entry and keep costs down. However, if the processing needs of ACE require that we increase staffing levels to accommodate changes required by ACE, we may have no alternative but to ask some of our customers for a nominal increase in certain processing fees. If that is the case, we will notify those customers individually. Thank you for your kind understanding.
If you have any questions, please contact your nearest James J. Boyle & Co. representative.

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Los Angeles

Kent Sunakoda


(323)263-8100 ext. 327


Lisa Whiles


(503)284-0909 ext. 120


Terry Pilant 


(206)447-9580 ext. 104 

San Francisco

Connie Arimoto


(650)871-6334 ext. 3130


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James J. Boyle & Co., 1200 Corporate Center, Ste 350, Monterey Park, CA 91754