Overview of Customs Reauthorization New De Minimis, Repeal of Consumptive Demand, & More

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1 Overview of Customs Reauthorization New De Minimis, Repeal of Consumptive Demand, & More Hosted by United States Fashion Industry Association (USFIA) & OHL May 17, :00 P.M. ET/11:00 A.M. PT

2 Today s Speakers Penny Ricas Vice President of Global Account Management Mary Jo Muoio Senior Vice President of Trade Services

3 Do you have a question? During the webinar, all attendees will be assigned to listenonly mode. Please use the Questions box on your dashboard to ask a question during the webinar.

4 Q u e s t i o n s? Please use the Questions box on your dashboard on the right side of your screen. You can also ask a question after the webinar. info@usfashionindustry.com Phone:

5 May 17, 2016 Trade Facilitation and Enforcement Act of 2015 prepared for the United States Fashion Industry Association 5

6 Trade Facilitation and 1 st Customs Modernization Enforcement = Legislation in more Act of 2015 than 20 Years 6

7 Trade Facilitation and Trade Enforcement Act of 2015 (HR 644) Signed by President Obama on 2/24/16 Non Partisan 9 Titles 75 Sections Enables enforcement of our Trade Agreements Officially authorizes various Customs programs (CTPAT, ACE/ITDS, CEE s, etc) 7

8 Brief Overview Title 1: Trade Facilitation and Trade Enforcement Title II: Import Health and Safety Title III: Import related Protection of Intellectual Property Rights Title IV: Prevention of Evasion of Antidumping and Countervailing Duty Orders Title V: Small Business Trade Issues and State Trade Coordination Title VI: Additional Enforcement Provisions Title VII: Currency Manipulation Title VIII: Matters Relating to US Customs and Border Protection Title IX: Miscellaneous Provisions 8

9 Title 1:Trade Facilitation and Trade Enforcement Requires CBP to improve its partnership programs with private sector, Customs agencies in other countries, and US Federal agencies. Codifies the Centers of Excellence and Expertise in order to process entries more efficiently. Requires the publication of reports or plans ie. Regular reporting on ACE progress Requires CBP to develop minimum criteria for an importer to obtain an importer of record number and maintain a centralized database of importer of record numbers. Requires CBP to establish a new importer program, under which CBP can assess new importers and their imported products. Requires that CBP implement new minimum requirements for the type of information that customs brokers must obtain from their customers 9 in order to verify the importer s identity.

10 Title II: Import Health and Safety The interagency Import Safety Working Group is formalized to ensure the safety of U.S. imports and to identify best practices to improve a coordinated government response to threats. It is expanded to include engagement with foreign governments. Requires CBP to create a joint response plan to respond to incoming cargo that poses a health and safety threat. The Group will include representatives from the departments of Health and Human Services, Treasury, Commerce and Agriculture; the Office of the U.S. Trade Representative(USTR); the Office of Management and Budget; the Food and Drug Administration ; CBP; and the Consumer Product Safety Commission. 10

11 Title III: Import related Protection of Intellectual Property Rights Requires CBP to share information with rights holder about suspected merchandise prior to seizure, so they can inspect them earlier to assist in determining whether there is a violation. There is an exception to this rule if CBP feels that sharing information will compromise an ongoing investigation. Expands protection to all trademarks and copyrights submitted to the Copyright Office, not just those registered with CBP. CBP is to consult with private sector for training collaboration and other support services Mandates CBP to notify travelers of implications of buying infringing goods, which will be noted on Travelers Declarations 11

12 Title IV: Prevention of Evasion of Antidumping and Countervailing Duty Orders Deals with the evasion of trade remedy orders (i.e., antidumping and countervailing duties) Expands the tools that CBP and the Department of Commerce have available to address evasions of trade remedy order duties including the creation of Trade Remedy Law Enforcement Division of CBP, supported by the National Targeting and Analysis Group. The Act also makes CBP s civil and criminal investigations more transparent to domestic industry. 12

13 Title V: Small Business Trade Issues and State Trade Coordination Ensures that small businesses have a voice when the U.S. government considers negotiating new free trade agreements (FTAs). Establishes working groups that are tasked with reporting on the impact of an FTA on small businesses and coordinating on export promotion and financing. 13

14 Title VI: Additional Enforcement Provisions Authorizes USTR to reinstate trade retaliatory measures that have expired because the affected industry did not request an extension. Creates the Chief Innovation and Intellectual Property negotiator position at USTR. Requires USTR to develop action plans for countries listed on the Priority Watch List for at least a year in USTR s Special 301 Report. The action plans are intended to assist the identified countries in developing adequate intellectual property rights protections. The President is authorized to take appropriate action if an identified country does not meet established benchmarks. 14

15 Title VII: Currency Manipulation Requires the Secretary of the Treasury to submit a report to Congress on the macroeconomic and currency exchange rate policies for major trading partner countries. The Secretary of the Treasury is required to take action to address currency issues with major trading partners that are subject to enhanced macroeconomic analysis. In the event that the Secretary of the Treasury is unable to address currency manipulation issues with the major trading partner, the President is to prohibit the Overseas Private Investment Corp. from providing any new financing to the trading partner. The President can waive the remedial actions only if he finds that the action would have an adverse impact on the U.S. economy or would cause serious harm to U.S. national security 15

16 Title VIII: Establishment of CBP Reauthorizes CBP and formalizes the process for establishing CBP preclearance facilities at airports in foreign countries. The purpose of the preclearance facilities is to (1) prevent terrorist attacks in the United States; (2) prevent inadmissible foreigners from entering the United States; (3) ensure that imported merchandise complies with U.S. law; (4) promptly process people entering the United States; and (5) accomplish any other objectives necessary to protect the United States. Outlines the procedures that CBP must follow to notify Congress before it establishes a preclearance facility. It includes reports on the impact of the facility on U.S. trade and travel, CBP staffing, and potential security vulnerabilities. 16

17 Title IX- Miscellaneous Provisions Includes various miscellaneous provisions, such as, but not limited to: Increase to the de-minimis threshold for lowvalue shipments Amendments to Chapter 98 to address certain returned goods Drawback Simplification Limits CBP s ability to voluntarily re-liquidate entries. 17

18 Section 901 Increase to the de-minimis threshold for low-value shipments Allows the duty-free entry of a shipment valued at $800 (an increase from $200) or less that is imported by one person on one day, with minimal documentation requirements. Also known as a Section 321 entry which comes from the provision s statutory source, 19 U.S.C. 1321(a)(2)(C). Designed for postal and courier shipments. This affects merchandise imported or withdrawn from warehouse for consumption on, or after March 06, Contains guidance from Congress that USTR should encourage foreign countries to establish commercially meaningful deminimis thresholds for express and postal shipments. 18

19 (a) What is Section 321? 19 U.S.C (a)(2)(c) language Disregard of minor discrepancies in collection of taxes and duties; admission of articles free of duty or tax; limit on amount of exemption. The Secretary of the Treasury, in order to avoid expense and inconvenience to the Government disproportionate to the amount of revenue that would otherwise be collected, is authorized, under such regulations as he shall prescribe, to (1) disregard a difference of an amount specified by the Secretary by regulation, but not less than $20, between the total estimated duties, fees, and taxes deposited, or the total duties,fees, and taxes tentatively assessed, with respect to any entry of merchandise and the total amount of duties, fees, taxes, and interest actually accruing thereon; (2) admit articles free of duty and of any tax imposed on or by reason of importation, but the aggregate fair retail value in the country of shipment of articles imported by one person on one day and exempted from the payment of duty shall not exceed an amount specified by the Secretary by regulation, but not less than (A) $100 in the case of articles sent as bona fide gifts from persons in foreign countries to persons in the United States ($200 in the case of articles sent as bona fide gifts from persons in the Virgin Islands, Guam, and American Samoa), or (B) $200 in the case of articles accompanying, and for the personal or household use of, persons arriving in the United States who are not entitled to any exemption from duty under subheading , , or of title I of this Act,1 or (C) $800 in any other case. The privilege of this subdivision (2) shall not be granted in any case in which merchandise covered by a single order or contract is forwarded in separate lots to secure the benefit of this subdivision (2); and (3) waive the collection of duties, fees, taxes, and interest due on entered merchandise when such duties, fees, taxes, or interest are less than $20 or such greater amount as may be specified by the Secretary by regulation. 19

20 What Section 321 IS A vacationer arriving in the U.S. from Ireland while transporting a shawl purchased for $ at a farming mill in Cork, Ireland. A dress arriving in the U.S. from an online retailer in China pursuant to an individual ecommerce order valued at $ Two Men s Dress Shirts purchased by a U.S. retailer, from a manufacturer in Vietnam, the retail value of which is $ each in Vietnam, arriving in one shipment into the U.S. 20

21 What Section 321 IS NOT May not be one of several lots covered by a single order or contract, the value of which would exceed $800. CBP may also refuse to release a shipment under Section 321 when taking into account risk considerations that may vary for different classes or kinds of merchandise. 21

22 Section 904: Amendments to Chapter 98 of the HTSUS Section 904(a) modernizes the rules for goods imported under subheadings and , HTSUS by allowing merchandise to be commingled and by providing that the origin, value and classification of such articles may be accounted for using an inventory management method. Section 904(b) amends the article description for subheading , HTSUS so that it includes any other products when returned within three years, after having been exported. Section 904(c) creates a new heading , which provides duty-free treatment for certain U.S. government property returned to the United States either by the U.S. government or a U.S. government contractor. 22

23 What Title IX Section 904 IS Title IX Section 904 (b) Chapter Products of the United States when returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. Previously included items in several tariff chapters, none of which were textile, apparel, or footwear chapters Now includes any other products when returned within 3 years after having been exported regardless of origin. This provision not only pertains to US goods being returned. 23

24 Chapter Importer shipped apparel to a foreign country to fill an order. Foreign customer has merchandise that they would like to return to the US. Until now, there was no duty free provision afforded to the return to U.S. Consolidated e-commerce returns 24

25 Section 906 Drawback and Refunds Imported goods of one eight-digit HTSUS subheading are permitted to qualify for duty drawback when goods of the same subheading are exported. For unused Drawback, claimant can use the Schedule B number to determine if the merchandise is classifiable under the same eight digit HTSUS subheading as the imported merchandise. Extends the time frame for filing drawback from 3 years to 5 years from the date the merchandise was imported Duties, taxes, and fees are eligible for drawback, instead of just duties in some scenarios In substitution drawback, claimants may claim the lesser of (1) duties, taxes and fees that are paid on the imported merchandise on the entry-line item level; or (2) the duties, taxes and fees that would have been paid on the export if it had been imported. Any person making a drawback claim is liable for the full amount of the claim, and any person claiming drawback, and the importer are jointly and severally liable for the lesser of the amount of drawback claimed or the amount that the importer authorized the other person to claim. 25

26 Section 906 Drawback and Refunds If drawback is claimed on merchandise that is exported, the record of exportation must be contained in a record kept by the exporter in the normal course of business or be entered into the Automated Export System once it is determined to be a system of record. Amends CBP s recordkeeping statute (19 U.S.C. 1508) to require that records for drawback claims be maintained for three years from liquidation, as opposed to the current date of payment of the claim. 26

27 Additional Resources OHL Trade Services: Mary Jo Muoio Robert Chin rchinquee@ohl.com 27

28 Thank You! 28