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07/26/2024

China’s Wooden Cabinets: Final Requirement on Dumping Duties & New Certification Rules

Check out this week's Customs Corner to read about the China's wooden cabinets: final ruling on dumping duties, upcoming webinar, and more!

Trade and Customs Updates

1) China’s Wooden Cabinets: Final Requirement on Dumping Duties & New Certification Rules

89 FR 58110 confirms the scope and circumvention inquiries cover wooden cabinets exported to the United States that were completed in Malaysia or Vietnam under four scenarios: 

  1. Scenario 1: A company in Malaysia or Vietnam imports finished wooden cabinet doors, drawer fronts, and frames from China. They produce the cabinet boxes and drawer boxes locally and combine these with the imported components, resulting in products that fall under the scope of the AD and CVD orders. 
  2. Scenario 2: A company in Malaysia or Vietnam imports semi-finished wooden cabinet doors, drawer fronts, and frames from China and performs further processing (e.g., trimming, cutting, painting) locally. They produce the cabinet boxes and drawer boxes locally and combine them with the processed components, resulting in products that fall under the scope of the AD and CVD orders. 
  3. Scenario 3: A company in Malaysia or Vietnam imports semi-finished wooden parts of cabinet doors, drawer fronts, and frames from China. They perform further processing and assembly locally, produce the cabinet boxes and drawer boxes locally, and combine them with the imported parts, resulting in products that fall under the scope of the AD and CVD orders. 
  4. Scenario 4: A company in Malaysia or Vietnam imports a finished component (toe kick) from China and produces all other cabinet components locally. They assemble the complete cabinet using both the imported and locally made parts, resulting in products that do not fall under the scope of the AD and CVD orders. 

 

Certification Requirements: 

  • Importers must complete and maintain the applicable importer certification and retain all supporting documentation. 
  • Importers must submit the certifications to CBP as part of the entry process. 
  • Exporters must complete and maintain the exporter certification and provide a copy to the importer along with supporting documentation. 
  • The claims and supporting documentation are subject to verification by Commerce and CBP. 
  • Certifications and documentation must be maintained for five years after the latest entry date or three years after the conclusion of any litigation. 

 

Certification Deadlines: 

  • For entries from November 4, 2021, through the date of the publication of the Federal Register notice that have not been liquidated, certifications must be completed within 90 days of the publication date. 
  • For unliquidated entries declared as non-AD/CVD type entries during this period, importers must file a Post Summary Correction to convert them to AD/CVD type entries and pay applicable duties. 
  • If certification requirements are not met, Commerce will instruct CBP to suspend all unliquidated entries and require importers to post applicable cash deposits. 

 

2) Lacey Act and Phase VII Implementation Webinar on August 21, 2024, from 2:00 to 3:00 p.m. ET

The webinar will cover the Lacey Act, including the 2008 amendments related to plants and plant products, and provide updates on Phase VII of the Import Declaration Implementation Schedule. To register, click here. Registrants will receive the webinar link the day before the event, but entry is first-come, first-served due to limited seats. The webinar will be available for replay afterward at Trade Outreach Webinars on the CBP website. 

 

3) CSMS # 61491879 - Drawback: Apportionment of Merchandise Processing Fees, Ruling H332753 dated 5/20/2024 

This ruling details the correct method for apportioning MPF on a drawback claim and can be accessed via the Customs Rulings Online Search System (CROSS) here. 

 

Claimants should contact the drawback office where their unliquidated claims are filed to amend or perfect claims as needed, in accordance with the ruling. Contact emails for drawback offices are: 

 

Questions regarding this message can be sent to [email protected]. 

 

4) Updated Section 321 Cargo Guides: $800 Limit in Aggregated Shipments & ET86 Requirement

Release 1 (Cargo Release Only): 

  • Requirement: Estimated date of arrival for all entry type 86 (ET 86) submissions in ACE (SE20 EDA). 
  • CERT Date: 7/11/24 
  • PROD Date: 7/25/24 
  • Details: See CSMS # 61264910 and CSMS # 61421135. 
  • Documents Updated: 
  • Cargo Release CATAIR: Changes to SE20 record and Update Action Table. Cargo Release CATAIR 
  • Cargo Release Error Codes: New validation rule 265 for master house bill mismatch with manifest, and rules 284, 286-288 added. Cargo Release Error Codes 

 

Release 2 (Cargo Release, Manifest, and Truck): 

  • Validation: Enforce $800 daily aggregated threshold for de minimis shipments. 
  • CERT Date: 7/25/24 
  • PROD Date: 9/28/24 
  • Details: CBP will publish more information soon. 
  • Document Updated: 
  • Cargo Release Status Notification: New disposition code in the SO60 record. Cargo Release Status Notification 

 

5) FMC Publishes Final Rule on Unreasonable Refusal to Deal 

This rule outlines the criteria for applying 46 U.S.C. 41104(a)(3) and 46 U.S.C. 41104(a)(10) concerning refusals of cargo and vessel space accommodations. 

 

Key Provisions: 

  • Negotiation Phase: 46 U.S.C. 41104(a)(10) applies to refusals during negotiations. 
  • Execution Phase: 46 U.S.C. 41104(a)(3) applies to refusals during the execution of a transaction. 
  • Case-by-Case Review: Claims will be assessed individually based on specific circumstances. 
  • Reasonable Basis: VOCCs (vessel-operating common carriers) may not be in violation if they can demonstrate a reasonable basis for refusal. 
  • Examples and Considerations: The rule includes non-binding examples of unreasonable behavior. 

 

New Requirements for VOCCs: 

  • Confidential Export Policy: VOCCs must file an annual documented export policy with the FMC, detailing pricing strategies, services, equipment provision, and market descriptions. 
  • Effective Date: The rule will be effective 60 days from publication in the Federal Register on July 23. However, the requirement to file the export policy is delayed until approval by the Office of Management and Budget. The FMC will announce the effective date once approved. 

 

6) BIS Issues Guidance on Addressing Export Diversion Risks

The Department of Commerce’s Bureau of Industry and Security (BIS) published guidance outlining actions that BIS plans to take to inform the industry of parties that present risks of diversion of items subject to BIS export controls to countries or entities of concern.  This guidance outlines the different actions that BIS takes – through “supplier list” letters, Project Guardian requests, “red flag” letters, and “is informed” letters – to inform companies and universities about parties (beyond those identified on public screening lists) that present diversion risks. It also outlines the responsibilities of companies and universities to mitigate those diversion risks. Further, the guidance contains a new recommended best practice for companies and universities involved with the export, reexport, or transfer (in-country) of Common High Priority List (CHPL) items to conduct additional screening of parties to such transactions to prevent the diversion of EAR items to Russia through third countries. 

 

Supplier List Letters  
BIS can learn information about foreign parties that are not found on one of their public screening lists.  In an effort to help targeted/at risk industry screen such parties, BIS may issue a letter to a company or university identifying parties of diversion concern regardless of whether or not that company or university has previously engaged in transactions with the foreign parties.  Upon receiving these types of letters, companies should closely scrutinize their transactions with the identified “supplier list” parties to determine whether any red flags, specifically those identified in Supplement No. 3 to Part 732 – BIS’s “Know Your Customer” Guidance and Red Flags are present.   

 

Contained in the guidance is a new recommended best practice asking exporters and reexporters of Common High Priority List (CHPL) items to screen transaction parties using a new online screening tool made available by the Trade Integrity Project (TIP).  The TIP screening tool provides a way for companies to identify third-country suppliers with a history of exporting CHPL items to Russia since its invasion of Ukraine.  TIP provides a way for exporters and reexporters to identify possible red flags prior to proceeding with an export transaction that could be at risk for diversion to Russia.   

 

Project Guardian Requests and “Red Flag” Letters  
In a Project Guardian request, BIS asks a company or university to be on the lookout for transactions with a specific party or for inquiries about a specific item. BIS further asks that if the company or university identify such a transaction or receive such a product inquiry, they deny (or at a minimum suspend filling) such order and contact their local Export Enforcement field office for guidance on how to proceed. 


BIS issues a “red flag” letter to inform a company that one of their customers may have, in violation of the EAR, reexported or transferred (in-country) the same type of item that the company previously exported to that customer. A “red flag” letter lets a company know that it needs to beware of dealing with a particular customer because the customer’s reexport or in-country transfer history creates a high probability that an export violation may occur.  A company that receives a “red flag” letter should conduct additional due diligence to resolve and overcome the red flag identified by BIS before filling an order from the identified customer. 
Supplement No. 3 to Part 732 provides guidance on how companies and universities should address transactions where there are red flags, including those affirmatively raised by BIS through a Project Guardian request or “red flag” letter. Specifically, companies and universities have a duty to evaluate red flags and determine whether they can be explained or justified. 

 

“Is Informed” Letters 
BIS has the authority to notify individual companies and universities of supplemental license requirements applicable to specific items going to specific entities or destinations, or to specific activities of U.S. persons. BIS administers this authority through the issuance of “is informed” letters. A company or university receiving such a letter “is informed” of license requirements for specific transactions because of U.S. national security or foreign policy concerns, including concerns related to weapons of mass destruction, military end uses or end users, or involvement in other activities contrary to U.S. national security or foreign policy interests. A recipient of an “is informed letter” who engages in a transaction covered by the letter without the required authorization violates the EAR. From an enforcement perspective, non-compliance with an “is informed letter” is treated the same as non-compliance with any other license requirement under the EAR and is subject to administrative and/or criminal penalties. 

For additional information regarding red flags or license requirements, companies can reach out to BIS directly Contact us | Bureau of Industry and Security (bis.gov).