11/15/2024
Guidance on Isotopic Testing and Supply Chain Traceability
Check out this week's Customs Corner to read about the guidance on isotopic testing, a new bill to revoke PNTR with China, and more.
1) Guidance on Isotopic Testing and Supply Chain Traceability
The Guide outlines the importance of supply chain traceability in light of the Uyghur Forced Labor Prevention Act (UFLPA), which aims to prevent goods linked to forced labor in the Xinjiang Uyghur Autonomous Region (XUAR) from entering the U.S. market.
Isotopic testing is a scientific method used to verify the geographic origin of materials like cotton, aiding compliance with UFLPA requirements. By analyzing the isotopic signature of materials, companies can trace their geographic origin and substantiate claims about sourcing regions.
U.S. Customs and Border Protection (CBP) endorses isotopic testing as a tool to manage trade fraud risks and ensure due diligence. However, while isotopic testing is a powerful tool, it is not exhaustive and should be part of a broader due diligence strategy.
CBP notes that understanding the confidence levels and limitations of results is crucial when selecting isotopic test providers. Coordination with additional supply chain tracing methods may enhance overall compliance effectiveness.
2) Bill Introduced to Revoke Permanent Normal Trade Relations with China
The Bill outlines a comprehensive overhaul of U.S.-China trade relations, focusing on revising tariff structures, eliminating Permanent Normal Trade Relations (PNTR) status for China, and creating mechanisms to counteract potential retaliation.
Key Provisions:
1. End of PNTR for China:
- Removes the need for an annual Congressional vote to recertify PNTR status.
Establishes tariffs for Chinese goods directly in statute, providing long-term predictability and stricter trade measures.
2. New Tariff Column for China:
- Introduces differentiated tariff rates:
- 35% minimum for non-strategic goods (based on the proportion of goods’ value).
- 100% minimum for strategic goods.
- Phase-in Schedule:
- Year 1: 10% of the full increase.
- Year 2: 25% of the full increase.
- Year 4: 50% of the full increase.
- Year 5: 100% of the full increase.
- Strategic Goods Definition:
- Listed by Harmonized System (HS) codes.
Derived from the Biden administration’s Advanced Technology Product List and China’s Made in China 2025 plan.
3. De Minimis Treatment Changes:
- Ends De Minimis exemptions (thresholds below which goods can enter duty-free) for nations like China.
Mandates customs brokers for remaining De Minimis shipments to improve oversight and compliance.
4. Revenue Utilization:
- Revenue would compensate farmers and manufacturers impacted by potential retaliatory actions from China.
- Additional funds to be allocated toward purchasing munitions and other resources critical for countering potential Chinese Communist Party (CCP) aggression in the Pacific region.
3) Harmonized System Update
CSMS # 63035311 confirms that the major updates include the 2024 Cotton Fee updates and the removal of the Agricultural Marketing Service (AM7 flag) from 1,700 HTS.
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