09/20/2024

White House Announces Executive Actions Aimed at De Minimis Shipment

Check out this week's Customs Corner to read about the White House executive actions, finalized Section 301 Tariff increases, and more.

Trade and Customs Updates

1) White House Announces Executive Actions Aimed At De Minimis Shipments

The de minimis exemption allows goods valued at $800 or less to enter the U.S. duty-free, which has led to over a billion such shipments annually. The recent actions announced will soon be followed by several regulatory and legislative proposals aimed at strengthening trade enforcement and transparency. Here’s what to expect:

Regulatory Proposals:

Exclusion of Products Covered by Trade Enforcement Actions:
A Notice of Proposed Rulemaking will propose that all shipments containing products subject to tariffs under Section 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962, be excluded from the de minimis exemption. This would stop those goods from entering duty-free.
Strengthened Information Collection for Low-Value Shipments:
Another Notice of Proposed Rulemaking will propose:

Requiring more specific data for de minimis shipments, including the 10-digit tariff classification number and the person claiming the exemption, to improve transparency and enforcement.
Clarifying who is eligible to claim the exemption and ensuring that the person benefiting from the de minimis rule is properly identified. This aims to enhance visibility and ensure compliance while allowing legitimate shipments to clear more quickly.

Final Rule to Prevent Circumvention of Safety Standards:
The Consumer Product Safety Commission (CPSC) will propose a final rule requiring importers of consumer products, including those using the de minimis exemption, to file Certificates of Compliance (CoC) electronically with CBP and CPSC at the time of entry. This rule is designed to ensure that imported products meet U.S. safety standards and to prevent companies from using the de minimis exemption to bypass consumer protection requirements.

Legislative Proposals:

The White House is also urging Congress to pass new legislation that would:

Exclude Import-Sensitive Products:
Textiles and apparel, among other import-sensitive goods, would no longer be eligible for the de minimis exemption, protecting U.S. industries from unfair competition.
Exclude Products Under Trade Enforcement Actions:
The proposed legislation would statutorily exclude products subject to Section 301, Section 201, or Section 232 tariffs from the de minimis exemption, making it more difficult for these goods to enter the U.S. market without paying duties.
Increase Transparency and Accountability:
Shippers would be required to provide more data, including product tariff classification numbers, allowing border officials to better track and target de minimis shipments. This would give CBP the necessary tools to scrutinize the millions of daily shipments more effectively.

These actions and proposals are part of a broader push to reform the de minimis exemption, curb its misuse, and safeguard U.S. workers, businesses, and consumers from unfair trade practices. The White House Fact Sheet provides further details.

2) Section 301 Tariff Increases Finalized, Increase Beginning September 27th

This review aimed to address concerns over China’s trade practices, while also offering limited exclusions for U.S. manufacturing equipment and certain solar panel manufacturing equipment. The final list includes several key changes and can be accessed here.

Key changes include:

Tariffs on Medical Products:

Face masks: The 25% tariff will increase to 50% by 2026.
Medical gloves: Tariffs will rise from 25% to 50% in 2025 and to 100% in 2026.
Needles and syringes: The 50% tariff will increase to 100% in 2024, but enteral syringes will be excluded through January 1, 2026.

Tungsten, Wafers, and Polysilicon:
USTR has proposed adding more tungsten, wafers, and polysilicon tariff lines, critical to industries like semiconductors and solar manufacturing. These will be subject to public comments.
Ship-to-Shore Cranes:
Cranes ordered before May 14, 2024, are excluded from increased tariffs if they arrive before May 14, 2026.
Machinery Exclusions Process:
Five additional tariff lines are included in the machinery exclusions process, covering categories like water and gas filtration and industrial robots.
Solar Manufacturing Equipment:
The scope of proposed exclusions for solar manufacturing equipment has been modified, considering domestic and European alternative sources.

USTR plans to launch the machinery exclusions process and open the comment period for the proposed tariff changes on tungsten, wafers, and polysilicon soon. Detailed information can be found in USTR's Federal Register Notice. Tariff increases are set to take effect on September 27, 2024, though some solar equipment exclusions are retroactive to January 1, 2024, and last until May 2025. This action follows USTR's review of over 1,100 public comments.

3) USDA National Organic Program Update – Additional Filing Codes in ACE

CSMS # 62228844 confirms the key changes:

Temporary Filing Code Prohibited:
The temporary filing code 999-999-T will no longer be allowed in the Automated Commercial Environment (ACE) for organic imports without a valid NOP Import Certificate (NOP-IC).

Any shipments using this temporary code after the effective date will face adverse actions or enforcement measures.

Tariff Flag Enforcement:

The AMS AM8 tariff flag will be enforced with a reject severity in ACE, meaning imports flagged under this code will be rejected.
The AM7 tariff flag will continue to be enforced with a warning severity, allowing some flexibility.

Reconditioning Process for Non-Compliant Shipments:

If a valid NOP-IC is unavailable at the time of filing, the shipment must undergo reconditioning to convert it to a conventional (non-organic) status.
This includes relabeling and reinvoicing the product, which must have all organic markings removed. The shipment must be reconditioned at an offsite location, and the Goods Subject to Reconditioning (010-420-L) code must be used.

Certified Organic Importers:

U.S. importers handling organic trade must be certified organic under the USDA's new organic regulations. Only importers listed in the Organic Integrity Database are authorized to handle certified organic imports. Any shipment without a valid NOP-IC cannot claim to be certified organic.

New 9-Character Codes for ACE Entries (Filed Under OR2):

333-550-R: American Certified Organic Goods Returned
For USDA-certified products returned to the U.S. after being exported to a certified organic recipient abroad. Only unopened and sealed products are eligible.
333-800-E: Non-Retail Sales/Donations
For USDA-certified products entering the U.S. for charitable donations, trade shows, humanitarian efforts, etc.
010-737-M: Personal Goods/e-Commerce
For USDA-certified products for personal consumption or purchased via mail order that are not required to have an NOP-IC but may flag in ACE due to HTS codes.
010-420-L: Goods Subject to Reconditioning
For cargo arriving without a valid NOP-IC, marked as USDA certified organic, which must be taken to an offsite location for reconditioning prior to entry.

These new rules aim to ensure compliance with USDA organic standards and improve oversight of organic imports entering the U.S.

4) Foreign Trade Zone Benefit for CTPAT Partners

Key Details of the Program:

Eligibility: Only importers who are CTPAT Trade Compliance partners can use FTZs for storage of goods detained under potential forced labor enforcement. Importers not in this program must use bonded warehouses with a Type 21 entry.
Approval Process:
CTPAT Trade Compliance partners must identify the FTZ Operator they plan to use and secure Port Director approval before moving goods.
The FTZ Operator must have an active Type 4 bond, a FIRMS Code, and comply with all CBP regulations.
Forced Labor Detentions:
If an importer has goods detained for forced labor currently stored in an FTZ, they may continue to store these goods by filing a formal 06 entry with all required data elements.
Goods from entities added to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List, already stored in an FTZ, may remain there if an 06 estimated weekly entry with complete data elements is filed.

Conditions for Storage of Goods in FTZ:

Admissibility Reviews: Centers will not conduct formal reviews prior to filing formal entries and issuing detention notices.
Notifications: Importers must notify the Port Director, the CTPAT Trade Compliance Branch, and the Center of Excellence and Expertise Director before utilizing FTZ storage options.
Entry Instructions:

The detained goods must be marked appropriately on the estimated weekly entry and remain segregated from other goods.
Detained goods cannot be released for consumption or removed from the FTZ until the issue is resolved.

Physical Identification:

Goods must be clearly identified with CBP 239 Warning Labels or copies of CBP Form 6051D, subject to Port Director approval.

This program provides CTPAT Trade Compliance partners with more flexibility in handling goods subject to forced labor reviews while ensuring compliance with U.S. trade regulations. CSMS # 62269186 provides further information.

5) CBP Form 4811, Special Address Notification Procedural Guidance

CBP Form 4811 authorizes the Designated Agent (4811 Notify Party) to receive CBP-issued documents such as checks, bills, refunds, and notices on behalf of the IOR. The IOR remains the named party on these documents, but they will be mailed or sent to the designated agent. This is a two-step process and both steps are required for the form to be effective:

Step 1: Submission of CBP Form 4811

Where to submit: The form must be submitted to the IOR's assigned Center of Excellence and Expertise (Center). If the IOR hasn’t been assigned a Center, the form can be submitted to the Center most aligned with the importer’s highest-valued commodity.
The form must list the Agent’s Number, which could be an Employer Identification Number (EIN), Social Security Number (SSN), or a CBP-Assigned Number.
Processing time: Allow 10 business days for processing. CBP personnel will confirm via email once the form has been processed.
The Center Directory is available on CBP's website.

Step 2: Identification of the 4811 Notify Party on Entries

After confirming that CBP Form 4811 has been processed, the IOR or the broker acting on their behalf can file entries listing the Designated Agent as the 4811 Notify Party.
The Agent’s Number must be listed as the Notify Party on the entry summaries covered by the form.

If the steps are followed correctly, CBP will send the check, bill, refund, etc., to the Designated Agent rather than the IOR. Taking the steps out of order (e.g., transmitting a 4811 Notify Party before the form is processed) will result in the documents being sent to the IOR instead.

Additional Information:

Post Summary Correction (PSC): If a 4811 Notify Party needs to be added or updated after filing, a PSC citing Reason Code H99 (Data Change – Other) can be submitted.
Refunds after liquidation: If a refund is needed after entry summary liquidation, a protest can be filed, including block 11 of CBP Form 19. This designation will override any previous CBP Form 4811.
A protest solely to add a 4811 Notify Party will be rejected.

More information can be found at CSMS # 62234804

6) Agricultural Marketing Service (AMS) Adjusts Value Assigned to Imported Cotton

The new rule becomes effective on November 15, 2024, unless significant adverse comments are received by October 16, 2024. If adverse comments are received, AMS will withdraw the amendment.

The total assessment on imported cotton consists of two parts:

Base Assessment: $1 per bale of imported cotton (500 pounds or 226.8 kilograms).
Supplemental Assessment: 0.5% of the value of domestically produced cotton, based on the cotton content of imported products.

The Import Assessment Table has been updated to account for changes since 2023. The new value assigned to imported cotton for calculating assessments is $0.013247 per kilogram, reduced from $0.014691 per kilogram, based on the average price received by U.S. farmers for Upland cotton in 2023. The amendments to the Cotton Research and Promotion Act were made under the Food, Agriculture, Conservation, and Trade Act of 1990. These provisions authorized the assessment of imported cotton and terminated refunds to cotton producers, which were allowed before the 1990 amendments. The amendment is in line with the statutory requirements to maintain consistency between assessments on domestically produced and imported cotton, ensuring equitable funding for the Cotton Research and Promotion Program. The Federal Register can referenced for further information.

7) Airline Industry Provides Established Business Relationship Statement

The "Established Business Relationship Statement" is a significant step for the freight forwarding and customs broker industry. This template was developed through collaboration between Airlines for America (A4A), the International Air Transport Association (IATA), and several airlines. Importantly, it has also been endorsed by the Transportation Security Administration (TSA), ensuring it meets security requirements.

The statement clarifies the definition of an Established Business Relationship (EBR) within the airfreight sector, ensuring that airlines can clearly demonstrate their ongoing partnerships with supply chain entities, which is essential for maintaining compliance with security measures. This development aids in streamlining processes for airlines while meeting governmental expectations in a transparent and uniform manner.

For the freight forwarding and customs broker industry, this standardized language is crucial as it reduces ambiguity and provides a clear pathway for compliance.

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The session will provide updates on Phase VII of the Import Declaration Implementation Schedule, detailing the latest requirements for reporting and compliance.

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