Customs Enforcement Programs on the Horizon
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
A number of importers have received compliance letters from Customs. These letters identify a number of Customs Informed Compliance Publications, and remind importers of their obligation to exercise reasonable care in preparing and filing their customs entries.
These notices are intended to encourage importers to review their import procedures and entry declarations to achieve higher levels of compliance. At the same time these letters will likely be used against importers to increase potential penalty claims if Customs identifies any violations on their own. In sending these letters Customs is encouraging importers to conduct internal compliance audits and file prior disclosures to minimize penalty exposure.
In the Trade Facilitation and Trade Enforcement Act of 2015, Customs received a mandate from Congress to increase trade enforcement and the prosecution of child and forced labor violations. Each of these new provisions contemplates that competitors will provide information to Customs about alleged violations for which investigations will be launched. In addition, these new programs permit Customs to initiate their own investigations without input from the trade. Customs must report to Congress on these issues so these allegations will not be ignored and will be dealt with expeditiously. Customs has broad powers which can be used to impact importations while investigations are continuing.
In the labor area, Customs has begun to compile a list of foreign companies believed to use child or forced labor; additional names will be added to this list as new allegations are received and found to be valid. In the trade area, violations of ADD/CVD orders could occur for a number of reasons. For example, false country of origin claims, false product descriptions, misidentification of the actual producer or exporter, etc. could impact the necessity to pay antidumping duties or countervailing duties entirely or at the appropriate deposit rate. If an investigation is initiated, companies will be expected to send large amounts of information to Customs in a short amount of time. All the while, the threat of cargo holds and potential penalties will be hanging in the balance. As a result, Customs compliance audits and vendor audit programs should be created to mitigate the potential exposure that could be inflicted should one of these investigations be commenced. If you have any questions please feel free to contact Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
Formaldehyde Emission Standards for Composite Wood Products
U.S. Environmental Protection Agency
On July 27, 2016, EPA finalized a rule to reduce exposure to formaldehyde vapors from certain wood products produced domestically or imported into the United States.
- Read a prepublication copy of the formaldehyde emissions standards final rule
- Read the press release
EPA worked with the California Air Resources Board to help ensure the final national rule is consistent with California’s requirements for composite wood products.
The Formaldehyde Emission Standards for Composite Wood Products Act of 2010 established emission standards for formaldehyde from composite wood products and directed EPA to finalize a rule on implementing and enforcing a number of provisions covering composite wood products.
One year after the rule is published composite wood products that are sold, supplied, offered for sale, manufactured, or imported in the United States will need to be labeled as TSCA Title VI compliant. These products include: hardwood plywood, medium-density fiberboard, and particleboard, as well as household and other finished goods containing these products.
By including provisions for laminated products, product testing requirements, labeling, recordkeeping, and import certification, the final rule ensures that hardwood plywood, medium-density fiberboard, and particleboard products sold, supplied, offered for sale, imported to, or manufactured in the United States are in compliance with the emission standards.
The final rule also establishes a third-party certification program for laboratory testing and oversight of formaldehyde emissions from manufactured and/or imported composite wood products.
Rule History
On July 7, 2010, President Obama signed the Formaldehyde Standards for Composite Wood Products Act into law. On June 10, 2013, EPA proposed two regulations:
The two proposed rules were combined for the final rule to consolidate requirements into a single rule to help regulated entities and other interested parties better understand how various requirements are related without having to cross-reference between two separate rules.
USITC Recommends that the President Make Certain Modifications in U.S. Harmonized Tariff Schedule Nomenclature for Certain Fish, Wood and Wood Products, and Bed-Nets of Warp Knit Fabrics - U.S. International Trade Commission
The U.S. International Trade Commission (USITC) has recommended to the President that he make certain modifications to the Harmonized Tariff Schedule of the United States (HTS) to conform it with World Customs Organization (WCO) amendments to the global Harmonized System.
The modifications concern the classification of edible fish offal; new subdivisions for coniferous and non-coniferous wood and new HTS subheadings for certain wood of pine, fir, spruce, beech, birch, poplar, aspen, and eucalyptus; and certain bed-nets of warp knit fabrics.
The USITC’s actions are the latest step in a process that began when WCO officials approved changes to the Harmonized System nomenclature in June 2015. Countries around the world must incorporate the changes into their own nomenclature systems. The USITC maintains and updates the HTS, which is the United States' product category system.
Following expiration of a 60-day layover period before the Congress, the President is authorized to proclaim the modifications to the HTS. The amendments will enter into force on January 1, 2018.
The Commission’s report, Commission Recommendations to the President to Modify the Tariff Nomenclature in Chapters 3, 44, and 63 of the Harmonized Tariff Schedule, Inv. No. 1205-12, USITC Publication 4621, July 2016, is available on the USITC web site at: https://www.usitc.gov/publications/tariff_affairs/pub4621.pdf.
Program Still Provides Too Few Incentives To Help Boost Competitiveness of Dominican Apparel Exports, Says USITC
U.S. International Trade Commission
Although U.S. Imports of Woven Cotton Bottoms under the EIAP Rose in 2015, Industry Sources Do not Attribute the Increase to the EIAP
Seven years after its implementation, the Earned Import Allowance Program (EIAP) is not providing enough incentives to substantially boost Dominican apparel exports to the U.S. market, as intended, reports the U.S. International Trade Commission (USITC) in its publication Earned Import Allowance Program: Evaluation of the Effectiveness of the Program for Certain Apparel from the Dominican Republic; Seventh Annual Review.
The EIAP allows apparel manufacturers in the Dominican Republic who use U.S. fabric to produce certain apparel to earn a credit that can be used to ship eligible apparel made with non-U.S.-produced fabric into the United States duty free. The Dominican Republic-Central America-United States Free Trade Agreement Implementation Act, as amended, requires the USITC, an independent, nonpartisan, factfinding federal agency, to evaluate annually the effectiveness of the EIAP program and make recommendations for improvements.
The USITC's seventh annual review was submitted to the U.S. House of Representatives Committee on Ways and Means and the U.S. Senate Committee on Finance on July 29, 2016. Highlights of the report follow.
- Of the 12 registered firms, only 5 firms are currently using the program, the same number reported in the sixth annual review.
- In 2015, U.S. imports of woven cotton bottoms from the Dominican Republic tripled by value to $8.2 million from $2.7 million in 2014 and increased more than fivefold by quantity. U.S. industry sources attributed these increases, however, to incidental larger orders rather than to incentives offered by the EIAP. Moreover, the value and quantity of U.S. imports of woven cotton bottoms under the EIAP in 2015 accounted for less than 25 percent and 41 percent, respectively, of what they were at their peak in 2010.
- U.S. exports to the Dominican Republic of cotton fabrics of a weight suitable for making bottoms rose 13 percent by quantity and 11 percent by value between 2014 and 2015.
- Except for one addition, the recommendations offered during the seventh annual review of the EIAP were virtually the same as those received by the Commission during the previous six annual reviews: 1) lowering the 2-for-1 ratio of U.S. to foreign fabric to a 1-for-1 ratio; 2) expanding the program coverage to enable other types of fabrics and apparel items to be included in the EIAP; and 3) changing the requirement that dyeing and finishing of eligible fabrics occur in the United States. The new recommendation proposed during the seventh annual review was to add countries to the EIAP to foster regional integration and create further opportunities in other CAFTA-DR countries.
Earned Import Allowance Program: Evaluation of the Effectiveness of the Program for Certain Apparel from the Dominican Republic; Seventh Annual Review (Inv. No. 332-503, USITC Publication 4626, July 2016) is available on the USITC's Internet site at https://www.usitc.gov/publications/332/pub4626.pdf
USITC general factfinding investigations, such as this, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, and the Senate Committee on Finance. The resulting reports convey the Commission's objective findings and independent analyses on the subject investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the USITC submits its findings and analyses to the requester. General factfinding investigations reports are subsequently released to the public, unless they are classified by the requester for national security reasons.
Terminals in Ports of Los Angeles and Long Beach Move Start of Chassis Rule to September 1 - PierPass
LONG BEACH, Calif., Aug. 1, 2016 – The West Coast MTO Agreement (WCMTOA) has extended the implementation date of a new tariff rule for chassis services by one month until September 1. The rule applies to chassis owned by chassis leasing companies that receive services from WCMTOA’s marine terminal members at the Ports of Los Angeles and Long Beach.
The chassis system in the United States has been in flux for several years as shipping lines have moved away from providing the chassis (the truck trailer onto which containers are mounted) as part of their services. Since 2014, users in Los Angeles-Long Beach have arranged chassis directly with the leasing companies.
However, the terminals haven’t been compensated by the leasing companies for basic services provided such as storage space, stacking and unstacking the chassis, and electronic data interchange (which tells the chassis lessors who is using their chassis). Since the chassis leasing companies formed a “pool of pools” in early 2015, the terminals have been working with the leasing companies to address the compensation and services issues.
The new Rule 15 of WCMTOA’s Marine Terminal Schedule No. 1 describes the “On-Terminal Chassis Services” provided and establishes the “Chassis Services Fee.” The rule provides for a $5 fee each time a chassis enters or leaves the terminal, to cover the cost of services. The fee will be collected by PierPass on chassis with loaded or empty containers mounted, but not on bare chassis. MTO Schedule No. 1 is available at http://goo.gl/v3oiuI.
No fees will be charged for chassis that are owned directly by cargo owners or trucking companies, as these owners don’t require the services provided to leasing companies. Neither cargo owners or trucking companies need register their chassis under Rule 15.
Rule 15 was originally scheduled to take effect today, August 1. On Friday, PierPass informed the FMC that it was extending the start date to September 1, giving the leasing companies additional time to implement the change without impacting cargo flow in the ports.
The West Coast MTO Agreement is filed with the Federal Maritime Commission, and comprises the 13 marine terminal operators serving the Los Angeles and Long Beach ports.
CBP Agriculture Specialists in Pharr Intercept Rare Pest In a Persian Lime Shipment - U.S. Customs & Border Protection
PHARR, Texas – U.S. Customs and Border Protection agriculture specialists at Hidalgo/Pharr/Anzalduas Port of Entry discovered a rare beetle, a first in nation discovery, in a shipment of Persian limes.
“I want to congratulate our agriculture specialists for their diligence and attention to detail that resulted in the interception of a rare, first in nation pest,” said Port Director Efrain Solis Jr., Hidalgo/Pharr/Anzalduas Port of Entry. “Their outstanding work helps to foster America’s economic security by helping protect American agriculture from adverse impact by invasive species not known to exist in the U.S.”
On July 9, agriculture specialists at the Pharr import lot conducted an inspection on a commercial shipment of Persian limes. During the inspection of the shipment, agriculture specialists discovered a live pest. The insect was submitted for identification by a U.S. Department of Agriculture entomologist. The initial identification was later confirmed by a national specialist as Chrysobothris capitata (Buprestidae). The interception is the first of its kind in the nation according to USDA’s Pest ID Database. According to USDA entomologists, this pest has never been found at any of the nation’s ports of entry. CBP refused entry to the shipment and the limes were returned to Mexico.
The interception is an example of the diligent work CBP agriculture specialists do on a daily basis, which is crucial in preventing foreign pests from becoming established in the U.S. Pests that are not known to occur in the U.S. may be detrimental to the nation’s agriculture industry. CBP agriculture specialists continue to fulfill CBP’s agriculture mission by preventing harmful pests and diseases from becoming established in the U.S.
More information regarding CBP’s agriculture inspection mission may be found at this link and this link as well.