PLANNING FOR 2013

As you set your business plans for 2013, consider a renewed focus on trade compliance, including:

•     Review of government import/export data;

•     Updating procedures;

•     Special trade program compliance;

•     Related party values;

•     New business ventures;

•     Training;

•      Internal assessments; and

•     Record access and retention.

AGOA/GSP

•    The Office of the U.S. Trade Representative is requesting comments on the possible withdrawal, suspension, or limitation of Generalized System of Preferences (GSP) benefits on products imported into the U.S. from Bangladesh.  Comments are due by January 31.  78 Federal Register 1300 (January 8, 2013).              

•    President Obama issued Proclamation 8921, designating South Sudan as an African Growth and Opportunity Act (AGOA) beneficiary, removing Mali and Guinea-Bissau as AGOA beneficiaries, and removing St. Kitts and Nevis as GSP beneficiaries.  77 Federal Register 76799 (December 28, 2012).   

APPLE RULING ON CASES

In a recent ruling, Customs disagreed that iPad carrying cases should be treated as accessories for automatic data processing (ADP) machines, and ruled that they still function as a cover even though they incorporate magnets, function as stands, etc.  HQ H219396 (October 9, 2012).   

BROKER CONFIDENTIALITY

A recent Customs ruling found that if a broker’s client provides written consent for the broker to disclose information to a third party for security screening purposes, the broker would not be subject to disciplinary action for violating confidentiality requirements of 19 C.F.R. § 111.24.  HQ H221355 (November. 21, 2012).  Importers should watch for the inclusion of over-broad consent clauses in broker powers of attorney and/or associated terms and conditions.

CBP/FDA REFUSALS

Customs Los Angeles/Long Beach Seaport has issued a bulletin on the newly created Customs and Food & Drug Administration Federal Destruction and Redelivery Team.  Effective January 13, 2013, it will process documentation concerning FDA refused merchandise at the port and notify importers with a combined CBPF 4647 and FDA Action notice called a Refusal Redelivery Notice (RRN).

CBP REGULATORY AGENDA

The U.S. Treasury has released the planned Regulatory Agenda for Customs.  Clients are encouraged to review the subjects being worked on by Customs and to prepare for potential changes.

DUTY SUSPENSIONS

A Miscellaneous Tariff Bill (MTB) (H.R. 6727) including 2,000 individual duty suspension provisions was introduced in  Congress on January 1, but it was not enacted and a new MTB will need to be introduced during the next Congressional session. Do not expect any immediate action.  Consider the alternative of using FTZ status to reduce or eliminate Customs duties in certain instances.   

EXPORT CASES

•    The former Managing Director for PPG Paint in Shanghai was convicted and sentenced to a year in prison, fined $100,000, and sentenced to 500 hours of community service for her role in diverting product to an entity in Pakistan on the Entity List. 

•    Settlements by OFAC for unauthorized exports that involved merchandise eligible for an OFAC license are often greatly mitigated, even when serious aggravating circumstances are present.  See Ellman International  and Brasseler USA.

FDA  HARPC

The FDA has issued a fact sheet and Proposed Rule on “Hazard Analysis and Risk-Based Preventative Controls” (HARPC), its revisions to current Good Manufacturing Practices for food.  Comments are due May 16, 2013.  78 Fed. Reg. 3646 (Jan. 16, 2013). 

FTR FINAL RULE AND SLIs

•    The Final Rule for the revised Foreign Trade Regulations (FTR) is expected to be published in February.  Among the expected changes is the option to include the end user in the Automated Export System (AES).  Contact Jerry Greenwell for more information.

•    We have updated our Shipper’s Letter of Instruction (SLI) to include an end user, as well as destination control statements, a continuation sheet to list more items, permission to allow Transportation Security Administration (TSA) screening, and instructions on whether or not the freight forwarder needs to do restricted party screening.  This SLI  provides better information than the Shipper’s Export Declaration (SED)-based SLIs still being used by many.  Contact Chuck Ballard for information on our SLI.

HTS

•    The U.S. International Trade Commission (ITC) is soliciting comments on proposed changes to the Harmonized Tariff Schedule.  The proposed modifications affect HTSUS Chapters 29, 30, 37, and 85.  There are also corrections to HTS provisions for chemicals.   Comments are due February 22.  77 Federal Register 76300 (December 27, 2012).

•    The Automated Export System (AES) is now accepting 2013 Harmonized Tariff Schedule of the United States (HTSUS) codes and any 2013 updated Schedule B codes.  2012 HTSUS codes will still be accepted through January 30.

ILLEGAL DINOSAUR FOSSILS

A Florida man recently ple guilty to illegally importing dinosaur fossils into the U.S. from Mongolia and China by misrepresenting the country of origin and substantially undervaluing the fossils on Customs documentation.  

IMPORT/EXPORT RECORDS

Now is the time to order 2012 importer/exporter activity data analyses.  These data analyses are the best method we know of to identify compliance concerns before the government does.  More information is available on the firm’s website.  To get your Company’s 2012 records as quickly as possible in 2013 and process them into reports, charts, and graphs, please contact Rod Baum. 

INFORMAL ENTRY INCREASE

The increase in the informal entry limit from $2,000 to $2,500  took effect on January 7, 2013.  CSMS #13-000008 (Jan. 8, 2013).

ISF

As a reminder, Customs no longer emails monthly Importer Security Filing (ISF) Progress Reports.  Importers should run, or have their brokers run, ACE ISF Reports on a monthly basis to track ISF compliance.

MEDICINE TO IRAN

Tucked in the new Iranian Transactions and Sanctions Regulations, which generally made it more difficult to export or re-export products to Iran, is a provision for a General License to allow the export of most EAR99 medicines and many basic medical supplies without the requirement of obtaining a license from OFAC.  Contact Chuck Ballard with questions.  77 Federal Register 64664 (October 22, 2012).

NEW IRAN SANCTIONS

As part of the National Defense Authorization Act (NDAA) signed on January 2, Congress imposed additional sanctions on Iran.  This new enactment requires the President to freeze the property of entities identified as “part of the energy, shipping, or ship building sectors in Iran” (including ports), or “knowingly providing significant support” to these entities.  The NDAA also requires the imposition of sanctions on those providing support.  The President has until July 1 to implement the legislation.

OFAC WARNINGS

The Office of Foreign Assets Control (OFAC) issued an advisory on January 10, warning financial institutions on the use of exchange houses and trading companies who are being used to evade U.S. economic sanctions against Iran.  

TPP

A recent study projects that the Trans-Pacific Partnership (TPP) agreement would yield $24 billion in income gains for the United States by 2025 and $21 billion in income losses for China as other Asian exporters that are TPP members would be more competitive with China in the U.S. market. 

WCO HTS CLASSIFICATION

On December 17, 2012 The World Customs Organization (WCO) published changes to tariff classification decisions, as well as the Harmonized Systems Explanatory Notes (ENs) and their classifications.  Changes to the Compendium of Classification Opinions include decisions on two types of tablet computers, three-wheeled vehicles with enclosed rear cargo area, and a total body cyrotherapy chamber.  There are numerous changes in the ENs.  Clients using the ENs for HTS classification should carefully examine the changes. 

WHISTLEBLOWER ACTION

Toyo Ink SC Holdings Co and its affiliates are to pay a $45 million settlement for antidumping/countervailing duties (AD/CVD) evasion.  The Department of Justice alleged misrepresentation of the countries of origin on the documents submitted to Customs to avoid paying AD/CVD duties.  The whistleblower will receive more than $7,875,000 as his share of the government’s recovery. 

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