The government has recently stepped up its enforcement against forced labour. As particular regions come under increased media scrutiny, this issue has seen renewed interest in Congress, which is considering several bills to enhance forced labour enforcement. Moreover, with the United States taking a whole-of-government approach against goods made from forced labour, companies must act now to mitigate risk in their supply chains. This article discusses these actions in further detail.
The Department of Homeland Security through US Customs and Border Protection (CBP) recently issued new withhold release orders (WROs) aimed at entities involved in the import, downstream manufacturing or sale of certain apparel, cotton, hair products and computer parts. As the WROs were backdated, they may adversely affect merchandise that is currently being shipped to the United States or which is already in CBP's custody.
Fashion and luxury goods companies should be concerned about the recent sanctioning of Chinese companies in Xinjiang province by the US Departments of Treasury and Commerce and other US Customs and Border Protection (CBP) developments relating to importing products that contain fabric made with prison or forced labour. Notably, there is a risk that garments made from cotton produced by Xinjiang Production and Construction Corps could be subject to a CBP withhold release order.
US Customs and Border Protection recently issued new guidance providing an additional 45-day transition period for compliance with new marking requirements for goods produced in Hong Kong that are imported into the United States. This extends the transition period for companies to comply with the requirements from 25 September 2020 to 9 November 2020.
US Customs and Border Protection recently announced that it had collected $575,000 in penalties resulting from a civil enforcement action against importer Pure Circle USA for imports made with forced labour. This action indicates that CBP is following through with its mandate to prevent goods produced using forced labour from entering the stream of commerce and penalise importers when such goods do enter.
In July 2020 President Trump issued an executive order concerning certain import and export trade requirements between the United States and China. Subsequently, US Customs and Border Protection published a notice in the Federal Register providing an effective date for the new marking and the penalties for incorrect marking and released further guidance on the origin of goods from Hong Kong for Section 301 China tariff purposes through the issuance of FAQs.
As a result of the growing tensions between the United States and China, President Trump recently issued an executive order concerning certain import and export trade requirements between the two countries. Among these changes, it was mandated that goods produced in Hong Kong be marked with China as their country of origin. Because of the time needed to mark, pack and ship goods from Hong Kong to the United States, importers must act quickly to ensure compliance with this new requirement.
The Federal Trade Commission (FTC) has published a proposed rule for Made in the USA (MUSA) claims which would codify its current standard that unqualified MUSA claims for a product should have a reasonable basis for asserting that all or virtually all of the product is made in the United States and authorise it to assess monetary penalties on unsubstantiated claims. Controversially, the proposed rule would also extend the FTC's enforcement authority to labels, mail-order catalogues and online advertising.
US Customs and Border Protection (CBP) recently released the long-awaited United States-Mexico-Canada Agreement (USMCA) Interim Implementing Instructions, which signal the transition from the North American Free Trade Agreement to the USMCA. For companies operating in the United States, selling into the United States or buying from the US marketplace, these instructions should be viewed as an indication that the USMCA is on track for a possible Summer 2020 entry into force.
Effective 20 April 2020, the government has introduced a temporary 90-day postponement of certain import payment deadlines for companies and individuals experiencing significant financial hardship due to the economic fallout from the COVID-19 pandemic. This announcement follows a previously abandoned US Customs and Border Protection action to provide relief, intense lobbying on both sides of the issue and mixed signals from the Trump administration.
To facilitate the import of personal protective equipment and other medical supplies in response to the COVID-19 pandemic, the government continues to waive some tariffs, but balks at broad relief. Among the recent developments in this respect are the launch of a new US Customs and Border Protection (CBP) COVID-19 website. In addition, CBP and the Food and Drug Administration have issued updated guidance for importing COVID-19 supplies and new Section 301 tariff exclusions have been published.
In response to the COVID-19 crisis, the US Food and Drug Administration has expanded its Enforcement Discretion Policy for the import, distribution and use of certain masks and other personal protective equipment (PPE) intended for medical use. In addition, US Customs and Border Protection has updated some previous guidance for importing PPE and other medical devices during the pandemic.
Due to the COVID-19 pandemic, medical items such as masks, ventilators and gowns are difficult to find. With people looking overseas to source these items, this article provides some basic guidance for importing them in a way which satisfies US import requirements and facilitates quick processing through clearance. Many of these items are regulated by the Food and Drug Administration as medical devices and are also subject to US Customs and Border Protection regulations.
The coronavirus (COVID-19) is affecting all elements of society, including the import, trade and transport sectors. The Department of Homeland Security and US Customs and Border Protection (CBP) have recently announced that the US-Canada and US-Mexico borders have been closed to 'non-essential' traffic for 30 days and that duty payments may be deferred. CBP has also announced the impact of COVID-19 on operations. For now, cargo shipments remain unaffected.
The US Department of Homeland Security recently released a department-wide strategy to combat human trafficking, child exploitation and forced labour in the supply chain. The strategy will build on current efforts to interdict imports of goods made with forced labour that US Customs and Border Protection has been enforcing since the passage of the Trade Facilitation and Trade Enforcement Act in 2016.
The Trump administration recently took the first step to implement its plan to crack down on counterfeit goods online when it issued an executive order allocating more federal resources to the inspection and oversight of imports that are at risk for counterfeits and other illicit goods. The executive order was issued one week after the US Department of Homeland Security issued a plan setting out steps to combat counterfeit goods.
The United States and China recently signed a long-awaited trade agreement after nearly two years of a trade war that has resulted in crippling tariffs. This preliminary agreement requests China to purchase approximately $200 billion in certain US goods and services and provide better protection to US intellectual property and trade secrets. In exchange, President Trump has agreed to reduce the List 4A tariffs on $120 billion worth of goods and indefinitely suspend the imposition of a 15% tariff on List 4B products.
The US Trade Representative recently announced that it has determined that France's digital services tax is unreasonable or discriminatory and burdens or restricts US commerce, and that it is proposing additional ad valorem duties of up to 100% on products from France under Section 301 of the Trade Act 1974. Parties seeking changes to the proposed list of tariff subheadings or lower duties should take advantage of the comment period.
List 4A goes into effect, all Section 301 tariffs are to increase by 5%, the US Trade Representative deadlines loom and the president has ordered US companies to "search for alternatives" to China sourcing. This is your end-of-summer Section 301 China tariffs round-up.
President Trump recently tweeted that, beginning on 1 September 2019, importers can expect a 10% tariff on $300 billion of Chinese goods. While the Office of the US Trade Representative (USTR) has yet to issue specific coverage for this new 10% tariff, importers should expect to see the goods subject to it on the proposed Section 301 List 4. The USTR has also indicated that a List 4 exclusion request process could come on the heels of the current List 3 exclusion request timetable.
At a recent G20 Summit press conference, President Trump said that he would not lift the existing Section 301 tariffs on China, but would also not add tariffs on any additional Chinese imports "for at least the time being" as part of an agreement to resume negotiations with China. This article summarises the current status of the Section 301 List 4 goods and the List 3 product exclusion process which commenced on 30 June 2019.
Because of the length of time since Section 301 duties were first imposed on Chinese imports, many 2018 entries first covered by the duties are approaching their liquidation date (if they have not liquidated already). As such, this article compiles US Customs and Border Protection guidance regarding how importers can preserve their rights to have product exclusions applied to merchandise that is close to liquidation or is still within the period before liquidation becomes final.
Mirroring President Trump's recent threats – which came just days after the Section 301 tariff on List 3 products was increased from 10% to 25% following a breakdown in trade negotiations between the United States and China – the administration has released a fourth list of Chinese-origin products that will be subject to additional duties. For these tariffs to become effective, the Office of the United States Trade Representative will need to publish a final notice after a public comment period and hearing.
While various news accounts have now indicated that President Trump will not close the US-Mexico border, the administration will take further actions. As such, there will likely be a slowdown in border processing and longer wait times at all land ports of entry on the Mexican border for an extended period. Among other things, importers are advised to factor in that wait times will markedly increase or even double.
As part of its response to the changes regarding forced labour enforcement brought about by the Trade Facilitation and Trade Enforcement Act 2015, US Customs and Border Protection is proposing to compel members of the Customs Trade Partnership Against Terrorism to maintain a social compliance programme to help to combat forced labour in supply chains.
The Trump administration recently announced the termination of India and Turkey as recipients of the Generalised System of Preferences on the grounds that neither country has been adhering to the programme's statutory eligibility criteria. According to the press release, Turkey is 'graduating' from this programme, while India is being removed, as it has failed to assure the United States that it will provide "equitable and reasonable access to its markets in numerous sectors".
Following weeks of negotiations, US Trade Representative Robert Lighthizer has published the agreed text of the US-Mexico-Canada Agreement (USMCA), which is slated to replace the 24-year-old North American Free Trade Agreement with what the parties have called "a 21st century, high-standard agreement". While the USMCA text has answered many questions, a number of issues will need to be fleshed out during the implementation phase.
A US trade representative recently issued a statement advising that President Trump had directed him to consider raising the previously proposed 10% additional duty to be applied to $200 billion worth of Chinese goods (referred to as the List 3 products) to 25%. Importers are urged to review their imports from China and, if they are importing any of the products on List 3, to consider, at a minimum, filing written comments and possibly appearing at the scheduled public hearing.
The United States Trade Representative (USTR) recently released two product lists relating to Section 301 duties. The first list is a culmination of a process that started on 13 April 2018, when the USTR published an initial list of products that would be subject to an additional 25% ad valorem tariff. The second list contains 284 additional product lines that will now undergo further review. Pharmaceutical products, textiles, apparel and footwear do not appear on the two recently released lists.
Following the presidential proclamations regarding the imposition of double-digit tariffs on certain steel and aluminium imports (ie, the Section 232 tariffs), the US Customs and Border Protection (CBP) has published further guidance detailing their implementation. Given the complexity of these tariffs and the scrutiny that the CBP will be applying to imports of steel and aluminium from all countries, importers should consider compliance with these trade actions to be a high-risk area.
President Trump recently signed a memorandum that marks the start of a multi-faceted trade offensive against China. The memorandum is designed to respond to the administration's findings of misappropriation of US intellectual property and discriminatory technology licensing practices. In addition, the administration instructed the Treasury Department to propose restrictions on investment in the United States by Chinese-controlled entities and funds in certain industries or technologies.
The beginning of a new year often brings new regulations or changes to programmes. Customs programmes are no exception. Some key January 2018 changes for importers include fee increases, the expiration of the Generalised System of Preferences and changes to the tariff code.
Based on recent activity in Congress, the possibility of a shutdown of US federal government activities for at least a brief period is looming larger. Although it is unknown what the US Customs and Border Protection and other government agencies involved in import operations would likely do in the event of a shutdown, the 2013 federal government shutdown can be useful as a planning tool for importers.