JAS USA COMPLIANCE

News & Insights from JAS Worldwide Compliance

JAS Forwarding (USA), Inc.

6165 Barfield Road
Atlanta GA, 30328
United States
Tel: +1 (770)688-1206
Fax: +1 (770)688-1229

COMPLIANCE SOLUTIONS

JAS USA Compliance Insights

Training Tidbits

JAS USA Compliance Insights on the Impact of COVID-19

Insect Repellent is regulated by EPA and FDA

Insect Repellent is regulated by EPA and FDA for importations and classified in chapter 3808 of the HTS book.  It can be imported as a cream, spray and other methods such as bracelets.  Some repellents can be applied directly to the skin and other methods can be applied directly to the clothing.  

Here are a few ways to reduce your exposure to mosquitoes this summer:

  • Eliminate standing water in containers that could breed mosquitoes.
  • Wear long sleeve clothes and socks to avoid exposing the skin.
  • Replace outdoor lights with yellow bug lights which tend to attract fewer mosquitoes.
  • Follow necessary instructions and labels closely on insect repellents.
For More Information Visit EPA.GOV
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Gardening has blossomed into a global phenomenon

In recent years, gardening has blossomed into a global phenomenon, not merely as a pastime but as a vital component of sustainable living and environmental stewardship. As more people recognize the benefits of cultivating their own green spaces, the gardening industry has witnessed significant growth, reflecting in both domestic practices and international trade.

The United States, with its diverse climate and rich agricultural heritage, plays a pivotal role in the global gardening market. Examining import and export data reveals intriguing insights into the dynamics of this flourishing industry.

Imports:

The importation of gardening-related products reflects the diverse interests and needs of American gardeners. From exotic plants to specialized tools, the U.S. imports a wide array of goods to cater to the demands of enthusiasts.

  1. Plants and Seeds: The import of plants and seeds is a prominent aspect of gardening trade.
  2. Garden Tools and Equipment: Innovations in gardening tools and equipment drive import trends.
  3. Fertilizers and Soil Amendments: The import of fertilizers, compost, and soil amendments supplements domestic production, ensuring optimal conditions for plant growth.

Exports:

Conversely, the United States also contributes to the global gardening market through its exports, showcasing its expertise and innovation in horticulture.

  1. Seeds and Bulbs: American seed companies are renowned for their high-quality seeds and bulbs.
  2. Landscaping Services: Exporting landscaping services to enhance public and private spaces, U.S. firms contribute to the beautification and sustainable development of landscapes globally.
  3. Gardening Knowledge and Technology: Beyond tangible goods, the export of gardening knowledge and technology is gaining traction.

The Green Economy:

The gardening trade exemplifies the growing importance of the green economy. Beyond economic transactions, it fosters environmental awareness, promotes sustainable practices, and fosters community engagement.

As the world grapples with environmental challenges, gardening emerges as a grassroots solution, empowering individuals to connect with nature and cultivate greener, healthier lifestyles.

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  • While it is often attributed to him, Ben Franklin actually did not come up with daylight saving time as we know it today, but he did pen the idea of adjusting schedules to the available sunlight in an unpublished satirical letter from 1784. In the letter he calculated the money that Parisians could save on candles if they woke with the sun instead of lazily waking at noon.
  • The actual name is Daylight Saving, not Daylight Savings, as it is often called.
  • Daylight Savings was not enacted officially in the US until March 1918. This was later repealed, then enacted again during WWII. After the war, states were allowed to choose whether they wanted to utilize DST or not. This resulted in massive travel issues for citizens crossing multiple state lines.
  • Modern use of DST was established in 1966, when the government passed the Uniform Time Act, creating a standard for daylight savings across the country (minus a few holdout states).
  • Hawaii, Arizona, and most US Territories do not observe DST.
  • There is much debate over whether DST has positive or negative effects on regions that use it, and whether it is necessary at all. Polls indicate that over 60% of Americans generally support the idea of eliminating DST permanently.
  • Studies show that the second Monday in March (the day we “lose an hour” every year) there are noticeable spikes in workplace accidents, traffic accidents, losses of productivity and slight increases in health issues such as heart attacks and strokes.
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Tidbits - February 2020
February 6, 2020

Did you know that the Super Bowl featured players from 33 different states and five countries?  Click HERE to review the Census data and demographics to see if anyone from your hometown was in the game!  Congratulations to the Kansas City Chiefs!

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Cheese trays can be nice holidays gifts!  Did you bring any back with you from your holiday travels?  If you did, did TSA inspect your bag?  They probably did!!!  Did you know that cheese can look just like a bomb when it is passed through the TSA Xray screens?  “A block of cheese could be indistinguishable from C4.  There is no difference on the screen.  Meats too.  All organic products look orange on the display and look like explosives.” Reported a TSA agent.  C4 is a common variety of a plastic explosive that could be harmful in an explosion

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Training Tidbits!
June 3, 2018

Ready to relax at the pool?  Do you have a life jacket?  Don't leave the country with it!  

Life jackets are meant to save lives, but did you know that according to the EAR, life jackets are potentially dangerous objects that can't be taken outside of the U.S. without an export license!  

Do you have an item that may require an export license?  Export license applications and commodity classification requests can be submitted online through a system known as SNAP-R.  

The Bureau of Industry & Security has also made new updates to the system May 2018!

To Find Out More About SNAP-R
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Did you know ……September is the only month with the same number of letters in its name as the number of the month: it is the NINTH month and has NINE letters!

Additionally, the first day of fall is in September.  As the weather cools down, it is the perfect time to indulge in some of the most popular fall flavored coffee, tea, and spices!  Coffee, tea, and spices are classified in chapter NINE of the Schedule B and HTS Tariff book!!!!

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Did you know ……Watermelons are not a fruit but a vegetable?  They belong to the cucumber family of vegetables and is one of the summer’s best treats!

The United States is the 3rd largest exporter of watermelon by dollar value.  For exporting purposes, the Harmonized Tariff Schedule for watermelon is found in chapter 08 of the HTS.

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Did you know ……The first women’s swimsuit was created in the 1800’s.  It came with a pair of bloomers.

For customs purposes, if swimsuits are imported with an accompanying swimsuit cover that matches the swimsuit in design, the two items cannot be imported as a set and must be imported as two separate items for classification purposes.

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Do you know which foods are exempt from the FSVP (Final Rule on Foreign Supplier Verification Program)?

May 27, 2017 the Food & Drug Administration will begin implementation of the Foreign Supplier Verification Program also known as FSVP. There are several foods that are exempt which are as follows:

  • Meat, poultry and egg products subject to USDA regulation;
  • Suppliers covered by the seafood or juice HAACP regulations
  • Raw materials or ingredients for use in a food produced under the seafood or juice HAACP regulations
  • Alcoholic beverages
  • Food imported for research or evaluation provided it is not for retail sale, is properly labeled and is accompanied by an electronic declaration at entry
  • Food transshipped through the US for export
  • Food imported for processing and future export

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Food Safety Modernization Act Wizard is a FREE compliance tool!

Did you know that there is a free, online tool designed by Registrar Corp to assist companies in assessing their U.S. FDA compliance issues, possible requirements and deadlines under five Food Safety Modernization Act (FSMA) Rules:

  1. Preventive Controls for Human Foods
  2. Preventive Controls for Animal Food
  3. Foreign Supplier Verification Program
  4. Intentional Adulteration (Food Defense)
  5. Produce Safety

Sign Up for the FSMA Wizard

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Red Flag Indicators for an Export Transaction. There are certain actions that could be an indicator that further investigation may be required prior to proceeding with an export transaction.  If you notice any of these actions, it could be a red flag!

Please be sure to check out the detailed list of red flag indicators to an export transaction on our flyer!

Download the Flyer
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How well do you understand routed export transactions?

Routed export transactions are a much discussed topic. Therefore, the U.S. Census Bureau has revisited this topic and have provided helpful tips on remaining compliant if you’re involved in a routed export transaction.

To review the helpful tips on routed export transactions click the button below.

Read More

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Are you a compliant traveler?

Things NOT to Do on an Airplane

As we approach the holiday season, the goal is to not only be safe but to also be as pleasant as possible.

However, sometimes we get in our own way!

JAS Compliance would like to give you a few helpful tips on what not to do if you are on an airplane and make your travel easier.

  • Don’t tune out the safety briefing.
  • Don’t joke about bombs.
  • Don’t recline your seat during meal times.
  • Don’t eat smelly foods.
  • Don’t drink too much.
  • Don’t abuse the flight attendant call button.
  • Don’t put your carry-on in an overhead bin where you are not sitting.
  • Don’t inflict your feet on other passengers.

Happy Holidays and Safe Travels to you this Holiday Season!

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2.5% or free of duty?  It can represent a large sum if the value is high and or the volume of entries is strong.  But picking harmonized tariff codes based on duty rates is not only incorrect, it is against the laws that govern trade.  The HTSUS (harmonized tariff schedule of the United States) is not a guide, it is a legal document backed with “teeth.” Failing to effectively classify commodities can lead to CF28’s (requests for information), CF29’s (notices of action often increasing the duty liabilities to the importer), focused assessments and audits.  All of these are efficiency killers in today’s modern fast paced supply chain environment.

CF28’s take time and resources to provide appropriate answers to CBP.  CF29’s take time and resources to review, rebut and sometimes to apply subsequent payments to an entry that may already be completed and closed in the books.  Focused assessments and audits are a whole new level of resource taxing for an importer compared to CF28’s and 29’s.

So what can importers do?

First of all, importers should begin classifying according to the General Rules of Interpretation codified in the HTSUS.  These rules provide the framework to follow a process to obtain correct HTS codes.

Second, importers should assess they database of commodities and determine items which need to be re-assessed.

Finally, an assessment of CF28’s and CF29’s should be examined.  How many have been received in the past 12 months?  How many have been answered? What items were affected by the requests? Have those items been updated inside the internal databases of the importer?

JAS Forwarding USA Inc. Compliance Team is experienced in all of these questions.  We have solved these problems and can help.  Contact us today and we will assist to analyze risk in this arena as well as others!

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Anti-dumping and countervailing duties are assessed in an honest attempt to help level the playing field for US manufacturers.  This is an important function and CBP is committed to aggressive action to protect the interests of US industry.  Anti-dumping and countervailing duties do have effectiveness and as a result CBP has seen an increase in evasion tactics in some areas of the trade community.  Evasion tactics have included fraudulent country of origin and shipping documentation etc.  This behavior by some in the trade community is rather costly to the country.  Keep in mind that ADD/CVD exists to encourage buyers to source items subject to these duties from US sources or sources that are using free market pricing strategies.  The August 2016 Government Accountability Report notes that in the past 15 years, $2.3 billion were not collected in ADD/CVD.  That is an average of $150+ million per year!  That is also a bunch of US manufacturers being harmed by these questionable evasive practices.

New regulations empower competing importers and federal agencies to call importers out for suspicion of evasive practices with regards to ADD/CVD.  Now is a good time for importers to engage in self-assessment and determine what risk(s) there may be.  Internal audits and continuous improvement of internal compliance processes is a mitigating factor when CBP considers penalties for importers.

Do you have self-audits regularly scheduled?  Do you have extensive experience investigating applicability of ADD/CVD?  We at JAS USA Inc. Compliance team have tackled these issues over and over again.  We pride ourselves in being educators and showing our valuable clients the right way to handle the sometimes uncomfortable positions these types of issues can create.  We are experts at building customized compliance plans, manuals and auditing schedules.  Contact us today and we will be glad to help you mitigate risk!

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TSA Compliance
September 14, 2016

TSA (Transportation Security Administration) plays a critical role in protecting the US transportation systems with the goal of ensuring freedom of movement for people and commerce (TSA Mission Statement).  All of us as members of the trade community have a role in this effort.

JAS Forwarding USA Inc. Compliance team strives to foster exceptional cooperation and partnering with government agencies involved in our daily business activities.  TSA is one of those key agencies!

JAS Forwarding USA Inc.’s commitment is displayed by participating in specific operational training at TSA’s request.

​JAS is honored to support TSA in its newest See Something Say Something Campaign.  Homeland Security is in the process of rolling out a pilot program for K9s, and are using trade community facilities as a setting for this training.  K9s are one of the many integral layers of screening employed by TSA to ensure that our transportation networks are kept safe from threats.  Both our JAS Forwarding USA Inc. Charleston, SC and Atlanta, GA locations have been used for this endeavor.  These branch locations exemplify our policy of cooperation and informed compliance.  All of our staff in our branch locations strategically placed around the USA are well trained and corporately supported in TSA regulations.

Questions?  Contact us today and let’s see how we can manage risk together!

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What is the difference between Schedule B Codes (for exports) and Harmonized Tariff Schedule (for imports)?

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All of the imports and export codes used by the United States are based on the Harmonized Tariff System (HTS). The HTS assigns 6-digit codes for general categories. Countries which use the HTS are allowed to define commodities at a more detailed level than 6-digits, but all definitions must be within that 6-digit framework.  The U.S. defines products using 10-digit HTS codes. Exports codes (which the U.S. calls Schedule B) are administered by the U.S. Census Bureau. Import codes are administered by the U.S. International Trade Commission (USITC).

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Did you know that per 15 CFR 758.6, a destination control statement is required on the invoice, bill(s) of lading or other export control documents accompanying shipments from US origin?  This is required for all exports of items on the Commerce Control List that are NOT classified as EAR99, unless the export can be made under a license exception (BAG-baggage or GFT- Gifts as defined in part 740 of the EAR).

Currently, the statement must say at a minimum: “These commodities, technology or software were exported from the United States in accordance with the Export Administration Regulations.  Diversions contrary to U.S. law is prohibited” (15 CFR 758.6).

These regulations have been revised and the requirement will change.  The new changes to 15 CFR 758.6 will be effective on November 15, 2016.  According the Federal Register published on August 17, 2016, the final rule implements changes which were proposed on May 22, 2015.  The stated goal of these revisions is “Harmonization of the Destination Control Statements.”  Per the summary of the Federal Register entry, “This final rule revises the destination control statement in 758.6 of the Export Administration Regulations (EAR) to harmonize the statement required for the export of items subject to the EAR with the destination control statement in 22 CFR 123.9(b)(1) of the International Traffic in Arms Regulations" (ITAR).

The revised regulation clearly states “The exporter must incorporate the following information as an integral part of the commercial invoice whenever items on the Commerce Control List are shipped (i.e., exported in tangible form), unless the shipment (i.e., the tangible export) may be made under License Exception BAG or GFT (see part 740 of the EAR) or the item is designated as EAR99.”  Yes it is similar to what we have already discussed in the opening paragraph.  However, note the language is specifying that the “exporter” must action this requirement.

The new statement as defined in revised 15 CFR 758.6 effective November 15, 2016 is: “These items are controlled by the U.S. Government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s) herein identified.  They may not be resold, transferred, or otherwise disposed of, to any other country or to any person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations.”

Are you ready to meet this requirement?  JAS Forwarding USA Inc. Compliance Team is working to ensure that our bill of lading’s language has been adjusted to comply with these revised regulations.  We can help you too.  Contact us today and let’s work on some risk management together!

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JAS Forwarding USA Inc. was excited to host all of our USA Customs Brokerage Managers at our Atlanta, GA Corporate Campus last week.  For two days, key licensed brokers from JAS Forwarding USA branch locations sat in a room together with our Corporate Compliance team and discussed current topics in the industry.  This was an exciting time of interactive learning.  Our group was eager to discuss and learn from each other on some very timely topics such as antidumping/countervailing duties, auditing strategies, training entry writers, reporting and many other topics our clients are facing.

The risks in the import sector continue to increase and Customs is ramping up information requests, actions, and enforcement.  Education is an important part of compliance with US Customs regulations protecting the interests of the United States and ultimately our clients.  JAS Forwarding USA Inc. Compliance Team is an advocate for continued education opportunities and is committed to assisting our internal team members in achieving excellence.

Did you know that JAS Forwarding USA Inc. Compliance Team can do external training too?  We are prepared and equipped to educate our clients and assist in training to ensure excellence in compliance and risk management.  Want to know more?  Contact us and let’s learn together.

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To many people, BIS sounds like many other government acronyms.  BIS stands for Bureau of Industry and Security.  The mandate of BIS is extremely important and worth taking a closer look at.

The BIS mission statement is to “Advance U.S. national security, foreign policy, and economic objectives by ensuring an effective export control and treaty compliance system and promoting continued U.S. strategic technology leadership.” That is quite a mission!  Think of each of the key words in this mission statement and realize the impact this mandate has.

Exporting certain items from the U.S. to certain places in the world may present a national security risk.  Items used for weapon production can be turned around and used against the U.S. both domestically and abroad.  These concerns drive the creation and updating of the Entity Lists.  It is worth re-iterating that the entity list exists because the BIS and other U.S. Government agencies have found cause to believe that somehow, those on the list may be a risk or related to something that poses a threat to our national security.

It is also important to note that just because a person/group/organization is on the entity list, it doesn’t necessarily prohibit trade with them.  However, it does raise the flag and compel the trade professional to ensure that due diligence is exercised in vetting the person/group/organization and determining what regulatory steps should be taken and appropriate authorization obtained in order to legally proceed to trade with those on the entity list.

While things are constantly changing these days it is imperative that we remain vigilant and attuned to all the changes going on around the world.  BIS is a key U.S. Government Agency charged with being an integral instrument of protecting the United States.  The JAS USA Inc. Compliance Team understands the BIS mandate and are always willing to assist.  Contact us and we will help!

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Is there a difference between the Incoterms DDU and DAP?

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DAP is the short form for “Delivered at Place” that was introduced in 2010.  It is a term of agreement between a buyer and a seller much like DDU.  DDU was removed from Incoterms 2010 and replaced with DAP; however, many traders continue to use DDU in their business documents.  As a result, if traders use the terms in their business documents it is mandatory to mention “as per Incoterms 2000.”  Otherwise, DAP terms are applicable.

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Today’s business world moves at great speed.  Although regulatory organizations do not always move with great speed, there are many of them out there making the rules.  With all of these organizations comes what sometimes feels to the trade community like lots of changes in short periods of time.

While not all changes are earth shaking, some are.  Some are so far reaching that they require the trade community to plan accordingly way ahead of time.  How should the trade community keep up?

There are many ways to keep up.  Newsletters, webinars and good old fashioned research are the most typical avenues.  These are all good.  There’s also the more intensive method of attending trade seminars.  Physical seminars are invaluable in many ways including the classroom style presentation of content, and the simple truth that the opportunity to network in the trade community is often a pathway to great knowledge.

JAS Forwarding USA Inc. Compliance Team is excited to be one of the sponsors of this year’s Second Annual Global Trade Educational Conference (G-TEC).  This is a two day intensive training event in Atlanta, Georgia starting on August 8 and ending August 9, 2016.  This is an exceptional opportunity for trade professionals including importers and exporters to interactively bring themselves up to date on relevant and well-timed content related to the trade community.

Join us at G-TEC and let’s get to know each other and learn together.

Click Here For More Information on G-TEC

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TYPE 86 CHANGE

In a notice published in the Federal Register on January 16, Customs and Border Protection (CBP) announced that it is amending the ACE Entry Type 86 Test to require filing of these entries prior to or upon arrival of the cargo. The Entry Type 86 is a test allowing the electronic filing of entries for low-value shipments meeting the requirements for admission under the administrative exemption in 19 U.S.C. 1321(a)(2)(C). The traditional entry time frame of permitting filing of an entry up to 15 days after arrival of the cargo was used initially for the Entry Type 86 test. However, CBP has determined that that time frame “has proven to be inconsistent with the expedited process envisioned for the ACE Entry Type 86 Test”, and this has led to enforcement challenges and various violations such as entry by parties without the right to make entry, incorrect manifesting of cargo, misclassification, and delivery of goods prior to release from CBP custody. The requirement to file Type 86 entries prior to or upon arrival of the cargo will go into effect on February 15, 2024.

GUN TSA

The Transportation Security Administration (TSA) advised that 2023 was a record year for the interception of firearms at airport security checkpoints. A record 6,737 firearms were intercepted at airport checkpoints during 2023, with 93%, or close to 6,265 firearms, being loaded at the time of interception. Firearms are strictly prohibited in carry-on baggage. They are allowed in checked baggage, however, they must be unloaded and packed in a locked hard-sided case and the presence of the firearm must be declared at the check-in counter. Upon discovery of a firearm at a checkpoint, the TSA officer will contact local law enforcement, who will remove the passenger and the firearm from the checkpoint. The passenger involved could then be arrested or cited. In addition, the passenger will be liable for a fine of up to $15,000 for possesing the firearm at the checkpoint.

On a lighter note, or maybe not so lighter note, the TSA also published a list of the Top Ten prohibited items discovered in traveler’s carry-on baggage in Idaho airports in 2023. Among the top items were a hatchet, a Ninja throwing star, a crow bar, and a grenade-shaped bottle of hot sauce.. (pictures are below).

JAS KNOW

This month we launch a new feature of our monthly newsletter – JAS WANTS TO KNOW! - A short one question poll to receive our readers’ input and advice. Our poll this month is concerning compliance challenges. Click below to let us know!

NCBFAA PORT

Laurie Arnold, JAS Vice President of Compliance, and Leah Ellis, JAS Compliance Operations Manager, were on the move this month attending the National Customs Brokers and Forwarders Association’s (NCBFAA) quarterly board meeting held in Los Angeles. Laurie serves as the Treasurer of the NCBFAA and Leah is the Legislative Committee Chair. During their time in Los Angeles, Laurie and Leah were also given an extensive tour of the Port of Los Angeles by invitation of the Los Angeles Customs Brokers and Freight Forwarders Association.

See below for pictures of the tour.

TARIFF DIFFICULT

While regular practitioners of tariff classification well know this, the World Customs Organization (WCO) recently issued a 30 page report, The Exploratory Study on a Possible Strategic Review of The Harmonized System, which concluded that the tariff classification process is a very complex system which requires a high level of skill to use appropriately. The purpose of the report was to explore the feasibility of possible structural changes to the system to improve the accuracy and consistency of the process and make it more “user-friendly”. One of the issues noted was that key words are often not defined in the tariff schedule or, if defined, the location of definitions can be hard to find. The complex nature of the process was illustrated by a discussion on how to classify a plastic covered textile, a truly difficult proposition. One interesting note was that the WCO did a survey and found that a majority of respondents do not really use or do not really understand how to use the General Rules of Interpretation, which are supposed to explain how to classify. Lets hope the report leads to some improvements.

301 CHINA

In a Federal Register notice, the United States Trade Representative (USTR) announced that 77 COVID-related and 352 other Section 301 duty exclusions that were set to expire on December 31, 2023, will be extended for an additional 5 months through May 31, 2024. The Section 301 duties were imposed on various products from China to counter certain acts, policies and practices related to technology transfer, intellectual property and innovation. The USTR stated that the extension of the exclusions “will enable the orderly review of the exclusions consistent with statutory factors and objectives to identify in which cases additional time would enable shifts in sourcing to the United States or third countries”. The statutorily required four-year review of the Section 301 duties themselves is currently in process and the USTR further stated that this extension “will also facilitate the alignment of further decisions on these exclusions with the ongoing four-year review”.

CBP LOGO GBI

Customs and Border Protection (CBP) is still welcoming importers of record and licensed customs brokers to participate in the Global Business Identifier (GBI) Evaluative Proof of Concept (EPoC). The GBI is a test to determine a potential replacement for the Manufacturer or Shipper Identification code (MID) currently required to be provided on entries filed with CBP. This new identifier could also be used for other entities involved in the entry process to obtain a “deeper insight into the legal structure of “who is who” across the spectrum of trade entities, and to understand more clearly ownership, affiliation, and parent-subsidiary relationship”. Participants in the EPoC can provide, at the time of entry filing, any of three entity identifiers associated with manufacturers, shippers, and sellers of merchandise covered by the entries. These identifiers are the nine (9) digit Data Universal Numbering System (D–U–N–S®), thirteen (13) digit Global Location Number (GLN), and twenty (20) digit Legal Entity Identifier (LEI). The test is limited to entry types 01 and 11, and to certain commodities and countries of origin. The limitations of the MID are well known in trade circles. Therefore, CBP is encouraging participation in this EPoC to facilitate the determination of a more robust replacement. If you would like to participate in this EPoC, contact compliance@jas.com.

VIOLATION FCA

A recent series of settlements in False Claims Act (FCA) cases and a large fine imposed by a California District court demonstrate the importance of complying with the Customs and Border Protection (CBP) importation regulations. FCA cases are filed by “whistleblowers”, on behalf of the United States, charging any person with making a false claim to the federal government. The whistleblower, called the relator, receives a portion of any agreed settlement.

In Georgia, an importer of tools will pay $1.9 million to settle FCA allegations that it was falsely labelling its tools as “made in Germany” when, in fact, the tools were made in China. The settlement states that tools manufactured in China were sent to Germany for some additional processing and were then commingled with tools that had no additional processing done in Germany. All the items were then claimed to be of German origin upon importation into the U.S., thus avoiding the payment of Section 301 duties of 25%  assessed on certain imports of Chinese origin.

In Texas, in another FCA settlement, an importer of industrial products, along with two Chinese companies and two individuals, agreed to pay $2.5 million to resolve allegations that they were undervaluing imported goods. Commercial invoices were submitted to CBP at time of entry for the items in question showing values that were lower than the actual values and agreed prices. Invoices showing the true higher values were then sent by the Chinese suppliers to the importer at a later time. This resulted in the loss of revenue for CBP in the form of underpaid customs duties and other fees.

Finally, in California, in another double-invoicing scheme, a clothing wholesale company was fined $4 million, ordered to pay $6,390,781 in restitution, and placed on probation for five years for undervaluing imported garments in a scheme to avoid paying millions of dollars in customs duties. In this case as well, a false lower valued commercial invoice was submitted to CBP at time of entry, and a true higher value invoice was then sent later to the importer by the Chinese supplier resulting in the underpayment of duties and fees.

COSMETICS DIRECT

On December 18, the U.S. Food and Drug Administration (FDA) announced the launch of the Cosmetics Direct electronic submission portal for registration and listing of cosmetic product facilities and products. Cosmetics Direct is dedicated exclusively to cosmetic product facility registration and cosmetic product listing electronic submissions mandated by the Modernization of Cosmetics Regulation Act of 2022 (MoCRA). FDA had advised previously that enforcement of these new requirements would be delayed to provide industry with sufficent time to submit the facility registration and product listing information. FDA will not be enforcing the requirements until July 1, 2024. However, the law is now in effect, and all facilities required to register and submit product listings should do so as soon as possible and well before the July 1 deadline.

CAPITOL LAW

Senators Bill Cassidy of Louisiana and Sheldon Whitehouse of Rhode Island introduced the bipartisan Customs Modernization Act of 2023 which would make significant changes to laws administered by Customs and Border Protection (CBP).

Some of the key sections of the proposed bill include:

• Allowing CBP to access data prior to entry from parties throughout the supply chain. The importer of record could convert this pre-entry information into a certified entry filing. For any violation relating to the filing of the required pre-entry information by any party, CBP may impose a penalty of $5,000 for the first violation of these regulations and $10,000 for subsequent violations.

• At present, only ocean vessel manifest information must be publicly disclosed. The proposal would make it mandatory to also publicly disclose aircraft, truck and rail manifest information for the purpose, inter alia, of monitoring supply chains for illegal goods like fentanyl and those made with forced labor, combatting trade-based money laundering, and identifying unfair trade practices like dumping.

• Relaxing the seizure and forfeiture rules to allow for the summary forfeiture of certain IPR-infringing goods by CBP without having to go through the formal seizure/forfeiture process. This is to allow CBP the ability to seize and forfeit articles found violative in the de minimis realm in an expedited fashion.

• Specific penalties are enumerated for violations of the Section 321 de minimis provisions of up to $1,000 for the first violation and $2,000 for each subsequent violation.

• Under current law, CBP can penalize vessel masters, aircraft pilots, and persons in charge of a vehicle for failing to comply with reporting requirements like providing manifest information. However, much of this data is now transmitted electronically by other parties such as the air carrier. A new provision would clarify that “any person” reporting such information who knowingly provides incorrect information is liable for a civil penalty.

Senator Cassidy also advised that a bipartisan Trade Facilitation measure will be introduced in 2024 as well.

EXPORT CONTROL DOC

The Departments of the Treasury, Commerce, Justice, State and Homeland Security jointly published a Quint-Seal Compliance Note entitled “Know Your Cargo: Reinforcing Best Practices to Ensure the Safe and Compliant Transport of Goods in Maritime and Other Forms of Transportation”. The document provides information on potential indicators of efforts to evade sanctions and export controls, emphasizing the need to “know your cargo”. Also included are various examples of recent criminal and civil enforcement actions taken for violations of sanctions and export controls. With six government agencies being involved in the publication of this compliance note, all participants in the global transport of goods should review it in detail.

CO2

The United Kingdom (UK) announced that it will be implementing a Carbon Border Adjustment Mechanism (CBAM) by 2027, joining, among others, the European Union whose own CBAM entered its transitional phase in October with the first reporting period set to end on January 1, 2024. The UK CBAM will place a carbon price on some of the most emissions-intensive industrial goods imported to the UK from the aluminum, cement, ceramics, fertilizer, glass, hydrogen, iron and steel sectors, with the precise list to be provided sometime in 2024 after additional consultations. The liability applied by the CBAM will depend on the greenhouse gas emissions intensity of the imported good and the gap between the carbon price applied in the country of origin (if any) and the carbon price that would have been applied had the good been produced in the UK. CBAM liability will lie directly with the importer of imported products within the scope of the UK CBAM on the basis of emissions embodied in those goods. Further details will be provided in 2024 also after additional consultations. Exporters of products to the U.K., and to the European Union as well, will need to become familiar with these mechanisms, as their customers in these countries will be needing detailed information on the greenhouse gas emissions intensity of the products they import.

WOMEN APPAREL

The New Democrat Coalition (NDC), a caucus of nearly 100 members of the House of Representatives, recently issued a letter to the President outlining a list of their  legislative priorities, one of which stated “Advance equity in trade policy by considering solutions to reduce gender bias and regressivity of the tariff system, in consultation with Congress”. Now, it may seem a stretch to claim that something like the Harmonized Tariff Schedule, a legalistic, inanimate document for the classification of imported products, could be biased towards a particular gender. However, after further examination, it seems that the NDC is correct, and the tariff may be somewhat biased towards women. A study performed by the International Trade Commission entitled “Gender and Income Inequality in United States Tariff Burden” discovered, “Across genders, we find large differences in tariff burden…The gender gap exists because spending on women’s apparel is higher than on men’s and because the average applied tariff rate on women’s clothing is higher than on men’s”. The study found “the average applied tariff rate for women’s apparel was 14.9%, but it was only 12.0% on men’s apparel. It was also noted that “the gender difference in applied tariff rates is mostly attributed to the sourcing of imports as a much greater share of men’s apparel than women’s apparel comes from U.S. Free Trade Agreement partners”. Perhaps some adjustments in the tariff are in order.

CHEMICAL

In a recent Federal Register notice, the Environmental Protection Agency (EPA) is proposing the prohibition of the manufacture, importation, processing, or distribution in commerce of Trichloroethylene (TCE). TCE is widely used as a solvent in a variety of industrial, commercial and consumer applications including for hydrofluorocarbon (HFC) production, vapor and aerosol degreasing, and in lubricants, greases, adhesives, and sealants. In the proposed rule, EPA lists numerous and diverse industries that would be affected by this proposal. Comments on the proposal are due by December 15, 2023. Importers of products containing TCE should review this proposal and submit any comments deemed necessary.

AGOA

The annual eligibility review for the African Growth and Opportunity Act (AGOA), in accordance with Section 506A(a)(3)(B) of the Trade Act of 1974, has resulted in the termination of eligibility for the Central African Republic, Gabon, Niger, and Uganda. The White House and the Office of the United States Trade Representative announced that recent unconstitutional changes in government in Gabon and Niger, and the resultant threat to political pluralism and the rule of law, led to their termination. The termination of the eligibility of the Central African Republic and Uganda was a result of gross violations of internationally recognized human and worker rights. On a positive note, the country of Mauritania had its eligibility reinstated based on progress it has made with respect to worker rights and eliminating forced labor across the country. Ethiopia, however, did not have its eligibility reinstated at this time. Recently, there have been a lot of discussions in Congress about the need to renew AGOA well in advance of its current September 2025 expiration date, to ensure the continuity of the program and encourage long term investment in the region.

EPA LOGO

Customs and Border Protection (CBP) published a new guide entitled “TIPS FOR FILING AN HFC IMPORT IN ACE” to assist the import community with filing obligations related to imports of bulk hydrofluorocarbons (HFCs) under the American Innovation and Manufacturing (AIM) Act. The Environmental Protection Agency (EPA) also announced in November that allocations for the import of HFC’s will be reduced to 60% of the stipulated baseline levels in January 2024. Importers of HFCs should consult this new guide as filing requirements for HFC’s can be complicated. CBP will advise in early January via the Cargo Systems Messaging Service (CSMS) when the new requirements will be operative in ACE.

EXAM

The protracted quest of Mr. Byungmin Chae to have his 2018 Customs Broker License Examination results changed to a passing grade came to an end when the Supreme Court denied his petition for a writ of certiorari in October. Mr. Chae’s case, if nothing else, proved he possesses ample persistence and determination. The court filing states that his original score on the April 2018 exam was 65%, with 75% or higher being needed for a passing grade. He filed a timely appeal to Customs and Border Protection (CBP) requesting that his answers to 13 of the questions originally marked wrong be deemed correct. Subsequent to his appeal, CBP announced that all test takers would be given credit for 3 particular questions, 2 of which Mr. Chae had been marked wrong on originally. This raised his score to 67.5%. CBP then denied his appeal request for the other 11 questions. Mr. Chae then appealed this decision to the Office of Trade. The Office of Trade granted his appeal for 3 of the questions, raising his score to 71.25%, but still short of a passing grade. Undaunted, Mr. Chae proceeded to file a petition with the Court of International Trade (CIT) as allowed by the regulations.

The CIT gave him credit for one more of the contested questions, raising his total of correct answers to 58 of the 60 he would need for a passing grade. Still undaunted, Mr. Chae filed an appeal of the CIT decision to the Court of Appeals for the Federal Circuit asking for 3 questions to be further reviewed. The Appeals Court gave him credit for one of the questions, raising his correct answer total to 59 of the 60 needed. However, the Supreme Court denial of his certiorari request ended the appeals process, terminating his case and giving new meaning to the phrase “so close, yet so far…”.

SIMP

A rule proposed December 28, 2022, by the National Marine Fisheries Service (NMFS) to significantly expand the species covered under the Seafood Import Monitoring Program (SIMP) was withdrawn on November 16. The additional species to be added to the SIMP, along with a change stating that the importer of record on the customs filing must also be the party that holds the required  International Fisheries Trade Permit, had caused concern in the trade community leading to a significant number of comments being filed with NMFS concerning the proposed rule. The NMFS advised that they will now conduct a comprehensive SIMP review to determine any future action to be taken in order to strengthen the impact and effectiveness of SIMP.

EURO NOTE

In a recent Cargo Systems Messaging Service message, CBP provided a list of the countries that are members of the European Union and who, therefore, use the Euro as their domestic and international trade currency. It was further stated, “Therefore, all invoices, other documents, and entry transmissions from these countries must show EUR for the foreign value or as their currency code”. CBP is updating its records to reflect the Euro as the appropriate currency for all countries listed.

CBP LOGO

Customs and Border Protection (CBP) will hold an important webinar on December 15, 2023, from 2PM to 3PM on the topic of the 2024 Permit Annual User Fee and Triennial Status Report Filing. The webinar will explain the process for paying the Permit fee and filing a Triennial Status Report via the e.CBP online portal. A link to register for the webinar is below.

CRACKERS

Christmas crackers are a festive holiday tradition in the United Kingdom, Australia, Canada, New Zealand and South Africa. They consist of a decoratively wrapped tube with a prize, a paper hat and a joke card inside. The wrapping on the tube is extended outwards on both sides and twisted around a shock sensitive card strip similar to what is used for cap gun shot caps. A person at each end will then pull on the wrapping simultaneously, generating a bang or cracking sound and causing the tube to open and reveal the prizes. It is believed that Christmas Crackers were invented in London around 1847 by a confectioner named Tom Smith who was looking for a way to repackage the candies he sold to increase sales. The hats and prizes were added by his son Walter Smith to further increase sales as other competitors began selling crackers as well. If you are planning on visiting the United Kingdom and are thinking of bringing back any Christmas Crackers, kindly note that the Transportation Security Administration does not allow crackers in carry-on bags or checked luggage on flights to the U.S.

ALUMINUM EX

A petition was filed on October 4, 2023, and an investigation instituted on October 13, 2023, by the Commerce Department and the International Trade Commission to greatly expand the antidumping and countervailing duty orders in effect on aluminum extrusions from China to cover products that are now exempt and to add 14 additional countries. The petition was filed by the United Steelworkers Union and the U.S. Aluminum Extruders Coalition. The requested scope of the order is five pages long and covers aluminum extrusions for a wide variety of applications. The list of countries to be included are Colombia, the Dominican Republic, Ecuador, India, Indonesia, Italy, Malaysia, Mexico, the People's Republic of China ("China"), South Korea, Taiwan, Thailand, Turkey, the United Arab Emirates and Vietnam. Importers of aluminum extrusions from the listed countries should follow the progress of this investigation and possibly pursue legal involvement in the proceedings if appropriate.

EU FLAG

The Internal Market and International Trade committees of the European Parliament adopted a draft regulation that would ban the importation and exportation of goods proven to be made with the use of forced labor. Items suspected of being made with forced labor would be halted at the border. If forced labor use is proven, the items would have to be donated, recycled, or destroyed. Any related goods that had already reached the European Union (EU) market would have to be withdrawn from the marketplace. The regulation would also create a list of geographical areas and economic sectors at high risk of using forced labor. For goods from these areas and sectors, there would be a presumption that forced labor was involved and the company attempting to import or export such goods would have the burden of proof to show otherwise. The EU council will review the proposed regulation next and then talks will start over the final shape of the regulation.

SEMICONDUCTOR

On October 25, the Bureau of Industry and Security (BIS) published in the Federal Register several updates to its comprehensive interim final rule of October 7, 2022, which amended the Export Administration Regulations (EAR) to implement controls on advanced computing integrated circuits (ICs), computer commodities that contain such ICs, and certain semiconductor manufacturing items exported to China. The updates, inter alia, adjust the thresholds for which chips are covered by the regulations, expand licensing requirements to an additional 43 countries included in the D:5 Country Group of the EAR, and add several dozen items to the list of controlled semiconductor manufacturing equipment. Exporters of ICs and semiconductor manufacturing items should thoroughly review the notice and submit any comments to BIS by the December 18, 2023, deadline. The Center for Strategic & International Studies has published a concise summary and commentary on these updates prepared by Emily Benson. A link to this commentary is below.

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