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LATEST: CBP Issues Marking Guidance for Goods Produced in Hong Kong

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Archives, Global Trade Daily, Imports/Exports, News

LATEST: CBP Issues Marking Guidance for Goods Produced in Hong Kong

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On August 10, 2020, U.S. Customs & Border Protection (CBP) issued a notice that goods produced in Hong Kong will need to be marked as a product of China starting on September 25, 2020. The marking changes are the result of the July 14, 2020 Executive Order on Hong Kong Normalization that ended Hong Kong’s special trade status.

CBP is allowing for a 45-day transition period after the date of publication in the Federal Register to implement the requirements due to the “commercial realities.” The notice does not specify how the changes affect tariff treatment of Hong Kong goods.

An administration official has stated that the Executive Order does not “provide for new U.S. tariffs on goods from Hong Kong”, but that the Administration is continuing to evaluate its policies. Therefore, at this time, it remains unclear whether goods originating in Hong Kong will be subject to the same tariffs as Chinese origin goods, including antidumping duties, countervailing duties and Section 301 duties.

Additional guidance from CBP, USTR and the U.S. Department of Commerce is expected.

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Stephen Brophy is an attorney in Husch Blackwell LLP’s Washington, D.C. office focusing on international trade.

Robert Stang is a Washington, D.C.-based partner with the law firm Husch Blackwell LLP. He leads the firm’s Customs group.

Turner Kim is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington, D.C. office.

Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington, D.C. office.

Brexit
Archives, EU Trade, Global Trade Daily

Preparing to Cross Brexit’s Finish Line

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For many, the onset of Brexit’s transitional period, which began on February 1, 2020, probably seems like an eternity ago, particularly considering the global pandemic that has consumed world affairs since that time.

But while the outcome of the transitional period may no longer be top of mind, its final stages are rapidly approaching, and businesses engaged in trade with the UK, the EU or both will need to begin preparing for changes that will take place as early as January 1, 2021. The governments of the UK and EU have now publicized clear guidance on what will be required with the official splitting of ties between the two entities – guidance that will determine how enterprises will trade, and what processes they will be required to follow in a post-Brexit landscape.

In February 2020, the UK’s government said it would implement full border controls on imports coming into Great Britain from the European Union. This statement has now been eased with the UK taking the decision to introduce the new border controls in three stages ending July 1, 2021. Downing Street has also published the “Border Operating Model,” which provides visibility and instruction to traders.

The details of these three stages of border controls for imports are as follows:

IMPORTS

1st January 2021

-Importers of non-controlled goods will need to prepare for basic customs requirements, such as keeping sufficient records of imported goods and completing customs declarations within six months of the date of import.

-Importers of controlled goods, however, will need to prepare for full customs declarations at the point of importation.

-There will be physical checks by the authorities at the point of U.K. destination (or other approved premises) on all high-risk live animals and plants where there is a biosecurity risk.

1st April 2021

-All Products of Animal Origin (POAO) will require pre-notification to British customs authorities along with the requisite health documentation. This includes meat, pet food, honey, milk or egg products.

-Physical checks will continue to be conducted at point of U.K. destination until July 1st

-All regulated plants and plant products require pre-notification to British customs authorities along with the requisite health documentation. A full listing of products will be published by the authorities prior to implementation.

-High-risk food and feed, which is not of animal origin will also require import pre-notifications to British Customs Authorities in advance of the goods’ arrival.

-For any high-risk food and feed, which is not of animal origin, importers will need to submit pre-notifications via the Import of Products, Animals, Food and Feed System (IPAFFS)

1st July 2021

-Importers moving goods will have to make pre-lodged notice to HM Revenue & Customs (HMRC), complete full declarations and pay tariffs at the point of importation directly or via their nominated representatives.

-The pre-lodged model requires all goods coming into Great Britain to have been declared to HM Revenue & Customs prior to export, the carrier normally undertakes this declaration on behalf of traders. Pre-lodgement allows HM Revenue and Customs (HMRC) to complete risk-assessments and clear many imports and transit movements prior to their arrival in the UK.

-To support the pre-lodgement requirement of HMRC the UK Government will also be implementing the Goods Vehicle Movement System (GVMS). The GVMS system is an IT platform that will support pre-lodgement. This will enable the linking of goods, customs brokers and customs through a referencing system, allowing the shipment to be customs cleared enroute to the UK or providing notification of a customs inspection upon arrival.

-Full Safety and Security declarations are required.

-For Sanitary and Phytosanitary (SPS) commodities, there will be an increase in physical checks that will now take place at Great Britain Border Control Posts.

EXPORTS

Any exports from Great Britain after January 1, 2021 to European Union destinations will be treated as third-country exports and, as such, full export customs processes and declarations will be required by HM Revenue and Customs.  This includes a full Safety and Security declaration prior to exit from the UK and an export entry declaration.

When declaring goods for export, an organization will require the following:

-An Economic Operator Registration and Identification Number (also known as an EORI number), which is a unique ID code used to track and register customs information.

-Commodity Code for the goods

-Correct Customs Procedure Code (CPC)

-If required, an Advanced Customs Ruling on the commodity code or country of origin.

-License validation and application as required.

-All paperwork (including any licenses) to be submitted to customs, usually via an intermediary, such as a customs broker.

If export customs formalities are to be completed by the organization rather than an intermediary, the following steps must additionally be implemented:

-Setup the organization for making customs declarations:

–Register for National Export System (NES)

–Apply for CHIEF badges from HMRC

–If applicable, register to export plants or controlled goods

-Complete internal training in the completion of export declarations and record-keeping requirements

-Submit all export declarations through NES

Understanding these requirements and preparing for them in advance will allow exporters to the UK — and those trans-shipping goods to the EU via the UK to avoid border delays and/or penalties for incomplete or inaccurate customs documentation.

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Paul Woodward is a Senior Consultant in the Global Trade Consulting division of trade services firm Livingston International. He can be reached at PWoodward@livingstonintl.com.

psc
Archives, Global Trade Daily, News

Customs Announces Extension of Deadline to File Post Summary Correction (PSC)

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Customs has posted CSMS #43528998 (July 31, 2020) reminding the trade community that as per the modification to the Post Summary Correction (“PSC”) procedure announced in the Federal Register on August 14, 2019 (84 FR 40430), the deadline for filing a PSC has been extended in cases where an importer requests and is granted an extension of liquidation pursuant to 19 CFR 159.12.

Under this modified procedure, after an importer is granted an extension of liquidation, a PSC may be transmitted to CBP up to 15 days prior to the scheduled liquidation date as per the liquidation extension.  Accordingly, under the modified procedure a PSC must be transmitted to CBP within 300 days after the date of entry or up to 15 days prior to the scheduled liquidation date, whichever is earlier, except in situations involving an extension of liquidation, in which case a PSC must be transmitted to CBP up to 15 days prior to the scheduled extended liquidation date.

This change was made to increase the amount of time a filer has to submit a PSC in situations involving trade requested extensions of liquidation. Significantly, it may have particular applicability in situations where an importer receives an extension of liquidation in order to preserve its right to a refund in the event that the importer requests an extension of liquidation to accommodate a Section 301 duty exclusion or duty exclusion extension request.

In those instances, if the duty exclusion request or the exclusion extension request is granted, then if liquidation of the entry has also been granted, the importer would have additional time to submit the PSC to Customs and obtain a duty refund. Of course, if the importer misses the time period for submitting a PSC in order to obtain a refund then it is also possible that the refund could still be obtained by filing a protest within 180 days of the date of liquidation.

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Robert Stang is a Washington, D.C.-based partner with the law firm Husch Blackwell LLP. He leads the firm’s Customs group.

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Archives, Global Trade Daily, News

LATEST: Canada Announces Retaliatory Tariffs on U.S. Imports

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On August 7, 2020, Canada’s Deputy Prime Minister Chrystia Freeland announced that Canada will be imposing retaliatory tariffs on $2.7 billion worth of U.S. imports in response to President Trump’s decision to re-implement a 10% ad valorem tariff on non-alloyed unwrought aluminum from Canada (HTS subheading 7601.10).

During a news conference, Freeland stated, “We will impose dollar-for-dollar countermeasures in a balanced and perfectly reciprocal retaliation.” These decisions come after the two countries, along with Mexico, recently implemented the USMCA to further facilitate trade.

Following the announcement, the Canadian Department of Finance issued a notice containing a list of over sixty aluminum goods subject to a 10% rate that will take effect on September 16, 2020.

According to the notice, interested parties (Canadian companies or Canadian industry associations) should provide written comments by September 6, 2020 to fin.tariff-tarif.fin@canada.ca.

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Stephen Brophy is an attorney in Husch Blackwell LLP’s Washington, D.C. office focusing on international trade.

Turner Kim is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington, D.C. office.

Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington, D.C. office.

imports
Archives, Global Trade Daily, Imports/Exports, International Trade

COVID-19 and the Future of Actions Against Unfairly Traded Imports

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The first half of 2020 has presented unanticipated and unique challenges to businesses, both in the United States and worldwide, due to public health-related restrictions on customers and the consequent economic effects. The challenges are likely to continue throughout 2020 and well into 2021. In a world trading system where supply chains often have been disrupted and competition for U.S. companies from foreign suppliers changes frequently, clients report that top management teams are seeking ways to address these challenges both through business actions and, when necessary, through legal action.

Foreign producers are facing many of the same challenges that U.S. companies are. As demand in their home markets decline, these foreign companies often look to the United States, a relatively open market, as a place to sell their goods. Sometimes these sales are at prices that under the law are considered unfairly low. Manufacturers at times even make loss-making transactions in order to cover their variable costs and make some contribution to fixed costs, in an effort to keep their businesses afloat. At other times, foreign government subsidies prop up foreign companies and allow them to sell products in the U.S. market. For U.S. companies faced with this kind of business challenge from overseas competition, there are legal means to help address the problem.

The nature of the cases

In the last few months, we have seen an uptick in cases filed with U.S. government agencies under the antidumping (AD) and countervailing duty (CVD) laws. The relief that can be granted from success in these cases are additional duties, and duties in the range of 25-35 percent are not at all unusual. AD and CVD cases may be filed separately or simultaneously.

The legal basis for AD cases is that a foreign product is being sold at unfairly low prices in the U.S. and that imports of the product are injuring the U.S. industry producing that product. The test for unfairly low pricing is complex, but the pricing of the foreign product need NOT be below cost, despite some news stories that misstate the standard. The legal basis for a CVD case is that foreign companies are being subsidized by foreign governments and the importation of such products into the U.S. are injuring the U.S. industry producing that product.

Market weakness likely explains rise in cases

The AD and CVD laws have been on the books for many years, and such cases tend to be filed more often in times of economic downturns and distress, when U.S. companies are feeling the injurious effects of the imports most acutely. Given the current economic turmoil—the Organization for Economic Co-operation and Development reported a 13 percent decrease in global gross domestic product during the first half of 2020—it is not surprising that the current economic environment has led several companies to consider this option.

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Jeffrey Neeley is a Washington-based partner with the law firm Husch Blackwell LLP. He leads the firm’s International Trade Remedies team.

the wto
Free Trade Agreements, Global Trade Daily, International Trade

DO AMERICANS WANT THE U.S. TO LEAVE THE WTO?

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TradeVistas’ inaugural survey of Americans’ attitudes toward trade shows a plurality support the idea, but most Americans seem unsure of the WTO’s role

Earlier this spring, the U.S. Congress faced the possibility of a vote – the first since 2005 – on whether the United States should withdraw from the World Trade Organization (WTO), a body it helped create.

Leading the effort was Missouri Republican Sen. Josh Hawley, a vocal WTO critic who has called to “abolish” the organization, accusing it of unfairness to U.S. interests and favoritism toward China. Although a procedural issue ultimately scuttled a vote, Hawley’s legislation amplified growing criticism of the WTO, including by the Trump Administration.

But what do ordinary Americans think?

A new poll by TradeVistas, conducted by Lincoln Park Strategies, finds that while a plurality of Americans support leaving the WTO, most Americans either oppose the idea or are unsure what to think. Our poll also finds that while Americans overwhelmingly want the United States to be “the leader of the global economy,” most Americans don’t see membership in the WTO as critical to that goal. These responses imply that most Americans are relatively unaware of the WTO’s role, and that the benefits of U.S. participation are far from obvious to the general public. The results also imply that any momentum for U.S. withdrawal largely reflects the work of a motivated minority, versus a groundswell of public will.

A plurality of Americans support leaving the WTO – but almost as many are “unsure” or “indifferent.”

TradeVistas’ July 2020 survey of 1,000 adults found that 36 percent of Americans support leaving the WTO, including 19 percent who “strongly support” U.S. withdrawal and 17 percent who “somewhat support” the idea. In contrast, 35 percent of Americans say they are “indifferent” or “unsure,” while 28 percent oppose withdrawal, including 18 percent who “strongly” object to the idea.

Q1

Our survey found that 45 percent of men (versus 29 percent of women) approve of leaving the WTO, including 48 percent of white men and 37 percent of men of color. Fully 25 percent of all men “strongly” support the idea, versus only 14 percent of women who feel the same. We also found that 51 percent of men under age 45 support the idea, as do 66 percent of Republican men.

These results, however, reflect broader generational and partisan splits. Overall, 41 percent of Americans under age 45 want the U.S. to leave the WTO as do 57 percent of Republicans. In contrast, the respondents most likely to oppose withdrawal are those over age 65 (42 percent) and Democrats (49 percent). Responses did not differ significantly by education level or by income.

When voters understand the role of the WTO, they are more likely to be supportive of it.

Despite Americans’ seeming indifference or, in some cases, hostility toward U.S. participation in the WTO, many Americans also see how the organization can benefit U.S. companies – once they receive some basic information about the WTO’s role.

After being told that “the job of the WTO is to enforce a set of rules for international trade that the members negotiated, and 164 countries agreed to follow,” 49 percent of survey respondents said it was “definitely true” or “probably true” that “WTO rules help U.S. companies compete on fair terms,” while 48 percent agreed it was definitely or probably true that “WTO rules stop foreign governments from applying unfair requirements to U.S. companies.”

Those most likely to say these statements are true were also those most opposed to the United States’ leaving the WTO. In fact, a whopping 74 percent of those who “strongly” oppose withdrawal say that WTO rules help U.S. compete, while 67 percent say the WTO stops foreign governments from discriminating against U.S. companies.

Interestingly, however, a majority of the respondents who support WTO withdrawal also believe these statements to be true. For instance, 53 percent of those who “strongly” support leaving say the WTO helps companies compete, while 55 percent say the WTO blocks unfair trade rules. This response suggests that for some Americans, opposition to WTO participation could be a “gut-level” response potentially open to tempering.

Q2

Americans want the U.S. to lead the global economy – but don’t see how the WTO can help.

By overwhelming margins – regardless of gender, age, party or race – Americans want to see their country “be the leader of the global economy.” Fully 79 percent of those surveyed rated this goal to be important, including 39 percent who called it “very important.”

Most Americans, however, don’t see WTO membership as instrumental to America’s economic success. When asked if WTO withdrawal “would help or hurt the United States standing as a global leader,” 33 percent of Americans said it would “definitely help” or “probably help,” while 18 percent said “it wouldn’t make a difference” and 13 percent were unsure. Just 36 percent said it would “definitely hurt” or “probably hurt” the United States’ global economic standing to leave the WTO.

Q3

Not surprisingly, those most likely to say that withdrawal would help the U.S. are among the minority who also strongly support leaving the organization. Of those who “strongly” support withdrawal, 58 percent also say this would “definitely help.” In contrast, among those who strongly oppose withdrawal, 70 percent say it would “definitely hurt.” It’s worth remembering, however, that both of these groups are relatively small subsets, substantially outnumbered by those who are indifferent, unsure, or have malleable views.

Q4

Conclusions

The TradeVistas poll findings suggest that the majority of Americans have formed no real opinion on the WTO and that strong support for withdrawal is limited to a minority of – albeit potentially vocal – voters. Even among these Americans, however, it’s possible that their support for withdrawal is based less on deep knowledge of the WTO than on partisan leanings or a general distrust toward institutions. Importantly, more than 40 percent of adults under the age of 45 support withdrawal from the WTO, with an equal amount simply indifferent or unsure.

Without question, our survey is limited in its scope and offers only the briefest of snapshots on American attitudes toward a global institution of long standing and enormous impact. What is clear, however, is that the vacuum of general public knowledge on the WTO could easily be filled by its detractors, if the organization’s defenders allow it.

Methodology: 1000 interviews among adults age 18+ were conducted from July 10-13, 2020 by Lincoln Park Strategies using an online survey. The results were weighted to ensure proportional responses. The Bayesian confidence interval for 1,000 interviews is 3.5, which is roughly equivalent to a margin of error of ±3.1 at the 95% confidence level.

Download the infographic:

TradeVistas | July 2020 WTO Poll America Trade Survey Infographic

Lincoln Park Strategies National Voter Poll Results

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Anne Kim is a contributing editor to Washington Monthly and the author of Abandoned: America’s Lost Youth and the Crisis of Disconnection, forthcoming in 2020 from the New Press. Her writings on economic opportunity, social policy, and higher education have appeared in numerous national outlets, including the Washington Monthly, the Washington Post, Governing and Atlantic.com, among others. She is a veteran of the think tanks the Progressive Policy Institute and Third Way as well as of Capitol Hill, where she worked for Rep. Jim Cooper (D-TN). Anne has a law degree from Duke University and a bachelor’s in journalism from the University of Missouri-Columbia.

This article originally appeared on TradeVistas.org. Republished with permission.

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Archives, Global Trade Daily, News

USTR to Consider Extending List 1 Exclusions Past October 2nd Expiration Date

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On August 3, 2020, the Office of the U.S. Trade Representative (USTR) issued a notice requesting comments on whether to extend specific exclusions on Chinese imports from the Section 301 List 1 that are set to expire on October 2, 2020. Companies whose List 1 Exclusions products were granted exclusions in notices published on October 2, 2019, December 17, 2019, and February 11, 2020 are eligible to submit comments.

The due date for companies to submit their comments is August 30, 2020. USTR has stated that it will focus its evaluation on whether, despite the first imposition of these additional duties, the particular product remains available only from China. Additionally, USTR encourages companies to specifically address the following in their submission:

-Whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries.

-Any changes in the global supply chain since July 2018 with respect to the particular product or any other relevant industry developments.

-The efforts, if any, the importers or U.S. purchasers have undertaken since July 2018 to source the product from the United States or third countries.

-Whether the imposition of additional duties on the products will result in severe economic harm to the commenter.

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Turner Kim is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.

NaVCIS section 321 freight-forwarders shippers carrier newtrul technology port ship4wd lane
Archives, Global Logistics, Global Trade Daily, Warehousing

HOW TO CAPITALIZE ON SECTION 321 TYPE 86 U.S. CUSTOMS ENTRIES

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As the world adjusts to life with COVID-19, the surge in popularity of online shopping shows no signs of slowing down. According to the U.S. Department of Commerce, ecommerce sales during the first quarter of 2020 were an estimated 14.8% higher than the previous year and accounted for 11.5% of total retail sales. At the ecommerce behemoth Amazon, North American sales for Q1 2020 increased 29% over last year to $46.1 billion, with international sales growing 18% to $19.1 billion.

The ongoing growth in ecommerce sales is driving a shift in how goods are crossing the U.S. border, putting pressure on freight forwarders and customs brokers to streamline operations to handle escalating volumes of shipments. Many of these ecommerce shipments are processed as low-value, Section 321 Type 86 customs entries in an effort to simplify the entry/release process, expedite shipments, and increase visibility into ecommerce imports for U.S. Customs and Border Protection (CBP) and Partner Government Agencies (PGAs).

What is Section 321 U.S. Customs Type 86 Entry?

To help manage the flow of goods, CBP introduced the voluntary Section 321 Type 86 entry on September 28th, 2019. This entry type eliminates duties and taxes for merchandise shipments valued at less than de minimis level of US$800, imported by one person on one day. Goods may enter the country by air, land, and sea through all commercial ports of entry (except for merchandise imported by mail).

This new Automated Commerce Environment (ACE) entry type simplifies the import process for the estimated 1.8 million package shipments valued at less than $800 that arrive in the U.S. each day. Plus, Section 321 Type 86 expands the number of imports that are eligible for informal entry, including cosmetics, food items, and other products typically regulated by PGAs.

Customs brokers and self-filers can use Entry Type 86 to submit low-value entries electronically through CBP’s Automated Brokerage Interface (ABI), which previously did not support small-package ecommerce.

So what does all this mean for freight forwarders and brokers?

automating customs clearance to drive revenue

With ecommerce volumes on the rise and the pandemic, trade wars, and rising freight costs threatening profits, customs brokers and freight forwarders must find a cost-effective and efficient way to keep pace with the accelerating stream of shipments and keep revenue flowing.

The good news is the ability to process high volumes of Section 321 Type 86 filings clears the path to revenue growth. The bad news is the standard manual “release from manifest” process is time-consuming, error-prone, and impractical for handling large volumes of this entry type.

Processing efficiency is the key to capitalizing on the financial and operational benefits of Section 321 Type 86 entries. Freight forwarders and customs brokers looking to use Type 86 filings to their advantage require a system that can automate and consolidate a high volume of transactions in a single filing to boost clearance efficiency. Solutions that can submit thousands of house bills on one master, automate rating, and enable automatic billing can further streamline operations for increased productivity.

EXPECT SCRUTINY

Section 321 Type 86 entries are subject to a higher degree of scrutiny from CBP, especially regarding accurate valuation. U.S. Customs is using multiple methods, including pricing comparisons, to ensure accuracy and verify that goods do not exceed the $800 threshold.

Adding complexity to the process, compliance for goods filed under Entry Type 86 involves multiple exceptions and exemptions. Certain types of goods are ineligible, including tobacco and alcohol products, goods requiring inspection or subject to quota, goods taxed under the IRS code, and goods subject to anti-dumping and countervailing duties (AV/CVD).

Given the intricacies of Type 86 eligibility and the need to maintain an audit trail for high volumes of low-value shipments, customs brokers and freight forwarders require an automated compliance solution that can flag exceptions, enable accurate record keeping, and demonstrate reasonable care. With technology on their side, brokers can leverage Type 86 filings to improve productivity and accelerate shipment clearance—all while helping their customers pay zero dollars on duties and taxes.

CUSTOMERS DEMAND VISIBILITY

In today’s digital world, customers expect continuous visibility into ecommerce shipments as goods move throughout the shipment lifecycle—and they’re leaning more on their logistics service providers to provide that insight.

To meet the needs of their customers, forwarders and customs brokers are turning to technology. Automated solutions enable end-to-end visibility for Type 86 shipments, from purchase order to the point-of-delivery, by sending in-transit updates and delivery and clearance status reports without the need for manual queries by user or customer.

Deploying a digital front-end to freight forwarding operations not only provides a convenient and efficient customer experience but can also improve internal operations and streamline previously manual processes, such as carrier rating, invoicing, and tracking.

USING SECTION 321 TYPE 86 TO THRIVE

With customs brokers and freight forwarders looking for ways to trim costs and boost the bottom line in the wake of COVID-19 supply chain disruptions and escalating ecommerce demands, the introduction of Section 321 Type 86 entries was a well-timed gift for importers bringing low-value goods into the U.S.

Although the sheer volume of ecommerce shipments poses both customs compliance and customer service challenges, the ability to automate the customs clearance—en masse—for these types of shipments creates an opportunity for growth. By using a robust solution to automate and consolidate Type 86 entries and digitally submit import data to ACE through ABI, customs brokers and freight forwarders can expedite clearance, cut costs, and improve operational efficiency and accuracy to create a streamlined customer experience. Is your organization maximizing the potential of Section 321 Type 86 entries yet?

ustr
Archives, Global Trade Daily, International Trade, News

USTR Grants Extensions to Products Subject to Section 301 List 2

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The Office of the U.S. Trade Representative (“USTR”) announced that it will extend certain product exclusions that were scheduled to expire on July 31, 2020 for fourteen (14) specific products subject to Section 301 List 2 tariffs at a rate of 25%.  As a result of these extensions, the exclusions will now expire on December 31, 2020.

The products for which the Section 301 exclusions were extended include the following:

(1) Polytetrafluoroethylene ((C2F4)n), having a particle size of 5 to 500 microns and a melting point of 315 to 329 degrees Celsius (described in statistical reporting number 3904.61.0090);

(2) Polyethylene film, 20.32 to 198.12 cm in width, and 30.5 to 2000.5 m in length, coated on one side with solvent acrylic adhesive, clear or in transparent colors, whether or not printed, in rolls (described in statistical reporting number 3919.90.5060);

(3) Rectangular sheets of high-density or low-density polyethylene, 111.75 cm to 215.9 cm in width, and 152.4 cm to 304.8 cm in length, with a sticker attached to mark the center of each sheet, of a kind used in hospital or surgery center operating rooms (described in statistical reporting number 3920.10.0000);

(4) Gasoline or liquid propane (LP) engines each having a displacement of more than 2 liters but not more than 2.5 liters (described in statistical reporting number8407.90.9010);

(5) Dispensers of hand-cleaning or hand-sanitizing solutions, whether employing a manual pump or a proximity-detecting battery-operated pump, each article weighing not more than 3 kg (described in statistical reporting number 8424.89.9000);

(6) Walk behind rotary tillers, electric powered, individually weighing less than 14 kg (described in statistical reporting number 8432.29.0060);

(7) AC motors, of 18.65 W or more but not exceeding 37.5 W, each with attached actuators, crankshafts or gears (described in statistical reporting number 8501.10.6020);

(8) Position or speed sensors for motor vehicle transmission systems, each valued not over $12 (described in statistical reporting number 8543.70.4500);

(9) Wheel speed sensors for anti-lock motor vehicle braking systems, each valued not over $12 (described in statistical reporting number 8543.70.4500);

(10) Apparatus using passive infrared detection sensors designed for turning lights on and off (described in statistical reporting number 8543.70.9960);

(11) Liquid leak detectors (described in statistical reporting number 8543.70.9960);

(12) Robots, programmable, measuring not more than 40 cm high by 22 cm wide by 27 cm deep, incorporating an LCD display, camera and microphone but without “hands” (described in statistical reporting number 8543.70.9960);

(13) Motorcycles (including mopeds), with reciprocating internal combustion piston engine of a cylinder capacity not exceeding 50 cc, valued not over $500 each (described in statistical reporting number 8711.10.0000);

(14) Digital clinical thermometers (described in statistical reporting number 9025.19.8040 prior to July 1, 2020; described in statistical reporting number 9025.19.8010 or 9025.19.8020 effective July 1, 2020).

USTR requested comments in April on whether it should extend the exclusions, which were originally issued on July 31, 2019. Over 50 products which were previously granted exclusions and were not listed in this extension notice will now expire on July 31, 2020.

To view the full list of extended product exclusions, please click here.

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Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.

Julia Banegas is an attorney in Husch Blackwell LLP’s Washington, D.C. office,

hs code
Archives, Global Logistics, Global Shippers 101, Global Trade Daily, International Trade

HS Code Classification Freeway: Take Your Exit

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Since the introduction of the Harmonized Tariff System (HTS or HS) in January of 1988 and its global implementation in following years (for example, in the U.S. on January 1, 1989), classifying products (i.e., associating the tangible product to its related HS code) has been a global party. Used on import (and export) declarations, HS codes identify the duty rates applicable to the specific goods, relate to statistics, give regulators an opportunity to link Anti-Dumping Duties (ADD) and Countervailing Duties (CVD) to products, dictate how to qualify for preferential treatment, and can govern document and license requirements. Quite a laundry list—and that makes the correct HS code classification an important piece of information, especially when using an incorrect classification can lead to penalties and delays upon import.

In the U.S., with roughly 16,000 HS codes to choose from, a customs ruling database for U.S. classifications only (CROSS) that is 206K classifications strong, ongoing changes to import tariffs, and a massive World Customs Organisation-initiated overhaul every five years (2022 here we come), it is no wonder classification is evergreen on trade compliance professionals’ list of concerns that demand a significant amount of attention.

To make it more complicated—although harmonized globally at the six-digit level, local authorities are allowed to differentiate down to a local nth digit (usually eight or 10) and have not been hesitant to do so. For example, the U.S. and European Union both support HS codes that have 10 digits, but few are the same or represent the same products. As import declarations are filed locally, this implies that, for each importing country, a different HS code must be identified and then maintained for any product shipped into that country. Do the math: a product catalog of 50,000 parts that ship to 50 different countries adds up to a solid 2.5 million classifications. Not something to maintain on the back of an envelope—unless it’s a really, really big one, erasers are cheap, and pencils are free.

With widely diverse needs for classification (e.g., from a B2C ecommerce shipment of two cotton T-shirts that need an HS code for a quick landed costs calculation, to raw materials and semi-finished products for manufacturers, to a single unique import of a $10 million factory engine), it is no surprise that any self-respecting Global Trade Management (GTM) solution or consultant is happy to assist companies in desperate need for those classifications. And no wonder that, since around 2000, numerous software companies have been trying to solve the mystery of auto-classification.

The diversity in the initial reason for classification comes with different parameters for success. For an ecommerce retailer, an autoclassification tool can solve many challenges (e.g., quick returns, high volume of items are immediately classified), but accuracy can be a challenge. A lack of accuracy is not something importers can afford when, for example, the classification determines whether the import is subject to ADD, is heavily restricted from a license perspective, or is subject to quotas. Basically, (auto-) classification is like a freeway and, depending on the exact needs, companies take a different exit.

There are three key components to a successful (auto-) classification project—other than, of course, the hopefully not superfluous statement that a decent amount of classification expertise comes in handy when either classifying or building a tool.

First, the quality of the product description. ‘Garbage in, garbage out’ also applies to classifying. Poor descriptions, lack of product detail, or even incorrect specifications will likely lead to an incorrect HS code with all related consequences. For quality descriptions, product managers or developers may get involved to provide the necessary technical detail as some classification decisions are made based on those elements.

Second, the classification logic. Whether the classification is assigned by a person or a tool, classification logic cannot lack, well, logic. This means many things: rules that decide to classify a piece of clothing that is not gender-specific as textiles for female or male (and the U.S. handles it differently from the EU); rules-based classification that guides the correct classification in a decision matrix fashion; the ability to ignore information not relevant to the classification (e.g., color); or the ability to observe characteristics that may be needed in one case but not for another (e.g., weight), including material compositions that are usually very important. The logic must also account for a way to ‘smart search’, or search across different references to generate results from, such as synonyms, natural language, industry jargon, and even from images. In addition, classification logic means integrating Artificial Intelligence (AI) and Machine Learning (ML) into the application so results can automatically improve, which enhances both the number of items classified and the quality of the classifications without human intervention.

Third, the classification reference database. The classification logic must look to match a description with an HS code not only by matching it with a ‘word in the tariff’ but also with the explanatory notes and, preferably, for broader context a natural language reference. This might include a shipping manifest reference or information gained via access to previous imports and classification repositories of identical products. Regardless, all types of references need to be reviewed before the final classification is determined. The logic is only as sound as the foundation on which it is built.

It’s important to keep in mind that references are also where, as an industry, companies should actually assist one another. Data privacy concerns notwithstanding, there must be a way to ‘crowd source’ references, which could reduce the efforts made and resources spent on classification in sensational fashion—engineering a classification freeway that is even more well-marked and efficient to traverse.