China 301 increase delayed by two weeks

October 1st carries tremendous cultural significance in China, and this year the country is celebrating the 70th anniversary of the People’s Republic of China. Perhaps with an eye to this, plus in response to China’s awarding of the first exclusions to US products from their additional import duties, President Trump announced a delay from October 1st to October 15th in the planned increase of Section 301 duties on the items on lists 1, 2 and 3. Scheduled to increase by 5% from 25% to a planned 30%, the President announced his delay on Twitter on Thursday evening.

For US importers, this temporary stay should likely be seen as just that…temporary…until further, more concrete signs appear. Certainly China’s sixteen exclusions to which they added soybeans and pork (in response to a massive reduction in their pig population because of African Swine Flu) could come into play when US and Chinese negotiators sit down again next month in Washington.

The de minimis rules of TFTEA allow eCommerce shipments of $800 or less to get to individual shippers and avoid Section 301 duties.

How using direct shipments from China legally avoids Section 301 duties.

The United States and China are embroiled in a back-and-forth trade war that has seen duties imposed on nearly every tariff number in the book. Regardless of the list, importers whose goods were duty-free or even single-digit duty percentages have seen Section 301 duties imposed on those goods from 10% all the way to now 30% for nearly $250 billion in exports to the United States.

For importers bringing in large commercial shipments that are being broken down and distributed to individual consumers, there is a way to move the distribution process further upstream and take advantage of a regulation that in most cases means the Section 301 duties aren’t an issue.

In 2015, President Obama signed the Trade Facilitation and Trade Enforcement Act which, among other things, raised the de minimis on shipments to the United States from $250 to $800 per individual, per day. These shipments when they arrive with an express consignment operator can be declared on a manifest and be released by Customs and Border Protection and unless they’re flagged and held for further review or a physical examination, will move from plane to package delivery truck or Postal Service for delivery to a customer’s doorstep or mailbox.

The reason this avoids the Section 301 duties is that shipments moving through the express consignment process do not present for entry using the regular formal entry process – thereby avoiding the declaration of the additional HTS and payment of those duties.

Among other things, this means avoiding dramatic increases to continuous bond limits of liability and the underwriting, financials and additional guarantee instruments that would elsewise be required.

At Kesco Logistics, our eCommerce solution affords companies looking to direct ship consignments valued at $800 or less per day a vehicle to do so legally, efficiently and cost-effectively. For more information on how to ship your eCommerce orders to consignees and legally avoid paying Section 301 trade remedy duties, contact us today.

Importers will be required to provide additional information to customs brokers under new regulations proposed by Customs.

CBP proposes new regulations for importer verification by brokers.

CBP looks to customs brokers as their front-line partner for, in their words, “facilitating legitimate trade.” Brokers file more than 96% of the entries the agency processes for admissibility decisions. As the agency looks to ratchet up enforcement and interdiction of drugs, opioids, intellectual property rights (IPR) violations and duty avoidance for antidumping and other trade remedy actions, they have proposed new regulations for brokers that would see them collecting additional information during the on-boarding process for not only the new importer with whom they are working, but also the individual granting that authority through a power of attorney.

Published for notice and comment in the Federal Register on August 14, 2019, with a deadline of October 15, 2019, the agency has offered as a sample of proposed changes the following:

At the time the POA is obtained by the broker, the broker must collect, at a minimum, the following information from the client, if applicable:

(1) The client’s name;

(2) For a client who is an individual, the client’s date of birth;Start Printed Page 40305

(3) For a client that is a partnership, corporation, or association, the grantor’s date of birth;

(4) For a client that is a partnership, corporation, or association, the client’s trade or fictitious names;

(5) The address of the client’s physical location (for a client that is a partnership, corporation, or association, the physical location would be the client’s headquarters) and telephone number;

(6) The client’s email address and business website;

(7) A copy of the grantor’s unexpired government-issued photo identification;

(8) The client’s Internal Revenue Service (IRS) number, employer identification number (EIN), or importer of record (IOR) number;

(9) The client’s publicly available business identification number (e.g., Data Universal Numbering System (DUNS) number, etc.);

(10) A recent credit report;

(11) A copy of the client’s business registration and license with state authorities; and

(12) The grantor’s authorization to execute power of attorney on behalf of client.

When the agency has reviewed and adjudicated the comments and issued their final changes, Kesco will update and advise importers of the additional data collection which will be undertaken and cite the relevant regulations. We are aware that customs brokers are comparison shopped and have many a time had a conversation where a sentence began with the phrase, “Well, my other broker…”

At Kesco, we are committed to working with importers to facilitate the importation of their cargo into the United States and our responsibility for the security and admissibility of that cargo also means adhering to the regulations which some may find onerous and intrusive but are still required.