By: Lenny Feldman, Senior Member, Sandler, Travis & Rosenberg, P.A.
Importers, customs brokers and supply chain service providers recognize that imminent changes lie ahead concerning the laws, regulations and policy in the customs and trade world. However, the adjustments needed to adequately handle these initiatives are not as obvious as one may suspect. Here are the top five issues your company could expect in 2018 and how to address them.
E-Commerce – Develop your Strategy
As on-line sales continue to explode so do the concerns and challenges of U.S. Customs & Border Protection (CBP) to welcome the legal, but halt the illicit small-package trade increasingly imported into the U.S. As we experience continued growth in one-off, unique products delivered by parcel we can expect CBP and the participating government agencies (PGAs) to draw some lines in the sand regarding the automation, data, processes and liabilities pertaining to e-commerce handlers and fulfillment enablers. Putting your e-commerce strategy into place to address importer of record/right to make entry requirements, data and information receipt and dissemination, filing opportunities and restrictions as well as revised terms and conditions with your business partners all top the list.
NAFTA & GSP – Consider the Alternatives
More stakeholders are becoming increasingly concerned that the U.S. may actually withdraw from NAFTA year due to the lack of consensus throughout the negotiations. And now that GSP has expired, which provided for one-way preferential trade with over 120 countries on thousands of products, we can expect more seismic shifts in trade policy. As a result, the trade community should carefully compare and contrast how their goods qualify for duty free treatment under other more modern agreements in the event NAFTA is negotiated along these lines or repealed and other sourcing options are possible. In any case, first sale valuation now shifts from the “should” to “most” category as importers will need to take advantage of the (on average) 10 to 20 percent reduction in appraised value and duties by declaring the first as opposed to last sale in multi-tiered transactions that the program grants.
Trusted Trader – Position Yourself for Benefits
If your company is focused on its return on investment (ROI), the time has come to refocus or recalibrate your partnership programs. CBP has announced its rollout of its enhanced CTPAT security and ISA import compliance programs, promising more benefits for participants. With CBP’s ten Centers of Excellence and Expertise now in place with partnership branches for such trusted accounts, entities can expect not only fast track and front of the line privileges at border crossings but also greater penalty mitigation in enforcement actions. As we can expect some significant program changes in the requirements as well as benefits, now is the time to ensure your CTPAT and ISA (or compliance) programs meet the reasonable care standard on issues ranging from classification, value and preference while addressing admissibility standards relating to PGAs, intellectual property and CBP’s latest priority, forced labor.
Trade Remedies – Take a Careful Look at your Supply Chain
The 2016 Trade Facilitation and Trade Enforcement Act (TFTEA) revved up the engine on enhanced antidumping and countervailing duty (ADD/CVD) enforcement, particularly with CBP investigations on circumvention. However, the Administration really put the pedal to metal via its 2017 executive orders calling for enhanced or supplemental bonding to secure such transactions where CBP has lost billions of dollars of uncollected ADD/CVD revenue in the past. The Administration’s self-initiated national security and global safeguard investigations on products ranging from steel, aluminum and washers underscore the need for importers to carefully weigh sourcing and strategic options to avoid supply chain disruptions. If companies take steps to: avail themselves of specific manufacturer/shipper rates (compared to higher country-wide rates), properly identify and declare manufacturers and shippers (and combinations thereof), and intentionally increase import volume during gap periods between the effective dates of orders, the financial reward can be exponential.
In-bond Movements – Map Out the Data Flow
After much anticipation, CBP issued its final rule overhauling its in-bond transport requirements. In addition to requiring electronic in-bond forms (CBPF 7512s) in most cases from the carrier, CBP specified a thirty (30) day window for transport and revised the timeframe for reporting or updating in-bond records. In addition to mandating some additional data elements companies are most concerned about the new six-digit HTSUS requirement. CBP has indicated its willingness initially to allow for an informed, rather than enforced, compliance period for the HTSUS number. However, companies need to carefully examine current processes and controls to obtain the HTSUS and all the other required in-bond elements to avoid cargo delays, holds and liquidated damages claims. The CBP-required data sets and transmission are attainable, but the trade community will have to adjust to meet the new parameters.
In conclusion, all parties to the supply chain will feel the impact of the legal, regulatory and policy changes ahead in the next coming months. Particularly, in the areas of e-commerce, NAFTA and GSP, trusted trader, trade remedies and in-bond movements companies can experience substantial gains and return on investment if they take the right steps to adjust and enhance internal controls, policies and procedures. In this way, companies will address the new challenges while taking advantage of the new opportunities ahead in customs and trade.