Reminder: New Dairy Product Import Tax is Effective August 1
The Agricultural Marketing Service issued a final rule in March 2011 that amended the Dairy Promotion and Research Order to implement an assessment (tax) on imported dairy products, effective August 1, 2011, and to add importer representation to the National Dairy Promotion and Research Board.
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Except for the implementation of the assessment on imported dairy products, the final rule's amendments were effective April 1, 2011. AMS stated that this delay would give U.S. Customs and Border Protection and customs brokers time to make the needed software changes.
The following are highlights of the AMS' final rule and the import tax that takes effect August 1, 2011. (see ITT's Online Archives or 03/18/11 news, 11031815, for BP summary of the details of the final rule.)
Final Rule Establishes Import Tax of “7.5 Cents per Hundredweight”
The final rule states that each importer will have to pay an assessment rate of $0.01327 per kilogram (kg) of milk solids1 for dairy products in certain tariff numbers in the following HTS subheadings, as listed in new paragraph 7 CFR 1150.152(b)(1): 0401-0406, 1517, 1702, 1704, 1806, 1901, 2105-2106, 2202, 3501, and 3502.
This rate is based on the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) requirement to assess 7.5 cents per hundredweight of U.S. milk or equivalent thereof.2
Final Rule Defines "Importer" as Importer of Record for Dairy Products
The final rule adds new section 7 CFR 1150.21 to define the term "importer" to mean "a person that imports imported dairy products into the U.S. as a principal or as an agent, broker, or consignee of any person who produces or handles dairy products outside of the U.S. for sale in the U.S., and who is listed as the importer of record for such dairy products."
The final rule also adds new section 7 CFR 1150.120 to define an "imported dairy product" as "any product that is imported into the U.S. under any of the Harmonized Tariff Schedule (HTS) classification numbers listed in 7 CFR 1150.152(b)(1)."
Importer Assessments Should be Paid to CBP When Entry Summary Docs Filed
The final rule states in 7 CFR 1150.152(b)(2), that the assessment on imported dairy products should be paid by the importer to U.S. Customs and Border Protection at the time of entry summary for subject products. AMS notes that the assessments collected by CBP will be transferred to the Dairy Board, which will, at its discretion, verify the information reported by importers to CBP to determine if additional money is due to the Dairy Board or if an amount is due to an importer based on the quantity of imported and the milk solids content per unit.
1AMS' May 2009 proposed rule offered importers two methods to calculate assessments, one using a rate based on milk solids content and the other based on product volume, depending on whether the importer had sufficient documentation to determine the milk solids content. The proposed rule also noted that for most products, the default assessment rate for each HTS code would be based on maximum milk solids content.
In response to commenter objections, AMS has decided to provide one method for importers to calculate the assessment. The final rule therefore states that importers will be required to pay assessments based upon cow’s milk solids content of imported dairy products only.
2Domestic producers are already assessed 15 cents per hundredweight for all milk produced and marketed, except for those in Alaska, Hawaii, the District of Columbia, and the Commonwealth of Puerto Rico, which will become subject to the assessment as of this final rule.
(See ITT's Online Archives or 06/15/11 news, 11061504, for BP summary of CBP announcing that it has decided to use "cows milk weight per kilogram" ckg for all dairy items subject to the August 1 assessment.)