Duty Deferral Entry Requirements, de Minimis Alignment Deserve Attention in NAFTA Talks, NCBFAA Says
Duty deferral provisions within NAFTA should be left out of any updated deal, the National Customs Brokers & Forwarders Association of America said in comments to the U.S. trade representative (here). Under NAFTA, some products processed in the U.S. "require a special deferral entry to be filed with duty payment to CBP" when exported to Canada or Mexico, the group said. "This special entry and duty payment would not apply if the same shipment were exported to any other country outside of NAFTA" and therefore "hinder U.S. exports to Mexico and Canada," the group said. The NCBFAA comments were in response to a USTR request for public input on how it should update NAFTA.
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The deferral entry also can't be filed in ACE, "so the special entry must be filed in a paper format, making it particularly cumbersome," the NCBFAA said. "If an importer is not aware of the intricacies of this fairly obscure program, they can [be] liable for substantial administrative penalties for failure to timely and properly file the special duty deferral entry." While USTR extended the comment deadline, many comments were already submitted (see 1706130035).
The NCBFAA also would like to see an alignment of de minimis rates with Canada and Mexico, which are set at $15 and $50 in U.S. dollars, respectively. The trade group criticized the provisions in the Trade Facilitation and Trade Enforcement Act that increased the de minimis value to $800 from $200. That change was "a unilateral gesture, a step taken only by the U.S., without negotiation or without a corresponding concession by others" and resulted in "reduced data requirements, less scrutiny and accelerated speed in traversing our borders," it said. This also "created incentives to ship goods, both via e-commerce and in traditional trade, in quantities qualifying for de minimis treatment," it said. "We understand that this has led to an increase in distribution centers being located outside of U.S. commerce in order to reduce delivery times and costs, and provide a location for re-packaging volumes of higher value merchandise into small de minimis quantities." The group previously raised the concerns in comments to the Commerce Department (see 1705110026).
Customs procedures could also use some harmonization, the NCBFAA said. "For example, both Canada and the U.S. allow importers to make post entry corrections, while Mexico does not," it said. An updated NAFTA also offers a chance toward a "Single North American Window," it said. "When NAFTA took effect, most Customs forms were paper-based. With automation, we now have the opportunity to align the format and content of data elements required at the border, eliminating redundancies, creating greater regulatory coherence and simplifying the cross border trade process."