Harmonized Tariff Schedule

Lawmakers were unable to reach a federal government funding deal on Dec. 21, resulting in a shutdown that began at 12:01 a.m. on Dec. 22 and has no clear end in sight. CBP held a conference call on Dec. 21 with members of the trade to discuss the agency's operations during a shutdown, according to the National Customs Brokers & Forwarders Association of America. CBP will have conference calls during the shutdown and is preparing a CSMS message to detail its plans, the NCBFAA said.

The Commerce Department set the 12-month 2019 value-added tariff preference level for certain apparel imported directly from Haiti (Harmonized Tariff Schedule 9820.61.25 for entry-specific claims or 9820.61.30 for aggregate claims) eligible to receive duty-free treatment under the Haitian Hemispheric Opportunity Through Partnership for Encouragement Act (HOPE). For the one-year period beginning on Dec. 20, 2018, and extending through Dec. 19, 2019, the recalculated quantity of imports eligible for preferential treatment under the value-added TPL is 372,889,066 square meters equivalent (SME), a increase of more than 11 million SME over 2018 levels. Apparel articles entered in excess of this TPL will be subject to otherwise applicable duty rates.

Although PricewaterhouseCoopers expects trade will not return to normal with China for more than three years, experts on a Dec. 20 webcast said clients are mitigating increased tariffs through a variety of strategies, including lowering customs value, bonded warehouse use, modifying tariff codes and negotiating with suppliers or customers. "Probably 20 percent can be mitigated without making any changes to the supply chain," said Scott McCandless, a trade policy specialist for the firm.

CBP created Harmonized System Update (HSU) 1820 on Dec. 18, containing 19,061 Automated Broker Interface records and 3,393 harmonized tariff records, it said in a CSMS message. The update includes changes related to the delayed increase of Section 301 tariffs on goods from China (see 1812180010), CBP said. Other changes "include the annual special program staged rate reductions mandated by the individual Free Trade Agreements," it said. "This update also contains modifications mandated by the 484 F Committee, the Committee for Statistical Annotation of Tariff Schedules. These adjustments are effective on January 1, 2019 and will be published within the change record, and chapters, of the 2019" Harmonized Tariff Schedule of the United States.

Apparel trade groups testifying at the Dec. 18 International Trade Commission hearing on a potential EU-U.S. trade deal said they see room for departures from past trade deal approaches. Steve Lamar, executive vice president of the American Apparel and Footwear Association, and Julie Hughes, president of the U.S. Fashion Industry Association, received many questions about how they'd like the deal to be shaped. Both said they want immediate and reciprocal elimination of high duties on textiles, footwear and apparel, though Lamar noted there are some domestic sensitivities. The ITC asked him to elaborate and Lamar said there are some domestic producers of protective boots and of athletic shoes, and those producers would like their Harmonized Tariff Schedule codes to have gradual phase-outs of tariffs or keep their tariffs. Lamar said the exact number of lines has shifted over the years, from 17, to 19, to 23, but it's a small proportion of all footwear -- he said about 120 lines can have immediate tariff removal.

CBP is issuing a "blanket" authorization to allow the release of most types of merchandise on or after Dec. 17 through Dec. 31 under Immediate Delivery (ID) procedures, it said in a CSMS message. Many entry filers make regular use of ID procedures for fresh fruits and vegetables and other merchandise from Mexico and Canada, etc.

The National Marine Fisheries Service and CBP will use a period of "informed compliance" starting Dec. 31 for entries of shrimp and abalone required to include data for the NMFS Seafood Import Monitoring (SIM) Program, CBP said in a CSMS message. "Entries will be audited, inspected, and verified for the “informed compliance” with the SIM rule starting December 31, 2018 to March 1, 2019," CBP said. "However, entries of only shrimp and abalone tariff codes [in the Harmonized Tariff Schedule] (HTS) will not be rejected if their SIM data is omitted." That period is meant to help the trade "work through any inadvertent, unintentional, or technical or concerns that may have precluded their being fully prepared to successfully submit SIM data for shrimp and/or abalone with the Entry," it said. Starting March 1, "entries that do not comply with the mandatory SIM message set requirements, including shrimp and abalone, will be refused entry," it said. A NMFS final rule issued in April said that as of Dec. 31, shrimp and abalone importers would be required to file harvest and landing data at the time of entry in ACE (see 1804230037).

Due to "limitations within automatic quota processing when quota and trade remedy conditions overlap," CBP will require manual input by the agency in some cases, CBP said in a Dec. 17 CSMS message. Manual processing is needed when "a quota entry summary line has three or more Harmonized Tariff Schedule (HTS) codes (e.g., if the line is properly classified with two chapter 99 HTS codes (a section 301 HTS and a quota HTS) and the commodity HTS)," it said. Manual processing is also necessary when "the primary HTS code is not subject to quota but the secondary HTS is subject to quota (e.g., if the line is properly classified with two HTS codes: a section 301 HTS and a non-trade remedy quota HTS)."

The United Automobile Workers union would like to see vehicles left out of trade negotiations entirely when Japan and the U.S. sit down to craft a free-trade deal. Josh Nassar, UAW legislative director, told the International Trade Commission that Japan has no tariffs on imported cars, yet its imports are just 7 percent of sales. From all countries, Japan imported 11.1 billion in vehicles in 2017, according to World's Top Exports. In 2017, the Commerce Department said the U.S. imported $51 billion in Japanese-built vehicles. The ITC also heard from the milk lobby, the American Chemistry Council and the American Apparel and Footwear Association during its hearing Dec. 6.

Trade groups called for improvements to Japanese customs procedures as part of any U.S.-Japan Free Trade Agreement, including enhanced cooperation between CBP and Japan Customs to combat fraud, in comments submitted to the Office of the U.S. Trade Representative on negotiating objectives for the potential trade deal. Commenters generally supported an increase in the Japanese de minimis level, but as was the case in prior trade agreement negotiations, disagreed on rules of origin, particularly for textiles.