Initially introduced in April 2015, the Trade Facilitation and Trade Enforcement Act (the Act), also known as the Customs Reauthorization Bill, was finally enacted in February 2016. The Act contains the most far reaching changes since the Customs Modernization Act and its main objectives include strengthening trade enforcement, increasing intellectual property protections, combatting anti-dumping duty evasion, and improving agency enforcement efforts. In addition, the Act will require U.S. Customs and Border Protection (CBP) to create standards that measure the performance and progress of trade, while also mandating that CBP report these results. Specifically, the Act has added 48 reports that CBP must submit to Congress regarding its operations. A few of the key changes to the Act are outlined further.
Anti-Dumping & Countervailing Duties
Among several trade priority issues, the Act targets Anti-Dumping and Countervailing Duties. The Act establishes new procedures for CBP to investigate evasions claims. To initiate investigations an “interested person” will be able to file an allegation with CBP regarding merchandise entered through evasion. This filing can also be conducted by a federal agency with information that a person has entered merchandise through evasion.
Once a complaint is filed and accepted, CBP is required to conduct a formal investigation within specific deadlines. CBP will also be able to issue questionnaires (similar to the ones issued in trade remedy cases) to importers and foreign producers. Failure to respond to the questionnaire will result in “adverse inferences,” and failure to cooperate in an investigation by an importer or foreign exporter may result in a finding of evasion. Where CBP makes an affirmative determination of evasion, it shall suspend liquidation of unliquidated entries and require cash deposits, effective with entries entered on or after the date of initiation. CBP can also extend the period of liquidation for unliquidated entries of merchandise that entered before the date of initiation to allow for the calculation and collection of appropriate AD/CVD.
Additionally, the Act provides clarification for support of unused merchandise drawback based, in most cases, at the 8-digit HTS. To simplify the process further, drawback claims are now acceptable five years from the date of import for all types of products instead of three years. It also provides that supporting drawback records may include those kept in the normal course of business or through the Automated Export System (AES). This new drawback system goes into effect in two years.
De Minimis Value
Notably, as of March 10, 2016, the Act raises de minimis levels for the value of articles that are entered into the United States informally from $200 to $800.
Importer Identity Verification
Within Section 116 of the Act, Congress has set forth the minimum standards for importer identity verification. This regulatory aspect of the Act requires that importers submit specific data to brokers who will collect and authenticate the data. If the brokers fail to collect data, both monetary and non-monetary sanctions exist for non-compliance and can be decided at the discretion of the Secretary. CBP is obligated to have this system in place for brokers to review and authenticate importer information within 180 days of the Act’s enactment. CBP will likely target new importers and non-resident importers, but all importers should prepare to provide additional details regarding their import activities.
Residue in Cargo Bulk
In discussing residue, changes to the Act have been anticipated by those involved in importing chemicals and petroleum as well as agricultural importers. The Act states that if the residue imported does not exceed 7% of the bulk of cargo, has no value or de minims value, and was previously exported from the United States, then the residue does not have to be declared. This change is effective immediately.
The Act enhances certain provisions of Chapter 98 regarding goods returned to the United States. The Act expands Chapter 98’s scope by specifically amending subheading 9801.00.10 to include “any other products when returned within three years after having been exported,” and Subchapter Note 3 to Heading 9802 to permit U.S. articles exported for repairs or alterations to be commingled and tracked using an inventory management method.
The Act will mandate a strict 90 day reliquidation deadline; CBP may only reliquidate an entry within 90 days of the actual data of liquidation. Previously, CBP took the position that it could reliquidate entries within 90 days of the date the notice of liquidation was provided to the importer, a very broad and controversial interpretation.
Structure of CBP
Regarding CBP’s structure, the Act specifically requires that the Office of International Trade become the Office of Trade, including the transfer of all assets, liabilities, funds, and personnel. Similarly, the office of Internal Affairs will be renamed as the Office of Professional Responsibility.
This article is not exhaustive and only covers some of the most talked about changes. Other important changes include the “permanent moratorium” on Internet access taxes (section 922) and the extension of the ban of goods made with indentured labor (section 910). Given that most of the changes must be implemented within 180 days after the Act’s enactment, we foresee August will be a busy month for both CBP and Congress.