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April 2004 - Issue #24

In This Issue:

EU Has Imposed Additional Duties on Imported U.S. Goods
Solid Wood Packing Update
March 12, 2004 Ushers in Phase Two Enforcement for Prior Notice
FDA to Explain BTA Rules in Asia
FTA with Morocco Could be Implemented by January 1, 2005
Lapsed Period for HTS 9808.00.3000
New Security Technology under Evaluation by Customs
GAO Calls for Examination of Security of the Nation’s Air Cargo
Trade Information Center Provides Assistance for Export Tariffs, Tax Information, and Resources
 

Trade Industry News
EU Has Imposed Additional Duties on Imported U.S. Goods

The European Union (EU) has imposed additional Customs duties on many imported goods of U.S. origin. The additional duties became effective on March 1, 2004. The duties are a result of the EU's dispute over the U.S. Foreign Sales Corporation/Extraterritorial Income Exclusion Act (FSC/ETI) tax regime.

The additional duty rate starts at 5%. Each month the additional duty will increase by 1% until the additional duty rate reaches 17%.

March 1, 2004 - March 31, 2004

5%

April 1, 2004 - April 30, 2004

6%

May 1, 2004 - May 31, 2004

7%

June 1, 2004 - June 30, 2004

8%

July 1, 2004 - July 31, 2004

9%

August 1, 2004 - August 31, 2004

10%

September 1, 2004 - September 30, 2004

11%

October 1, 2004 - October 31, 2004

12%

November 1, 2004 - November 30, 2004

13%

December 1, 2004 - December 31, 2004

14%

January 1, 2005 - January 31, 2005

15%

February 1, 2005 - February 28, 2005

16%

From March 1, 2005

17%

 

 

 

 

 

 

 

 



The EU will watch to see if the United States implements the recommendations of the WTO concerning the FSC/ETI. If the EU is satisfied with the actions of the U.S., these additional duties may be rescinded.

A full listing of the tariff numbers affected and the staged duty rates can be found at:
http://europa.eu.int/eur-lex/pri/en/oj/dat/2003/l_328/l_32820031217en00030012.pdf

Exporters are urged to verify tariff numbers to determine if the additional duty rates apply. For assistance, please contact our Compliance Department at compliance@shapiro.com

Source: "EU Imposes Additional Duties Beginning March 1, 2004 on Selected U.S. Products Due to FSC/ETI Dispute" appearing in International Trade Today dated March 2, 2004.

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Solid Wood Packing Update

The Animal and Plant Health Inspection Service (APHIS) issued a proposed rule in May 2003 to require imported solid wood packing material (SWPM) to be either heat treated or fumigated with methyl bromide, as well as marked, prior to importation, in accordance with the International Standards for Phytosanitary Measures (ISPM) 15 entitled "Guidelines for Regulating Wood Packaging Material in International Trade."  The Interim Commission on Phytosanitary Measures of the International Plant Protection Convention (IPPC) approved ISPM 15 on March 15, 2002.
 
The final rule is expected to be published in the Federal Register no later than June 2004.

In October 2003, APHIS stated that, beginning January 2004, as an information dissemination tool, it would begin issuing notices to exporting countries with National Plant Protection Organizations (NPPOs) for SWPM if packing material was not appropriately treated and marked.

In an update, APHIS states that, due to administrative difficulties, notices to NPPOs for such materials have not yet been issued. APHIS does not know when it will be able to begin issuing these notices.

(APHIS has previously stated that it will follow its current policy on SWPM until the final rule goes into effect. The final rule is expected to have a phase-in period of six months or longer, during which time APHIS does not expect to take action against those who are not in compliance.)

Sources: APHIS SWPM website available at http://www.aphis.usda.gov/ppq/swp/; “Delay in Issuance of SWPM Notices to Exporting Countries” appearing in International Trade Today dated March 8, 2004.

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    March 12, 2004 Ushers in Phase Two Enforcement for Prior Notice

    In October 2003, the Food and Drug Administration (FDA) announced the implementation of two interim final rules regulating the Prior Notice and Registration requirements of the Public Health Security and Bioterrorism Preparedness and Response Act of 2002, popularly known as the Bioterrorism Act or the BTA.

    Under the requirements of the BTA, the FDA must receive Prior Notice (PN) for all food imported or offered for import into the United States. Also, foreign facilities that manufacture, process, pack, or hold food for human or animal consumption in the United States must register with the FDA. Any imported food products that are not in compliance with the PN requirements of the BTA may be held at either the port of arrival, or at a secure facility, until such time that they are either brought into compliance with the BTA or exported from the U.S. Although these requirements were scheduled to take effect on December 12, 2003, FDA and CBP have agreed to a phase-in enforcement timeline over a period of the next eight months. The specific phases of this discretionary enforcement period are described in the FDA Compliance Policy Guide, which can be found at http://www.cfsan.fda.gov/~pn/cpgpn.html.

    The implementation of Phase Two of the enforcement for Prior Notice (PN) commenced on March 12, 2004, and will run through May 12, 2004. During Phase Two, FDA will provide information to Customs regarding companies that have failed to provide PN data as required. Customs will issue informed compliance notices to those companies identified as non-compliant. Phase Two enforcement also includes the potential for CBP to issue monetary penalties to flagrant violators for non-compliance with the Prior Notice requirement. While working with the public in an effort to provide reminders, CBP will not issue any Bioterrorism Act-related penalties until the latter part of Phase Two.

    For more information, contact: CBP - Other Government Agency Branch (202) 927-0300.

    Source: Customs Notice posted to CBP website http://www.cbp.gov/ImageCache/cgov/content/import/commericial
    _5fenforcement/bioterrorism/bta_5fphase2_2edoc/v1/bta _5fphase2.doc

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    FDA to Explain BTA Rules in Asia

    The Food and Drug Administration (FDA) plans to expand efforts to assist foreign food facilities that supply food for consumption into the U.S. to comply with facility registration and prior notice requirements under the Bio-Terrorism Act (BTA) regulations. In an attempt to enforce compliance with the regulations, U.S. officials will travel to Japan, China, South Korea, and Thailand in April to detail the regulations, as well as to discuss mistakes that facilities have been making.

    A recent FDA study revealed that about 192,000 foreign facilities (fewer than half the expected number) have registered with the FDA. The agency also received about 140,000 Prior Notice notifications each day in February. The prior notice compliance rate for food imported by land is lower than for food imported via other modes of transportation.

    The FDA will open a final 30-day comment period soon, allowing the public to provide additional comments or to ask questions about the regulations.

    Source: Sandler, Travis, Rosenberg Newsletter Volume 11, Issue 54 dated 03/18/2004

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    FTA with Morocco Could be Implemented by January 1, 2005

    On March 8, 2004, President Bush informed Congress of his intent to sign a Free Trade Agreement (FTA) with Morocco. The details of the FTA were established on March 2, 2004, when the United States and Morocco reached an agreement on trade concerns.

    After the U.S.-Morocco FTA is signed, President Bush will submit the draft to Congress.  At that time, Congress would have 90 days to decide whether to implement the legislation. Congressional sources stated that the U.S.-Morocco FTA legislation could not be revised and would be subject to a straight “up or down” vote by the House and Senate.  If the House and the Senate pass the FTA legislation, President Bush could sign it into law and issue a proclamation implementing the U.S.-Morocco FTA.

    If the Bush Administration is able to complete the steps outlined above in 2004, the U.S.-Morocco FTA could be implemented as soon as January 1, 2005.  The fall election, in addition to the Congressional schedule, could negatively impact this target date for implementation.

    For more information, please visit the Office of United States Trade Representative’s website at the following link: http://www.ustr.gov/new/fta/Morocco/2004-03-02-factsheet.pdf.

    Source: “President Bush Notifies Congress of His Intent to Sign FTA with Morocco” appearing in International Trade Today dated March 12, 2004.

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    Border and Transportation Director Evaluates Objectives for Cargo Security

    On March 3, 2004, the Border and Transportation Security (BTS) Director of the Department of Homeland Security (DHS) outlined three specific goals for the upcoming year relating to cargo security. BTS’ objectives are mainly focused on developing a Threat and Vulnerability Process, discovering and eliminating the outstanding gaps in security, and fully launching the Smart Box initiative.

    These are the highlights of the three goals, according to the BTS Director:

    Objective #1:  Continue to develop assessment and analytical tools for cargo examination

    BTS understands that it is unrealistic to inspect all incoming shipments into the United States; therefore, it is their goal to develop a Threat and Vulnerability Process in order to evaluate the susceptibility of certain locations.

    This goal may be accomplished by utilizing the best intelligence and data. The BTS Director noted that the provisions of the Trade Act of 2002 have been an essential tool in improving the intelligence and data received by DHS.  The Trade Act also mandated that manifest information be transmitted ahead of time so that DHS may collect this information in advance.

    Objective #2: Focus on the further development of cargo security programs, such as C-TPAT

    CSI – DHS’ original goal for the Container Security Initiative (CSI) was to establish bilateral agreements with foreign governments of the top 20 ports (based on cargo volume), which accounts for two thirds of containers exported to the United States. At this point, governments for 19 of the 20 ports have become a part of CSI.

    C-TPAT – Currently, 51% of organizations participating in the Customs-Trade Partnership Against Terrorism have been certified.  The certification process involves providing Customs and Border Protection (CBP) with a supply chain security profile, which includes reviewing current security procedures, discovering areas in need of improvement, and developing and implementing security enhancements.  C-TPAT participants are believed to have many benefits, including a reduced number of inspections and eligibility for bi-monthly or monthly duty payments.  BTS states that C-TPAT certification reveals a standard of excellence.  They further note that certain companies are demanding certification in order to do business.

    BTS’ main C-TPAT objective for 2004 is to perform as many validations of security profiles as possible.  The C-TPAT validation process involves an on-site review of the member’s C-TPAT security profile. CBP notes that on-site validations are in progress and incorporate visiting foreign and domestic facilities.

    SMART BOX – Currently, five C-TPAT partners are working towards implementing the “Smart Box” initiative.  The Smart Box initiative encourages C-TPAT members to utilize containers equipped with security devices, ensuring its safe movement into U.S. territory. According to CBP, C-TPAT members utilizing smart containers will receive the “green lane” of commerce. At the moment, over 80 containers have been transported under this initiative and a minimum of 500 boxes is projected to move under the program by April 2004.

    The BTS Director noted that the Smart Box Initiative requires that the container is sealed and tamper evident. Additionally, the Director confirmed that supplementary criteria for sealed containers are under development but that BTS would most likely not require the implementation of any other high-tech products in the future.

    Objective #3: Identify and fill in remaining gaps in security

    BTS has formed an internal working group to focus on identifying and “filling in” remaining security gaps. BTS has also proposed a subcommittee under the Departmental Advisory Committee on Commercial Operations of CBP (COAC) for the purpose of making difficult decisions such as which security requirements will become mandatory.

    Our Consulting Team can provide you with assistance in becoming a certified C-TPAT partner. For more information on how we can help you, please contact our Consulting Team at consulting@shapiro.com.

     Source: “BTS Director of Cargo and Trade Policy Outlines Goals for Cargo Security” appearing in International Trade Today dated March 18, 2004.

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    Lapsed Period for HTS 9808.00.3000

    On March 18, 2004, U.S. Customs and Border Protection (CBP) issued Administrative Message 04-0541 stating that the criteria for HTS 9808.00.3000 emergency war material was inadvertently allowed to lapse for the period of December 1, 2003 – January 13, 2004.

    HTS 9808.00.3000 allows duty-free entry to articles/materials certified to CBP by the authorizing procuring military agency to be emergency war material purchased abroad.

    As a result, several entry summaries were bypassed or processed as paperless. CBP adds that the field operations has been informed not to send informed compliance letters to the brokers or importers during this time period.

    CBP will be requesting paper documents for all entry summaries that were processed as paperless, as they come across them; they have indicated that any assistance from the trade on expediting this process would be appreciated.

    Questions concerning this issue can be directed to Don Yando, Chief, Entry and Drawback Management, at (202)-927-1082 or Debbie Scott, Field Operation Specialist, at (202)-927-1962.

     Sources: “CBP Notice on ‘Lapsed Period’ for HTS 9808.00.3000 Emergency War Material” appearing in International Trade Today dated March 22, 2004; ”Customs and Border Protection Administrative Message #04-0531” dated March 18, 2004.

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    New Security Technology under Evaluation by Customs

    U.S. Customs and Border Protection is either evaluating, or using, a wide variety of technologies, including radio frequency identification devices and wireless and mobile computing, to enhance the effectiveness of the Container Security Initiative (CSI) and other programs designed to protect the global supply chain from terrorists.  It is also refining its older communication systems such as Electronic Data Interchange (EDI).

    Customs is currently testing high-tech containers equipped with electronic seals in an effort to prevent terrorists from opening the doors once they are locked. These “smart” containers can also be equipped with internal sensors to detect any tampering of cargo inside the boxes. By using a growing database of shipping patterns, Customs is able to target risky containers before they are loaded on vessels in foreign ports bound for the U.S.

    Customs is hoping that the combination of new technologies, the advance manifest filing requirement, and other programs will prevent containers carrying weapons of mass destruction from ever reaching U.S. shores. Customs’ goal is to further strengthen supply-chain security without delaying the huge number of legitimate shipments that enter the country every day; it is diligent in its concern not to generate unnecessary congestion by these security initiatives.

     Source: “Official: Customs Evaluation New Security Technology,” appearing in Pacific Shipper, Volume 78, Issue 50, dated Feb. 9, 2004.

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    GAO Calls for Examination of Security of the Nation’s Air Cargo

    The Government Accounting Office (GAO) has been asked by a bipartisan group of seven members of the U.S. House of Representatives to undertake what will likely be the most extensive examination of the security of the nation’s air cargo.

    On Wednesday, March 17, the lawmakers asked the GAO to determine what actions are being taken by all federal agencies to strengthen the security of air cargo transported on both commercial passenger aircraft and on all-cargo planes, heading to or from the United States. The lawmakers are asking the GAO to check if there is overlap or duplication of effort and they would also like to research similar activities of foreign governments. In addition, they want to know what steps are being taken by domestic passenger carriers, cargo carriers, and freight forwarders to improve cargo security.

    Finally, the lawmakers would like the GAO to determine whether current technology can screen 100 percent of air cargo, and what kinds of financial or other barriers exist to stop its implementation.   Transportation Security Administration (TSA) officials have recently been conducting out-reach meetings with the Forwarding community and with the airlines to understand the concerns of the shipping public, while announcing the goal to screen 100 percent of both inbound and outbound air cargo in the near future.

     Source: “GAO Asked for Air-Cargo Security Exam,” appearing in Journal of Commerce Online, dated March 23, 2004.

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    Trade Information Center Provides Assistance for Export Tariffs, Tax Information, and Resources

    The Trade Information Center (TIC), http://www.ita.doc.gov/tic under the International Trade Administration (ITA), provides online help and resource information available for those involved in U.S. exports. There are close to 100 countries with Tariff and Tax Information currently listed on the Trade Information Center website. This information is available at: http://www.ita.doc.gov/td/tic/tariff/country_tariff_info.htm

    The TIC has other export references, which include Tariff resources in the United States for agricultural and non-agricultural exports from the United States to various regions of the world. The link is available at: http://www.ita.doc.gov/td/tic/tariff/gov_resources.htm

    Other tariff resources include foreign customs contacts, information on where to find details on certain tariffs such as computer product tariffs, sending gifts, European Union (EU) tariffs and value added tax (VAT), as well as tariff and tax information for U.S. territories. All available at: http://www.ita.doc.gov/td/tic/tariff/resources.htm.

    If you are unable to find tariff and tax information for your product, you may contact 1-800-USA-TRADE (1-800-872-8723) for direct assistance from the TIC.

    Source: The Trade Information Center website available at: http://www.ita.doc.gov; “Tariff Schedules, Duty Rates, and Taxes for over 90 Countries Are Available on the Internet” appearing in International Trade Today dated March 12, 2004

    For more information about export issues, please contact our compliance department at compliance@shapiro.com.

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