U.S. – Japan Trade Agreement Update

The U.S. – Japan Trade Agreement officially took effect on Wednesday, January 1st, 2020. Per our previous Shap Flash, the Agreement will actively reduce agricultural/industrial tariffs and digital trade barriers between the two countries.

In order to receive preferential treatment under this new Agreement, a good must be originating and meet all the requirements of the U.S.-Japan Agreement.

Annex II to the Agreement specifies the rules of origin (beginning on page 13) used to determine if a good qualifies for preferential tariff treatment or “originates” under the Agreement.  The product-specific rules specify the level of change of tariff classification that non-originating materials must undergo.  General Note 36 will be added to the HTSUS and will include the requirements of the Agreement. The links to the US-Japan Trade Agreement text and related documents are below.

According to CBP, in order to benefit from the reduced tariffs offered under the Agreement, the following stipulations must be met:

  1. Country of Origin must be ‘JP’.
  2. Country of Export must be ‘JP’.
  3. Once programmed in the Automated Commercial Environment (ACE), the Special Program indicator ‘JP’ must be placed before the eligible tariff number to make the claim.

** Claims for preferential treatment under this Agreement are not exempt from the merchandise processing fee (class code 499 and class code 311).

Please note:

According to CBP, ACE will be programmed to accept the “new special program indicator ‘JP’ as a prefix to the eligible tariff number” effective January 14th, 2020.  For any applicable goods entered from January 1st, 2020 through January 13th, 2020, CBP states that, “importers must pay duties on qualifying goods under the Agreement and request a preferential tariff retroactive claim by filing a post summary correction (PSC) to request the duty refund.”

To visit the USTR’s website for a complete overview of the Agreement, please click HERE.

If you are a current Shapiro client, your account representative will be in touch with you shortly should you be able to take advantage of the reduced tariffs offered under the Agreement.

Shapiro will continue to monitor the situation and provide updates as they become available.

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