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Customs NewsTransshipment Lists 01.22.08
Last week, a majority of the 12-member National Surface Transportation Policy and Revenue Study Commission recommended a number of ideas that seek to raise revenues to improve the country’s dilapidated transportation system. However, the commission’s proposals may be asking the industry and the consumer to foot a lion’s share of the bill.
The report calls for a federal container fee as well as the possibility of earmarking Customs duties to fund federal freight programs. In supporting documents, the report calls for the imposition of a Federal Freight Charge as the private sector’s contribution to a needed freight project. In outlining the features of a federal freight charge, the report only mentions the merits of imposing a container fee, suggested at $30. These fees would be deposited into a special account to be used solely for international and domestic freight programs. While the report suggests the need for a federal container fee to pay for roads, the report says nothing on federal preemption of state and local container fees. Already, the ports of Los Angeles and Long Beach plan to impose a container fees to pay for roads in southern California. At the same time, California State Senator Alan Lowenthal plans to move forward with his legislation that would impose state-wide container fees. The imposition of one or any combination of container fees on cargo would create an enormous financial burden to the manufacturers, shippers, retailers and ultimately, the consumers of goods that travel through the nation. The panel’s study also calls for a possible increase of the federal gas tax to as much as 25 to 40 cents per gallon over the next five years. The tax would then be indexed for inflation. The gas tax and other user fees would go into a new surface transportation trust fund, which would replace an existing highway trust fund that is projected to have as much as a $5 billion deficit next year. Three panel members, including Transportation Secretary Mary Peters and former deputy Transportation Secretary Maria Cino, offered dissenting views on the gas tax increase and other findings. They dispute the majority view that at least $225 billion in transportation investment is needed annually over the next 50 years to upgrade highways, transit and passenger rail. The three commissioners also doubt it is politically feasible for Congress and states to approve a gas tax increase amid high gas prices. Certainly, an increase to the gas tax would also regressively hit the low and moderate-income consumer especially hard. In light of seemingly always-rising gas prices, any move to increase the gas tax would receive strong push back from people nation-wide. 01.22.08
On January 14, the Ports of Long Beach and Los Angeles voted unanimously to increase tariffs to fund infrastructure projects worth $1.4 billion. The hike comes less than a month after the ports approved another program to generate $1.6 billion to replace some 17,000 trucks used in the port. The two plans, when put together, could add as much as $250-$500 per container coming through the ports. The fee is initially set at $30 per FEU and will go into force on January 1, 2009 as the first of several projects are completed. The fee will increase to $36 per FEU when the Gerald Desmond Bridge project is completed in 2010, and will continue to rise to an undetermined amount in 2012 when the SR-47 Expressway project is completed. The fee will then sunset when all projects are fully funded, around 2024.
The fee is problematic for several reasons. First, cargo owners are to pay the fee and marine terminal operators are to collect. Yet, no working relationship exists between the two. Secondly, the fee is to be paid by cargo owners moving freight by both rail and truck. However, roughly 60% of the project costs flow to road, bridge and highway projects with the remainder going towards rail projects. Shippers solely moving freight by this intermodal method would largely be subsidizing road and highway projects while receiving no benefit of their own. While these concerns have been expressed to port staff several times over the course of the previous year, port staff ignored these ideas and chose to collect the fee directly from cargo owners and include rail projects in their plan. 01.14.08
In a letter to AAFA on January 10, Janet Labuda, Customs and Border Protection, Director, Textile/Apparel Policy and Programs, detailed the results of recent textile product verification team visits to foreign factories. The letter notes that CBP officials visited nearly 500 targeted factories in the Middle East, Asia, Central America and Asia. Factories that are identified as high risk as a result of this exercise (unable to provide production records to satisfy CBP of the origin of the merchandise) will have shipments scrutinized more closely at CBP ports until CBP is satisfied that they can prove production. Earlier, CBP had released details of its Fiscal Year 2007 trade enforcement activity.
11.27.07
The House of Representatives approved a provision that would ban funding for a pilot program allowing long-haul Mexican trucks to operate across the United States as part of a FY2008 spending bill to provide new funds to upgrade the nation’s dilapidated highway system.
Cross-border trucking between Mexico and the U.S., a NAFTA-related commitment, has been delayed for years by legal challenges, safety concerns, and opposition from the Teamsters Union. Despite this opposition, the Bush administration had moved to implement this program, using existing funds from the Department of Transportation (DOT) that allow as many as a hundred Mexican trucking carriers to send trucks to the U.S. for a year. In September, DOT cleared three Mexican trucking companies to make long-haul deliveries in the U.S., and eliminate costs related to transferring goods to U.S. trucks at the border. The bill, which must still pass the Senate, faces a presidential veto because it exceeds Bush’s budget ceiling. 11.27.07
The US Department of Homeland Security's Bureau of Customs and Border Protection (Customs) issued a memorandum to its field offices November 13 modifying its detention and penalty policy for certain textile and apparel shipments. This memo provides that while shipments identified based on the findings of a Customs Textile Production Verification Team (jump team) (TPVT) are usually not released until their country of origin has been verified through the presentation of production records, in certain cases shipments from companies approved under the Importer Self-Assessment (ISA) program will not be detained. 10.1.07
California Governor Arnold Schwarzenegger and California State Senator Alan Lowenthal announced September 5 that SB 974, legislation that would have imposed a container fee on all cargo moving through California ports, would be delayed for a year while efforts are made to develop alternatives through some newly formed state working groups. In the wake of this announcement, the Ports of Long Beach and Los Angeles announced that they plan to move forward, by the end of September, with their Clean Air Action Plan (CAAP), which includes the possible institution of both a $52 per FEU container fee on all loaded containers and a proposed truck replacement plan to fund CAAP. The truck program would result in additional drayage fees of $250 per container and could easily put some of the smaller trucking companies out of business. AAFA will continue to monitor this quick changing situation closely. The US Department of Homeland Security's Bureau of Customs and Border Protection (Customs) announced September 20 that it has issued final rules on the classification of unisex footwear. Unisex footwear typically has a tariff rate 1.5 percent higher than those classified for males or females. The final rules, which go into effect October 22, for the most part reverse an earlier preliminary ruling that would have made it much harder to classify footwear for men and boys or women and girls and, therefore, obtain the lower gender-specific duty-rate.
8.27.07 Voting 371 to 40, the US House of Representatives on July 27 followed the US Senate, which voted 85 to 8 on July 26, to approve legislation implementing the remaining recommendations of the 9/11 Commission. President George W. Bush is expected to sign the legislation into law. The bill includes an AAFA-opposed provision requiring all US-bound cargo to be screened for radiation and radiological devices before leaving the foreign port. The so-called "100 percent screening" provision must be implemented at all foreign ports within five years. AAFA opposes 100 percent scanning because current technology is unreliable, with a 1.5 percent false positive rate, finding positive radiation levels with such benign cargo as bananas. With over 15 million containers entering US ports every year, this means over 20,000 containers would be held for physical inspection over false positives, straining US Customs staff and bringing commerce to a virtual halt. AAFA instead supported an ongoing pilot at three foreign ports to test and improve current technology. 7.27.07 The current contract between the Office and Clerical Unit (OCU) and marine terminals in southern California expired on June 20. However, negotiators for the OCU local 63 and the 14 employers are still negotiating a new 3 year contract. In the negotiations, the OCU has demanded a 75 percent increase in pay and benefits, but the negotiators for the employers are trying to negotiate a more modest increase. Earlier this month, OCU local 63 stated that if negotiations did not conclude “soon” pickets would be established. Furthermore, OCU officials claim that the union representing the port workers, the International Longshore and Warehouse Union (ILWU), pledged not to cross the pickets. If true, it would effectively create a port-wide job action and shut down of the ports in Southern California. Despite the threat of a picket, the two sides continue to talk. House and Senate negotiators are working to resolve differences over a 100 percent container-scanning mandate as part of legislation to implement the 9-11 Commission recommendations. Although the House is insisting upon a unilateral 100 percent scanning mandate, the Senate is pushing for framework approach that relies upon international cooperation and builds upon the risk-based approaches already in place to address cargo and container security. Although AAFA supports efforts to constantly promote greater cargo and container security, AAFA has been actively lobbying against artificial 100 percent scanning mandates since these approaches are unlikely to advance security and will only create additional burdens for legitimate commerce. Most recently, AAFA President and CEO Kevin M. Burke sent a letter opposing a 100 percent scanning mandate. Congressional leaders have indicated they would like the underlying legislation submitted to the President by the end of the month. With several other high profile disputes in the legislation resolved – such as whether certain Homeland Security workers can engage in collective bargaining – this goal looks like it may be achieved. An aggressive program designed to reduce truck emissions at Southern California’s ports received considerable opposition from bulk shippers, importers, trucking companies and other industries, delaying its scheduled July rollout. The Clean Truck Program (CTP) called for the replacement or retrofit of each of the estimated 16,000 harbor trucks and mandated that trucking companies receive a concession or permit to be able to move cargo through southern California’s marine terminals. However, for a company to receive this concession, CTP would have required companies to demonstrate that its fleet of trucks meets strict clean-burning standards among other arduous criteria. Such standards would have increased costs from $200 to $500 per container, which port users publicly explained would be particularly burdensome, if not crippling, to the movement of goods through California’s ports. As a result, on June 27, the ports announced that implementation of the plan would be postponed until staff reviewed comments and developed an economic impact study to ascertain the true cost of their plan. Yet, even if the ports move forward with the CTP as currently outlined, the ports could face a costly court battle, possibly leading to an injunction forbidding any future implementation of CTP. 7.10.07 On June 22, U.S. Customs and Border Protection (CBP) published a Federal Register notice outlining interim regulations for the Haitian Hemispheric Opportunity through Partnership Encouragement (``HOPE'') Act of 2006. The notice also solicits public input. Comments must be received by August 21 at Trade and Commercial Regulations Branch, Regulations and Rulings, U.S. Customs and Border Protection. AAFA expects to submit comments on this program. For more information or to have perspectives reflected in AAFA comments, please contact Steve Lamar at 703.797.9041.
6.20.07
The US Department of Homeland Security's Bureau of Customs and Border Protection (Customs) has announced that Jayson Ahern will be the new Deputy Commissioner of Customs. Ahern currently occupies the position of Assistant Commissioner of Field Operations.
5.31.07
The US Department of Homeland Security's Bureau of Customs and Border Protection (Customs) issued final regulations May 25 for submitting and receiving duty refunds on imports of apparel and textiles (including textile travel goods) under "retroactivity" provisions of the US/Central America-Dominican Republic Free Trade Agreement (CAFTA). The notice states the applications for duty refunds will be accepted until 90 days after the last signatory country enters CAFTA. Costa Rica is the only CAFTA country yet to approve and implement the agreement. They are expected to join CAFTA sometime in early 2008.
5.11.07
Eleven members of Congress sent a letter May 1 to Ralph Basham, Commission of the US Department of Homeland Security's Bureau of Customs and Border Protection (Customs), regarding the ongoing Customs footwear textile outsole issue. The letter, sent on behalf of the US footwear industry, opposes any efforts by Customs to overturn the long accepted practice of allowing lower duties for fabric upper, rubber bottomed footwear that have fabric imbedded or otherwise permanently attached to the sole of the shoe. Over 200 million pairs of shoes, or almost ten percent of all shoes sold in the United States, use this application. If Customs overturns the current practice and reclassifies these shoes, the US footwear industry could pay an additional $200 million a year in higher duties annually. Hardworking American families, in turn, could be forced to pay an additional $500 million in the form of higher prices on the typically lower-priced and children's shoes that use this application. With the support of AAFA's Customs counsel, the law firm of Sandler, Travis & Rosenberg, AAFA continues to work with the Footwear Distributors and Retailers of America (FDRA) and individual US footwear firms to gain Congressional and Bush administration support to prevent Customs from overturning the current policy allowing the use of textile outsoles to gain lower duties.
4.26.07
AAFA sent a letter April 16 to California Senator Alan Lowenthal opposing SB 974, legislation that would impose a $60 per container fee on all containers leaving or entering the Ports of Los Angeles, Long Beach and Oakland to raise revenue for environmental projects. The California State Senate's Transportation Committee is tentatively scheduled to consider the bill this week. (Nate Herman)
4.10.07
Representatives from AAFA, the Footwear Distributors and Retailers of America (FDRA) and interested footwear firms met with Assistant Secretary for the Private Sector Office Alfonso Martinez-Fonts at the US Department of Homeland Security on March 28 to discuss the ongoing Customs footwear textile outsole issue. While Assistant Secretary Martinez-Fonts listened to the footwear industry's concerns and offered to support the industry's efforts to obtain a meeting with Customs Commissioner Basham, he seemed less receptive to supporting the industry's efforts to prevent the US Department of Homeland Security's Bureau of Customs and Border Protection (Customs) from overturning the long accepted practice of allowing lower duties for fabric upper, rubber bottomed footwear that have fabric imbedded or otherwise permanently attached to the sole of the shoe. If Customs overturns the current practice, the US footwear industry could pay $200 million in additional duties annually. The industry, with the support of AAFA's Customs counsel, the law firm of Sandler, Travis & Rosenberg, continues to work to gain Congressional and Bush administration support to maintain the status quo. (Nate Herman).
3.12.07
Due to intense opposition, the bill's lead sponsor has pulled AAFA-opposed legislation in the Washington State Senate that would have imposed a new $100 per container fee on containers moving through the Ports of Seattle and Tacoma. Instead, new legislation now proposes a study to evaluate whether a new container fee would lead to cargo diversion away from Washington State ports.
3.5.07
AAFA sent letters March 5 to Customs Commissioner W. Ralph Basham as well as numerous Bush administration officials urging them to prevent a decision by Customs to overturn current rulings applying to textile outsole (fabric bottom) footwear. Instead of continuing the current standard that allows canvas upper, rubber bottom footwear to receive lower duty-rates as long as fabric is somehow embedded or otherwise permanently affixed to the sole of the shoe, AAFA has learned that Customs is proposing a new wear test that would not only require that the fabric be imbedded into the sole, but that the fabric on the outer sole survive three months of regular wear before wearing off. Such a change would likely cost US footwear firms at least $200 million a year in additional duties. AAFA continues to work with the Footwear Distributors & Retailers of America (FDRA), the law firm of Sandler, Travis & Rosenberg and interested US footwear companies in trying to prevent any significant changes from the current 30+ Customs rulings allowing the use of textile outsoles.
On February 23, California Senator Alan Lowenthal re-introduced SB 974, which calls for a $60 per container fee at the ports of Los Angeles, Long Beach and Oakland to pay for goods movement infrastructure investments and goods movement-related pollution reduction programs. The same bill passed the California General Assembly last year, but Governor Arnold Schwarzenegger (R) vetoed the measure. Many experts feel that the political environment has changed, which could force Schwarzenegger to sign the measure if it reaches his desk again. This measure follows the introduction of a similar measure in Washington State.
The US Department of Transportation announced February 23 that Mexican trucks, once they receive US insurance and meet US safety standards, can now transport cargo to anywhere in the United States.
1.31.07 Echoing the ongoing battle in California on this issue, the Washington State Senate is currently considering legislation that would impose a new $100 container fee on all containers entering or leaving the Ports of Seattle and Tacoma. The purpose of the new fee would be to pay for unspecified infrastructure improvements. Prospects for approval of the measure are uncertain at this time.
1.17.07 The US Department of Homeland Security's Bureau of Customs and Border Protection (Customs) issued a new directive January 4 extending the deadline for refund claims under the retroactivity provisions of the US/Central America-Dominican Republic Free Trade Agreement (CAFTA) until 90 days after the last country joins CAFTA. Customs will soon publish a Federal Register notice confirming this extension.
The US Department of Homeland Security's Bureau of Customs and Border Protection (Customs) has floated a preliminary proposal to impose additional reporting requirements on US importers as part of its current rules requiring manifests 24 hours in advance of cargo leaving foreign ports. In its "10 + 2" proposal, Customs has selected the 12 proposed new data elements because of their probative value and because Customs believes they are readily available in current logistics processes. Certain proposed elements, however, are not a part of the current data set that is required for importation (such as information concerning the original manufacturer) or presumes that the importer is the party most likely to have direct knowledge of the 12 proposed data elements. Comments are due February 5.
11.20.06
A November 14 report sponsored by the Natural Resources Defense Council and other groups claims that US apparel and footwear firms (and all other importers/exporters moving freight through the Ports of Los Angeles/Long Beach) are responsible for rising pollution related health costs in California, including premature deaths, throat cancer and other illnesses. In a message reminiscent of the fight over new container fees earlier this fall, the report recommends that importers and exporters pay for fixing these health costs through a $30 container fee. This report is the first salvo in a likely new battle over container fees and environmental costs expected in California, and possibly elsewhere, next year.
10.12.06 On September 30, Congress approved the AAFA-supported Security and Accountability for Every (SAFE) Port Act (H.R. 4954) with the passage of the bill’s conference report by a vote of 409 to 2 in the House and by Unanimous Consent in the Senate. The final bill, which now goes to President Bush for his signature, does not include an AAFA-opposed measure that would have required 100 percent screening of all incoming cargo before it left foreign ports. Instead, the legislation creates a pilot screening program at three foreign ports.
9.19.06 The US Senate on September 14 unanimously approved (98-0) legislation to improve port security (H.R. 4954). The AAFA-supported legislation, which is similar to the Security and Accountability for Every (SAFE) Port Act passed by the US House of Representatives in May, would require Customs to put in place pilot programs and increase funding to improve technology that would eventually allow screening of virtually all incoming cargo for nuclear materials. The legislation would also increase requirements for participants in Customs' Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terrorism (C-TPAT) program.
The Senate successfully fought off two AAFA-opposed amendments that would have immediately required 100 percent radiation screening of US-bound cargo before it left foreign ports. With time running short before the end of the legislative session and November Congressional elections, the House and Senate must now meet in conference to reconcile the differences between the House and Senate-passed versions of the legislation. AAFA sent a September 6 letter to California Governor Arnold Schwarzenegger urging him to veto SB927, which would require new container fees at California ports. Governor Schwarzenegger has until the end of September 2006 to sign or veto the bill, but could make a decision as early as next week.
SB927 requires the ports of Los Angeles and Long Beach to impose a $60 container (feu) fee to fund undefined transportation, clean air and port security programs. AAFA and others believe SB927 is unconstitutional on several grounds and, more importantly, will drive business away from California ports. While Governor Schwarzenegger has vetoed such measures in the past, a series of powerful national and state interests have lined up to support the bill, blaming poor air quality and road congestion in southern California on big corporations moving freight through San Pedro Bay. Several polls suggest that these arguments are playing well among likely California voters. In fact, the Los Angeles Times and other major newspapers have already issued editorials in support of SB927. Therefore, AAFA urges AAFA members to immediately mail and fax letters to Governor Schwarzenegger with the subject line -- Attention: Legislative Unit: Veto Request -- urging him to veto the legislation (see AAFA letter for address and fax number). Please fax copies of your letter to Mr. Richard Costigan, Deputy Chief of Staff and Legislative Affairs Secretary (Fax# 916.327.1009) and Mr. Michael Prosio, Deputy Legislative Secretary (Fax# 916.327.1009). Please also share your letters with AAFA's Nate Herman. 9.11.06 AAFA sent a September 7 letter to California Governor Arnold Schwarzenegger urging him to veto SB927, which would require new container fees at California ports. Governor Schwarzenegger has until the end of September 2006 to sign or veto the bill, but could make a decision as early as next week. SB927 requires the ports of Los Angeles and Long Beach to impose a $60 container (feu) fee to fund undefined transportation, clean air and port security programs.
AAFA and others believe SB927 is unconstitutional on several grounds and, more importantly, will drive business away from California ports. While Governor Schwarzenegger has vetoed such measures in the past, a series of powerful national and state interests have lined up to support the bill, blaming poor air quality and road congestion in southern California on big corporations moving freight through San Pedro Bay. Several polls suggest that these arguments are playing well among likely California voters. In fact, the Los Angeles Times has already issued an editorial in support of SB927 Therefore, AAFA urges AAFA members to immediately send letters to Governor Schwarzenegger urging him to veto the legislation. Further, AAFA encourages AAFA member CEOs and other senior executives to call the governor's Chief of Staff Susan Kennedy at 916.445.5106 to register their opposition to SB927. Please share with AAFA your letters and phone calls. 9.7.06 The California General Assembly on August 30 passed AAFA-opposed SB 927 by a narrow vote of 41-36. The California Senate approved the measure shortly afterwards. Governor Arnold Schwarzenegger has until the end of September 2006 to sign or veto the bill.
SB 927 requires the ports of Los Angeles and Long Beach to impose a $60 container (feu) fee to fund undefined transportation, clean air and port security programs. The text of the bill specifically identifies cargo owners as the sole entity responsible for paying the fee. The fee, if enacted into law, is expected to generate about half a billion dollars a year. AAFA and others believe the container fee structure outlined in SB 927 is unconstitutional on several grounds and, more importantly, will drive business away from California ports. While Governor Schwarzenegger has vetoed such measures in the past, a series of powerful national and state interests have lined up to support the bill, including the American Lung Association, the Natural Resources Defense Council and the influential California Nurses Association. These groups have placed responsibility for poor air quality and road congestion in southern California on big corporations moving freight through San Pedro Bay. Several polls suggest that these arguments are playing well among likely California voters. AAFA will continue to lobby Governor Schwarzenegger to veto SB927 and encourages AAFA members to do the same. AAFA blasted US import restraints on apparel, footwear and travel goods in comments submitted August 11 to the US International Trade Commission (ITC). The comments, submitted for the ITC's annual report on The Economic Effects of Significant Import Restraints detailed the immense costs these restraints have on US consumers, particularly low-income families while providing little, if any, benefit to those the import restraints are supposed to protect.
The World Customs Organization (WCO) recently released its first-ever review of customs and counterfeiting. The report provides a global overview of the increase in the trade and trafficking in counterfeit and pirated goods, while also demonstrating the efforts by Customs administrations worldwide to combat the problem. The trends and statistics uncovered by the WCO include more than 4,000 cases involving the seizure of more than 166 million counterfeit or pirated articles. Fine leather goods (+46 million articles valued at almost $3 billion) was top with products of the textile sector (+3 million articles) also making the top five.
8.11.06
The US Department of Homeland Security's Bureau of Customs & Border Protection (Customs) issued final regulations for the Andean Trade Promotion & Drug Eradication Act (ATPDEA) on August 7, less than five months before ATPDEA is set to expire. The final regulations attempt to clarify many of the uncertainties generated by Customs' interim regulations, including ATPDEA's provisions on apparel and footwear. Customs has yet to issue final regulations for the Caribbean Basin Trade Partnership Act (CBTPA) and the African Growth and Opportunity Act (AGOA) more than five years after the programs were implemented.
8.1.06
The AAFA-supported Supply Chain Security Coalition (SCSC) sent a July 27 letter to Senate leadership urging the US Senate to quickly pass legislation to improve security at the nation's ports. The letter outlines what the US business community believes should and should not be included in any such legislation.
7.26.06 There is growing support in California's General Assembly for legislation sponsored by California Senator Alan Lowenthal (S.B. 760) that would impose a new tax on containers entering the Ports of Los Angeles/Long Beach. The push for a new container tax comes on the heels of ongoing discussions on how to fund the Clean Air Action Plan proposed by the ports.
4.25.06 |
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