Customs News 2004
11.22.04
The US Bureau of Customs and Border Protection (Customs) and the US International Trade Commission are currently considering a proposal by the World Customs Organization (WCO) to modify the classification of footwear with textile outsoles under the Harmonized Tariff Schedule (HTSUS). The proposal addresses whether a shoe with a textile outsole where the textiles on the outsole wear off after only a few wearings should be classified as having a textile outsole, which has a much lower tariff-rate. Customs has already issued a number of rulings on this issue and it is trying to determine if the WCO proposal meets its needs. If approved, the modification would take effect January 1, 2007.
The Transpacific Stabilization Agreement, which represents virtually all of the major shipping lines, announced October 29 that it recommends that all shipping lines raise their prices on all Pacific-based freight by at least 11-12 percent in 2005. The group blames port and inland congestion in the United States and Asia as well as delays moving through the Panama Canal caused by a dramatic increase in cargo volumes from Asia, particularly out of China, as the main reasons behind the recommended price increases.
11.17.04
The US Bureau of Customs & Border Protection (Customs) advised AAFA November 9 that they are finding a significant number of instances, going back to December 2003, where bras (Category 349/649), dressing gowns (Category 350/650), and knit fabric (Category 222), which have been entered as having come from Macau or Hong Kong, are really coming from China (based on an examination of the import documentation). Customs is preparing to adjust the fill rates on the China safeguard quotas on each product to show that these goods should have been applied against the quota when they were originally entered. This will obviously increase the quota fill rates to the extent they are not already filled, and may have other consequences (penalties, holding shipments, etc.) related to how Customs addresses the overfills. CITA and Customs have advised that the fill rate adjustment would occur in the next few days and bra entries are on hold until the adjustments are made. Please note that the safeguard quota for US imports of Chinese dressing gowns already embargoed on November 1. AAFA is working with Customs and CITA to reduce the uncertainty caused by this situation.
10.26.04
With delays starting to extend beyond a week due to shortages of dockworkers and other issues, a coalition of major carriers announced that, effective November 15, it will impose a "congestion surcharge" on all shipments entering or leaving the Ports of Los Angeles/Long Beach of $200 per 20 foot container and $400 per 40 foot container. At the same time, the Port of Long Beach recently announced that the Ports' much-vaunted program to alleviate the delays by expanding the ports to round-the-clock operations, called PierPass, will be delayed indefinitely because of a shortage of longshore labor and delays in establishing a collection system. In response, many US apparel and footwear firms have begun to explore the use of other ports, such as the West Coast ports of Oakland, Portland and Seattle-Tacoma as well as ports in the Gulf like Houston and New Orleans and East Coast ports like Baltimore and Norfolk. The Ports of LA/Long Beach handle 40 percent of all shipping containers entering the United States, including 2/3 of all imports from Asia. The situation is expected to get worse when worldwide apparel and textile quotas are removed on January 1, 2005.
On October 15, the US Department of Homeland Security's Bureau of Customs and Border Protection (Customs) sent a directive to all ports ordering them to review entries of goods that may be subject to the current China textile safeguard quotas - brassieres (Category 349/649), dressing gowns and robes (Category 350/650) and knit fabric (Category 222) - that will remain in place through December 23, 2004. Customs has reviewed numerous entries not claiming China as the country of origin for the above categories and has determined, based on entry documentation, that the country of origin was indeed China. The directive orders the ports to pursue gross negligence penalties against importers and brokers if the entry documentation has clearly identified these articles as China as the country of origin. The directive urges importers and brokers to review their entries of the subject categories to ensure that the proper country of origin has been declared.
The US Department of Homeland Security's Bureau of Customs and Border Protection (Customs) announced that it has moved its Fifth Annual Trade Symposium to January 12-14, 2005. The Symposium, titled Security and Facilitation of Trade: The Way Forward, will include discussions on Trade Act of 2002 implementation, the Container Security Initiative (CSI) and other relevant border security issues. The Symposium will be held in Washington, DC.
10.15.04
An AAFA-support coalition sent a letter October 4 to key members of the US House of Representatives opposing a provision in S 2279, a Senate-passed bill dealing with maritime transportation security issues. The bill contains a provision calling for the "Security of Piers and Wharfs" that could cost shippers an enormous headache. According to the "Security of Wharfs and Piers" provision, all uncleared containers sitting at dock longer than 7 days are subject to a $5,000 fine levied by Customs and are to be removed to a general order warehouse where the container will undergo an intrusive inspection. The letter urges the House to oppose the provision when it considers the legislation. In a related note, an AAFA-supported coalition successfully lobbied for the defeat of a proposed amendment to the US Senate's September 11th Commission Reform legislation that would have required the US Department of Homeland Security's Bureau of Customs and Border Protection, within two years, to manually inspect at least 10 percent of the containers offloaded at US ports. Currently, about 1 percent of all incoming containers are manually inspected and another 4 percent are inspected through other non-intrusive means (x-rays, scans, etc.). The amendment was ruled "non-germane" to the 9/11 bill and dropped on October 5. AAFA also sent a letter October 8 to the Senate leadership urging them to support an amendment to the 9/11 bill ensuring that oversight of the revenue and trade facilitation functions of the Senate Finance Committee - a role that the Committee has played for the last two centuries - would be retained in order to ensure that important and necessary efforts to improve cargo security don't bring international trade to a halt.
9.14.04
The US Senate approved by voice vote on September 10 an amendment to the proposed FY 2005 Homeland Security Appropriations Bill (HR 4567) that would extend Customs user fees, now due to expire in March 2005, to September 2005. The Senate amendment would use the fees to pay for border security improvements and other homeland security needs. The appropriations legislation must still pass the full Senate, expected sometime this week, and then must be reconciled with the House-version of the legislation before being sent to President George W. Bush for his signature.
8.24.04
The U.S. Department of Homeland Security's Bureau of Customs and Border Protection (Customs) announced August 17 the dates when the advanced manifest rules for truck cargo entering the United States will go into effect. The new rules require all truck cargo to submit all advanced manifest information to Customs at least one hour before arrival in the United States or 30 minutes for shipments qualifying under the FAST (Free and Secure Trade) program. All trucks entering the United States from Mexico and trucks entering the United States through the biggest ports of entry from Canada must comply with the new rules by November 15, 2004 while all other ports of entry will be phased-in by January 14, 2005.
8.10.04
On July 28, the U.S. Department of Homeland Security's Bureau of Customs and Border Protection issued a notice outlining how it expects to deal with the so-called retroactivity provisions in the recently passed AGOA III bill. Among other things, Customs' instructions do not permit duty refunds relating to the legislation's changes to the African Growth and Opportunity Act's (AGOA) provisions on collars and cuffs. AAFA has taken issue with this interpretation, and is working with Congress and Administration officials to determine if it might be reversed.
7.12.04
On July 1, all ports and ships worldwide had to be certified by the International Maritime Organization (IMO) to be in compliance with the new International Ship and Port Facility Security (ISPS) Code. The U.S. Coast Guard has made clear that all foreign-flagged ships entering U.S. ports as well as the foreign ports of origin for those ships must be ISPS-certified or the Coast Guard will either board ships at sea to perform security inspections or deny those ships entry to U.S. ports. According to a June 30 report from the IMO, only 88.9 percent of all ships and 53.4 percent of all ports are currently ISPS compliant. According to a July 6 press release, of the 232 ships arriving in U.S. ports from July 1-5, the Coast Guard denied entry to 19 ships and detained 30 ships in port. The Coast Guard had already certified 151 of the 232 ships as ISPS-compliant prior to July 1. The Coast Guard claims its strict enforcement of ISPS has so far caused little disruption to trade.
6.4.04
AAFA sent a letter May 17 to the U.S. Department of Homeland Security's Bureau of Customs and Border Protection (Customs), urging Customs to quickly fix the leather/plastic coating issue affecting all leather goods imports. Customs has started to classify leather goods (handbags, portfolios, briefcases, travel bags, etc.) as having "an outer surface of plastic sheeting." As a result, Customs has charged a number of U.S. firms with significantly higher duty-rates on their imported leather goods. The AAFA letter urges Customs to return to its decades-old standard of classifying leather goods, i.e. if the coating or finish is 0.15 mm or less in thickness, the item is classified in HTS 4202 as having an "outer surface of leather."
4.26.04
The U.S. Department of Homeland Security's Bureau of Customs and Border Protection (Customs) announced April 12 that, by July 12, virtually all rail cargo from Canada or Mexico must provide Customs with advanced manifest information at least two hours prior to arrival in the United States. The advanced manifest information will not be required at some smaller ports until August 12 or September 9.
4.13.04
Thanks to an AAFA-supported industry effort, the Senate Commerce, Science and Transportation Committee voted April 8 to strip the port security use fee provisions in legislation to improve port security - The Maritime Transportation Security Act of 2004 (S. 2279). In echoing calls from industry, many committee members instead suggested that current Customs tariffs and duties be used to pay for improved port security. AAFA had joined with over 80 other prominent business organizations in sending an April 7 letter to the Chair and Ranking Member of the Committee, Senators John McCain (R-AZ) and Fritz Hollings (D-SC), strongly opposing additional port security fees.
3.16.04
AAFA, in conjunction with the Travel Goods Association (TGA), has begun lobbying Congress to fix a decision by the U.S. Department of Homeland Security's Bureau of Customs & Border Protection (Customs) that has imposed significantly higher duty-rates on imported leather goods. Based on a liberal interpretation of an August 2002 Customs ruling, Customs has started to reclassify leather goods (handbags, portfolios, briefcases, travel bags, etc.) as having "an outer surface of plastic sheeting." Customs has interpreted the ruling to mean that even the most minute finish on a leather good (.01 MM) constitutes plastic sheeting (the previous standard was .15 MM), and, therefore, has charged a number of U.S. firms with a significantly higher duty-rate on their imported leather goods. To our knowledge, only the airports in the New York City area have enforced this ruling to date. Customs has told AAFA/TGA that legislation is the only way to fix this problem despite numerous efforts by AAFA/TGA to inform Customs that virtually all leather goods have some sort of finish to prevent staining, scratching or bleeding. In many cases, the finish is not even plastic, but one of many types of resins used in the finishing process. AAFA will reach out to its members over the next few weeks for assistance in lobbying Congress to approve a legislative fix to this problem. Please stay tuned for more information as the situation develops.
3.3.04
Effective March 22, the Committee for the Implementation of Textile Agreements (CITA) announced that visas required to accompany all U.S. textile and apparel imports from Vietnam subject to quota must be submitted to the U.S. Department of Homeland Security's Bureau of Customs & Border Protection (Customs) electronically under the Electronic Visa Information System (ELVIS).
In an unprecedented move, CITA announced February 24 that it has ordered the U.S. Department of Homeland Security's Bureau of Customs & Border Protection (Customs) to immediately cancel its December 16, 2003 directive requiring Customs to deny entry of all product from the Daewoo El Salvador, S.A. de C.V. apparel factory for two years. In its announcement, CITA stated that "information received since that time (December 16)" had prompted it to cancel the directive. CITA, however, declined to state what that information entailed.
3.4.04
The General Accounting Office (GAO), Congress' watchdog agency, issued a new report on January 26 that criticized the U.S. Department of Homeland Security's Bureau of Customs & Border Protection (Customs) for failing to create an effective system to prevent the illegal transshipment of apparel into the United States. While acknowledging the difficulty of inspecting more than three million textile and apparel shipments each year for evidence of illegal transshipment, the GAO report found numerous delays in Customs issuing lists of foreign entities suspected of illegal transshipment. Furthermore, the GAO criticized Customs' handling and tracking of in-bond shipments, i.e. shipments imported into the United States but then re-exported to third countries. The GAO did express approval of Customs' program of in-country inspections of foreign factories, but felt that the results of those inspections must be made public more quickly. Customs has just received funds from Congress that will allow it to hire 48 new Customs inspectors specifically to deal with textile transshipment. In addition, the report fails to note that the elimination of quotas on most textile and apparel imports on December 31, 2004 will eliminate most of the incentives for illegal transshipment.
1.28.04
The U.S. Department of Homeland Security's Bureau of Customs & Border Protection (Customs) announced January 14 that it made 6,500 seizures of counterfeit goods in 2003 worth $94 million. Apparel ($14 million), footwear ($2.6 million) and handbags, wallets and backpacks ($11.5 million) accounted for almost a third of the confiscated counterfeit products. To learn more about how your company can work with Customs to stop the flow of counterfeit products that infringe on your copyrights and trademarks, please go to Customs' Web site. Posted January 28, 2004.
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