• Proposed Revocation of Three Ruling Letters and Proposed Revocation of Treatment Relating to the Tariff Classification of Wireless Headphone Sets from China and an Undisclosed Country
  • In NY N022195, NY N022204 and NY N240329, CBP classified wireless headphone sets in heading 8517, HTSUS, specifically in subheading 8517.62.00, HTSUS, which provides for “Other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network): Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus.” CBP has reviewed NY N022195, NY N022204 and NY N240329, and has determined the ruling letters to be in error.
  • It is now CBP’s position that the wireless headphone sets are properly classified in heading 8518, HTSUS, specifically in subheading 8518.30.20, HTSUS, which provides for “Microphones and stands therefor; loudspeakers, whether or not mounted in their enclosures; headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers; audio-frequency electric amplifiers; electric sound amplifier sets; parts thereof: Headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers: Other.”
• Country of Origin Marking Requirements for Containers or Holders
  • Section 304 of the Tariff Act of 1930, as amended, 19 U.S.C. 1304, requires each imported article of foreign origin, or its container, to be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article or container permits, with the English name of the country of origin. The marking informs the ultimate purchaser in the United States of the country of origin of the article or its container. The marking requirements for containers or holders of imported merchandise are provided for by 19 CFR 134.22(b).
  • CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). This proposed information collection was previously published in the Federal Register (Volume 87 FR Page 39108) on June 30, 2022, allowing for a 60-day comment period. This notice allows for an additional 30 days for public comments.
  • Written comments and suggestions from the public and affected agencies should address one or more of the following four points: (1) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) suggestions to enhance the quality, utility, and clarity of the information to be collected; and (4) suggestions to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
  • The comments that are submitted will be summarized and included in the request for approval. All comments will become a matter of public record.
• Delivery Ticket
  • CBP Form 6043, Delivery Ticket, is used to document transfers of imported merchandise between parties. This form collects information such as the name and address of the consignee; the name of the importing carrier; lien information; the location of where the goods originated and where they were delivered; and information about the imported merchandise. CBP Form 6043 is completed by warehouse proprietors, carriers, Foreign Trade Zone operators and other trade entities involved in transfers of imported merchandise.
  • CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). This proposed information collection was previously published in the Federal Register (87 FR 36867) on June 21, 2022, allowing for a 60-day comment period. This notice allows for an additional 30 days for public comments.
  • Written comments and suggestions from the public and affected agencies should address one or more of the following four points: (1) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) suggestions to enhance the quality, utility, and clarity of the information to be collected; and (4) suggestions to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
  • The comments that are submitted will be summarized and included in the request for approval. All comments will become a matter of public record.
• Customs and Border Protection Recordkeeping Requirements
  • The North American Free Trade Agreement Implementation Act, Title VI, known as the Customs Modernization Act (Mod Act) amended Title 19 U.S.C. 1508, 1509 and 1510 by revising Customs and Border Protection (CBP) laws related to recordkeeping, examination of books and witnesses, regulatory audit procedures and judicial enforcement. Specifically, the Mod Act expanded the list of parties subject to CBP recordkeeping requirements; distinguished between records which pertain to the entry of merchandise and financial records needed to substantiate the correctness of information contained in entry documentation; and identified a list of records which must be maintained and produced upon request by CBP.
  • CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). This proposed information collection was previously published in the Federal Register (87 FR 35565) on June 10, 2022, allowing for a 60-day comment period. This notice allows for an additional 30 days for public comments.
  • Written comments and suggestions from the public and affected agencies should address one or more of the following four points: (1) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) suggestions to enhance the quality, utility, and clarity of the information to be collected; and (4) suggestions to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
  • The comments that are submitted will be summarized and included in the request for approval. All comments will become a matter of public record.
• Application-Permit-Special License Unlading-Lading-Overtime Services
  • The Application-Permit-Special License Unlading-Lading-Overtime Services (U.S. Customs and Border Protection (CBP) Form 3171) is used by commercial carriers and importers as a request for permission to unlade imported merchandise, baggage, or passengers. It is also used to request overtime services from CBP officers in connection with lading or unlading of merchandise, or the entry or clearance of a vessel, including the boarding of a vessel for preliminary supplies, ship’s stores, sea stores, or equipment not to be re-laden.
  • This form is anticipated to be submitted electronically as part of the maritime forms automation project through the Vessel Entrance and Clearance System (VECS), which will eliminate the need for any paper submission of any vessel entrance or clearance requirements under the above referenced statutes and regulations. VECS will still collect and maintain the same data but will automate the capture of data to reduce or eliminate redundancy with other data collected by CBP.
  • CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). This proposed information collection was previously published in the Federal Register (87 FR 31252) on May 23, 2022, allowing for a 60-day comment period. This notice allows for an additional 30 days for public comments.
  • Written comments and suggestions from the public and affected agencies should address one or more of the following four points: (1) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) suggestions to enhance the quality, utility, and clarity of the information to be collected; and (4) suggestions to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
  • The comments that are submitted will be summarized and included in the request for approval. All comments will become a matter of public record.
• Holders or Containers Which Enter the United States Duty Free
  • Subheading 9803.00.50 of the Harmonized Tariff Schedule of the United States (HTSUS), codified as 19 U.S.C. 1202, provide for the release without entry or the payment of duty of certain substantial holders or containers pursuant to the provisions of 19 CFR 10.41b. Section 19 CFR 10.41b eliminates the need for an importer to file entry documents by instead requiring, among other things, the marking of the containers or holders to indicate the HTSUS numbers that provide for duty-free treatment of the containers or holders.
  • For U.S. manufactured serially numbered holders or containers which may be released without entry or the payment of duty under 9801.00.10 HTSUS, 19 CFR 10.41b requires the owner to place the following markings on the holder or container: 9801.00.10, HTSUS (unless the holder or container has a permanently attached metal tag or plate showing, among other things, the name and address of the U.S. manufacturer); the name of the owner; and the serial number assigned by the owner.
  • For serially numbered holders or containers of foreign manufacture for which may be released without entry or payment of duty under 9803.00.50 HTSUS, 19 CFR 10.41b requires the owner to place markings containing the following information: 9803.00.50 HTSUS; the district and port code numbers of the port of entry; the entry number; the last two digits of the fiscal year of entry covering the importation of the holders and containers on which duty was paid; the name of the owner; and the serial number assigned by the owner.
  • CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). This proposed information collection was previously published in the Federal Register (87 FR 34283) on June 6, 2022, allowing for a 60-day comment period. This notice allows for an additional 30 days for public comments.
  • Written comments and suggestions from the public and affected agencies should address one or more of the following four points: (1) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) suggestions to enhance the quality, utility, and clarity of the information to be collected; and (4) suggestions to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
  • The comments that are submitted will be summarized and included in the request for approval. All comments will become a matter of public record.
• Declaration for Free Entry of Unaccompanied Articles (CBP Form 3299)
  • 19 U.S.C. 1498 provides that when personal and household effects enter the United States but do not accompany the owner or importer on his/her arrival in the country, a declaration is made on CBP Form 3299, Declaration for Free Entry of Unaccompanied Articles. The information on this form is needed to support a claim for duty-free entry for these effects.
  • CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). This proposed information collection was previously published in the Federal Register (87 FR 37882) on June 24, 2022, allowing for a 60-day comment period. This notice allows for an additional 30 days for public comments.
  • Written comments and suggestions from the public and affected agencies should address one or more of the following four points: (1) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) suggestions to enhance the quality, utility, and clarity of the information to be collected; and (4) suggestions to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
  • The comments that are submitted will be summarized and included in the request for approval. All comments will become a matter of public record.
• User Fees (CBP Form 339A, 339C, and 339V)
  • The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) (Pub. L. 99–272, 100 Stat. 82; 19 U.S.C. 58c), as amended, authorizes the collection of user fees by U.S. Customs and Border Protection (CBP). The collection of these fees requires submission of information from the party remitting the fees to CBP. This collection of information is provided for by 19 CFR 24.22. In certain cases, this information is submitted on one of three forms including the CBP Form 339A for payment upon arrival or prepayment of the annual user fee for a private aircraft (19 CFR 24.22(e)(1) and (2)), CBP Form 339C for prepayment of the annual user fee for a commercial vehicle (19 CFR 24.22(c)(3)), and CBP Form 339V for payment upon arrival or prepayment of the annual user fee for a private vessel (19 CFR 24.22(e)(1) and (2)).
  • CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). This proposed information collection was previously published in the Federal Register (87 FR 39105) on June 30, 2022, allowing for a 60-day comment period. This notice allows for an additional 30 days for public comments.
  • Written comments and suggestions from the public and affected agencies should address one or more of the following four points: (1) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) suggestions to enhance the quality, utility, and clarity of the information to be collected; and (4) suggestions to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
  • The comments that are submitted will be summarized and included in the request for approval. All comments will become a matter of public record.
• Exportation of Used Self-Propelled Vehicles
  • U.S. Customs and Border Protection (CBP) regulations require a person attempting to export a used self-propelled vehicle to furnish documentation to CBP at the port of export. Exportation of a vehicle is permitted only upon compliance with these requirements. The required documentation includes, but is not limited to, a Certificate of Title or a Salvage Title, the Vehicle Identification Number (VIN), a Manufacturer’s Statement of Origin, etc. CBP will accept originals or certified copies of the Certificate of Title. The purpose of this information is to help ensure that stolen vehicles or vehicles associated with other criminal activity are not exported.
  • CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). This proposed information collection was previously published in the Federal Register (87 FR 39107) on June 30, 2022, allowing for a 60-day comment period. This notice allows for an additional 30 days for public comments.
  • Written comments and suggestions from the public and affected agencies should address one or more of the following four points: (1) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) suggestions to enhance the quality, utility, and clarity of the information to be collected; and (4) suggestions to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
  • The comments that are submitted will be summarized and included in the request for approval. All comments will become a matter of public record.
• Canadian Border Boat Landing Permit (CBP Form I-68)
  • The Canadian Border Boat Landing Permit, U.S. Customs and Border Protection (CBP) Form I–68, generally allows select individuals entering the United States along the northern border by small1 pleasure boats to report their arrival and make entry without having to travel to a designated port of entry for an inspection by a CBP officer. The information collected on CBP Form I–68 allows eligible individuals to be inspected in person only once during the boating season, rather than each time they make an entry. United States citizens, Lawful Permanent Residents of the United States, Canadian citizens, and Landed Residents of Canada who are nationals of the Visa Waiver Program countries listed in 8 CFR 217.2(a) are eligible to apply for the permit.
  • CBP has developed a smart phone application known as ROAM that will in certain circumstances allow travelers participating in the I–68 program to report their arrival in the United States through the ROAM application, instead of by telephone. The ROAM app, implementing the I–68 program, will allow CBP officers to remotely conduct traveler interviews with a phone’s video chat capability, and replace other technologies used for remote inspections that are obsolete or inefficient.
  • CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). This proposed information collection was previously published in the Federal Register (87 FR 34282) on June 6, 2022, allowing for a 60-day comment period. This notice allows for an additional 30 days for public comments.
  • Written comments and suggestions from the public and affected agencies should address one or more of the following four points: (1) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) suggestions to enhance the quality, utility, and clarity of the information to be collected; and (4) suggestions to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
  • The comments that are submitted will be summarized and included in the request for approval. All comments will become a matter of public record.
• Application to Establish a Centralized Examination Station
  • A Centralized Examination Station (CES) is a privately operated facility where merchandise is made available to CBP officers for physical examination. If a port director decides that a CES is needed, he or she solicits applications to operate a CES. The information contained in the application is used to determine the suitability of the applicant’s facility; the fairness of fee structure; and the knowledge of cargo handling operations and of CBP procedures and regulations. The names of all principals or corporate officers and all employees who will come in contact with uncleared cargo are also to be provided so that CBP may perform background investigations. The CES application is provided for by 19 CFR 118.11 and is authorized by 19 U.S.C. 1499, Tariff Act of 1930.
  • CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). This proposed information collection was previously published in the Federal Register (87 FR 36867) on June 21, 2022, allowing for a 60-day comment period. This notice allows for an additional 30 days for public comments.
  • Written comments and suggestions from the public and affected agencies should address one or more of the following four points: (1) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) suggestions to enhance the quality, utility, and clarity of the information to be collected; and (4) suggestions to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
  • The comments that are submitted will be summarized and included in the request for approval. All comments will become a matter of public record.
• Oman Fasteners, LLC v. United States
  • Plaintiff Oman Fasteners, LLC seeks relief from defendants’ refusal to allow bonding in lieu of cash deposits for potential liability for duties under a Presidential Proclamation, Proclamation No. 9980, Adjusting Imports of Derivative Aluminum Articles and Derivative Steel Articles Into the United States, 85 Fed. Reg. 5,281 (Exec. Office of the President Jan. 29, 2020) (“Proclamation 9980”), which imposed duties on various imported products made of aluminum or steel, including steel fasteners.
  • Granting Oman Fasteners’ motion in part and denying it in part, we require defendants to exclude Oman Fasteners from a requirement to post cash deposits for potential duty liability under Proclamation 9980 until such time as defendants obtain a further order from this Court or Oman Fasteners voluntarily enters into an agreement with defendants that modifies the terms of this Opinion and Order.
• Garg Tube Export v. United States
  • Before the court is the U.S. Department of Commerce’s second redetermination on remand filed pursuant to the court’s order in Garg Tube Exp, LLP v. United States, 569 F. Supp. 3d 1202 (Ct. Int’l Trade 2022) (“Garg II”) in connection with Commerce’s 2017–2018 administrative review of the antidumping duty (“ADD”) order on welded carbon steel standard pipes and tubes (“CWP”) from India, covering the period of review from May 1, 2017 to April 30, 2018.
  • In Garg II, the court remanded Commerce’s first remand results to reconsider its determination that a particular market situation (“PMS”) existed in India for hot-rolled coil steel (“HRC”) and its regression methodology applying a PMS adjustment or explain its determinations and support them with substantial evidence. Garg II, 569 F. Supp. 3d at 1220–21. On remand, under respectful protest, Commerce no longer finds that a PMS existed, and accordingly no longer applies a PMS adjustment to the costs of production for sales based on constructed value. Pursuant to Ct. Remand, June 9, 2022, ECF No. 98 at 17–22 (“Second Remand Results”). Commerce’s redetermination is supported by substantial evidence and complies with the court’s remand instructions. Therefore, Commerce’s Second Remand Results are sustained.

UFLPA

The Uyghur Forced Labor Prevention Act (UFLPA) establishes a rebuttable presumption that goods mined, produced, or manufactured wholly or in part in the Xinjiang Province of China or by an entity on the UFLPA Entity List are prohibited from importation into the United States under 19 U.S.C. § 1307. However, if an Importer of Record can demonstrate by clear and convincing evidence that the goods in question were not produced wholly or in part by forced labor, fully respond to all CBP requests for information about goods under CBP review and demonstrate that it has fully complied with the guidance outlined in this strategy, the Commissioner of CBP may grant an exception to the presumption.

Clear and convincing evidence is a higher standard of proof than a preponderance of the evidence, and generally means that a claim or contention is highly probable. See e.g., Colorado v. New Mexico, 467 U.S. 310 (1984) (a forced labor case holding that complainant did not meet “clear and convincing” burden of proof because it failed to show that the evidence is highly and substantially more likely to be true than untrue; rather, the fact finder must be convinced that the contention is highly probable).

CBP will employ a risk-based approach, dynamic in nature, that prioritizes the highest-risk goods based on current data and intelligence. Currently the highest-risk goods include those imported directly from Xinjiang into the United States and from entities on the UFLPA Entity List. CBP will also prioritize illegally transshipped goods with inputs from Xinjiang, as well as goods imported into the United States by entities that, although not located in Xinjiang, are related to an entity in Xinjiang (whether as a parent, subsidiary, or affiliate) and likely to contain inputs from that region.

Below is a list of high-priority sectors for enforcement:

1. Apparel
2. Cotton and Cotton products
3. Silica-Based Products (including polysilicon)

• Silica is a raw material that is used to make aluminum alloys, silicon, and polysilicon, which is then used in buildings, automobiles, petroleum, concrete, glass, ceramics, sealants, electronics, solar panels, and other goods.

4. Tomatoes and downstream products

In addition for general guidance on how CBP will be implementing the UFLPA, please refer to our prior article “Uyghur Forced Labor Prevention Act (UFLPA): What You Need To Know.”

DHS Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the PRC.

On June 17, 2022, per statutory requirement , the U.S. Department of Homeland Security (DHS) published the Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China. The purpose of this publication is to provide guidance as to how the UFLPA will be implemented, and how it plans to prevent the importation of goods made with forced labor to enter into the United States. Below is a summarized guidance for importers with recommendations and guidance as to what evidence importers may provide to rebut the presumption that the goods were made with forced labor under the UFLPA as mentioned by DHS’ June 17, 2022 and earlier guidance published on June, 13, 2022 by CBP  of evidence required. The guidance for importers provided information on three topics:

1) Due Diligence,

2) Supply Chain Tracing, and

3) Supply Chain Management

What does due diligence mean?

DHS stated that for purposes of the guidance, due diligence includes assessing, preventing, and mitigating forced labor risk in the production of goods imported into the United States. An example of effective due diligence, may include the following elements:

• Engage stakeholders and partners
• Conduct a Forced Labor Risk Assessment
• Develop a written code of conduct

To perform a forced labor risk assessment, importers map their supply chains to identify any steps within the chain at risk of using Forced Labor. Such factors used to determine whether a risk exists are, but not limited to:

• Origin of imported goods or any raw materials or components in the imported good.
• Transactions among entities along the supply chain tied to the specific imported goods.
• Locations and identities of entities in the supply chain.

A written code of conduct should provide a framework on how you address the risk of forced labor in you supply chain. In addition, DHS recommends the written code of conduct be incorporated into supplier contracts. We separately recommend that you include your conditions on your purchase order as well.

Importantly, DHS noted that for supply chains that touch the Xinjiang or involve entities that use labor transferred from Xinjiang, the code of conduct MUST explicitly forbid the use of forced labor. Furthermore, as mentioned in our prior DTL post “U.S. Customs Targets Use of Forced Labor ,” importers should review the DOL’s Comply Chain  principles and create a compliance system as a business practice.

What Does it Mean to have an Effective Supply Chain Tracing System?

DHS has defined supply chain tracing, as the ability to demonstrate chain of custody of goods and materials from the beginning of the supply chain to the buyer of the finished product. An effective Supply Chain Tracing system is one that identifies who their suppliers are and labor sources at all levels of the supply chain system. Generally, there are three common practices importers may engage in for effective supply chain tracing:

1. Mapping: Importers should be able to map out their entire supply chain, including suppliers of raw materials used in the production of the imported good or material. Mapping allows the importers to identify who is doing the work at each step in the process of the supply chain and under which conditions the work is being done.
2. Identity preservation: This requires importers to preserve each product input to be packaged, processed, and traced separately from other product inputs or modifications throughout the supply chain. However, under this method product inputs are not allowed to be commingled at any point in the supply chain.
3. Segregation: This approach allows importers to commingle inputs, as long as each input to be commingled is fully traced and documented. It is essential to demonstrate that the inputs are free of forced labor prior to commingling. As an example, importers should have readily available evidence that indicates the source of each component of the good and documents showing how the imported goods was made from raw materials to finished good, by what entity, and where.

Supply Chain Management Measures

Importers should also have Supply Chain Management Measures in place, that reflects the measures taken to prevent and mitigate identified risks of forced labor. DHS identified that effective measures include:

1. Having a process to vet potential suppliers for forced labor prior to entering a contract with them; requiring that supplier contracts necessitate corrective action by the supplier if forced labor is identified in the supply chain; and
2. Outlining the consequences if corrective action is not taken, such as termination of the contractual relationship.
3. Having access to documentation, personnel, and workers for verification of the absence of forced labor indicators, including at the recruitment stage.

DHS noted as well that, under 18 U.S.C. Section 1589 (b), failure to take appropriate remedial action could expose an importer to potential criminal liability if the importer continues to benefit, financially or by receiving anything of value, from participating in a venture engaged in forced labor, while knowing of or recklessly disregarding the forced labor.

For additional guidance as to the type and nature of evidence that CBP will require if the goods are subject to the UFLPA, please refer to the following:

• Xinjiang Supply Chain Business Advisory
• DTL Article: “Importers: If you Can’t Answer these 12 Questions on Forced Labor You’re In Trouble”
• U.S. Department of Labor Sweat & Toil App 

Contact Us

Diaz Trade Law has significant experience in a broad range of import compliance matters including forced labor issues. For assistance with importer due diligence in relation to forced labor requirements; or for assistance in submitting documents to dispute the use of forced labor, contact our Customs and International trade law attorneys at info@diaztradelaw.com or call us at 305-456-3830.

Register today to to hear directly from Senior Trade Advisor, Don Woods, DTL’s president, Jennifer Diaz, and Associate Attorney, Denise Calle as they discuss real life stories, current trends/risks associated with the import process, proactive ways to stay compliant, and the importance of training to avoid costly encounters with CBP.

Why Should I Register for this Webinar?

CBP is actively enforcing its laws and regulations against non-compliant importers, as seen by the 70,683 seizure letters issued to importers in FY2021.  Importers are required to develop, maintain, and follow a compliant import plan. Importers must be aware of CBP’s various enforcement mechanisms, and more importantly,  how to avoid  such actions. CBP’s most common enforcement activities include seizures, detentions, and criminal prosecution.

In response to the increase in enforcement discussed below, Diaz Trade Law is hosting a NEI accredited webinar, Building & Maintaining an Effective Import Compliance Plan to train industry on top compliance tips to avoid enforcement, and best practices to maintain and effective and compliant import plan.

Seizures in FY21:

• With Fy21 yet to finish, the CBP has already had more than 70,000 trade seizures
• With Fy21 yet to finish, CBP has already had $2.5 billion worth of IPR Seizures – More than it has seized in each of the past 5 years!

Other Trade Enforcement Activities:

• 1,942 Trade Penalties Issued
• 16,302 Total Trade Liquidated Damages
• $16 million collected in Trade-related penalties and liquidated damages

In this webinar, you will learn the common risks associated with the import process and how to build and maintain an effective Import Compliance Plan . Presenters will discuss… The objective of the webinar is to teach participants how to create an effective import plan that allows importers to avoid CBP altogether.

Importers, Customs Brokers, Regulatory Affairs Professionals, and others engaged in the importation of goods into the United States are encouraged to attend either live on October 6, 2021 at 12:00 PM, or on demand thereafter. Register Here

All merchandise of foreign origin imported into the United States (U.S.) must generally be marked with its country of origin, and it is subject to a country of origin (COO) determination by CBP. The country of origin of imported goods may be used as a factor to determine eligibility for preferential trade treatment under a free trade agreement.

The country of origin of imported goods is also used to determine non-preferential trade treatment, such as admissibility, marking, and trade relief (310 duties, antidumping and countervailing duties (AD/CVD). CBP uses the “substantial transformation” standard to determine the COO of goods for non-preferential purposes. For a substantial transformation to occur, “a new and different article must emerge, `having a distinctive name, character or use.’” Anheuser-Busch Brewing Ass’n v. United States, 207 U.S. 556, 562 (1908) (quoting Hartranft v. Wiegmann, 121 U.S. 609, 615 (1887)).

CBP applies two different methods to determine if goods have been substantially transformed – even though both are intended to produce the same origin determinations:

1. Case-by-case decision based on court decision and CBP rulings (often criticized because of the varied case-specific interpretations of the basic rule that has resulted in a lack of predictability and increased uncertainty both within CBP and in the trade community). Using this method, the effect of a particular type of processing could have on impact on  origin determination.
2. Rules of Origin in 19 CFR 102 – these rules are included in the Harmonized Tariff Schedule of the U.S. (HTSUS) under General Notes and are often referred to as the “change in tariff classification” or “tariff shift” method.

Prior to the USMCA, under the NAFTA, COO marking determinations were made using the NAFTA marking rules codified in 19 CFR 102, to determine if substantial transformation existed when a good imported from Canada or Mexico (was not entirely of Canadian or Mexican origin). The 102 rules helped determine whether or not goods were substantially transformed through processes that resulted in changes in the tariff classification (i.e., tariff shifts) in Canada or Mexico. To determine the country of origin of goods imported from Canada or Mexico for other non-preferential purposes (i.e., purposes other than marking), CBP employed case-by-case adjudication to determine whether such goods were substantially transformed in those NAFTA countries. These different non-preferential country of origin-determination methods required some importers to determine and declare two different countries of origin for the same imported good!

The Current Problem with COO Determinations Under USMCA

Importers from Canada and Mexico are subject to two different non-preferential origin determinations for imported merchandise:

• One for marking; and,
• Another for determining origin for other purposes (e.g., 310 duties, AD/CVD).

Consequently, these importers must also potentially comply with requirements to declare two different countries of origin for the same imported good (e.g., Canada and China, forcing the import to also tender the additional 301 duties, but, also take advantage of the FTA not having to pay regular duties). This is not only a burden, but, also quite confusing, creating inconsistency, and vastly reduces transparency.

CBP’s Proposed Solution

CBP is proposing to amend the scope provision in 19 CFR 102 by adding new language to apply the substantial transformation standard consistently across country-of-origin determinations CBP makes for imported goods from the USMCA countries of Canada and Mexico for non-preferential purposes. With this regulatory change, all non-preferential country of origin determinations by CBP for goods imported from Canada or Mexico would be based on the tariff shift rules in 19 CFR part 102.

Since importers must exercise reasonable care in determining the country of origin of their goods and may seek advice from CBP to determine the country of origin for their goods for preferential and/or non-preferential purposes; the proposed solution means CBP will no longer need to issue CBP rulings with non-preferential origin determinations for goods imported from Canada or Mexico, and there would no longer be rulings that conclude that a good imported from Canada or Mexico has two different origins under the USMCA (i.e., one for marking and one for other, customs non-preferential purposes).

CBP is proposing these changes to simplify and standardize country of origin determinations by CBP for all non-preferential purposes for goods imported from Canada or Mexico.

Comment Opportunity

Interested persons are invited to comment on the proposed rule by submitting written data, views, or arguments on all aspects of the proposed rule. CBP is seeking comments related to the economic, environmental, or federalism effects that might result from this proposed rule.

Deadline: Comments must be received on or before September 7, 2021 (extended from August 5, 2021).

Impacted Parties

Certain Canadian and Mexican importers are directly affected by the proposed change. In fiscal year (FY) 2019, 38,832 importers made 2.6 million non-NAFTA-preference entries. All of these entries were subject to non-preferential country of origin marking requirements, and some were also subject to trade remedies, that involve case-by-case adjudication. Around the same time, in FY 2020 and the start of FY 2021, CBP issued 52 rulings determining the origin of goods imported from Canada and Mexico for non-preferential purposes. These rulings, except for those involving the importation of certain textile and apparel products, were issued on a case-by-case basis to determine whether such goods were substantially transformed in Canada or Mexico or another country.

Impact on other Free Trade Agreements

While the Federal Register Notice (86 FR 35422) announcing the proposed rule and requesting comments from trade is focused on USMCA, this may be the future for all FTAs. The  Federal Register Notice makes clear that  19 CFR 102 was established to promulgate the U.S.’s responsibilities under the North American Free Trade Agreement (NAFTA); however, thereafter, 19 CFR 102 has been extended to apply to numerous other FTAs as CBP has found them to be reliable, simplified, and standardized method to determining the COO of a good. Specifically, 19 CFR §§ 102.21 through 102.25, are also to be used by CBP to determine the COO of textile and apparel products (imported from all countries except Israel).

As we learn more, we will keep you up to date on whether this change will also be adopted for FTAs that are silent as to how the country of origin should be determined for marking and other non-preferential purposes.

Contact Us

Jennifer Diaz and Denise Calle have extensive expertise on FTA’s and in preparing and submitting comments for federal rulemaking. Please reach out to our trade attorneys to prepare and submit your comments to CBP. If you would like more information on this issue, contact Diaz Trade Law at info@diaztradelaw.com and 305-456-3830.

Co-Authored by Jen Diaz & Denise Calle