The National Association of Foreign-Trade Zones appealed to CBP officials during the group's annual legislative summit on Feb. 11 on the issue of CBP's treatment of goods that are in foreign-trade zones and are subject to the Section 301 tariffs on goods from China that will be reduced on Feb. 14. CBP said in a recent CSMS message about the tariff decrease that the applicable tariff rate for goods in FTZs is based on “the rate of duty and tax in force on the date of filing the application for privileged foreign status.” That policy has prompted some industry claims of inconsistency by the agency (see 2002050038).
Section 301 (too broad)
International Trade Today is providing readers with some of the top stories for Feb. 3-7 in case they were missed.
The Office of the U.S. Trade Representative issued four new exclusions from the first tranche of Section 301 tariffs on goods from China, it said in a notice. The exclusions apply retroactively to July 6, 2018 and will expire on Oct. 2, it said. The agency also adjusted tariff subheadings and made other "technical amendments" to previously issued exclusions.
The Office of the U.S Trade Representative is set to publish a notice Feb. 11 of some new product exclusions from Section 301 tariffs on the first list of products from China (see 2002100008). The product exclusions apply retroactively to July 6, 2018, the date the tariffs on the first list took effect, and will remain in effect until Oct. 2, 2020.
U.S. importers in December sourced 539,000 TVs from China, 46.2 percent fewer than in November and the lowest monthly volume since the 507,000 Chinese sets shipped here in February 2015, according to Census Bureau data posted Feb. 9 and accessed through the International Trade Commission’s DataWeb tool. Import statistics culled from DataWeb for the fourth full month that the 15 percent List 4A Section 301 tariffs were in force on Chinese goods showed the December exodus from Chinese TV sourcing accelerating at an even faster pace than in November. With it came signs of TV supply-chain diversification through third countries other than Mexico, especially for the cheapest entry-level sets.
IRobot’s 2019 operating-profit margin would have been 3.1 points higher at 10.4 percent if not for the $37.9 million in List 3 Section 301 tariff costs imposed on the robotic vacuum cleaners (RVCs) it sourced from China, CEO Colin Angle said on a Q4 earnings call Feb. 6. IRobot expects to incur $47 million to $50 million more in 2020 tariff costs, Chief Financial Officer Alison Dean said.
CBP's notice on the coming Section 301 tariff decrease (see 2002040045) and the agency's treatment of List 4A goods in foreign-trade zones are drawing some industry concerns. The CBP notice said the duty rate for goods subject to the tariffs in FTZs is based on “the rate of duty and tax in force on the date of filing the application for privileged foreign status.” CBP's interpretation “is inconsistent with existing CBP precedent and [we] will be challenging it on behalf of our a number of clients,” said Sidley lawyer Ted Murphy in a blog post.
The effort to give Congress more say on Section 232 tariffs that has stalled so far is not broad enough to ensure that erratic tariffs are not levied, according to experts who spoke during a Feb. 5 briefing held by Rep. Stephanie Murphy, D-Fla., a Ways and Means Committee member who has hosted trade sessions three times in the last few months. No other members of the committee responsible for trade attended, but Rep. Jim Cooper, Rep. Donna Shalala and Rep. Jim Costa, all Democrats, listened for at least part of the session, in addition to many Hill staffers and some lawyers, diplomats and industry representatives.
The coming decrease to Section 301 tariffs on goods from China classified in subheading 9903.88.15 will apply to merchandise admitted to a foreign-trade zone depending on “the rate of duty and tax in force on the date of filing the application for privileged foreign status,” CBP said in a CSMS message. The tariffs on goods on the Section 301 4A list will fall from 15 percent to 7.5 percent on Feb. 14 (see 2001160019). Despite an industry request for blanket authority to allow for immediate delivery procedures (see 2001290037), CBP said that “immediate delivery procedures are not applicable.”
The Office of the U.S Trade Representative is set to publish a notice Feb. 5 some new product exclusions from Section 301 tariffs on the third list of products from China (see 2001020013). The product exclusions apply retroactively to Sept. 24, 2018, the date the tariffs on the third list took effect, and will remain in effect until Aug. 7, 2020.