Did You Know: The 2015 Trade Enforcement Act Can Save Importers Money?

Signed into law by President Barack Obama on February 24, 2016 (and which we covered in two previous alerts on February 17, 2016 and March 1, 2016), the Act contains the most far reaching set of changes since the Customs Modernization Act, including significant updates to the operations and programs of US Customs and Border Protection, new provisions for combating evasion of the antidumping and countervailing duty laws, and the inclusion of brand new measures to protect intellectual property rights.

Found below are a number of the key cost-saving benefits.

De Minimis Entry Threshold Increased to $800. Effective March 10, 2016, the Act raised the threshold for a “Section 321 Entry,” which may be used to enter articles duty free and without all the requirements of a formal entry, from $200 to $800. This increase applies to shipments of articles imported by one person (e.g., a company) on one day, other than in the case of articles sent as gifts from a person in foreign countries or in the case of articles accompanying and for the personal or household use of a person arriving in the United States. Further, merchandise subject to the jurisdiction of other government agencies, and merchandise subject to AD/CVD, cannot be entered on Section 321 Entries. The higher threshold enables companies to clear more low risk, low value merchandise without the administrative costs and burdens of ascertaining all the entry data elements and filing the entry. However, we caution that goods imported on Section 321 Entries lose their “traceability,” and therefore should only be used on miscellaneous, low risk shipments which are unlikely to require supply chain traceability in the future.

9801 Provisions Expanded to Certain Goods Not of US Origin. Effective April 25, 2016, heading 9801.00.10 will be expanded to include non-US origin goods being returned within three years of having been exported from the United States, provided that such products had not been “advanced in value or improved in condition by any process of manufacture or other means while abroad.” Previously, only US origin goods that met the  “not advanced in value or improved in condition” criteria qualified for duty-free treatment upon return to the United States. Although importers will still need to file an  entry and meet the stricter chapter 98 record-keeping requirements, including retaining records demonstrating that the subject goods had, in fact, been exported from the United States within the preceding three years, this expanded provision will eliminate the need to pay duties on many non-US goods that are being returned to the United States.

Entry Requirement for Bulk Cargo Residue Removed.  After years of working with CBP on this issue, importers are no longer required to file entries for certain bulk cargo residue contained in instruments of international traffic. The exemption from entry applies to material of bulk cargo, in solid, liquid or gaseous form, that remains in an instrument of international traffic after the bulk cargo is removed, provided the residue is a quantity, by weight or volume, not exceeding seven percent of the bulk cargo, and has no or de minimis value. This exemption has been  incorporated into HTSUS General Note 3(e), which also exempts from entry corpses, telecommunications transmissions, business records, articles returned from space and items returned to the US under certain limited circumstances. 

Duty Reductions on Protective Footwear. Currently, protective active footwear classified HTS subheadings 6402.91.90 and 6402.99.90 is dutiable at 20 percent ad valorem. The Act provides for staged duty rate reductions for such protective active footwear qualifying as originating under the United States free trade agreements with Panama, Oman, Peru, Colombia and Korea, to begin this year. Additionally, the Act provides for retroactive application of the staged duty reductions. Entries made after January 1, 2016 but before February 24, 2016 (the date of enactment of the Act), to which a lower duty would be applicable if the entry was made after February 24, 2016, will be reliquidated only if a request is filed with CBP within 180 days, specifically by August 22, 2106. Amounts owed by the government pursuant to the liquidation or reliquidation will be paid, without interest, within 90 days of the date of liquidation or reliquidation.

Duty Free Treatment for Certain Goods from Nepal. In recognition of Nepal’s economic challenges and the devastating earthquake in 2015, the Act enables the President to authorize preferential duty treatment to articles imported directly from Nepal into the United States. Although the President has not yet exercised his authority on this matter, if and when he does, the trade preference rules and benefits similar to those under the African Growth and Opportunity Act, including duty free treatment on certain qualifying products, will be extended to goods from Nepal. As with all trade preference programs, the benefits are also accompanied by the burdens of ensuring that the preference is claimed only on qualifying goods. As such, the Act specifically provides for CBP verification of claims for preferential treatment.

Duty Reductions on Certain Environmental Goods. The Act authorizes the President to exercise his proclamation authority to implement an agreement by members of the Asia-Pacific Economic Cooperation to reduce duty rates on certain environmental goods. If and when the President exercises this authority, importers will benefit from lower duty rates on a variety of goods classified in HTS chapters 84, 85 and 90, including gas turbines; industrial or laboratory furnaces, incinerators and ovens; solar water heaters; filtering or purifying machinery; machinery designed for wide range of environmental management, including waste, waste water, drinking water production and soil remediation; wind-powered electric generating equipment; solar photovoltaic cells and related equipment; water disinfection equipment; surveying, hydrographic, oceanographic, hydrological, meteorological or geophysical instruments and appliances; and air pollution monitors, among many other instruments, appliances and devices with a variety of environmental applications.