On April 29, 2020, U.S. Customs and Border Protection announced CUSTOMS BULLETIN AND DECISIONS, VOL. 54, NO. 16, beginning on page 62) Notice of proposed revocation of one ruling letter, and proposed revocation of treatment relating to the tariff classification of textile covered high-density fiberboard boxes.
Customs Binding Ruling Letter NY N302855 pertains to two styles of storage boxes. Each storage box is made with high-density fiberboard ("HDF") and covered in textile. The first box is an opened faced drawer organizer that contains multiple divider panels inside of it. The second box is a closed box sweater organizer with a drop front panel that is see through so consumers can view the contents inside of the box. The drop front panel can be opened to provide access to the stored items. Both storage boxes come in a variety of sizes and can be used to store clothes, accessories, hosiery, and lingerie
In NY N302855, CBP classified textile covered high-density fiberboard boxes in heading 6307, HTSUS, specifically in subheading
6307.90.98 (rate of duty 7%, HTSUS, which provides for "Other made up articles, including dress patterns: Other: Other: Other." CBP has reviewed NY N302855 and has determined the ruling letter to be in error. It is now CBP's position that the textile covered high-density fiberboard boxes are properly classified, in heading 4420, HTSUS, specifically in subheading 4420.90.65 (rate of duty FREE), HTSUS, which provides for "Wood marquetry and inlaid wood; caskets and cases for jewelry or cutlery and similar articles, of wood; statuettes and other ornaments, of wood; wooden articles of furniture not falling within chapter 94: Other: Jewelry boxes, silverware chests, cigar and cigarette boxes, microscope cases, tool or utensil cases and similar boxes, cases and chests, all the foregoing of wood: Other: Lined with textile fabrics."
Comments must be received on or before May 29, 2020.
On May 6, 2020, The United States notified the World Trade Organization (WTO) that it has fully complied in the dispute brought by the European Union (EU) regarding U.S. subsidies to Boeing. In April 2019, the WTO found that the Washington State Business & Occupation (B&O) tax rate reduction continued to breach WTO subsidy rules. At that time, the EU was unsuccessful on the remainder of its challenges to 29 state and federal programs alleged to harm Airbus.
Washington enacted Senate Bill 6690 on March 25, 2020, which eliminated a preferential tax rate for aerospace manufacturing. The removal of the subsidy fully implements the WTO’s recommendation to the United States, bringing an end to this long-running dispute.
Background
After many years of seeking unsuccessfully to convince the EU and four of its member States (France, Germany, Spain, and the United Kingdom) to cease their subsidization of Airbus, in 2004 the United States brought a WTO challenge to EU subsidies. The EU responded by challenging what it claimed were even larger subsidies to Boeing by the United States.
Two separate WTO panels addressed the claims brought by the United States and the EU, respectively. The two processes resulted in two very different sets of WTO findings and subsequent respondent actions.
The U.S. Claims Against the EU
In 2011, the WTO found that the EU provided Airbus $17 billion in subsidized financing from 1968 to 2006, and that European "launch aid" subsidies breached WTO rules because they were instrumental in permitting Airbus to launch every model of its large civil aircraft, causing Boeing to lose sales of more than 300 aircraft and to lose market share throughout the world.
In response, the EU removed two minor subsidies, but left most of them unchanged. The EU also granted Airbus more than $5 billion in new subsidized "launch aid" financing for its A350 XWB family of aircraft. The United States filed a complaint in March 2012 alleging that the EU not only had failed to comply with the WTO’s findings but had further breached WTO rules through the new subsidized financing for the A350 XWB.
The WTO compliance panel and appellate reports found that EU subsidies to high-value, twin-aisle aircraft continued to cause serious prejudice to U.S. interests. The reports found that billions of dollars in launch aid to the A350 XWB cause significant lost sales of Boeing 787 aircraft. The reports also found that subsidies to the A380 continue to cause significant lost sales of Boeing aircraft, as well as impedance of exports of Boeing very large aircraft to the EU, Australia, China, Korea, Singapore, and UAE markets.
In 2018, the United States requested authority to impose countermeasures commensurate with the adverse effects that the EU subsidies continued to cause. The EU challenged the U.S. estimate, and a WTO arbitrator found that the annual adverse effects to the United States amounted to $7.5 billion per year. The United States imposed countermeasures in October 2019, consistent with the WTO’s authorization.
The EU Claims Against the United States
The EU's original 2004 complaint alleged that the United States provided unlawful subsidies to Boeing. In that dispute, the WTO found that the United States provided Boeing with $3.2-4.3 billion in subsidized research and development funding, certain federal tax benefits, and the Washington State preferential B&O tax, with far more limited market effects than the EU's subsidies to Airbus, which enabled launch of entirely new aircraft programs.
In response to the WTO's findings, the United States modified the research and development funding and revoked much of the tax benefits, which in its view removed any adverse effects to the EU from Washington B&O tax rate reduction. The EU then filed a compliance challenge in October 2012 alleging that the United States failed to comply with the findings against it. The WTO compliance panel issued a report in June 2017, which rejected 28 of the EU’s 29 claims. The appellate report likewise found only that the Washington B&O tax rate reduction continued to cause adverse effects to Airbus. The EU subsequently asked a WTO arbitrator in 2019 to determine the level of countermeasures it could take in response to U.S. non-compliance. The decision in the arbitration is expected later this year.
USTR has announced 146 additional articles excluded from List 3 China 301 tariffs. Among them --
15) Disposable cloths of nonwoven textile materials impregnated, coated or covered with organic surface-active preparations for washing the skin, put up for retail sale (described in statistical reporting number 3401.30.5000)
27) Backpacks with outer surface of textile materials of man-made fibers, each with padded and insulated zippered compartments measuring not more than 27 cm by 19 cm by 21.5 cm (described in statistical reporting number 4202.92.3120)
28) Cases of textile materials of man-made fibers, each measuring not more than 57 cm by 47 cm by 34 cm, specially fitted to contain a sewing machine, each with outer pockets, side handles and 4 wheels (described in statistical reporting number 4202.92.3131)
29) Cases of man-made fiber, each measuring not more than 40 cm by 27 cm by 9 cm, with clear zippered pockets, mesh pockets and a carrying handle (described in statistical reporting number 4202.92.9100)
36) Dyed sateen fabric containing at least 85 percent by weight of cotton, measuring at least 292 cm but not more than 293 cm in width, weighing not more than 210 g/m² (described in statistical reporting number 5208.39.2020)
Tennier Industries Inc., Delray Beach, Florida, has been awarded a maximum $8,771,992 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for a variety of trousers and parkas. This is a one-year base contract with two one-year option periods. This was a competitive acquisition with one response received. Locations of performance are Florida and Tennessee, with an April 30, 2021, performance completion date. Using military services are the Marine Corp, Army and Air Force. Type of appropriation is fiscal 2020 through 2021 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE1C1-20-D-1273).
On April 3, 2020, the Canada Border Services Agency issued Customs Notice 20-14 Implementation of the Canada-United States-Mexico Agreement (CUSMA)
This notice provides information on the changes to the Customs Tariff that will occur as a result of the implementation of the Canada-United States-Mexico Agreement (CUSMA) and summarizes the requirements in order to benefit from the CUSMA's preferential rates of duty, once the CUSMA enters info force.
Implementation of the Canada-United States-Mexico Agreement (CUSMA)
1. The CUSMA's implementing legislation, Bill C-4, received Royal Assent on . Upon entry into force of the Agreement, with the exception of a few agricultural goods, all qualifying imports into Canada from a CUSMA country will be customs duty free.
2. More information regarding the CUSMA and the text of the agreement can be found on the Global Affairs Canada website.
3. Regulatory amendments and new regulations made under the Customs Act as a result of the CUSMA's implementation will be announced in a separate customs notice.
5. CUSMA's preferential tariff treatments are: the United States Tariff (UST - tariff treatment code 10) and the Mexico Tariff (MXT - tariff treatment code 11).
6. The Mexico-United States Tariff (MUST tariff treatment code 12) used under the North American Free Trade Agreement (NAFTA) cannot be used for the CUSMA, which has a simplified preferential tariff treatment provision without differing start dates for tariff commitments as there were in the NAFTA.
7. All eligible goods imported under the CUSMA are eligible for either the United States Tariff or the Mexico Tariff. The MUST will remain in place in the interim, for adjustments pertaining to importations that occurred while the NAFTA was in effect.
9. The required proof of origin is referred to as a certification of origin and consists of a set of minimum data elements contained in Annex 5-A of Chapter 5 of the CUSMA, that may be placed on an invoice or any other document. The certification of origin may also be completed and submitted electronically including with an electronic or digital signature. Additional information concerning CUSMA's certification of origin is contained in Article 5.2 of Chapter 5 of the CUSMA. Information concerning the electronic submission can be found in Memorandum D11-4-14, Certification of Origin Under Free Trade Agreements.
10. Importers, exporters or producers of CUSMA-eligible goods may complete the certification of origin. Importers are required to have the certification of origin in their possession at the time that the importer makes a claim for preferential tariff treatment.
11. A certification of origin shall include the following minimum data elements:
i. Importer, Exporter, or Producer - Certification of Origin
Indicate whether the certifier is the exporter, producer or importer in accordance with Article 5.2 of Chapter 5 of the CUSMA.
ii. Certifier
Provide the certifier's name, title, address (including country), telephone number and e-mail address.
iii. Exporter
Provide the exporter's name, address (including country), e-mail address, and telephone number if different from the certifier. This information is not required if the producer is completing the certification of origin and does not know the identity of the exporter. The address of the exporter shall be the place of export of the good in a Party’s territory.
iv. Producer
Provide the producer's name, address (including country), e-mail address, and telephone number, if different from the certifier or exporter or, if there are multiple producers, state "Various" or provide a list of producers. A person that wishes for this information to remain confidential may state "Available upon request by the importing authorities". The address of the producer shall be the place of production of the good of the Party's territory.
v. Importer
Provide, if known, the importer's name, address, e-mail address, and telephone number. The address of the importer shall be in the Party's territory.
vi. Description and Harmonized System (HS) Tariff Classification of the Good
a) Provide a description of the good and the HS tariff classification of the good to the 6-digit level located in the Customs Tariff. The description should be sufficient to relate it to the good covered by the certification;
b) If the certification of origin covers a single shipment of a good, indicate, if known, the invoice number related to the exportation.
vii. Origin Criteria
Specify the origin criterion under which the good qualifies, as set out in Article 4.2 (Originating Goods) of Chapter 4 of the CUSMA.
viii. Blanket Period
Include the period if the certification covers multiple shipments of identical goods for a specified period of up to 12 months as set out in Article 5.2 (Claims for Preferential Tariff Treatment) of Chapter 5 of the CUSMA.
ix. Authorized Signature and Date
The certification must be signed and dated by the certifier and accompanied by the following statement:
"I certify that the goods described in this document qualify as originating and the information contained in this document is true and accurate. I assume responsibility for proving such representations and agree to maintain and present upon request or to make available during a verification visit, documentation necessary to support this certification."
Shipment Requirements
12. Goods may be shipped from a CUSMA country, with or without transshipment, to Canada. The transshipment conditions are contained in Article 4.18 of Chapter 4 of the CUSMA and the associated documentation requirements are contained in Article 5.4(3) of Chapter 5 of the CUSMA.
Exemption from the requirements of 35.1 (1) of the Customs Act
13. If the benefit of preferential tariff treatment under CUSMA is claimed for locomotives classified under heading No. 86.01 or 86.02, or railway freight cars classified under heading No. 86.06 of the List of Tariff Provisions set out in the schedule to the Customs Tariff, the importer and owner of the goods are exempt from the requirements of subsection 35.1(1) of the Customs Act with respect to those goods if they are transported overland from the United States into Canada.
Refunds
14. An application for a refund under paragraph 74(1)(c.11) of the Customs Act may be made within four years from the date the goods were accounted for under subsections 32(1), (3), or (5), in respect of goods that were imported from the United States or Mexico on or after the date of entry into force of CUSMA.
Additional Information
15. For more information, please call the Border Information Service line from within Canada at 1-800-461-9999 or from abroad at 204-983-3500 or 506-636-5064. Long distance charges will apply. Agents are available Monday to Friday (08:00 -- 16:00 local time / except holidays). TTY is also available within Canada: 1-866-335-3237.
On May 1, 2020, the U.S. International Trade Commission ("USITC") released U.S. Trade and Investment with Sub-Saharan Africa: Recent Developments
(Publication 5043 Inv. No. 332-571).
U.S. imports for consumption of apparel from SSA under AGOA grew at 9.9 percent between 2016 and 2018. Within SSA, five countries:
Kenya,
Lesotho,
Madagascar,
Mauritius, and
Ethiopia
accounted for almost 95 percent of all apparel imported from the region under AGOA. Notably, imports from Ethiopia had an increase of 76.5 percent between 2016 and 2018, reflecting an increase in exports to the United States from $37 million to $114 million. This growth was primarily due to the country’s focus on increasing garment production in industrial parks and its increased use of AGOA benefits. The largest categories of U.S. apparel imports from SSA in 2018 were men's or boys' cotton trousers and shorts, and men's or boys' knit shirts of manmade fiber ($225 million and $205 million, respectively)
In examining factors that may have affected the rise in apparel exports from SSA to the United States, the report states:
Some multinational firms are looking for new sourcing options due to a rising emphasis on corporate social responsibility (CSR) in many countries.
Regional integration efforts among SSA countries could also be contributing to the increase. For example, the African Continental Free Trade Area intends to remove duties on goods shipped within the continent to develop regional value chains and strengthen manufacturing capacities in SSA.
According to the 2019 Fashion Industry Benchmarking Study, 83 percent of survey respondents expect to decrease sourcing from China over the next two years, up from 67 percent for the same question in 2018. However, the same survey found that only 28 percent of respondents were sourcing from SSA, a nearly 6 percent decline from 2016. Almost half of the respondents attributed their hesitancy about investing in the region to the temporary nature of AGOA. Moreover, long lead times, lack of infrastructure, and high logistical costs continue to deter apparel retailers from investing in the AGOA region.
