Tag: Customs

Future Forwarding expands in to Scotland, UK

We have expanded our network into Scotland with the opening of a new branch based in Glasgow, providing freight forwarding services for all modes of transport and international trade lanes. With excellent connectivity for air, road, and sea, this is a key location for Future Forwarding’s development plans, bringing additional knowledge and networks to complement the existing UK offices in Leeds and Manchester.

“We are extremely pleased to be opening our new location in Scotland. It is an exciting time as we look to grow our UK operations and reach new customers. With a long and established customer base in the north of England it seemed a natural step for us to open north of the border, where we hope customers will appreciate our quality of service and personal approach” said Richard Lawford, Managing Director UK

The office based at Rutherglen in Glasgow is headed up by Regional Director Jason Sanders, alongside co-directors Scott Gallacher and Kenny Cooney, all bringing extensive knowledge and many years of experience from the Scottish freight forwarding industry.

 “We are delighted to be joining the Future Forwarding family, and opening an office that will serve Scotland’s companies who trade on an international scale,” said Jason Sanders Regional Director Scotland, “We look to take pride in building solid relationships with customers and suppliers, and providing them support for their supply chain models and businesses through our bespoke and flexible service offerings”

UFLPA Guidance from CBP

In late December, a nearly unanimous House and Senate passed the Uyghur Forced Labor Protection Act (UFLPA) and sent the bill to President Biden for his signature. He did so, beginning the 180-day clock to the day it would become law.

 

That day is June 21, 2022, and importers and government agencies and task forces have been working furiously towards that deadline. UFLPA is slightly different from the agency’s traditional Withhold Release Order (WRO) where it has researched and determined that a particular country, region or manufacturer is guilty of using forced labor. UFLPA supersedes existing WROs for the Xinjiang region.

 

UFLPA’s “rebuttable presumption” presumes guilt and places the burden of proof of innocence (read: no forced labor was used) on the importer. How do they plan to enforce this, and how are importers expected to affirmatively demonstrate that no forced labor was used? Since the law’s passage, the agency has been communicating with affected importers, a pool drawn from the entry data submitted for cargo release. 

 

They began with Known Importer Letters in April, with the key paragraph of obligation in that letter reading:

 

“The Act requires CBP to apply the rebuttable presumption unless the importer can overcome the presumption of forced labor by establishing, by clear and convincing evidence, that the good, ware, article, or merchandise was not mined, produced, or manufactured wholly or in part by forced labor.  This elevated standard will require the importer to not only use due diligence in evaluation of its supply chain, but also to respond completely and substantively to CBP requests for information regarding entries it may review.”

 

For companies who are members of CTPAT, the agency went further – informing them of their potential suspension or removal from the program for non-compliance.

 

“As your company has previously imported merchandise from locations or entities potentially subject to the Act, you are being notified that subsequent entries of such merchandise may result in, among other things, suspension or removal from the Customs-Trade Partnership Against Terrorism (CTPAT) program, seizure, forfeiture and/or penalties, or other appropriate action under the customs laws.  Please note that this notice may serve as an aggravating factor should CBP take enforcement action upon determining future violations of the Act.”

 

Within the guidance document VIEWABLE HERE, the agency lays out what will happen with regards to the holding of an entry, remanding for an examination, their time frame to review, and methods of disposition if the goods are found to either be excepted from, or included in, the detention and prohibited entry. If excepted, as per the law, the exemption will be reported by the Commissioner of Customs to Congress.

 

In reviewing this guidance document, the agency remains silent on many things. Importers should expect that once enforcement begins that the time to release goods being held for UFLPA proof may rise and along with that, applicable storage, detention and demurrage documents.

 

CBP provides instructions on administrative relief when importers cannot provide sufficient proof at time of entry to protest a prohibited entry order. They have also provided a not insubstantial list of places that companies can go across multiple government agencies to determine compliance and actions to take with suppliers.

 

Finally, they have also grouped into three key areas of product export from the region – cotton, tomatoes and polysilicon – what specific action companies can take.

 

The beginnings of this process for importers whose supply chains run through the affected region will be bumpy, but Future Forwarding’s customs brokerage team is committed to working with our clients to quickly and readily respond to holds and inquiries from the agency. We encourage our customers with affected goods to carefully read this document and if you have not already done so, begin assembling proof to submit for entries which are held or detained. Together, we can work through these challenges with as minimal delays and additional costs as possible.

Explaining MFN and what it means for Russian Imports

As the US and European allies continue to identify ways to punish Russia for Ukraine, last week news broke that one step that governments were planning to take was the revocation of the country’s Most Favored Nation trade status, or MFN. Whether you realize it or not, MFN is what allows most importers to enjoy favorable duty rates on goods imported into the United States and losing this status not only puts duty rates at a higher level, but also sets the stage for imports to be banned entirely.

For importers, the details of MFN status are laid out in the beginning of the Harmonized Tariff Schedule, or HTS.

 

There are only two countries right now that do not enjoy MFN status with the United States: Cuba and North Korea. That list alone should be a significant indicator of the severity of the relationship a country would (or wouldn’t) have with the United States to be included.

When determining classification in the HTS, after the proper tariff number is located, the question then is whether or not the exporting country is eligible for Column 1 duties (the lower, preferable rate) or Column 2 duties (the higher, prohibitive rate). The idea behind the stark difference is that US buyers who want to select between identical merchandise purchased from a friendly trading nation versus an unfriendly one will find little market for a product priced far more expensively and therefore choose a country with MFN status.

 

Take, for example, this page from the tariff for footwear showing the difference in duty rate for Column 1 versus Column 2 countries.

MFN

Sandals from a friendly country are 3% – from a Column 2 country, 35%.

 

Aside from the outright prohibition for entry that the administration announced on oil, seafood and diamonds, other products such as steel, iron or aluminum will see additional duties as well. It is likely that Russia’s actions and reaction here in the United States will, by and large, eliminate a buyer’s appetite for these products unless they absolutely cannot be procured elsewhere, but that remains to be seen based on the length of time sanctions will remain in place.

 

The steps taken by governments continue to evolve and move rapidly, and Future Forwarding’s compliance team is committed to monitoring announcements by governments in the US, UK and EU and proactively advising our clients if products they source or ship could be caught up in trade action.

Unwelcome supply chain surprises: Withhold Release Orders

Importers need to add one more worry to their supply chains: detention orders issued by CBP for issues surrounding withhold release orders. Just as companies should perform due diligence before importing a shipment to look for antidumping or countervailing duties, questions should be asked of foreign suppliers whether or not the finished goods or component parts are the subject of withhold release orders and findings that would prohibit entry.

 

Every finished product begins with a bill of materials. The finished product, depending upon origin and parts, could need to undergo substantial transformation or meet minimum regional value contents to qualify for reduced or duty-free treatment under a bilateral or regional free trade agreement.

 

What happens, though, when one of those components turns out to be prohibited for entry? Importers of FDA regulated merchandise know about automatic detentions – if a product contains an ingredient deemed not safe for humans or animals, the agency detains and denies entry for consumption. CPSC regulated merchandise is the same. Fish & Wildlife prohibits improperly documented endangered species. 

 

Importers of goods from China and other countries are becoming increasingly familiar with Withhold Release Orders – a determination made by CBP that goods from a country, manufacturer, or region are produced using forced or prison labor. When an entry is presented for release, Customs places the merchandise on hold and refuses to allow the importer to clear and receive the goods.

 

Recently, an apparel importer filed a protest challenging an exclusion of goods subject to a WRO. CBP excluded a shipment, claiming the cotton came from Xinjiang Production and Construction Corporation (“XPCC”) and its subordinate and affiliated entities who are the subject of a WRO. 

 

CBP denied the protest.

 

The importer provided documentation showing the raw cotton was sourced from entities in the U.S., Australia and Brazil. What CBP demanded, and the importer could not produce despite the number and different types of records they presented, was no affirmative determination that at any point in the production forced labor was not used.

 

CBP maintains a list of active Withhold Release Orders that spans countries such as China, Brazil, India, Malaysia and others. Impacted industries include fishing, photovoltaic cells and even tomatoes.

 

Future Forwarding strongly encourages our clients to familiarize themselves with CBP’s Informed Compliance Publication on Forced Labor (available here) and also encourages requiring written answers about component sourcing and final point of manufacture locations. Companies should also lay out the expectation with vendors that production records can and will be produced on demand for either an internal compliance audit by the importer or in response to an inquiry from Customs and Border Protection.

 

For more information about Withhold Release Orders and whether your imports could be subject to this increasingly-used program by CBP, contact your Future Forwarding representative today.

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