Fashion Intel & Analysis

By John Pellegrini, USFIA Customs Counsel, McGuireWoods LLP

As reported in the Customs Overview for June, during a National Association of Foreign Trade Zones conference held in May, an official from U.S. Customs & Border Protection (CBP) disclosed that the agency had ruled that distributors may not enter bulk goods into a Foreign Trade Zone (FTZ), break them down into consumer shipments, and take advantage of the de minimis legislation. The ruling, HQ H275567 (May 8, 2018), has surfaced in CROSS. 

As anticipated, the ruling does not turn on the retail sale prohibition but focuses on the point at which goods are determined to have been imported into the United States. 

The de minimis exception is limited to goods valued at $800 or less and “imported by one person on one day.”

HQ H275567 cites multiple previous rulings in the FTZ context holding that goods are deemed imported prior to the date of admittance to an FTZ. Since at the time of importation the bulk shipment is valued at more than $800, the de minimis exception does not apply. The ruling states: “Under Section 321, the $800 per day limit applies to the merchant at the point of the importation and not the individual purchasers determined subsequent to importation.”

Unfortunately, it appears CBP may be on solid ground here and legislation would be necessary to allow a distributor located in an FTZ to take advantage of the de minimis exception. Clearly, the decision will encourage the use of distribution centers in Canada and Mexico that may be used for that purpose.

The U.S. Department of State has issued a new advisory, North Korea Sanctions and Enforcement Actions: Risks for Businesses with Supply Chain Links to North Korea. The advisory highlights sanctions evasions tactics used by North Korea that could expose businesses—including manufacturers, buyers, and service providers—to sanctions compliance risks under U.S. and/or United Nations sanctions authorities. This advisory also assists businesses in complying with the requirements under Title III, the Korean Interdiction and Modernization of Sanctions Act of the Countering America’s Adversaries Through Sanctions Act (CAATSA). The advisory and more information is available at https://www.state.gov/e/eb/tfs/spi/northkorea/advisories/index.htm.

Reminder: Members-Only Call on China Tariffs – Today! This call will cover the latest updates and recommendations for companies to respond to the tariffs. You must register in advance here.

On July 17, Chairman Dave Reichert (R- WA) announced the House Ways and Means Trade Subcommittee will hold a hearing addressing which products should be excluded from Section 232 tariffs on steel and aluminum. The hearing takes place on Tuesday, July 24 2018, in 1100 Longworth House Office Building at 2:00 PM.

The hearing will include testimonies from U.S. companies describing the difficulties they have encountered firsthand during the exclusion process. In regards to the hearing Chairman Reichert stated, “We owe it to our companies and workers to find effective solutions to streamline and improve this burdensome process and ease the pain created by these tariffs.”   

CBP Webinar on Entry Summary Business Process Document

U.S. Customs & Border Protection (CBP) will be hosting a webinar for the trade on July 23, 2018, from 11 AM - 12:30 PM ET, to review the Entry Summary Business Process Document. To register for the webinar, visit https://cbp.adobeconnect.com/aceesbpd/event/registration.html. More information on this document is available here.

Bloomberg: Domestic Textile Industry Embraces Trump’s Trade War

new report by Bloomberg explains how one industry is embracing President Trump’s trade war: the domestic textile industry in the United States:

The industry immediately saw Trump’s election as the best chance in a generation to reorient U.S. trade policy. And so far he hasn’t disappointed. The president withdrew America from negotiations on the Trans-Pacific Partnership (TPP) trade deal in his first week on the job. Now he’s enacted tariffs on $36 billion of Chinese-made goods, including some textiles, and wants to push that to $250 billion.

But the industry wants more. Textiles -- like fabrics and yarns -- are the materials used to make everything from clothing to seat belts. And duties on end, or finished, apparel and other goods from China would help domestic manufacturers compete better on price with Chinese companies and generate more orders for U.S.-made textiles, industry leaders say. Trump, however, largely avoided targeting consumer products for fear of upsetting voters who could face higher prices at the mall.

The article is available on the Bloomberg website.

During an interview with CNBC last week, President Trump threatened to place tariffs on every Chinese good imported in the United States. “We’re down a tremendous amount. I raised 50, and they matched us,” he told SquawkBox. “I’m ready to go to 500,” he added, referencing the $505.5 billion in imports from China in 2017. The United States has already placed tariffs on $34 billion in imports. 

We will host a members-only call tomorrowTuesday, July 24, at 2:00 PM ET/11:00 AM PT, featuring USFIA Washington Counsel David Spooner and speakers from USFIA Premier Partner PwC. They will discuss the impact of the current tariffs on the industry, the potential for more retaliatory tariffs on imports from China, and strategies for companies to respond to the tariffs. Click here to register in advance for this free, members-only call.

Walorski Leads 149 Colleagues in Bipartisan Letter to Ross Urging Against Section 232 Auto Tariffs

Rep. Jackie Walorski (R-IN), who spoke at the USFIA Washington Trade Symposium this month, led 17 House Ways and Means Committee Members and over 140 bipartisan Members of Congress in a letter to Department of Commerce Secretary Wilbur Ross advising against imposing trade restrictions on imports of autos and auto parts through its investigation under Section 232. They wrote,

We support the Department of Commerce as it seeks a level playing field for our manufacturers and workers in the global marketplace and penalizes bad actors. We believe, however, that the taxpayer dollars being used by the Commerce Department for this investigation would be better spent on other endeavors. We do not believe that imports of automobiles and automotive parts pose a national security threat. Rather, we believe the imposition of trade restrictions on these products could undermine our economic security.

The full letter is available here.

Last night, the Office of the U.S. Trade Representative (USTR) announced the list of $200 billion in Chinese products that will be subject to the 10% retaliation tariff, a response by the United States to China’s retaliation to the U.S. tariffs. Some of the key products of importance to our industry include:

  • rubber gloves and rubber clothing in chapter 40
  • leather products, including apparel, gloves, handbags, flatgoods and travel goods in Chapter 42
  • fur apparel and products in chapter 43
  • rattan bags and products in chapter 46
  • paper products in chapter 46
  • textile products in chapter 50 through 60
  • headwear in chapter 65
  • tableware and articles of precious metals in chapter 71
  • TVs and monitors and machinery in chapter 85
  • furniture in chapter 94
  • plastic hangers

The full list is available in the Federal Register here. We will be discussing this tomorrow, including the impact and our response, during our Washington Trade Symposium.

USTR’s statement is available here.

USTR will hold a public hearing from August 20-23, 2018 and will accept written comments and rebuttals according to the schedule in the Federal Register.