It’s hard to believe we are already rounding the corner into the second half of 2021! As the year began, there were open questions in several categories, and now we are finally getting answers. Here is an update on where we stand today in key areas.
While the FDA’s partnership with D&B's online DUNS portal ended last month, a new FDA portal for FSVP (Foreign Supplier Verification Programs for Food Importers) record submission is now open. The FDA has gotten serious about the enforcement of FSVP requirements. These requirements are designed to ensure that FSVP importers are performing all the required checks on their foreign suppliers of human and animal food products. These products must be up to US food safety standards, and the new portal allows for better communication and record keeping between all FSVP importers and the FDA.
The FDA has also been very vigilant with inspection and review of PPE (personal protection equipment) imports as those shipment numbers increased throughout the Covid-19 pandemic. Although the initial scramble to get PPE good into the US has subsided, the FDA remains alert and continues to conduct audits on PPE shipments to ensure no fraudulent or mislabeled products are imported.
Forced Labor & Enforcement
Concern with global labor and human rights issues have been hot topics. A new WRO (Withhold Release Order) for Cotton and Tomato products from the Xinjiang Uyghur Autonomous Region in China was instated earlier this year. We have already seen examples of enforcement action. Shipments are being held for inspection and requests for additional information are being received requesting proof that the product supply chain does not violate the WRO – from finished product all the way back to the origin of the raw materials. Forced labor discussions continue, and the G-7 countries recently agreed for the need to evaluate products within the garment, solar, and agricultural sectors.
Restrictions on forced labor in supply chains will only continue to get more rigorous in nature and expand to additional product categories. US Importers must ensure their supply chains are compliant with all requirements. Here are a couple of great informational resources to visit:
MTB & GSP Renewal
MTB (Miscellaneous Tariff Bill) and GSP (Generalized System of Preferences) are two programs that allow US importers to benefit from reduced or duty-free treatment of certain goods, under specific conditions. Since MTB and GSP were not renewed before they expired at the end of 2020, importers have been paying duty on these products all year. Once the updated version of each program is agreed upon and put in place, importers will be able to file for duty refunds for all products that qualify. This is not the first time these longstanding programs have lapsed, but US companies are frustrated with how long the renewal is taking.
Finally, the Senate passed ‘The China Package’ on June 8th, which includes the renewal of GSP and MTB. The House must also vote to renew both programs. Although members of the House have expressed interest in the renewals, the version of the bill circulating there is still different than what was passed by the Senate, with concern over the number of tariff waivers on finished/consumer goods – among other things. At this point, GSP and MTB may not be up for vote until after the August recess. Importers will be expected to continue to pay the additional duties while they wait for more news.
Section 301 Tariffs and Exclusions
Along with MTB and GSP, there were provisions in ‘The China Package’ for the USTR to reinstate the Section 301 exclusion process. This would once again allow for more widespread use of exclusions importers could utilize to avoid paying additional duty on certain goods with China as the Country of Origin. As of now, almost all existing exclusions have expired – with only 108 active exclusions remaining of the thousands which were originally granted. There has not been much public facing discussion about the Section 301 tariffs on China goods being lifted, so the possibility of additional exclusions is the only glimmer of hope toward relief for US importers. Many importers found the first iteration of the exclusion process cumbersome and hard to manage but welcomed the relief from high duty payments.
The Section 301 Litigation is still active with the CIT (Court of International Trade) to determine whether the implementation of Lists 3 and 4A were lawful. An outcome which favors US importers, is a long, uphill battle, and a decision may not be reached for 2-3 years. Regardless of which side wins, it is likely the case will be appealed, further extending the time period those involved in the litigation must wait for a decision and any potential duty refunds.
We have a team of experts on staff who would be happy to help you navigate the complexities of these issues. As always, we will continue to monitor these (and additional) issues as they arise and change. Please contact Ashley Coxey, National Director of Business Development, Customs Brokerage or your Laufer representative for more information on any topic discussed in this mid-year US Customs Brokerage and Compliance market letter.