International Trade Law News

The 2009 version of the Harmonized Tariff Schedule of the United States Annotated (HTUSA) is now available and can be found here on the U.S. International Trade Commission's website.

Among other things, the 2009 HTSUSA contains the rules of origin for the U.S.-Oman Free Trade Agreement that went into effect on January 1, 2009 and other changes made to the HTSUSA during 2008.

The 2009 version of the Schedule B codes for use in filing Electronic Export Information via the Automated Export System can be found here. AES will accept shipments with outdated 2008 codes during a grace period for 30 days beyond the expiration date of December 31, 2008. Reporting an outdated 2008 code after the 30 day grace period will result in a fatal error.

Current HTSUSA numbers that are invalid for use in AES as of January 1, 2009 can be found here.

Export codes (which the U.S. calls Schedule B) are administered by the U.S. Census Bureau. Import codes are administered by the U.S. International Trade Commission (USITC).

Labels: AES, HTS

The U.S. International Trade Commission (ITC) has released a new Harmonized Tariff Schedule (HTS) Online Reference Tool that contains an online version of the U.S. HTS.

The ITC's online HTS includes a number of very useful features to importers, such as links directly to U.S. Customs and Border Protections' customs classification rulings on the CROSS system at the 10-digit level, an online version of the relevant chapter notes and links to the chapter 99 item showing temporary and seasonal rates.

Labels: CBP, HTS, ITC

On July 3, 2008, the U.S. Court of International Trade (CIT) denied Totes-Isotoner Corporation’s ("Totes") claim alleging that the Harmonized Tariff Schedule of the United States (HTSUS) violated the equal protection and due process clauses of the U.S. Constitution by setting higher duty rates on men's gloves than women's gloves.

In its opinion, a three judge panel of the CIT held that the mere classification of men’s gloves under a separate tariff heading does not violate the equal protection clause without proof that the government intended to discriminate on the basis of gender. As a result, the CIT dismissed the case for failure to state a claim.

The U.S. Constitution prohibits the government from denying any person the equal protection of the laws. Totes’ complaint alleged that imported men’s gloves are subject to 14% duty rate, while imported gloves for "other persons" are subject to a duty rate of 12.6%. Because these provisions provide for a higher duty rate for men’s gloves, Totes alleged that the HTSUS "discriminates" on the basis of gender.

In its decision, the CIT noted that to properly state a claim for violation of the equal protection clause based on gender, a plaintiff must allege that the government has engaged in gender-based discrimination that is not substantially related to important governmental objectives. To establish the government’s intent, the discrimination must either be evident on its face, or must result in unequal treatment of persons or property within the same class. The CIT held that Totes’ complaint failed on both grounds since Totes’ complaint failed to establish that the gloves will actually be purchased for these purposes or that men will necessarily pay the allegedly discriminatory tax. In addition, the CIT held that because the duty is paid by importers the complaint failed to show how the different duty rates resulted in a discriminatory application of the tax.

Specifically, the CIT stated that:

To be clear, were this a facially discriminatory tax, Plaintiff’s pleadings could be sufficient; in addition, we do not ignore the fact that the tariff schedule makes an express reference to gender. Nor do we assume that this express reference is necessarily benign. Nonetheless, because the challenged tariff classifications are, at worst, "in between" classifications that impose a facially discriminatory tax and classifications that are not facially discriminatory, Plaintiff must at least include an allegation that the challenged tariff classifications distribute the burdens of the tax rate imposed in a way that disadvantages one sex as a whole, or has a disproportionate impact based on sex. To the extent that the challenged tariff provisions do not impose a facially discriminatory tax, Plaintiff must include an allegation of some intent that renders plausible the claim that the discrimination at issue is invidious, arbitrary or unreasonable. In the absence of such allegations, the Complaint does not provide "plausible grounds to infer" a violation of equal protection or allege "enough fact to raise a reasonable expectation that discovery [or further proceedings on the merits] will reveal evidence of illegal" conduct.

Significantly, the CIT dismissed the U.S. Government's claims that the case should be dismissed due to lack of standing and because the case raised a non-justiciable political question. Because the case was dismissed without prejudice, the lawsuit can be revised and re-filed in the CIT. Totes can also appeal the CIT's decision to the Court of Appeals for the Federal Circuit.

This test case has been closely watched by the apparel industry, as a large number of importers of men's and women's clothing, footwear and other articles that are subject to different duty rates have filed similar lawsuits.

Labels: Court of International Trade, HTS

The U.S. International Trade Commission has published the second revision to the 2007 Harmonized Tariff Schedule of the United States Annotated (HTSA). This version of the HTSA took effect on July 2nd. The second revision to the 2007 HTSA corrects a number of typographical errors in the previous version. It also includes changes made by the Committee for Statistical Annotation of Tariff Schedules (commonly known as the 484(f) Committee) and modifications made to the Generalized System of Preferences program. A complete "change record" listing the various changes can be found here.

Labels: HTS, ITC

The U.S. International Trade Commission recently published its first revision to the 2007 version of the Harmonized Tariff Schedule of the United States (HTSUS). The changes correct a number of typographical and other errors in the general notes, duty rates and make several other changes to various provisions of the 2007 HTSUS schedule that took effect in February.

U.S. importers should now use the revised version of the 2007 HTSUS, which can be found at the following link: www.usitc.gov/tata/hts and entitled "HTS 2007 Revision 1". The list of changes made in Revision 1 can be found at the following link: hotdocs.usitc.gov/docs/tata/hts/bychapter/0701chgs.pdf.

Labels: HTS, ITC

U.S. Customs and Border Protection (CBP) has posted on its website a page entitled"Questions and Answers Regarding the Conversion to the 2007 Harmonized Tariff Schedule of the United States with WCO Updates". Many of the answers shed new light on the transition to the new Harmonized Tariff Schedule of the U.S. that will go into effect on February 3, 2007.

For example, CBP explains that the "grace period" for implementing the new version of the U.S. Harmonized Tariff Schedule will work as follows:

Q: How does the “Grace Period” work, does it mean that both 2006 and 2007 data will be available simultaneously - or just that the filers have an extra 17 days to respond?

A: The “Grace Period” applies to classification errors related to tariff classification made by the WCO. These could be either the late filing of a rejected entry for correction or a post entry correction for entries filed during the “Grace Period” that were later found to have classification errors.

ACS will only have "active" HTS numbers available in the reference files for processing entry/entry summary transmissions. For example, if a HTS declared on the transmission of an entry summary on February 10, 2007 is for an HTS that expired on February 2, 2007, the transmission will be rejected by ABI/ACS back to the filer without acceptance. Therefore, the Trade MUST utilize an active HTS number at the time of transmission.

If upon subsequent review of the entry summary by the Import or Entry Specialist CBP determines that the HTS successfully used on the February 10th ABI transmission is not the correct HTS and consequently issues either a penalty or formally rejects the entry summary package, this situation may be mitigated/resolved by using this “Grace Period”. This may also be the case if these same errors are discovered during an audit.

In addition, the Q&As discuss the effect of the HTS changes on NAFTA blanket Certificates of Origin (COs) for good imported in to the U.S. CBP explains that NAFTA Blanket COs will be handled as follows:

The NAFTA product specific rules are being amended to reflect the 2007 HTS. However, they are not likely to be implemented on February 3, 2007 with 2007 HTS. However, because the amended rules do not include any substantive, but are merely re-stated using HS 2007 nomenclature, COs completed using the 2006 rules of origin will be valid for 2007. COs completed prior to implementation will need to continue to reference the 2006 HTS numbers because the product specific rules are directly related to those HTS numbers.

To avoid confusion, it may be helpful for exporters to include both the old and new HTS on the CO. Once the new rules are issued, CBP may request that an amended CO be presented if there is no reference to the 2007 HTS number.

Please keep in mind that this only pertains to importations into the US and not procedures for importing into Mexico and Canada.

Finally, CBP states that importers should have completed all internal classification updates by February 20, 2007. However, CBP advises that if importers experience difficulties in completing their internal classification updates in a timely manner they should work with CBP through their assigned Account Manager.

The 2007 version of the HTSUS that will go into effect on February 3, 2007 can be found at the following link: www.usitc.gov/tata/hts/bychapter/index.htm.

Labels: Customs, HTS

To facilitate the need for an easier transition to the World Customs Organization (WCO) 2007 Harmonized Tariff Schedule of the U.S. (HTSUS), U.S. Customs and Border Protection (CBP) announced a 17 day grace period to U.S. importers to assist in the HTSUS conversion.

The 17 day grace period, which will begin on February 3, 2007 and ends on the close of business on February 20, 2007, pertains to:

• Entries rejected by an Import Specialist or Entry Specialist either manually or electronically by RLF and returned to the filers for classification correction; and
• Post-entry classification corrections.

CBP expects internal classification related updates will be completedall customs brokers to have their ABI software updates to be installed and ready for use on February 3, 2007 and expects importers to have all of their internal classifications to be finalized on February 20, 2007.

The 2007 version of the HTSUS that will go into effect on February 3, 2007 can be found at the following link: www.usitc.gov/tata/hts/bychapter/index.htm.

Labels: Customs, HTS

As we previously noted, the Presidential Proclamation authorizing the modification of the Harmonized Tariff Schedule of the U.S. (HTSUS) to conform to the numerous changes made to the Harmonized System was recently issued. The Proclamation states that the modifications to the HTSUS will apply to "goods entered, or withdrawn from warehouse for consumption, on or after the later of (i) February 1, 2007, or (ii) the thirtieth day after the date of publication of this proclamation in the Federal Register."

The Proclamation will be published in the Federal Register on January 4, 2007. The thirtieth day after January 4, 2007 is February 3, 2007.

In the meantime, today the U.S. International Trade Commission (ITC) posted on its website for the first time the complete 10-digit version of the HTSUS, incorporating the changes made by the World Customs Organization (WCO) and other changes required by U.S. law. The draft chapter-by-chapter listing of the 2007 Harmonized Tariff Schedule and general notes can be found at the following link: www.usitc.gov/tata/hts/bychapter/index.htm. As you will note, this version is prominently labeled "DRAFT" in red on each page, since it will not take effect until February. The ITC has advised that the final version of the basic edition of the 2007 HTS will be posted on the ITC's website on or about February 3, 2007 and a hard copy version will be published by the Government Printing Office at that time.

Another major change that will occur with the implementation of the new HTSUS in February, is that in most cases the tariff codes contained in the HTSUS can be used instead of Schedule B codes for reporting exports on the Shipper's Export Declaration or under the Automated Export System. The list of products for which a Schedule B number still must be used can be found in the "Notice to Exporters" section of the HTSUS at http://hotdocs.usitc.gov/docs/tata/hts/bychapter/0700n2x.pdf.

Labels: Customs, HTS, ITC

On January 1, 2007, customs tariff schedules around the world will undergo significant changes as a result of modifications made to the International Convention on the Harmonized Commodity Description and Coding System (the "Harmonized System"). While most countries finalized their new tariff schedules prior to the January 1, 2007 deadline, the U.S. has not yet issued the final version of its 2007 tariff schedule. As a result, implementation of the 2007 version of the Harmonized Tariff Schedule of the United States (HTSUS) will be delayed until February 2007.

On December 29, 2006, President Bush issued a Proclamation authorizing the modification of the HTSUS to conform to the numerous changes made to Harmonized System. The Proclamation states that the modifications to the HTSUS will apply to "goods entered, or withdrawn from warehouse for consumption, on or after the later of (i) February 1, 2007, or (ii) the thirtieth day after the date of publication of this proclamation in the Federal Register." Thus, assuming that there is not an unusual delay in publishing the Proclamation in the Federal Register, the new HTSUS will take effect in early February 2007.

The U.S. International Trade Commission (ITC) will soon issue the final version of the HTSUS, incorporating the changes to the Harmonized System as well as a number of other changes, including revisions to certain duty rates as a result of the Tax Relief and Health Care Act of 2006 (HR 6111). The ITC has already published a preliminary version of the 2007 HTSUS, which includes scheduled duty rate changes made by several free trade agreements and changes in reporting at the statistical (10-digit) level.

In the meantime, U.S. importers should review the draft version of the 2007 HTSUS published by the ITC in Publication 3851 to see how particular HTSUS subheadings will be affected in 2007 (note that this document only shows the HTS subheadings at the 8-digit level).

Many countries have already issued their 2007 tariff schedules, which will go into effect today. For example, the 2007 tariff schedules of the 27 countries in the European Union was published in the Official Journal of the European Union's website in October (note that Bulgaria and Romania joined the EU today). Canada's 2007 tariff schedule can be found on the Canada Border Service Agency's website.

Labels: Customs, HTS

U.S. importers and customs brokers should be advised that the U.S. International Trade Commission (ITC), the U.S. agency responsible for issuing the Harmonized Tariff Schedule of the United States (HTSUS), has issued another update regarding the status of the 2007 changes to the HTSUS. These changes are necessary to implement the modifications made to the Harmonized System by the World Customs Organization (WCO). While these changes will go into worldwide effect on January 1, 2007, as noted below the new version of the HTSUS incorporating the changes made by the WCO will not be available until January or February 2007. The complete text of the ITC's announcement is reprinted below:

IMPORTANT NOTE CONCERNING THE 2007 HTS:

Effective January 1, 2007, the USITC will post on this website an electronic version of the 2007 Harmonized Tariff Schedule of the United States (HTS) (Preliminary). This version will include changes occurring since the posting of the 2006 HTS (Supplement 1, Rev. 2), but likely will NOT include the following: (a) tariff legislation recently passed by the Congress and (b) amendments recommended by the World Customs Organization (WCO) for implementation on January 1, 2007. By U.S. law, the President cannot proclaim the implementation of these latter amendments in the HTS until a required Congressional layover period is completed; that layover period was completed during the week of December 4-8, and it is anticipated that the President will sign the implementing proclamation before the end of December, with an effective date yet to be determined. As soon as possible after the President signs the proclamation, the ITC will post an updated electronic version on this website, and the Government Printing Office will publish a hard-copy version of the 2007 HTS.

In the meantime, U.S. Customs and Border Protection's Office of Trade Enforcement and Facilitation has issued a blanket authorization for Immediate Delivery (ID) procedures for merchandise to be released on or after December 15, 2006 and until December 31, 2006. The authorization is offered to filers who may want to take advantage of the 2006 HTSUS with 2007 staged duty rates, which take effect on January 1, 2007. A second blanket authorization will be offered 10 days prior to the effective date of the 2007 HTS changes.

Labels: Customs, HTS