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House Approves Customs Reauthorisation Bill

The House-Senate conference committee tasked with hammering out a customs reauthorisation bill reached a deal on 9 December after a couple of days of intensive but very productive negotiations. The House of Representatives approved the legislation on 11 December but a vote has been delayed in the Senate over concerns by various lawmakers about a provision not included in the House or Senate versions of the legislation that was inserted in the final compromise at the last minute. That provision would make permanent an existing moratorium on states and localities taxing Internet access or placing multiple and discriminatory taxes on Internet commerce. The existing temporary ban was first put in place in 1998 and has been extended multiple times since then with broad bi-partisan support.

The customs reauthorisation legislation includes compromise language on addressing evasion of antidumping and countervailing duties but does not include a provision to reform the miscellaneous tariff bill process. Instead, the conferees added non-binding language highlighting the need for “a regular and predictable legislative process for the temporary suspension and reduction of duties that is consistent with the rules of the Senate and the House.”

According to a fact sheet issued by the House Rules Committee, the Trade Facilitation and Trade Enforcement Act of 2015 (H.R. 644) will do the following.

  • reduce paperwork burdens for low-value shipments, U.S. goods returned, drawback and residue
  • establish Centers for Excellence and Expertise within U.S. Customs and Border Protection
  • improve consultations between CBP, Congress and the trade community
  • modernise CBP’s automated systems, continue authorisation to complete the development and implementation of the Automated Commercial Environment for processing imports and exports, and establish reporting requirements for programme accountability
  • set requirements and deadlines so that all U.S. government import and export requirements are fulfilled through a single window
  • authorise CBP to establish pre-clearance operations, subject to stringent notification, certification and consultation requirements
  • establish tools for CBP to effectively act against evasion of AD and CV duties through a new process with strict deadlines and judicial review
  • require the negotiation of bi-lateral agreements with the customs authorities of other countries to co-operate on preventing evasion of trade remedy measures
  • ensure that all distributions required by the Continued Dumping and Subsidy Offset Act are made
  • establish a new enforcement fund to provide the necessary resources to enforce U.S. trade agreements
  • expand the Special 301 report to include trade secrets, create additional intellectual property monitoring tools, and establish a chief innovation and intellectual property negotiator
  • require CBP to provide IPR right holders with samples to identify counterfeits
  • create new oversight of trade enforcement by the Office of the U.S. Trade Representative
  • make permanent the Interagency Center on Trade Implementation, Monitoring and Enforcement (formerly the Interagency Trade Enforcement Center)
  • eliminate an exemption in current law that allows the United States to import products made with forced, convict or indentured labour if the U.S. does not produce a sufficient amount of those goods to meet domestic consumption levels
  • create an early warning system to identify trade surges from unfair trade
  • enhance targeting of high-risk shipments
  • provide clear direction and robust tools for identifying and addressing currency manipulation
  • reaffirm that trade agreements must not include obligations for the United States regarding greenhouse gas emissions measures (other than those fulfilling other negotiating objectives in the trade promotion authority law) or require changes to U.S. immigration law or expanded visa access
  • strengthen incentives to address human trafficking
  • address barriers to fisheries trade, fisheries subsidies and illegal fishing through a new negotiating objective
  • ensure greater oversight of administration nominees and at negotiating rounds
  • combat politically-motivated acts of boycott against, divestment from, and sanctions against Israel
  • authorise the state trade expansion programme, improve state and federal export promotion co-ordination, and make improvements so that small businesses fully benefit from trade agreements
  • make technical corrections related to certain outerwear and footwear provisions in the Trade Preferences Extension Act of 2015
  • establish a trade preference programme for certain products of HS Chapters 42, 57, 61, 62, 63 and 65 from Nepal

One of the provisions that could impact U.S. imports of mainland Chinese goods pertains to the investigation of allegations of evasion of trade remedy measures. The legislation provides that if an affirmative determination of evasion is made CBP must (i) suspend the liquidation of any unliquidated entries of the covered merchandise entered between the date of initiation and the date of the determination, (ii) extend the period for liquidating any unliquidated entries of merchandise that entered before the initiation of the investigation, (iii) notify the U.S. Department of Commerce of the determination and request that it determine the appropriate duty rates for such covered merchandise, (iv) require importers of such covered merchandise to post cash deposits and assess duties on the covered merchandise as directed by the DOC, and (v) take such additional enforcement measures as CBP deems appropriate, including initiating proceedings for related violations of law, modifying CBP's procedures for identifying future evasion, requiring a deposit of estimated duties on future entries, and referring the matter to U.S. Immigration and Customs Enforcement for civil or criminal investigation. The DOC would also be required to promptly provide CBP with cash deposit and AD/CV duty rates and a special rule would be established for cases in which the producer or exporter is unknown.

CBP would also be required to determine within 90 calendar days of the initiation of an evasion investigation whether there is a reasonable suspicion that entries of covered merchandise that are the subject of the allegation were entered through evasion. If CBP decides there is a reasonable suspicion, it would have to (i) suspend the liquidation of any unliquidated entries of the covered merchandise entered after the date of initiation, (ii) extend the period for liquidating any unliquidated entries of merchandise that entered before the initiation of the investigation, and (iii) take any additional measures necessary to protect the ability to collect appropriate duties, which may include requiring a single transaction bond or posting cash deposits with respect to entries of covered merchandise.

Some of the deadlines to conduct evasion investigations were modified during the House-Senate conference. For example, CBP would have 15 business days after receiving an evasion allegation or a referral to determine whether to initiate an investigation. If CBP is unable to determine whether the merchandise at issue is covered merchandise, it would have to refer the matter to the DOC, which would make this determination pursuant to its applicable statutory and regulatory authority. The time required for the DOC to determine whether the merchandise at issue is covered merchandise would not be counted in calculating any deadlines under the new procedures. CBP would have 300 calendar days after the date on which an evasion investigation was initiated to make a determination as to whether the covered merchandise was entered through evasion. If the agency concludes that the investigation is extraordinarily complicated and additional time is necessary to make a determination, it would be able to extend the time to make a determination by no more than 60 calendar days.

On the positive side, the legislation does not include a controversial provision added to the Senate version of the bill that would have required the DOC to initiate a CV duty investigation or review to determine whether currency undervaluation by the government of, or any public entity within, a foreign country is providing a countervailable subsidy directly or indirectly to its exporters or products. This provision was strongly favoured by a number of Democrats, including Ways and Means Committee Ranking Member Sander Levin, but was ultimately ruled out during the conference process.

The legislation also provides for enhanced oversight of international exchange rate policies by enabling the U.S. government to pursue specific remedial actions against trading partners that fail to adopt appropriate exchange rate policies (including restrictions on U.S. government financing and procurement, additional efforts at the International Monetary Fund, and by taking into account such currency policies before initiating or entering into any bi-lateral or regional trade agreement negotiations) and providing the U.S. government with additional tools to strengthen trade enforcement.

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