March 2019 is coming and importers and exporters need to be prepared for what lies ahead. The UK is leaving not only the EU but its Customs Union.  No longer will imports into a distribution center in the EU cover sales in the UK.  Companies will need to set up logistics to manage UK imports and exports and be compliant with new UK customs regulations.  It is likely that a two year “standstill” or “transition” period will be agreed for the April 2019 to March 2021 period.  Should the UK leave the EU without an agreed deal on trade and customs, however, the UK would be a third country vis-à-vis the EU (now typically referred to as the “EU27” denoting the 28 EU Member States minus the UK) and all imports and exports between the UK and the EU bloc would be governed by WTO rules.

According to the British Retailers Consortium, with Brexit more than 180,000 companies could be required to make customs declarations for the first time and the UK is expecting more than 200 million additional customs declarations annually.  The most significant impact is feared for goods that are transported by road between the UK and the EU27 due to the lack of infrastructure at port facilities to handle queues of trucks on both sides of the Channel.  The Republic of Ireland faces significant obstacles given its use of the UK as a land-bridge to the EU single market.  While it is unimaginable that a solution will not be found, without an open skies agreement between the UK and the EU27, airplanes carrying everything from people to post, packages and time-sensitive goods will not be able to fly.     
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Since the advent of the Centers of Excellence and Expertise (CEE’s), US Customs and Border Protection (CBP) has moved its audit function to the Centers and is focusing on single issue audits rather than the focused assessments previously conducted by regulatory audit.

Targeted single issue audits can be misleading.  CBP typically sends an audit questionnaire

The AP recently reported that North Koreans are working in China as forced labor and their products are being imported into the U.S.  The AP followed the production of seafood from Chinese facilities to U.S. retailers, but stated that there other affected product categories, including apparel and wood flooring.

While it has been known that North Korea sends workers abroad, this report is the first time the supply chain has been documented to show North Korean forced labor products entering the U.S., which is a federal crime.  It has been reported that North Korea sends tens of thousands abroad, bringing in revenue estimated at $200-$500 million per year as Kim Jong Un keeps a large percentage of the salaries.  According to the AP, the North Korean workers in China remain under constant surveillance and live in forced labor conditions.
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Post 9/11 U.S. Customs initiated numerous anti-terrorism measures in response to the new need to secure imported cargo and the ports.  In fact, the agency’s name changed from the U.S. Customs Service under the Treasury Department to eventually becoming U.S. Customs and Border Protection under the newly formed Department of Homeland Security.  Post 9/11 Customs advises importers to have control over their supply chains including the security and safety of the imported products.  Each importer has a “profile” with Customs and the agency does a risk analysis when targeting shipments.  Part of that risk analysis is an importer’s compliance with anti-terrorism regulations.

Below is a listing of Customs security initiatives:
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On September 6th Customs and Border Protection (“CBP”) released a statement regarding cargo processing during the upcoming hurricane.   In the wake of Hurricane Harvey, diversion of cargo to open ports was a key factor in allowing trade to continue to operate in the face of the closures of Texas and Louisiana seaports.

CBP will permit ocean vessels to divert from their intended port to another port for discharge. CBP requests that ocean manifests be amended and new destination ports be alerted.  CBP will not issue penalties for violations arising from port diversions during the hurricane.
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“Drawback” is U.S. Customs program that allows importers to get their duty payments refunded by Customs if they export the same or a similar product.  There are lots of permutations and it’s quite a bit of “paperwork” to qualify, but the upside is significant.

Under the recently enacted Trade Facilitation and Trade Enforcement Act (TFTEA), drawback is being simplified and will be effective Feb 24, 2018.  The importing community is still waiting for certain Customs regulations on this, including whether distilled spirits will be eligible for “substitution” drawback.  Customs has historically denied substitution drawback to distilled spirits.
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The American Manufacturing Competitiveness Act of 2016 (“AMCA”) established a new process for the submission and evaluation of requests for temporary duty suspensions and reductions.  Under the AMCA, petitions for duty suspensions and reductions are filed with the U.S. International Trade Commission (“Commission” or “USITC”), and the Commission, with input from other federal agencies, reviews each petition.  The Commission must submit preliminary and final reports to two Congressional committees (the House Committee on Ways and Means and the Senate Committee on Finance).  Following the final report’s submission, the Committees will draft a miscellaneous tariff bill (“MTB”).  Once the MTB passes, the temporary duty suspensions or reductions will be take effect for a period not to exceed three years. The process will repeat again in a second series, no later than October 15, 2019.

In the first series, over 3,100 petitions were submitted to the ITC through its online Miscellaneous Tariff Bill Petition System (“MTBPS”).  Due to petition withdrawals, 2,500 petitions still are under consideration.  On June 6, 2017, the Commission issued its preliminary report to the Committees, entitled:  American Manufacturing Competitiveness Act of 2016: Preliminary Report, USITC Pub. 4699 (USITC June 2017).  
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