Some Cotton and Tomato Products Face Withhold Release Orders

In 2018, Customs issued statements that they would be increasing their focus on enforcement of forced labor and money laundering laws. Last year, we witnessed one result of this focus with the issuance of Withhold Release Orders (WRO) for products suspected to be in violation of forced or child labor regulations. Recently, they announced an aggressive action aimed at cotton and tomato products produced in the Xingang region of China. The WRO action is aimed at cotton and tomato products grown in the Xinjiang Uyghur Autonomous Region and any goods made in whole or in part using these products.

This action is a step up from a July 2020 advisory caution to businesses about the risks of forced labor in Xinjiang, where the Chinese government is accused of exploiting and repressing the Uyghur population. Early last December, Customs announced the issuance of a WRO on cotton and cotton products from the Xinjiang Production and Construction Corps (XPCC) based on information that Customs believe indicates that XPCC uses forced labor.

WROs require that shipments be detained at the port until a determination can be made that the products do not violate the current sanctions. An importer faced with a WRO must provide documentation that indicates that the detained cargo does not include goods produced from cotton or tomatoes from the Uyghur region. If the goods are found to violate then sanctions they will be excluded from entry into the US.

 

Vietnam Will Not Face Tariff Increases Due to Currency Valuation

The USTR has announced that it will not take any action following their Section 301 investigation of Vietnam’s currency valuation. Though it did find that Vietnam has consistently undervalued their currency and this has resulted in a burdening or restriction of US commerce, they are not taking any specific action. In December, Vietnam the US Treasury had listed Vietnam as a currency manipulator and there had been speculation that the US might impose Section 301 tariffs on Vietnam similar to the actions taken against China.

Trade Representative Robert Lighthizer stated that these practices, ”need  to be addressed,” and that he hoped both sides, ”can find a path for addressing [our] concerns.” Since the imposition of additional tariffs on Chinese goods, our trade deficit with Vietnam has grown dramatically as shippers have moved manufacturing there looking for better tariff treatment. A USTR notice will be published in the Federal Register.

In October, the USTR also launched a  separate investigation in Vietnams policies on timber imports which may have violated domestic and international laws. In response to the this investigation, Vietnam has vowed to tighten their regulations and have doubled fines related to illegal timber imports. They also have pledged to purchase more American timber. Earlier last year, the Vietnamese government announced that they would significantly increase the importation of US liquid natural gas. This action has been closely watched since the US is the biggest market for wood products from Vietnam. Notably, the furniture industry has turned to Vietnam to avoid the higher tariffs and costs associated with manufacturing in China.

Vietnam’s Ministry of Industry and Trade stated that the imposition of tariffs as high as 25 percent would devastate the sector. The actions taken by the USTR means that any future action would have to be implemented by the Biden administration.

 

Gina Raimondo Selected as Commerce Secretary

President Biden has selected Gina Raimondo, a former venture capitalist and Rhode Island governor, to be the new Commerce Secretary. Ms. Raimondo has promised aggressive actions on China to combat their unfair trade practices. The USTR falls under the Commerce Department and she is expected to continue many of former President Trump’s hard line economic policies against China including the Sec 301 tariffs and a growing number of anti-dumping cases. Left unclear is the department’s stance on the requirement to obtain export licenses for sells to telecommunications Giant Huawei Technologies.

 

Sam McClure, LCB

Director of Compliance & Customs Services

 

Need a refresher on tariff rounds and exclusions?

CVI Exclusion Guide 2020

CVI has a free, complete guide to EVERYTHING you need to know for tariff rounds and exclusions, including:

  • HTS Code
  • Publish Dates
  • Exclusion provision number per set list and round
  • Effective & Extended Expiration Dates

The CVI Exclusion Guide 2020 provides you with a link to original USTR exclusion announcements with a breakdown of each excluded product.

Please let us know if you have any questions. We will be regularly updating this document via our website. Check it out here!

 

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Meet one of CVI’s Customs Brokerage & Compliance experts, Sam McClure:

Sam serves as Director, Compliance and Customs Services for CVI. He serves as CVI’s corporate compliance officer and is responsible for overseeing all aspects of our Customs related services, including growth.

Sam started his career in 1977 with Waters Shipping Company in Charlotte, NC. He began as a document runner, soon becoming a leader in operations and customer service for the branch. Sam, along with Linda Masten, founded Central Carolina Shipping Inc. in 1983 as an independent Customs Brokerage firm where he served as Vice President for 26 years. Sam and Linda grew Central Carolina into a successful and highly respected member of the Carolinas trade community. When Charlotte opened their local chapter of the IFFCBA Sam was part of the organizing group and he headed the Customs committee for several years. Sam obtained his Customs Brokers License in 1984 and remained with Central Carolina until the company was acquired by CVI in 2009.

At CVI, Sam has held several positions in both the operations and sales departments. As an expert in U.S. Customs regulations, Sam is often called upon on to provide guidance to importers on Customs compliance issues. He makes regular presentations on matters related to importation and broader regulatory compliance.

– Sam McClure, LCB, Director of Compliance & Customs Services, CVI
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