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Congress has been busy with trade legislation recently; sometimes, that is a good thing, and sometimes, it is questionable. On the good news, a bill has been introduced that would reinstate the Generalized System of Preferences (GSP), a preferential trade agreement that has been allowed to lay dormant for far too long. Introduced in the House by Reps. Debbie Wasserman Schultz (D-FL) and Elvira Salazar (R-FL) and sponsored by other House members from Florida, this bill would reinstate GSP and make it retroactive to the December 31, 2020, expiration date. The proposed renewal would extend the program to the end of 2029. GSP renewal has been attempted in previous legislation only to fall flat despite bipartisan support. While the prospects for passage of this bill are unknown, at least it has not been forgotten. GSP is the largest preferential trade agreement, covering 119 countries and dating back to its establishment under the Trade Act of 1974. The Miscellaneous Tariff Bill (MTB), another tariff reduction package, is not included in this legislation. The MTB had been included in previous attempts to renew GSP.

Several bills addressing China have also been introduced. HR 7476, The Countering Communist China Act, was introduced on February 29 by Rep. Kevin Hern (R-OK) and has been termed “the largest and most comprehensive legislation addressing the Chinese Communist Party ever introduced” by its sponsors. Among other actions, this bill would end permanent normal trade relations status for goods imported from China. This could result in very significant duty increases for any goods imported from China. The bill would also restrict investments in Chinese tech companies while giving incentives to US companies to manufacture drugs and medical supplies domestically.

S 3866, The Declaring our Energy Independence from China Act, was introduced in the Senate by Sen. Josh Hawley (R-MO). It would impose additional tariffs of 25% on imports of battery components and components of wind and solar energy from China. These tariffs would increase by 5% a year, reaching a final rate of 50%. The bill would also require the US Trade Representative (USTR) to issue a report on Chinese subsidies for these industries over the past 15 years.

Sen. Hawley also introduced the Protecting American Autoworkers from China Act (S 3831), which would increase the tariffs on Chinese-made automobiles from 2.5% to 100%. The tariff increase would be extended to vehicles made by Chinese companies regardless of where they are actually produced. China has been trying to enter the US market with a range of lower-cost electric vehicles.

Addressing both China and the De Minimis issue, The Coalition to Close the De Minimis Loophole, composed of labor unions, domestic manufacturers, and trade groups, is working with Congress to change the current de minimis policy. In most cases, goods valued under $800 can be imported into the US duty-free and under lower entry requirements. Rep. Earl Blumenauer (D-OR), the ranking member of the House Ways and Means Subcommittee on Trade, is working with the Coalition. In 2023, Rep. Blumenauer introduced legislation that would have barred China and certain other countries from access to the de minimis exception. This announcement comes the day after Rep. Mike Gallagher (R-WI), the chair of the House Select Committee on the Chinese Communist Party, denounced the reported increase in de minimis shipments in FY 2023-24. The report shows that CBP processed over 1 billion de minimis shipments in FY’23 and has already processed nearly 500 million in FY’24. Not all trade associations are in favor of curtailing the de minimis legislation, as they view the exception as beneficial to some industries and claim that the harm caused by the higher allowance has been overstated by its opponents. What is not disputed is that the US offers a more generous de minimis exception than our trading partners. It is also evident that some companies have abused the exception and, in some cases, have blatantly violated the de minimis regulations. In view of the situation, it is expected that some type of change is inevitable.

The Illegal Red Snapper Enforcement Act (S3879) introduced by Sen. Ted Cruz (R-TX) would require that the Department of Commerce develop a standard methodology for identifying the country of origin for the importation of red snapper. Currently, there are chemical tests that can determine the origin of many foods, but not one for red snapper. The impetus for this legislation is Mexican boats illegally fishing for red snapper in US waters. The catch is then returned to Mexico, where it is mixed with legally caught fish and exported to the US.

For Customs Brokers, the big news from Washington was the passage of the Customs Business Fairness Act (CBFA) included in HR 4366, The Consolidated Appropriations Act of 2024, an appropriations bill signed by President Biden on March 9. The CBFA gives brokers subrogation of claims for any duties paid on behalf of an importer who subsequently files for bankruptcy. Legislation of this type has been pushed for years by the brokerage industry, which has faced the possibility of a claw back on duties outlaid on behalf of an importer.

 

 

Best Regards,

Sam McClure, LCB

Director of Compliance & Customs Services

 

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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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