Companies are challenged to hire the right personnel and create the internal wherewithal to keep up with compliance challenges bursting forth in 2018.
Those of us in the trade world who thought policy would settle down to some sort of soothed equilibrium a little over a year into the Trump administration are realizing how wrong we were.
While most trade compliance professionals likely have no shortage of business these days, they’re facing increased strain as clients seek immediate answers on how the new Section 232 tariffs on steel and aluminum, Section 201 tariffs on washing machines and solar panels, and soon-to-be-finalized Section 301 tariffs on a range of products from China will affect them.
With understandably anxious clients – compounded by a rapid succession of tariffs unlike anything the U.S. has seen in recent years and an executive branch that finally got a slew of empty high-level trade positions filled through Senate confirmations in March – compliance professionals face a very tricky and complicated trade landscape.
Recently announced trade remedies have “really had an impact” on the workload of AN Deringer Director of Customs Affairs and Compliance Amy Magnus, especially the steel and aluminum tariffs, she said recently.
Part of the reason for the strain stems from a lack of government guidance on how to handle “in the weeds” import filing matters, and figuring out what was and wasn’t covered in the presidential proclamations, she said.
Magnus said U.S. Customs and Border Protection (CBP) is investigating whether, for instance, steel and aluminum articles filed under “immediate transportation in bond” are subject to the tariff rate in place on the date the in-bond was cut, or whether the goods are subject to the tariff rate in place on the date that the entry is presented at the port of final arrival.
“Some of us are of the opinion…that those goods do not fall under the proclamation, because the proclamation does not specifically call out immediate transportation, and the rate of duty should be calculated on the date that in-bond was cut,” she explained. “And there are rulings and there are court cases that support that opinion.”
CBP clarified the issue about a week after my chat with Magnus, saying in an April 5 Cargo Systems Messaging Service (CSMS) message to the trade that “Section 232” duties, for immediate transportation (IT) entries, should be assessed at the time that the entry was accepted at the port of original importation.
The CSMS message acknowledged that CBP may have incorrectly rejected immediate transportation steel and aluminum entries accepted at the port of original importation before the duties took effect March 23, and said the agency is working “to alleviate the need for the trade to resubmit entry summaries, submit post-summary corrections (PSC), or file protests.” The message added that CBP is addressing the matter “promptly.”
But importers who incorrectly paid “Section 232” duties on antidumping/countervailing duty entries should file a PSC to request an administrative refund of the “Section 232” duties prior to liquidation, CBP said.
This transportation matter is an “urgent” one to resolve, because CBP is currently rejecting such entries and ordering duty payments for those goods, “even though some of us are of the opinion that that is an incorrect assessment, and we don’t have anything official from CBP,” Magnus said.
The difference of opinion between traders like Magnus and CBP is creating uncertainty, which is spilling over to clients and the larger trade community “big time,” she said.
“The job has changed a lot,” as the post-2016 election trade landscape is stocked with new challenges, according to Barnes/Richardson attorney Lawrence Friedman, who represents importers and exporters on trade compliance matters.
Several clients after the election started asking Friedman for investment strategies for Mexico, cognizant of President Trump’s NAFTA skepticism.
Mix that with the widespread perception of an increased CBP enforcement focus on antidumping and countervailing duty cases, Section 232, and potential Section 301 duties on China to come, “everybody is running hard to keep up with the changing environment, and how it impacts their supply chain,” he said.
What do compliance pros need to cope with what’s happening?
“I’m telling people, in a serious way, to make sure they’re watching the president on Twitter, which is something we’ve obviously never had to do before,” Friedman said.
That’s in addition to following the more traditional notices released by Commerce and Office of the U.S. Trade Representative, he said.
In the past, “I’ve never seriously told our clients before that Twitter was an important piece of your compliance information,” Friedman added.
Magnus said she can’t remember a time “we had presidential proclamations like this,” and that Section 232 is a novel issue for many trade compliance personnel at AN Deringer.
Applying for product exceptions through Commerce is also a new process for many trade compliance professionals.
“We haven’t had to do it in many, many years,” she said. “This is not your standard, every day, ‘here’s how you do an entry’ process.”
It’s been a hustle for AN Deringer to hire additional personnel and create the level of muscle within the company to keep up with the trade compliance challenges bursting forth in 2018, she said.
One of the key ways trade compliance practitioners can help their clients is to find ways to keep their import duties as low as legally possible, Magnus said.
During a March webinar, KPMG U.S. Practice Leader for Trade and Customs Services Andrew Siciliano advised companies to revisit a part of trade practice that often doesn’t get much attention – import valuations, including transfer pricing – in order for companies to save money.
“There’s a myriad of customs opportunities with respect to changing that value or modifying it or pulling costs out that aren’t dutiable,” he said.
As for staying up to the minute on trade news, Magnus said she follows all the trends, but tries to keep the TV off because “it’s depressing.”
She has a point.
It’s best to know when to take a moment to look away from the madness, and enjoy those more routine aspects of non-work life. Because trade compliance professionals are seeing firsthand that there’s no shortage of challenges awaiting them in the office.
Compliance 360: Feeling the trade policy strain
