On June 7, 2019, the U.S. Department of State published a statement explaining that the U.S. and Mexican governments had come to an agreement on what measures would be taken to address the issue of the increasing number of migrants coming into the U.S. from its southern border. In a string of tweets, President Trump wrote “The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended.” Mexico said it would send 6,000 troops from its newly formed National Guard to its border with Guatemala, a move intended to cut off the flow of migrants trying to reach the U.S. Mexican officials emphasized that the agreement doesn’t make Mexico a “safe third country,” as the Trump administration had sought. Under such an agreement, Central American migrants would be required to seek asylum in the first foreign country they entered. Another part of the deal included the expansion of the Migrant Protection Protocols program across the entire southwest U.S. border. Under the program, which started in January, certain non-Mexican migrants will be forced to wait in Mexico until their asylum cases are resolved.
Customs Ruling of the Week – Classification of Sport Helmets with Integrated Headphones
In NY N303834, U.S. Customs and Border Protection (CBP) determined the classification of sport helmets with integrated wireless headphones. The hard-shell of the helmet is composed of acrylonitrile butadiene styrene (ABS) which is not reinforced and is constructed with an inner lining of expanded polystyrene (EPS). It features a removable goggle clip and is manufactured in three sizes (small, medium, and large). The helmet is said to meet or exceed ASTM standard 2040 (standard specification for helmets used for recreational snow sports), and incorporates Unit 1 Inc.’s “QUAD4LOCK” patented docking system for use with specially designed wireless headphones.
The helmet and headphones are exclusively imported, marketed and sold together as an integrated unit.
The Explanatory Notes (ENs) to heading 6506, HTSUS, state, in pertinent part:
“This heading covers all hats and headgear not classified in the preceding headings of this Chapter or in Chapter 63, 68 or 95. It covers, in particular[,] safety headgear (e.g., for sporting activities, military or firemen’s helmets, motorcyclists’, miners’ or construction workers’ helmets), whether or not fitted with protective padding or, in the case of certain helmets, with microphones or earphones.”
In the case of the item in question, it may (or may not) be fitted with the wireless headphones. The wireless headphones are analogous to the term “earphones” in the ENs to heading 6506, above.
CBP determined that the applicable subheading for the item is 6506.10.6075, HTSUS, which provides for: Other headgear, whether or not lined or trimmed: Safety headgear: Other: Other: Athletic, recreational and sporting headgear. The rate of duty will be Free.
Mexico in Discussions With US Over Proposed Tariffs
O
n May 30, 2019, President Trump threatened to implement a 5% tariff, starting on June 1, on all Mexican imports if the country did not stop the increasing number of migrant persons crossing the U.S. and Mexican border. The White House also posted a statement that laid out the increase of tariffs if no solution arose between the two countries. The tariffs proposed could rise to 10% on July 1st, 15% on August 1st, 20% on September 1st, and 25% on October 1st. Furthermore, the tariffs would remain at the 25% level until the U.S. believes that Mexico had substantially stopped the flow of migrant persons coming through its territory.
Since this past Monday, June 3rd, U.S. and Mexican officials have been holding talks in an effort to prevent the tariffs from going into effect. As of Thursday, June 6, 2019, officials were discussing changes in asylum rules and border enforcement. The proposed plan would dramatically increase Mexico’s immigration enforcement efforts and give the United States a greater ability to reject requests for entry from migrant families, according to senior officials from both countries. Migrant persons would be required to seek asylum in the first foreign country they enter after leaving their home country. Additionally, Mexico would allow an expansion of a program in which those seeking asylum in the US would be required to wait in Mexico while their legal cases proceed. Earlier Friday, the Mexican government said in a statement that it plans to deploy 6,000 Mexican National Guard troops near its border with Guatemala to help stop the flow of Central American migrants seeking to enter the United States. President Donald Trump said in a tweet on Friday, June 7, 2019, that there is a high chance the two countries will reach a deal, and that Mexico may be able to avert tariffs on its goods by purchasing American agricultural products.
USTR Extends “On Water” Exception for Section 301 List 3 Goods until June 15
The Office of the United States Trade Representative (USTR) announced it would be publishing a notice in the Federal Register extending the amount of time certain goods exported from China have to enter the United States before they will be subject to an additional tariff increase from 10 percent to 25 percent.
Per USTR, “Covered products that were exported from China to the United States prior to May 10, 2019 will remain subject to an additional 10 percent tariff if they enter into the U.S. before June 15, 2019. Originally, the deadline to enter the U.S. before the goods would be subject to an additional 25 percent tariff was June 1, 2019. This limited extension will further account for customs enforcement factors and the transit time between China and the United States by sea.”
Trump Administration Follows Through on Plans to Tighten Cuban Sanctions
On June 4, 2019, the Trump Administration formally implemented its previously announced intent to tighten its Cuban sanctions program. Specifically, on April 17, 2019 the Administration had announced that in response to Cuba’s alleged role in “destabilizing” activities throughout Latin America, particularly in Venezuela and Nicaragua, it would terminate aspects of the relaxations, primarily related to travel, previously implemented by the Obama Administration. Yesterday, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) and the Commerce Department’s Bureau of Industry and Security (BIS) implemented that intention in a set of coordinated actions, discussed below.
The Trump Administration announced that these changes were intended to limit tourism, which it alleged has “served to line the pockets of the Cuban military” and to “enrich[] the Cuban military, security, and intelligence services.” To do that, OFAC and BIS announced the following two changes to the Cuba sanctions program:
- Ending Group “People-to-People” Educational Travel: OFAC removed its previous general license that had authorized groups to undertake “people-to-people” educational travel. These changes do not, however, affect: (1) previously scheduled travel that was to be undertaken pursuant to the “people-to-people” authorization, provided that at least one “travel-related transaction (such as purchasing a flight or reserving accommodation)” was undertaken prior to June 5, 2019; (2) the parallel educational authorization for travel related to programs undertaken by accredited U.S. undergraduate or graduate degree-granting institutions; or (3) any of the other 11 general licenses that authorize specific types of travel to Cuba.
- Limiting Aircraft and Vessel Travel to Cuba: In parallel, OFAC and BIS both took steps to remove authorization for non-commercial aircraft and passenger and recreational vessels on temporary sojourn. Specifically, BIS amended License Exception Aircraft, Vessels and Spacecraft (AVS) to remove the previous authorization for such aircraft and vessels that are subject to the Export Administration Regulations (EAR) as well as to establish a licensing policy of denial; OFAC removed the parallel authorization it had previously maintained for associated services. The net effect is to cut off the ability of private aircraft as well as cruise ships and other private vessels subject to the EAR to travel to Cuba, unless a specific license is granted.
OFAC and BIS issued a coordinated Fact Sheet and OFAC updated its previously issued Frequently Asked Questions Related to Cuba to incorporate these changes.
Steel yourselves – troubles ahead?
British Steel has entered compulsory liquidation today with EY being appointed as special managers. Is British Steel the first real victim of Brexit? First, as a result of the delay in the UK’s divorce deal, the EU delayed granting carbon credits to British Steel necessitating a £120m loan from the government to stave off significant penalties in relation to its emissions targets. The directors now cite “Brexit-related issues” as the reasons for the failure of the business, with the on-going uncertainty over future tariffs and trading terms resulting in the company’s order book from Europe falling off a cliff.
Whilst politically this is a huge issue for the government, it is of more concern to the 4,500 employees directly employed by British Steel and the further 20,000 jobs in its supply chain which will be significantly impacted. The failure of the business is likely to have a knock-on effect upon a number of companies involved in the British Steel supply chain, which is not a good start for life outside the EU.
As stated in our earlier blog (https://www.restructuringmatters.com/2019/03/will-britain-be-open-for-business-post-brexit/#more-1877), a lot of British business is holding its breath until our future terms of trade with the EU are resolved – but that doesn’t appear to be any time soon. How many other British businesses will run out of steam before the terms of our departure from Europe are resolved?
Webinar – From NAFTA to USMCA – What is the Future of International Investment Protection for US Investors?
Canada and Mexico Eliminate Section 232 Steel/Aluminum Countermeasures as of May 20
Following the U.S. removal of Section 232 tariffs on steel and aluminum products from Canada and Mexico, both countries have officially lifted their retaliatory tariffs.
- Canadian Finance Minister Bill Morneau announced that effective May 20, 2019, Canada is lifting its retaliatory countermeasures against the U.S.
- The Mexican Ministry of Economy published, and put into force, a decree on May 20, 2019, eliminating its retaliatory tariffs against the United States. This decree repeals Articles 1, 2, and 9 of the decree that initially established retaliatory tariffs on June 5, 2018.
Steel and Aluminum 232 Tariffs from CA and MX No Longer in Effect
Per CBP, “Effective for goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 20, 2019, the Section 232 duty on imports of steel and aluminum articles with a country of origin of Canada or Mexico will no longer be in effect.”
The Cargo Systems Messaging Service message also provides the following filing information for imports of “steel mill and aluminum articles with a country of origin of Canada or Mexico”:
- Do not report Harmonized Tariff Schedule (HTS) classification 9903.80.01 or 9903.85.01.
- For steel products, report the regular Chapter 72 or 73 HTS classification for the imported merchandise.
- For aluminum products, report the regular Chapter 76 HTS classification for the imported merchandise.
Webinar/CLE – Understanding the False Claims Act (FCA) Risks Facing U.S. Importers
Webinar – Tuesday, June 11, 2019
12:00 – 1:00 pm EDT
In recent years, there has been a steady rise in the number of lawsuits brought under the False Claims Act (FCA) alleging that importers have concealed obligations to pay duties to U.S. Customs and Border Protection. The increase in the number of qui tam suits filed by whistleblowers, combined with the current administration’s protectionist policies, suggests that U.S. importers could face increased FCA risks for years to come.
This webinar will provide an overview of the FCA and the “reverse false claim” theory of liability that applies in duty evasion cases where an importer is alleged to have made false statements about tariff classification, country of origin, or the value of goods. The presenters will analyze recent enforcement trends, discuss considerations for responding to a government FCA investigation, and share practical steps that importers can take to mitigate risks.
Continuing Legal Education (CLE) —
We will provide a certificate of attendance and other materials to use in seeking continuing education credits.
This webinar is pending for California & New York CLE credit. California attorneys may claim self-study CLE credit for watching the recording of this webinar.
SPEAKERS
· Frances Hadfield, Counsel, New York
· Jason Crawford, Counsel, Washington, D.C.
· Allegra Flamm, Associate, Washington, D.C.
Questions? Contact: Tricia Wyse (twyse@crowell.com)