Ch 6 BUL
Export Administration Regulations (EAR)
Provide general overview of U.S. export restrictions; published by Bureau of Export Administration (BXA)
Change in tariff classification test
- Alternative method to determine country of origin; used under GATT - Bases country of origin status upon any change in a product that results in a change in its tariff classification
Statement by Ultimate Consignee and Purchaser
- An assurance from the purchaser that the goods will not be resold or disposed of contrary to the requirements of the export license - Necessary to expedite application process for validated license
Bonded warehouse
A warehouse authorized by customs authorities for storage or manufacturing of goods on which payment of duties is deferred until the goods are removed
Country Group List
Countries being boycotted by U.S. government
Ultimate purchaser
The last person in the country of import who receives the article in the form in which it was imported
Export-processing zones (EPZs)
small areas within which especially favorable investment and trading conditions are created by governments in order to attract export-oriented industries
Ad valorem duties
- "according to value" - Any charge, duty, or tax that is applied as a percentage of value
Free trade zone (FTZ)
- A duty-free and tax-exempt industrial park created to attract foreign corporations and create industrial jobs - Defined in regulation as a "restricted-access area, in or adjacent to a Customs port of entry"
World Customs Organization (WCO)
- A global organization whose purpose is to improve the operations and efficiency of customs services - Publishes the harmonized tariff schedule (HTS)
Maquiladora
- A manufacturing operation in a free trade zone (FTZ), where companies import material and equipment on a duty- and tariff-free basis for assembly, processing, or manufacturing. The assembled, processed, or manufactured products are then usually exported back to the country of origin. - Specifically in U.S., there are a number of assembly plants (maquiladoras) along US/Mexican border
Special 301
- A part of U.S. trade law requiring the United States Trade Representative to monitor property rights enforcement around the globe - Allows USTR to create "priority watch lists" to designate countries that should be monitored for unfair trade practices
Agreement on Customs Valuation
- Adopted during Uruguay Round of GATT; currently only a framework agreement - Establishes fair valuation as an internationally recognizable principle - Makes transaction value the internationally preferred means of calculating dutiable value
Origin Agreement of GATT
- Adopts the change in tariff classification as the primary method to determine country of origin - Emphasizes transparency by WTO countries regarding their country of origin rules
Deductive value
- Alternative method for customs valuation - Price that the goods being imported are ultimately sold at in the U.S, with allowable deductions for costs such as international freight, duties, and certain commissions
Value-added test
- Alternative method to determine country of origin; adopted by NAFTA for goods transported within the area - Based upon the use of percentages, either of the value added or percentage of component parts coming from imported materials, to determine the country of origin
Specified processes test
- Alternative method to determine country of origin; has been used piecemeal to target certain products (not universally adopted) - Expressly lists the types of processes or operations that are considered to confer country of origin status.
Bureau of Export Administration (BXA)
- Consists of Export Administration and Export Enforcement - Admin implements and administers the export controls as detailed in the EAR and provides assistance to exporters and re-exporters - Enforcement handles Restrictive Trade Practices and Boycotts restrictions enacted under U.S. law
Chevron Doctrine
- Established by Supreme Court ruling in Chevron USA v. Natural Resources Defense Council - Decisions and regulations of Federal government agencies are to be given deference as long as the agency's interpretation is "permissible" under the Statute that it is interpreting. A party challenging an agency decision or regulation has a heavy burden of proof to show that the agency's interpretation was unreasonable.
United States v. Donald Shetterly
- Export licenses are required for exporting certain commodities under the Export Administration Act. - A general license requires merely that the commodity meets certain standards—no license application is necessary and no license document is issued. - A good that is on the Department of Commerce's Commodity Control List requires a validated license. - Knowingly exporting or attempting to export a controlled commodity without a license is a crime.
Destination Control Statement
- Exporters required to place the statement on commercial invoices and bills of lading - Alert foreign buyers of goods and documents that diversion contrary to U.S. law is prohibited
U.S. marking requirements
- Found in Section 304(a) of the Tariff Act of 1930 - States "every article of foreign origin imported into the United States shall be marked in a conspicuous place in such manner as to indicate to an ultimate purchaser the English name of the country of origin"
Validated license
- Grants authority to a specific exporter to export specific products - Requirement for this license is based on whether: (1) country of import is on Country Group List; (2) exported product is on Commodity Control List; (3) any special restrictions apply - Formal application required to obtain license
National Foreign Trade Council v. Baker
- Highlights foreign affairs doctrine (see separate card) - A state law that prohibits the procurement of goods from a particular country is an unconstitutional intrusion of federal government powers.
Country of origin (as to importing goods)
- Important in order to determine tariff rate - could be WTO most-favored-nation, NAFTA rate, or generalized system of preferences (GSP) rate - Determination can be difficult: (1) rules generally come from national import laws which will vary by country; (2) global manufacturing - products are made in different stages in different countries & their component parts may come from different countries
Samsonite Corp. v. United States
- In order to obtain the duty exemption for offshore assembly found in Section 9802, the exported items must be ready for assembly without further fabrication. - The "bending process" to which the strips were subjected to in Samsonite "did more than 'adjust' the article" and thereby constituted further fabrication.
TARIC Code
- Integrated Tariff of the European Communities is designed to show the various rules applying to specific products when imported into the EU. This includes the provisions of the HTS, but also additional provisions specified in EU law, such as tariff suspensions, tariff quotas, and tariff preferences. - Provides rules for determining whether an import license is required for a particular good
Bureau of Customs and Border Protection (CBP)
- Largest federal law enforcement agency of DHS - Regulates and facilitates international trade - General rule-making authority in customs classification and assessment of duties in the United States is vested in the CBP; courts typically will defer to CBP authority
Mutatis mutandis
- Latin for "the necessary changes having been made" - In terms of HTS interpretation, means that when determining the appropriate subheadings, the same rules used to determine headings shall be used to determine the appropriate subheading, but only between subheadings under the same heading, but not in trying to compare subheadings under different headings.
Computed value
- Least preferred alternative method for customs valuation - Determined by adding the manufacturer's actual labor and material costs, along with an estimate of its general expenses and profits
Customs Modernization Act
- Legal responsibility for classifying and valuing imported products lies with the importer. Importer has a duty of reasonable care in ensuring correct classification & valuation. - Importer must maintain adequate records that substantiate their customs declarations
Transaction value
- Most preferred basis for customs valuation - Value determined on a commercially realistic basis, i.e., goods must be priced at a value that would be the result of a sale between two unrelated parties in the ordinary course of business - Best interest of importer to keep transaction value as low as possible
Rule of specificity
- Primary interpretation rule for the HTS - Requires the use of a heading and subheading that provides a more specific description of the good over one that gives a more general description
Substantial transformation test
- Primary test in country of origin determinations; adopted by U.S. law - Country of origin = last country in which a good or product was substantially transformed - "Substantial transformation" occurs when a product is changed into a new or different product, having a distinctive name, character, or use from that of the original product - Factors to apply rule: (1) whether good went through tariff classification change; (2) amount of value added due to transformation; (3) complexity of processing operation
U.S. Trade and Tariff Act of 1984
- Revised and expanded drawbacks - Main drawbacks: (1) articles manufactured in the U.S. using imported merchandise that are then exported - duties paid on the imported merch can be refunded; (2) imported and domestic merch of the same kind used to manufacture exported articles - duties paid on imported merch can be refunded (even if merch was. not used in exported articles); (3) foreign imports are either exported or destroyed under CBP supervision within 3 years of importation in the same condition and without being used - duties on imports can be refunded
Essential character rule
- Secondary interpretation rule for the HTS; use this if no potential description is more specific than another - Requires the use of the heading for the material, component, or function that represents the principal use of the good
Orbisphere Corp. v. United States
- Terms such as profits and expenses occurring within the United States relating to imported goods should be subtracted when using the deductive method of calculating value for purposes of duty assessment. - Other items that may be deducted from the value of imported goods include the cost of legal services, travel expenses, and accounting costs. - The importer of goods must show the connection between the items being deducted and the U.S. sale of the imported goods.
United States v. Haggar Apparel Company
- The Court of International Trade is the U.S. court that has jurisdiction over any civil matters against the U.S. arising out of federal laws governing import transactions. The court hears cases dealing with anti- dumping, product classification, valuation, and countervailing duty matters. - Permapressing clothes are not assembly under Section 9802 or an "operation incidental to the assembly process." - Merely because a process, operation, or treatment fails to produce a substantial transformation does not automatically result in it being able to obtain a duty exemption under Section 9802. - Courts must give deference to the regulations published by the Customs Service (CBP).
Drawback
A form of tax relief in which a lawfully collected customs duty is refunded or remitted wholly or in part because of the particular use made of the commodity on which the duty was collected
Generalized system of preferences (GSP)
A framework under which developed countries give preferential tariff treatment to manufactured goods imported from developing countries
General license
A grant of authority to all exporters; sufficient for most of the goods exported from the U.S. No application for exportation or government approval is needed when exporting under a general license, just a filing of a SED. Note - no actual license is provided.
Harmonized tariff schedule (HTS)
Classification scheme used by WTO member countries to determine tariffs on imported goods
Immigration and Customs Enforcement (ICE)
DHS agency charged with enforcing immigration law
Specific duties
Duties assessed based on weight or quantity
Technical Committee on Rules of Origin
Established to interpret Origin Agreement-related rules
Foreign affairs doctrine
It is the exclusive domain of the federal government to enact laws regulating international trade
Shipper's Export Declaration (SED)
Must be submitted to Dept of Commerce in order to obtain a general license to export
Automated Export System (AES)
Require electronic system for filing Shipper's Export Declarations (SEDs)
Commodity Control List
Sensitive products whose export is restricted or regulated