Monday Morning eBriefing

On September 22, 2018, Governor Jerry Brown signed into law a bill (SB-1402) that would make forwarders, customs and property brokers and shippers liable to pay any judgments that have been entered against drayage companies arising out of their indebtedness to drayage drivers for unpaid wages or expenses, inappropriate deductions, penalties for unpaid unemployment insurance or other judgments in favor of the drivers. Briefly, the bill applies to "customers" who use a "port drayage motor carrier" to provide "port drayage services" using a "commercial driver." Each of the terms in quotes is defined in the legislation, and would include a freight forwarder, property broker, customs broker or shipper. The law is set to take effect in January 2019.

In a letter to U.S. Customs and Border Protection (CBP) and the Treasury Department, the National Customs Brokers and Forwarders Association of America, Inc., (NCBFAA) provided detailed comments on the proposed regulations implementing the drawback amendments in the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). While NCBFAA recognized the extensive work undertaken by CBP in developing the regulations, NCBFAA's Drawback Committee identified three key areas where its members believed the agencies' proposed regulations did not implement the intentions of Congress.

U.S. Customs and Border Protection (CBP) has announced via CSMS #18-000543 that starting today, September 17, 2018, "absolute quota will be processed on an hourly basis, and absolute quota shipments made available for cargo release, between 11:45am - 7:45pmEastern Time every business day."

On September 5, 2018, the FMC released its Interim Report authored by Commissioner Rebecca Dye concerning the investigation of current demurrage and detention practices by the VOCCs and MTOs. The Report was issued in the FMC's Fact Finding Investigation No. 28, which grew out of the Petition filed by a coalition of parties, including the NCBFAA, that had requested the agency to issue interpretative guidance on when the carriers and ports would be required to extend free time in situations where shippers and NVOCCs were not able to pick-up or return containers for reasons that were not their fault.

Ozone-depleting substances (ODS) deplete the stratospheric ozone layer when the chlorine and bromine atoms that they contain come into contact with ozone molecules. One chlorine atom can destroy over 100,000 ozone molecules before it is removed from the stratosphere. ODS that release chlorine include chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), carbon tetrachloride, and methyl chloroform. ODS that release bromine include halons and methyl bromide.

Due to the efforts of the NCBFAA, a new rule that substantially deregulates NVOCC service arrangements ("NSAs") and NVOCC negotiated rate arrangements ("NRAs") went into effect Wednesday, August 22, 2018. The Association would like to express its appreciation to Acting Chairman Khouri and Commissioner Dye for their efforts in promulgating this new rule.

In the August 20 edition of the Federal Register, U.S. Customs and Border Protection (CBP) has issued a correction regarding Modernized Drawback. In the proposed rulemaking, CBP unintentional stated "an exemption for drawback claims for wine which included an imprecise reference to the entirety of paragraph (b)."

The NCBFAA and the AfA have commented on the Interim Final Rule (IFR) for the Air Cargo Advanced Screening (ACAS) program. These comments are the culmination of NCBFAA and AfA's years spent in on-going discussions with the TSA, CBP and the air cargo transportation community, as well as with their members who participated in the ACAS program.

The US Food & Drug Administration (FDA) has created a new product code for low risk devices promoted as general wellness products. Product code 80PWC is now available for import use only. This product code should not be used for FDA device registration purposes under any circumstances.

U.S. Customs and Border Protection (CBP) have announced that effective October 1st, the Consolidated Omnibus Budget Reconciliation Act (COBRA) will increase by 4.886 percent to adjust for inflation. Fees affected by this increase include:

On Thursday of last week, the Senate voted unanimously to pass the Miscellaneous Tariff Bill Act. This bill is an amended version of the document that passed in the House earlier this year. The items that were removed from the original bill are propargyl butylcarbamate, esfenvalerate, collapsible insulated food and beverage bags, rotary hand cutting tools, full tang knives, electric commercial vehicles, and cabs and bodies for electric vehicles. The original bill, with its over 1700 duty suspensions or reductions on imported products not produced in the U.S., can be found here.

Butch Connor of John S. Connor, Baltimore, spoke before the House Port Caucus on Wednesday, July 18th, representing NCBFAA in describing the value of the customs broker, freight forwarder and NVO to the U.S. economy.

The NCBFAA Board of Directors would like to acknowledge the following 18 new members approved at the June 23 meeting in Washington, D.C.

Last Monday, Mary Jo Muoio (Chair of NCBFAA's Customs Committee) and Jon Kent (Counsel) met with a group assembled by John Leonard from the Office of Trade and OFO to discuss the Association's punch list of functionalities missing from core ACE. For well over a year, NCBFAA has engaged in discussion about such issues as AII, the House Airway Bill, de minimis and approximately two dozen functions that our members felt essential to the needs of the industry.

On July 6th, after the additional 25% tariffs on over $34 billion of Chinese goods went into effect, China reacted by enacting additional tariffs of 25% on over 545 products originating from the United States, also valued at $34 billion. These tariffs cover commodities such as agricultural products such as beef and dairy, automobiles and aquatic goods. Additionally, China plans to enact additional tariffs on 114 products originating from the United States, valued at $16 billion should the U.S. enact additional tariffs. These commodities include chemical products, medical equipment and energy products.

Beginning last Friday, the European Union (EU) has started charging import duties of 25 percent on a range of U.S. products as retaliation to the U.S. imposed tariffs on EU steel and aluminum earlier this month. This list of products includes home appliances, motor vehicles, household articles, apparel and footwear, textiles and fabrics, whisky, tobacco products and more. All told, these duties equate to approximately $3.2 billion of U.S. goods.

The White House officially announced that retaliatory tariffs will be imposed on 818 HTS lines, with collection of the additional 25% duties beginning July 6. At the same time, an additional 284 tariff lines are being proposed, but will first undergo a public comment process. The targeted products fall primarily in aerospace, automobile, industrial machinery, information technology and robotics industries. The U.S. Trade Representative announced it will establish a process for U.S. companies to request exclusion from the tariffs on specific products if no alternative supplier exists.

As we have reported previously, based on a petition filed by several trade associations, including the NCBFAA, in FMC Docket P4-16, the FMC has initiated Fact-Finding Investigation 28, headed up by FMC Commissioner Rebecca Dye, that is charged with making recommendations to the Commission concerning unfair or unreasonable assessment of demurrage and detention.

Last week, U.S. Customs and Border Protection (CBP) announced they would be spending the $30M in funding issued through congressional appropriation for FY2018 on enhancements to the ACE platform. CBP's goals for enhancing ACE come from an active dialogue with the industry, government agencies and congressional stakeholders, as well as the Customs Commercial Operations Advisory Committee (COAC). Enhancements include:

Last week, House Speaker Paul Ryan set May 17 as the last day for the Trump Administration to submit notice to Congress of its intent to sign a new NAFTA deal in order for a vote to occur this year (due to the procedural steps that must occur prior to a congressional vote). Now that the May 17 date has passed, Speaker Ryan said there may still be "some wiggle room," though warned that time is running out for a vote in Congress this year. House Ways and Means Chairman Kevin Brady downplayed the significance of the timing for a vote in Congress, urging negotiators to "stay at the table" to reach a modernized NAFTA with high-standard rules. "I hope all countries continue working in good faith to get this done," he said, "whether that means a vote in Congress this year or next."