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U.S., China Sign Phase 1 Of Trade Deal, While USMCA Advances

President Trump and Chinese Vice Premier Liu He signed the initial Phase 1 U.S.-China trade deal on January 15 in Washington, D.C.

Although negotiations between the two countries in recent months failed to produce a comprehensive agreement to end the ongoing trade war, talks have progressed. Notably, the resulting Phase 1 U.S.-China trade deal halted the planned imposition of additional retaliatory tariffs by both sides in December.

The Phase 1 deal requires the U.S. to cut its 15 percent tariff rate, imposed on $120 billion worth of Chinese goods on September 1 (List 4A), down to 7.5 percent. In exchange, China has committed to increase purchases of American goods and services by at least $200 billion over the next two years, strengthen intellectual property protections, refrain from competitively devaluing its currency, and increase market access to its financial services industry, among various other commitments. The full text of the deal is available here.

Meanwhile, the United States-Mexico-Canada Agreement (USMCA) implementing legislation easily passed the House of Representatives in mid-December and  the Senate on January 16 by a vote of 89-10.

Sources: Federal Register Notice; Reuters; Washington Post

U.S. and France Agree To Suspend Planned Measures In Dispute Over French Digital Services Tax.

The U.S. and France have reached a détente in their dispute over the proposed French Digital Services Tax (DST), resulting in the suspension of France’s DST and of U.S. retaliatory tariffs through the end of 2020. The truce postpones the imposition of tariffs of up to 100 percent on $2.4 billion worth of French goods – such as wine, cheese and handbags – that the U.S. had proposed in response to the DST. In the meantime, the two parties will seek a broader agreement on digital taxation.

The U.S. position is that the DST, which applies to companies with global revenues of at least 750 million euros and digital sales of at least 25 million euros, “discriminates against U.S. companies and is inconsistent with prevailing principles of tax policy and unusually burdensome for affected U.S. companies,” according to a December 2 U.S. Trade Representative (USTR) report. Bruno Le Maire, France’s finance minister, had warned that if the U.S. imposed the tariffs, “it would deeply and durably affect the transatlantic relationship at a time when we need to stand united.”

Separately, the Trump administration has already imposed retaliatory tariffs against the EU over aircraft subsidies to Airbus.

Sources: Wall Street Journal; USTR Report

USTR May Extend Exclusions On Additional China Tariffs

USTR is considering a possible 12-month extension of the second set of exclusions granted in March 2019 to provide further relief from the $34 billion Section 301 tariffs on List 1 Chinese goods.

Interested parties have until February 15 to submit comments to USTR on the proposed extension.

List 1 is comprised of Chinese goods classified under 818 8-digit HTSUS subheadings that became subject to an additional 25 percent tariff on July 6, 2018. The second set of exclusions from this tariff for List 1 goods was issued in March 2019, and it is set to expire on March 25, 2020.

USTR will evaluate exclusion requests on a “case-by-case basis,” and the “focus of the evaluation will be whether . . . the particular product remains available only from China.”

Sources: Federal Register Notice; USTR

CBP Issues Update On New Minimum Security Criteria For CTPAT Members

On December 19, 2019, U.S. Customs and Border Protection (CBP) issued a bulletin updating the trade community on the new Minimum Security Criteria (MSC) for members of the Customs Trade Partnership Against Terrorism (CTPAT) program.

Among the changes are two new criteria that apply to all entities. First, “members must have a code of conduct in place” (ID Number 11.5).  Second, “members must initiate their own internal investigation of a security breach as soon as they are aware of the incident (ID Number 7.37).” CBP also advised that additional criteria were developed for sea carrier members.

All CTPAT members are required to comply with the new requirements by January 2020, even though members are on a four-year validation cycle and most members will not undergo a revalidation in 2020.

Source: CBP Bulletin

Safe Food For Canadians Regulations Effective January 15, 2020

Canada’s Safe Food for Canadians Regulations (SFCR) came into force on January 15, ushering in new requirements that include preventive controls and preventive control plans, along with traceability, food packing, and other requirements that will be phased in over the coming 12 to 30 months, according to the Canadian Food Inspection Agency (CFIA).

“The new regulations simplify and strengthen rules for food in Canada, whether they are produced here or imported into the country,” noted the CFIA.

Information and guidance on the new regulations are available here.

Sources: CSCB; CFIA

Canada: Notice To Importers Regarding TRQs For Certain Steel Imports

On December 31, 2019, the Canadian government published a Notice to Importers (Serial No. 983) regarding tariff rate quotas (TRQs) for certain imports of heavy steel plate and stainless steel wire for the period beginning on February 1, 2020 and ending after October 24, 2021.

There are three quota periods: February 1, 2020 to May 12, 2020; May 13, 2020 to May 12, 2021; and May 13, 2021 to October 24, 2021.

The TRQ quantities specified in each quota period will be divided into two pools: (1) “an allocation pool, available for eligible applicants based on their import history during the reference period”; and (2) “a residual pool, available on a first-come, first-served basis to those who do not hold allocations.”

Source: Canadian Government Notice to Importers

Canadian Customs Extends Evaluation Period For eManifest Turnaround Policy

The Canada Border Services Agency (CBSA) is extending its evaluation period of the “turnaround policy” for truck drivers who arrive at a Canadian border without Advance Commercial Information (ACI), as specified in the eManifest rules in effect since January 11, 2016.

In particular, the CBSA is extending the evaluation period for the turnaround policy until midnight on June 30, 2020.

During the extended evaluation period, “CBSA will allow drivers in the highway mode who arrive without ACI to return voluntarily to the United States to await transmission of both their conveyance and cargo information.” No penalties will be issued when a carrier returns to the U.S.

However, if a carrier is provided an opportunity to return but chooses not to, penalties C378, C379, and C382 may be applied.

Sources: CSCB; CBSA Customs Notice

DOT Solicits Input On National Freight Strategic Plan

On December 27, 2019, the U.S. Department of Transportation (DOT) issued a request for information (RFI) asking transportation stakeholders to comment on the National Freight Strategic Plan (NFSP), an initiative required by the Fixing America’s Surface Transportation (FAST) Act.

The entire U.S. freight transportation system encompasses nearly 7 million miles of highways, railways, navigable waterways, and pipelines that are linked by hundreds of seaports, airports, and intermodal hubs. According to the RFI, this system moves approximately 18 billion tons of freight every year.

DOT estimates that freight tonnage will increase by 44 percent between 2015 and 2045. Additionally, because of worsening congestion on U.S. highways, shippers and beneficial cargo owners are increasingly reliant on multiple modes of transportation to move goods across the nation. As such, DOT seeks to develop a national freight strategy “to retain the United States’ global competitive advantage.”

The deadline for comments is February 10, 2020.

Source: Federal Register Notice

U.S. Trade Deficit Falls In November To Lowest Level In 3 Years

On January 7, the U.S. Department of Commerce (DOC) reported that the U.S. trade deficit fell 8.2 percent in November to $43.1 billion—the lowest level since October 2016.

Not surprisingly, reduced trade volumes with China contributed to the overall lower deficit.

The U.S. trade deficit with China narrowed by 15.7 percent to $26.4 billion in November, while the period of January to November 2019 saw the deficit with China fall 16.2 percent compared to the same period in 2018.

America’s trade in goods, such as autos, food and appliances, posted a $63.9 billion deficit in November. However, a $20.8 billion trade surplus in services was led by sectors such as education and banking.

Sources: AP News; U.S. Bureau of Economic Analysis

CBP Announces Broker License Exams Dates For 2020

CBP  announced dates for its semiannual customs broker license exams for 2020 as follows:

  • Wednesday, April 1
  • Thursday, October 8

Although the exams are typically held on the fourth Wednesday in April and October, CBP opted to change the regularly schedule dates “due to the limited availability of testing sites and to ensure the integrity of exam conditions by preventing commingling of the administration of the broker exams with other types of exams.”

Source: Federal Register Notice

Upcoming trade shows and conferences

Trade Shows/Conferences Location Date
Cargo Logistics Canada Vancouver, Canada Feb 4 – 6
17th Annual Reverse Logistics Association Conf & Expo Las Vegas, NV Feb 4 – 6
Food Shippers of America Orlando, FL Feb 23 – 25
RILA Link2020 Dallas, TX Feb 23 – 26
AFFI’s Con 2020 Las Vegas, NV Feb 29 – Mar 3
JOC’s TPM Long Beach, CA Mar 1 – 4
ICPA (International Compliance Professionals Association) San Diego, CA Mar 15-18
NAFTZ (National Association of Foreign-Trade Zones) Minneapolis, MN May 17-19
AAEI (American Association of Exporters and Importers) Ft. Lauderdale, FL Jun 15-17

2020 UPS® Tradenomics Webcast Series

All webcast are complimentary

Register for the series here

February 6: U.S. Export Compliance Year in Review

Time: 3:00-3:45PM ET

UPS Customs & Trade Compliance and STTAS, a UPS company, will provide the latest information regarding Export Compliance, and provide key insights pertaining to companies who export.

Register for the webinar here

March 12: Update on Brexit

Time: 11:00-11:45PM ET (Please note the AM start time)

UPS Europe Customs Affairs and UPS Customs Brokerage will provide an update on Brexit and what is planned ahead.

Register for the webinar here

April 15: Transitioning to USMCA

Time: 3:00-3:45PM ET

UPS Public Affairs and UPS Customs & Trade Compliance will provide an update on what should be expected to transition to USMCA.

Register for the webinar here

May 20: Annual U.S. Trade Policy Update

Time: 3:00-3:45PM ET

Welcome back to our second annual trade policy review that investigates government policies impacting trade. We will also evaluate tools and options available to a trader to take advantage of opportunities or alleviate possible negative impacts\

Register for the webinar here

Note: dates subject to change

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