CBP Expected To Ease Initial Enforcement of USMCA
International Trade Today (ITT) reported that U.S. Customs and Border Protection (CBP) would initially be lenient with enforcement of relating to the U.S.-Mexico-Canada Agreement (USMCA) comes into force on July 1, 2020.
ITT reported that, during a CBP webinar on June 1, 2020, Maya Kumar, director of textiles and trade agreements at the agency, stated that, “The first six months of this trade agreement, we can pretty much say there will be very little enforcement to no enforcement.”
In addition, the CBP official said that if an USMCA-related request for information via a Customs Form 28 is issued, the agency would allow for additional time to secure the documents needed from suppliers.
“The idea is that for the first six months to be extra flexible and then to still use flexibility when we request documents,” explained Kumar.
USTR Launches Section 301 Investigations Over Digital Services Taxes
The Office of the U.S. Trade Representative (USTR) recently launched Section 301 investigations over digital services taxes that have been adopted or are being considered by some U.S. trading partners.
Specifically, “President Trump is concerned that many of our trading partners are adopting tax schemes designed to unfairly target our companies,” explained USTR Ambassador Robert Lighthizer.
In a Federal Register notice, the USTR identified the countries under investigation as Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey and the United Kingdom. Last July, USTR initiated a similar investigation with respect to a digital services tax in France.
The Organization for Economic Cooperation and Development (OECD) is working on a proposal to try and settle the dispute over digital services taxes between the U.S., France, and the countries targeted under the Section 301 investigation.
For its part, France has agreed to delay imposition of digital services taxes on U.S. companies until 2021 in order to give the parties time to reach a resolution.
The European Commission, the executive arm of the EU, has said previously that digital companies pay, on average, an effective tax rate of 9.5 percent in the EU, compared to 23.2 percent for traditional companies.
U.S. Trade Gap Widens In April As Exports Drop
Exports fell to a 10-year low in April, widening the U.S. trade gap by 16.7 percent to $49.4 billion.
The significant drop in exports—which fell by a record 20.5 percent to $151.3 billion—was the lowest since April 2010, dragged down by fewer shipments of motor vehicles and parts as well as consumer goods. Reuters reported that global lockdowns due to the COVID-19 pandemic had seriously disrupted international supply chains.
Tensions Strain Phase One Of U.S.-China Trade Agreement
The phase one trade agreement reached by the U.S. and China in January is being tested as tensions between the two countries escalate over China’s response to pro-democracy protests in Hong Kong.
Recently, Chinese state-run companies cancelled some shipments of U.S. livestock feed, corn, pork, cotton and meat, potentially making it even harder for China to reach the import targets Beijing agreed to in January, reported The Wall Street Journal.
A Chinese shipping executive said state importers China Oil and Foodstuffs Corp. and China Grain Reserves Corp., “were looking at 23 American soybean cargoes but held off,” in what the shipping executive described as “a warning shot to the Americans to ease the verbal attacks.”
Despite this, the U.S. Department of Agriculture confirmed on June 11 that China recently imported approximately 720,000 tons of soybeans from the U.S., as supply from Brazil has become pricier.
Under the phase one trade agreement, China committed to increasing its purchases of U.S. goods and services by $200 billion over 2017 levels.
Brexit Negotiations: UK, EU Eager To Make Progress; UK Does Not Want To Extend The Transition Phase Past 2020
In early June, the United Kingdom and European Union met for a fourth round of Brexit negotiations in an effort to reach a free trade agreement.
Since the June round, the British government has confirmed that it does not want to extend the transition period beyond this year, even though the EU previously said that it was open to an extension. In light of the pressure to reach a deal soon, both sides have indicated that they are ready to intensify negotiations.
One of the biggest sticking points in the negotiations is fishing rights. The UK claims its fishing industry was harmed when it joined the EU, and now it wants to rectify that harm under a new trade deal.
EU Leading Effort To Eliminate Tariffs On Medical Goods
The European Union wants to eliminate customs duties on a range of medical goods, including antibiotics, penicillin, vaccines, masks, gloves and gowns, to prevent the kinds of supply chain disruptions caused by the COVID-19 global pandemic and make it harder for countries to hoard their own supplies through the use of, for example, export restrictions.
Under the proposal, members of the World Trade Organization would be invited to participate in the tariff elimination agreement.
Bloomberg reported that, “As countries around the world emerge from the lockdown triggered by the pandemic, the EU wants to use trade as a tool to help revive devastated economies and prevent commercial barriers from re-emerging during future health scares.”
UNCTAD Forecasts 27 Percent Drop In Global Trade In Q2
The United Nations Conference on Trade and Development (UNCTAD) estimates that global trade will drop 27 percent during the second quarter of the year, accompanied by marked decreases in commodity prices.
“Worryingly, the duration and overall strength of the current downward trend in commodity prices and global trade remain uncertain,” stated UNCTAD, which added that, “[b]efore the COVID-19 pandemic sent international commerce into a tailspin, global merchandise trade volumes and values were showing modest signs of recovery since late 2019.”
U.S. Chamber Of Commerce Warns Against Reshoring
The U.S. Chamber of Commerce is warning the Trump administration to not overreach in its efforts to reshore American manufacturing from China in the wake of the COVID-19 pandemic, saying such tactics could hurt the economy.
“Protecting the resiliency of our supply chain doesn’t have to mean reshoring all production in the United States,” remarked Chamber Chief Executive Thomas Donohue during an online conference.
President Trump’s calls to bring manufacturing back to the U.S. and lessen dependency on China have resurfaced during the pandemic.
In a TV appearance, White House economic adviser Kevin Hassett said that ensuring domestic production in critical industries was a “real high priority” for Trump and his team.
“We’ve had a lot of policy ideas on the table and we’re sort of sorting through them right now,” said Hassett.
However, the U.S. Chamber of Commerce and other groups worry that expanding the U.S. government’s “Buy American” rules to drugs and medical equipment could prompt retaliation by China and other countries.
Furthermore, Donohue added that most shortages of medical equipment, such as masks and devices, were due to a sharp and sudden increase in demand, not over-reliance on supplies from China.
According to the U.S. Chamber of Commerce, 70 percent of pharmaceuticals used in the U.S. are made domestically, while China produces less than 1 percent of all drugs consumed by Americans.
Canada Sees Major Drop In Commercial Truck Crossings
Inbound truck shipments from the U.S. to Canada continue to drop as a result of COVID-19, even though there are no restrictions on commercial vehicle shipments.
According to the Canada Border Services Agency (CBSA), arrivals during the week of May 25-31 declined 22 percent to 85,743 from 109,640 in the same period in 2019. For the four weeks prior, declines averaged 30.5 percent per week.
In March, the U.S. and Canada restricted border crossings for non-essential travel. The current restrictions are in place until June 21, but do not apply to commercial vehicle crossings.
U.S. Fish and Wildlife Service Expands Production Pilot To All ACE Filers, Effective July 6
In a Cargo Systems Messaging Service item (CSMS #42866592) dated May 29, 2020, the U.S. Fish and Wildlife Service (FWS) stated that beginning on July 6, 2020, submission of the FWS PGA (Partner Government Agency) Message Set in the Automated Commercial Environment (ACE) will be available to all filers in all FWS ports.
CSMS #42866592 further provides that FWS data must be filed through an authorized FWS Designated Port, listed at the document in this link (FWS ACE Wildlife Ports July 6.docx), per Title 50 Code of Federal Regulations Part 14.12. Any CBP Port outside of this list will require a valid FWS Designated Port Exception Permit (DPEP), which will be issued to the importer and will authorize the specific port.
|ProcureCon Indirect West (Virtual)||Online||July 28 – 30|
|ASCM Connect||New Orleans, LA||Sept 13 – 15|
|LogiPharma||Philadelphia, PA||Sept 14 – 15|
|CSCMP Edge||Orlando, FL||Sept 20 – 23|
|ProcureCon Indirect West||Scottsdale, AZ||Sept 21 – 23|
|Transportation Marketing & Sales Leadership Conference||Chicago, IL||Oct 20 – 23|
|Home Delivery World||Philadelphia, PA||Oct 29 – 30|
|Best of the Best S&OP Conference||Chicago, IL||Dec 3 – 4|
*In light of the ongoing COVID-19 pandemic, this list of conferences is subject to change. Please review the individual trade shows/conferences’ website for updates.
Given the current environment, certain information in this Trade Broadcast may change from the date of distribution. Please note the disclaimers below.
2020 UPS® Tradenomics Webcast Series
All webcasts are complimentary
September 24: Brexit Update – Status of a UK-EY Trade Agreement
Time: 11:00-11:45AM ET (Note the morning start in the US)
This year of transition, 2020, is focused on putting together a trade deal between the EU and the UK for implementation in 2021. We will address the current status of the deal and how it might impact trade upon implementation.
Especially for our Canadian customers, but available to all
September 15: Canada’s CARM: CBSA Assessment and Revenue Management
Time: 3:00-3:45PM ET
CBSA’s CARM project is a multi-year initiative designed to modernize and streamline the collection of tax and duty for goods imported into Canada. We will review the program and what is means for the Canadian importer.
Note: dates subject to change
© Copyright 2020 STTAS, a UPS Company. All rights reserved. This document is for informational purposes only. It does not constitute legal advice. Recipient has sole responsibility for determining the usability of any information provided herein. Before recipient acts on the information, recipient should seek professional advice regarding its applicability to the recipient’s specific circumstances.