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U.S. Issues Advisory on Sanctions Risks Involving North Korea (July 23, 2018)

Posted By RCVF Admin, Saturday, August 4, 2018
Updated: Saturday, August 4, 2018



U.S. Issues Advisory on Sanctions Risks Involving North Korea (July 23, 2018)

 By Melissa Proctor (Miller Proctor Law PLLC)

 

On July 23, 2018, the U.S. Departments of State, Treasury and Homeland Security issued an advisory that warns companies of the tactics used by North Korea to evade U.S. and United Nations economic sanctions. The advisory does not impose any new sanctions on North Korea. Rather, the sanctions on North Korea remains fully in effect. The advisory merely provides examples of how North Korea is attempting to evade existing sanctions, and draws attention to the risks of inadvertent sourcing and purchasing of goods, service and technology from North Korea.[1] In many cases, U.S. companies are wholly unaware of North Korea’s involvement in their overseas transactions.

 

For example, third-country suppliers are known to have moved their manufacturing operations (or have subcontracted portions of their production processes) to factories in North Korea without notifying their customers. In addition, North Korean companies often place false country of origin labels on goods that were produced in North Korea. The advisory also notes that North Korean companies have entered into joint ventures with entities located in other countries—the involvement of North Korea in those entities are not readily apparent to many multinational companies in industry sectors that include seafood, consumer electronics, minerals and precious metals, textiles and apparel, and construction, among others. (A list of the known joint ventures are identified in Annex 2 of the advisory.) Further, companies in North Korea are known to sell their products far below market prices, making them very attractive to middlemen and trading companies.

 

The advisory also points to the use of North Korean labor in international supply chains—where North Korean nationals have been loaned out by the North Korean government to manufacturers located throughout Asia, Eastern Europe, the Middle East and even South America. Based on a report issued by Military.com earlier this year, it is estimated that approximately 200,000 North Koreans are being used as slave labor in over 45 countries around the world, and that the North Korean government earns an estimated $3 billion annually for supplying slave labor to these countries. All of the wages earned by the workers are paid directly to the North Korean government or to companies controlled by the North Korean government. The average wage for a North Korean worker, payable to the North Korean government, is reportedly around $400 per month; however, the workers receive only 10% to 20% of that total amount. The export of slave labor is in addition to the forced labor taking place in the numerous prison labor camps inside North Korea.[2] Affected industries include seafood processing, shipbuilding, medical and pharmaceutical, textile apparel and footwear, IT, and the restaurant and hospitality industries.


1. Current Sanctions on North Korea

 

By way of background, the Foreign Assets Control Regulations,[3] which are enforced by the Treasury Department’s Office of Foreign Assets Control (“OFAC”) prohibit virtually all dealings by U.S. persons with North Korea. The U.S. Customs Regulations also prohibit the importation of North Korean-originating goods into the United States—specifically, imported merchandise that contains any amount of North Korean content is prohibited from entering the United States. CBP has also long had the authority to deny entry into the United States of merchandise produced, in whole or in part, by prison, forced, child or indentured labor under the Tariff Act of 1930 (19 U.S.C. Section 1307). The Trade Facilitation and Trade Enforcement Act (“TFTEA”),[4] which was enacted in 2016, further solidified CBP’s enforcement authority in this area. CBP is authorized to deny the entry of imported goods into the United States where there is evidence that they were produced by forced labor—but the burden was placed on CBP to prove that forced labor was in fact involved in the manufacture of imported goods.

 

The Countering America’s Adversaries Through Sanctions Act (“CAATSA”),[5] however, changed the rules of the game. CBP continues to refuse the entry of imported merchandise into the United States where it is believed to have been produced with forced labor, but the burden of proof now falls on the U.S. importers to show by clear and convincing evidence that North Korean forced labor was not used. If there is evidence of North Korean labor, CBP may detain and seize the imported goods, subject the goods to forfeiture, assess civil penalties, and may even refer the issue to Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”) for criminal investigation. U.S. importers caught up in a violation of CAATSA should expect to have their future import shipments scrutinized by CBP to a much greater degree, such as through increased examinations and detentions. And of course, violators will likely suffer negative publicity as a result of the violations.

 

2. Previous Guidance Issued on North Korea’s Deceptive Practices & U.S. Enforcement

 

Earlier this year, OFAC issued guidance on the various deceptive shipping practices employed by North Korea. For example, North Korea is known to physically alter the names and International Maritime Organization (“IMO”) number of vessels passing themselves off as different vessels. North Korea has also transferred cargo from one ship to another while at sea rather than while located a port, thereby concealing the origin or destination of the cargo. North Korea has also falsified vessel and cargo documents to obscure the origin or destination of cargo, as well as disabled the Automatic Identification System (“AIS”), a vessel’s collision avoidance system, to mask their movements.

 

We also previously reported that CBP had begun scrutinizing import shipments suspected of being made with North Korean forced labor, as directed by CAATSA. For example, CBP has detained and seized shipments from China, and has requested information and documentation from U.S. Importers through the issuance of CF-28s. The documents and records that may be requested by CBP as part of a CF-28 inquiry may include certificates of origin, supplier certifications stating that no forced labor was used, foreign supplier daily production records (including subcontractor production records), finishing and packing records, employee timecards and wage records, employee lists, purchase orders and delivery documents for raw materials, inputs and components used, inventory records, bills of material, commercial invoices, packing lists, proof of payment, factory visit reports and photographs, inline and final inspection reports, factory utility bills and payment, etc.  At the same time, CBP encourages parties, who have information about the use of North Korean or forced labor with respect to imported merchandise, to submit information via its online eAllegation portal—parties who provide tips that lead to the recovery of a penalty, fine, or the forfeiture of violative merchandise may be eligible to receive compensation of up to $250,000.

 

3. Advisory Urges Due Diligence and Awareness of North Korean Tactics


The advisory reinforces the need for companies with multinational operations to make themselves aware of the deceptive practices described above, and to implement due diligence policies and procedures to prevent inadvertent dealings with North Korea that violate U.S. sanctions laws and regulations. Companies should first and foremost ensure that they are screening all supply chain parties and those involved in international activities against the U.S. restricted parties lists, the restrictive measures imposed by the European Union, and other applicable country sanctions lists. Companies should also review the list of joint ventures involving North Korean entities provided in Annex 2 to the advisory.

 

In addition, to assist U.S. companies in their increased supply chain due diligence efforts, CBP previously published guidance on its website recommending the adoption of additional internal controls for compliance and updated its Reasonable Care Checklist. CBP recommends that U.S. importers—

 

  • Fully understand the sourcing, manufacturing and finishing processes for their imported goods, all of the companies involved, where exactly such operations are performed, and the labor conditions that exist in each of the production facilities:
  •  Review the information contained on CBP’s website relating to Forced Labor, such as fact sheets and recent investigations conducted by CBP;
  •  Review the U.S. Labor Department’s “List of Goods Produced by Child Labor or Forced Labor” and “Reducing Child Labor and Forced Labor Toolkit,” as well as the International Labor Organization’s (“ILO’s”) publication “Indicators of Forced Labour,” with respect to high-risk countries, high-risk commodities, and red flags;
  •  Perform regular risk assessments and internal audits of their supply chains to confirm that their imported goods are both “forced labor free” and “North Korea free”;
  •  Implement a formal, robust process for vetting foreign suppliers and vendors in high-risk areas, and incorporate prohibitions against the use of forced labor in purchase order terms and conditions, supplier agreements and codes of conduct; and,
  • Implementation of a formal social corporate responsibility compliance program.


Melissa Proctor is the founder of Miller Proctor Law PLLC, an international trade law firm located in Scottsdale, Arizona. For more than twenty years, she has advised companies on the full of array of international trade issues, imports, exports, embargoes and economic sanctions, anti-corruption compliance, and other agency requirements that impact the cross-border movement of goods, information and services. She may be reached at 480-447-8986 or melissa@millerproctorlaw.com.



[1] See https://www.state.gov/r/pa/prs/ps/2018/07/284312.htm.

[2] See http://www.military.com/daily-news/2017/07/10/how-north-korea-uses-slave-labor-exports-to-circumvent-sanctions.html

[3] See 31 C.F.R. Part 500 et seq.

[4] See Pub. L. 114-125.

[5] See Pub. L. 115-44.

 

Tags:  exports  imports  North Korea  Regulations  sanctions  Tariff 

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Importers and Exporters: Use Digital Tools to Save You Time and Money

Posted By Administration, Thursday, April 12, 2018
Updated: Thursday, April 12, 2018


by Shahar Vigder, Shiperd


We all lead a digital lifestyle – we snap and share photos on Instagram, order a car on Uber, and shop on Amazon. But in our professional lives, when it comes to managing shipping, importers and exporters still use tedious phone calls, e-mails and spreadsheets like it's still 1999. Despite delivering trillions of dollars' worth of goods, importers and exporters have largely skipped the digital overhaul most other industries have undergone. International logistics is still a manual, cumbersome, and non-transparent process, leading to losses of billions of dollars due to inefficiencies. But fret not – a number of tech companies are now bringing innovation to the world's last industry yet to be disrupted by tech; they allow importers and exporters to regain control and visibility over their shipments, manage their shipments online quickly and effectively, and save money and hours of productivity.

When it comes to digitizing our business, our colleagues seem to do just fine. The CFO has an accounting software to follow up on payments, credit limits, and salaries like Xero or Quickbooks. The sales manager has a sales management software like Salesforce. The warehouse manager uses warehouse management software to track goods. So how come logistics managers still use Excel, e-mails and phone calls to manage their duties? One of the reasons is the information gap between the importers/exporters and the freight forwarders. There is large reliance on the service provider to advise on market conditions, legal position, and other logistical considerations that need to be taken into account. This makes service providers the industry's standard setters. However, one of the standards that might not be in the service providers' best interest is having a highly transparent and competitive market. Another factor, not necessarily negative in its own right, is the close relationship between the service providers and clients. The logistics sector is well known for friendly relationships between suppliers and clients. It's not always clear where the line between business and friendship ends as many deals are agreed upon over the phone, sometimes not even quoted until after the operation started. The trust often leads everyone to believe that all will be sorted later, between friends.

Shipping is an industry of highly specialized information flow, middlemen arbitrage, and asset play. But so much of what happens is either unnecessary duplication or prone to manual mistakes and other inefficiencies. The logistics industry has lagged behind most of the modern economy in both transparency and speed. It still uses archaic technology and operates in silos. The logistics industry is partially broken because it is very "offline," therefore wasting time and money while also providing a poor service. Pricing is often not transparent to the customers, resulting in billions of dollars of inefficiencies and missed opportunities.

But what if all processes – from the inquiry stage through the shipment transportation, freight tracking, and payments – could be automated?

Shiperd, the cloud-based Shipping Management Software, surveyed 200 logistics managers in the U.S., Europe, and Israel, and found the following inefficiencies:

  • It can take on average 3 days just to get a quote (by e-mail, fax, or phone)
  • In more than 10% of cases, quotes are inaccurate, confusing, or contain mistakes
  • Up to 50 e-mails and 10 calls are required per single trade
  • Endless questions about freight forwarders invoices
  • No automated updates about the shipment location/ETA
  • Zero transparency on charges, tracking, or process

However, there are some digital innovations that are here to make your life easier as a logistics manager:

  • Digital Freight Forwarders – Aiming to replace traditional freight forwarders, companies like Flexport or iContainers combine modern software and dedicated service to bring accountability, transparency, and efficiency to the supply chain.
  • Marketplaces – Companies like Freightos or Uship compare freight quotes from a global network of forwarders on an online freight marketplace.
  • Transportation Management Systems – Companies like SAP or Oracle provide full enterprise level supply-chain management solutions.
  • Shipping/Workflow Management Software – Shiperd is offering simple-to-use workflow management software for importers and exporters to save them time and money, while gaining control and visibility over their shipments. A cost-effective solution that blends into existing workflows and doesn't require changing methodologies or switching freight forwarders.

With these new innovations, manual processes will become a thing of the past, allowing importers and exporters the ability to better support their clients and move shipments more efficiently.


Shahar Vigder, Founder and CEO at Shiperd, is an experienced entrepreneur, enthusiastic about how innovation and digital together can disrupt complete industries. For more information, visit http://www.shiperd.com.

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Tags:  Digital Tools  Exports  Imports 

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The Proposed Border Adjustment Tax Heads to the Freezer While the Renegotiation of the NAFTA Heats Up

Posted By Administration, Thursday, August 10, 2017
Updated: Tuesday, August 8, 2017


by Melissa Proctor, Polsinelli, P.C.


July ushered in significant new developments on the international trade front involving the controversial proposed Border Adjustment Tax and the renegotiation of the North American Free Trade Agreement (NAFTA). U.S. companies with international supply chains are urged to stay abreast of these new developments as they arise, assess how proposed changes to the NAFTA may impact their operations, and voice their interests to ensure that they are considered by key decision-makers and protected.

1. The Proposed Border Adjustment Tax Has Been Shelved
On July 27, 2017, House Speaker Paul Ryan (R-Wis.) announced that the previously proposed Border Adjustment Tax (BAT) would not be included in the upcoming House tax reform effort. The announcement, which was made by way of a joint statement issued by Speaker Ryan, Treasury Secretary Mnuchin, Senate Majority Leader McConnell (R-Ky.), Senate Finance Committee Chairman Hatch (R-Utah), House Ways and Means Committee Chairman Brady (R-Texas) and National Economic Council Director Cohn, stated that –

While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.

By way of background, the concept of a BAT was originally rolled out in June 2016 in the House Republicans' "A Better Way" publication (otherwise known as "the Blueprint"), which was intended as a means to encourage companies to manufacture their products in the United States. Generally, under a BAT scenario, the corporate income tax would not be assessed on worldwide income; rather, a U.S. company would pay the tax based on its domestic revenues minus its domestic costs – thus, the tax would be calculated on the place of production and sale of the goods (i.e., the destination). Both foreign and domestically produced products would be taxed, and the costs associated with any imported goods or supplies used in sales in the U.S. would no longer be deductive. At the same time, the BAT would not be levied on export sales at all.

Although only murky details were released about the BAT, it was speculated that a BAT could have increased taxes by almost 20% on goods imported into the United States, while offering significant tax incentives to U.S. companies supplying goods to overseas markets. Many in the trade industry also believed that the implementation of a BAT would likely be challenged by other WTO member countries as a prohibited subsidy under the rules of the General Agreement on Tariffs and Trade (GATT). Many industry sectors dependent on imports voiced their opposition to the BAT, including the textile apparel, footwear, computer and automobile industries whose supply chains depend on imports of raw materials and finished goods. The BAT proposal was also opposed by many in Congress, as well; thus, the decision to abandon the controversial BAT will also likely make it somewhat easier for Congress and the Trump Administration to move forward with an overhaul of the tax code.

2. The Renegotiation of the NAFTA May Launch in Mid-August
A recent U.S. Trade Representative (USTR) news release stated that the NAFTA renegotiation is planned to commence between August 16th and 20th, and it has been reported that there will be seven rounds of talks which will be held every three weeks in order to conclude the process before Mexico's 2018 presidential elections.

Previously, on July 17, 2017, the USTR published its specific objectives for the renegotiation of the North American Free Trade Agreement (NAFTA) as required by the Bipartisan Congressional Trade Priorities and Accountability Act of 2015. Acknowledging that the NAFTA, since its entry into force in 1994, has linked the continent through trade and provided new market access opportunities for American farmers and ranchers, the USTR nonetheless stated that the NAFTA has also created new problems for many American workers. The USTR requested public comments from interested parties with regard to the modernization of the NAFTA, and held a public hearing at the International Trade Commission. The USTR received more than 12,000 written responses and heard the testimony of more than 140 witnesses during the hearing, representing various industry sectors. The majority of comments that were submitted, as well as the testimony presented, reflected U.S. industries' support of the NAFTA because of increased U.S. exports to Mexico and Canada since 1994. They also urged that negotiations should not jeopardize existing market access gains and that the key negotiating principle should be, "Do No Harm" as suggested previously by USTR Lighthizer during his testimony before a House of Representatives Committee in June.

The USTR stated that its overall goals will be to break down barriers to American exports through the elimination of unfair subsidies, market-distorting practices by state-owned enterprises, and burdensome restrictions of intellectual property. The USTR also intends to work to modernize the NAFTA, address America's trade imbalances in North America, and ensure that the United States obtains more open, equitable, secure, and reciprocal market access. The stated objectives reflect many (though not all) of the items on the wish lists of various U.S. industry sectors, as offered in the public comments and testimony provided to the USTR. Even though the USTR would maintain existing reciprocal duty-free market access for trade in goods (including agricultural products), there was no specific mention of the application of the "do no harm" principle for the jobs, businesses and industries that currently depend upon that trade with Canada and Mexico. Many industry sectors urged the Administration to maintain current NAFTA benefits and to avoid disrupting the demand for U.S. exports. U.S. exporters, importers and retailers should continue monitoring the NAFTA renegotiation closely.


Melissa Proctor is a Shareholder with Polsinelli, P.C. With significant experience in the customs laws and regulations, export controls, economic sanctions, and international trade, Melissa is committed to understanding companies' operations and providing assistance geared toward helping them reach their specific business and operational goals. She may be reached at (602) 650-2002 or via e-mail at mproctor@polsinelli.com.

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Tags:  Border Adjustment Tax  Exports  Imports  NAFTA 

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Yusen, We Have a Problem!: Benefits of an NVOCC

Posted By Administration, Thursday, January 14, 2016
Updated: Wednesday, January 13, 2016

by Anthony Paik Jr., Yusen Logistics (Americas) Inc.


For the past couple of years the ocean import market has been very volatile to say the least. In the last twelve months alone rates have spiked upwards of $6,000 per 40' container to the East Coast to as low as $1,500 per 40'. As such, customers are now considering carrying both carrier direct contracts (BCO's) and working with NVOCC's/Freight Forwarders or just working without a carrier contract. The difference between the two is that with carrier direct contracts you deal directly with the carrier of the steamship line (SSL) whereas with an non-vessel owned carrier contract (NVOCC) you work with a company that has a license to carry ocean freight but does not own any of the vessels.

There are multiple benefits of working with an NVOCC versus carrier direct. The biggest difference is once you sign a contract with a direct carrier your rate (price) is fixed for that contract period – usually twelve months for the TPEB trade, which is typically from May 1st through April 30th. With an NVOCC you don't sign a contract and you get rates that are fixed for as little as thirty days to twelve months.

Another difference is the need for additional space in excess of your agreement. If you complete your minimum quantity commitment (MQC), you might be subject to higher prices for the space depending on demand.

In addition to the fixed price, you typically only one sailing a week. If your vendors don't get the production completed on time, you miss the sailing and you have to wait another week. That could mean missed deadlines, opening yourself up to compliance chargebacks.

Working with an NVOCC you have multiple carrier options with anywhere from 6-7 carriers and sailing options. So if production is delayed a day or two, you still have options. NVOCC's also don't just sell a rate, they sell service. Associates are on hand to ensure your freight is moving when you need it to move. Customer service works directly with the carriers to place your bookings and track your freight, allowing you to focus on your supply chain and other duties.

The last difference is pricing. As the market moves up and down, the pricing can be adjusted based on spot market rates. If demand is low, the price moves down; conversely, when demand is up, pricing goes up.

These are all options you have with working with an NVOCC that can provide you with additional flexibility when you need it most.


Anthony Paik Jr. is the National Sales Director of Yusen Logistics (Americas) Inc. International Division, an NYK Group Company. Commercially responsible for the Ocean Freight Forwarding Sales for the Americas based in Secaucus, NJ, Anthony has been in the Freight Forwarding industry for 10 years and 10+ years with previously held positions on a national level.

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Tags:  Imports  NVOCC 

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Another Step Closer to Implementation: The Current Status of the Trans Pacific Partnership and Its Implications for Manufacturers, Retailers and Distributors

Posted By Administration, Thursday, December 10, 2015
Updated: Wednesday, December 9, 2015

by Melissa Proctor, Polsinelli, P.C.


The Trans Pacific Partnership agreement ("TPP"), the largest comprehensive regional free trade and investment agreement that has ever been negotiated, is slated to be signed by twelve countries in the Asia Pacific region that represent roughly 40% of the world's economy. The Obama Administration has touted the TPP as a means for boosting U.S. exports, supporting higher paying jobs in the United States, growing the U.S. economy, and countering China's economic expansion. The full text of the agreement was made available to the public on November 5th.

What does all of this mean for retailers, distributors, and manufacturers? For starters, the TPP will eliminate import tariffs on more than 18,000 goods, many of which are currently subject to high duty rates. Although it may be quite a while before the TPP goes into force, companies are advised to take stock of the agreement, assess its potential impact on future sourcing decisions and international sales strategies, and contemplating the rollout of processes for making import claims under the TPP as well as responding to requests for TPP certifications from overseas customers. This article provides a brief overview of the current status of the TPP, the TPP's rules of origin and the requirements for making and supporting valid claims for preferential tariff treatment.

1. Current Status of the TPP and Its Entry into Force
For the past five years, the following countries have been actively negotiating the TPP: United States; Australia; Brunei; Canada; Chile; Japan; Malaysia; Mexico; New Zealand; Peru; Singapore; and, Vietnam. Negotiations officially concluded on October 4, 2015, and the signatory countries are slated to formally sign the agreement in New Zealand on February 4, 2016. Thereafter, the signatory countries' respective legislative bodies will have a maximum period of two (2) years in which to implement the TPP into their respective local laws.

With respect to implementation of the TPP in the United States, Section 106(a)(1)(A) of the Trade Priorities Act (Pub.L. 114-26) requires the President to notify Congress of his intent to enter into an international agreement, such as the TPP. President Obama provided that notification to Congress on November 5, 2015. The Trade Priorities Act also requires the President to sign the international agreement no later than ninety (90) days after providing notification to Congress, which will be February 3, 2016. On November 17, 2015, the U.S. International Trade Commission ("ITC") announced the commencement of an investigation on the likely economic impact of the TPP on the United States. Such ITC investigations are part of the international agreement implementation process and the ITC generally issues its reports to Congress when the implementing legislation is about to be voted upon. In the case of the ITC's investigation of the TPP, the impact analysis report is expected to be released on or around May 18, 2016. It is likely that Congress will delay its vote on the TPP implementing legislation until after the ITC's report has been released. Further, in light of the upcoming Presidential election at the end of 2016, there will likely be additional delays in the implementation of the TPP in the United States.

It should also be noted that the TPP will enter into force only after at least six of the signatory companies (that represent a minimum of 85% of the GDP of all of the participants) have implemented the agreement into their local laws. Thus, the TPP may not go into force until sometime in 2017 or later.

2. The TPP Rules of Origin and Direct Shipment Rule
As noted above, duties on more than 18,000 products will be eliminated under the TPP. However, only goods that are considered "originating" in a TPP member country will be afforded preferential tariff treatment. There are three ways in which a good may be eligible for preferential treatment under the TPP:

  • It is wholly obtained or produced entirely in the territory of one or more of the parties
  • It is produced entirely from TPP-originating materials
  • It satisfies the product-specific rules set forth in Annex 3-D to the agreement (e.g., regional value content rules, tariff-shift rules, etc.)

The agreement also provides a de minimis rule that will allow products containing non-originating materials to qualify for the TPP – where the product-specific rule of origin cannot be satisfied. Those goods will still be afforded preferential treatment if the value of all of the non-originating materials does not exceed 10% of the value of the finished good.

In addition to satisfying the TPP rules of origin, originating goods will only be eligible for preferential trade benefits if they have been transported directly from one member country to another without passing through the territory of a non-party. However, originating goods that transit a third country may still retain their TPP eligibility provided that: (a) they do not undergo any operation in the third country other than unloading, reloading, separation from a bulk shipment, storing, labeling or marking, or any other operation necessary to preserve them in good condition or to transport them to the importing TPP country; and, (b) they remain under the control of the customs authorities in the non-party's territory.

3. Making TPP Claims
Once the agreement goes into force, companies in TPP member countries may claim preferential tariff treatment on imports of qualifying goods. TPP claims may be made at the time of entry provided that the importer has the required certification statement. In addition, companies may submit retroactive claims for qualifying goods post-importation in order to obtain duty refunds – this scenario is likely where the required certification statement and supporting eligibility records were not available at the time of entry.

As noted above, importers are to make claims for preferential tariff treatment under the TPP based on a written certification of origin attesting to the fact that the goods in question satisfy the applicable rules of origin. The certifications are not required to be submitted to the importing country's customs authorities at the time of entry; rather, they must merely be in the possession of the importer when a claim is made. The certifications may be prepared by the exporter, producer or even the importer itself. The certification may apply to a single shipment or to multiple shipments made over the course of a 12-month period. Certifications may be submitted in English, but the importing country may also require that a translation into its local language be provided as well. There is no specified format for the certification or form that must be used. Rather, the certification must merely be in writing and contain the following data elements:

  • Names and addresses of the Importer, Exporter or Producer
  • Certifier's name, address, telephone number and e-mail address
  • Description and Harmonized System Tariff Classification of the goods
  • Invoice number (if known and if the certification of origin covers a single shipment)
  • Origin Criterion
  • Blanket Period covered by the certification
  • Signature and date of the certifier

As with other free trade agreement that are currently in force, it is likely that many of the importing TPP member countries will provide suggested templates or recommended formats for the certifications, though they will not be legally required to be utilized. Further, the certification must contain the following statement:

I certify that the goods described in this document qualify as originating and the information contained in this document is true and accurate. I assume responsibility for proving such representations and agree to maintain and present upon request or to make available during a verification visit, documentation necessary to support this certification.

Importers making TPP claims will be required to maintain documentation relating to their imports (including the certification of origin and additional documentary evidence that substantiates the goods' eligibility) for a period of five years from the date of importation. Similarly, exporters or producers that issue certifications to their customers must also maintain records for five years from the date the certifications were issued (as well as all records that demonstrate TPP eligibility).

At this stage of the TPP process, it is still too early to predict when the agreement will actually go into effect. However, it is a good idea for companies to begin thinking about how the TPP may impact their operations and whether it could be used for greater duty and cost savings in the future. Companies are urged to review the agreement, assess whether their goods or raw materials may qualify, monitor developments relating to the ITC's investigation and release of the draft U.S. implementing legislation down the road.


Melissa Proctor is a Shareholder with Polsinelli, P.C. With significant experience in the customs laws and regulations, export controls, economic sanctions, and international trade, Melissa is committed to understanding companies' operations and providing assistance geared toward helping them reach their specific business and operational goals. She may be reached at (602) 650-2002 or via e-mail at mproctor@polsinelli.com.

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Tags:  Exports  Imports  TPP  Trans Pacific Partnership 

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