Business Law environment essay
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Ch12Ppt2011.pptxCHAPTER 12 Imports, Customs and Tariff Law
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Administration of Customs and Tariff Laws
Customs divided into seven regions, then further divided into districts.
Customs offices are located at ports of entry to U.S., (e.g., major seaports, airports, and border crossings).
Within each district are field import specialists who can seek advice from national import specialists.
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Administration of Customs and Tariff Laws
The Formal Entry: administrative process required to import goods into the customs territory of a country.
Goods have officially “entered” when:
Arrived at U.S. port of entry.
Goods are permitted.
Delivery is authorized by Customs after inspection and release.
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Administration of Customs and Tariff Laws
The Formal Entry (cont’d).
Estimated duties have been paid or customs bond posted.
Required Documentation: Documents must be filed within 5 days:
(1) An entry manifest or merchandise release form.
(2) U.S. Customs Entry Summary Form.
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Administration of Customs and Tariff Laws
The Formal Entry (cont’d).
Required Documentation.
(3) Proof of the right to make entry (a bill of lading, air waybill, or carrier’s certificate)
(4) The commercial invoice obtained from the seller.
(5) Packing slips to identify the contents of cartons.
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Administration of Customs and Tariff Laws
The Formal Entry (cont’d).
Required Documentation.
6. Other documents required by special regulations (e.g., certificate of origin, quota visa, textile declaration).
The Commercial Invoice.
The Entry Summary and Immediate Delivery Forms.
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Administration of Customs and Tariff Laws
The Formal Entry (cont’d).
Payment of Duties.
Informed Entries: personal smaller shipments valued at $2,000 or less.
Electronic Entry Processing.
Remote Location Filing.
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Administration of Customs and Tariff Laws
Liquidation and Protest.
Liquidation: final computation and payment of duty.
Time Limits on Liquidation: within one year of entry.
Protesting Liquidations: within 90 days.
Judicial review within 180 days (CIT in NYC).
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Administration of Customs and Tariff Laws
Enforcement and Penalties.
Making Materially False Statements to Customs.
Negligent Violations.
See the U.S. v. Golden Ship Trading (2001) case. Relying on assurances from the broker can still make the importer liable.
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Administration of Customs and Tariff Laws
Enforcement and Penalties (cont’d).
Crimes: 2 years plus fine.
Smuggling of certain items will carry longer penalties.
Better to disclose before investigation.
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Administration of Customs and Tariff Laws
Enforcement and Penalties (cont’d).
Aggravating and Mitigating Circumstances (p. 372).
Enforced and Informed Compliance.
Judicial Enforcement of Penalty Actions.
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Administration of Customs and Tariff Laws
Binding Rulings.
Requesting one can help plan business strategy.
Should be submitted in writing.
Judicial Review.
Judicial review of formal rulemaking.
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Administration of Customs and Tariff Laws
Judicial Review (cont’d).
Judicial Review of Binding Rulings, see the U.S. v Mead Corp case: U.S. agencies and courts must grant limited deference to U.S. Customs letters and rulings.
Pre-Importation Judicial review in emergency situations.
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Dutiable Status of Goods
Tariffs, restraints on imports, and other import controls are applied to goods according to the item’s dutiable status.
Harmonized Tariff Schedule of U.S. (HTSUS) – since 1989.
Special schedules in NAFTA agreement.
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Dutiable Status of Goods
Harmonized Tariff Schedule (cont’d).
Using the Harmonized Tariff Schedule.
The Classification of Goods.
See the Camel Manufacturing Co. v. United States case: tents were not sporting goods but camping equipment.
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Dutiable Status of Goods
The Classification of Goods (cont’d).
Understanding Tariff Descriptions.
Determining the Classification of Products: Questions of Law and Fact.
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Dutiable Status of Goods
Using the General Rules of Interpretation.
GRI 1: classification by terms of the headings.
GRI 2: classification includes complete as well as incomplete article if it has the essential character.
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Dutiable Status of Goods
Using the General Rules of Interpretation (cont’d).
GRI 3: when goods could be classified under 2 headings. Go to the most specific, if components go to essential character, when can’t be classified by above go to the last in numerical order.
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Dutiable Status of Goods
Using the General Rules of Interpretation (cont’d).
GRI 4: If goods can not be classified based on above, one should find heading for goods they are most like.
GRI 5: (a) cases (camera, music) should be entered with the article normally sold
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Dutiable Status of Goods
Using the General Rules of Interpretation (cont’d).
5(b) packing goods shall be classified with the goods, unless containers have repetitive use.
GRI 6: subheadings at the same level are comparable.
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Dutiable Status of Goods
Using the General Rules of Interpretation (cont’d).
Rule of Relative Specificity.
Classification by Essential Character.
Classification of Items Packaged for Retail Sale as a Set.
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Dutiable Status of Goods
Using the General Rules of Interpretation (cont’d).
Classification of Items Packaged for Retail Sale as a Set.
See the Better Home Plastics Corp. v. United States (1996) case : essential character, not relative specificity applies, and goods are classified by shower liner not curtain.
Classifications at the Subheading Level.
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Dutiable Status of Goods
Tariff Engineering.
An importer is free to engineer his product in order to take advantage of the tariff laws (Tariff engineering.
Customs Valuation.
Customs value (dutiable value) must be reported at time of entry.
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Dutiable Status of Goods
Customs Valuation (cont’d).
Dutiable value equals transaction value or price actually paid for goods when sold for export plus packing costs, selling commission paid by buyer, value of an assist, royalty buyer is responsible to pay, proceeds of any resale that accrues to buyer.
Agency Commissions.
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Dutiable Status of Goods
Customs Valuation (cont’d).
Production Assists.
Other Methods of Calculating Dutiable Value.
Currency Exchange Rates.
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Dutiable Status of Goods
Rules of Origin.
Definitions and Purposes of Rules of Origin: administered by U.S. Customs and Border Protection.
Types of Rules of Origin.
The General Rule in the United States: if an item is wholly grown, produced, or manufactured in one country, then that country is the country of origin.
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Dutiable Status of Goods
Substantial Transformation Test.
The “Name, Character, or Use” test.
See the Ferrostall Metals Corp. v. United States (1987) case. Japanese steel that was galvanized in New Zealand was substantially transformed to a New Zealand product, not subject to voluntary restraints between U.S. and Japan.
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Dutiable Status of Goods
Substantial Transformation Test (cont’d).
North American Preferential Rules.
Other Trade Preference Rules.
Coming Changes in Rules of Origin?
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Dutiable Status of Goods
WTO Agreement on Rules of Origin: under development since 1995.
Special Rules of Origin for Textiles and Apparel.
Textiles and clothing present complicated trade issues because companies move operations from country to country, raw materials from many locations.
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Dutiable Status of Goods
Special Rules of Origin for Textiles and Apparel (cont’d).
Textiles are governed by special rules into U.S.
U.S. imports from Canada and Mexico are governed by separate rules.
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Dutiable Status of Goods
Marketing and Labeling of Exports.
FTC- if label states “Made in USA” it means, “all or virtually all of the materials, processing or component parts are made in the U.S. and that their final assembly or processing took place there”.
Only negligible foreign content- all or virtually all is a very high standard.
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U.S. Trade Preferences for Developing Countries
Trade Preference: granting of preferential access or trade advantage to imported goods not similar to other goods.
Encourages manufacturing in Caribbean
The goods are imported to U.S. at favorable tariff rates.
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U.S. Trade Preferences for Developing Countries
Generalized System of Preferences.
Beneficiaries are developing countries; goods enter at lower tariff rate. In 1976 program- benefits 140 countries. In 1980’s 4 countries graduated: Hong Kong, Singapore, S.Korea & Taiwan.
GSP Rules of Origin-35% value added in GSP country.
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U.S. Trade Preferences for Developing Countries
Caribbean Basin Initiative.
CBI is collective name given to several laws that grant trade preferences to aid the Caribbean countries. Now includes footware, luggage, and watches.
Caribbean Rules of Origin.
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U.S. Trade Preferences for Developing Countries
Africa Growth and Opportunity Act.
Established to help with political freedom in forty-eight poor countries in sub-Saharan Africa where per capita income is $500/year.
AGOA broadens GSP for Africa and extends it to 2008.
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U.S. Trade Preferences for Developing Countries
U.S. – Andean Trade.
Andean Trade Program: U.S. program to promote economic development in Andean countries while combating drug trafficking and encouraging democracy.
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U.S. Trade Preferences for Developing Countries
CAFTA.
Central America-Dominican Republic Free Trade Agreement with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic.
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Other Customs Laws Affecting U.S. Imports
Drawbacks: refund of duties already paid.
Most common is the manufacturing drawback.
Same-condition drawbacks are utilized when the imported goods are not processed or manufactured, but are reexported in the “same condition” as they were imported.
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Other Customs Laws Affecting U.S. Imports
Foreign Trade Zones.
Goods may be imported without being subjected to tariffs until goods are released into the stream of commerce
See the Nissan Motor Mfg. Corp. v. United States case: machinery entering a foreign trade zone for assembly is not merchandise (not duty free).
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Conclusion
Bureau of Customs and Border Protection is responsible for securing our borders from:
terrorist threats; interdicting illegal immigration and contraband; collecting tariff revenue; enforcing the customs and tariff laws of the United States; and enforcing the export control laws.
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Conclusion
Bureau lives in a tension between securing borders and allow free flow of commerce into and out of the United States.
Tariff laws are intended to encourage and reward certain business decisions.
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