Exclusion portal to open June 30th

Importers who have been attempting to get their products removed from one of three lists of HTS numbers carrying an additional 25% in duty from China are no strangers to the process of requesting exclusions. However, effective June 30th, the Office of the United States Trade Representative has announced a changed policy for the group of products which were on the third list and were increased from 10% to 25% earlier this year.

The full details of the announcement were published in the June 24th edition of the Federal Register.

Beginning on June 30th at http://exclusion.ustr.gov, companies will use an online portal to submit an exclusion request for consideration by the agency. The window for submission is only open between June 30th and September 30th.

Remember, an exclusion request is a public request and for fourteen days after posting, responses as to why the product should not be excluded can be submitted by interested parties. The original submitter of the exclusion will then have seven days to file a response.

Companies wishing to file an exclusion will need to register with the portal when it opens. The data elements that will be required for the exclusion request can be found in .pdf format here with thanks to Susan Kohn Ross of MSK.

If you or your company are interested in requesting an exclusion and would like for Edward J. Zarach & Associates to assemble and submit the request on your behalf, please contact your account representative who will work with you on this process.

CBMA information for 2019

The Craft Beer Modernization and Tax Reform Act of 2017 (CBMA) was passed as part of the Tax Cuts and Jobs Act. It amends the Internal Revenue Code with respect to the tax assessed on of certain imported and domestically produced alcoholic beverages, including beer, wine and distilled spirits.

The CBMA is unlike any other tax reduction program in that it’s controlled overseas and seemingly backwards. To receive the reduction the importer must go to the manufacturer for a certification that states the importer is entitled to the reduction on a set number of barrels/bottles, etc., for the stated year (2018 or 2019). Importers need to reach out to their manufacturers to be supplied this document in a timely manner helping to avoid any lapses.   A working template is available for the manufacturers that they can renew yearly. We recommend educating your manufactures about what they need to provide for this program. Requirements are detailed here for your use.

This certification can dramatically decrease the tax due on imports. In one case, we’ve seen importers receive $20,000 back on one importation. This Program is now being considered for 2020 calendar year. We encourage all importers to reach out to their suppliers to take advantage of this reduction and to make sure we get a yearly copy of the CBMA Assignment Certification to use when we process your cargo. Please feel free to reach out to us if you need assistance on this. The CBMA is unlike any other tax reduction program in that it’s controlled overseas and seemingly backwards. To receive the reduction the importer must go to the manufacturer for a certification that states the importer is entitled to the reduction on a set number of barrels/bottles, etc., for the stated year (2018 or 2019). Importers need to reach out to their manufacturers to be supplied this document in a timely manner helping to avoid any lapses.   A working template is available for the manufacturers that they can renew yearly. We recommend educating your manufactures about what they need to provide for this program. Requirements are detailed here for your use.

CBP clarifies what China origin merchandise requires increase from 10% to 25%.

Federal Register notice indicates date of export from May 10th onwards.

Customs and Border Protection today clarified the details of the USTR’s Federal Register notice regarding the increase from 10% to 25% on the third annex (list) of HTS numbers from the Section 301 finding against China.

The FT notice states that the duty is Effective with respect to goods (i) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, AND (ii) exported to the United States on or after May 10, 2019.

The duty will be collected on air and ocean shipments which are exported from China beginning tomorrow. Goods which have already been exported and are in transit by air or sea from today’s date forward are not subject to the increase.

This is a key differentiator. However, as of today, per CBP on a trade call, we received this bit of disturbing news: ACE is not programed to support this so ALL entries with a consumption date of May 10th will be getting applied the new rate of 25% regardless of the date of export.

An announcement will be issued shortly with a new tariff number to resolve this issue but there was no indication of when we will be receiving this new tariff number. Depending on when the new tariff number becomes available and if the entry is still “In Trade Control” (prior to payment of duties) the entry can be updated with the new tariff number allowing the Section 301 rate to return to 10%. If this process becomes available after the Entry is triggered onto Statement it will require a Post Summary Correction (PSC) to obtain refunds of the duties paid at 25% where the date of export is prior to May 10, 2019.

Zarach attends WCA

The WCA Conference is a behemoth. Known as the largest and most powerful industry networking event of the year, the first time you walk in is an overwhelming callithump of people and excitement. Having the event in Singapore, one of the cleanest, safest and most beautiful cities in the world, only adds more heat to the fire of possibility burning among attendees.  WCA offers a chance to meet with new and existing partners from around the world in one central place. What would normally be weeks of travel and expenses courting these opportunities one at a time, is here in a single place to hold meetings and network.

This year I attended WCA to discuss new partnerships to work with our new location in Doral, Florida to serve the greater Miami area and commodities from South America. As we work with cargo bound for Amazon warehouses, our new location will offer a large amount of cooler space to handle cut flowers, seafood and other temperature sensitive commodities. Because Miami is a hub for dangerous goods cargo, live animals and perishables, we find ourselves strategically placed to serve new partners who need a US representative. We expect to be open in the first half of 2019 in our space.

The chatter among attendees, even though it’s an international event, was still centered on the US President and trade deals that are being worked or renegotiated. “What Will Donald Trump Do?” is the question on everyone’s minds. Thankfully, for the bulk of attendees it appears that the market is stronger than any individual forces. The growth and development of more strategic international partnerships is the best way to manage the cycles of growth and recession in our industry.

The WCA Conference isn’t the only meeting that offers a way to nurture these relationships. I attended the Global Ocean Agency Lines (GOAL) conference in Las Vegas, NV with CJ Coral from our Chicago office and Louis DeMarco from our NY office. The GOAL conference allowed us to meet with our longtime partners to discuss shared business and talk regulations that impact our cargo. It’s a great time to share market insights from across the country and share the best practices we’ve established.

The GOAL conference is a much more intimate gathering than WCA. With a total of approximately 200 attendees from 70-80 companies, it’s a small group with a more micro view of the industry. The hottest topic we discussed was trucking congestion and solutions we can implement to avert delays. We spent time organizing ways to pool trucking resources as more cargo arrives at ports and needs to be distributed with fewer truckers available.

Professional networks and the events they offer are important tools in making connections in our industry. Having an organization that facilitates partnerships, payments, insurance, opens up trade lanes, and mediates disputes takes some of the risk out of new partnerships. They bring the value of confidence to opportunities.

Looming tariff increases cause major congestion

On March 1st, the 25% tariffs on $200 billion in Chinese goods will go into effect if a negotiation isn’t reached by the two countries. Doesn’t it feel like we’ve said that so many times already? The looming increase has been the talk of trade since they were announced and then delayed before the implementation date of January 1st. In an effort to avoid those tariffs, importers have been busy front loading cargo, bringing inventory into the US before it’s needed to then be warehoused until it can move to sellers across the country. The steady influx of cargo into warehouses and eventually on the road will complicate an already congested transportation situation in major cities around the country.

Congestion issues in traffic have been exacerbated by a shortage of drivers, the re-invigoration of the polar vortex that dropped snow and frigid temperatures on the Midwest US – where a chassis shortage was already slowing container traffic in major hubs. The overloaded traffic and now as warehouses are bursting at the seams leaves the world watching the negotiations as they play out between the US and china. Will cargo stop flowing because no deal is reached? Or will the US and China come to agreeable terms so the urgency of imports can fade into a more temperate climate?

Sticking points to the agreement include intellectual property, cyber theft and the trade imbalance between the two nations. Those are real issues that require careful negotiation because the nations are irrevocably betwixt to each other and facilitating healthy trade is beneficial to both though the path to get there is painful and uncomfortable for everyone who makes a living in trade and logistics. We at Edward J. Zarach & Associates are working hard to keep cargo moving as smoothly as possible during this tumult. If you have questions or concerns about cargo coming from China, we encourage you to reach out to your representative and discuss options.

Importers should continue to plan for 25% from China on January 1, 2019

Sometimes, there is news we wish we didn’t have to share, but this is one of those instances.

As all US importers buying from China are aware, the US determined that for national security reasons, select goods of Chinese origin were targeted for additional duties under a Section 301 investigation.

There have been three lists, or “annexes” published with proposed and adjudicated tariff numbers.

The first annex can be found here.

The second annex here.

The third and final annex, here.

The only difference in the three lists is that the first two were immediately subject to 25% additional duty above the duty rate published in the Harmonized Tariff. The third and most recent list has been subject to 10% duty, with an announced increase to 25% on January 1, 2019.

At the end of the President’s visit to Argentina for the G20 meetings, the US and China met for a working dinner. Coming out of that meeting, it appeared that the January 1st deadline was going to be postponed for ninety days to give both sides to work through some additional issues and perhaps find resolution to the disagreements. The US said that China committed to purchase agricultural and energy products, reduce the duty on cars and take up the issue of IPR enforcement and theft of secrets which caused the investigation in the first place.

However, two-plus weeks on from the dinner, there has neither been an announcement from the US Trade Representative, nor anything published in the Federal Register delaying the increase to 25%.

In the first days after the meeting, there was even confusion and disagreement among the US delegation back here in America about what had been agreed to. Coupled with the detaining of the CFO of Huawei, a major Chinese telecom in Canada over alleged Iran sanctions violations and the apparent retaliation by China against two Canadian citizens, any progress or promises made at the dinner are quickly fading from view.

While we continue to encourage importers to speak with their elected representatives about the impact is is having on the people who work and live in their respective districts, we are also advising that importers who thought relief was coming in the new year should be thinking otherwise. Further, they should keep their fingers crossed that the administration doesn’t move forward on threats to put duty on all Chinese imports.

We will continue to monitor developments through all of our resources and advise clients immediately if and when the delay is officially published. Until then, arrangements should be made for an additional 15% on that list of products for items imported on or after January 1, 2019.

USMCA to supplant NAFTA

The new agreement that has been signed is known as United States – Mexico – Canada Agreement  (USMCA). Unlike NAFTA, this new trade agreement will be reviewed in 6 years and is scheduled for termination/renewal in 16 years in a Sunset Clause, which is expected to help the agreement keep better pace with technology advancements and developments. As of right now limited information is available on line with the full agreement to be voted on by the US congress in early 2019. Key points in the agreement are detailed below.

  • Autos – will now require 75% vs. the current 62.5% content
    • Labor – requires 40-45% of auto components be made by workers paid at least $14/hr by 2020, $16/hr by 2023 with more union rights to workers in Mexico.
  • Steel & Aluminum – Tariffs remain the same but going forward new tariffs cannot be applied against CA & MX for at least 60 days
  • Dairy – US  will be given access to Canada’s dairy market
  • Dispute resolution – 2 methods remain in place in the USMCA
    •   State to State
    •   Chapter 19.
  • Wine – will now be allowed on the shelves next to CA Wine
  • Intellectual Property Rights – copyright protection now extended in CA to 70 years after the death of the author.
  • Drugs – Biologic drugs will be protected for 10 yrs from generic competitors up from 8 years previously
  • De Minimis – Mexico $50 to $100, Canada  C$20 to C$150 ($117)

We at Edward J. Zarach & Associates are keeping a close watch on these developments of the USMCA and will continue to update information as it becomes available. If you have any questions or concerns preparing for these new regulations, we encourage you to reach out to your representative for assistance.

Second tranche of additional China 301 duties begin August 23rd.

The Office of the United States Trade Representative announced on Tuesday that they have completed their work on the second proposed list of additional HTS numbers that will be subject to 25% duties from China. Unlike the first list which saw 818 out of an initially proposed 1300+ HTS numbers be put into effect, over 98% of the HTS numbers on the initially published list made it to the final list after comments and adjudication.

Beginning August 23rd, Customs and Border Protection will begin to collect 25% in additional duty on 279 of the originally proposed 284 numbers. This list includes $16 billion of products ranging from chemicals to plastic hoses, fertilizer spreaders, motors and more. As with the first list, importers will be able to write to request an exclusion and if one is granted to another company, they can make entry with that exclusion as well. The instructions for this process are expected to be identical to the first list, but have not yet been published. It is anticipated that exclusions will be very difficult to obtain and we strongly suggest that you speak to your Zarach representative about it in greater detail.

Unfazed by the US decision, China announced that correspondingly they would also impose sanctions beginning at 12:01 PM local time on a list of American products as well.

There are two things that warrant monitoring as this seemingly endless escalation continues and all importers should be wary.

  1. There are signs that while the comment period closes in early September for the third proposed list including handbags, bicycles and other retail-level consumer items, the proposed 10% may not be sufficient and the USTR may revise that list to 25%.
  2. Importers who find themselves caught in having to pay these additional duties will find that their continuous bonds are reaching their sufficiency at a much quicker rate than they calculated for the life of the bond. We are working with importers but also caution others to be aware that if they continue to import goods subject to these additional duties, they will need to seek much larger Customs bonds which will require additional data and financial instruments of collateral to guarantee them.

Edward J. Zarach & Associates is continuing to monitor these changes which impact importers of goods from China. We are also experienced in helping companies who are facing additional duties owing to the steel and aluminum duties that have been imposed as well. To learn more, contact us today.



USTR provides vehicle to request exclusion from 25% China 301 duties.

Companies and associations can write to request an exclusion from 25% duties under China 301 trade measures.

On July 6th, the Office of the United States Trade Representative (USTR) published a press release on their site detailing the process by which companies (or trade associations) can request exclusions from the 25% duties that were assessed on more than 800 HTS numbers from China. The instructions for requesting an exclusion were published the same date that the duties came into effect, triggering a reciprocal action from Beijing.

Unlike the steel and aluminum duties which were assessed and other categories of actions, the provision for a way out from underneath is a new one to importers and one that they can use to attempt to nullify the impact.

Published in the Federal Register, there are key elements to the program that applicants must be aware of.

  1. The period to request an exclusion runs through October 9, 2018.
  2. The public has fourteen days to respond to requests for exclusion once published on regulations.gov and after that period, an additional seven days to reply to any comments in favor of exclusion.
  3. Exclusions will apply for one year from date of publication and are retroactive to July 6, 2018.

There are a number of additional nuances and  simply writing to request an exclusion does not guarantee its acceptance. For more information about this opportunity for companies and associations, contact Lorrie Roddy, Director of Compliance, in our Chicago office at (630) 595-7300.



Employee Spotlight: Marcela Schaub

After almost four decades in the logistics profession, Marcela Schaub knows the industry like the back of her hand. Starting in export in the late 1970’s, she’s worked in almost every facet, mastered almost every job, and applies the same tenacity to her current position as Vice President with Edward J. Zarach & Associates. Her mantra of flexible perseverance is a perfect summation of what it takes to be successful in an ever-evolving career. “If you’re not flexible and persevering you’ll never make it in this business.”

An adventurer at heart, Marcela began her career as a travel agent but left in 1974 to take a part time job when her best friend informed her of a position that came available in ocean export. The fit was instantaneous and she worked throughout the company and industry in various positions from imports to a trading house to air freight and finally compliance. Her ability to adapt her skills and understand the complex nuance of logistics catapulted her to become first a National Vice President of Customs for Celadon Jacky Maeder and then the Director of North American Fashion at Panalpina. While she found much success, the breakneck pace of fashion eventually began to wear on her over the years and she began seeking a new position with more flexibility and creativity in a smaller office.

“I want to build something great from the ground up. Larger multi-national companies are perfect for learning and specializing, but if you want to get into the ideas, deep into the potential of building logistic solutions, a smaller place is where the dream lives,” she explains, noting that she herself is a glass-half-full person. “I enjoy finding a comprehensive solution to total success. I want to be part of change, of growth.”

In her spare time, this Argentinean born dynamo enjoys flying with her husband, Rene who has his pilot’s license and living on the shore, having left the frantic Manhattan pace behind. Married 22 years to a kindred spirit and fellow logistician workaholic, she is a voracious reader who enjoys opera, cooking, traveling and yes, as always, working hard to create something outstanding.

Photo Credit: Marcela Schaub, during an excursion around the city while Rene piloted.