October 2, 2013
U.S. Federal Government Shutdown - Update
Dear Customer, A U.S. Government shutdown has commenced due to the failure of U.S. Congress to pass a new federal budget by the deadline of Sept 30, 2013. Some government organizations have ceased all operations while others are running on reduced staffing with reduced services/capabilities. Fortunately, entry processing by U.S. Customs & Border Protection is currently mostly unaffected by the shutdown. Per the acting Customs commissioner: "All ports of entry are operating as normal with the usual hours of service. There are no limitations on overtime, which is now fully available as we are in a new fiscal year. All front line personnel are exempt from the shutdown, including port inspectors, agricultural inspectors, revenue staff (import specialists, duty collection, drawback, fines and penalties staff), the Border Patrol and Air and Marine." Trusted trader and traveler programs will continue as normal, although C-TPAT validations will be curtailed due to limitations on travel. Global entry appointments will be conducted on schedule. ACE development may be impacted, as IT staff is not exempt from the shutdown. CBP is trying to limit the impact through the use of available government and contactor staff. The Office of International Trade is looking at the options to keep the momentum going on ACE and meet their planned deployment schedule. However, while there are no current issues with entry processing by Customs, other government agencies (OGAs) have been affected by the shutdown, and that may correlate to delays and issues with clearance and entry of importations. Below is a summary of the currently noted impacts to some key government agencies: ATF (Bureau of Alcohol, Tobacco, Firearms and explosives) - Suspension of processing of permits, certificates of label approval, and manufacturer of non-beverage products drawback claims.
CBP (U.S. Customs & Border Protection) - All client representative offices are closed.
- The CBP website is still up but is not actively being managed.
Census Bureau - Census website is down.
- The AES Direct website still operational at this time.
DOC (Department of Commerce) - ADA/CVD. The Commerce Department is tolling all deadlines in antidumping and countervailing duty proceedings.
DCMA (Defense Contract Management Agency) - Website is up but is not actively being managed.
- Based on information on website, DCMA staffed have been furloughed and it appears no duty-free certificates will be issued to support HTS 9808 entries. We are currently monitoring for confirmation.
FDA - The FDA at various ports have issued communications warning of potential delays in entry reviews/FDA clearances due to furloughed staffing.
Fish & Wildlife - Per a fact sheet on DOI (Department of Interior) website, no F&W permitting work or consultations will occur with respect to:
- Endangered Species Act, Bald and Golden Eagle Protection Act,
- The Convention on Trade in Endangered Species (CITES),
- The Lacy Act or the National Environmental Policy Act.
ITC (International Trade Commission) - Closure of USITC website.
- HTSUS On line Tool is down.
ITA (International Trade Administration) - Website closed.
- No access to ADD/CVD information.
- Steel Import Monitoring and Analysis Unit site down.
USDA-APHIS - Closure of website, affecting on-line access to information.
- No review or authorization of notifications or permits for the importation, interstate movement, or field release of genetically engineered organisms.
USTR (U.S. Trade Representative) - The U.S. Trade Representative website will remain live, but without updates, for the duration of the government shutdown.
While regular Customs entries should continue to flow as normal, it is possible that imports subject to OGA (i.e. FDA, USDA, F&W, etc.) review and clearance will experience delays during the government shutdown period – and, after it ends, there will certainly be backlogs. Importers whose goods are subject to OGA permits or licenses should ensure they have obtained them prior to shipping. Importers may experience delays or inability in obtaining those permits/licenses until the shutdown is over. DHL will continue to gather information on what effects the shutdown is having on importers. Additional information will be shared on our website as it becomes available.
Free Trade Agreements — Are Your Vendors Knowledgeable?
There are a variety of free trade agreements (FTAs) in existence that provide preferential duty treatment to eligible imported goods. To obtain such FTA benefits on their Customs entries, importers must ensure they are knowledgeable about the requirements for making such claims. Importers must also rely on certifications and information from their vendors to reflect that the goods are eligible for the FTA duty preference. For example, to claim NAFTA, the importer relies on the exporter's NAFTA certificate of origin. An ongoing concern for importers is whether or not their vendors are truly knowledgeable about the FTA and are accurately making positive certifications of eligibility. The importer must rely on the certification and information received from the vendor in good faith. However, there are consequences if the vendor turns out to have been wrong in their certification. Recently, a U.S. importer purchased and imported an agricultural product from a Canadian vendor over a period of two years. The importer received NAFTA certificates from the vendor and claimed duty-free treatment on their Customs entries based off of those certifications. During a Customs review it was determined the product did not qualify for NAFTA treatment and actually was not even of Canadian origin. It turns out the vendor was unaware of NAFTA's rules and simply filled out the form without any understanding of what they were doing. As a result, the importer could no longer claim NAFTA and was liable, and had to pay over 80 thousand dollars in back duties and interest tied to their past entries of the product. Unfortunately, such situations are not that all uncommon. Thus, it is important for importers to know how they can help protect themselves and reasonably ensure the vendors they work with are capable of making accurate FTA certifications. Importers can start by asking their vendors some basic questions to gauge their knowledge and understanding: - What is your knowledge level concerning the U.S. free trade agreements? - Who within your company is responsible for validating FTA eligibility on your products? - Do you have documented procedures in place for validating FTA eligibility of your products? - Has U.S. Customs previously reviewed/validated your FTA certifications? Importers should examine statements or provisions in their sales contract or purchase orders specifying the vendor's requirements for making accurate certifications of their products' FTA eligibility. Importers can also share FTA reference material, information on available FTA training, etc. with their vendors. The U.S. Customs website contains a vast amount of FTA information that can be viewed here. Ensuring your vendors are knowledgeable and capable of providing you with accurate, valid FTA certifications and information will go far in minimizing potential risks involved with making FTA duty preference claims. If you have any questions, please contact your DHL Global forwarding representative or chb.consulting@dhl.com .
Best regards, Paul Vroman
Manager, Regulatory & Compliance Consulting
DHL Global Forwarding
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