October at-a-glance…taxes, tariffs & trade

USMCA Certificate of Origin requirements finalized

U.S. Customs and Border Patrol (CBP) recently clarified that the United States – Mexico – Canada Agreement (USMCA) removed the requirement to file a formal Certificate of Origin for imported products. However, because information attesting to the originating status is still required, CBP provided a fillable template companies can use. While this form is not required, importers are required to provide all of the data included within.

NAFEM members have opportunity to file suit, potentially recover Section 301 tariffs

More than 3,400 companies, including multiple NAFEM companies, joined a lawsuit that HMTX Industries, an importer of vinyl floor tiles, filed with the U.S. Court of International Trade (CIT) challenging that Lists 3 and 4A of the Section 301 tariffs on goods imported from China were “prosecuted in an untimely fashion and without statutory authorization.” The plaintiffs ask that tariffs be declared unlawful that duties be refunded and that the U.S. Government not impose tariffs in the future.

Given the large number of complaints, the Department of Justice (DOJ) filed a motion with the Court asking it to assign all China Section 301 tariff cases to the same judge. DOJ also requested a test case (or a few test cases) and a stay (or hold) on all related cases; to appoint a steering committee of plaintiff’s lawyers to “enhance coordination and reduce duplication; and to establish procedures that would permit all plaintiff counsel to participate in the test case (e.g., by filing short amicus briefs).

In response, HTMX requested a three-judge panel to hear the case. HTMX also asked that the government confirm that a refund remedy is available should the plaintiffs win the case.

While the deadline to join the List 3 lawsuit has passed, challenges to List 4A can be filed until Friday, Aug. 20, 2021, two years after the initial list was published by the United States Trade Representative (USTR). Any company that imported products covered by List 4A that has paid the additional tariffs may do so. To file a case, companies must concurrently file a summons and complaint with the CIT and complete a few additional forms. Companies filing their own case should be prepared to disclose their publicly owned companies and affiliates, as well as publicly owned shareowners with a greater than 10 percent interest. Companies also may intervene in the case filed by HMTX Industries as the appeal proceeds, rather than filing their own case, although intervention is subject to the Court’s discretion and may be denied.

Further details of the appeal are available via a Fact Sheet  and by reviewing the HMTX’s original complaint.

WTO finds Section 301 tariffs violated rules

In response to a challenge by China, a World Trade Organization (WTO) panel found that the Section 301 tariffs on imports from the country violated the organization’s rules regarding nondiscrimination and import tariff rates previously agreed to by the U.S. The U.S. argued that the parties were engaged in bilateral negotiation outside of the WTO. “China is trying all angles to protest the tariffs,” said Christine Sohar Henter, NAFEM legal counsel, Barnes & Thornburg. “However, the ruling is not expected to have much impact.”

The U.S. will likely appeal the decision, but due to the government blocking replacement appointments to WTO’s Appellate Body, there are too few judges to form the quorum required for appeals.

According to U.S. Trade Representative Robert Lighthizer, “The United States must be allowed to defend itself against unfair trade practices, and the Trump Administration will not let China use the WTO to take advantage of American workers, businesses, farmers and ranchers.”

U.S. withholds imports from China region, citing human rights abuses

Citing concern over human rights abuses, including forced labor, in China’s Xingjang Uighur region, U.S. Customs and Border Patrol (CBP) restricted imports on cotton, apparel and other products from 12 companies in the region. The Trump administration issued an unprecedented 12 Withhold Release Orders to delay shipments for further consideration. “The main lesson here is to know your supply chain,” said Christine Sohar Henter, NAFEM legal counsel, Barnes & Thornburg. “Companies should always update their supply chain due diligence and screening to ensure they are not working with blocked entities or individuals.”

Trade agreements pending

  • On Oct. 12, President Trump signed into law a bipartisan extension of the Caribbean Basin Trade and Partnership Act (CBTPA) through 2030. Eligible CBTPA countries receiving duty-free access to the U.S. market include Antigua and Barbuda, Aruba, the Bahamas, Barbados, Belize, the British Virgin Islands, Curaçao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago.
  • NAFEM is awaiting the text of a proposed U.S./U.K. bilateral agreement that follows the latter’s exit from the European Union. The agreement is expected to address a number of trade, regulatory and national security issues.