A PricewaterhouseCoopers trade and tax expert told an audience at the U.S. Fashion Industry Association Virtual Washington Trade Symposium that while the prospect of trade liberalization in the next few years is low, he does not think that threatened tariffs on apparel and other goods from European countries, Turkey and India will be levied in November, in retaliation for digital services taxes. Scott McCandless, who spoke July 14 at the virtual conference, said that although it will be "a complicated dance both internationally and domestically" to arrive at an agreement on the intertwined issues of minimum corporate taxes and digital services taxes, he thinks it's more likely than not that Congress will pass a tax bill this fall that would give countries the right to levy taxes on multinationals that do business in their countries. If that happens, he said, "The DSTs likely go away, and the proposed tariffs on countries that have DSTs will go away as well."
International Trade Today is providing readers with the top stories from July 6-9 in case they were missed. All articles can be found by searching on the titles or by clicking on the hyperlinked reference number.
Accumulation of production costs from non-originating intermediate goods is allowed under USMCA for regional value content calculations, just like it was under NAFTA, CBP said. In a recently released ruling requested by Daimler Trucks North America (DTNA), CBP found the commercial vehicle manufacturer can add a tier two supplier’s costs of processing within USMCA territory to the USMCA costs of its tier one water pump supplier, even though the tier two costs were not sufficient to result in an originating material.
Revisions to the tariff schedule over the past six months echoed the back and forth between the U.S. and the European Union over retaliatory tariffs under both the Airbus and digital services tax disputes. Provisions for new tariffs were added then suspended, some immediately. Other changes include updates for USMCA tariff-rate quotas, a Section 301 exclusion extension and an extension to Section 201 safeguards on large residential washers.
The U.S. and Mexico reached an agreement for how to remediate labor issues at a General Motors factory in Silao, Mexico, U.S. Trade Representative Katherine Tai said in a July 8 news release. The remediation plan is a result of the first use of “rapid response” provisions for addressing labor issues under USMCA (see 2105120007), the agency said in another release. “Reaching an agreement with Mexico on a remediation plan shows the USMCA’s potential to protect workers’ rights and the benefits of a worker-centered trade policy,” Tai said. “Fully implementing and enforcing the USMCA not only helps workers there, it also helps American workers by preventing trade from becoming a race to the bottom. Our agreements must be more than words on a page, and the United States will use every avenue to protect workers and ensure that Americans compete on a level playing field.”
The International Trade Commission posted Revision 5 to the 2021 Harmonized Tariff Schedule. The semiannual update to the HTS removes General Note 12 for NAFTA from the tariff schedule, and adds new tariff numbers for a variety of products, including frozen warmwater shrimp, tomatoes, organic berries and high-strength steel. All changes take effect July 1, unless otherwise specified.
CBP's proposed use of Part 102 marking rules to determine the country of origin for non-preferential claims under USMCA (see 2107010045) would create an imbalance between USMCA member countries and the rest of the world, possibly in violation of U.S. commitments to the World Trade Organization, Sidley Austin lawyer Ted Murphy said in a blog post. There is questionable legal basis for continued use of the NAFTA marking rules in USMCA and the expanded use for determining origin on non-preferential claims, he said. “CBP may be attempting to gloss over this issue by trying to tie the proposal to the 'implementation' of USMCA (see the title of the notice of proposed rulemaking),” Murphy said.
The Commerce Department released a redacted version July 6 of its Section 232 report on the national security implications of U.S. imports of autos and auto parts. The Bureau of Industry and Security posted the report and its appendices, dated Feb. 17, 2019. Then-Commerce Secretary Wilbur Ross suggested two scenarios for tariffs that the Trump administration could impose if USMCA negotiations weren't productive. No tariffs were imposed as a result of the report, but the possibility of tariffs remained a threat for years after.
The Customs Rulings Online Search System (CROSS) was updated July 2. The following headquarters rulings were modified recently, according to CBP:
A CBP proposal to expand the use of Part 102 marking rules to determine the country of origin for non-preferential claims (see 2107010045) could be controversial, law firm Neville Peterson said in a July 6 blog post. The proposal to use tariff shift rules of Part 102 “would preclude the use of the traditional 'substantial transformation' test of a change in name, character or use,” it said.