Recent Trade & Tariff Perspectives

August 11, 2021 | Ivana Gavroski Customs Compliance Manager

Highlights from the Detroit U.S. Customs and Border Protection Trade Week

Last week, the U.S. Customs and Border Protection (CBP) Office of Field Operations–Detroit held their 10th Annual Trade Week, a three-day virtual event to provide updates on CBP trade priorities and policies. This year’s agenda featured eleven diverse topics, including intellectual property rights, forced labor, and even a demonstration on how to detect pests in wood packaging materials (WPM).

Of the topics discussed, we are going to look at a few that could potentially save you time and money while mitigating risks to your supply chain.

The rise in e-commerce and the Type 86 entry

While e-commerce has been steadily increasing for decades, the COVID-19 pandemic drastically fueled an increase in e-commerce sales as more people became accustomed to shopping from home.

An estimated 80% of Americans currently shop using one or more e-commerce platforms. According to U.S. Department of Commerce estimates, e-commerce sales for the first quarter of 2021 increased 39.1% from the first quarter of 2020, accounting for 13.6% of total sales.

The surge in e-commerce over the years lead to CBP developing the Section 321 and Type 86 entry pilots in 2019. Both programs allow for qualifying shipments, valued at $800 or less, to be exempt from duties, taxes, and fees, also known as “de minimis” entry.

However, unlike the current processing of Section 321 shipments, Type 86 entries can be cleared in advance for all modes of transport, including shipments regulated by Partner Government Agencies (PGAs), such as the Food and Drug Administration (FDA). As a result, Type 86 entries expedite the clearance process and save money.

Your goods may qualify for Type 86 if the following requirements are met:

• The shipment’s aggregate fair retail value in the country of shipment cannot exceed $800
• No more than one shipment per person per day can be filed under Type 86
• The goods cannot be subject to or fall into any one of the following categories:
  • Bona-fide gifts
  • Certain personal and household goods
  • Goods subject to anti-dumping and countervailing duties (AD/CVD)
  • Goods subject to quota
  • Certain tobacco and alcohol products
  • PGA-regulated commodities that required fee collection
  • Goods taxed under the Internal Revenue Code

Since its launch in 2019, the Type 86 pilot has been tremendously successful with over 200 million entries filed through January of 2021. CBP plans to further develop Type 86 as popularity grows for this low-value entry type.

Northern border seizures

Since the beginning of the COVID-19 pandemic and passenger travel bans, CBP has detected a dramatic increase in narcotics smuggling seizures, mostly of Canadian-grown marijuana in commercial shipments entering through several northern land border ports. Unfortunately, the victims of these seizures have been importers and highway carriers.

CBP alerted members of the Customs and Trade Partnership Against Terrorism (CTPAT) program in 2020, advising to reassess the risk of shipments coming from Canada. As seizures continue to increase into 2021, CBP has further advised to take the following actions to mitigate vulnerabilities:

• Reinforce screening and monitoring policies and procedures
  • Stress the importance of security throughout the supply chain to all business partners
  • Monitor your business partners via the CTPAT portal’s Status Verification Interface (SVI)
  • Increase the number of on-site visits to business partners operating in high-risk areas
  • Highly scrutinize new business partners
• Enforce contracting and sub-contracting policies and procedures
  • Thoroughly screen contractors and sub-contractors 
  • Limit sub-contracting to one level only
• Ensure all security inspections are being conducted thoroughly
  • Systematic security inspections of conveyances and Instruments of International Traffic (ITT) are conducted at the point of stuffing and at conveyances/IIT storage yards
  • Increase the frequency of random and unannounced inspections by management of conveyances/IIT after the transportation staff have conducted the security inspections

CTPAT members should also consider implementing minimum security criteria to mitigate risks. Some of the key recommendations include:

• Incorporate specific requirements for tracking, reporting, and sharing of data within the terms of service agreements with service providers. Shippers should have access to their carrier’s GPS fleet monitoring system.
• Implement a “no-stop” policy for unscheduled stops that are in proximity to the U.S. border.
• Set up a mechanism to report security-related issues anonymously. When an allegation is received, investigate it, and, if applicable, take corrective action.

AD/CVD enforcement

Antidumping and Countervailing Duty (AD/CVD) continues to be one of CBP’s Priority Trade Initiatives (PTIs) with enforcement increasing every year. As of July 2021, CBP has enforced over 625 orders on approximately 191 products originating from 59 countries.

CBP has already begun to enforce 83 new orders in 2021, almost double the amount of new cases from the prior 2020 fiscal year of 45 orders. By country, China is subject to the most orders with 225, followed by India with 57 orders. By product, over half of all orders are steel and steel-related products.

One of the common questions addressed during trade week was how the Harmonized Tariff Schedule (HTS) number pertains to the AD/CVD scope. Each AD/CVD order contains a narrative description that defines the scope of the covered merchandise. The order references the HTS classification of the goods subject to the order for convenience only. The scope language, not the HTS numbers, determines whether a product falls under the scope of an AD/CVD order.

CBP further noted that the most valuable partners in AD/CVD enforcement are the representatives from domestic industries that contribute by:

• Meeting with CBP to discuss AD/CVD evasion schemes
• Gathering and sharing valuable industry intelligence with CBP
• Providing technical commodity expertise and multi-day training sessions to enhance CBP’s industry knowledge
• Submitting e-allegations to report violators

A list of current AD/CVD orders that are in effect can be found on CBP’s website.

Next steps

If you have any questions about Detroit’s CBP Trade Week or any other topic, please do not hesitate to contact your C.H. Robinson commercial representative or connect with one of our trade policy experts.

Additional resources

• U.S. Census Bureau news May 18, 2021
• U.S. CBP e-commerce statistics
• U.S. CBP Virtual Trade Week E-Commerce FAQ
• U.S. CBP Section 321 vs Type 86
• Federal Register Notice 84 FR 40079 - Test Concerning Entry of Section 321 Low-Valued Shipments Through Automated Commercial Environment (ACE)
• U.S. CBP CTPAT
• U.S. CBP Priority Trade Issue (PTI)
• U.S. CBP e-Allegations Program