U.S. targets mid-February implementation of 2007 tariff changes
U.S. importers may have lost a couple of extra weeks to comply with massive changes to the tariff code that governs international trade when the Bush administration late last week recalculated the timeline that triggers when the code goes into effect.
U.S. Customs and Border Protection officials said Friday they expect to begin enforcing the new tariff around mid-February.
The trade community has been gripped by uncertainty about when the U.S. government will approve the World Customs Organization's updated Harmonized Tariff Schedule, which significantly changes for 2007 about two-thirds of the commodity categories used to determine tariff rates.
The WCO tariff code changes are supposed to go into effect around the world on Jan. 1, but the United States will miss the deadline because the International Trade Commission was late in adding U.S. suffixes to the WCO's six-digit code. The administration notified the Congress late in the last session about the U.S. code changes, starting the clock for Congress to review and approve the U.S. refinements to the code within 60 legislative — not calendar — days.
Businesses were concerned that they might only have two or three days to reclassify their products and update their trade databases to properly enter their goods into the United States.
The miscellaneous tax and trade bill passed on Dec. 9, the last day of the lame duck congressional session, included a provision advocated by the trade community that extended the layover period before the government can begin enforcing the code changes once the president signs the authorizing proclamation to publish the tariff. The government must now wait a minimum of 30 days, instead of 15, before it can begin implementing the changes to the tariff code.
But the HTS process took an unexpected turn when the Bush administration and the Senate Finance trade subcommittee concurred last week that the 60-day congressional review period, which most had assumed would extend until early January, has transpired. The short fall legislative session, when Congress left town for the election season and then returned for a lame duck session, complicated how the legislative review period was calculated.
CBP, the agency responsible for collecting duties, earlier last week projected that the HTS changes would go into effect sometime between Feb. 10 and Feb. 25, but is now projecting that the rules will go into effect around Feb. 1, Daniel Baldwin, assistant commissioner in charge of international trade, told hundreds of trade practitioners at the annual CBP Trade Symposium in Washington.
In response to industry pleas for a minimum of 45 days to implement the tariff update, CBP is granting an additional 15 grace period on top of the 30-day layover before it will begin requiring the new tariffs on customs entries, said Angela Downey, director of summary and account management.
The International Trade Commission, which sets the U.S. product number code out to 10 digits, announced on its Web site that it would post the electronic version of the 2007 tariff without the WCO amendments on Jan. 1. The first wave of changes simply covers the handful of normal changes that the U.S. government makes each year to refine the product categories. President Bush is expected to sign late this week the proclamation authorizing those code changes, with the effective date yet to be determined.
Meanwhile, the president is also expected to soon sign the miscellaneous trade bill and proclamation on the much more extensive WCO Harmonized Tariff Schedule changes, kicking off the 30-day waiting period.
Downey said CBP expects to update the software in the Automated Broker Interface with the 2007 tariff changes in time for the implementation date so that no manual, paper entries will need to be filed.
She said the grace period will apply to both the U.S. and WCO tariff amendments, meaning that CBP will begin enforcing both U.S.-centric and WCO tariff amendments at the same time rather than in staggered fashion to simplify compliance and management of the process.
The grace period is welcome news for the trade community. Baldwin told the Trade Support Network, a CBP advisory group, that he had been peppered in previous weeks by calls from customs brokers and importers seeking 'papal dispensation' to avoid incurring penalties for using the wrong tariff code.
CBP will put out instructions to its field offices and industry once the final effective dates are known, Downey said.