Featured Headlines:
Adjusted COBRA Fees Slither In
Trade Compliance Equals More Benefits
Harmonized Tariff Schedule Receives Revision 8
Adjusted COBRA Fees Slither In
- U.S. Customs and Border Protection (CBP) is adjusting certain customs user fees and corresponding limitations established by the Consolidated Omnibus Budget Reconciliation Act (COBRA) for Fiscal Year 2023 in accordance with the Fixing America’s Surface Transportation Act (FAST Act) as implemented by the CBP regulations.
- As a result, your import entry will be a little more expensive in October, as certain customs user fees are being adjusted for inflation.
- Please note the following adjustments effective October 1, 2022:
- The Merchandise Processing Fee (MPF) minimum moves to $29.66;
- The MPF maximum moves to $575.35; and
- Commercial Truck Arrival fee moves to $6.50.
- Click here to view the official Federal Register Notice.
Trade Compliance Equals More Benefits
- The Customs Trade Partnership Against Terrorism (CTPAT) opened a new trade compliance program portal on August 1, 2022; although the program is voluntary, it is recommended for importers with robust internal controls.
- Additionally, US Customs and Border Protection (CBP) is offering more CTPAT benefits to importers, in exchange for assuming the responsibility of monitoring their own compliance.
- In order to qualify, importers must also be a Tier II or Tier III member of CTPAT with two years of import experience; they cannot have any financial debt with CBP; and they must include forced labor as part of the controls.
- For more details on all benefits, please review the CTPAT Trade Compliance Handbook from CBP.
- If you have any issues or questions, check out this helpful FAQ guide from CBP.
Harmonized Tariff Schedule Receives Revision 8
- On July 26, 2022, the International Trade Commission (ITC) posted Revision 8 to the 2022 Harmonized Tariff Schedule (HTS); some of the revisions included, but are not limited to:
- A new secondary 10-digit tariff number for certain infant formula, which was effective July 21, 2022.
- The removal Russia and Belarus from “Normal Trade Relations” (NTR) and added them to “column 2” duty rates, alongside Cuba and North Korea.
- Subheading 9903.90.08, will apply to certain products of the Russian Federation, which is dutiable at 35% in column 2.
Export Report
- The US Commerce Department added another 25 Russian-operated Airbus airplanes to their “naughty list” after they were believed to have violated US export controls. These 25 join 150 Boeing airplanes in “detention” for flying into Russia since March despite many public warnings. Just to confound us, the Commerce Department’s rules cover all US made airplanes, in addition to foreign-made craft consisting of 25% US origin content.
- The 25 Airbus A320, A321 and A330 airplanes are operated by Ural Airlines, S7 Airlines, Red Wings, Yamal Airlines, Nordwind, and I-Fly. The orders aim to deny the airlines access to refueling, spare parts, maintenance services, and (inexplicably) recess on the playground. These are the first foreign airplanes added to the export control list.
- In a development only Sherlock Holmes could follow, the US Justice Department is seeking possession of a Venezuelan cargo jet vacationing in Argentina since June, but is still affiliated with Iran’s Islamic Revolutionary Guard Corps. If possible, the plot thickens!
- You see Mahan Air of Iran must not sell, donate, or loan airplanes to anybody without US government approval. In this case, the Venezuelan firm, Emtrasur, is also subject to US sanctions. Just to be sure they got caught, after buying the airplane last October, Emtrasur has been flying routes between Caracas, Tehran, and Moscow (and back). Well golly, what might be in the belly of those flights?! Nobody, including Emtrasur, seems to know why the jet is currently in Argentina sipping cold cocktails.
- As many of us head to the beach and watch Shark Week with dread, shark fins have found their way into the news. A Miami federal court is accusing two exporters who will remain unnamed (Elite Sky International and Aifa Seafood) of falsely labeling huge consignments of shark fins bound for Asia. The heightened scrutiny from law enforcement comes as Congress debates a federal ban on harvesting and trade in shark fins. Every year, US inspectors seize thousands of shark fins in transit.
- Legislation intended to impose a near-total finis on fins has bipartisan support in the US House and Senate. Fascinatingly, this is the first measure to enjoy bi-partisan support in both houses since Ronald Reagan.
- The lead shark researcher at Mote Marine in Sarasota, Demian Chapman, a man who clearly has “fin” in the game, is less positive about the legislation than one might expect.
- Chapman contends that “subtracting the US from the fin trade entirely won’t do anything to directly affect international demand and it’s likely that other countries, with far less regulation of fisheries, will simply fill the void.”
- When asked how on Earth the FMC will be able to control the practices, pricing, and profits of gigantic multi-national steamship lines, Chapman simply blushed.
Yarns and Global
- The Office of Foreign Assets Control (OFAC), which is responsible for monitoring international commerce that poses a national security risk for the US (and rather notorious for stealing and/or breaking other nations’ toys), is targeting the flow of Iranian liquefied petroleum gas.
- Shipping companies and ships, mostly domiciled in China, Hong Kong, and Singapore continue to move tens of millions of dollars’ worth of Iranian petrochemicals in defiance of sanctions over Iran’s nuclear program. Fortunately, enforcement is absurdly easy since Iranian oil products glow in the dark (for obvious reasons) and cause the hair on people’s heads on those vessels to stand straight up (for less obvious reasons). Phew!
- Nancy Pelosi has landed in Taiwan and in a rather large pile of doo doo, but the opportunities for political satire are too great for this newsletter to take that bait! I mean Newt Gingrich was the last high-ranking US official to visit Taipei; with today’s political fractiousness, it just ain’t safe to kid around. Well, okay… Nancy, Newt, a priest, and a rabbi walk… into a bar… in Taiwan…(we’ll stop there).
- On a much more serious note, Beijing has announced the following actions in response to Pelosi’s trip: a) ban on several categories of Taiwanese imports to China; b) targeted military operations by land and by sea; c) plenty of teeth gnashing and rhetoric about fire and the playing with fire; d) what looks like an attempted cyberattack on Taiwan; e) removing the US and Taiwan from the guest list when Xi Jinping, already President of China, extends his term as the ruler of China’s Communist Party later this year.
- And, for those of you still wondering, the second definition of yarn is “a long or implausible story.” Thus, yarns and global does make sense. So there!
Air Fright
- China has opened to a limited number of international passenger flight arrivals. And, you only have to watch TV alone in your underwear while leaving your food tray outside your hotel door for ONE week after arrival! Woot, y’all. For all of you greedy exporters looking for air belly space, do not yet celebrate. The number of arrivals in China sits at 3.3% of pre-pandemic levels when 2,883 international flights landed each day.
- Global air volumes shrunk by 6.4% in June 2022 vs. 2021, while available capacity rose almost 6.7%. For you many math nerds out there, you know that many markets will see softening prices in this scenario.
- In yet another chance to get in trouble for teasing Nancy Pelosi, Air China has canceled freighter service to the US for two weeks in response to the Speaker’s Taiwan trip. As you might expect, airfreight prices from Shanghai to US gateway airports are spiking and currently sit at about $9/kilo for LAX and JFK. Rates from Hong Kong, which has yet to fully recover recent supply chain stoppages, are at an unseasonably low $6/kilo.
- The Latin America and Africa airfreight markets are growing crisply despite the global reduction in volume. While some of this growth is considered short-term medical, the multiplying number of variants and mutations—sure to kill us all eventually—should keep the medical segment flying for months and years to come!
Ocean Hodge Podge
- In an effort to prepare for enforcement of the new federal shipping act, OSRA 22, the US Federal Maritime Commission (FMC) has established a Bureau of Enforcement, Investigations and Compliance (BEIC). The bureau will be divided into offices of enforcement, of investigations, and of compliance, surprisingly enough. At the last minute, the FMC decided not to add an office of “explaining how it all works and why so many matters create advantages for ocean carriers” because the acronym is far too long!
- All kidding aside, the move is intended to establish a “body with teeth” to better regulate international shipping as an essential part of American commerce. The FMC has long been starved of resources, and the trade will be watching this development closely (and likely whining daily if not more frequently).
- The Port of New York, eager to test the FMC, has announced a container imbalance fee designed to reduce congestion at the East Coast’s largest port. In the simplest terms, ocean carriers will be fined $100 per container if they don’t export 110% of total New York non-rail traffic each quarter (including empties). A (now former) spokesperson for the port was heard muttering “and they’ll wear concrete shoes while swimming with the fishes if the C note fails.” Wow, let’s hope the small fine does the trick!
- Sea Intelligence estimates that over 10% of global ocean capacity is essentially off-line due to poor transit reliability; the average vessel delay globally stands at 6.2 days. In related news, more than half of seafarers have moved to Las Vegas, having gotten so much practice playing Texas Hold ‘Em on idling vessels. Oh, dear.
- From a US perspective, vessel on-time reliability has been below 50% since November 2020. While the metric has trended up slightly this summer, the average reliability in 2022 has stayed between 30-40%. In Savannah and Houston, the average vessel waits almost 200 hours for a berth (that’s 8.33 days; we looked it up!).
