Section 232 Update — The End of the Temporary Exemptions

Dear Friends, 

Further to the below, the President issued two new proclamations this morning regarding the imposition of additional duties on imports of steel (25%) and aluminum (10%) under Section 232 of the Trade Expansion Act of 1962, as amended.  Copies are attached here for your reference. 

The steel proclamation (1) exempts imports from Argentina, Austrailia, Brazil and South Korea from the additional 25% duty (based on voluntary-export restraint agreements (i.e., export quotas) Argentina, Brazil and South Korea agreed to with the United States; Australia is also exempt, but thus far, no export quota has been imposed); and (2) ends the temporary exemptions previously afforded imports from Australia, Canada, Mexico and the EU.  As a result, imports of steel from all jurisdictions except Argentina, Australia, Brazil and South Korea will be subject to an additional 25% duty as of 12:01 am tonight (i.e., June 1, 2018).

The aluminum proclamation (1) exempts imports from Argentina and Australia from the additional 10% duty (based on voluntary-export restraint agreements (i.e., export quotas) those countries have agreed to with the United States); and (2) ends the temporary exemptions previously afforded imports from Brazil, Canada, Mexico and the EU.  As a result, imports of aluminum from all jurisdictions except Argentina and Australia will be subject to an additional 10% duty as of 12:01 am tonight (i.e., June 1, 2018).

We expect that many countries will proceed with imposing retaliatory measures.  For example, the EU already announced that it is ready to impose an additional 25% duty on $3.3 billion worth of U.S. imports as of June 20, 2018.   Other countries have also announced an intent to pursue this at the WTO level (e.g., Japan, India, etc.), which could lead to the imposition of more retaliatory duties on U.S. products.

At this point, it is not clear how long the additional U.S. duties will be in place.  It is clear, however, that the duties are being used as leverage to influence on-going negotiations aimed at re-balancing our trade relationships with many countries (including many of our closest allies).  In the meantime, companies impacted by today’s announcements should be considering all of their options, including the viability of filing product exclusion petitions with the Dept. of Commerce.

We trust that this update is helpful.  If you have any questions about these issues, please let us know.

Best regards,
Ted


Dear Friends,

By now, you have probably seen that the President issued two new proclamations regarding the imposition of additional duties on imports of steel (25%) and aluminum (10%) under Section 232 of the Trade Expansion Act of 1962, as amended.  The proclamations do the following:  (1) extend the temporary exemption applicable to imports of covered articles from Argentina, Australia and Brazil while the details associated with permanent exemptions are finalized; (2) extend the temporary exemption applicable to imports of covered articles from Canada, Mexico and the EU through May 30, 2018; (3) address issues related to the application of the additional duties when foreign trade zones are involved; and (4) clarify that “[n]o drawback shall be available” with respect to section 232 duties.  The steel proclamation also finalizes the permanent exemption afforded imports of covered steel articles from South Korea.  Imports of aluminum covered articles from South Korea are not covered by a permanent exemption and are, therefore, subject to the additional 10% duties as of May 1, 2018.  Copies of the April 30th proclamations are attached here for your reference:  2018-09841 and 2018-09840.

Since the issuance of the proclamations, it has been reported that the permanent exemption to be afforded Brazil will only apply to steel imports (in exchange for a limit on Brazilian steel exports to the USA) and that aluminum imports will be subject to the additional 10% duty.  It is also been reported that the permanent exemption to be afforded Argentina will cover both steel and aluminum imports (again, in exchange for a limit on Argentine exports to the USA).

In terms of Canada and Mexico, the permanent exemptions appear to be tied to the on-going NAFTA negotiations.  While those negotiations have reportedly made substantial progress in recent weeks, it is not clear whether a deal will be able to be announced in the next couple of weeks.  The Administration has recently expressed concern that if a deal is not reached by May 21, 2018, then any revised agreement would need to be voted on by the next Congress, due to timing issues associated with applicable legal requirements (e.g., the Administration has to provide notice of any deal to Congress, the U.S. International Trade Commission has to do a study of any new deal, etc.).  This is problematic because the next Congress (which will be sworn in in January 2019) will not have had an opportunity to help direct the negotiations (as the current Congress has) and may have a different composition as a result of the elections in October.  As a result, expect the U.S. Administration to put on a full court press to get a deal done (or at least announced) before May 21st.  If that does not happen, then there is an increased chance that the section 232 duties will go into effect for Canada and Mexico June 1, 2018.

In terms of the EU, the Administration has made clear that the key to getting a permanent exemption from the section 232 duties is agreeing to an export quota, or other voluntary-export-restraint-type agreement.  The EU, however, has made it clear that it will not agree to any sort of quota or VRA.  It has, however, reportedly offered to enter into negotiations with the United States for a new ‘trade in goods’ free trade agreement.  It will be an interesting few weeks to be sure as these discussions play out.

In the meantime, we recommend that any company which imports covered articles from Canada, Mexico or the EU (or relies on covered articles from these countries imported by other U.S. parties) consider preparing product exclusion petitions now.  While exclusions are not needed currently, there is a meaningful chance that such exclusions will be needed in the near future (i.e., June 1st).  Given the delay in the processing of product exclusion petitions, it is important that companies which are impacted be proactive in protecting their interests (e.g., not languishing at the back of a very long line, etc.).

We hope that this update is helpful.  We are assisting numerous clients deal with these section 232 issues.  If you would like to discuss any of this further, please let us know.

Best regards,
Ted

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Section 232 Update

Dear Friends,

By now, you have probably seen that the President issued two new proclamations regarding the imposition of additional duties on imports of steel (25%) and aluminum (10%) under Section 232 of the Trade Expansion Act of 1962, as amended.  The proclamations do the following:  (1) extend the temporary exemption applicable to imports of covered articles from Argentina, Australia and Brazil while the details associated with permanent exemptions are finalized; (2) extend the temporary exemption applicable to imports of covered articles from Canada, Mexico and the EU through May 30, 2018; (3) address issues related to the application of the additional duties when foreign trade zones are involved; and (4) clarify that “[n]o drawback shall be available” with respect to section 232 duties.  The steel proclamation also finalizes the permanent exemption afforded imports of covered steel articles from South Korea.  Imports of aluminum covered articles from South Korea are not covered by a permanent exemption and are, therefore, subject to the additional 10% duties as of May 1, 2018.  Copies of the April 30th proclamations are attached here for your reference:  2018-09841 and 2018-09840.

Since the issuance of the proclamations, it has been reported that the permanent exemption to be afforded Brazil will only apply to steel imports (in exchange for a limit on Brazilian steel exports to the USA) and that aluminum imports will be subject to the additional 10% duty.  It is also been reported that the permanent exemption to be afforded Argentina will cover both steel and aluminum imports (again, in exchange for a limit on Argentine exports to the USA).

In terms of Canada and Mexico, the permanent exemptions appear to be tied to the on-going NAFTA negotiations.  While those negotiations have reportedly made substantial progress in recent weeks, it is not clear whether a deal will be able to be announced in the next couple of weeks.  The Administration has recently expressed concern that if a deal is not reached by May 21, 2018, then any revised agreement would need to be voted on by the next Congress, due to timing issues associated with applicable legal requirements (e.g., the Administration has to provide notice of any deal to Congress, the U.S. International Trade Commission has to do a study of any new deal, etc.).  This is problematic because the next Congress (which will be sworn in in January 2019) will not have had an opportunity to help direct the negotiations (as the current Congress has) and may have a different composition as a result of the elections in October.  As a result, expect the U.S. Administration to put on a full court press to get a deal done (or at least announced) before May 21st.  If that does not happen, then there is an increased chance that the section 232 duties will go into effect for Canada and Mexico June 1, 2018.

In terms of the EU, the Administration has made clear that the key to getting a permanent exemption from the section 232 duties is agreeing to an export quota, or other voluntary-export-restraint-type agreement.  The EU, however, has made it clear that it will not agree to any sort of quota or VRA.  It has, however, reportedly offered to enter into negotiations with the United States for a new ‘trade in goods’ free trade agreement.  It will be an interesting few weeks to be sure as these discussions play out.

In the meantime, we recommend that any company which imports covered articles from Canada, Mexico or the EU (or relies on covered articles from these countries imported by other U.S. parties) consider preparing product exclusion petitions now.  While exclusions are not needed currently, there is a meaningful chance that such exclusions will be needed in the near future (i.e., June 1st).  Given the delay in the processing of product exclusion petitions, it is important that companies which are impacted be proactive in protecting their interests (e.g., not languishing at the back of a very long line, etc.).

We hope that this update is helpful.  We are assisting numerous clients deal with these section 232 issues.  If you would like to discuss any of this further, please let us know.

Best regards,
Ted

Section 232/Section 301 Update

Dear Friends,

I wanted to share with you a couple of thoughts on the Section 232/Section 301 process that I thought might be helpful.

The first is a reminder.  The temporary exclusions from the Section 232 duties on steel (an additional 25%) and aluminum (an additional 10%) granted to products of Canada, Mexico, Australia, Argentina, Brazil and the EU expire at midnight on Monday, April 30th (i.e., tomorrow).  While there has been some reports that the Administration intends to extend the temporary exclusions for some countries (i.e., those that have expressed a willingness to negotiate a voluntary export restraint-type agreement), that is not likely to extend to all countries.  Based on what the EU has said publicly about its willingness to accept a VER, it seems likely that the additional duties will go into effect on Tuesday.

The second is also a reminder.  As companies grapple with the Section 232/Section 301 duties, many are reviewing their imports and determining whether articles are correctly classified or not (e.g., if an article is on the list of products proposed to be subject to the Section 301 duties, can the article be re-classified in a different HTS provision not on the list?).  Many companies are also reviewing the publicly-available data of their competitors. . . .

 As many of you know, U.S. Customs and Border Protection makes available to the public manifest data for import and export shipments.  The manifest data includes information such as the name and address of the foreign shipper & U.S. consignee/notify party, the ports of lading and unlading, the carrier, a description of the goods, weight, etc.  This data is obtained by private companies that repackage it (and often add their best guess at classification, entered value, etc.) and then sell it to the public for a fee. 

You may also know that CBP allows companies to request confidential treatment for their manifest data.  Under the regulations, if a company requests confidential treatment, CBP will not disclose the names and addresses of the importer/consignee, foreign shipper or notify party and any other identifying marks. 

The process to obtain confidential treatment is pretty straight-forward (it involves submitting a letter to CBP HQ) and we recommend that all clients pursue confidential treatment every 2 years.

We hope that this is helpful.  If you have any questions, or if you would like any assistance with Section 232/Section 301 issues, including requesting confidential treatment for your manifest data, please let us know.

Best regards,
Ted

The Art of the Deal – Update on Section 232 Duties on Steel & Aluminum

Dear Friends,

Late last week, the President issued two proclamations amending his earlier proclamations imposing additional duties on imports of steel and aluminum.  Copies of these proclamations may be found here and here.

The proclamations made a number of important changes to the section 232 duties.  Most notably, the President extended the temporary exemption previously afforded to Canada and Mexico, to Australia, Argentina, South Korea, Brazil and the EU.  In addition, the temporary exemption will now only run through April 30, 2018.  As of May 1, 2018, covered steel and aluminum articles from all countries will be subject to the additional 25% (steel) and 10% (aluminum) duties unless a further agreement is reached.

The President also indicated that, if any long-term agreements are ultimately reached with any countries, such that the exemption is continued beyond April 30, 2018, he will consider whether to adjust the additional duty rates (the 25% and 10%) to ensure that the desired goal is achieved (limit imports sufficiently to allow for domestic production utilization of 80%).      

The proclamations also include provisions that discuss the possible implementation of a quota on imports from exempted countries, place restrictions on articles admitted into Foreign Trade Zones and provide further detail on the product exclusion petition process (e.g., additional criteria for approval and retroactive treatment for approved petitions).

Regardless of what you think of the policy, the threat of significantly increased duties has (thus far) had the desired result, as many countries have sought to negotiate with the United States.  It will be interesting to see what unfolds over the next few weeks (e.g., will the imposition of section 232 duties to Canada and Mexico be tied to concluding the NAFTA renegotiations? will countries like Japan seek its own long-term exemption? if long-term exemptions are granted, will the duty rates be increased to even higher rates? what sort of voluntary-restraint type of agreement/quota will be required in order to obtain a long-term exemption?).  All companies that utilize steel or aluminum articles (whether imported or domestically-produced) should be taking steps now to review the economic impact the section 232 duties will have on their business.  Consideration should be given to the impact on long-term supply agreements (whether upstream or downstream – who bears the cost of increased duties?), the impact on market competition (e.g., are you making a product here with imported steel or aluminum, but competing against finished products produced abroad and imported into the United States without being subject to the section 232 duties?), etc.

We are assisting numerous companies navigate these issues (as well as the product exclusion process) and would be happy to discuss your situation with you further.  If you would like to do so, just let us know. 

Best regards, 

Ted

 

3/8/17 Update: Section 232 Duties on Steel & Aluminum – Part IV

Dear Friends,

Further to the below, President Trump signed two Presidential Proclamations today – one on steel imports and one on aluminum imports (available here and here).  As expected, the President is imposing an additional 25% duty on steel, and an additional 10% duty on aluminum, imported from all countries except Canada and Mexico beginning on March 23, 2018.  The details are as follows:

Steel Duties

* the 25% additional duty will apply to “steel articles” imported from all countries except Canada and Mexico as of March 23, 2018; 

* “steel articles” are defined by reference to Harmonized Tariff Schedule (HTS) 6-digit subheading, as follows:  “7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90, including any subsequent revisions to these HTS classifications”;

* the 25% additional duty will apply to articles entered, or withdrawn from warehouse for consumption, as of March 23, 2018;

* imports from Canada and Mexico are exempted from the additional duty for now; the proclamation describes the special relationship the United States has with these countries and concludes that steel imports from these countries should be exempted, but qualifies it by saying “at least at this time”; this exemption is likely tied progress with the on-going NAFTA renegotiations and could be taken away by the President with little notice; also, it seems clear that the President means to exempt articles produced in Canada or Mexico, not just articles imported from Canada or Mexico (you cannot ship steel produced in China through Canada and avoid the additional U.S. duty);

* imports from countries with which the United States has “a security relationship” (e.g., allies, like the EU, Australia, Japan, Korea, etc.) are encouraged to discuss with the Administration “alternative ways to address the threatened impairment of the national security” presented by imports from their country; this could possibly lead to a series a ‘voluntary-restraint-type’ arrangements being negotiated where exporting countries agree to limit exports to certain levels; 

* there will be a petition-based, product exclusion process run by the Department of Commerce (with input from other agencies); the standard for exclusion will be whether the article is (i) produced in the United States “in a sufficient and reasonably available amount or of a satisfactory quality” or (ii) subject to specific national security considerations; petitions need to be filed by “a directly affected party located in the United States” (i.e., foreign suppliers need not apply); Commerce will issue formal procedures for this process by March 18th;

* the duties will remain in effect until “expressly reduced, modified, or terminated”;

* Commerce will continue to monitor the situation with regard to imports and their impact on the national security and recommend further actions to the President, as needed.

Aluminum Duties

* the 10% additional duty will apply to “aluminum articles” imported from all countries except Canada and Mexico as of March 23, 2018;

* “aluminum articles” are defined by reference to Harmonized Tariff Schedule (HTS) classification, as follows:  “(a) unwrought aluminum (HTS 7601); (b) aluminum bars, rods, and profiles (HTS 7604); (c) aluminum wire (HTS 7605); (d) aluminum plate, sheet, strip, and foil (flat rolled products) (HTS 7606 and 7607); (e) aluminum tubes and pipes and tube and pipe fitting (HTS 7608 and 7609); and (f) aluminum castings and forgings (HTS 7616.99.51.60 and 7616.99.51.70), including any subsequent revisions to these HTS classifications”;

* the 10% additional duty will apply to articles entered, or withdrawn from warehouse for consumption, as of March 23, 2018;

* imports from Canada and Mexico are exempted from the additional duty for now; the proclamation describes the special relationship the United States has with these countries and concludes that aluminum imports from these countries should be exempted, but qualifies it by saying “at least at this time”; this exemption is likely tied to progress with the on-going NAFTA renegotiations and could be taken away by the President with little notice; also, it seems clear that the President means to exempt articles produced in Canada or Mexico, not just articles imported from Canada or Mexico (you cannot ship aluminum produced in China through Canada and avoid the additional U.S. duty);

* imports from countries with which the United States has “a security relationship” (e.g., allies, like the EU, Australia, Japan, Korea, etc.) are encouraged to discuss with the Administration “alternative ways to address the threatened impairment of the national security” presented by imports from their country; this could possibly lead to a series a ‘voluntary-restraint-type’ arrangements being negotiated where exporting countries agree to limit exports to certain levels;

* there will be a petition-based, product exclusion process run by the Department of Commerce (with input from other agencies); the standard for exclusion will be whether the article is (i) produced in the United States “in a sufficient and reasonably available amount or of a satisfactory quality” or (ii) subject to specific national security considerations; petitions need to be filed by “a directly affected party located in the United States” (i.e., foreign suppliers need not apply); Commerce will issue formal procedures for this process by March 18th; 

* the duties will remain in effect until “expressly reduced, modified, or terminated”;

* Commerce will continue to monitor the situation with regard to imports and their impact on the national security and recommend further actions to the President, as needed. 

*     *     *

These additional duties will have a meaningful impact on the market that will go well beyond just producers or importers.  All companies that utilize steel or aluminum in their products are expected to be impacted.  As a result, there are a number of steps all companies should be taking to assess the impact.  For example, supply contracts should be reviewed (even for downstream – e.g., finished products) to determine whether cost increases due to increased customs duties can be passed on or not.  Companies should also be considering whether to apply for a product exclusion.  While the procedures will not come out for several more days, companies should be preparing now (this exclusion process is expected to be similar to that being used in the Section 201 cases, procedurally).  It is not clear whether exclusion will be granted with retroactive effect or not, so it would be best to get your petitions in as early in the process as possible.  We are helping a number of clients with the exclusion process and would be happy to discuss this or other issues related to these duties with you further.

We hope this is helpful.

Best regards,
Ted


It is being reported that the formal announcement regarding the section 232 duties will come as early as Thursday this week.  The reports also contain unclear/conflicting information on whether imports from certain countries could be exempted (the President had previously said that there would be no country-based exceptions, but that now seems to be in flux).  More to follow . . . .


Dear Friends,

Further to the below, it is being widely reported that the President has decided to impose a 25% duty on imported steel and a 10% duty on imported aluminum next week in response to the reports from Commerce.  It is not yet clear whether those additional duties will apply on imports from all countries, or just to imports from a subset of countries.

More to follow on this.  In the meantime, if you have any questions, please let us know.

Best regards,
Ted


Dear Friends,

As you may recall, early last year, President Trump issued two presidential memoranda instructing the U.S. Commerce Department to initiate an investigation into the national security implications of steel imports and aluminum imports into the United States.  If these so-called “section 232” (section 232 of the Trade Expansion Act of 1962, as amended) investigations determine that steel import and/or aluminum imports “threaten to impair the national security[,]” then the President can impose additional customs duties (among other things) on covered products.

Last Friday, the Secretary of Commerce issued his reports to the President in both matters (available here).   In each case, the Department of Commerce concluded that the quantities and circumstances surrounding steel and aluminum imports “threaten to impair the national security,” thereby opening the door to the imposition of import restraints.  Specifically, Commerce’s recommendations are as follows:

Steel – Alternative Remedies

1.  A global tariff of at least 24% on all steel imports from all countries, or

2.  A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States, or

3.  A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.

The measures would apply to steel mill products classified in subheadings 7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90.

The goal of such measures is to ensure that U.S. steel producers utilize 80% of production of capacity.

The recommendation also includes a process to allow Commerce to grant requests from U.S. companies for specific product exclusions if there was insufficient domestic production, or for national security considerations.

Aluminum – Alternative Remedies

1.  A tariff of at least 7.7% on all aluminum exports from all countries, or

2.  A tariff of 23.6% on all products from China, Hong Kong, Russia, Venezuela and Vietnam. All the other countries would be subject to quotas equal to 100% of their 2017 exports to the United States, or

3.  A quota on all imports from all countries equal to a maximum of 86.7% of their 2017 exports to the United States.

These measures would apply to unwrought aluminum (heading 7601), aluminum castings and forgings (subheadings 7616.99.51.60 and 7616.99.51.70), aluminum plat, sheet, strip and foil (flat rolled products) (headings 7606 and 7607); aluminum wire (heading 7605); aluminum bars, rods and profiles (heading 7604); aluminum tubes and pipes (heading 7608); and aluminum tube and pipe fittings (heading 7609).

The goal of such measures is to ensure that U.S. aluminum producers utilize 80% of production of capacity.

The recommendation also includes a process to allow Commerce to grant requests from U.S. companies for specific product exclusions if there was insufficient domestic production, or for national security considerations.

The reports and recommendations are now under consideration by the President.  The President is required to make a decision on the recommendations by April 11th (for steel) and by April 19th (for aluminum).

*           *           *

We believe that it is likely that the President will take some action to “adjust imports” based on these reports.  Accordingly, all companies that rely on steel and/or aluminum articles need to evaluate the impact such action may have on their production.  This would apply not only to companies that import covered articles (which will be the articles hit with additional duties and/or quota limitations), but companies that import downstream articles (e.g., parts made of steel or aluminum) as well.  The actions being contemplated are significant enough to have a ripple effect that impacts far more than just the covered products.

If you have any questions about these reports, or what sort of evaluation you should be doing as a result, please let us know.

Best regards,

Ted

Post-Entry Preference Program Claims II

Dear Friends,

We wrote to you back in November about a development which was expected to expand the number of preferential duty claims that could be asserted for the first time via protest. 

U.S. Customs and Border Protection (CBP) has now issued updated guidance specifying that all preferential trade agreements for which post-importation refund claims were previously limited to post-entry amendments (PEAs) or post-summary correction (PSCs) may now also be raised for the first time via protest.  This includes preferential claims under GSP, AGOA, the Australia, Bahrain, Israel, Jordon, Morocco and Singapore FTAs, and the Pharmaceutical Products Agreement, among others.

As noted below, this is a significant development since it expands the period in which post-entry refund claims may be made under certain preference programs.  It also breathes new life into protests filed for such claims that were previously rejected as “non-protestable”.  We have been helping clients secure refunds from CBP on such protests and would be happy to discuss this with you further, if relevant.

We hope this is helpful.  If you have any questions about this issue, please let us know.

Best regards,
Ted

 

Post-Entry Preference Program Claims

Dear Friends,

There has been some recent developments in the world of post-entry preference program claims that we wanted to make sure you were aware of, as they could provide meaningful refund opportunities.  A recent decision by the U.S. Court of International Trade (CIT) raised serious concerns about the legality of U.S. Customs and Border Protection’s 2014 policy limiting the filing of post-importation claims for preferential tariff treatment under a number of programs, including GSP, AGOA, the US FTAs with Australia, Bahrain, Israel, Jordan, Morocco and Singapore, the Pharmaceutical Products Agreement, and others (“the 2014 Policy”).  It is now being reported that CBP may have abandoned the 2014 Policy altogether.

There are two key outcomes from this development.  First, post-entry claims under certain preferential duty programs may now be raised for the first time in a protest.  Second, for companies which have filed protests asserting such claims, there may be an opportunity to revive such protests and obtain the duty savings, regardless of how long ago such protests were filed.

Background

Preferential duty programs (such as free trade agreements, GSP and the like) can be grouped into two buckets when it comes to post-entry preference claims—the programs which explicitly authorize post-entry claims (e.g., NAFTA), and those which do not.  When it comes to asserting post-entry preference claims for the second bucket of programs, CBP has, since 2014, taken the view that such claims could only be made prior to liquidation.  In other words, for this second group of programs, a preferential duty claim could not be raised for the first time in a protest.  Once an entry was liquidated, the window for claiming a duty preference was closed.

In August, the CIT issued an opinion in a case captioned, Zojirushi America Corp. v. United States, which questioned the legality of CBP’s 2014 Policy.  The CIT said that the 2014 Policy was based on a misreading of two key Federal Circuit cases.  Both of those cases had addressed post-entry claims for NAFTA (which belongs to the first bucket of preferential duty programs), and according to the CIT, it was a mistake for CBP to try and apply the outcome of those cases to post-entry claims made under preferential duty programs falling in the second bucket. 

Zojirushi was dismissed by the CIT for lack of jurisdiction, because the Court found that the importer had not followed the appropriate course to get into court.  The importer claimed that it could not follow the traditional course for bringing a customs case at the CIT, because CBP would not deny its protests.  Instead, its protests had been “rejected as non-protestable”, leaving the protests in a state of limbo— having been neither allowed nor denied. 

The Court pointed out that there is a way to get your protest denied, even where CBP merely rejects them.  Namely, an importer can file a request for “accelerated disposition”.  Any such protest that is not granted within 30 days is deemed to be denied, thereby satisfying one of the prerequisites for getting into court.  Interestingly, there is no limit on the time for requesting accelerated disposition on a protest that has not been denied.  In other words, any protest that (1) has not been approved or denied, or (2) has been rejected as non-protestable, can be “revived” by filing a request for accelerated disposition.  At the very least, the request for accelerated disposition will trigger a deemed denial, which will in turn start the 180-day clock for filing a summons with the CIT.

Just this week, it has been reported that Zojirushi took the Court’s advice.  It went back to CBP and requested accelerated disposition for all of its rejected protests.  CBP could have denied the protests, or just waited 30 days until they were deemed denied, giving Zojirushi a path back to court.  Instead, we understand that CBP has relented with respect to its 2014 Policy, and has decided to allow these protests, rather than denying them.  While this change in policy by CBP has not been formally announced, we believe that a similar outcome is likely available to any importer with similar facts.

What To Do Now

(1)  Make a note of this change in the law.  If you need to make a post-entry preference claim under a preferential program in the second bucket (i.e., a program which does not include an explicit post-entry refund provision), you may now seek to do so by filing a protest, which extends the period available to file the claim.

(2)  Review your records to identify any protests that your company may have filed that were “rejected as non-protestable”, particularly protests that were rejected for the reasons set out in CBP’s 2014 Policy. 

*     *     *

We hope this is helpful.  If you have any questions on this potential refund opportunity, please let us know.

Best regards,
Ted