E-Commerce:

Understanding the New Entry Type 86 and

PGA RequirementsJuly 30, 2019

Speakers:

Cindy Allen | FedEx Trade Networks

Lenny Feldman | Sandler, Travis & Rosenberg P.A.

Susie Hoeger | Abbott Laboratories

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1.Current Legal & Regulatory Framework

2.Entry & Data Requirements

3.CBP Strategy & Private Sector Recommendations

4.Role of the Parties

5.Enforcement & Facilitation Mechanisms

6.Global Standards

7.Top Tips & Takeaways

Overview

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CBP laws and regulations• 19 U.S.C. §1321: CBP authorized to admit articles free of

duty and of any tax, where aggregate fair retail value in country of shipment of articles imported by one person on one day and duty exemption is:

- $100 in the case of articles sent as bona fide gifts from persons in foreign countries to persons in the U.S.

- $200 for articles accompanying, and for the personal or household use of, persons arriving in the U.S.

- $800 in any other case

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CBP laws and regulations• 19 C.F.R. §10.151: Free admission if fair retail value as evidenced by oral

declaration or bill of lading (or other document filed as the entry) or manifest listing each bill of lading not exceeding $200 (now $800)

- unless reason to believe shipment is one of several lots covered by a single order or contract and that it was sent separately for the express purpose of securing free entry or to avoid compliance with any pertinent law or regulation

- such merchandise shall be entered under the informal entry procedures

• 19 C.F.R. §10.153: Current regulatory exclusions:

- alcoholic beverages

- cigars and cigarettes

- subject to absolute quota

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Trade Facilitation & Trade Enforcement Act

• Section 901, De Minimis Value:

• De Minimis value –

• Change from $200 to $800

• Congressional findings –

• Modernizing international customs is critical for U.S. businesses of all sizes, consumers in the U.S., and economic growth of the U.S.

• Higher thresholds for value of articles that may be entered informally and free of duty provide significant economic benefits to businesses and consumers in the U.S. and the economy of the U.S. through costs savings and reductions in trade transaction costs

• Sense of Congress –

• USTR should encourage other countries to establish commercially meaningful de minimis values for express and postal shipments that are exempt from customs duties and taxes and from certain entry documentation requirements, as appropriate

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Data – Manifest versus ACE Release

Data Element Manifest – 19 CFR 128.21 ACE Release – 19 CFR 141, 142

Seller Yes

Buyer Yes

IOR Number Yes

Consignee Yes

Manufacturer/Shipper Yes Yes

Ship to Party Yes Yes, if not sold

Country of Origin Yes Yes

HTSUS (10 digits) Yes

Specific Merchandise Description

Yes

Quantity Yes Yes

Shipping Weight Yes

Value Yes Yes

BL/AWB Number Yes Yes

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E-Commerce entry options• Formal (consumption) entry – Type 1

• Informal entry – Type 11

• Section 321 – Type 86

• Informal entry:

• Applies to –

• Merchandise not exceeding $2,500 in value

• Other items such as household or personal effects, books, theatrical scenery, U.S. products returned after repair/alteration or rejected/returned (up to $10,000)

• Data elements –

• Merchandise description, value, duty rate, duty amount, taxes, fees, BL/AWB, country of export, import date, importing carrier, importer or agent signature

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JFK Pipeline – Requests for Release of Consolidated Non-Express Section 321 Shipments. January 16, 2018

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Cleveland Pipeline – Section 321 DeMinimis Value Threshold (DMT). January 12, 2018

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E-Commerce import/entry issues• Partner Government Agency (PGA) requirements and

potential effect on entry type?

• Customs business requiring a licensed customs broker to file entry…or not?

19 CFR 111.1. Definition - Activities involving transactions with CBP concerning the entry and admissibility of merchandise, its classification and valuation, the payment of duties, taxes or other charges assessed or collected by CBP on merchandise by reason of its importation, and the refund, rebate, or drawback of those duties, taxes, or other charges.

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COAC E-Commerce Recommendations

Filing Partner Government Agency (PGA) Data:

1. Do not limit, encourage or require section 321 filings to a certain class or group of service providers.

2. Provide section 321 filing capability in ACE for ACE filers. Automated solutions, including the ability to file PGA data, should be available in ABI and/or AMS.

Data Elements:

1. Ensure shipments have necessary data required for CBP and PGAs to release cargo consistent with risk and targeting standards.

2. Clarify whether a merchandise description only or an HTSUS number is recommended or required for section 321 importations and the applicable circumstances.

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COAC E-Commerce Recommendations

Process to Determine Section 321 Eligibility:

1. Ensure an adequate process is in place, and/or automated solution, to determine if a shipment is subject to PGA admissibility requirements, and if eligible for section 321 clearance.

Guidance and Collaboration Between Government & Trade:

1. Encourage each PGA to clarify whether section 321 imports require a data set as they do for entry types 01 or 11 for cargo release.

2. CBP and government agencies that require duties or fees, e.g., antidumping and countervailing duties, or fees on entries, should clarify whether they also will require them on section 321 importations.

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COAC E-Commerce Recommendations

3. If certain data elements are required for admissibility or revenue/fees, CBP should establish filing requirements and ensure minimal effect on costs and efficiencies to process section 321 importations.

4. Educate and inform trade community to improve descriptions of merchandise provided on commercial and shipping documents, including manifests.

5. CBP’s work load staffing model, used to facilitate and manage the flow of legitimate cargo, should include a review and determination of the additional volume of shipments being imported under the section 321 limit.

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COAC E-Commerce Recommendations

Responsible Party for Enforcement and Trusted Party for Facilitation Benefits:

1. CBP should clarify the laws and regulations such as those relating to risk-based cargo release, product admissibility, manifesting cargo, intellectual property, commercial negligence/fraud, etc. that provide CBP with the ability to hold various parties responsible for the accuracy of such transactions. CBP should consider parties who have the primary financial gain due to the sale of the goods and/or knowledge about the manufacture, country of origin, or admissibility of the goods.

2. CBP and the PGAs should provide benefits to trusted partners involved with section 321 importations and consider expedited processing and less targeting due to minimal risk associated with such transactions when there is additional processing or screening performed.

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CBP’s E-Commerce Strategy

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Parties in E-Commerce Transactions• Foreign Manufacturer/Shipper

• E-Commerce Platform/Marketplace

• Carrier

• Express Courier

• Customs Broker

• Importer of Record

• Purchaser/Consignee

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U.S. Postal Service• Data and regulatory parity

• STOP Act

• 12/13/18: 70% advance data to CBP

• 12/31/20: 100% advance data to CBP

• Universal Postal Union

• Varied rates to 192 member countries

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Earrings or Toys?

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Earrings or Toys?

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Keychains or Fashion Jewelry?

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Keychains or Fashion Jewelry?

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Responsible Party? Considerations

• Knowledge of merchandise – standards, requirements

• Access and/or control of data relating to merchandise

• Physical possession of merchandise

• Transporter of merchandise

• Seller - financial benefit from merchandise

• Purchaser - beneficial owner of merchandise

• Platform/Marketplace – facilitator of transaction

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CBP Enforcement: Priorities for E-Commerce

• Partner Government Agencies (PGAs)

• Data versus Duty

• Intellectual Property Rights (IPR)

• 19 USC 1526(d) personal use exemption for traveler importing one article of the type

• Must accompany traveler; for personal use, not sale; not granted an exemption for last 30 days

• Revenue – Duties, AD/CVD, Fees

• De Minimis for AD/CVD? Fees?

• Border Security

• C-TPAT/Trusted Trader Applicability

• “Unmanifested” Cargo

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CBP Enforcement: PGAs/Admissibility

• 19 U.S.C. 1595a.• Merchandise introduced or attempted to be introduced into the U.S.

contrary to law –

– Shall be seized and forfeited if stolen, smuggled or clandestinely imported or introduced, if a controlled substance, or if contraband.

– May be seized and forfeited if subject to a legal restriction or prohibition relating to healthy, safety, or conversation and not in compliance; requires a license, permit or other authorization and not accompanied by it; copyright, trademark or trade name violations occur; trade dress involved that violates a court order, or is intentionally or repetitively mismarked.

• Every person who directs, assists financially or otherwise, or in any way concerned with such unlawful activity, is liable to a penalty equal to the value of the articles.

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Top Five Tips• Know What Role You and Your Business Partners are Playing

• Understand What Data is Needed and What Might be Missing

• Determine PGA Admissibility Requirements

• Familiarize Yourself with Applicable Penalty and Seizure Laws

• Leverage Partnership Programs

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E-Commerce Checklist• Have you addressed opportunities to import under section 321 for

de minimis value shipments?

• Have you addressed warehouse/fulfillment options?

• Have you assured proper warehouse/fulfillment procedures?

• Have you confirmed service provider (courier, broker) capabilities?

• Have you addressed impact of PGAs and ADD/CVD?

• Have you addressed IPR issues?

• Have you addressed necessary data flows and information?

• Have you ensured proper description and HTSUS?

• Have you considered informal entry requirements?

• Do documents, agreements address liabilities and responsibilities?

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Questions?

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Lenny Feldman, Esq.

Sandler, Travis & Rosenberg,

P.A.

Phone:

305-894-1011

Email:

lfeldman@strtrade.com

Cindy Allen

FedEx Trade Networks

Phone:

(901) 684-4869

Email:

cindyallen@fedex.com

Susie Hoeger

Abbott Laboratories

Phone:

(847) 938-3566

Email:

susie.hoeger@abbott.com