Brief Considerations About Usa Retaliatory Duties Entered Into Force: From Burden To Opportunity

A list of European products subject to a surcharge of the related duties to be paid upon importation in the USA, in 10 or 25 percent measures, has been published the Federal Register, Vol. 84. N. 196 of Wednesday, October 9th, 2019 (USA Official Journal).

Hoping it can be of help, I am attaching the aforementioned provision to my brief comment thus allowing the companies concerned to check if, and to what extent, the related products are affected by the retaliatory duty.

The application of the duty is subject to the recurrence of 3 conditions:

• The first of temporal nature, as the duty is applied starting at 12.01 a.m. of the day October, 18, 2019, if US customs barrier is exceeded after the aforementioned term the application of additional duties is determined.
• The second of items nature, as the duty only affects the specifically indicated products in the US provision by direct reference to the customs heading which describes the relative products in detail.
• The third concerning the destination of the affected products, which must be a destination entered for consumption also through storage in warehouses.

• Time requirement

The temporal requirement concerns the actual registration and/or certification of customs documentation concerning imports into the USA.

If these obligations take place later than 12.01 a.m. of October 18th, if the additional conditions mentioned above are applied, the new regulation will be applicable.

The first consideration concerning the existence of the time requirement, concerns goods that have passed the customs barrier of their exporting States prior to the aforementioned term, but are imported to the USA after it. For these goods the applicable regime will be that of additional duties since the legislation refers to entry into the US territory.

• Items requirement

The structuring of the tax provision is designed in a distinct manner for individual states and related products. Specifically, as can easily be seen from the attached document, the list of the relative products are distinguished by individual States in the sense that, for example, the importation of wine into the USA is not affected if the exporting country is Italy, while it’s affected by additional duties if the exporting country is France.

The specific reference to the customs heading contained in the provision, ensures that any difference with respect to the product indicated in the relevant item determines the exclusion from the additional duty: diversity that may concern, for example, a product similar to the one described there, as the similarity is not identity.

It follows that a different percentage composition of raw materials, compared to that indicated in the customs heading will result in exclusion from the additional duty.

This consideration is extremely important since it can achieve decisive exemptions from the duty, which could prove extremely advantageous for European exporters, otherwise affected.

The difference which determine the exclusion from the duty do not only concern the substantial composition of the product, but in some cases also its packaging.

Therefore, a careful study of the relative operations will be necessary to be able to make the best choices, in order to eliminate the impact of the additional duty.

• Use for consumption

The structure of the provision seems clear and having a simple meaning, yet the content is delicate and crucial.

The product affected by the additional duty is, in fact, only the one that exceeds the customs barrier in the condition of being suitable for its “consumption”.

If for a variety of reasons, the imported product is not suitable to be released for “consumption” in the USA, it will not have to pay the additional duties: the suitability obviously concerns a series of requirements among which not least, that of being packed and/or bottled to be sold.

• Taxable base

Since these are additional duties, the rules for determining the tax base will be the same as those concerning the duties and therefore those in force for the application of the United States harmonized customs tariff.

As known to operators in the sector, these rules constitute an essential moment for the application of duties and are based on distinct and varied import customs procedures.

Such procedures are distinguished, for example, in cases of direct sales and imports and in the case of so called indirect (for example triangular) sales and imports.

In the latter case, for example, the determination of the customs value may or may not be subject to the rules of the so-called “first price”, by applying specific conditions and on the basis of specific documentation to be produced in the US customs.

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In conclusion, the points outlined above on  retaliatory duties, can be used as a tool by exporting companies in the USA for an orderly and economic planning of their operations. Hence they can verify the cost effectiveness of any investments that, on the one hand are aimed at reducing the impact of the additional duty and, on the other hand turn out to be chosen for improving efficiency and foreign sales processes.

In essence, a burdensome “prima facie” burden could turn into opportunities!

Notice of determination and action

L’Autore
Avv. Marco Giontella