March 14, 2016

Customs budget reauthorization law raises threshold for imports free from customs fees, duties

Shipments valued at up to $800 now exempt from duties, paperwork requirements.

By DC Velocity Staff

U.S. importers are now free to exempt the value of relatively low-value imports from customs duties under a provision of U.S. Customs and Border Protection's FY 2017 budget reauthorization law.

The language, included in the law signed by President Obama on Feb. 24, exempts the first $800 of imported merchandise from customs fees and duties, up from $200. Perhaps more significantly from a dollars-and-cents perspective, the law also eliminates most compliance requirements for shipments valued at less than $800, again up from $200. The provision took effect on March 10.

Previously, shipments valued between $200 and $800 and listed as one entry required a 32-page CBP form demanding numerous details about the merchandise. Increasing the so-called de minimis—Latin for "too trivial or minor to merit consideration, especially in law"—to $800 could save air express carriers and the U.S. Postal Service, which transport most of those types of shipments, about $56 million in reduced paperwork and processing burdens, according to a 2011 forecast by the think tank Peterson Institute. That would be offset by an estimated $44 million forgone-revenue hit taken by CBP annually, according to the 2011 data. The estimated declared value of affected shipments at the time the report was issued was $1.7 billion a year.

However, imports of specific commodities that are regulated by any government agency may be subject to an examination and compliance with more detailed, formal entry requirements regardless of the shipment's value.

UPS Inc. said in an e-mail that the amount of volume involved "represents a substantial increase for retailers." However, the Atlanta-based company couldn't put a dollar figure on it because it doesn't quantify package volume based on its value. UPS is working with customers to see how the change will impact their cross-border commerce. DHL issued a statement last Thursday hailing the change, saying it would "provide more opportunities" for small and mid-size businesses to begin international trading. The overwhelming majority of U.S. businesses—many of those smaller concerns—do neither.

The law also contained language effectively codifying the CBP's 10-year effort to get all U.S. agencies involved in importing and exporting to use a "single window" to receive shipment information from the agency after it has been provided by the trade. Businesses will file entries within CBP's Automated Commercial Environment (ACE), which will then process the data and forward it to the agencies via the "International Trade Data System" (ITDS). The program's overall goal, as outlined in a 2014 White House executive order, is to eliminate the need for businesses to submit separate filings to multiple government agencies.

Full implementation of the "single window" policy is set for Dec. 31. The trade community has been slowly migrating to ACE software, which will connect businesses, CBP, and the federal agencies. However, most "participating government agencies" (PGAs)—other federal agencies that have involvement with U.S. imports and exports—are not yet ready to accept data filed through ACE.

Tom Gould, senior director, customs and international trade, for the law firm Sandler, Travis & Rosenberg P.A., said most participating agencies have started their pilots, and a few have finished them.

The legislation is important in that it will push the agencies to move ahead with coding their computer systems and developing appropriate policies and procedures to support the software migration, Gould said.

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