Policy Updates

U.S. and Virginia Trade Policy Updates

April 1, 2024

U.S. Trade Negotiations

So far in 2024, the United States has had several discussions around critical minerals, supply chains, and tariffs. USTR has stated that it is currently negotiating critical mineral agreements with the United Kingdom and the European Union while the Department of State hosted the inaugural meeting on critical minerals with Central Asian countries. In addition, the U.S. has had conversations with the EU and separately with Japan on the importance of diversifying and strengthening their supply chains, and the Indo-Pacific Economic Framework for Prosperity agreement relating to supply chain resilience also recently entered into force. The U.S. has continued its trade discussions with Kenya while the U.S. and Mexico exchanged threats on reinstating tariffs on steel and aluminum.

U.S. and EU Advance Economic Security Cooperation at Ministerial Meeting

High-ranking U.S. and EU officials sought to advance bilateral efforts to strengthen economic security at the fifth ministerial meeting of the U.S.-EU Trade and Technology Council held Jan. 30 in Washington, D.C. The two sides highlighted the importance of further de-risking and diversifying the U.S. and EU economies, building resilient supply chains, employing outbound investment mechanisms to safeguard national security-related technologies, enhancing and better coordinating U.S. and EU export control regimes to prevent the exploitation of dual-use technologies, and jointly countering the use of economic coercion and non-market policies and practices by authoritarian actors. They also discussed greater cooperation to counter the misuse of technology, including countering foreign information manipulation and interference.

 U.S. and EU officials discussed ways to expand transatlantic cooperation in critical and emerging technologies, including artificial intelligence, and to jointly promote innovation, security, and trustworthiness across digital ecosystems. They highlighted progress made through the TTC Joint Roadmap on Trustworthy AI and Risk Management and resolved to continue to promote interoperability in emerging approaches to AI governance. Virginia companies involved in high-tech products will want to monitor these discussions for further developments. For more information, click here.

Optimism for a Critical Minerals Agreement between the U.S. and EU

The U.S. has been in discussions with the European Union about the establishment of a critical minerals agreement that would allow certain minerals sourced in the EU to meet the sourcing requirements under the Inflation Reduction Act. The U.S. established a CMA with Japan last year, and USTR Katherine Tai stated in December that the U.S. was currently actively negotiating CMAs with the EU and the United Kingdom.

In March, European Parliament Trade Committee Chair Bernd Lange expressed optimism over a possible critical minerals trade agreement with the United States. Despite some challenges on the negotiations around labor and environmental standards, Lange stated, “I guess there are possibilities to find a solution…So, I'm quite a bit optimistic.” A CMA with the EU and the UK would make it easier for Virginia companies sourcing critical minerals from Europe to benefit from the Inflation Reduction Act. For more information, click here.

U.S.-Japan Discuss Forced Labor and Supply Chains

The first round of dialogues under the U.S.-Japan Task Force on the Promotion of Human Rights and International Labor Standards in Supply Chains was held in February. This task force is a mechanism for the two partners to protect and promote human rights and internationally-recognized labor rights, including by prohibiting the use of forced labor in supply chains through trade policy.

According to USTR, the government dialogue included an exchange of information on relevant laws, policies, and guidance, including implementation of the Uyghur Forced Labor Prevention Act, the Xinjiang supply chain business advisory, the rapid response mechanism in the U.S.-Mexico-Canada Agreement, and the Department of Labor’s list of goods produced by child or forced labor. The stakeholder dialogue featured discussions and information sharing on corporate due diligence best practices. Japan was Virginia’s 12th largest export destination in 2023, and these discussions may have an impact on the supply chain between these two countries. For more information, click here.

IPEF Supply Chain Agreement Enters into Force

The U.S. Department of Commerce announced Jan. 31 that the Indo-Pacific Economic Framework for Prosperity agreement relating to supply chain resilience will enter into force Feb. 24. IPEF was launched in 2022 with the aim of strengthening U.S. ties to the region and creating “a stronger, fairer, more resilient economy for families, workers, and businesses.” Australia, Brunei, Fiji, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam are the current participants, and each of them except India has pledged to take part in all the initiative’s four pillars: trade (which India opted out of), supply chains, clean economy, and fair economy.

The supply chain agreement provides for the creation of (1) an IPEF Supply Chain Council to oversee the development of sector-specific action plans designed to build resilience and competitiveness in critical sectors, including by helping companies identify and address supply chain vulnerabilities before they become significant bottlenecks, and (2) an IPEF Supply Chain Crisis Response Network that can serve as an emergency communications channel and help support the timely delivery of affected goods during an acute supply chain crisis.

In March, participating members took the important step of publishing texts for the clean economy and the fair economy, representing Pillars III and IV of IPEF, respectively. Members also proposed an agreement that would establish a ministerial IPEF council that would meet annually. On June 6, IPEF members are scheduled to meet in Singapore, where they will discuss and possibly sign the proposed texts. Negotiations on the trade pillar of IPEF is expected to continue throughout 2024. The ratified IPEF supply chain agreement may help Virginia companies by developing more reliable and efficient supply chains with negotiating parties. For more information, click here.

U.S. Engages with Central Asian Countries on Critical Minerals

The U.S. hosted Feb. 8 the inaugural meeting of the C5+1 Critical Minerals Dialogue, which seeks to increase Central Asia’s involvement in global critical minerals supply chains, strengthen economic cooperation, and advance the clean energy transition while protecting the region’s ecosystems. The State Department reports that during this meeting senior officials from Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan “shared their interest in developing investment opportunities in critical minerals that meet the highest environmental, social, and governance standards.” Although Virginia and neighboring states appear to have critical mineral deposits, Central Asia is largely unexplored and has a lot of potentially untapped rare earth minerals and other critical minerals. For more information, click here.

U.S. Kenya Talks Continue

USTR reports that during a Jan. 29-31 round of negotiations on the U.S.-Kenya Strategic Trade and Investment Partnership, the two sides exchanged views on the most recent proposed texts regarding agriculture, good regulatory practices, and workers’ rights. They also discussed textual issues in the chapters on anti-corruption; micro-, small-, and medium-sized enterprises; and services domestic regulation. Virginia companies exported just under $9 million to Kenya in 2023, and this agreement may make it easier to do business there in the future. For more information, click here.

U.S.-APEP Discussions Continue

At the first meeting of trade ministers under the Americas Partnership for Economic Prosperity on March 18 in Washington, D.C., participants received a progress update on priorities such as trade facilitation, digitalization of customs procedures, and supply chains in the clean energy, semiconductor, and medical supply chain industries. A joint concluding statement noted that APEP country leaders are expected to hold a summit in 2025 but otherwise gave no indication of a timeframe for moving negotiations forward. 

U.S. Trade Representative Katherine Tai said she expects much of the ministers’ work will focus on supply chain resilience, which “is about crafting a new approach to trade policy so that we can adapt and rebound with agility, advance workers’ rights and environmental protections, and drive more inclusive economic prosperity.” Previously, APEP participants met Feb. 12-13 at the Council on Trade and Competitiveness to begin establishing committees and working groups to advance the implementation of trade-related elements of the priorities identified in November 2023. 

Specifically, they established the Trade Rules and Transparency, Trade and Sustainable Value and Supply Chains, and Inclusive Trade and SMEs committees. The CTC intends to meet regularly, including in person at least twice annually, and will continue developing projects to realize APEP’s goals of deeper economic integration and sustainable and inclusive trade and investment. For more information, click here.

Mexico Promises Retaliatory Tariffs if U.S. Acts First

Earlier this year, USTR Tai referred to an increase in steel and aluminum from Mexico as a “surge” and has expressed concern over the lack of transparency into the origins of these imports. As such, USTR has iterated that it has the ability to reimpose Section 232 tariffs on Mexico, based on a previous 2019 agreement between the United States and Mexico. The Mexican economy minister has reportedly called this politically driven and has promised that it would respond to any reinstatement of Section 232 tariffs with its own tariffs on U.S. steel. In mid-March, a bipartisan group of U.S. Senators introduced legislation that would reinstate Section 232 tariffs on steel from Mexico. The tariffs would start at 25 percent and authorize the Biden administration to further restrict steel imports using other measures. Rising tariffs between the U.S. and Mexico could be disruptive for Virginia companies, not only those importing Mexican steel but also by the potential retaliatory tariffs from Mexico on U.S. goods. For more information, click here.

Tariff Threat Pushed Back Again in Digital Tax Dispute

The U.S. has delayed through June 30 the threat of additional tariffs on hundreds of millions of dollars’ worth of imports from Turkey in a dispute over digital services taxes. The U.S. recently took similar action with respect to imports from Austria, France, Italy, Spain, and the United Kingdom. DSTs are taxes on revenues generated from providing digital services to, or aimed at, users in the subject jurisdiction. In June 2020 the Office of the U.S. Trade Representative launched a Section 301 investigation into whether DSTs adopted or under consideration by Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the United Kingdom would discriminate against U.S. companies, be inconsistent with prevailing principles of international taxation, and burden or restrict U.S. commerce. 

USTR concluded that DSTs in Austria, India, Italy, Spain, Turkey, and the United Kingdom would meet these criteria and proposed additional tariffs of up to 25 percent on imports from these countries. USTR subsequently announced a political compromise under which such tariffs would be suspended through Dec. 31, 2023, to give the Organization for Economic Cooperation and Development time to conclude a multilateral agreement on DSTs. (The investigations of Brazil, the Czech Republic, the EU, and Indonesia were terminated after USTR concluded that they had not adopted or implemented DSTs at that time.) The OECD talks are still ongoing, with the organization recently calling for participants to finalize an agreement by the end of March 2024 and sign it by the end of June. It is unclear if any such action is forthcoming with respect to India. For more information, click here.


U.S. Trade Activity

The United States has focused on enhancing enforcement so far in 2024. The Biden administration has directed federal agencies to ensure global supply chains are not utilizing forced labor, and several agencies are seeking ways to increase enforcement on textiles trade. The U.S. has also proactively warned U.S. businesses actively engaged in countries like Russia and Burma to ensure they remain in compliance with U.S. laws and regulations. Also, the Bureau of Industry and Security is enacting measures to make it easier for businesses to self-disclose export violations. 

Resetting China Ties with Tariffs, Customs Reform, Export Controls, Report Says

The House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party adopted recently a strategy for pursuing the U.S.’ “economic and technological competition” with China that puts U.S. “national security, economic security, and values” at the core of the bilateral relationship. This report could set Congress on a path toward more aggressive action on U.S.-China trade issues ahead of presidential and congressional elections next fall.

The report cited longstanding complaints that allowing China into the World Trade Organization “has failed” to open China’s economy and foster political reforms and that instead Beijing “has pursued a multi-decade campaign of economic aggression” against the United States. The strategy seeks to “reset” the U.S.-China economic relationship, asserting that China’s economic system is “incompatible” with the WTO and undermines U.S. economic security because China uses “an intricate web of industrial policies, including subsidies, forced technology transfer, and market access restrictions, to distort market behavior, achieve dominance in global markets, and increase U.S. dependency on PRC imports.” It also aims to reform U.S. export controls, which “have been slow to adapt to rapid changes in technology and attempts by adversaries to blur the lines between private and public sector entities.” Further, it identifies the need to reduce supply chain reliance on China, particularly for items like critical minerals, pharmaceuticals, and medical devices.

To advance these goals, the committee offers nearly 150 policy recommendations, including modifying tariffs, customs reform, and export controls. There has been increasing pressure to decouple the U.S. economy from China.  U.S. agriculture interests are voicing concern with taking extreme action due to the implications on exports.  China is the largest export market for American agriculture products and Virginia companies involved in exporting to or importing from China may be impacted in the future. For more information, click here.

China Tariff Exclusions Extended Five Months

Importers of numerous goods from China won’t face higher tariffs for at least several more months after President Biden extended hundreds of Section 301 tariff exclusions through May 31. These include more than 300 exclusions of various products (click here for full list) as well as exclusions for 77 medical care products needed to address the COVID pandemic. These exclusions are available for any product that meets the specified HTSUS numbers and product descriptions, regardless of whether the importer filed an exclusion request.

In the meantime, Section 301 tariffs remain in effect on hundreds of billions of dollars’ worth of other goods imported from China. The Biden administration has not yet concluded a long-awaited review of those tariffs, which officials had expected to wrap up by the end of 2023, and USTR said the extension of the existing exclusions will “facilitate the alignment of further decisions on these exclusions with the ongoing four-year review.” USTR Katherine Tai has said this review could result in some changes to the tariffs, including removals and/or additions, as well as a new exclusion process. Until the review is complete, Virginia companies will need to continue absorbing these additional tariff costs if importing from China. For more information, click here.

Trade Actions Part of New Labor Standards Initiative

President Biden has signed a memorandum outlining a “whole-of-government approach” that directs federal departments and agencies to advance labor rights and worker empowerment in their work abroad. With respect to trade, the memorandum calls on select federal agencies to act in a variety of ways, such as eradicating forced labor, strengthening the enforcement of import bans from Xinjiang Uyghur Autonomous Region, and prioritizing initiatives to improve labor-related abuses in global supply chains. 

According to a White House fact sheet, “upholding common standards and protecting fundamental rights are key for American workers and American companies to compete fairly in the global economy” and “an integral part of advancing a trade policy that contributes to inclusive economic growth.” Virginia companies importing goods need to closely monitor their supply chains and ensure they have taken due diligence and reasonable care in getting visibility into their sources and supply chains. For more information, click here.

Aluminum Extrusions AD/CVD Case Scope Expanded

The Department of Commerce is considering a case that will expand antidumping and countervailing duties on a vast array of aluminum extruded products from China, Colombia, Ecuador, India, Indonesia, Italy, Korea, Malaysia, Mexico, Taiwan, Thailand, Turkey, U.A.E. and Vietnam. 

The scope of products to be subject to this case is so broad that it seeks to cover any aluminum extrusion, regardless of form, finishing or fabrication, whether assembled with other parts or unassembled, whether coated, painted, anondized, or thermally improved.  It includes products ranging from vehicle roof rails, to tradeshow display fixtures and framing, parts for tents, door thresholds, flooring trim, electric vehicle battery trays, sinage or advertising poles, heat sinks, subassemblies that may contain a component other than aluminum extrusions such as shower and bath parts, solar panel mounting systems, furniture parts or subassemblies, appliance parts, motor vehicle parts or subassemblies, etc., etc.  The deadline to submit comments on the scope closed on March 28 and is likely to be the last chance to define what products are covered by the investigation. Virginia companies that may use imported aluminum extrusions from any of the listed countries should seek counsel to advise if their product is subject to the potential ADD/CVD case.

Homeland Security Secretary Seeks Comprehensive Enforcement Plan on Textiles

Following a Jan. 30 virtual meeting with the National Council of Textile Organizations, the Department of Homeland Security announced that Homeland Security Secretary Alejandro Mayorkas has directed U.S. Customs and Border Protection and Homeland Security Investigations to “provide him with a comprehensive enforcement action plan in 30 days, including a determination whether current trade law provides adequate authorities to solve the core issues.” To date, such a plan has not yet been released to the public.

NCTO members argued at the meeting that unscrupulous individuals and entities have created an unfair market by circumventing the operation of U.S. free trade agreements, violating the Uyghur Forced Labor Prevention Act, and exploiting the de minimis provision in U.S. law that allows for the informal entry of shipments valued at less than $800. These concerns were also voiced in a recent letter to Mayorkas by House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party Chair Mike Gallagher and Ranking Member Raja Krishnamoorthi.

In response, CBP, HSI, and other relevant DHS agencies and offices will increase and expedite their work in prosecuting illegal customs practices that harm the U.S. textile industry, according to the DHS readout of the meeting. Efforts are already underway by CBP to increase enforcement, including by using traditional methods like physical inspections, testing and analysis by CBP laboratories, textile production verification visits, and audits. Virginia companies importing textiles should monitor this situation closely. For more information, click here.

BIS Wants More Self-Disclosures of Export Violations

The Bureau of Industry and Security is again revising its policies to further encourage exporters to voluntarily self-disclose potential violations of export rules. In 2022, BIS announced changes that promised quicker resolution of VSDs involving minor or technical infractions. In April 2023 BIS increased pressure on exporters to disclose not only their own potential violations but those by others as well. Just three months later BIS joined with the Office of Foreign Assets Control and the Department of Justice to stress that exporters have a duty to report violations to help protect U.S. national security.

BIS is now making the following updates to enhance the efficiency and effectiveness of its VSD program and make it easier for exporters to make disclosures. Virginia companies engaged in exporting should review these policies on VSDs. For more information, click here.

Port Security Effort Includes New Requirements for Ships and Cranes; Section 301 Investigation on Chinese Shipbuilding requested

The Biden administration is taking a number of steps to strengthen U.S. port security, maritime cybersecurity, and supply chain resilience, particularly in response to threats from China. This effort also aims to “bring domestic onshore manufacturing capacity back to America to provide safe, secure, cranes to U.S. ports.”

A statement from the Department of Homeland Security explains that owners and operators in the U.S. marine transportation system increasingly rely on an ecosystem of automated and cyber-dependent systems to enable critical operating functions, including cargo movements, ship navigation, engineering, safety, and security monitoring. While these systems “have revolutionized the maritime shipping industry by centralizing operational control and improving efficiency,” DHS states, “they also introduce vulnerabilities that, if exploited, could have significant cascading impacts to the MTS, the economy, and the American people.” Administration officials noted that actions of this type have already occurred in the U.S. and elsewhere. Virginia has some of the largest ports on the East Coast and could benefit from the increased investment opportunities deriving from this initiative. However, compliance with a shift to new crane technology could also come at a cost to the State. For more information, click here.

Not only are the cranes used at the ports being scrutinized, but the actual ships made in China.  On March 12, a group of unions filed a petition with the United States Trade Representative seeking the initiation of an investigation into the Chinese shipbuilding industry alleging “unreasonable and discriminatory acts, policies, and practices” by China to “dominate the maritime, logistics, and shipbuilding sector that burden or restrict U.S. Commerce”. 

Section 301 investigations require the U.S. to seek to resolve the issue with the foreign government but if no resolution is reached, to file a dispute at the World Trade Organization and to take remedial actions.  In this instance, a unique remedy is being proposed that would assess a port fee on all Chinese build ships that dock at a U.S. port and create a Shipbuilding Revitalization Fund to help the domestic industry and its works compete, and other measures to stimulate demand for, and the capacity to construct, commercial vessels build in the U.S.  Resolution of these investigations can take 12-18 months but the USTR must respond within 45 days as to whether or not it will initiate the investigation.

Any Virginia company that imports or exports and the ship is Chinese-made, could be subject to a fee that will be levied on the ship when it ports in the U.S.

U.S. Cautions Businesses by Expanding Sanctions Against Russia

The U.S. recently imposed a wide range of additional trade restrictions and economic sanctions against Russia as Moscow’s war against Ukraine enters its third year. On Feb. 23, several federal agencies issued an advisory cautioning that those doing business in or engaging in transactions involving Russia or the Russian-occupied territories of Ukraine “increasingly risk severe civil and criminal penalties in navigating the raft of economic sanctions, export controls, and import restrictions imposed on Russia” by the U.S. and its allies and partners. This includes businesses, individuals, financial institutions, and other persons – including investors, consultants, non-governmental organizations, and due diligence service providers – that operate in or have value chains linked to these areas.

Virginia companies doing business in Russia need to understand these policies to ensure continued compliance with U.S. laws. Furthermore, Virginia companies exporting should always ensure they review the BIS and OFAC lists for prohibited entities. For more information, click here.

U.S. Again Warns of Risks to Businesses with Supply Chains Involving Burma

The U.S. departments of Commerce, State, Treasury, Homeland Security, and Labor, along with the Office of the U.S. Trade Representative, are again warning U.S. companies about the continued risks of potential exposure to or involvement in operations or supply chains tied to the military regime that overthrew Burma’s elected government in February 2021.

This supplemental business advisory builds on a previous advisory issued in January 2022 by highlighting additional sectors and activities of concern, as well as the actions taken under various federal and multilateral authorities to address destabilizing conduct involving the military regime or private entities located in Burma. It is intended to inform individuals, businesses, financial institutions, and other persons, including investors, consultants, non-governmental organizations, and due diligence service providers, of the continued risks and considerations for businesses and individuals with exposure to entities responsible for undermining democratic processes, facilitating corruption, and committing human rights and labor rights abuses in Burma. Virginia companies that are importing from Burma/Myanmar should understand the risks and regulations for doing so. For more information, click here.

Special Topic: Section 321 De Minimis

Section 321 of the U.S. Tariff Act of 1930 allows the import of goods into the United States duty-free and under expedited customs inspection and processing, as long as the goods are valued at $800 or less and are imported by “one person in one day.” There are a few restrictions on items, including those that are subject to anti-dumping or countervailing duties or other trade restrictions.

In 2016, the de minimis threshold increased from $200 to $800, which is currently one of the highest amounts globally, standing in stark contrast to many U.S. trading partners, such as China at $6.50, Canada at $111, Mexico at $50, the European Union at $162, and the United Kingdom at $168.

 According to a recent report by the International Trade Commission, Section 321 imports account for a substantial share of all U.S. e-commerce imports by quantity, increasing by 88 percent from 2018 to 2021 and constituting 83 percent of total U.S. e-commerce imports in fiscal year 2022. By value, de minimis imports were less than two percent of the total value of U.S. goods imports in 2021, but from 2018 to 2020 their value more than doubled from $29 billion to $67 billion. 

The ITC also points out that China is the leading source of de minimis imports by a large margin, more than three times larger than the UK and Canada, the next leading foreign suppliers. From 2018 to 2021 nearly two-thirds of the 2.3 billion shipments imported under Section 321 came from China. While that percentage has declined recently as imports from other markets have increased, the shares of such imports from Canada (eight percent), the UK (seven percent), and Hong Kong (four percent) likely include transshipments originating from China.

The report states that the large volume of Section 321 imports from China in recent years has led to increased scrutiny. For example, because de minimis imports are subject to minimal documentation and inspection, concerns have been raised about product safety, the use of illicit cotton from Xinjiang and forced Uyghur labor, and violations of intellectual property rights.

Earlier this year, the House Select Committee on the Chinese Communist Party recommended that Congress reform Section 321 based on the idea that Chinese companies, such as Temu and Shein, utilize Section 321 to avoid paying tariffs on their products. In contrast, some U.S. importers are paying more than $100 million in tariffs in any given year. The Select Committee’s report also highlighted how some imports from China may not be in compliance with the Uyghur Forced Labor Prevention Act (UFLPA). According to the report, Temu asserts that it “is not the importer of record with respect to goods shipped to the United States, [the UFLPA] and the prohibitions set out in [Section 307 of the Tariff Act of 1930] do not apply directly to Temu’s activities as an online platform operator.”

In response to the concerns surrounding Section 321, several bills have been introduced in Congress that are gaining traction. First, a bipartisan group of legislators introduced the “Import Security and Fairness Act” in both the House and Senate in June 2023 to exclude non-market economies, like China and Russia, from benefitting from the Section 321 program and to require U.S. Customs and Border Protection to do more to ensure imported articles are eligible for Section 321.

A second bipartisan bill, the De Minimis Reciprocity Act of 2023, would reduce the $800 threshold to match the de minimis threshold limit in the country of origin for the imported good and would ban China and Russia from eligibility under Section 321. The bill would also require an annual list of countries ineligible for the de minimis, which includes countries that fail to adhere to the UFLPA or those that export counterfeit goods, among other items.

The Americas Act which has companion bills in both the House and Senate is similar to the De Minimis Reciprocity Act. It has the reciprocity component as before, but adds more countries to the black list, including countries ranked Tier 3 on the Trafficking in Persons list and also makes FTZs eligible to transact de minimis entries. Senator Mike Braun is circulating another bill, not yet introduced, called the Ensure Accountability in De Minimis Act of 2024 that would limit parties that can enter de minimis shipments, modifies the penalties for fraud, gross negligence and negligence, requires more data elements on all entries and reports on illegally entered goods seeking de minimis treatment.

In addition, Senators Sherrod Brown and Rick Scott have also asked President Biden to use executive authority to reform Section 321 and to focus on achieving three objectives.

1.     End the Abuse of the De Minimis Loophole by ensuring the application of the same importer of record and entry summary requirements for Section 321 shipments that already exist for other informal entry imports, 

2.     Ensure Accurate Shipment Reporting by directing the U.S. Treasury, per Section 321(b), to ensure de minimis is not being used by commercial operators to avoid paying duties, and

3.     Protect Domestic Industries and Ensure the Proper Application of the Law by excluding from de minimis goods that are subject to partner government agencies import notification requirements, Section 301 and Section 232 penalty tariffs, and UFLPA import restrictions, as well as products in sectors designated as priority trade issues by Congress.

There appears to be general bipartisan agreement in Congress that Section 321 needs reform, and there is a strong push to make that reform happen during this year in this Congress.

On a separate note, CBP is currently modifying an ongoing test designed to expedite the entry of low-value shipments, which was initially launched in September 2019. The test allows Section 321 shipments to be entered via informal entry type 86 in the Automated Commercial Environment, resulting in faster clearance. CBP states that this test allows it to address the growing volume of Section 321 shipments resulting from the increasing use of e-commerce platforms and to utilize a low-value entry process for Section 321 shipments subject to PGA data requirements for the first time.

The test is open to all owners, purchasers, consignees, and designated customs brokers of Section 321 low-value shipments, including those subject to PGA requirements, imported by all modes of cargo transportation except mail. However, it is not available for goods subject to antidumping or countervailing duties, goods subject to quota, certain tobacco and alcohol products, and goods taxed under the Internal Revenue Code.

CBP states that it has experienced enforcement challenges in the course of this test related to its efforts to prevent imports of illicit substances, counterfeits and other goods violating intellectual property rights, and goods made with forced labor. For example, CBP has encountered violations such as entry by parties without the right to make entry, incorrect manifesting of cargo, misclassification, misdelivery (e.g., delivery of goods prior to release from CBP custody), undervaluation, and incorrectly executed powers of attorney. 

To address these problems CBP is making the following modifications to the test, effective Feb. 15.

  • Requiring entry type 86 to be filed prior to or upon, rather than within 15 days of, cargo arrival;
  • Clarifying that only specified regulations are waived under the test and that all others (e.g., those allowing CBP to require formal entry) remain in force; and
  • Clarifying the types of misconduct by test participants that may result in civil and criminal penalties, administrative sanctions, or liquidated damages.

In the months ahead, there may be important changes to Section 321. It is imperative for all Virginia companies to ensure they are in compliance with these changes and to understand how they can impact your business. Please reach out to your trade manager if you have any questions. You can find your trade manager using the “enter zip code” box on the top left of your screen.