White House Specifies Changes in U.S. Trade Law Needed to Implement TPP

Excerpt from: Sandler, Travis & Rosenberg Trade | April 06, 2016

Scarbrough has interpreted these points in blue for better understanding.  Please email info@scarbrough-intl.com with any questions in regards to the Trans-Pacific Partnership (TPP), or visit our TPP Resource Page.

The Obama administration has released a statement indicating that the following changes to existing trade law will be required to bring the U.S. into compliance with its obligations under the Trans-Pacific Partnership. These changes are likely to be included in the TPP implementing legislation that the White House could submit for congressional approval later this year.

• The merchandise processing fee will have to be conformed to the requirement that fees or charges on or in connection with importation or exportation not be levied on an ad valorem basis.

What this means: the TPP provides for updated fixed MPF levels (you will need to grab the law to find them) for increments of value, instead of the 0.3464% on the basis of value.

• 19 USC 1592(c) will have to be amended to exempt an importer from penalties for an invalid claim that a good qualifies as an originating good under TPP provided that the importer, on becoming aware and prior to the government’s discovery of the error, voluntarily corrects the claim and pays any customs duty owed.

What this means: This relates to exercising reasonable care and is very similar to the recent news based on this article, ‘NAFTA importers be on the lookout for this… a win in your book!‘.

• 19 USC 1592 will have to be amended to provide for the imposition of penalties on U.S. producers and exporters that make false certifications that goods qualify as TPP originating goods.

What this means: An exporter that makes false certifications that goods qualify for TPP will be penalized.

• 19 USC 1508 will have to be amended to provide that U.S. producers and exporters that issue certifications stating that a good qualifies as TPP originating must keep copies of such certifications and supporting documents and information for at least five years and render them for examination and inspection by U.S. customs officials upon request.

What this means: all TPP certifications and documents must be kept on record sourced in-house with the Importer/Exporter of Record for at least 5 years. Scarbrough can add additional assistance with record keeping via electronic imaging, as well as ACE portal access and customized reporting options.

Concerning this last point, Rep. Rosa DeLauro, D-Conn., said that “TPP would undermine our ‘Buy American’ procurement preferences.” As a result, “we would be required to treat products and firms from TPP nations, including Chinese state-owned firms in Vietnam, the same as U.S. firms when granting U.S. government contracts.” This would be harmful, she said, “at a time when we are losing manufacturing jobs to nations overseas by the thousands and wages are stagnant or falling.”

Rep Rosa DeLauro D-Conn brings up a good point, but let’s look at this from the exporting side. 

Let’s look at this scenario. USA doesn’t join TPP.  TPP countries now set up barriers for importing from USA.  USA continues to import goods from other countries + those TPP countries (not to mention the others that plan to join in our place). As a result, USA is not exporting as many goods, while still importing foreign-made products. US producers & manufacturers can’t compete with an international market which continues to grow. Sales decrease, revenues decrease, plants shut down… you get where I am going.  Outcome of the story based on a USA Exporter’s point of view: TPP will only help business grow internationally, which in turn will help the US economy.