2007 HTS May be Delayed (CBP, Trade Could be Short on Necessary Lead Time to Prepare)
The U.S. is preparing to implement hundreds of tariff changes in the 2007 U.S. Harmonized Tariff Schedule (HTS) in order to conform U.S. law to international Harmonized System (HS) nomenclature changes recommended for adoption by the World Customs Organization (WCO), and certain Harmonized System Committee (HSC) decisions necessary to ensure uniform application of the nomenclature, etc.
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(Such updates occur every five years. This year's update is particularly extensive for technology products, although significant changes also occur in other areas.)
Implementation of 2007 HTS May be Delayed
According to government sources, it is likely that the implementation of the 2007 HTS will be delayed beyond January 1st due to i) the number of changes being implemented, ii) the 60-day Congressional layover period that must expire before the President can proclaim the changes (50 or 51 days have expired to date), and iii) the legal requirement that the proclaimed changes take effect no sooner than 15 days after the proclamation is published in the Federal Register.
(Sources add that Canada is expected to delay the implementation of its 2007 HTS.)
Changes at 10-Digit Level Drafted, Not Yet Available to the Public or CBP
Although the 2007 changes for HTS Chapters 1 - 97 have been drafted at the 10-digit level, it is not known when they will be available to the public or to government agencies, such as U.S. Customs and Border Protection.
Sources indicate that once available, it may take a great deal of time (depending on the line of business, and for CBP) to update product classifications and/or automated systems for the 10-digit and other HTS changes, and the legal requirement that the proclaimed changes take effect no sooner than 15 days after the proclamation is published in the Federal Register may not provide the necessary lead time.
This problem could be eased by making the new 10-digit tariff number and other HTS changes available early, or alternatively, the 15 day delay in the proclamation's effective date could be pushed back to a 30, 45, or 60 day delay.
Sources state that the decision for early availability or an additional delay largely rests in the hands of the Office of U.S. Trade Representative (USTR).
Update to NAFTA Rules of Origin Expected to be in Proclamation; Updates to Other FTA Rules of Origin Not Expected Yet
Trade sources indicate that updates to the HTS NAFTA Rules of Origin to reflect the 2007 HTS tariff changes are expected to be in the proclamation. However, updates to the Rules of Origin for the Singapore Free Trade Agreement (FTA), Australia FTA, Chile FTA, etc., are not expected to be in the proclamation.
Tariff Number and Note Modifications Will Affect 83 HTS Chapters and May Affect Duty Rate
According to the International Trade Commission (ITC), the tariff number and note modifications will consist of several hundred amendments affecting 83 chapters and more than 240 headings throughout the nomenclature. These changes are intended to update the nomenclature or clarify the classification of particular goods.
Although the tariff changes are designed to ensure substantial rate neutrality, in certain instances the duty rate for a product may change.
Modifications Listed by ITC and in 35 BP Summaries
The ITC has issued a detailed report which lists the tariff number (up to eight digits) and note changes for 2007 that are the result of WCO and HSC recommendations and decisions, etc. In addition, Broker Power has issued a 35-part series of summaries on these ITC-reported changes.
(Note that the 2007 duty rates for these tariff changes are only contained in the ITC report.)
(See ITT's Online Archives or 06/08/06, 06/09/06, 06/13/06, 06/15/06, 06/16/06, 06/19/06, 06/20/06, 06/21/06, 06/22/06, 06/23/06, 06/26/06, 06/27/06, 06/28/06, 06/29/06, 06/30/06, 07/06/06, 07/24/06, 07/26/06, 07/27/06, 07/28/06, 07/31/06, 08/04/06, 08/14/06, 08/31/06, 09/14/06, 09/19/06, 09/27/06, 10/02/06, 10/06/06, 10/10/06, 10/12/06, 10/16/06, 10/17/06, 10/20/06, 10/24/06, and 10/25/06 news, 06060815, 06060915, 06061320, 06061510, 06061620, 06061920, 06062020, 06062120, 06062230, 06062330, 06062630, 06062730, 06062820, 06062910, 06063015, 06070625, 06072415, 06072615, 06072820, 06073120, 06080430, 06081425, 06083115, 06091415, 06091920, 09062735, 06100225, 06100630, 06101030, 06101210, 06101620, 06101720, 06102035, 06102420, and 06102530 for BP summaries of the ITC's final report on other proposed changes. See ITT's Online Archives or 07/21/06 news, 06072105, for BP Addendum to Chapters 1-63.)
ITC Final Report on HTS changes, including duty rates (Inv. No. 1205-6 (Final), USITC Publication 3851, dated April 2006) available at http://hotdocs.usitc.gov/docs/tata/hts/Pub3851.pdf