WCO Changes to HTS Expected to be Delayed Until February 2007 (CBP, Trade Could Still be Short on Time to Prepare)

(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 WCO Changes Expected to be Delayed to February 2007

According to government sources, it is likely that the implementation of the WCO- recommended nomenclature changes to the HTS will be delayed beyond January 1, 2007 due to i) the number of changes being implemented, ii) the 60-legislative day Congressional layover period that must expire before the President can proclaim the changes (approximately 54 legislative days have passed 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.

ITC sources state that they expect the changes to become effective sometime in February 2007.

WCO Changes at 10-Digit Level Drafted, Not Yet Available to the Public

Although the 2007 changes for HTS Chapters 1 - 97 have now been drafted at the 10-digit level, it is not known when they will be available to the public. ITC sources state that the decision to release the 10-digit tariff numbers to the public rests in the hands of the U.S. Trade Representative (USTR).

WCO Changes Still Scheduled to Take Effect 15 Days After Proclamation Published (Trade Asks for 45 Days, New Bill Would Provide 30 Days)

Sources indicate that once available, it may take a great deal of time (depending on the line of business, and for U.S. Customs and Border Protection) to update product classifications and/or automated systems for the 10-digit and other WCO 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.

Trade sources indicate that while the USTR is still advocating this 15 day lead time, it is beginning to understand the trade's view that 45 days advance notice of the 10-digit changes is necessary. In addition a new Senate bill has been unveiled that would provide a 30 day implementation window.

CBP would also benefit from a longer lead time, as sources state that CBP will not begin programming the WCO changes until the proclamation is signed and there is an effective date. Sources note that programming for this change is a "big job" and CBP is short-staffed in this area.

WCO Modifications to NAFTA Rules of Origin to Probably be in Proclamation

Even though there are a few technical details to be worked out, government sources indicate that the U.S. is ready to update the HTS for the NAFTA Rules of Origin to reflect the WCO changes. BP has previously reported that the Rules of Origin for other free trade agreements may not be updated in as timely a fashion.

USTR Hoping to Include U.S.-Oman FTA in a Proclamation Soon

Government sources state that the USTR is also be interested in including the Oman Free Trade Agreement (U.S.-Oman FTA) in an upcoming proclamation in order to implement it, if possible. (See ITT's Online Archives or 10/04/06 news, 06100405, for BP summary of President signing into law implementing legislation for this FTA.)

WCO 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 only) 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.)

Export Schedule B Should be Published in January

According to government sources, the export Schedule B should be published in January 2007. Sources note that Schedule B is published once a year and this year's changes include the following: the deletion of approximately 1,200 obsolete numbers and the addition of approximately 1,100 numbers. Government sources add that approximately 500 of the record changes are 1 to 1 changes.

Other Countries Expected to Miss January 1, 2007 Target Date for Implementing the WCO Changes

According to government sources, countries other than the U.S. are expected to miss the January 1, 2007 target implementation date for the WCO changes, and this may cause problems for exporters.

(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