Customs Duty

Even at only 10 percent, the List 4 Section 301 tariffs due to take effect Sept. 1 on up to $300 billion worth of Chinese imports (see 1908010059) “would have a much larger impact on the U.S. tech sector” than the previous three rounds of 25 percent duties, said an S&P Global Ratings report Monday. The List 4 tariffs would “significantly raise costs for manufacturers and prices for consumers,” much more than current tariffs, it said.

Questions abound about President Donald Trump’s decision Thursday to put 10 percent List 4 Section 301 tariffs into effect on Chinese imports Sept. 1. Since Trump can’t legally impose List 4 by tweets, all eyes will await the Office of the U.S. Trade Representative notice soon to be published in the Federal Register detailing which product categories, if any, are spared from the final duties.

Delaying comments on competitive bidding procedures for the 833 toll-free numbers auction would unnecessarily delay the auction, said the FCC Wireline Bureau and Office of Economics and Analytics in a docket 17-192 order Tuesday. The agency said responsible organization TollFreeNumbers.com's ask for an extension as GAO hears its bid protests about selecting Somos as auctioneer was unrelated to the setting of auction proceedings. GAO dismissed that protest June 19. The FCC said RespOrg Get800's request and issues of how the auction might affect the toll-free number market are similarly outside the proceeding's scope. The proceeding's deadlines were June 3 and 10. In a docket 17-192 posting Tuesday, TollFreeNumbers.com said having Somos auction 833 numbers directly to RespOrgs' customers instead of through RespOrgs violates the Communications Act and is outside toll-free number administrator, service management system database administrator, numbering administration administrator and numbering administration service center duties. It said Somos itself said it could administer the auction among RespOrgs but not that it could execute the auction proposed by the FCC.

Another state service-quality probe of Frontier Communications is brewing. The Utah Public Service Commission Friday asked the Division of Public Utilities to share in docket 19-041-04 the status of an undocketed DPU investigation into the carrier, and with the Office of Consumer Services to propose a process and schedule by Monday. Frontier may comment on that plan by July 15, the PSC said. OCS last month asked the PSC to study “numerous allegations of significant, long-lasting and continuing quality issue with” the company's service and “confusing and self-contradicting limits of liability provisions in Frontier’s terms of service contract which conflict with Frontier’s tariff, seeks to disclaim Frontier’s statutory duty as a utility and may confuse customers of their recourses in confronting service quality issues.” The telco responded June 17 that the OCS request “lacks any foundation,” fails to raise new issues, and gives no evidence the carrier violated PSC service-quality rules. Frontier probes are open in Minnesota (see 1906260009) and West Virginia (see 1906190037). The provider will comply and "work toward a positive resolution," a spokesperson emailed Monday. "We are committed to providing reliable, adequate, and reasonably priced services [in] the communities we serve."

The Court of International Trade upheld Customs and Border Protection denial Monday of EchoStar’s drawback claims as untimely. EchoStar filed the claims for duty refunds worth $276,275.12 in 2014 and early 2015, before new drawback procedures under the Trade Facilitation and Trade Enforcement Act, including fully electronic filing, took effect. EchoStar transmitted its filing via the automated broker interface within the three-year deadline, but its paper claim, including CBP Form 7551 and supporting documentation, was filed too late, causing CBP to reject the claims. “CBP is ultimately not responsible for EchoStar’s failure to timely file complete drawback claims because of either the Guidance or CBP’s ‘late’ notice to EchoStar to provide additional documents,” said CIT, referring to guidance documents that EchoStar believed meant no paper documentation was necessary. The company had no immediate comment Tuesday.

"Secondary impacts” of the third U.S. tranche of tariffs on Chinese products to customers of Texas Instruments “is very difficult to measure,” said Vice President-Investor Relations Dave Pahl. “Do we think tariffs are bad thing and do they ultimately destroy demand? Economic theory says it does. So that’s not something that we’re big fans of.” TI's "direct impact is real easy to measure, and it's a number very close to zero," Pahl told a Bank of America Merrill Lynch investor conference Tuesday. U.S. trade law for the semiconductor industry defines country of origin “pretty much” by where products are “assembled and tested,” said Pahl. “We do have assembly test operations in China,” plus a half-dozen other “assembly test sites,” mostly in Asia, so "we can move things around,” he said. The chipmaker hypothetically could move assembly and test operations completely out of China, “given enough time and energy,” Pahl said. “But I don’t think we’d want to. China continues to be an important market.” VTech Communications, which bills itself as “the major supplier” of cordless phones and baby monitors in the U.S., is “hearing” from its big retail customers “that they will pass along the costs directly to consumers” if the Trump administration makes good its threat to impose 25 percent List 4 tariffs on Chinese goods not previously dutied, commented the vendor Tuesday in docket USTR-2019-0004. “This will mean additional financial burden to many low to middle income family households” in the U.S. that “still rely on the corded or cordless telephone as their primary device for communication,” it said. Best Buy and Walmart are among VTech's biggest retail customers, and say 25 percent tariffs would mean price increases (see 1905230038). Wednesday, the Office of the U.S. Trade Representative extended by two weeks to June 15 the deadline when List 3 goods can enter the U.S. at the former 10 percent duty rate if they were already on the water when the tariff increase to 25 percent took effect May 10.

G20 trade ministers convening this month in Osaka, Japan, “should support enabling frameworks for open trade in an increasingly digital global market,” said the Computer & Communications Industry Association, Internet Association and seven other tech groups Wednesday of “recommended outcomes” for the June 28-29 summit. To “facilitate” digital trade, the G20 should recognize the need for all countries to support a permanent World Trade Organization “moratorium against customs duties on electronic transmissions,” said the groups. “Approaches to data governance that fail to include such commitments should be discouraged.” The G20 should also “ensure that any new approaches to content regulation are made pursuant to comprehensive dialogue with meaningful opportunities for input by industry and civil society,” they said. The tech industry “recognizes the importance of building trust online to strengthen consumer confidence in digital trade,” they said. “Industry supports baseline privacy and consumer protection rules.” Prioritize "research and investment” in artificial, automation and “algorithmic data analysis” technologies, they asked. “Frameworks regarding the governance of these technologies should be adaptable to account for the future stages of the technology and should be designed to protect users from demonstrated, rather than speculative harms.”

Some smartphones and TVs from China imported to the U.S. under the 8528.72.64 Harmonized Tariff Schedule are on the list of goods the U.S. will subject to 25 percent duties, as are a broad assortment of other consumer tech goods, said an Office of U.S. Trade Representative notice Monday. The $300 billion in goods on the list (see 1905130022) are the biggest tranche of the four so far and represent virtually all of the remaining Chinese imports not previously dutied. A single day of public hearings on the proposed duties is set for June 17. The notice appears to be flexible on scheduling additional days of hearings. Roughly 350 witnesses testified on the List 3 tariffs in hearings that spanned six days in late August. June 10 is the due date for filing requests in docket USTR-2019-0004 at regulations.gov to appear at the hearing and place in the record a summary of expected testimony at the public hearing. Written comments are due June 17. Smartphones are the largest of eight classifications of consumer tech products that would bear the biggest brunt of the penalties, CTA Vice President-International Trade Sage Chandler emailed us Tuesday. “The import values of the products that hit our members are massive.” The customs value of smartphones imported from China last year under the HTS 8517.12.00 subheading exceeded $44.8 billion, said Chandler. Laptops and tablets imported under HTS 8471.30.01 were the next biggest category germane to CTA members, she said, worth $38.7 billion. The broad assortment of goods imported under HTS 8517.62.00 was worth $23.9 billion in 2018 customs value, she said, with smart speakers, Bluetooth headphones, smartwatches and fitness trackers included. Current tariffs have “hurt consumers, rattled supply chains for U.S. manufacturers and businesses, and created uncertainty across economies,” said Naomi Wilson, Information Technology Industry Council senior policy director-Asia. “Additional tariffs threaten to needlessly escalate this conflict.” On the big hit smartphones stand to take should the tariffs go through, CTIA declined comment for now. It may have something to say “in coming days as we discuss further with members,” emailed a spokesperson. AT&T, T-Mobile and Verizon didn’t comment, nor did Apple or Samsung.

U.S. importers whose Chinese goods were on the water when the List 3 Section 301 tariffs went up to 25 percent early Friday can assign their goods a special new 9903.88.09 heading on the Harmonized Tariff Schedule to enter at the old 10 percent duty rate, said the U.S. Trade Representative Thursday night. This obviates importers needing to pay the 25 percent duty at ports of entry and then seek refunds, under Customs and Border Protection's “in the meantime” guidance earlier Thursday (see report in the May 10 issue). Goods bearing the special HTS heading need to enter the U.S. on or before June 1 to qualify, said USTR. CBP will issue “instructions on entry guidance and implementation,” it said.

There’s room for TV stations to improve electronic newsroom technique (ENT) captions, said representatives of consumer groups at an FCC-hosted forum on local news captioning Friday. Broadcasters described in-company captioning audits and efforts to internally police caption quality. Advocates from the National Association of the Deaf, Gallaudet University and other consumer groups said more should be done.