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U.S. and Japan Trade Deal: Tariff Reductions to Take Effect Jan 1

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An initial trade deal between the U.S. and Japan was officially signed on October 7. This new deal will reduce or eliminate tariffs on $7 billion worth of U.S. agricultural exports. The trade deal sets forth the same agricultural access in exports that the U.S. would have received in the Trans-Pacific Partnership. Tariff reductions are scheduled to take effect January 1, 2020.

According to the Office of the U.S. Trade Representative (USTR), tariffs will be removed from the following exports:

  • Almonds
  • Blueberries, cranberries and prunes
  • Sweet corn, broccoli and sorghum
  • Food supplements

The below exports will receive gradual reductions throughout the elimination process:

  • Wine
  • Cheese and whey
  • Cherries and oranges
  • Tomato paste
  • Egg products
  • Frozen potatoes
  • Specific beef and pork product

Japanese imports on machinery, musical instruments, bicycle parts, televisions and turbines will have duties either reduced or eliminated on January 1, 2020. A second round of reductions and elimination is currently scheduled to take place April 1, 2020. Import duties on these items could be reduced or removed either immediately, or over the course of 10 years.

Import restrictions of Section 232—which adds additional tariffs on steel (25 percent) and aluminum (10 percent) imports—on auto parts have not been discussed as part of the initial trade deal according to the USTR. The trade deal also includes a $40 million digital trade agreement that forbids certain customs duties.

As further negotiations continue, a comprehensive list of tariff lines effected by the trade deal is available.

If you have questions on how this will impact your business, please reach out.

U.S.-Japan Trade Agreement Negotiations

 

 

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Do I Need an Export License?

do I need an export license

As an exporter it is your responsibility know if you need an export license. On top of that, it is your responsibility to know who you’re exporting to and to watch for red flags. To help, the Bureau of Industry and Security (BIS) has published guidance for exporting to Pakistan, Saudi Arabia, and UAE. But what if you don’t export to those countries? Luckily, these guidelines apply to all exports.

Export Due Diligence

Research any new or unfamiliar customers. Exporters should exercise increased due diligence when vetting new customers. If you notice any of the following red flags, then those customers merit extra scrutiny.

  • A new customer places an unexpected and/or high-value order for sophisticated equipment.
  • The customer is a reseller or distributor. In such cases, you should always inquire who the end-user is.
  • The customer has no website or social media and is not listed in online business directories.
  • The customer’s address is similar to an entity listed on the U.S. Government’s Consolidated Screening List (CSL), or the address indicates the customer is located close to end-users of concern, including co-located with an entity listed on the Entity List.
  • Your customer places an order ex-works and makes all shipping arrangements through a freight forwarding service. In such cases, request that the freight forwarder provide you a copy of the Electronic Export Information (EEI) filing to ensure the information is accurate.

Assess the potential applications of your products. Whenever you identify red flags indicating a potential concern about your customer, or if you are unable to confirm the bona fides (i.e. legitimacy and reliability) of your customer, you should consider potential dual-use applications of your products.

File true, accurate, and complete export control information. True, accurate, and complete EEI must be filed in accordance with Sections 758.1 and 758.2 of the EAR, as well as the Foreign Trade Regulations (15 C.F.R. Part 30). In the case of exports made under the terms of a letter of credit (LoC), BIS has noticed that the parties to an export transaction may be inadvertently misrepresented on EEI filings due to differences between commercial document requirements and EEI requirements.

It is imperative for you to know who you’re exporting to. If you are still unsure, the BIS also has guidance on ways to ensure you know your customer. It is highly recommended that you check if your customer is on the Consolidated Screening List.

Need help identifying if your shipment needs an export license and if so, how to get one? Reach out to Mohawk Global Trade Advisors, we’ll walk you through it.

Helpful Resources:

How to Survive an Export End-Use-Check

My Goods are EAR99. Why Do I Have to Screen?

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Mohawk Global Trade Advisors, a division of Mohawk Global Logistics © 2016