U.S. Customs and Border Protection (“CBP”) recently issued a ruling on the classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) of Apple Watch Bands. In the ruling, CBP concluded that the watch bands properly are classified under heading 9113, which specifically covers “watch bands” and “watch straps”.  CBP declined Apple’s request that the watch bands be classified under heading 8517, for parts of a radio transceiver – or, in other words, parts of an Apple Watch. These HTS classifications have commercial significance because the usual duty rate for products in heading 9113 ranges from 1.8 percent to 11.2 percent, but the duty rate for products in subheading 8517.70 (for parts of a radio transceiver) is zero.

This ruling underscores a key classification principle, from Rule 1 of the General Rules of Interpretation (“GRI 1”) of the Harmonized System. GRI 1 requires that the first place to look when determining an item’s classification is “the terms of the {four-digit} headings and any relative Section or Chapter Notes.”  In other words, to determine classification one must turn first to the four-digit tariff schedule headings, and any section or chapter notes for that heading.  Only then, as CBP reminds in the watch band ruling, “in the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, GRIs 2 through 6 may then be applied in order.”  In other words, if the language of a heading, at the four digit level, matches the product in its condition as imported, then the product is properly classified somewhere in that heading, without looking at other headings, other subheadings, or other GRIs.
Continue Reading How Your Smart Watch Illuminates Fundamental Customs Classification Principles

On March 31, 2017, President Donald J. Trump signed two Executive Orders on international trade and customs issues. The first of the two orders suggests that much tougher enforcement actions will be coming for import compliance especially, but not only, on merchandise (1) subject to antidumping (“AD”) or countervailing duty (“CVD”) orders, and (2) that may infringe on intellectual property rights (“IPR”).  The second order requires a thorough report on trade deficits to support potential, as yet undefined, changes in trade policy to reduce those deficits.  While relatively short on specifics, the orders strongly suggest that changes in US import requirements – and an increase in enforcement actions – may be implemented in the coming months.
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Continue Reading Executive Orders Indicate Increased Enforcement and Costs on Import Declarations, Potential Action on Trade Deficits