FTZ Management: Knowledge Based Articles - FTZ 301 Receipt Processing
Receipts subject to 301 tariffs
This document provides an outline of system expectations for processing new receipts admitted into the Foreign Trade Zone (FTZ) that were imported from China whose HTS Classification is subject to the Section 301 remedies tariffs.
Background
On August 18, 2017, the Office of the United States Trade Representative (USTR) initiated an investigation under Section 301 of the Trade Act of 1974 into the government of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. Since that time, there have been three separate lists that have gone into effect that increase tariffs on imported goods from China. The below CBP link has all the three Federal Register for each list and the HTS Classification under each list.
CBP Guidance
CBP has published specific guidance on how goods imported from China subject to Section 301 remedies tariffs process through the FTZ.
- If a product is admitted into the FTZ on or after when a specific list went into effect, it may only be admitted as privileged foreign status unless permitted to process an exclusion
- HTS subject to Section 301 are subject to an additional ad valorem rate of duty imposed per a specific chapter 99 heading
- List 1 – Effective July 06, 2018 – 9903.88.01
- Additional Duty Rate 25%
- List 2 – Effective August 23, 2018 – 9903.88.02
- Additional Duty Rate 25%
- List 3 – Effective September 24, 2018 – 9903.88.03 or 9903.88.04 (dependent on HTS classification)
- Before May 10, 2019 - Additional Duty Rate 10%
- May 10, 2019 and after - Additional Duty Rate 25%
- List 4 – Effective September 1, 2019 – 9903.88.15
- Before February 14, 2020 - Additional Duty Rate 15%
- February 14, 2020 and after - Additional Duty Rate 7.5%
301 Validations
The system has
hard-stop
validation errors specifically related to Section 301 to ensure receipts are correctly being processed through the system. These validation errors must be resolved to process the Section 301 subject transactions correctly.- Fields that will flag are HtsIndex, HtsNum2, StatusCode, and CountryOfOrigin
- Errors messages that could be displayed related to 301 validation errors are as follows:
- HTS may need to be filed with StatusCode P if not exempt
- HTS may need to be filed with CH99 in HTSNum2 of XXXXXXXX if not exempt
- HTS may not need to be filed with CH99 if COO is not CN
- HTS may need to have Chapter 99 HTSIndex applied for correct 301 additional duty
note
Errors will specify each respective HTS effected along with the list the transactions flagged.
Processing Receipts with Necessary Section 301 Details
Identify if the receipt being processed is subject to the Section 301 remedies tariffs and if so, follow the below steps.
Step | Action |
|---|---|
1. | If missing 301 details, the validations will flag those values and click Edit of the validation error line to review the transaction details. Alternatively, the Preparation → FIFO Processing Correction screen or any available FTZ lookups can be used to research transactions. |
2. | In the HTSIndex field, update this to the base HTS number and append “_99.” Doing so will used the HTS Codes maintenance details of the “_99” version setup that includes the additional duty rate to pull onto the transaction. Clear any value in the HtsIndexSource field to ensure the change will not overwrite. Ex: HtsNum = 84149404180 à HtsIndex = 84149404180_99 |
3. | In the HtsNum2 field, input the Chapter 99 HTS for the list the product is subject to and clear any value in the HtsNum2Source field to ensure the change will not overwrite. List 1 – 99038801 List 2 – 99038802 List 3 – 99038803 or 99038804 (dependent on HTS Classification) |
4. | Update the StatusCode to be P (privilege foreign status) and clear any value in the StatusCodeSource field to ensure the change will not overwrite. |
5. | Once the updates are complete, click Save towards the top right of the screen. |
6. | If there are multiple validation errors, repeat these steps once until all transactions have been updated with the correct Section 301 details. Click Revalidate to rerun system validations and ensure all errors are cleared.
note
Revalidate can be clicked at any time to rerun validation while working through validation errors. |
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