Delays in Rule-Making Process Push Back Implementation of Mandatory AES

At some point in 2004 all U.S. exporters will be required to switch from providing paper copies of the Shipper's Export Declaration (SED) to filing the information electronically through the Automated Export System (AES). It's just not going to happen as quickly as first anticipated.

When the shift from paper to electronic filing of the SED information was announced in the first part of 2003, the U.S. Census Bureau anticipated the implementation date would be in April 2004. But according to a Census Bureau official, the implementation date has been pushed back toward the end of 2004, probably in October or November.

Until that time, exporters can still provide paper copies of the SED unless they are shipping products on the Commerce Department’s Commerce Control List or the State Department’s U.S. Munitions List. Companies exporting products on either of these lists were required to begin filing their SED information electronically through AES on October 18, 2003.

Companies that currently aren't required to complete a paper SED won't be required to file their export information through AES. These exporters don't complete an SED because their shipments don't require an export license and (1) they are of low value or (2) they are shipping to Canada.

According to a representative at the AES desk at Census (1-800-549-0595), the rule making process requires Census to go through an international and external review process with other agencies affected by proposed rule changes—in this case U.S. Customs and Border Protection and the U.S. State Department. Once that review process is completed, Census will publish the proposed rule in the Federal Register, at which time companies affected by the proposed rule will have a 60-day comment period.

After responding to those comments, Census will publish the final rules in the Federal register, and they will take effect after a 90 day implementation period.

Also on the horizon, Census will be publishing rules increasing the penalties for delays in filing through AES, failing to file at all, or filing inaccurate information 10-fold up to $10,000 per violation. These new penalties are scheduled to take affect some time in 2005. (See the November 2003 issue of the Shipping Solutions News.)

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United States-Chile Free Trade Agreement

By Susan Senger email | bio

The U.S.-Chile Free Trade Agreement (FTA) became effective on January 1, 2004. At that time, more than 85 percent of two-way trade in consumer and industrial goods became duty free. Duties on other products will gradually be phased out over a 12-year period.

My next three articles will address how international corporations can benefit from complying with this new agreement.

To take advantage of the benefits for U.S. goods under this agreement, exporters will need to understand how to determine that their goods are originating or qualify for preferential duty treatment under the U.S.-Chile FTA Rules of Origin.

Lower duty rates are not the only benefit provided by the U.S.-Chile Free Trade Agreement. The agreement also contains commitments by both countries on many non-tariff issues including intellectual property rights, services, investment, temporary entry of business/technical persons, and telecommunications.

The U.S.-Chile FTA will eliminate tariffs on U.S. and Chilean goods over a 10-year period for industrial goods and a 12-year period for agricultural products. However, over 85 percent are duty-free as of January 1, 2004.

To determine when your product can enter Chile duty-free:

The U.S.-Chile FTA tariff schedules code each line item with a letter, indicating the staging by which the current tariff for each item is reduced and ultimately eliminated. The schedules also note the base rate of customs duty, which is used to determine the starting point and interim rate at each stage of reduction for an item. For purposes of eliminating duties, interim stage rates shall be rounded down, at least to the nearest tenth of a percentage point.

Staging Categories

Except as otherwise noted in the Head Notes section to each tariff schedule, the codes are generally defined as follows:

Category A: Goods are duty-free immediately.

Category B: Duties will be eliminated in four equal annual stages January 1, 2004, and shall be duty-free effective January 1 of year four (2007).

Category C: Duties will be eliminated in eight equal annual stages beginning January 1, 2004, and shall be duty-free effective January 1 of year eight (2011).

Category D: Duties will be eliminated in 10 equal annual stages beginning January 1, 2004, and shall be duty-free effective January 1 of year 10 (2013).

Category E: Duties will be eliminated in 12 equal annual stages beginning January 1, 2004, and shall be duty-free effective January 1 of year 12 (2015).

Category F: Goods already receiving duty-free treatment shall continue to receive duty-free treatment under the FTA.

Category G: Duties shall remain at their base rates during years one through four. Duties on these goods shall be reduced by 8.3 percent of the base rate on January 1 of year five, and by 8.3 percent of the base rate each year thereafter through year eight. Beginning January 1 of year nine, duties on these goods shall be reduced by 16.7 percent of the base rate annually through year 12, and shall be duty-free effective January 1 of year 12 (2015).

Category H: Duties shall remain at their base rates during years one and two. Beginning January 1 of year three, duties on these goods shall be removed in eight equal stages, and such goods shall be duty-free effective January 1 of year 10 (2013).

Categories J, K, L, M, and N are described in the Head Notes to the U.S. tariff schedule, located in Annex 3.3 of Chapter Three.

Categories O, P, and V are described in the Head Notes to the Chilean tariff schedule, located in Annex 3.3 of Chapter Three.

In order to take advantage of the benefits for U.S. goods under this agreement, exporters will need to understand how to determine that their goods are originating or qualify for preferential duty treatment under the U.S.-Chile Free Trade Agreement Rules of Origin.

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