Last week, U.S. Customs and Border Protection (CBP) published a Federal Register Notice inviting U.S. exporters to request CBP’s assistance in resolving disputes with foreign customs agencies over the tariff classification or customs valuation of U.S. exports. CBP explains that it is willing to assist U.S. exporters with these disputes under the auspices of the World Customs Organization (WCO). CBP is very active at the WCO and regularly participates in meetings concerning the application of the Harmonized Commodity Description and Coding System (HS System) and the World Trade Organization’s (WTO) Customs Valuation Agreement (CVA). In our experience, this process was helpful in providing a successful outcome for clients who disputed a foreign customs agency’s classification of imported goods.

Background on CBP Participation at the WCO and WCO Dispute Mechanisms

Tariff Classification

CBP represents the United States at meetings under the auspices of the International Convention on the Harmonized Commodity Description and Coding System (“HS Convention”). The HS Convention is the international agreement that provides that WCO Members will implement the HS System and comply with decisions of the various committees organized under the convention. CBP attends semiannual meetings of the WCO’s Harmonized System Committee (HSC), where contracting parties to the HS Convention examine policy matters, make decisions on classification questions, settle disputes, and prepare amendments to the HS System and its Explanatory Notes.

Article 10 of the HS Convention governs disputes between contracting parties concerning the interpretation or application of the HS Convention. The article provides that parties with potential disputes should first try to settle the dispute through bilateral negotiations. If such negotiation cannot resolve the dispute, the parties may refer the dispute to the HSC for its consideration and recommendations. The HSC, in turn, refers irreconcilable disputes to the WCO Council for its recommendations.

Customs Valuation

CBP represents the United States at the WCO with respect to issues arising under the CVA. Pursuant to Annex II to the CVA, the WCO’s Technical Committee on Customs Valuation (TCCV) is authorized to examine specific problems arising from the customs valuation systems of WTO Members. The TCCV is responsible for examining the administration of the CVA, providing WTO Members with advisory opinions regarding particular customs valuation issues, and issuing commentaries or explanatory notes regarding the CVA. Like the HSC, the TCCV may get involved in disputes amongst foreign customs agencies. CBP stands willing to help U.S. exporters with these disputes. This process may provide U.S. exporters with a faster procedure to resolve disputes than a typical WTO dispute.

CBP’s Role at the WCO May Resolve Export Issues for U.S. Exporters

CBP states in the notice that its communication with other customs administrations through the meetings of the HSC and TCCV at the WCO can “often serve to eliminate or resolve export issues for U.S. traders.” As an example, in 2014, a U.S. exporter notified CBP of a foreign customs administration’s misclassification of its textile exports. The U.S. exporter requested that pursuant to Article 10 of the HS Convention, CBP (1) contact the foreign customs administration to resolve the tariff classification dispute; and (2) refer the matter to the HSC at the WCO, if it could not be resolved bilaterally. After confirming it agreed with the U.S. exporter’s position, CBP engaged the foreign customs administration directly. Within seven months of the exporter’s request, CBP secured a favorable decision by the foreign customs administration to classify the merchandise in a manner consistent with the U.S. position. Consequently, the U.S. exporter obtained correct tariff treatment of its imported merchandise in the foreign country as a result of CBP’s engagement.

In response to CBP’s success, it published the instant notice to provide U.S. exporters with the process for requesting its assistance in classification and customs valuation disputes. The procedure described in CBP’s notice is below.

Procedure for Requesting CBP’s Assistance

• U.S. exporters submit a formal letter to CBP requesting its assistance in a dispute with a foreign customs agency. The request is similar to a classification or customs valuation ruling request describing the legal requirements under the HS System or the CVA and notes any applicable CBP rulings, U.S. court cases, HSC or TCCV decisions.
• U.S. exporters should address requests to:

U.S. Customs and Border Protection
Office of International Trade, Regulations and Rulings
Attention: Commercial and Trade Facilitation Division
90 K Street, NE, 10th Floor
Washington, DC 20229-1177

• CBP will review the request and determine whether it agrees with the U.S. exporter’s position before it reaches out to a foreign customs agency or the WCO.
• After CBP reviews the request and confirms it agrees with the position, it states that it will “endeavor to provide an initial response to such requests within 60 days of their receipt.”
• CBP will then consider the appropriate course of action (e.g., initiation of consultations or dispute settlement proceedings at the HSC or TCCV).
• CBP will inform the requester of the progress achieved in resolving the matter.