Dear Clients and Friends,
As you may already be aware, the Department of Commerce (DOC) notified the Mexican signatories to the 2013 Suspension Agreement on Fresh Tomatoes from Mexico that the Department intends to withdraw from the Agreement on May 7, 2019. Upon completion of the withdrawal, the DOC will continue with its investigation and notify the International Trade Commission (ITC) of its final determination. If the Department continues to find sales made at less than fair value in its final determination, the ITC will then complete its own investigation and make a final determination. If both Commerce and the ITC issue affirmative final determinations, an antidumping duty order will be issued. Commerce must give 90 days’ notice of the withdrawal and the administrative review of the Suspension Agreement is still ongoing at this time. Attached please find the official statement provided by the DOC regarding this matter:
Although there is still a lot of uncertainty and the negotiations are still ongoing, to be proactive, we would like to encourage all tomato importers to apply for their own ACH account (Automated Clearing House) and ACE account with CBP. ACH is a U.S. financial network used for electronic payments and money transfers. ACH payments are a way to transfer money from one bank account to another without using paper checks, credit cards, wire transfers, or cash. The ACE Secure Data Portal is a web-based application providing a single, centralized on-line access point to the ACE system that connects to CBP, the trade community and government agencies involved in importing goods to the U.S. The ACE portal gives users access to view their account information as it exists with CBP and monitor daily operations.
If the withdrawal is finalized and fresh tomatoes become dutiable in the near future, having an ACH and ACE account already set up will make for a smoother transition by facilitating the entry process without interruptions of the day to day operation.
Below please find the links with information and instructions on how to apply for an ACH and ACE account:
- ACH: https://www.cbp.gov/trade/trade-community/automated/automated-systems/gs-automated-systems/ach/signing
- ACH Application Form: https://www.cbp.gov/sites/default/files/assets/documents/2018-Nov/CBP%20Form%20400.pdf
- ACE: https://www.cbp.gov/trade/automated/getting-started/portal-applying.
Having both an ACE and ACH account will enable your company to have complete control and direct access to issue duty payments directly to CBP. Please contact our office to inquire regarding the different options available as to how this may be handled.
Additionally, if there is a withdrawal from the agreement please note the requirements for the importers Continuous Bond may be affected as well. While there still aren’t any final options on how exactly the surety companies will change their underwriting policies and what additional information and/or collateral might be required, we have created a simple formula based on other ADD cases we’ve encountered not related to this agreement to give you a broad idea what surety companies may require in the event the withdrawal is finalized. Surety companies may possibly treat the matter as a regular antidumping exposure and could require the importer to raise their bond limit depending on the entered value of the merchandise, antidumping (AD) and countervailing (CVD) margins. The bond amounts are normally calculated at 10% of the duties, taxes and fees (DTF) within a 12 month period, however, please note that the percentage used for the calculation could vary. It is also very important for an importer to estimate and project how many shipments they are expecting to import for the following 12 month period to ensure their current bond amount remains sufficient.
Below is an example of how a bond formula could be calculated by a surety company:
- If each entry is valued at $10,000.00 and the duties, taxes and fees (DTF) are calculated using 17.5%, the DTF on each entry would be $1,750.00. If there were 1,000 entries per year, the annual DTF would total $1,750,000.00. Ten percent of $1,750,000.00 is $175,000.00, therefore the bond would need to be increased from $50,000 (minimum) to $175,000.00.
- In the event a surety company required collateral on a bond that had to be increased to $175,000.00, they could possibly require collateral for the FULL BOND AMOUNT of $175,000.00 in the form of a cash deposit or line of credit to back up the bond.
- The surety company could also possibly require collateral for the FULL AMOUNT OF DUTIES of $1,750,000.00 in the form of a cash deposit or line of credit to back up the bond.
We would like to stress that these are merely examples we came up with as a courtesy due to all the uncertainty surrounding the withdrawal and so that our clients could have an idea of what could possibly be required by surety companies if the withdrawal were to be finalized.
In conclusion, although this is disappointing news, please note negotiations are still in progress and we are hopeful a new agreement will be reached that will be satisfactory to all parties involved. As your U.S. Customs Broker we feel obligated to advise you of what the future may hold and the available actions you can take to be proactive and well prepared ahead of time should the withdrawal become finalized.
In the meantime, all buyers and sellers must continue to abide by the terms of the 2013 Tomato Suspension Agreement with Mexico until further notice. Please don’t hesitate to contact our office with any additional questions or concerns.
Regards,
