01/06/2020

U.S. Japan Free Trade Agreement Now in Effect

The U.S. -Japan Trade Agreement officially took effect on Wednesday, January 1st, 2020. This much anticipated new agreement will reduce agricultural/industrial tariffs and digital trade barriers between the two countries. In order to receive preferential treatment under this new agreement, a good must be originating and meet all the requirements of the U.S.-Japan Agreement. You can access an overview of the entire agreement on The Office of the United States Trade Representative (USTR) website. Annex II to the agreement details the specific rules of origin for a good to qualify as an originating good under the terms of the agreement. The product-specific rules (Annex II to the Agreement) specify the level of change of tariff classification that non-originating materials must undergo. General Note 36 will be added to the HTSUS and will include the requirements of the Agreement.

According to CBP, in order to benefit from the reduced tariffs offered under the Agreement, the following stipulations must be met:
> The Country of Origin must be ‘JP’.
> The Country of Export must be ‘JP’.
> Once programmed in the Automated Commercial Environment (ACE), the Special Program indicator ‘JP’ must be placed before the eligible tariff number to make the claim.

According to CBP, ACE will be programmed to accept the “new special program indicator ‘JP’ as a prefix to the eligible tariff number” effective January 14th, 2020. For any applicable goods entered from January 1st, 2020 through January 13th, 2020, CBP states that, “importers must pay duties on qualifying goods under the Agreement and request a preferential tariff retroactive claim by filing a post summary correction (PSC) to request the duty refund.”

It is important to note that claims for preferential treatment under this Agreement are not exempt from MPF (merchandise processing fees).

Please contact your V. Alexander account team with any questions and follow us on our website www.valexander.com for updates on this and other topics.

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09/27/2019

On September 25, 2019, The White House announced two new agreements on trade with Japan that it expects will reduce the U.S. trade deficit with that country. The Office of the U.S. Trade Representative (USTR) said the two sides plan further negotiations in the coming months in the interest of achieving a more comprehensive agreement that “addresses remaining tariff and non-tariff barriers and achieves fairer, more balanced trade.”

Under a market access agreement , Japan will eliminate or significantly reduce tariffs on $7.2 billion worth of U.S. agricultural products. For some agricultural products, Japan will establish U.S. specific quotas. According to the USTR, once all of this is in place, over 90% of U.S. food and agricultural items will receive duty free or preferential tariff access. The United States will eliminate or reduce tariffs on 42 tariff lines for agricultural imports from Japan valued at $40 million in 2018, including products such as certain perennial plants and cut flowers, persimmons, green tea, chewing gum, and soy sauce.

Additionally, the U.S. also agreed to reduce tariffs on certain industrial goods from Japan, including certain machine tools, fasteners, steam turbines, bicycles, bicycle parts, and musical instruments.

The United States and Japan have reached a separate agreement on a high-standard and comprehensive set of provisions addressing priority areas of digital trade.

The USTR has provided a fact sheet that can be found here but it has not yet announced when the agreement will become effective.

V. Alexander will continue to monitor the situation and provide updates as they become available. Please contact your V. Alexander account team with any questions.