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How Admissibility, Textile Quotas and Tariff Rate Quotas Impact Your Company

Quotas

Many governments, including the U.S. and the EU, place absolute limits on the amount of merchandise that can enter a country. For example, the U.S. will permit only a certain amount of textile and apparel products to be imported into the U.S. each year from certain countries. These limits are called “quotas.” They impact goods from non-WTO countries such as Vietnam, as well as goods from China which under a current “Memorandum of Understanding” between the U.S. and China permits the U.S. to place yearly quantitative limits on certain products through 2008.

Companies importing products subject to quota must ensure that their tariff classifications are correct because quotas are tariff-specific. Prior to export, they must ensure that they have the correct visa documents to demonstrate that their goods imported from affected countries have been allocated a share of quota, and that the quota limit has not been exceeded, in which case their shipment will not be permitted to enter the country, even though they have a visa.

Importantly, companies must be careful to ensure that textile and apparel products that they purchase from abroad are actually manufactured in the claimed factory. In some instances, foreign vendors manufacture merchandise in a country subject to quota and then send it off to a non-quota country for finishing or temporary storage. They then claim an incorrect country of origin. Customs officials are on the lookout for this transshipment and will seize merchandise from suspected transshipping countries or factories, putting the importer in a position where it must prove through documentation that its goods were from the claimed factory.

Tariff Rate Quotas

The U.S. also imposes tariff rate quotas or TRQs on certain products such as some products containing dairy, sugar or peanuts. Tariff rate quotas permit a certain quantity of goods to enter the U.S. at a lower preferential tariff rate, once that quantity is exceeded, all subsequent shipments during the TRQ period will be subject to a very high rate of duty. It is essential for companies to confirm whether their products are subject to TRQs and to monitor TRQ closing dates so that realistic duty amounts will figure into profit margin calculations. Again, tariff classification is very important because the ability to characterize a product under a particular tariff subheading will impact whether or not it is subject to TRQs.

In addition, certain Free Trade Agreements (FTAs) permit a limited amount of non-qualifying merchandise to enter an FTA beneficiary country at preferential FTA duty rates based on TRQs.

Our Services
We confirm the applicability of quotas or tariff rate quotas and assist companies to monitor quotas and TRQ availability to ensure that the goods are never embargoed and are entered at optimal duty rates.

We also have an anti-transshipment program that enables companies to prevent unexpected shipment delays or seizures and that demonstrates due diligence, and we can assist companies to obtain speedy release of shipments subject to detention for possible transshipment.

We can confirm our position on quota and TRQ issues with the customs authorities through binding rulings and protests and can fix any errors discovered and minimize or eliminate penalties through prior disclosures.