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How to Navigate TFTEA and NAFTA Regulations During the Duty Drawback Process
08/20/2019
The Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) is an authorization of CBP’s trade authority and was enforced to create an environment for fair, honest and competitive trade in the United States. Section 906 of TFTEA made a comprehensive set of changes to duty drawback claim filing. Even though TFTEA was only signed into law in 2016, it is necessary to know these recent changes since it greatly affects the drawback application process.
What is TFTEA?
TFTEA was signed into law on February 24, 2016, and Section 906 of this act made specific changes to the drawback law and filing process and as of February 24, 2019, all drawback claims must be filed under the new TFTEA regulations. Calculating TFTEA claims vary depending on the type of drawback the claimant is filing under.
According to US Customs and Border Protection, “This Act supports CBP’s efforts to protect U.S. Economic Security through Trade Enforcement; collaborate with the Private Sector through direct engagement; and streamline and modernize processes through Business Transformation initiatives to meet the demands and complexities of a rapidly evolving global supply chain.”
What is Required for Claim Filing Under TFTEA Modernized Drawback?
According to CBP, unless otherwise specified, for a drawback claim to be complete under TFTEA it must include:
- The successful electronic transmission to CBP of the drawback entry
- Applicable Notice(s) of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback on CBP Form 7553
- Depending on the type of claim being filed, additional applicable documents could be required.
- Applicable import entry data and evidence of exportation or destruction
TFTEA claims do require line level reporting from the CBP Form 7501.
What is No Longer Required Under TFTEA?
- The ability to file paper is no longer available, claims must be made electronically.
- Certificate of Delivery (CD) / Certificate of Manufacture and Delivery (CMD)
- They are no longer required but can still be helpful if the claimant is unable to prove the transfer of merchandise.
NAFTA
NAFTA, the North American Free Trade Agreement, was signed into law on December 8, 1993 and took effect on January 1, 1994. NAFTA creates a trade bloc amongst the three major countries of North America: The United States, Mexico and Canada.
Under NAFTA, drawback is payable on the lesser of:
- Duties paid or owed on the merchandise in the U.S., or
- Total amount of duties paid on the exported goods into Canada or Mexico
Under the current administration, there are tentative plans to move from NAFTA to USMCA (United States-Mexico-Canada Agreement), which would also affect the drawback claim filing process. According to the United States Trade Representative, “the USMCA can come into effect following the completion of TPA procedures, including a Congressional vote on an implementing bill.”
It is important to stay up to date to ensure that duty drawback claims are being filed correctly in the case of new laws and regulations. To learn more about duty drawback, download our 101 eBook guide here.
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