The Lesser of the Two Rule: Understanding FTA Limitations
The FTA Drawback Limitation When goods are exported to free trade agreement partners—Canada, Mexico, or Chile—drawback claims face a significant limitation known as the “lesser of the two” rule. This rule dramatically affects the economics of drawback for exports to these major trading partners and must be understood when evaluating drawback opportunities. The rule applies […]
The Future of Drawback: Emerging Opportunities and Program Evolution
The TFTEA Modernization Impact The Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) modernized drawback significantly, with final regulations taking effect in 2019. Key changes included simplified substitution standards, expanded destruction drawback, streamlined filing processes, and updated accounting methods. These changes made drawback more accessible and practical for many companies, but also created transition challenges as programs adapted from […]
Waiver of Prior Notice: Streamlining Export Documentation
The Prior Notice Requirement Under standard drawback regulations, claimants must notify CBP before exporting goods intended for drawback claims. This notice allows CBP the opportunity to examine the merchandise and verify it matches claim documentation. Historically, this requirement created significant operational friction. The Waiver of Prior Notice eliminates this requirement for qualified claimants, allowing exports to proceed without advance […]
Common Drawback Mistakes and How to Avoid Them
Mistake 1: Ignoring the Five-Year Window The most expensive drawback mistake is simply waiting too long to start. Every day that passes, import entries age out of eligibility. Companies that delay drawback evaluation for “when things slow down” often discover years of refunds have already expired. The solution: evaluate drawback opportunity now. Even if implementation takes months, […]
Accelerated Payment: Getting Your Refund in Weeks, Not Years
Standard vs. Accelerated Payment One of the most common misconceptions about drawback is that refunds take years to receive. While it’s true that standard drawback processing can take 12-24 months (waiting for full liquidation of underlying entries), the Accelerated Payment privilege changes this timeline dramatically. With Accelerated Payment, CBP processes refunds within 30-45 days of claim filing—regardless of whether underlying entries […]
Choosing a Drawback Service Provider: What to Look For
Why Expertise Matters The Customs Modernization Act introduced “informed compliance” and “reasonable care” standards that place responsibility on drawback claimants for ensuring accuracy. This means selecting the right partner to administer your program isn’t just about efficiency—it’s about compliance. Drawback is specialized work requiring specific systems, expertise, and processes. General customs brokers who handle occasional drawback claims often lack […]
The Five-Year Window: Why Timing Matters in Drawback Claims
Understanding the Statutory Window Duty drawback operates under a strict statutory timeline: claims must be filed within five years from the date of the original import entry. This five-year window creates both opportunity and urgency that every potential claimant must understand. The clock starts on the entry date—not the payment date, not the liquidation date, not the […]
Drawback for Automotive Parts and OEM Suppliers
The Automotive Opportunity The automotive industry—from OEMs to tier suppliers—presents substantial drawback opportunities. High import volumes, complex supply chains, significant duty payments (especially Section 301 on Chinese-origin components), and global export activities create the conditions where drawback recovery can be meaningful. Auto parts suppliers are among the industries most commonly benefiting from drawback programs, yet many eligible companies have […]
Rejected Merchandise Drawback: The One-Year Exception
Understanding 1313(c) Rejected merchandise drawback under 19 U.S.C. § 1313(c) covers a specific situation: imported goods that don’t conform to sample or specifications. Sometimes called “retail drawback,” this provision applies when products are defective, unsellable, or otherwise fail to meet expectations and are subsequently re-exported or destroyed. This provision differs from unused merchandise drawback in a critical way: any product that could have […]
The Section 301 Tariff Opportunity: Recovering China Duties Through Drawback
Section 301 Duties and Drawback Eligibility The Section 301 tariffs imposed on Chinese goods represent one of the most significant duty recovery opportunities in recent memory. Unlike Section 232 duties on steel and aluminum, Section 301 duties ARE eligible for drawback. This means companies importing Chinese-origin goods subject to 7.5 percent, 25 percent, or even […]