AHPA: “Phase One” Agreement with China Offers Relief to Supplement Importers

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Silver Spring, MD—On January 15, 2020, the U.S. and China signed an agreement on a Phase One trade deal that, according to a fact sheet from the Office of the United States Trade Representative (USTR), requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. The Phase One agreement also includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years.

Related: Limited Agreement Announced to Halt Trade War

The American Herbal Products Association (AHPA) issued an update for industry on the matter, noting that the agreement will reduce U.S.-imposed tariffs on some imported Chinese goods used by U.S. dietary supplement and food companies, but it will leave tariffs on other commodities in place, at least for the short term.

“Of most direct interest to AHPA members and the herb and supplement trade, USTR issued a pre-publication notice to announce that certain of the ad valorem tariffs that have been imposed on Chinese exports over the last two years will be reduced, effective on February 14, from 15% to 7.5%,” AHPA reported. “More specifically, the reduced rate will apply to all of the commodities identified by formal HTSUS [Harmonized Tariff Schedule of the United States] numbers in Annex A (and by informal descriptions in Annex B) in USTR’s Federal Register notice of August 20, 2019.

AHPA also shared comments filed by the association, in which AHPA listed many of the affected commodities that are used in dietary supplements and other herbal products manufactured and marketed in the U.S. Among the items on this list:

  • Various forms of a number of specifically identified spices (e.g., pepper; capsicum; cinnamon; nutmeg; cardamoms; seed of coriander, cumin, anise caraway or fennel; ginger; saffron; turmeric; vanilla beans; etc.)
  • Fruits (e.g., lemons; limes of the Citrus aurantifolia variety; and other citrus fruits);
  • Other botanicals (e.g., black and green tea; kola nuts; mate; chicory root; ginseng; numerous essential oils; etc.). In addition, AHPA said, the reduced tariff rate will apply to several general HTSUS categories that cover many botanical extracts.

Related: 3 Takeaways from AHPA’s Botanical Congress
Herbs & Botanicals: Trends, Safety, and Traceability
On the horizon: 2020 Forecast

AHPA’s message: Importers of any commodity subject to the new tariff reduction may consider delaying imports until February 14 when the lower rate goes into effect. AHPA has been informed it is also possible to defer entry of imported goods for up to 15 days to take advantage of the lower rate, so companies may consider consulting with qualified customs brokers and international trade attorneys to assess the viability of this strategy to their particular circumstances.

Read more from AHPA here.

Also of note regarding hemp: Marijuana Moment reported that China will  be required to buy more hemp from the U.S. under a new trade deal. Marijuana Moment spoke with Jonathan Miller, general counsel for the U.S. Hemp Roundtable, who noted that this is a “really good development.” Get the full story here.

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