Savings Under TFTEA Via Drawback Trading

Client

Global supplier, importer, exporter, and distributor of chemicals, minerals, and raw materials.

Challenge

An existing customer (Client 1) had substantial imports but minimal exports upon which to claim drawback.

Solution

Under the provisions of the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA), we can now match tariff codes at the 8-digit level for drawback purposes. Based on this law, using our drawback trading concept, we can match imports from Client 1 with exports from Client 2, even if they don’t have an existing commercial relationship.

Under TFTEA, the rules for matching imports to exports have changed from “Commercially Interchangeable,” a very high standard to meet, to classification-based interchangeability, which is a much easier test to meet.

We identified another customer (Client 2) with excess exports that, under the new TFTEA interchangeability rules, could be matched with Client 1’s excess imports. We then analyzed each party’s excess imports and exports inventory to identify those that could qualify for drawbacks under an adequately structured arrangement.

We fully appreciate that importers and exporters guard their commercial transaction details zealously. Therefore, it is our practice to obtain NDAs that grant us the necessary access while protecting each party from disclosure of their details to the other. Our NDAs permit disclosure only when a Customs inquiry requires it under pre-established rules and is vetted by our trade counsel.

Establishing a commercial relationship, whether pre-existing or newly created, is necessary to make a drawback claim. Therefore, using a drawback trading concept, we demonstrated the required commercial relationship between the import-rich company (Client 1) and the export-rich company (Client 2) to file drawback claims resulting from their combined transactions.

Results

JMR discovered over $1 million in refunds neither the importer nor the exporter had expected to receive. JMR is in a unique position as the only A-to-Z drawback provider able to facilitate this kind of trading scenario under TFTEA, giving customers access to drawback refunds that their transaction histories hadn’t identified.