President Obama Signs Free Trade Agreements

As expected, President Obama signed into law Free Trade Agreements (FTA’s) with Colombia, Panama and South Korea respectively. Also signed into law was a bill extending the Trade Adjustment Assistance (TAA) program aimed at retaining U.S. workers who will lose their jobs due to the newly signed agreements.

The FTA’s now await ratification by the governments of the three nations. U.S. Trade Representatives are already working to bring the agreements into force as soon as possible.

The TAA program offers not just benefits to help displaced workers to stay afloat financially, but also services to upgrade their skills helping them to re-enter the workforce in viable growth industries.

U.S. Import Merchandise Processing Fee Increases 65%
(Courtesy of the Journal of Commerce)

Through a provision embedded in the recently signed FTA’s, importers will be hit with nearly a 65% increase in merchandise processing entry fees.

Customs will retroactively apply the new rate to cargo imported effective October 01, 2011 through June 30, 2021. The new fee is 0.3464% on the value of the cargo, up from 0.21%. The MPF fee cap of $485.00 usd remains the same; however, the cap will now apply when cargo reaches a vlaue of $140,011 usd. Under the old MPF rate, the fee was capped at a cargo value of $230,952 usd.

This change in the MPF will result in significant increases for many importers, especially importers of lower valued merchandise.

Can You Afford To Be Uninsured?

On October 04, 2011 the M/V “Rena” came into contact with the Astrolabe Reef near New Zealand. Recent reports have the vessel listing 20 degrees with over 80 containers lost overboard and many more damaged.

The vessel owner will most likely declare “General Average” which is common when the journey of a vessel is threatened by a major peril. Under General Average all parties involed in the voyage (including cargo owners) MUST pay their share of the cost of saving the vessel and its cargo, even if the individual cargo is not damaged or lost. This means cargo owners can not pick up their cargo until financial security has been provided, even if the cargo is not damaged.

What does this mean to you as a cargo owner?

If insured through J.W. Allen & Co., our insurance company will promptly handle your claim by issuing an “Average Guarantee” while you provide an Average Bond. This will result in the prompt release of your cargo while your insurer handles the General Average contribution. If insured but your cargo is damaged, our insurer will take up the recovery of your claim to ensure the responsible parties pay their share of the loss.

If uninsured, adjusters will likely require a CASH deposit of a proportion of your cargo value with the cargo held in trust until the necessary cash contribution is paid. Sometimes, this can take months or even years.

General Average is more common than you might think, amounting to approximately 10% of the losses suffered by marine insurers because of the size and frequency of such claims.

Contact us now and let us show you that peace of mind is more affordable than you think!