US IEEPA tariff refund... What are the key issues that companies should not miss?

The U.S. Customs and Border Protection (CBP)'s International Emergency Economic Powers Act (IEEPA) tariff refund measure has entered the full implementation phase. CBP has established a consolidated refund processing function (Consolidated Administration and Processing of Entries (CAPE)) within the Export and Import Clearance System (ACE) to request a first-stage refund, and refunds will be paid by Automated Account Transfer (ACH). Although many people are relieved that this is an opportunity to get back the tariffs paid in the past, the atmosphere in the field is complex, with expectations and concerns intersecting. This is because there are a lot of tasks that companies must solve, from applying for tariff refunds through the new refund system to responding to the disruptive trade pressure from the United States that will develop after the refund.

The first practical issue that must be faced is that this refund is possible only through the company's active application, not through voluntary action by the administrative agency. In particular, CBP strictly limits refund application eligibility to the import declarant (IOR) and the customs broker (broker) designated by the import declarant. Even if the Korean headquarters paid actual tariffs during commercial transactions, you cannot apply for a refund if you are not a document importer. This is because CBP's refund application criteria gives priority to the status of the importer declared on the import declaration rather than the cost-sharing relationship in commercial transactions. Therefore, if differences of opinion that may arise between the head office and the local corporation or distributor over the ownership entity after the refund is paid are not settled in a detailed contract in advance, there is a high possibility that the tariff paid by the Korean company will not be refunded.

The selection criteria for refunds also require a sophisticated approach. Currently, the first stage of refund is limited to import declaration cases that are unsettled or less than 80 days after settlement. Cases that have passed 80 days after settlement, post-settlement reports (PSC), objection cases (Protest), AD/CVD imposition cases, etc. will be reviewed separately at a later stage. If a company hastily relies on the first stage of application without carefully classifying the status of its import case, it may face the risk of losing its rights due to administrative omissions. Ultimately, the future task is to manage non-traditional cases that the system does not accept and to prepare for judicial response if CBP refuses refund.

A more fundamental threat is the United States' macro trade strategy that lurks beyond the immediate reward of refunds. Currently, the US administration is imposing a 10% global tariff based on Article 122 of the Trade Act, and is also conducting an investigation under Article 301 of the Trade Act with unprecedented intensity. The Office of the United States Trade Representative (USTR) began a detailed investigation of 16 countries last March under the pretext of structural overproduction, and is also pressuring 60 countries in all directions regarding forced labor.

This policy stance is formally a way to deal with trade issues between countries, but in the actual implementation process, it is developed to target the production of individual companies and the overall supply chain. In particular, the U.S. Trade Representative's investigation and follow-up measures target specific countries, but accumulate evidence through cases for each industry and product, and connect this to tariffs and regulations to directly affect the business environment of companies. Accordingly, rather than dismissing this as a simple conflict between countries, companies are required to respond by examining their entire supply chain and transaction structure.

Ultimately, the response in this IEEPA situation must go beyond the level of simple refund application agency. The key is strategic compliance, which involves legally re-examining the commercial settlement structure between the Korean headquarters and the U.S. subsidiary and comprehensively designing how past customs practice data is connected to future trade dispute scenarios. From investigations into structural overproduction to regulations on forced labor, it is time for companies to examine their structural response system, which also foresees chain regulations after refunds amidst the wave of increasingly sophisticated protectionism in the United States.
 

Reporter Lee Dong-oh (canon35@mt.co.kr)

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