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GAO-17-515R 1 (2017-04-24)

handle is hein.gao/gaobaaktc0001 and id is 1 raw text is: cU.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 April 24, 2017 The Honorable Ron Wyden Ranking Member Committee on Finance United States Senate Electronic Cigarettes: U.S. Imports in 2016 Dear Senator Wyden: Over the last decade, use of electronic cigarettes, known as e-cigarettes, in the United States has grown rapidly as use of traditional cigarettes declined among both adolescents and adults. As we reported in May 2015, most e-cigarettes sold in the United States were thought to be imported, but e-cigarette import volume and tariff revenue were unknown because the Harmonized Tariff Schedule of the United States (HTS) did not contain separate statistical reporting numbers (also known as 10-digit HTS numbers or codes) specific to e-cigarettes.1 Instead, imports of e-cigarette devices, e-cigarette parts, and e-cigarette liquid were entered under HTS statistical reporting numbers that the U.S. International Trade Commission (USITC) calls basket categories, which cover a range of goods. An e-cigarette device typically contains a battery, a heating element, and a cartridge or tank that can be empty or filled with liquid. Major e-cigarette parts include heating elements and cartridges, which can be imported separately from devices. E-cigarette liquid-which can contain nicotine in different concentrations or have no nicotine-can also be imported separately from both devices and cartridges. In the fall of 2015, the Committee for Statistical Annotation of Tariff Schedules-comprising representatives from USITC, U.S. Customs and Border Protection (CBP), and the U.S. Census Bureau (Census)-established six new statistical reporting numbers for e-cigarette devices, parts, and liquid in the HTS. The six new statistical reporting numbers went into effect on January 1, 2016, and covered e-cigarette liquid that contains 5 percent or more by weight of nicotine (3824.90.2840) or less than 5 percent by weight of nicotine (3824.90.9280),2 1GAO, Electronic Cigarettes: Imports, Tariffs, and Data Collection, GAO-i 5-491 R (Washington, D.C.: May 7, 2015). All goods imported into the United States are classified by U.S. Customs and Border Protection according to the HTS. The HTS, published and maintained by the U.S. International Trade Commission, provides the legal basis for the classification of every product that enters the United States and the corresponding tariff rate the importer must pay for each product. The HTS contains numbered provisions at the 2-, 4-, 6-, 8-, and 10-digit level. The 10-digit provision is known as a statistical reporting number that can be used for tracking and reporting trade statistics. 2Presidential Proclamation 9549 implementing international changes to the HTS, which took effect on January 1, 2017, resulted in the renumbering of HTS statistical categories 3824.90.2840 and 3824.90.9280 to 3824.99.2840 and 3824.99.9280, respectively. GAO-1 7-515R Electronic Cigarettes Page 1

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