Wednesday, June 29, 2005

Self Improvement

There are a number of things I wish I could do better.

1. Standing up to traffic. I watch cyclists navigate traffic. We fall into two categories: those who follow the rules in a fairly strict sense and those who shoot the half-ton motorized rapids. I am more the former than the latter. When I come to an intersection with a 4-way stop, I rarely stop. I slow, look both ways and proceed. The skilled or stupid never slow down. They seem to get to the intersection, fade a bit to the right to get into the flow of oncoming traffic, wait for a clearing, do a U-turn to get back to the intersection and go right to finish crossing. It takes just a second and is a beautiful thing to see. Only now and then do they get plastered by a minivan.

2. Stand up to Gravity. Another thing some cyclist can do is stop without ever really stopping. They creep ahead, waiting for traffic to clear or the light to change, without ever putting a foot on the ground. Often, they stop completely, cock the front wheel a bit, stand on the pedals, and wait while defying gravity. When the coast is clear, off they go. I, on the other hand, click out of the pedals at the first hint of trouble, brake, and put a foot firmly on the ground when I come to a stop. I need to go to some deserted parking lot and practice this maneuver. I am sure that will result in many tumbles to the ground.

3. Talking wine. I know what I like. I have no idea how to describe it.

4. Sail off the wind. It is relatively easy to sail close to the wind. All you have to do is haul in your sails and go like hell. It is much harder to sail in the direction you actually want to go by falling off the wind a bit and then having to think about sail trim. I'd like to practice this, but beating to the wind is much more fun than bobbing around in Lake Michigan on a broad reach or run.

I probably need to come up with bigger life goals.

Thursday, June 23, 2005

Take That, CBP! And, That!

Sometimes, the good guys win. Recently, the importer came away with significant wins over Customs in decisions from the Court of International Trade and the Court of Appeals for the Federal Circuit.

In the CIT case, called International Custom Products, Inc. v. U.S., an importer did exactly what Customs tells importers to do: it got a ruling before it started bringing in merchandise. In this case, it got the ruling years ago and set up its business according to the allegedly binding advice from Customs. Trouble is, at some point, Customs decided it did not like the results of the ruling. Coincidentally, I'm sure, Customs' new position increased the duties by some 2400%. The opinion indicates that there may have been some legitimate reason to think that the ruling is, in fact, wrong, but that is not the point. Once Customs decides that it no longer thinks a ruling is right, there is a process it needs to undertake to revoke or modify the ruling. That involves public notice and the the collection of comments on the proposed changed. Only after jumping through these hoops can Customs officially change its mind.

In this case, Customs tried an end run around that rule. Rather than go through the so-called § 1625 process, Customs matter of factly issued a Notice of Action (the familiar CF29) and just told the importer that the classification would change. In addition, Customs told the importer to change the classification on all future entries of the merchandise. The importer did the smart thing again; it called its lawyer.

Sometimes legal analysis is complicated. Sometimes it is not. In this case, it was both. There was a mess of stuff relating to jurisdiction, exhaustion of administrative remedies, ripeness, and the standard of review. But, the core issue was simple. What Customs did looked like a revocation, had the effect of a revocation, and should, therefore, have been handled like a revocation. Thus, the CIT held Customs to the law and declared the change to be null and void.

Of course, this is only half the battle. Customs will likely turn around and go through the revocation process and get to the same place. The importer will have to fight that fight in due course.

At the Federal Circuit, the case was International Trading Co. v. United States. In that case, the question was whether imports of goods subject to an antidumping duty order should be deemed liquidated by operation of law because Customs was too slow in liquidating them. If so, the importer would only be liable for the relatively small amount of estimated dumping duties deposited at the time of entry. If not, it would be hit with a whopper of a bill.

Basically, what it comes down to is whether the Commerce Department's notice of the final results of an antidumping duty review is "notice" to Customs of how to liquidate the merchandise. The meat of Customs' argument was that a Federal Register notice is considered to be official binding notice on astronauts in orbit, submarine commanders, and Amazon explorers but not on agencies of the Federal Government. Instead, Customs said that the six-month liquidation clock did not start to run until it received an e-mail from Commerce saying, "Excuse me, Customs, you may not have noticed the Federal Register notice, so this is a friendly nudge to go ahead and liquidate that merchandise." In other words, Customs wanted the proverbial engraved invitation. The CAFC said no and affirmed the CIT.

Good results and good decisions.

Wednesday, June 22, 2005

NAFTA and CAFTA in the News

It turns out we might get a CAFTA-DR deal after all. At least as far as the important House Ways & Means Committee is concerned. On June 15, the Committee worked out a compromise bill to send to the House. Implementing legislation still needs to get through the full House and the Senate. This follows a June 14 informal poll of the Senate Finance Committee showing support for the pact. When passed, CAFTA-DR will eliminate tariffs on $33 billion in trade between the US and Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. The agreement will also increase sugar imports to the U.S. by 50% over 15 years making dentistry a growth industry.

NAFTA, on the other hand, is getting a minor make over. On June 21, the International Trade Commission announced a study into whether there should be adjustments to the rules for a bunch of sundry goods including cocoa and cocoa preparations; cranberry juice; ores, slag and ash; leather; cork and articles of cork; prepared feathers and down and articles made of feathers or of down, artificial flowers, and articles of human hair; glass and glassware; copper; nickel and articles thereof; lead; zinc and articles thereof; tin; other base metals; televisions; information technology agreement goods; and controls. Makers of chocolate covered wigs and leather televisions are lobbying hard for these changes.

Friday, June 17, 2005

I'm Your Spokesman for Szechuan Nan

I have not been able to ride to work in a while because my bike was in the shop. Why? Because I broke a spoke on my rear wheel, again. That is about the third time in a year and that is three times more than most people ever see. I took the bike to my reliable mechanics at Turin and got a reasonably technical explanation about the geometric arrangement of the spokes not being ideal because of the design of the hub. I think it comes down to the fact that I am heavier than, shall we say, the anticipated rider; I put a relatively high number of miles on the bike; and many of the roads I travel are rough. So, now I have a new Mavic cxp 33 rear wheel and I am back on the road.

Wednesday, I rode to and from work. The ride in was cold and cloudy but pleasant. I made great time and had the wind at my back most of the way. But, on the way home, it rained. Started out as a drizzle and I decided to tough it out. By the time I was at the top of the Lake Shore trail, I had a small waterfall running down the front on my helmet. That was no big deal as I could not see through my wet glasses.

Today, was a really spectacular morning. It was warmer, no real wind and sunny. I had a pleasant ride and was distracted along the way by big thoughts. While working out the solution to poverty, I rode right past Pratt. Consequently, I turned on Devon, which is narrow, busy and loaded with belching buses. This took me past many Indian restaurants. One, the Jewel of India, struck me as particularly absurd. The sign in its window says "Indian Style Chinese Cuisine." What does this mean? Sweet and sour samosas, perhaps? Maybe they serve kung pao aloo gobi matar or tandoori wantons. I guess it is not really that different than fancy French-Japanese fusion food, but it strikes me as humorous.

The ride home was uneventful and, I am happy to report, without spoke breaking incident.

Wednesday, June 15, 2005

Welcome to the South Side

Last night, I was at U.S. Cellular Field (AKA "The Joan") watching the Arizona Diamondbacks pummel the White Sox. Waiting in line for food, the following occurred.

In front of me were two girls (maybe the better word would be proto-women). They might have been 20, but just barely. Girl number 1 is short, with stringy hair the color of nothing. It was not brown and not blond. It was indeterminate. She was wearing a halter top that was too tight and too short for her slightly buldgy size. Girl number 2 had curly brown hair and looked something like Chelsea Clinton circa the impeachment. She had one of those excessively bright smiles in a shade of white not known in nature.

Girl 1: Why do they only have kosher dogs? What's the difference?

Girl 2: It just means they don't have pork. They're all beef.

Girl 1: But I want a hot dog, not a Jew-dog.

Me: Snort, eyes rolling, head shaking.

Apparently, I made enough of a noise or a big enough gesture for Girl 2 to notice. She looked me right in the eye as if to say "Sorry," nodded in the direction of her friend and said "She's an idiot."

At least we agreed on that.

Saturday, June 11, 2005

Two Hours, Eight Minutes Of My Life: Stolen!

And, Steven Spielberg is the thief.

To my knowledge, there are no great movies in which Customs has played a major role. There are a few good ones and one terrible film called The Terminal which I have only had the recent misfortune to see. This movie is the dim witted offspring of two much better movies: Moscow on the Hudson and Cast Away. I have no doubt that is how it was pitched to studios in the meetings.

Don't dismiss this as coming from one of those people who watches a movie related to his or her profession and can't get past the technical defects in the script. You know, the lawyers who cannot watch a courtroom drama without periodically shouting "Objection!" at the screen. This also applies to ER docs who harrumph at fake CPR and military people who complain about everything that happens in a war movie. I'm not like that as long as the movie is interesting and internally consistent.

The Terminal is neither. The movie is about a guy named Navorsky--played by Tom Hanks--arriving at JFK from a fake Eastern European country that has undergone a coup while he was in the air. As a result, his passport and visa are invalid and he cannot return home until his country is recognized by the U.S. I have no idea whether an immigration lawyer would sigh heavily at the implausibility of that, but I can buy into it as plot device to get the guy stuck in the international transit lounge at JFK. While there, he falls under the jurisdiction of Customs & Border Protection.

The closest thing this movie has to a villain is Stanley Tucci in the role of a CBP official at the airport angling to become "Field Commissioner" of CBP. This is a position that does not exist. I think he wants to be Port Director. Judging from the swank office he inhabits, he might already be the CEO of IBM. I have seen CBP offices at several ports of entry (although not JFK). Some are nicer than others. None is as nice as the one in this movie.

Navorsky spends his time learning English from cable news, collecting quarters from the luggage cart machine, and eating food stolen by airline food service workers. He also goes to the same cute CBP officer every day to see if she will stamp his visa application to let him into the country. All the while, he shuffles around the airport carrying a mysterious Planters nut can, making friends with the wacky airport employees, and doing major construction projects. Meanwhile, the evil Tucci character wants to get rid of him.

Guess what. None of this is interesting. Even the trumped up romance with flight attendant Katherine Zeta Jones goes nowhere. She thinks he is a frequent flyer who she just happens to see whenever she is at JFK. When they finally have a dinner date, she apparently goes home to change and does not think it is strange that she comes back to JFK to have dinner in the terminal building.

Here is the end of the movie, so either (1) stop reading or (2) consider this a favor. She rejects him for reasons that are not made entirely clear. His wacky friends come to his aid in a time of need. The nut can contains his father's priceless collection of jazz souvenirs. Navorsky has come to NY to get the one remaining element needed to complete the collection. So, of course, he carried all the others with him half way around the world in a nut can rather than leave them safely at home. He gets what he wants when a sympathetic CBP officer lets him walk out of the terminal illegally. The movie ends with the clear implication that he is an honest man who will now head back to the airport to go home where, luckily, peace has broken out.

There is only one chuckle in this movie. Navorsky gets in a NYC cab and says he needs to go the Ramada. The driver has a similar accent. He says he is from Albania and has been in NY "since Thursday." Its funny, I guess, because he is already driving a cab and knows where the Ramada is.

The worst technical point is when a Russian is stopped for trying to move prescription drugs from Canada through the U.S. back to Russia. The evil Tucci character wants to seize the medicine because the passenger does not have the proper forms. Navorsky is called in as an interpreter. Navorsky, who spends his days reading Customs forms, has apparently learned that medicine for animals is not subject to the same restrictions. Thus, rather than accurately translate that the drugs are for the guy's dying father, he says they are for a goat. Given this tremendously important piece of hearsay, the drugs are released to the happy passenger. Hanks should take the customsbroker test the next time it is offered.

So what worthwhile movies involve Customs? Here are a few. I've used the current definition of "Customs" to include the Border Patrol. If you think of any better examples, let me know.

1. Casablanca: Rick has papers from General De Gaul to get him across the border. That's close enough for me.

2. Flashpoint: Kris Kristoferson and Treat Williams are Border Patrol agents in Texas who find a skeleton and a box of money. Mayhem and conspiracies ensue.

3. Jackie Brown: The great Quentin's movie about a flight attendant who moves drugs from Mexico to LA. There is a great line where a DEA agent played by Michael Keaton threatens to turn her over to Customs. With a menacing look, he says something like "and you don't want to mess with those guys."

4. The Heist: This is a really good caper film written and directed by David Mamet. I am fighting my desire to begin swearing like a sailor. Gene Hackman needs to steal some gold from an airliner. At one point, one of his team cold cocks a Customs officer and at another point he announces that he needs a "customs broker and freight forwarder" he can trust.

5. The Score: This is essentially the same movie as The Heist but the Gene Hackman role went to Robert De Niro. Rather than rob an airliner, they have to steal an antique royal scepter from the Montreal Customhouse.

6. Men in Black: Giving new meaning to the phrase "illegal aliens."

7. Stripes: Because going to Czechoslovakia is like sneaking in and out of Wisconsin.

Monday, June 06, 2005

Customs Valuation: The Saga Ends

I think we have heard enough about customs valuation for now, but I want to make good on my promise to cover three things: deductive value, computed value, and reconciliation. For various reasons discussed below, I am going to give each topic short shrift. Later, I will look up exactly what "shrift" means.

Deductive value is just not used that often. That is not to say it is never used, but it is fair to call it rare. The first reason for that is that Customs rarely rejects transaction value when there is a sale (but it does happen). Next, before an importer can ever get to deductive value, Customs has to find that there is no transaction value of similar or identical merchandise available to stand in as the transaction value for the entry in question. So, not only are we talking about goods that are not sold at arm's length, but goods that really have not been sold to anyone recently. Second, importers have the option of applying computed value rather than deductive value, and that seems to be what people end up doing.

Deductive value is the price of the goods when sold in the U.S. (as always, subject to certain complicated limitation) less a bunch of stuff including:

(i) any commission usually paid or agreed to be paid, or the addition usually made for profit and general expenses, in connection with sales in the United States of imported merchandise that is of the same class or kind, regardless of the country of exportation, as the merchandise concerned;

(ii) the actual costs and associated costs of transportation and insurance incurred with respect to international shipments of the merchandise concerned from the country of exportation to the United States;

(iii) the usual costs and associated costs of transportation and insurance incurred with respect to shipments of such merchandise from the place of importation to the place of delivery in the United States, if such costs are not included as a general expense under clause (i);

(iv) the customs duties and other Federal taxes currently payable on the merchandise concerned by reason of its importation, and any Federal excise tax on, or measured by the value of, such merchandise for which vendors in the United States are ordinarily liable; and

(v) (but only in the case of a price determined under paragraph (2)(A)(iii)) the value added by the processing of the merchandise after importation to the extent that the value is based on sufficient information relating to cost of such processing.

That last bit is what is called "super deductive value." Wanna know the customs value of a spring that is never sold as a part but is sold when put inside a watch? Subtract all the stuff listed above, plus whatever is costs to make the watch. That is your spring value. And you wonder why Customs doesn't encourage this.

Computed value is just the opposite. Figure out what it costs to make the product in the foreign location, don't add in all that stuff listed above, make sure to include materials, labor, assists and profits, and you've got your value. As always, the Devil is again in the details.

Computed value is used a lot by maquiladora producers in Mexico. Generally, the reason for that is that there is no sale between the maquiladora and the U.S. importer. Sometimes, the importer can arrange the transaction to include a real live ("bona fide" as we lawyers like to say) sale, so transaction value will apply. But, often Customs uses computed value.

Here's the problem: often, at the time of importation, the manufacturer does not have final costs for materials, labor, overhead, etc. Generally, these figures are estimates based on "standard costs" the cost accountants and industrial engineers have determined. At the end of the fiscal year, companies often review the actual costs and reset standards accordingly. This permits proper budgeting for the next year. The difference between the standard cost and the actual cost is called the variance.

Because of the variances, for customs purposes, it is nearly impossible to accurately state the computed value at the time of entry. After dancing around this issue forever, Customs finally came up with a solution called reconciliation. Under the reconciliation program, an importer can set an electronic flag on an entry. The flag tells Customs that the value information submitted at the time of entry is not completely reliable and will be finalized later. In this case "later" means 21 months later, which should let people get their variances calculated. At that time, the importer files a reconciling entry that basically says, "this is the true value" and, if necessary, deposits additional duties or claim your refund.

Reconciliation has a few other uses. It can be helpful in limited circumstances where there is a classification dispute or where there is a question as to the value of American content in products assembled abroad from U.S.-origin materials. Finally, importers can use reconciliation to make post-entry claims under the NAFTA or the U.S.-Chile Free Trade Agreement. These claims, however, are limited to 12 months from the date of importation.

Now to the important question, what the heck is a "shrift" and why is it sometimes short? Turns out, completely unbeknownst to me, that "shrift" is the confession given to a priest or the absolution given by the priest. No wonder I had no idea what it means. The "short shrift," however, is (according to "a summary, careless treatment, or scant attention." A note on provides further insight:

In early medieval times penances were long and arduous--lengthy pilgrimages and even lifelong exile were not uncommon--and had to be performed before absolution, not after as today. However, less demanding penances could be given in extreme situations; short shrift was a brief penance given to a person condemned to death so that absolution could be granted before execution.

I guess I can still learn something every day.

C'mon Blawgers: Throw Me Bone

I know more than a handful of folks have found this site via the very helpful Blawg.Org. But, no one has rated the site. I know I may live to regret this, but how about some instant feedback via ratings on Blawg.Org? Or, use the fancy new button on the right. Preferably favorable ratings, of course.

Also, I'll take requests for posts on a specific topic as well (mindful of the Important Disclaimer at the top of this page).

Thursday, June 02, 2005

Sweet Trade Article

The New York Times ran a good article today on the sugar lobby and the future of the Central America Free Trade Agreement. The article is notable in that it focuses on three of my favorite things: sugar, trade, and Chicago. The gist is that the powerful sugar lobby, which has been fighting CAFTA, is losing its clout to sugar consumers like the candy and soft drink industries. This is a truism of all trade disputes: for every producer of raw materials that wants trade-related protection, there is a consumer industry trying to get cheaper access to the same product. The winner is usually industry with more clout. Chicago, a center of candy production, is on the front lines of this particular fight.

The article is worth reading.