Saturday, October 29, 2005

Heavens! Some Caviar Imports Banned

The U.S. Fish & Wildlife Service has banned the importation of beluga sturgeon caviar (and meat) originating in the Black Sea basin. This comes as a blow to luxury buyers in the U.S. who have already been suffering with a ban on these products from the Caspian. This move, consistent with the Convention on the International Traffic in Endangered Species, is intended to force the exporting countries to make progress in implementing conservation programs for the endangered fish.

Of course, the fact that caviar comes from this fish, might make it less appealing. There is a lovely description of the production process here. It might be more than you want to know that the fish is stunned once by a blow to the head with a wooden club, then stunned again before it is cut open.

This ban also covers personal importations with arriving passengers. First, the Concorde is put out of service. Now some beluga caviar is banned. What's next; a tax on polo ponies?

Monday, October 24, 2005

The Death of the Entry?

A lot of what Customs has to do is routine and painfully dull. But, it is important. Think about the thousands of passengers and cargo containers that present absolutely no issues whatsoever. Most people tell the truth when entering the country and most importers properly declare their goods. The tricky part is letting the legitimate trade happen while finding and stopping the bad guys.

One of the current trade facilitation projects is the Periodic Monthly Statement under the Automated Commercial Environment. The Periodic Monthly Statement (which is still technically a test program) lets participating importers identify entries and pay Customs for them by the 15th business day of the following month. This creates an interest free loan of up to 45 days for importers. It also simplifies recordkeeping and allows importers to create national or port summaries of activity.

Until recently, the only way importers could take advantage of the Periodic Monthly Statement was to have an ACE Portal account. Customs has now announced that certified C-TPAT members who are not current ACE accounts will automatically be established as ACE Non-Portal Accounts. This will make certified C-TPAT members eligible to participate in PMS. Non-C-TPAT members can also choose to participate. The importer needs an appropriate bond and their broker needs to be a portal participant.

This seems to be a good move in that it really does provide a benefit to importers and will not have a negative impact on cargo security because it only defers the payment of duties and fees. So, Customs should be given credit for expanding this test program.

But, it does not address the real underlying inefficiency: the entry. Why is it that Customs continues to work from a business model that requires each and every transaction to be the subject of separate documentation? It is as if you had to file a tax return every pay day. The IRS doesn't work that way and there is no intrinsic reason why Customs could not simplify entry reporting while increasing the importers' obligations to periodically report imports and the associated liability. Some sort of cargo manifest report of arriving shipments should be enough to match up to a subsequent quarterly report of duty and fee liability.

Of course, there is a problem with this pie-in-the-sky idea: Congress. Right now, importers are statutorily required to file entries and Customs is, therefore, required to accept them. And, many compliance activities are triggered by entry dates and the corresponding liquidation dates. But, those are details. If Congress wants to help facilitate trade, it should take another look at the continued rationale for the entry. It is clear that Customs is inching away from the all important entry and liquidation. That is clear from the fact that there are now Supplemental Information Letters, Reconciliation, and now the expanded Periodic Monthly Statement. Let's face it, the entry as we know it is on life support and someone needs to pull the plug.

Thursday, October 20, 2005

Gee, Trade Negotiations Are Confusing

There is lot going on in the lead up to the next meeting in the Doha round of trade negotiations. The U.S. is pushing what it calls the Doha Development Agenda which consists of four components:

  • Agricultural market access (with a limited emphasis on the elimination of subsidies)
  • Industrial products market access
  • Services
  • Trade facilitation
While trying to promote this agenda of trade liberalization, the U.S. and other developed countries have to balance the different economic needs of the developing world. There are more than a billion people in the world living in poverty. The Doha agenda includes a mandate that developing countries receive "special and differential treatment" to assist them in more fully integrating into the global economy. These countries can opt for more limited liberalization and longer phase-in periods for changes in trade rules.

There are lots of competing interests in these talks. The most obvious friction results from the facts that the developing world's agenda does not always match up to the desires of the developed world. There are also a lot of industrial sectors that come into conflict. For every industry willing to trade lower tariffs for access to foreign markets, there is another legitimately seeking to maintain tariffs to protect market share, jobs, capital investment, etc. At the same time, there are non-governmental groups seeking to ensure that trade negotiations support the environment, labor interests, human rights, and other interests. And, in the past few years, there have been vocal groups opposed to globalization as a concept.

Balancing all this is hard enough without the confusing fact every group of countries taking a position seems to become known as the G-something. There is the G8 (Canada, France, Germany, Italy, Japan, Russia, U.K., and the U.S.) group of industrialized countries. Recently, the G20 has been active (along with Australia) in pushing for market access in agricultural goods. There is also a G4 (India, Germany, Japan, and Brazil) looking for membership in the U.N. Security Council. And now comes the G33 group of developing countries active in the WTO agriculture negotiations. Oddly, there is an 11-member G10 (Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United
Kingdom and the United States) which issued an impressive report on financial consolidation. This may or may not be the same G10 that just got the support of Norway on on agricultural duty reductions. Then there is the Quad Group consisting of the U.S., Canada, Japan, and the EU.

I think people who pull together these groups need to be more creative in naming them. I suggest following the lead of college sports where the number of members is tacked on to something other than the letter G. There is, for example, the Pacific-10, Atlantic-10, and my personal favorite, the Big-10. Of course, the fact that the Big-10 consists of eleven schools does not do much for my effort to avoid confusion.

Tuesday, October 11, 2005

CAFTA-DR Coming Together

It looks like we might have CAFTA by January 1, 2006. The USTR announced that Nicaragua has approved the agreement. Since I am short on words at the moment, here is the entirety of the USTR statement:

Statement of USTR Spokesperson Neena Moorjani Regarding Nicaragua’s Passage of CAFTA-DR


“We congratulate the Nicaraguan government for passing the Central America-Dominican Republic Free Trade Agreement.

“They now join El Salvador, Guatemala, Honduras, the Dominican Republic and the United States in approving the CAFTA-DR.

"We have met with representatives of the CAFTA-DR governments recently and we are working towards a target date of January 1, 2006, for implementing this agreement.

“This agreement levels the playing field for American workers, farmers and businesses, expands choices for consumers and strengthens democracies with our neighbors.”

Sunday, October 09, 2005

No Bonking Zone

Today was the Chicago Marathon in which 40,000 runners competed either to win, make a new personal record, or just finish. I wasn't there; bad knees, and all. I have personally made a significant contribution to the college funds of the children of several orthopedic surgeons and a raft of physical therapists. That is why I now ride a bike rather than run. But, due to a serious downpour, I did not complete the 100-mile ride I had planned for the end of September. Thus, I am feeling envious of the marathoners who finished today. In particular, that means you, P.

P is the runner I turned on to Gu when he decided to train for his first marathon. I think that makes me kind of a legal sugar pusher. He finished today at about 4 hours, 34 minutes. For 26.2 miles, that is something to be proud of.

For those of you who don't know, Gu is a concentrated carbohydrate gel. When competing in endurance events, Gu comes in very handy to prevent the dreaded and embarrassing bonk. Runners and cyclists bonk when they completely deplete the reserves of fuel in their muscles and blood. The liver can't replenish the supply fast enough. What's left is a very inefficient process of trying to burn fat. It won't work and the runner will eventually collapse after suffering weakness and nausea possibly followed by vomiting and hallucinations. Ahh, the glory of long distance sports!

The trick, of course, is to eat properly throughout the event. Enter Gu. When cycling distances, I try and eat one every hour and half or so. Should the Gu folks read this endorsement of their very fine product, I prefer the Just Plain variety with vanilla being a close second. Eating it is quite pleasant. It is very similar to swallowing a mouthful of frosting or pudding. The small amount of caffeine in it is also helpful.

I think it might be a reasonably successful business model to travel around the country with a supply of Gu selling it at grossly inflated prices to tired looking runners and cyclists as they pass by. I could set up a little table along a bike or running path with a sign reading "Bonking? GU $5 each" and probably do just fine. If I toss in a cup of warm tap water for another $1, I'd be sitting pretty. This sounds like a franchise opportunity. Isn't this how the FedEx guy and Michael Dell got their starts? One problem is that runners don't tend to carry much cash. Hmmmm. I need to work on this a bit more. Perhaps I can take credit cards.

Saturday, October 08, 2005

Blackberry Whine

Here is a U.S.-Canada battle worth watching. Research in Motion, the makers of the ubiquitous and, for some, essential Blackberry wireless e-mail and phone devices has been sued for patent infringement. The U.S. patent holder, NTP, sued RIM for infringing patents relating to its software for transmitting e-mail. RIM's main argument is that its servers are located in Ontario (that's Canada, not California), which is a separate sovereign country where U.S. patent laws are not in effect. The U.S. Court of Appeals for the Federal Circuit, which also hears appeals from the Court of International Trade, was not swayed by the border argument. The most recent opinion is here.

The news media now reports that the Federal Circuit has denied RIM's request for en banc review by the entire 12-member court. RIM faces the possibility of an injunction against sales or operations in the U.S., which, according to the New York Times, is 70% of its revenue.

Two interesting things are bound to happen. First, RIM will surely appeal to the Supreme Court which, if it takes the case, will have to make a decision about the extraterritorial application of the patent law. This may be unlikely as the Federal Circuit hears all patent appeals and there is no possibility for another circuit to disagree with it. Also, there is no obvious constitutional issue. The second thing going on is that the U.S. Patent & Trademark Office is re-examining the NTP patents to see if they should have been issued in the first place. According to RIM, that is looking like a promising way to get this wrapped up.

We'll have to see what happens. Just image the hue and cry from Blackberry addicts if the service goes dark. Palm shares rose on this thought alone. If that happens, I suspect the Canadian military will have to move to the border as U.S. white-collar workers threaten to invade Ontario in an effort to force RIM to settle with NTP.

Thursday, October 06, 2005

Twinkies, Anyone?

There are blogs I check now and again and one I am reading start to finish. The former category includes blogs to which I have linked on the right. The latter blog is called The Real-Life Twinkie Experiment. It purports to be the experiences of an identical twin who switched lives with her 2L law student sister. It is well written and entertaining. Thus, I am fairly convinced it is a work of fiction. But, the depiction of the law school experience is pretty compelling if a bit overly dramatic.

Saturday, October 01, 2005

No Protesting NAFTA, Really!

For years, Customs has said that importers can't seek a refund of duties paid on NAFTA-originating merchandise via standard refund. The reason for this is that if the importer failed to make a claim at the time of entry and Customs liquidates it accordingly, it made no mistake that can be challenged. At least that has been Customs' take on the question. If you want a post-entry refund, you need to apply for it via a request for reliquidation under 19 U.S.C. § 1520(d). These requests must be filed within one year of the date of importation.

The Court of Appeals for the Federal Circuit has now had the opportunity to weigh in on this in a case called Xerox Corp.Vv. United States. Xerox filed protests to seek NAFTA refunds and Customs denied all but one of the protests finding them to be untimely. This is because all but one of the protests was filed more than a year after the date of entry. Customs treated the remaining protest as a request for reliquidation.

The Federal Circuit look at the law, regulationss, and legislative history and found that the one-year limit is a strict requirement. More important, the Court also held that the lack of a NAFTA claim at the time of entry means that Customs made no decision regarding the NAFTA status of the goods. As a result, there was no protestable decision and, therefore, there could be no valid protest of the NAFTA status of the merchandise. Obviously worried about how far this holding might apply, the Court was clear that is did not mean to imply that when Customs liquidates merchandise "as entered," there is no protestable decision. Mainly, this seems to be because 19 U.S.C. § 1520(d) specifically addresses this question. But, it seems to be a dangerously slipper slope. We'll have to see.

Help Wanted

Anyone looking for a policy job who is willing to relocate to DC should send a resume to the President of the United States. Customs Commissioner Bonner has announced his intention to retire. I'm not sure what the job pays but I'm guessing it comes with decent benefits. You probably also get a pretty high security clearance, lots of opportunity for travel, and a big staff.

On the downside, you are near the top of the food chain with respect to Homeland Security. If anything breaks bad via a U.S. port of entry or an immigrant, it will not look good on your resume. Plus, you need to be sure to keep Congress happy. That can't be easy, or fun.