Saturday, April 29, 2006

Interesting NAFTA Reading

Note from Larry: I edited the post below to add some links. I originally wrote it on the fly but now feel like it is not very informative without references to the source material.

There is not a lot of caselaw on NAFTA. There are a few cases on whether something does or does not qualify. I have been involved in a couple of those. There was also some litigation over whether the NAFTA was properly passed and whether it is constitutional. Those cases tend to be more interesting in an academic sense than for any practical impact.

In that vein, I feel a little bad for Judge Pogue who issued a very thorough opinion over a very technical aspect of NAFTA and trade law. The case is Canadian Lumber Trade Alliance v. United States, Slip Op. 06-48 (Apr. 7, 2006). The reason I feel bad is that he obviously put a lot of effort into the opinion, but it really has limited impact.

In a nutshell (Note to West, I am using that in the generic sense), the case involves a provision of the NAFTA (Article 1902) that shields Canada and Mexico from amendments to the antidumping and countervailing duty laws unless certain steps were taken. The change involved was the so-called Byrd Amendment. The Byrd Amendment required Customs to distribute the collected duties to certain affected domestic producers of the subject merchandise. Canadian interests, with the support of the Mexican government sued in the U.S. Court of International Trade to prevent the application of the Byrd Amendment to Canadian merchandise.

The interesting parts of the case involve whether the Canadian government and producers had legal standing to pursue the case in court. Here is the upshot: producers have standing because they might actually be injured by the distribution of funds to competitors; the government of Canada does not have standing.

The next question was whether the NAFTA language applied to the Byrd Amendment. Answer: yes it does. The U.S. had some good arguments involving a technical parsing of the language relating to the difference between "goods" of Canada and antidumping duties collected on the importation of Canadian goods. My favorite argument was the Hail Mary position that Congress has the constitutional power to spend money however it wants and that distributing Byrd funds is a spending function. The court did not buy any of this.

In the end, it held that the Byrd Amendment was illegally applied to Canadian and Mexican imports. Hats off to whoever came up with the Article 1902 argument.

The reason this is primarily of academic interest is that the Byrd Amendment has been repealed effective October 1, 2007. So, future imports of Canadian and Mexican goods face little chance of being damaged by the law.

The question that is not at all academic is what to do about this. Should all the money collected illegally be returned to the treasury from the recipient companies? Should the U.S. return it to the treasury from some other source? Or, should future collections just be enjoined? Don't know. Judge Pogue ordered further briefing.

One side note, I found footnote 7 very interesting. In it, the Court states that the extensive discussion of relevant WTO decisions is provided only as background and that the court's decision is based exclusively on U.S. law. That says something interesting about the Court's approach to the use of international law. I'm just not sure what it is. But, in my head (and completely without supporting information), I am taking a bit of credit for that footnote.
Possibly more on that later.

Wednesday, April 26, 2006

Prurient Customs Interest

I have had complaints that my postings are too dull; I need to spice this space up a bit. Generally, I am the source of those complaints. So, I don't listen to myself.

But, here is a customs-related tid bit of minor prurient interest. A super model has been denied entry to the U.S. This is really an immigration issue and I don't know much about immigration. But, CBP now has jurisdiction, so I'll toss you super model stalkers and immigration lawyers a bone.

For what it is worth, I have never heard of this woman. I previously covered the Kate Moss immigration issue. Maybe I am developing a side practice representing super models who can't get into the country.

Friday, April 21, 2006

The Disaster on Bloor

I am in Toronto today. I always like visiting here. It is a very cosmopolitan city with great restaurants and terrific cultural venues. Of course, I am here on business so I won't see much of that.

What I did see was a major addition going on at the Royal Ontario Museum. I swear when I first saw it, I though the building was in the middle of demolition. It looks for all the world like rubble from a tornado. I actually approached it the same way I approached Ground Zero in November of 2001.

When done, it will look like this and this.

While right now it just looks scary. I have faith that, in the end, it will be stunning and will be adopted by the city as a symbol of Toronto.

How do I know that? Because I live in Chicago (well, close to Chicago) and work in close proximity to the new Frank Gehry Millennium Park pavilion. While it was going up, I grumbled about it; declaring it "gimmicky" and saying that it would never look finished. I was wrong. See for yourself here.

An odd coincidence is that Ghery is a Toronto native. Maybe major cities on major lakes have a lot in common.

Sunday, April 16, 2006

Measure for Measure

It often surprises my colleagues when I say that I find classification to be one of the most interesting areas of customs law. The way I look at it, complex classification is a puzzle. There are very specific rules set out in the General Rules of Interpretation and the Section and Chapter Notes. In my opinion, the Explanatory Notes tend to muck things up, but that is a different story.

The thing about classification is that there can only be one right answer. Even if you get to the point where you are opting for the last classification in numerical order, you are still following the rules. So getting to the right answer is like doing a sudoku puzzle. You need to figure out the possible answers and test them out against the rules. If a Note pops up that conflicts, you have it wrong.

I'm thinking about this because I read in the latest Customs Bulletin (look at page 24), that CBP is modifying some rulings on the classification of steel measuring spoons. It strikes me that measuring spoons should be pretty easy to classify.

Customs had classified measuring spoons in 8215.99.30 as: "Spoons, forks, ladles, skimmers, cake-servers, fish-knives, butter-knives, sugar tongs and similar kitchen or tableware . . . other: spoons and ladles: with stainless steel handles: spoons valued under $0.25 each." The current duty rate for this provision is a surprisingly high 14%.

In the Bulletin Notice, Customs is proposing to reclassify these goods in 7323.99.90 which provides for "Table, kitchen or other household articles and parts thereof, of iron or steel; iron or steel wool; pot scourers and scouring or polishing pads, gloves and the like, of iron or steel: Other: Not coated or plated with precious metal: Other: Other." The rate for this provision is a favorable 3.4%.

I am wondering about what makes a measuring spoon useful. It is not like every other spoon in the house, which may or may not approximate a teaspoon, tablespoon, or some other random quantity. No, I say, a measuring spoon is an instrument for the measurement of volume. It is an apparatus designed to prevent the inadvertent excess of cayenne from doing bodily harm to dinner guests. It is the noble household measuring spoon that permits the proper dosing of the sick with over-the-counter medication. No one reaches for a measuring spoon to stir their morning coffee or eat their cereal. No, spoons of all shapes and sizes are available for those lowly tasks. The measuring spoon, I tell you, deserves more respect than it is receiving from Customs.

Which brings me to my question. Why isn't the measuring spoon classifiable in 9031.80.80 as "Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter . . . Other instruments, appliances and machines: Other . . . ?" This provision not only treats measuring spoons with the degree of respect they deserve, but it also carries the more favorable duty rate of 1.7%. The language of the heading certainly describes measuring spoons which, after all, are for measuring. Also, measuring spoons do not appear to be more specifically described elsewhere. Seems like a slam dunk.

Of course, it is not. One thing I often tell clients is that if Customs or a broker tells you something is classified somewhere, think long and hard before challenging it. There might be a reason. Of course, I make my living challenging classifications and other decision by Customs, so I am not afraid of a fight. But, you need to go into it with your eyes fully open.

The other thing I tell people is that if you reach a classification conclusion without carefully consulting the Notes, you might be in for a bad surprise. That's what might happen with measuring spoons. It turns out that Chapter 90, Note 1(l) says that the Chapter does not cover "Capacity measures, which are to be classified according to their constituent material . . . ."

Hmmm. That makes me wonder. Is "capacity" the same as "volume?" Maybe capacity in this context means the electrical capacitance. Maybe this is harder than it looks.

Thursday, April 13, 2006

Happy Anniversary

This blog has occupied its quiet corner of cyberspace for a year. It started as research for my column in the CBA Record and took on a life of its own. Let's see where we end up.

I'll try and post regularly.
I'll try and post about customs law more often than not.

From you, I'd appreciate a bit of help. Drop me a comment or an e-mail when I touch on something of interest to you. Let me know when I completely whiff on some news you want to know about. I'll do my best to be interesting, helpful, and occasionally entertaining.

Tuesday, April 11, 2006

Riding with DHS

Edited for typos . . .

Customs has recovered a motorcycle stolen in 1971 and is returning it to its owner. It also recently recovered a Corvette stolen in 1969. By themselves, these stories are amusing and heart warming. Sort of like reuniting a geek with his 1977 Ohio Scientific Challenger C-1P computer. Ahh, the memories! Four K of memory, a Radio Shack cassette tape for storage, and a Sears black & white TV for a monitor.

But, Customs' good deeds reminded me of something I planned to blog months ago. I was driving in the south, scanning the radio hoping to hear the soothing voice of Terry Gross or the far less soothing Nina Totenberg. Apparently, NPR had not penetrated into this market. Eventually, I gave up and just listened to whatever was on. What I heard was a piece of C&W drivel called Riding with Private Malone by David Ball.

I have no interest in country music. This is not an urban elitist prejudice. I also have no interest in hip hop (apologies to Wayla guy), R&B, bebop, John Tesh, or Mongolian throat singing. But, I like music and can appreciate the value of a good pop song. I am increasingly a fan of the subgenre indie folk which sometimes walks dangerously close to the country line.

The thing about Private Malone is that it is just a story (I won't spoil it for you) told over a few verses and a catchy chorus. If you submitted the story to a highschool creative writing class, it would be marked down as both unfinished and a cliche. It is sort of a low rent Twilight Zone episode crossed with Touched by an Angel. As sung, however, it is surprisingly appealing and has that stick-in-your-head quality of, say Mmmbop by Hanson (which is not a good thing). So clearly the total package is more than the sum of the parts.

But, my question is this: am I in danger of becoming a country fan? Do I need to investigate Alan Jackson and that mullet wearing guy with the doctor show? Does the fact that I like Lucinda Williams mean I have already crossed over?

I am having a panic attack. I need to return to my roots. Pete Townshend is a genius. I drink Boddington's not Budweiser. I drive an import not a pickup. Deep breaths. I like that duet between Cyndi Lauper and Shaggy on her new album. Maybe I need to look more closely at hip hop.

If you want to investigate the Riding with Private Malone phenomenon, watch the video here.

Addendum Added Apr. 19, 2006

Apparently, the artist in question is named David Ball. I originally had it misspelled. Here is a link to his official web site.

Sunday, April 09, 2006

Sometimes, the Most Important Question is "Why?"

Sometimes, people do crazy, stupid things. Often, there is a plausible excuse for acting poorly. Sometimes not.

But, if you are going to act out, it seems like there should be a really good reason. Maybe you need cash to feed your hungry kids or your crime is a political protest. Maybe you are just addle-brained by some psychoactive force like testosterone or alcohol. Whatever, just have something to say at the sentencing. Otherwise, you will look foolish.

Now, explain this crime to me. Some guy in a Chevy pickup truck tried to smuggle two wallabies out of Texas into Mexico. This is a crime under the Convention on the International Trade in Endangered Species. But, so what? I want to know who ordered up the wallabies. Were they going to be dinner for some eccentric Mexican? Perhaps wallaby mole with ancho peppers and pomegranate seeds. Were they going to become pets for the Mexican equivalent of the King of Pop? Are wallaby fights eclipsing cock fights as back-alley entertainment in Tijuana?

And where did they come from? Is there a clandestine ring of wallaby breeders in Texas? I picture a ranch, perhaps in Crawford, with a frequently absent owner and just enough cattle to look legit but actually profiting from the forced breeding of wallabies for the growing Mexican black market.

We may be seeing only the tip of the iceberg. Who knows how many other examples of Australian fauna might be at risk in Texas? Perhaps wallabies are a gateway to illegal kangaroo breeding. Next thing we know, angry fighting koalas might be loose in Nuevo Laredo or poisonous platypuses might invade the swamps of Houston.

I demand a full congressional investigation.

Read this for more news featuring angry koalas.

Thursday, April 06, 2006

Colombia, El Salvador & NAFTA, In One Post

See what happens when I get busy? I get behind on interesting things. Here are three:

U.S. Moves to Protect Colombian Cultural Property

Museum lawyers, take note: Customs issued a Federal Register notice adding certain Colombian pre-colombian and ecclesiastical period (1530-1830) artifacts to the list of property protected under the UNESCO Convension on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property. Under the convention, Colombia claims "patrimony" of these artifacts as part of its cultural heritage and unauthorized traffic in these products will be prohibited.

Retroactive CAFTA-DR Textiles Claims

Under the CAFTA-DR, duty preferences are retroactively applicable for certain textile products entered on or after January 1, 2004 when the Office of the USTR makes a determination that the goods are eligible. USTR has done that for El Salvador and Customs published a Federal Register notice saying that claims need to be in by December 31, 2006.

So NAFTA is really odd!

Folks who work closely with NAFTA has always known that there is a quirk in the marking rules. Under the so-called NAFTA Preference Override, it appears that a good might end up having "US" as the country of origin properly stamped on its side (forgetting discussions of FTC issues) while being subject to duty as if it were from Mexico or Canada. Turns out that is, in fact, correct. In this Bulletin (scroll to page 75), Customs is proposing to modify a ruling to reflect that realization. To cut to the chase, Customs says the following:

In NY G86772, based on 19 CFR 102.19(b)(2), CBP ruled that the plastic
space bags were required to be marked to indicate that their country of origin
was Mexico. In reviewing 19 CFR 102.19(b)(2), we now believe that CBP misapplied
the regulation in NY G86772. The plain language of 19 CFR 102.19(b)(2)
indicates that the so-called ‘‘NAFTA Preference Override’’ applies only to
country origin determinations for customs duty purposes, and it does not apply
to determinations of the country of origin for the marking of imported
merchandise under the requirements of 19 U.S.C. 1304 and 19 CFR Part