Monday, December 17, 2007

Ford News Flash

If you have an interest in NAFTA, this is big news.

As you know, Customs & Border Protection has been pursuing a $42 million recordkeeping penalty against Ford for failing to produce backup documents supporting certificates of origin from a Mexican supplier. For background see this earlier post.

Earlier today, and despite winning a preliminary ruling, CBP agreed to settle the case for zero penalty from Ford. The settlement is done and a stipulated dismissal has already been filed with the District Court. According to industry sources, the only statement the government has made regarding the substance is that it is re-evaluating is policy regarding NAFTA recordkeeping.

This is tremendously good news for NAFTA importers. As I have said previously, we all owe Ford a debt of gratitude for fighting the good fight. Ford's counsel deserves congratulations as well.


Christie A. said...

Hi Larry,

I am curious to know what your opinion of this is...§iontree=3,21&itemid=279

Larry said...

What Christie refers to is the NAFTA Accountability Act. I blogged about this earlier in this post. I'm not a big fan of the bill, at least based on what I have read so far. It seems that NAFTA is becoming the Willie Horton of this campaign cycle. As I said in my earlier post, the U.S., North American, and world economies are complicated and intertwined. The NAFTA is not to blame for much of what is invoked in this bill as an appropriate measure for success.

I'm not an inside-the-beltway guy, but I doubt this will get too far into the legislative process.

Jane P said...


I'm just curious if you see down the road a-ways any possibility of recordkeeping violation (which as this case shows Customs is willing to make staggeringly costly to the trade) being mitigat-able in a prior disclosure-type way. We know they aren't in the 1592 section therefore not diclosable in that way - do you think as Customs focuses on this area they will also develop a way for companies to come clean about a1a doc violations - and does inclusion in the ISA make extra sense from this point of view (e.g., protection for recordkeeping in particular...)

Thanks - and liked your viewpoint of NAFTA being exporter-oriented from early October....

Larry said...


Interesting question. I'm not sure there is much of a policy advantage to CBP for recordkeeping disclosures. In the 1592 context, CBP gets the money it is owed when the importer does a disclosure. In recordkeeping, there is no way to make the government whole because the importer apparently cannot produce the records.

As to mitigation, some circumstances merit mitigation of a recordkeeping penalty. You know, fires in the record facilities, third party failures, etc. Also, recordkeeping penalties are supposed to be set based on the degree of compliance compared to the total number of importations, importer cooperation, etc. Mitigation is permitted under 19 USC 1618.

Hope that helps. Best to your colleagues.