Thursday, May 31, 2007

Cool Surface Technology

This new technology from Microsoft (as well as the Apple iPhone) is about the coolest user interface I've seen in a while. Looks like something from a dozen different sci-fi movies including Minority Report.

Tuesday, May 29, 2007

One Last Thing


I am trying to get more posts onto the blog. It would be easier if I were not buried in cicadas.

Here is my front door in the morning. The black spots are all cicadas. That was Monday. It was twice as busy this morning.

Here is the ornamental grass in front of my house. Each one of those red-eyed beasts is about an inch and a half long. When they start buzzing, it is going to sound like a convention of chainsaw artists around here.



Counterfeit Progress

Just as Customs and Border Protection announced progress with China on the sticky issue of counterfeit goods, Michael Tonello wrote at the Huffington Post an ode to designer brands and, by implication, the allure of the counterfeit.

The U.S.-China agreement seems to be little more than an information exchange. Still, positive steps on this issue are important for many U.S. based companies that depend on the exclusivity of their brand or the novelty of their technology.

Tomb Raiders

NPR ran a series on the traffic in illicit antiquities. It is an interesting look at the international market for archaeological pieces.

Customs and Border Protection is responsible for interdicting and seizing this merchandise when imported without legal authority. The US has 11 bilateral agreements designed to protect so-called cultural property of archaeological, ethnological, or cultural significance. The US did this pursuant to the UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property. The US implemented this convention through the Convention on Cultural Property Implementation Act. Here is a handy chart showing the status of the agreements. Other protection is afforded under the
Pre-Colombian Monumental, Architectural Sculpture or Murals Act of 1972

For its part, Customs has published an Informed Compliance Publication on the topic.

I've always been fascinated by this sub-specialty of customs law. It strikes me as one of those rare areas of customs law where the stakes are something other than money. On one side is a country trying to reclaim or preserve its cultural heritage. On the other side, in the best case, is a museum that acquired a piece in good faith and possibly generations ago. In the worst case it is an unscrupulous collector. In the case of the museum, it is not immediately clear who has the moral high ground. The NPR story uses a good analogy. Suppose someone made off with the Liberty Bell and it later turned up at an auction in Japan or Russia. That is kind of what Peru claims happened when Inca artifacts were stolen from Machu Picchu or other sites.

And, no post on Tomb Raiders would be complete without this link.

Friday, May 18, 2007

Oh Canada! Land of AMPS


Yesterday, I spoke at a CBA event. Normally, when I go to the CBA, I am visiting the Chicago Bar Association. This event, however, was in Ottawa and it was the Canadian Bar Association. The program was on Best Practices Before the CITT (the Canadian International Trade Tribunal).


I spoke on two panels: Export Controls and Penalties. The export piece was fun because I was there to give a very short presentation essentially laying out the U.S. governmental parties involved in export controls. I sounded like something from the Jumbles: BIS at DOC, DDTC at State, OFAC at Treasury. Make sure you confirm the ECCN from the CCL and determine whether your product might be on the USML. You'll need a Schedule B for the SED although you can file electronically under AES. Don't mess up or you could get a call from BIS, CBP, ICE, or the FBI. On a substantive level, I was impressed by the level to which Canada has worked cooperatively with the U.S. to coordinate its export controls to prevent Canada from becoming a platform for re-exports.


In the penalties panel, I ran through the concept of reasonable care; the penalties for negligence, gross negligence, and fraud; and prior disclosure. The interesting thing in this session is how very different the Canadian Administrative Monetary Penalties system is from the U.S. law. Canada has built a laundry list of specific violations, called "contraventions" in Canadian. Each contravention is assigned a penalty amount. Some penalties are staged for first, second, and subsequent offenses. Others are "zero rated," which amounts to a warning.

A Canadian official who spoke on the matter said pretty firmly that Canada considers its AMPS program to be based on absolute liability. In other words, it does not matter how hard the importer tried to get it right, a contravention results in liability. The grounds for appeal seem to be very limited and mitigation is not often granted. On the other hand, the penalties cap out at $25,000 Canadian.

In the U.S., the a violation occurs whenever an importer provides incorrect material information in relation to the entry of merchandise through the failure to exercise reasonable care. That means that an importer can always assert the defense of "Look, I tried as hard as anyone to get it right. Mistakes happen." Word on the street is that Customs and Border Protection has cancelled penalty cases where the importer showed a valiant effort at compliance. Personally, I haven't seen that.

I've written about this before, but it bears repeating: Evidence of reasonable care includes:
  • Documented policies and procedures for compliance
  • Responsible individuals have training
  • Responsible individual have access to relevant materials such at the Customs Regulations, HTSUS, and Customs Bulletin
  • Seeking Customs rulings
  • Reliance on outside experts such as me, my firm, or some riskier lawyer, accountant, or broker

The question came up from the audience, which system is worse for the importer? Tough call. Absolute liability really does not give importers much opportunity to avoid the imposition of a penalty. Both systems have a means of correcting entries where the importer discovers the violation before CBP or the Customs and Border Services Agency. U.S. penalties routinely get a lot bigger than $25,000. Over all, I have to say that for big companies, the lower liability of the Canadian system might look appealing. From the perspective of a lawyer who needs something to argue about, I like the malleability of "reasonable care."

Either way, I know that I like Ottawa. I've been up there a few times and have always found it a pleasant city to visit. The pictures are of Parliament House and the nearby canal and locks. My only complaint: clearing U.S. Customs in Ottawa was painfully slow given the relatively low number of people being processed.

Thursday, May 10, 2007

New Stuff

Yes, I am still here. Swamped at work. You've heard it all before.

Here are a couple interesting things that crossed my desk recently.

First, HQ W968392 asks the fascinating question of whether a stone "Ushabti of Neferhotep," dating from 1479-1400 BC, are properly classifiable in heading 9703 as original sculptures, 9705 as a collectors piece of historical, archaeological or ethnographic interest or in heading 9706, HTSUS, which provides for antiques of an age exceeding one hundred years, might be more applicable. Good question.

It turns out that because this was a relatively common type of object in ancient Egypt, it lacks the quality of artistic originality necessary for 9703. Also, while it is clearly an antique, Customs held that it was better described as a collectors piece of archaeological or ethnographic interest.

It must be late, because for some reason, I find this fascinating. I would have loved to have been at the meetings with the client, Sotheby's, and Customs.

Second, someone read Tradewind Farms and let me know if I am crazy. It seems to me that the Court of International Trade just made it impossible for anyone to protest Customs' failure to treat something as classifiable in an actual use provision unless the claim was made at the time of entry or pursuant to 19 C.F.R. § 10.134. The reasoning seems to be that there are regulations for making these claims and they need to be followed.

Except that they don't. If an importer fails to make a GSP claim at the time of entry and can later prove that GSP applied, it can file a protest. Same goes for 9801 and 9802. Again, it is late and I may be missing something. Is there something special about actual use provisions that prevents Customs from correcting a liquidation based on proof of actual use? Would a Supplemental Information Letter work for an unliquidated entry?

Lastly, I have started riding my bike to work again. I hope to do that about three times a week. Its good for me, its good for you too because my carbon footprint is decreased. Except that my train still runs without me, meaning I waste that fuel by creating an empty seat. On the other hand, today was my third bike commute and I am aching all over. And, I only rode home today. Go figure. Some good pictures of Chicago area biking are here and here.

Wednesday, May 02, 2007

Seminar Question

On Monday, I spoke at a Chicago Bar Association CLE event on customs compliance. It was one of the more fun sessions in which I have participated. I knew most everyone on the panel, the moderator did a good job keeping us in check, and the topic was pretty basic so prep was easy. One question, however, was not so basic.

The question was asked, "Does the value of an assist include the duties and brokerage fees paid on import to the country of production?"

Think that over for a second. It initially stumped the whole panel and we all agreed that we had never been asked that question.

At a break, we huddled and reached the following very lawyerly conclusion: It depends.

Remember that an assist is something of value given buy the buyer to the seller for use in the production of the imported merchandise. Classic examples include tools, dies, and molds. Most people know that the shipping cost is included in the value of the assist. The status of duties and brokerage is a perfectly natural question. Except that it is not.

If you think it through, in few circumstances will the buyer pay the duties and brokerage fees associated with the importation by the producer. More often than not, those expenses will fall to the producer who will, one would hope, recoup them in the piece price. Thus, duties and brokerage are not likely to be provided by the buyer to the seller and, thus, are not included in the value of the assist.

Two questions arise out of that analysis. First, what if the producer pays the transportation? Then there is no cost to the buyer and, again, the seller should be including that expense in its piece price (or just eating it). Second, what if the buyer actually does pay the duty and brokerage (e.g., in a DDP transaction)? Those are costs the seller would normally have to bear and, as a result, would normally pass on in the piece price. Given that the seller did not bear those costs, the piece price is theoretically artificially too low. Thus, it would seem that the duty and brokerage expense covered by the buyer would be included in the value of the assist or separately identified as an indirect payment.

Does that make sense? It's an off the cuff analysis and I specifically reserve the right to change my mind in the right circumstances. Of course, when it comes to what appears in this blog, I always reserve that right.