They Must Love Lacey in DC

They can't seem to leave the Lacey Act alone. This was introduced February 24:

S. 462 Boxer: A bill to amend the Lacey Act Amendments of 1981 to prohibit the importation, exportation, transportation, and sale, receipt, acquisition, or purchase in interstate or foreign commerce, of any live animal of any prohibited wildlife species, and for other purposes.

So far, the text is not up on Thomas.

Don't get me wrong. I am a big fan of prohibiting the illegal trade in animals. I'm OK with the bill (at least with the title). It just seems like this is not a good time to be piling on the poor Lacey Act.

Hey Mexico: What's With The Trucks?

I know, renegotiating NAFTA is the talk of the moment. It was a campaign promise and apparently came up during President Obama's first foreign trip, which was to Ottawa. One issue that has never been satisfactorily worked out, at least from a legal perspective, is the trucking dispute. The agreement clearly lets Mexican domiciled trucks have full access to the U.S. market (and, therefore, to Canada). But, this has never been implemented. There have been pilot programs in fits and starts, but it has never become the law.

And, it still won't. H.R. 1105, the recently introduced omnibus appropriations bill effectively tries to prevent it again by prohibiting the use of funds in furtherance of the program. It's hard to find in the bill. Look at page 983, in section 136.

Here's my question: Does anyone in Mexico care about this? I understand that people on the U.S. side might have concerns as varied as job loss, safety, and environmental protection relating to more trucks on the road. Based on what I have read, I suspect many of these concerns are rationalizations aimed at protecting jobs, which is not an insubstantial concern. But in Mexico is there a constituency to push this? My guess is that there is not, otherwise they would be trying to enforce the dispute decision they already won (nod to Todd Weiler for the document). And yet, they thought enough about it at the time to want it in the agreement. So, there was some interest at some point.

Much like every episode of MonsterQuest, I don't have a conclusion here. Just some theories and a limited amount of time and money to spend contemplating them. I would like a cool computer generated graphic of a Mexican truck driver to spice up this post, though. Maybe Loren Coleman (of whom I am a big fan) can help me on that one. In the mean time, the rarely sighted Truckerisis Dieselamo Mexicanis remains a cryptid north of the Rio Grande.

Side note: I propose to start using "MonsterQuest" as a synonym for "inconclusive," "unfinished," or "impossible." For example, "Mrs. Jones, the results of your pregnancy test were a MonsterQuest." Or, "Don't bother looking for that golf ball, its a MonsterQuest." I hope they take that up on The Skeptics Guide (of which I am also a big fan, go figure).

Byrd Part I: The Majority

SKF USA, Inc. v. Customs and Border Protection is a hefty opinion, so I am going to blog it in two parts. Here is the majority opinion.

The issue is whether the Court of International Trade properly held that the Continued Dumping and Subsidy Offset Act of 2000 is unconstitutional. The Act, more commonly known as the Byrd Amendment, provides that petitioners and interested domestic producers who supported the initiation of a dumping or countervailing duty case may receive collected AD or CV duties in an amount equal to their expenses associated with the investigation.

The plaintiff in this case had not supported the petition. Nevertheless, it sought "Byrd money." Customs denied the request on the ground that SKF did not qualify under the terms of the statute. The Court of International Trade made two holdings. First, the requirement that a domestic company support the petition violates the equal protection clause of the fifth amendment. Second, that the unconstitutional support requirement could be severed from the remainder of the Act. According to the CIT, when the support requirement is removed, the statute permits SKF to recover.

Before we get into the Federal Circuit's analysis. Let me address a comment to a previous post. Yes, I understand that there is lots of money involved in this case. There are lots of potential plaintiffs out there waiting to see what happens. So, it was an overstatement for me to call this issue "academic." On the other hand, the Byrd Amendment was repealed effective October 1, 2007. So, the issue is not likely to arise again. This might be a one-shot issue, but it is more like a cannon than a .22.

On appeal, SKF pursued two constitutional arguments. First, that the support requirement violates the equal protection clause. Second, that the support requirement violates the first amendment by compelling commercial speech.

The first question to be addressed was whether the CIT had jurisdiction. The government and a U.S. interested party argued that the action was time barred. There were several theories presented on when the two-year statute of limitation began to run. The Court treated the timeliness question was jurisdictional and held that the earliest point at which SKF could have filed its action was when the 2005 notice of intent to distribute funds was published. Prior to that, it was not certain that a SKF could have made a claim for funds. Based on this date, the action was not time barred.

.

On the merits, the Federal Circuit first considered the first amendment argument. It conducted its constitutional analysis with the understanding that courts are to construe statutes as constitutional whenever possible. Next, the court found that it must determine the purpose of the Byrd Amendment to properly review its constitutionality. If the purpose is to suppress speech, the law will have to survive stricter scrutiny.

The Court agreed that the primary purpose of the Byrd Amendment was to compensate domestic parties for injuries resulting from dumping. However, the fact that only domestic parties who supported the petition are compensated indicates a possible subsidiary purpose of rewarding those companies that express a certain point of view. The government disagreed and argued that the support requirement is only used as a means of identifying those domestic companies that were injured. The government had previously argued in a WTO proceeding that the statute was not intended to compensate injured parties.

Despite the government's position, the majority held that the constitutional construction of the law was that it was intended to reward those parties that assisted the government by supporting the initiation of the investigation. Remember, it is a necessary step in the initiation process for there to be support from the domestic industry. This is the 25/50 rule my students love so well.

Having established the purpose of the Byrd Amendment, the Federal Circuit noted that opposing the initiation of an antidumping case is speech protected by the first amendment. Therefore, the question is whether the government's purpose and the means used to further that purpose are appropriate. To be constitutional, the regulation imposed by the law (1) must be in furtherance of a substantial government interest, (2) must directly advance that interest, and (3) must be no more restrictive than necessary.

The Court held that the Byrd amendment meets this test. The enforcement of trade laws is a substantial governmental interest. The rewarding of private parties who assist in that effort directly advances that interest. Finally, petitioners and those supporting the petition provide substantial support to the government through questionnaire responses, briefs, and hearings. While other domestic parties may provide some support, it is generally less. Because the law does not require a perfect correlation between support and reward, the Court held that the Byrd Amendment was not overly broad. Thus, it was constitutional.

It follows from the first amendment analysis that there is a legitimate purpose behind the law. It also follows that the law is rationally related to the governmental purpose. Thus, the law passes equal protection muster as well.

That's the majority. I need to quite now because I am having flashbacks to law school. It is not pretty. Susan Conner, if you are out there, please feel free to grade this blog post as if it were in a blue book.

Peru Instructions

I've been asked a couple times about the process for making claims for duty-free treatment under the Peru Trade Promotion Agreement. Customs and Border Protection has now issued guidance. The first document is a memo doing a good job of summarizing the terms of the agreement with respect to rules of origin. The second document sets out the data elements necessary to make the claim.

One thing to ponder: Why is the rule on sets so strict in this agreement? Talk amongst yourself.

Calling Samuel L. Jackson

Almost snakes on a plane.

In my continuing fascination with small animal smuggling, I saw this article about a 24 year old man stopped at the airport in Sydney, Australia trying to board a plan carrying 40 lizards and four snakes. At least he had the decency to put them in his luggage rather than his pants, as is often the case.

And, for those wonder, yes I will get to the Byrd decision. Keep in mind, though, that the thing has been repealed. So, the decision is largely academic.

Byrd Constitutional

What's with the dumping cases suddenly being interesting?

The Federal Circuit has reversed the Court of International Trade and held that the Byrd Amendment is constitutional. The amendment provided disbursements of antidumping duties collected to members of the domestic industry that supported the petition. In this case, the plaintiff argued that it was a member of the domestic industry and was entitled to disbursements despite having opposed the petition. According to the plaintiff, the requirement that a company support the petition violated its right to equal protection and to free speech.

Unfortunately, the decision is 81 pages long and I am not going to read it tonight.

Here is the link: http://www.cafc.uscourts.gov/opinions/08-1005.pdf

Consider this post a down payment on a future analysis.

Really? This is what we are worried about?

H.R. 1082. A bill to prohibit the importation for sale of foreign-made flags of the United States of America; to the Committee on Ways and Means.

Now, in the 111th Congress, a bill that has died in the last four congresses.

Details on Georgetown

Yes, I feel chastised by the comment to a previous post. Here are the details on the always excellent Georgetown Law CLE International Trade Update for 2009. Here is the brochure.

And here is the blurb:

Designed for both new practitioners and experienced trade and customs lawyers, the international Trade Update provides you with critical knowledge, skills and practice development ideas. This is a unique opportunity for you to spend time with experienced lawyers and government officials exploring the up-to-the-minute developments in international trade and customs law. Not only will you receive practical tips on how to help your clients solve complex problems, but you will analyze the projected trends for the coming years through plenary and specialized break-out sessions.

Commissioner Basham to Retire

News flash:

The Commissioner of Customs and Border Protection has announced his intention to retire at the end of the month. Commencing March 1, current Deputy Commissioner Jayson Ahern will be Acting Commissioner. Here is a JOC article.

What qualities do you want to see in the next Commissioner?

Toshiba Tablet Trouble

I have had a tablet PC for a long time. It is an aging Toshiba M200 and I am quite happy with it. So happy, in fact, that I would like to replace it with another tablet. I'd even get another Toshiba, but they are making it hard.

One of the great benefits of a tablet is that it is an easy way to end up with a dual monitor system. With the tablet closed, screen facing out, in its dock, it looks just like a flat panel display. Plug in another monitor, a keyboard, and a mouse, and you have a dual monitor system. I like keeping Outlook open on the tablet and my current work on the larger monitor. The dock also cleverly lets me pull the computer down to the table without disconnecting from the dock so I can mark up a document with the stylus.

As best I can tell, no tablet makers are manufacturing compatible vertical docks anymore. That means I can't do this trick and a new tablet is much less appealing. I saw a picture of an HP upright dock, but it apparently it's not for sale.

Am I wrong about this? Are there tablet users out there who can tell me where I can get new tablet that will dock to a port replicator in an upright position with the internal screen usable? This is very frustrating. I like my Toshiba, but if they have failed to recognize the utility in the upright dock, I'm happy to move on to another brand. Anyone from Toshiba want to explain this to me?

Laptop Searches: Signs of Change?

Just a quick note. This may be a sign of change at DHS. This comes from an internal draft letter regarding how DHS manages privacy issues. Among the issues discussed is searches of digital media by Customs and Border Protection (which is unnamed in the letter):

Border Searches and Seizures of Stored Digital Information. This is currently a highly visible and sensitive issue. While certain DHS components may have legal authority to conduct border searches, there is a significant difference between looking at paper documents and searching through the volume of digital information that can be carried by travelers. The Privacy Office should have a role in reviewing current policies and practices for searches and seizures of digital information and developing guidelines to integrate privacy protections into these processes.

That is exactly the kind of thinking about discretion I like to see. Legal authority to do something does not make it a good idea.

Eurodif, finally

Eurodif is a dumping case.  This is the Customs Law Blog.  Usually, I skip over the dumping cases.  But, this is the U.S. Supreme Court.  So . . . let's get to it.

The relevant facts are simple.  The importer "buys" low enriched uranium for money plus unenriched uranium.  The contract styles this as a service agreement by which the uranium is enriched and returned to the buyer.  The dumping laws apply to sales of goods and not to services.  So the issue is ultimately whether the dumping laws apply to this transaction.

The Commerce Department, (i.e., the "master of the dumping laws"), says it does.  The way Commerce sees it, the contract is for the sale of LEU.  Part of their reasoning for this is that the foreign enricher holds fungible uranium in inventory from a number of sources including uranium it owns. Further, the enricher has complete control over the process.  The Court of International Trade and the Court of Appeals for the Federal Circuit found that nothing in the contracts vested title over the uranium in the enricher and, as a result, both courts held the contract to be for services.  

Think about it this way, when you take you car in to be painted, you don't give the title to the body shop.  But, what if you could drop off your 1968 VW Bug for painting and, without any delay, drive off with a different freshly painted 1968 VW Bug?  What just happened, a sale or service?  The latter is kind of like what happened with the uranium.

The Supreme Court looked at this the way all good administrative lawyers do: 

The issue is not whether . . . the better view is that [the contract] is one for the sale of services, not goods.  The statute gives this determination to the Department of Commerce in the first instance, . . . and when the Department exercises this authority in the course of adjudication, its interpretation governs in the absence of unambiguous statutory language to the contrary or unreasonable resolution of language that is ambiguous.

In other words, this is a Chevron case and Commerce will be upheld if its interpretation of an ambiguous statute is permissible.  And, as often happens when Chevron is invoked, the Court found for the agency.

According to the decision, the agency may properly apply the ADD law beyond cash-only sales. Otherwise, importers could switch to barter and avoid the law.  Second, Commerce did not have to accept the premise that the uranium delivered to the enricher was the same LEU returned to the US.  In other words, it is a different freshly painted 1968 Volkswagen.  Further, the Court noted that the enrichment process results in a "substantial transformation," which indicates a sale.

So, the Supreme Court of the United States has unanimously spoken and held:

Where a domestic buyer's cash and an untracked, fungible commodity are exchanged with a foreign contractor for a substantially transformed version of the same commodity, the Commerce Department may reasonably treat the transaction as the sale of a good under § 1673.  We therefore reverse the judgment of the Federal Circuit and remand the cases for further proceedings consistent with this opinion.

Stimulus Update

This is a fast developing story.  It seems that the Senate has heard complaints from far and wide about the Buy American provisions put into the stilulus plan passed by the House.  Australia, for example, does not want to be shut out of providing the steel for new bridges and roads.  Canada has pointed out that NAFTA includes a government procurement provision to prevent this kind of thing.  And, of course, there is that pesky WTO Agreement on Government Procurement.

So, the Senate has added language stating that the Buy American provision should be applied consistent with our international trade obligations.

Here is the amendment as provided to me by my faithful crack staff in DC:

(Purpose: To clarify that the Buy American provisions shall be applied in a manner consist with United States obligations under international agreements)

On page 430, strike lines 7 through 12 and insert the following:

(d) This section shall be applied in a manner consistent with United States obligations under international agreements.

Here is an article from the Canadian perspective.

Holy See, Batman!

The Fish & Wildlife Service has announced the list of countries that have not properly documented their Competent Management and Scientific Authorities under the Convention on the International Traffic in Endangered Species (CITES).  As a result, CITES documentation from these countries will not be accepted.

I was somewhat bewildered to note that the Holy See is one such country.  Mainly, I wonder what endangered species might be roaming around what, at least in my mind, is a neighborhood in densely urban Rome.  The pigeon?  The rat?

No doubt the Holy See has no such species and, therefore, can justifiably ignore this requirement. But, the whole thing is odd.

So, I checked the official web site of the Holy See.  Keep in mind, I have very little practical experience with anything related to the Pope.  So, I was quite surprised to see the Pope's homepage includes a link to "Vatican Secret Archives."  I have not yet had the opportunity to browse the secrets, but I hope it includes things such as the current addresses and photos of any vampires living in my neighborhood and the most effective means of dispatching them.  Any good info on the fate of my possibly immortal soul would also be useful.

Lots to Blog

I'll get to Eurodif today.

Reminder that I'll be speaking at the Georgetown CLE International Trade Update March 5-6.

Substantively, the USTR is asking for comments on U.S. participation in a Trans-Pacific Free Trade Agreement.  Are we suffering free-trade agreement fatigue yet?  Is American industry clamoring for a new compliance regime to access trade with our neighbors around the pacific?  This proposed agreement would include:

• Singapore
• Chile
• New Zealand
• Burei Darussalam
• Australia
• Vietnam
• Peru

Note that we currently have agreements with Singapore, Chile, Australia, and Peru.  So basically, this seems to me to say: "Doha is dead.  We are going it alone."  That is not really news.  

I do wonder whether the WTO can survive being continually undercut by the rapidly growing number of bilateral and regional trade agreements.  As of January 2005, there were 310 regional trade agreements notified to the WTO pursuant to GATT 1947 Article XXIV.  There have been a number since that time.  According to my colleague Prof. Ralph Folsom of the University of San Diego, the lone country on the planet without a regional or bilateral trade agreement is Mongolia.  See the handy WTO list here.

What is the value of WTO membership and most favored nation status, if Article XXIV lets regional agreements provide better market access and enhanced benefits to members?  Is a country better off with a bilateral agreement with its actual trading partners than a global agreement?  Tough question that I cannot start to answer.  It is something for the new administration and the USTR to think about.

For companies, a new agreement might provide valuable market access, protections for intellectual property rights, assurances to investors, and cheaper access for production materials.  For my part, it means another set of rules of origin, another certification process, and more enforcement by Customs and Border Protection.  At the detail level, this might be a great thing.  It's the big picture where things are troubling me.