Friday, July 30, 2010

Reminder from BIS: We Don't Do Jurisdiction

In one my rare forays into blogging on exports, I will point out this reminder from the Bureau of Industry and Security. This interim final rule will amend the Export Administration Regulations to clarify that CCATS determinations by BIS only tell the applicant the relevant ECCN for the product. Having it classified for export purposes, however, does not mean the product is actually subject to the EAR. Currently, BIS does not issue jurisdiction rulings as the Directorate of Defense Trade Controls (DDTC) does for ITAR.

The Federal Register notice solicits comments on this rule. Perhaps the thing that might be valuable to tell BIS is that it should start issuing jurisdiction rulings. Maybe this will be moot if and when the export regimes are merged and there is a single list administered by a single agency. Wouldn't that be nice?

Monday, July 26, 2010

News slap: One Really Small Step

PETA complains to CBP after the death of a CBP dog in a hot CBP car.

Aphids stopped at border.

US stops computers bound for Cuba from Canada.

Customs and Border Protection employee stole Neil Armstrong's declaration and tried to sell it. For those of you under 30, Neil Armstrong is kind of big deal. He used to be more famous than Justin Bieber. More here.

A couple cases from the Court of International Trade:

Delphi Petroleum, Inc. v. United States, denying Delphi's effort to force the United States to pay attorney's fees following the decision on the merits. The Court denied the motion.

Ford Motor Company v. United States, is a somewhat confusing case involving protests from the lack of explicit liquidation of reconciliation entries. The question has to do with whether the liquidations were extended or whether they should be treated as having liquidated by operation of law. In the end, the Court found that the case as presented was either not properly before the Court or not an appropriate venue in which to address the merits. What it comes down to is that for liquidated entries, the proper way into the Court of International Trade is via a denied protest and 28 U.S.C. sec. 1581(a). For unliquidated entries, it might be proper to get into Court via the Court's residual jurisdiction under 28 U.S.C. sec. 1581(i). But, if liquidation is still in the offing or might actually have happened, it is better to go the denied protest route.

Sunday, July 25, 2010

Passing this on . . .

I rarely get what amounts to a press release, but I recently received one from the University of Minnesota regarding a symposium on international economic law. I consider myself a workaday administrative law practitioner. I tend to find these things to be more theoretical than practical and I am all about being practical. nevertheless, there are people interested in these things, so I will pass it on.


The International Economic Law Interest Group of the American Society of International Law wishes to solicit paper and panel submissions in connection with its Biennial Conference at the University of Minnesota from November 18-20, 2010.  The conference is a wonderful opportunity to collaborate with a broad cross-section of international economic law specialists and hear from prominent keynote speakers including Professor Jose Alvarez at NYU and WTO Appellate Body member Ricardo Ramirez (Mexico).

Under the theme of International Economic Law in a Time of Change: Reassessing Legal Theory, Doctrine, Methodology and Policy Prescriptions, the Interest Group has issued the following call for papers:

“The start of the second decade of the twenty-first century is witnessing a confluence of events affecting international economic law that calls for re-evaluation. The international context has radically changed. Most analysts contend that we are shifting toward a multi-polar world in light of economic transformations in China, India, Brazil, and other developing and transitional countries, coupled with economic stagnation in the United States and Europe which are beset by a financial crisis and embroiled in foreign wars and security concerns. These developments have arguably complicated international economic governance, yet other factors–such as the current financial crisis–press consideration of new forms of international economic governance, such as the G-20. Global economic interdependence, exemplified by global production and supply chains, calls for sustained attention to international economic law and institutions.

With this backdrop, the November conference will organize sessions that address the full range of international and transnational economic law. We encourage scholars to submit papers or panel proposals related to trade, investment, international financial regulation, transnational private law, and development law, as well as their intersection with social regulation such as over global warming, labor rights and consumer safety. This call for papers welcomes submissions that provide new analytic frameworks, reassess legal theory, evaluate developments in legal doctrine, engage in empirical analysis of the way international economic law operates, and provide guidance for policymakers, regulators and adjudicators in this time of international economic change.”

Abstract submissions of a maximum of 300 words are due by July 30, 2010 and should be emailed to 2010IELconference@gmail.com.  After a blind review process, selection decisions will be made in September.  

The conference is co-sponsored by the University of Minnesota Law School and the Minnesota Journal of International Law.  The Journal anticipates publishing some of the conference papers as part of a special symposium issue.  Questions about the conference should be directed to the Interest Group Co-Chairs, Susan Franck (franck@wlu.edu) and Greg Shaffer (shaffer@umn.edu).  

Tuesday, July 20, 2010

Monkey Business

It has been a while since I reported on the nastiness that is exotic animal smuggling. Here is a story from the BBC about a man arrested in Mexico City for smuggling titi monkeys from Peru. He had them rolled up in socks under his clothing, to protect them from having to be x-rayed as cargo. He had 18 monkeys with him, two of which had died when he was arrested.

Thursday, July 15, 2010

APHIS Wins One

Sometimes, interesting court decisions come from someplace other than the Court of International Trade or Federal Circuit. In this case, it is the Second Circuit.

In Natural Resources Defense Council v. Department of Agriculture, the NRDC, California, Connecticut, and my state of Illinois sued the Department of Ag over its implementation of regulations regarding imported solid wood packing materials.

If you are event tangentially involved in international logistics, you know that wood packing materials have been identified as a vector for plant pests entering the United States. Emerald ash borers and Asian longhorn beetles have destroyed trees throughout the U.S. and in my neighborhood. Given the danger posed by these and other pests, the Animal and Plant Health Inspection Service decided to regulate the importation of SWPM. The issue in this case is whether APHIS properly considered the alternatives, including the possibility of a phased-in complete ban on SWPM.

The legal basis for this challenge is two fold. First, the National Environmental Policy Act requires that a federal agency prepare an environmental impact statement prior to taking any major action affecting the quality of the environment. The plaintiff's alleged that APHIS' EIS was inadequate in that it failed to give full consideration is a phased-in ban on SWPM. The second basis for the case is the Plant Protection Act, which requires Ag to facilitate trade while also working to reduce the risk f the dissemination of plant pests.

Like most administrative law cases, this one does not turn on whether APHIS' decision is correct or even the best alternative. Rather, the sole issue before the Court was whether APHIS had properly followed its mandate to consider the environment and trade. It appears the main complaint was that APHIS did not give enough thought to and discussion about the notion of a phased-in ban. The details that I am skipping over relate to the availability of substitute materials, the fact that the fumigating chemicals used on SWPM are ozone-depleting, and the relative level of development of our trading partners.

The Court held that APHIS provided sufficient consideration to the relevant factors and adequately explained them in its various Federal Register notices. Consequently, the Court affirmed the decision of the district court and upheld the current regulatory standards.

Speaking of which, importers need to know these rules. Imports that are not compliance with the standards may result in liquidated damages, seizures, and redelivery notices. None of which is going to make you happy.

DNA in the CIT

Remember the scene in Jurassic Park in which the characters watch a cartoon Mr. DNA explain how the bad guys sequenced bits of dinosaur DNA taken from amber-preserved mosquitoes then strung the strands together to form the full genome of the various soon to be rampaging Triassic (not Jurassic) critters? If you do (or if you are familiar with the phrase "polymerase chain reaction"), you will understand what was at issue in Applied Biosystems v. United States.

If not, or if you just don't care, you will be happy to know that this is a straight-forward classification case. The issue was whether thermal cyclers used in gene sequencing should be classified as machinery, plant or laboratory equipment for the treatment of materials by a process involving a change in temperature. The alternative advanced by the plaintiff was classification as automated regulating or controlling instruments.

If Mr. DNA were explaining this, he would say, "What it comes down to is whether this machine is the toaster or the thermostat!"


The Court of International Trade concluded that the controller is conceptually distinct from the device it controls. In this case, the imported device changes the temperature of the DNA in solution. The regulator facilitates that. Since the product is not fully described as a controller but is fully described as lab equipment for treating materials by a change in temperature, the latter description wins and so does Customs and Border Protection.

I hope that someone reestablishes a secure perimeter around the Court of International Trade by getting power back to the electric fence. Otherwise, the Clerk of the Court might have to go T-Rex hunting in Foley Square. Personally, I would pay good money to see a pterosaur perched on the Woolworth Building.


Tuesday, July 06, 2010

A Material Question

A problem with which I have been grappling lately is how to advise clients on when raw materials are processed far enough to be considered unfinished articles. Sometimes it is a tough call. In Canex Int'l Lumber Sales v. U.S., the Court of International provided a good review of the law.

The issue in Canex was whether certain sawn lumber was classifiable as wood in 4407 or as builders' joinery in 4418. In other words, is the merchandise wood, a basic material, or parts suitable for use in assembly. To cut to the chase on Canex, Customs and Border Protection won this one. The goods are not advanced enough to be considered dedicated to use in trusses (the apparent intended purpose) and the documentation did not show how the individual pieces would be assembled into a truss.

More relevant to my question is the general discussion on differentiating materials from articles. On this point, I will rely on the text from the decision:

Heading 4418, HTSUS covers “[b]uilders’ joinery and carpentry of wood.” It “applies to woodwork . . . used in the construction of any kind of building, etc., in the form of assembled goods or as recognisable unassembled pieces (e.g., prepared with tenons, mortises, dovetails or other similar joints for assembly).” Explanatory Note 44.18, at 686. “[U]nassembled pieces must be more than just basic material generally suitable for use in the finished article.” Millenium II, 558 F.3d at 1329. “To qualify as recognizable unassembled pieces of particular articles, the subject merchandise must be dedicated solely or principally for use in those articles.” Id. (internal quotation marks and citation omitted); see also Finn Bros. v. United States, 454 F.2d 1404, 1406 (CCPA 1972) (“[I]f an item in its imported condition has been so far advanced beyond the stage of materials as to be dedicated to and commercially fit only for use as a particular article, it is properly classifiable, albeit in an unfinished condition, under the eo nomine designation for that article.”). Additionally, “if the item as imported can be made into multiple parts of articles, the item must identify and fix with certainty the individual parts that are to be made from it.” Millenium II, 558 F.3d at 1329 (internal quotation marks and citation omitted); see also Millenium I, 2007 WL 1116148, at *3 (holding that unassembled pieces must be “discernable as pieces of specific product structures, not just ‘the making of [the products] in the abstract’ (quoting Bendix Mouldings, Inc. v. United States, 388 F. Supp. 1193, 1194 (Cust. Ct. 1974)).

That is all well and good. The hard part is applying that law in the specific context of the HTSUS. What happens, for example, to rubber parts of machinery in light of the note to Section XVI excluding articles of Chapter 4016 (certain rubber)?

The rule states that the Section does not cover: "Transmission, conveyor or elevator belts or belting, of plastics of chapter 39, or of vulcanized rubber (heading 4010); or other articles of a kind used in machinery or mechanical or electrical appliances or for other technical uses, of vulcanized rubber other than hard rubber (heading 4016) . . . ."

Does that mean that no article of 4016 rubber for use in machinery, no matter how far advanced or how dedicated to a specific use can ever be classified in Section XVI? Given that 4016 is a basket provision only loosely describing merchandise, it seems wrong to not have the more specific parts provision in Section XVI apply.

What if the rubber article is so far advanced that it is not only a part of some Section XVI article but is actually an unfinished, essentially complete example of the Section XVI article? Does GRI 2(a) trump the Section Note?

Obviously, it does not. The Section Note is applicable via GRI 1, which has precedence over GRI 2(a). So, that is not the answer to this problem. Similarly, one can never get to comparing relative specificity if GRI provides the correct classification. It would seem that the Section Note works to move all articles of 4016 out of Section XVI, no matter how advanced or dedicated to use they may be.

Still, at some point, applying GRI 1 would, in my view, result in rubber articles remaining in Section XVI. That would be when the article is not "used IN machinery" but IS machinery or is an essentially complete but unfinished machine. I'm not sure there is a real example of this other than the one I am contemplating for work, which I will not discuss here. But, as a law school hypothetical, assume there were a pump of some kind wholly made out of rubber. Simple pumps like that are often used on machines with small engines as a means of priming the engine to start. That pump is, I think classifiable as a pump in Section XVI, not as a 4016 other article of rubber because it is a machine in and of itself, rather than being used in a machine. I would venture that the same applies to a nearly complete rubber pump for the same reason, plus GRI 2(a).

Give me feedback on this. Am I off base? Seriously, I need to know.

Thursday, July 01, 2010

The Elena Kagan Hearings

What I want to know is: Where was Lindsay Graham on Passover?