Tuesday, March 22, 2011

Ford Wins on NAFTA Jurisdiction

Ford Motor Company got a win out of the Court of Appeals for the Federal Circuit yesterday. Here is the opinion. I am still in Phoenix for ICPA, so I need to be quick about this.

Basically, the case involved a 1520(d) post-entry claim. Ford made the claim within the one-year period but did not submit the required NAFTA certificates until after the one year period. The Court of International Trade held that the one-year period was jurisdictional, meaning that no claim could be made in the CIT to challenge Customs denial of the claim. This was based on two prior cases finding that the failure to make a NAFTA claim at the time of entry was not protestable.

The CAFC disagreed with the CIT on narrow grounds. Following a recent Supreme Court case, the Federal Circuit stated that the CIT had labeled the failure to submit certificates within the one-year period as "jurisdictional" incorrectly. Rather, the lack of certificates is an element of the claim to be considered by the Court but it does not deprive the Court of International Trade subject matter jurisdiction to review the denial of the protest challenging the denied 1520(d) claim.

This is a good result and makes sense. But, the CAFC was clear that it did not address the merits. That will go back to the CIT. Now the issue will be whether Customs properly denied the claim in the absence of timely certificates. That is a close question. The regulations provide the port with discretion to waive the need for some documents including certificates of origin. Given that, it appears that question will be whether Customs properly exercised its discretion when it denied the claim.

For that, we will have to wait and see what the Court says. Personally, I think it is important for Court to hear cases on their merits and to avoid placing technical obstacles in the way of litigants. But, the CO is not a court document. What is involved here is a technical obstacle to duty-free access to the U.S. That is going to get a high degree of deference from the Court. So, we will wait and see.

Thursday, March 17, 2011

Export Conviction Upheld

Compliance people all understand that export controls law is almost impossibly complicated. It is hard to image a more complicated set of laws, especially when criminal enforcement is involved. But, is the law so complicated that it is unconstitutionally vague? That is the question the Ninth Circuit Court of Appeals addressed in United States v. Zhi Yong Guo.

Just or background, for a criminal law to be enforceable, it must be written in a way that allows people to understand what is illegal and to adjust their behavior accordingly. When the speed limit is set at 55 MPH, we all know what is expected. If, however, the speed limit we written as "Travel as fast as is appropriate given the circumstances described in a chart published in the official regulations and assuming the Governor has not let his executive order expire," would you know how fast to go?

The Defendant in this case conspired with others to export FLIR thermal cameras to China without the required licenses. FLIR cameras are prized by the military, security services, industry, and cryptozoologists for their ability to image people, animals, and blobsquatches in the dark. Because of their obvious value to people who do not have the best interests of the United States at heart, the Commerce Department controls their export to much of the world. So, next time you mount a Yeren hunt, be sure to get a license to export the FLIR cameras.

In this case, the defendant argued that the export controls laws are too vague to be constitutional. The Ninth Circuit discovered what compliance people have always known: it is damned complicated but not impossible to figure out. So, the Court upheld the conviction. While I have no sympathy for the defendant based upon his bad acts, I do have some sympathy for his criminal defense lawyer. Apparently, he got so frustrated trying to figure out the Commerce Control List that he threw up his hands and said, "This can't be constitutional."

Protests Basics

Most importers and their customhouse brokers understand that an administrative protest is the vehicle by which importers challenge many (but not all) decision by Customs. Often, protests are treated as routine administrative documents. In a classification case, it is not uncommon to see protests that say "Customs classified the gizmo as X and it should be Y, so please reliquidate." That won't get you very far.

A good protest includes a fully developed argument for the correct classification and against the classification Customs applied. This is usually supported by technical drawings, photographs, and legal reasoning based on HTSUS language, court decisions, and rulings.

What is not always understood about protests is that they are jurisdictional documents. That means that often the only way to get into the Court of International Trade is to have a valid protest that clearly addresses the question presented to the Court. If a protest is untimely, does not cover the correct merchandise, or relates to some decision that is not subject to protest, you will get bounced from Court.

The issue in Estee Lauder Inc. v. United States was whether the protest sufficiently described the merchandise. The merchandise involved was several configurations of kits of cosmetics and accessories in and vanity bag. The question presented to the Court of International Trade was whether Customs and Border Protection properly liquidated the merchandise in several different tariff classifications rather than a retail set with a single tariff classification.

Customs denied the protest and Estee Lauder took the matter to Court. Once in Court, the Justice Department moved to have the case dismissed on the grounds that the protest insufficiently described the merchandise. Relying on an 1877 Supreme Court decision, the Court of International Trade started from the premise that technical precision is not required of a protest. Rather, a protest is sufficient if it shows that the challenge brought to the Court was, at the time of the protest, "in the mind of the importer, and that it was sufficient to notify [Customs] of its true nature and character. . . ." Further, the law requires that the Court should liberally interpret a protest in favor of it being sufficient to secure jurisdiction.

The government's argument was that the protest specifically described some configuration so of the cosmetics kit and, therefore, necessarily excluded other configurations. Thus, to the extent the importer sought judicial review, it can only be with respect to merchandise specifically described by the protests.

The Court agreed that it was difficult to make a precise comparison of the protests and the entry documents to determine which kits were at issue. At the same time, the Court found that the protest contained general language referring to cosmetic kits made up of "various components" and that this language was broad enough to notify Customs of the challenged classification decisions.

This seems like a close case, but I can certainly see how the Court could reach this conclusion. Considering the requirement that the Court of International Trade liberally construe protests, the broad reading of the protest seems appropriate.

The final, and interesting point, is that the Court also said that the lack of precision in the protest should not have presented an insurmountable hurdle for Customs. Rather, based on a prior court decision involving Saab cars, the Court found that Customs should have inquired of the importer to determine the scope of the question. This, I think, might be a slippery slope of sorts. My advice to importers is to not let this mean Customs must act on a sloppy protest by seeking clarification from the importer. There remains a level of specificity which the Court will require. As I have said in the past, you don't want to be the test case to determine how unclear a protest can be to still get judicial review. I also wonder whether Customs will agree that it has a duty to inquire. If this case, along with Saab, is read to create a new duty of inquiry on Customs, it is likely to end up appealed to the Federal Circuit.

So, watch this space.

Tuesday, March 15, 2011

See You at ICPA

Anyone headed to Phoenix for the ICPA meeting next week should come by to say hello. I will be hanging around the Barnes, Richardson & Colburn table (booth 16) between sessions. I am also speaking at a Monday session. Looking forward to seeing everyone.

Friday, March 11, 2011

Zune Humor


It's been a long while since I posted anything completely off topic, so bear with me.

I'm a Zune guy. Not the fancy HD version and not with functionality built into a Windows Phone. No, I have a first generation, 120 GB, big old Zune. It sounds great, holds more content than I will ever need, and works just fine. I do find that I like the convergence of having content on my phone. My upcoming choice between sticking with a Motorola Droid (which I love) and a Windows Phone is for another day.

The thing that people don't appreciate about the choice between MP3 players is the desktop side of things. Every time I have to deal with one of the iTunes accounts in my house, I am reminded how much better the Zune desktop client is than iTunes. For starters, while iTunes is entirely functional in its design, the Zune client has an appealing look to it. But, the main thing is that when I plug in my Zune, it syncs new content, removes played podcasts, and generally does what it is supposed to do without any fuss. I can't say that is true of iTunes. For whatever reason, I find I am often struggling with iTunes to get it to sync properly and, almost more important, to understand exactly what it is doing. We use our mobile devices for podcasts more than anything else, and maybe that is an area where iTunes is weak.

The Zune client also provides really good recommendations for content. It's "mix view," which shows how artists relate to one another, is also great. I don't use many of the social features built into Zune. I wish they would be adopted to the podcast market. It would good to find the small cohort of people who listen to both Skeptoid and This American Life.

The big problem I am having in iTunes is trying to isolate the iPad library from two iPod libraries all of which use the same credit card info in the iTunes store. The libraries keep ending up merged. And, since it is not possible to do what Zune calls a "reverse sync," I don't want to delete the libraries on the PC. I know there are third party utilities to sync from the iDevice to iTunes, but it seems to me that I should not need to do that.

Why am I thinking about this? One, I have recently had to replace the HD in my main home computer and have been wrestling with iTunes to get everything back to normal. Also, because Matt and Jessica from the Zune Inside Podcast alerted me to the recent appearance of Zune Man on Robot Chicken. In this episode, Steve Jobs is attacked by an angry Compact Disc Man and Zune Man.


UPDATE: It appears Microsoft will no longer produce Zune hardware. That probably makes sense. As you can see from the post above, it is the software that provides the advantage. See this story from CNN.

Wednesday, March 09, 2011

Laptop Search Snags Secrets

This, ladies and gentlemen, is why Customs and Border Protection searches laptops and other digital media. I'm not saying I agree with the current state of the law on this topic. I am particularly worried about maintaining privilege and the very person nature of some of the information on digital devices. But, there is a real law enforcement benefit to being able to do this. The article linked below is an example. Interestingly, the article says Customs got a search warrant to look at the laptop. That was nice, but probably unnecessary.

Defense contractor charged with stealing secrets on laptop - Computerworld

Monday, March 07, 2011

Making Headway Under CITES

The WCO is reporting good results from a transregional effort to stem the illegal trade in species protected by the Convention on the International Traffic in Endangered Species. According to the report the effort:

resulted in the seizure of more than 22 tonnes and 13 000 pieces of protected wildlife covering over 31 species, including one live monkey (“Macaca sylvanus” species), two dead monkeys (bushmeat of the Macaques species), 295 pieces of ivory (statues, jewellery, chopsticks, etc.), 57 kg of raw ivory, four rhino horns, 4 726 kg of pangolin meat, 323 seahorses, and one leopard skin.
Other products detained during the operation and still undergoing further investigation to determine their exact CITES status include: 5 300 kg of shark fins, 12 056 pieces of sea shells, 11 250 kg of sea cucumbers, 1 000 kg of eel intestines, and 50 kg of bushmeat.

Link: WCO - Press

Wednesday, March 02, 2011

Lacey Act Sentencing

Of all the things compliance people need to worry about, the Lacey Act is one of the craziest. Not that it is not an important and valuable law. As originally drafted, it was intended to prevent poaching of wild game and is used to enforce laws against trafficking in endangered species. But, the Lacey Act has been expanded to require that importers of plants and plant-based materials make a declaration of the botanical name of the species involved and that it was harvested and exported legally. This is very tough when the importer is several steps removed from the person who harvested the tree, for example. Consider a car company in Germany that uses lovely rosewood in its interior trim. The importer in the U.S. needs to know that the wood making up the trim was harvested legally. That is way outside the usual visibility of the supply chain.

That is just me grousing.

In a much more typical case, the Justice Department recently announced the conviction and sentencing of an antiques dealer who illegally importer sperm whale teeth and narwhal tusk. That is worth 33 months of prison time.

Since there is no copyright on government documents, I'll give you the highlights rather than a link.

WASHINGTON—David L. Place, owner of Manor House Antiques Cooperative in Nantucket, Mass., was sentenced to 33 months in prison for illegally importing and trafficking in Narwhal tusks and Sperm Whale teeth, the Department of Justice and the National Oceanic and Atmospheric Association (NOAA) announced today.
On Nov. 19, 2010, a federal jury in Boston convicted Place of eight counts including conspiracy, Lacey Act violations and smuggling for buying and illegally importing Sperm Whale teeth and Narwhal tusks into the United States, as well as selling the teeth and tusks after their illegal importation. The market value of the teeth and tusks illegally imported and sold by Place was determined to be between $200,000 and $400,000. One of Place’s co-conspirators, Andrei Mikhalyov of Odessa, Ukraine, pleaded guilty in federal court in Boston on related charges. Mikhalyov served a nine month prison sentence and was deported to the Ukraine.
Sperm Whales are listed as “endangered” under the Endangered Species Act (ESA), and are listed on Appendix I of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Narwhals are listed as “threatened” under the ESA, and are listed on Appendix II of CITES. It is illegal to import parts of either the Sperm Whale or the Narwhal into the United States without the requisite permits/certifications, and without declaring the merchandise at the time of importation to U.S. Customs and Border Protection and the U.S. Fish and Wildlife Service.
“The unlawful importation of endangered species is a serious crime that the Justice Department is committed to stopping,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “We will not tolerate the illegal market in endangered species such as the Narwhal and the Sperm Whale, and we will continue to prosecute those who violate the law.”