Customs Law

Sorry, I have to do this. I use Google Alerts to keep up on NAFTA related news. A large portion of what I get relates to the impending merger of the U.S., Canada, and Mexico into a North American Union and the resultant loss of the American way of life. Go to YouTube and search for video relating to the Security and Prosperity Partnership of North America. Watch videos relating to the North American Union. You will find the shameful and shameless Lou Dobbs fomenting fear and resentment with a non-story relating to the loss of America to a European Union-style North American meta-nation. This is all supposed to happen before 2010. If you watch these videos and read the equally uninformed web sites and blogs decrying the NAU, one thing quickly becomes clear: although it seems very important to them, these people do not have the faintest idea what sovereignty means. That includes Lou Dobbs who uses a position of media power to whip up strong emotions in well meaning patriotic American

International Trade Today, put out by Broker Power, Inc., ran an interesting piece on December 19 th in which Census sources indicated that the final rule on the mandatory use of the electronic Automated Export System (AES) for filing export documents remains a goal for the future. Census claims it will make a push for adoption of the electronic system in 2007 and will encourage large paper filers to make the switch voluntarily. More ominous, Broker Power reports that Census is going to begin "visits" to AES users. These visits will be used to determine the procedures in place at compliant companies and to "assist" those in need of compliance improvements. That assistance might include referral of violations to the relevant agency (i.e., Custsoms, BIS, or State). AES filing is something everyone will have to get used to--eventually. You may as well get started on a voluntary basis. At least look at the online training tools .

Here, have a NAFTA CO . The start of a new year is always exciting for the folks responsible for maintaining NAFTA compliance. Same goes for all the other new free trade agreements. That is because everyone is scrambling to get NAFTA certificates of origin from suppliers. Or, you might be one of those unfortunate people getting your arm twisted by a customer who wants a NAFTA CO yesterday. Here are a couple tips. At the end of this post, I'll give you a free tool to help. I promise. Tip Number 1: Tell Your Broker What is Going On Most NAFTA COs will expire December 31. If you are an importer who is used to claiming NAFTA status for your merchandise and don't have a replacement CO, you can't make the claim on January 1. Remember, NAFTA works on the assumption that you have a valid CO in your hand at the time of the claim. The other FTAs are a little different in this regard, but just go with me here. So, if you don't let your broker know that Acme Tools of Tijuana did no

So GSP survives for another 2 years with some new restrictions on Competitive Needs Limits. The restrictions are supposed to help the lesser developed of the beneficiary developing countries benefit from GSP as opposed to the larger economies like Brazil, India, and Thailand. One has to wonder how that is going to work. It seems more likely that if those countries lose GSP either for certain commodities or entirely, that trade will most likely shift to China rather than, say, Nepal, Columbia or Benin. I'll let my day job do the talking on this one: click here . Sorry for taking the lazy way out.

Update: I fixed this link so that it points to the relevant story. There is not much to say about this story . It is illegal to fail to declare merchandise entering the U.S. That includes live birds. And, if you go to Canada just to purchase 25 pounds of bird seed, expect to be searched.

An interesting case involving allegedly counterfeit goods came out of the CIT last week. The merchandise involved was PDA accessories including chargers and keyboards. Lots of goods issues were raised including one of my favorites: how is Customs supposed to determine the manufacturer's suggested retail price of counterfeit goods? Another issue was whether it is possible to counterfeit the "flying Windows" mark on a keyboard or--as plaintiff maintained--is using that mark protected "fair use" because it is effectively a requirement for all Windows based keyboards. Unfortunately, these meaty issues were not resolved because Judge Stanceu dismissed the case on procedural grounds. In summary, the Court found there was no valid protest of the exclusion of the merchandise. Thus, there was no jurisdiction under 1581(a). The Court also found no jurisdiction under 1581(i) because the restriction on the importation of counterfeit goods is not an embargo under 19 USC sec.

What the heck is this? It made its way to the produce department in my grocery store but it was not labeled. On top are kiwis; below are prickly pears. That ugly thing in the middle may or may not be edible. Whatever it is, I can almost guarantee that it is here as a result of international trade and I bet it passed through Customs.

Not with a bang, but with a whimper . Read about it via the CBC here . With a few more details, the story is this: The Coalition for Fair Lumber Imports had challenged the NAFTA Chapter 19 dispute resolution process as violating the U.S. Constitution. Unfortunately for this interesting claim, in October the U.S. and Canada entered into a settlement of the softwood lumber dispute. As a result, there was no controversy before the Court to decide and the Court dismissed the action as moot. You can read that here . Want to know why Chapter 19 might be unconstitutional? I have no idea what the parties to the actual case were arguing. But, I can tell you the argument most commonly raised. It has to do with the appointments clause of the Constitution. Article II, Section 2 gives the President the power to appoint "Judges of the supreme Court, and all other officers of the United States . . . ." This extends to all so-called Article III judges. Prior to NAFTA, antidumping

I was trying to post more regularly, and I will continue to do so. Today, I was traveling and not able to do it until now. At this point, I want nothing more than to vent and to invest in anyone working to perfect the Star Trek style transporter thus eliminating the need for cars and planes. It is cold here in Chicago. Thus, I was not at all happy when I found myself at 6:00 AM, in five degrees of cold, in the dark, on the side of the Edens Expressway (at Peterson for the locals), with a flat. I was headed to O'Hare to catch a 7:00 plane. This, it turns out, was not a pull-into-the-nearest-gas station-for-air-and-limp-to-the-airport kind of flat. No, it was a gaping-hole-in-the-sidewall, riding-on-the-rim kind of flat. I have no earthly idea what happened. There was no way I was driving on this thing. If I were either Starsky or Hutch, I would assume that someone shot out my rear wheel. Keep in mind, I was going to visit a client and was (as the client later put it), i

Customs just announced beefed up penalties for taking your merchandise before it is officially released. That sounds like a crazy thing, but it happens. Usually, this is the fault of the carrier or broker trying to look like a hero by getting the goods to you. After all, it is not often that the importer actually shows up at the port to pick up the goods. The penalties are pretty substantial. Here is the gist of it (which are published in the guise of "mitigation guidelines"): A first violation may be mitigated upon payment of an amount equal to the lesser of: 1) 75% of the domestic value of the merchandise, removed or delivered without authorization and/or examination, or 2) a flat sum between $10,000 and $25,000, as determined at CBP ’s sole discretion. A second violation may be mitigated upon payment of an amount equal to the lesser of: 1) 75% of the domestic value of the merchandise, removed or delivered without authorization and/or examination, or 2) a flat sum betw

I am treading lightly. It turns out, people read this stuff. The last time I talked about sec. 1625 and the revocation or modification of rulings or treatments, I got chewed out (with some justification). But, here we go again. This time, I freely admit I am writing this not out of a disagreement with the judgment but because I had a hard time piecing together what happened. Maybe you did too. In Motorola, Inc. v. United States , (slip op. 06-165), the issue was whether 900 bypass entries or pre-classification rulings constitute "treatment" for purposes of 1625. If so, Customs should have engaged in the 1625 notice and comment process before issuing a ruling changing the classification in a way unfavorable to Motorola. The Court does a very thorough, well-reasoned analysis finding that bypass entries are not a treatment triggering section 1625. The regulations (19 CFR 177.12(c)(2)(ii)) state the following: The determination of whether the requisite treatment occurred will be

Here is a link to another article on counterfeit enforcement. This really must be one of the hot issues in CBP these days. Oh, and a Happy Thanksgiving to all who care about such things.

I saw this story a few days ago and passed on blogging it. It came up in my automated Google Alert for CBP. Unfortunately, the first site on which I saw it reported was NSFW , if you know what I mean. Now, it is showing up in the news without illustrations. The story is simply that CBP arrested one Timothy Boham after he was questioned at the border in Arizona. Apparently, when questioned he volunteered that he was the subject of an arrest warrant in Denver for murder. Generally, that is an answer that will lead to your arrest. The reason the original link was NSFW is that Mr. Boham is an "actor" in gay pornography where he goes by the name Marcus Allen. Which, of course, makes me wonder whether this Marcus Allen has considered filing for trademark protection for his name.

Apparently, it is not just Ford that has come under scrutiny from Customs and Border Protection for NAFTA certification. Here is the text of a press release that pretty much speaks for itself: WASHINGTON -- U.S. Customs and Border Protection in San Diego has reached a $10 million settlement with Pioneer Speakers, Inc. for violations of Nafta rules and record-keeping requirements. The settlements are in lieu of fines totaling more than $46 million that accrued against Pioneer in two unspecified years, according to a Customs press release. Customs said that Pioneer provided false claims for preferential treatment for speakers imported from Mexico. The speakers were assembled from parts made in another country, so do not qualify for Nafta duty preference. Pioneer also failed to keep proper records on the imports, Customs said. A million here, a million there, pretty soon these penalties get to be real money. Like so much else in this business, there has got to be an interesting story behi

Looking to pick up a fake Rolex on your next trip overseas ? Careful. Customs is looking for you. Well, really they are looking for larger quantities, but you get the point. Here is an article posted by the State Department on the increased international attention being paid to counterfeit merchandise. The article says that seizures have doubled since 2001. I am going to speak on this topic at John Marshall on Nov. 30. Here is the brochure . If you are smuggling, don't assume you won't come under suspicion just because you look like a respectable, non-threatening civilian. That's probably what 60-year old Carmen Grado Franco thought. At least up until she was busted at the port with almost 200 pounds of marijuana and a bit of cocaine.

The USTR announced yesterday (11/14/2006) a WTO Appellate Body finding that the EU fails to administer uniformly its customs laws with respect to liquid crystal display monitors. While this might seems like a narrowly focused issue, it has broader ramifications. First, the decision reaffirms the important principle that the EU needs to have uniformity across its 25 member states. This should be true for all merchandise, not just the liquid crystal display monitors. Second, the Appellate Body also held that the original panel should have considered the broader question of EU uniformity rather than limiting it to the LCD display question. The full report and background is available here from the WTO . In the U.S., this is seen as an important step toward giving exporters a uniform set of rules in Europe and, therefore, reducing costs and other burdens in trade with EU members.

It's odd that I feel bad when I don't post for a while. I try and post twice a week and to have at least one post on topic. When I travel, I find it harder to post and I have been on the road lately. Last Monday, I moderated the Administrative Procedure Act panel for the CIT Judicial Conference. From where I sat, it seemed like an interesting panel. Boiled down to its core, the conclusion is that the APA has no real role in CIT cases brought under 28 USC 1581(a)-(h) because those cases are either de novo or have a standard of review set in a different statute. But, the APA is directly implicated in 1581(i) cases. How the APA applies will depend on the nature of the case and the questions of both law and fact. It is clear, however, that more than just the "arbitrary and capricious" shorthand is applicable. From NY, I went to Miami for the ABA Section of International Law Fall Meeting. There was an excellent discussion there about "new" opportuni

Customs and Border Protection has announced a new program to make it easier for pre -registered recreational boaters to return to the U.S. after visiting foreign ports. The program, called the Local Boater Option is only available in select ports from Tampa to the U.S. Virgin Islands. Pre -registered arriving vessels will only need to report in via phone. Everyone else has to arrange for the normal face-to-face screening. Seems like a good idea as long as the 2007 Terrorist Regatta is not in town.

On Monday, November 6, 2006 the previously unknown to me Association of Corporate Travel Executives issued a warning to its members about carrying laptops in international travel. The association is rightly concerned about the risks to corporations of having a laptop seized as evidence at the border and losing access to important corporate information. I've written on this before . At that time, though, I did not think of it in terms of corporate compliance. It is an issue. If one of your managers is traveling abroad with a computer containing sensitive information, your corporate policies should prohibit that person from storing any illegal or questionable information on the computer even temporarily (Customs and Border protection can look at deleted files, Internet caches, etc.). What you are worried about here is illegal information. There is no problem with your executives having a computer chock full of pictures of their kids and pets or the latest version Grand Theft Auto

Customs recently issued a ruling quite wisely stating that an electronic signature would be acceptable on a NAFTA certificate of origin. OK, fine. This is hardly newsworthy since copies of COs are acceptable. The interesting thing here is the distinction between a run of the mill electronic signature and a digital signature. The electronic signature at issue in the ruling was a bit map graphic of a handwritten signature. For all intents and purposes, it is the digital equivalent of a rubber stamp and ink pad signature. Don't get me wrong. I think the ruling is fine. There is no reason to require that a human being take a pen in hand and make his or her mark on the document to authenticate it. Customs correctly noted that the law has long recognized that anything placed upon a document with the intent that it signify that the person making mark agrees to the contents, is a signature. That is why illiterate people used to "make their mark" with an X on a document o

News reports from down under (where women glow and men chunder ) say the U.S. has banned the importation of the Australian culinary staple Vegemite . This is a serious issue. One blogger at Homeland Stupidity has done a little investigative journalism and ordered a sample from Oz. It appears to have arrived without delay , leading to questions on whether there is, in fact, a ban. Aussie newspapers have quoted a Kraft spokesperson as explaining that the folate added to Vegemite is apparently only permitted in U.S. grains and cereal products. When all else fails, I turn to Snopes , which declares this story to be false. But, the explanation clearly indicates that U.S. rules prohibit boosting folate in non-grain food products and that commercial importations would be a violation of U.S. regulations. Snopes, however, concludes that because the FDA has not asked Customs to seek out Vegemite in the possession of arriving passengers, the story is false. I think they need to parse thi

I am back from Canada. The fine folks at ieCanada throw a nice annual meeting. Next week, I am moderating a panel at the Judicial Conference of the Court of International Trade. Although talking to a room full of lawyers is never as much fun as talking to real people, it should be a good program. In the category of sure signs that the ecosystem is a mess I note the following. First, a skunk has recently taken up residence in my yard. I have seen him (I assume it is male) three times in the past month. Most recently, he walked right up onto my back deck. Second, my new garbage pails are being gnawed and whatever is doing it is smart enough to go right for the locking mechanism. Lastly, outside my office today, hanging upside down (as one would expect) on a concrete step, was a small bat. At first, I thought it was a dead bird but it was clearly covered in fur, not feathers. Also, it had tiny little claw at the top (because it was upside down). It was a bat . This sounds like the openi

I know a lot of people in the customs law business. Occasionally , I disagree with my colleagues. For the most part, that leads to a polite exchange of ideas and, maybe, an agreement to disagree. It's different, however, when I commit my opinions to the public through this blog. When someone disagrees with a blog post, I have the choice of ignoring it or letting the world know about. Today, by the express request of a friend and the implied rebuke of the Federal Circuit, I address an apparent error in my thinking. The relevant context here is International Custom Products v. United States . When the case was decided at the CIT , I wrote a post that was hard on the government and congratulated the Court for keeping CBP on the straight and narrow. The basic facts as presented were that the importer received a ruling and went about its business based on the ruling. Much later, Customs investigated the product and its use. As a result of this investigation, Customs issued a N

If any of you happen to be headed to the ie|Canada annual meeting on Monday through Wednesday, I'll be there. Please say hello. I'll be talking on U.S. penalty law and manning the Barnes/Richardson booth at the trade show where we will try hard to give away an iPod.

When I started in this practice, a decade before 9/11, there were always Special Agents sniffing around importers looking for revenue and admissibility violations. My first really big project involved a multi-year investigation of one of the biggest companies in the world. The investigation went on so long that I became relatively friendly with the lead agent and auditor. It was the auditor's job to follow up on the agent's theories and hunches about the bad things the client had allegedly done. I'm happy to say that, in the end, it did not amount to much more than several prior disclosures. Today, things appear to be very different. The agents have been peeled off into a different agency altogether. They spend most of their time, it would appear, working to keep us safe from terrorists and narcotics. Which is, of course, laudable. For the past five years, it has been rare, at least in my experience, to deal with a Special Agent on a matter involving commercial enforcement.

If you grew up in Chicago and know what a " Boogie Check " is, click here to instantly feel old. You are the same people who see Bob Sirott on the 10:00 news and say, "How did that top-40 radio goof get on TV?" And, if you are anything like me, you have listened to Steve Dahl for more than 25 years; although now I tend to hear only the part from 6:55 to 7:00 when I get off the train and into my car. So, for today's barely-on-topic post I have this animal story of a canine Amber Alert . I am not making fun of this story. CBP dogs are important tools in the fight against terrorism and smuggling--both drugs and people. I once had a client who was stopped while trying to leave the country without declaring that he was in possession of more than $10,000 in cash. CBP , it would seem, has cash sniffing dogs. While I am not poking fun at the missing dog, it is interesting (at least to me) that this seems to be the number one CBP story of the moment. I suspect that

No good Friday questions this week. Most of the searches were pretty basic ones like "customs law." So, I'll just pass on this good article on steel dumping from the Chicago Tribune . The gist of the article is that the U.S. steel industry and the U.S. auto industry (including foreign-owned producers in the U.S.) are at odds over whether a dumping order on corrosion-resistant flat-rolled steel. The U.S. steel companies, which are now relatively profitable, have been protected by antidumping duties on goods from six countries since 1993. This, of course, helped the U.S. companies compete with imports by offsetting the allegedly unfair low price of imported steel. The thing to keep in mind is that for every producer of steel desiring protection from injury caused by low-priced imports, there are multiple consumers of that steel who feel they are paying unfairly high prices. And who are among the biggest steel consumers? Car companies. Not to mention appliance manufacturers

I try and keep my off topic posts to a minimum. I've started using tags to let you skip what you may not find of interest. At the same time, I have not posted much of late. So, to make up for that, here are some links I find interesting in their almost absurd focus on the narrowest of topics. Project Posner : Do we need a searchable database of opinions by a single federal appellate judge? Last time I looked, Lexis and Westlaw would both do that with a simple search. Yes, I know that Project Posner is free. I also know he is a prolific writer with lots of fans. But think about the time, effort, and bandwidth involved. This smacks of someone with too much time on their hands. But, to redeem the project, I suggest you read this case in which the plaintiff tried to challenge the constitutionality of the ban on the importation of switchblade knives. Interesting reading for, as Judge Posner puts it, "aficionados of federal jurisdiction." Bike Rack Blog : It is

Lately, I have been swamped. I have been thinking mostly about the nuances of administrative law and of pleading. The reasons for both of these things will likely be public in the next few weeks. Today, however, I wasted an enormous chunk of the day. Illinois recently imposed a requirement that lawyers engage in Continuing Legal Education. I understand and applaud the idea behind this new rule. The bar wants to be certain that lawyers are aware of developments in the law. It is a means of protecting the public. Almost every other state bar has a CLE requirement. I get that. The problem for me and--judging by my visitor data--probably you, is that your run-of-the mill CLE is not particularly useful for a customs lawyer. Today, I spent three hours listing to several speakers talk about evidentiary issues that arise in trials, making objections, preserving the record, etc. I am sure it was a great seminar. The people around me were taking copious notes and laughing knowingly ev

Today's Friday question comes from Jyvskyl , Finland . That's great. I love having visitors from far away lands. But, here is the odd part: the search this visitor used to get to my blog was "transaction value method NAFTA ppt ." So, someone in Finland want to know how to certify goods for duty free treatment in trade between Mexico, the U.S., and Canada. There is something odd in that transaction, but who am I to judge? Under NAFTA, goods can be certified as originating in North America (and, therefore, entitled to preferential treatment) if they satisfy detailed rules of origin. Some of these rules are based on the percentage of North American value in the finished product. The regulations provide for two ways of calculating regional value content (" RVC "). My friend in Finland is interested in the transaction value method. Under this method, the RVC is calculated as follows: RVC =(TV- VNM )/TV x 100 TV stands for transaction value, which is the

For almost a year now, Customs has had a policy of seizing prescription drugs imported from Canada via mail. That policy is about to change. The Wall Street Journal reported today that CBP will stop that practice due to pressure from legislators. The prime mover behind the policy change appears to have been Florida Senator Bill Nelson. According to Nelson, CBP has seized drug shipments to 40,000 Americans from Canada. There are lots of arguments about this as a policy question. A couple years ago, I chaired an ABA panel on this issue. Speakers raised questions about the safety of drugs not subjected to FDA scrutiny on the one hand. On the other side, some questioned whether CBP should be used as a mechanism for protecting intellectual property rights for big companies that can generally afford to take care of themselves in court. But, the most interesting thing I heard came from a Canadian health-care industry consultant who had pretty compelling evidence that much of what is

Someone from Germany visited with the following search: "origin country customs marking." Glücklich zu helfen, Freund. U.S. law requires that all articles of foreign origin imported into the United States be marked with their country of origin. The marking must be permanent and conspicuous. For certain specific articles, Customs has specific marking requirements. This applies, for example, to watches and jewelry in the style of Native American wares. Also, Customs likes to see die cast or etched markings on pipes and the like. Bottom line is that it has to be permanent enough to reach the end user. Deciding on the correct country of origin is tricky. We already discussed NAFTA marking, which is wholly different, so that is not what I am talking about here. The country of origin of goods is generally the country in which the goods originate or last underwent a substantial transformation. So a coconut grown and harvested in Thailand is of Thai origin. No problem. Coconut milk c

Last night I had a close encounter with a spider. Normally, this would not merit any discussion. In most cases, when I find a spider that has taken up residence in my house, I scoop it up and toss it outside to fend for itself. I believe the spider PR that they eat things we like even less than spiders. But this was different. My new roommate was big. Really big. I looked into its eight eyes and I saw no fear. To get this into perspective, we are not talking Clint Eastwood's Tarantula . But, we could easily be talking about an extra from William Shatner's Kingdom of the Spiders. This spider claimed Peter Parker as a dependent on its last tax return. The spider sat in a plastic bin full of toys, mostly of the Play-Doh genre. I could not reach in with a shoe, newspaper, or other suitable blunt instrument as the spider was in a crevice between some containers. So, I did exactly what a third world dictator would do. I gassed the S.O.B. More specifically, I sprayed it with a prod

Today I spoke at a seminar put on by the International Trade Club of Chicago . The topic was internal reviews and prior disclosures. Three hours listening to me seems like a lot, but I think it went well enough. I took a new approach on my PowerPoint slides. It is a long story, but I am convinced that in the hands of the unskilled ( like me), PowerPoint can suck the life out of a presentation. I've been doing some reading about this and I tried to emulate Stanford professor Lawrence Lessig today. Basically, I had no bullet points, no charts, no slide transitions, and no fancy fonts; just a few key words for each thought. Anyway, I think it was OK. I'll have to keep practicing the method. We had lots of good questions. Rather than find a search engine phrase for my Friday question, I'll just give you some from the meeting this morning. Why do I have to worry about privilege for an internal review? Because you may not want to turn the results over to Customs

Two border stories worth noting: A guy who deserted from the Marine Corp. 40 years ago was arrested driving in from Mexico through the port of San Ysidro. There has been a warrant for his arrest since 1966. Here is the story. If CBP has good enough records to catch this guy, how come they are constantly requesting that importers "reconstruct" entry documents for them? This one is better. It has to be, because it includes the sentence "I've got monkeys in my pants." Here is that story. Apparently, a guy and his buddy were coming into the U.S. through LAX with a trove of banned wildlife and plants. "Buddy" was being searched by Customs when a tropical bird flew out of his backpack. It was at that point that he made the above-referenced confession to monkey smuggling. Seeing this, the other guy bolted from the line along with his own concealed cargo of Asian leopard cubs. From there, the story gets murky. It is clear that the guy made it out of the cust

Sometimes we get into a routine of looking for information a certain way. I know people who strike out with Google and decide that there must be no information available anywhere in the world on the topic. The thought of other search engines, let alone actual books, never enters their mind. Others have the reverse problem. I have friends and relatives who make statements that scream "This can't be true. Google that!" and never think to check for accuracy. My problem is that I often check facts mid-conversation, especially (but not exclusively) while on the phone. No doubt this can be annoying. Which brings me to something I noticed this morning. I may be the last customs professional to have noticed this. Generally, when I visit www.cbp.gov , I go to two locations. Most often, I click on "Legal" to get to something . . . well, legal. Other times, I go right to CROSS and look for rulings. This morning, my Newsgator aggregator told me there was someth

Someone from Italy visited my site this week via the search "NAFTA preference override." I am going to assume that means someone is sitting at a desk in Rome right now trying to make sense of the crazy NAFTA marking rules and, in particular, the NAFTA preference override. I'm here to help, paisano. The first thing to understand is that the regular NAFTA rules of origin are designed only to tell you whether something is originating in North America. They do not tell you what country in North America. Normally, that would not be a big deal. Once you know it is originating, you could just apply the normal substantial transformation rules to figure out how to mark it. But, this is not normally. First, because Canada had a head start on duty reduction under the U.S. Canada Free Trade Agreement, the rates for Canada and Mexico were not always the same. Now, they are in all but a few sensitive products from Mexico. Second, there is a general understanding that Mexico and Canada