Showing posts from July, 2008

News To Me

I'll be off line for a week or so. If anything of interest to readers of this blog happens, feel free to post it in the comments. I'll do my best to catch up on my return. In the meantime, here is a topic for discussion: SSAB v. United States : Another case of good law making for a bad result? One other note, as of tomorrow, my office is relocating to another floor of the same building. If you need to send me anything, the new suite number is 1020. All other contact info is the same as it has been for the past nine years. And, just to gratuitously vent about moving a law firm: What a hassle! Thanks for listening.

Goodbye Substantial Transformation, Hello Tariff Shift

Customs and Border Protection has published a Notice of Proposed Rule Making today proposing to do away with the time-honored substantial transformation test for determining country of origin. I'm sad. I like this rule. I like it for precisely the reasons that CBP wants to do away with it. The substantial transformation rule states that merchandise originates from the country in which it last changed its name, character, or use. The first articulation of this test was in a 1908 Supreme Court decision involving Anheuser-Busch. The question was whether cleaning and coating beer bottle corks (!) produced U.S.-origin corks. The Court held that the corks remain foreign because no new product emerged from the operations in the U.S. The most famous substantial transformation case is U.S. v. Gibson-Thomsen (1940) in which the Court of Customs and Patent Appeals found that wooden brush blocks and toothbrush handles without bristles became articles of the U.S. when bristles were adde

Administratve Law and Super Bowl XXXVIII

Is 9/16th of a second enough to offend anyone? We'll come back to that. Whenever I talk to students (either as an adjunct professor or in so-called "informational interviews"), I talk up the value of a class in administrative law. Customs and trade law is administrative law. Despite the name and the often undue emphasis on WTO disputes, this practice is generally about the federal government regulation of business. That makes it administrative law. It is only tangentially international law. The only way to be fully able to advise clients on what Customs and Border Protection can and cannot due is to understand the more general limitations imposed upon the agency by administrative law. Agencies are bound by law. Agencies must follow their own regulations. Courts should defer to the agency only when the law is unclear. Stuff like that. As I tell students, the most important trade law case is Chevron and that case involves environmental regulations. So, what are we to do wi

9th Circuits Still Says CBP Can Search Your Laptop

In an expected result, the U.S. Court of Appeals for the 9th Circuit has denied a petition for rehearing in the case of U.S. v. Arnold . This case involved the issue of whether Customs and Border Protection can search laptops (or other digital devices) that passengers carry with them across the border. We've covered this issue before ( here , here and here ). I also recently contributed an article on it to the June 2008 issue of CCS Contact . So, it seems there is not much to add except that nothing has changed. Should this go up to the Supreme Court, which is doubtful, I predict not much will change there either. It seems that Congress is going to need to step in if there is to be any limitation in the authority given Customs to conduct border searches. As previously noted, some Senators have raised the issue .

More from the Courts

The Courts have been busy. On Wednesday, the Federal Circuit decided Volkswagen , in which another case was dismissed under Court of International Trade Rule 12(b)(5) for failure to state a claim. Volkswagen follows from Saab and similar cases involving efforts by importers to secure a value adjustment under 19 CFR 158.12 for latent defects in automobiles. Because Customs and Border Protection calculates duties as a percentage of value, if the vehicle was actually worth less than reported at the time of entry, the importer paid too much in duties. The problem in this case is that the defects were not discovered until after liquidation was final, meaning that a protest was no longer available. VW attempted to claim the adjustment directly under 158.21, which has no time limit associated with it. The result here is that the CAFC held that even though there is no deadline stated in 158.12, it relates to appraisal. Appraisal decision can only be challenged via a protest. Thus, there

Dispatches from Laredo

Here are a couple good articles on enforcement activity in Laredo. Both involve the use of in-bond procedures to defraud either the U.S. or Mexico. In one case, Chinese fabric moving in-bond to Mexico was improperly manipulated to change its origin labeling to indicate that it was of U.S.-origin. False NAFTA certificates were also issued. In the other case, in-bond merchandise destined for Mexico was diverted to the U.S. and false pedimentos were used to show export. Thanks to the reader who tipped me to these stories. False Certificates Shamed Broker

The CIT and the Endangered Species Act

Federal Circuit has issued a decision in Salmon Spawning & Recovery Alliance . The issue here is whether the CIT can hear a claim that Customs and Border Protection and Fish & Wildlife have failed to enforce the Endangered Species Act with respect to certain salmon imports from Canada. The CIT previously dismissed for lack of subject matter jurisdiction because the enforcement of the embargo lies within the discretion of the agencies and is not subject to review. On this point, the CAFC affirmed the CIT finding the claim to be non-justiciable. The plaintiff's second claim is that the agencies failed to conduct a required consultation on the enforcement of the embargo. The CIT dismissed this claim for lack of standing. On this point, the CAFC reversed. The Court held that the plaintiff's members have an interest (even if only aesthetic) in observing the salmon in their natural habitat. Also, the right invoked is procedural (i.e., the requirement for consultation) and

Breaking: Gender Discrimination Case Dismissed

On July 3, the CIT dismissed Totes-Isotoner, but not on the grounds many people expected. It is a very interesting read ( link ). This is the case asserting that tariff rates that distinguish between products for men and women or between adults and children are unconstitutionally discriminatory. For example, men's gloves of HTSUS item 4203.29.30 are subject to a rate of 14% while gloves for other people (presumably women and children) of HTSUS item 4203.29.40 are dutied at 12.6% ad valorem . I'm going to read the case more carefully and will provide a fuller analysis, but here are the highlights I have gleaned this morning: Because the tariff differential is implemented in a statute, review of its constitutionality is not precluded by the political question doctrine. In other words, this is not purely a questions of policy or negotiations, it is a tariff law that can be reviewed. Totes, as the importer, has standing to pursue the case even though it is only indirectly affec

Let The Chips Fall

Here is a classification decision of another sort. In the UK, most food items are exempt from the value added tax. However, there is an exception for what Americans would call "potato chips." Recently, the UK tax court had to decide whether Pringles, those tube-packed stacks of potato-ie goodness, are actually potato chips for purposes of the tax exemption. Procter & Gamble, the maker of Pringles, argues that Pringles are actually made from a baked dough rather than a fried slice of potato. Further, Pringles do not shatter when eaten like a chip but melt in your mouth. This last bit strikes me as odd since in my experience Pringles shatter quite nicely when chewed and also seem to spontaneously shatter in the bottom of the can. Here is an article from Bloomberg on the controversy. Thanks to numerous readers for the tip.

Touch My Survey Monkey

I've created a survey of to get some visitor feedback. It is not at all scientific; just humor me. Click here to take survey I view this as kind of an experiment. If it works, I'll do future surveys on important issues like whether companies should join Customs and Border Protection's Importer Self Assessment program and what is the best harbor on Lake Michigan ?

Costa Rica Inches Closer to CAFTA

To meet the U.S.-imposed October 1 deadline for implementing CAFTA, Costa Rica has dismantled its telecom monopoly and now its insurance monopoly. See the story here from the International Herald Tribune. You may now break into "Do You Know the Way to San Jose ?" and I don't mean California.