Customs Law

I am going to be off the grid next week (more or less). So, to keep everyone happy while I am gone, here are some things to contemplate: The House passed its Omnibus Trade Act of 2010 on December 15. The bills contains an 18-month extension of GSP and an 18-month extension of ATPA/ATPDEA but only for Ecuador and Colombia, not for Peru. Here is a link to the bill text . The bill also contains many temporary duty rate reductions. The Senate is expected to take up the bill soon. The final text of the Anti-counterfeiting Trade Agreement has been published and the USTR is seeking comments on it before February 15.

The Supreme Court has decided the Costco grey market Omega watch case . We discussed that earlier here . Unfortunately for those seeking clarity, the case was "decided" by an eight-judge panel. Newest Justice Kagan was excluded because she worked on the case at the Justice Department. As you Supreme Court scholars know, a tie decision results in a non-precedential affirmance of the lower court decision. Thus, this is entirely anticlimactic.

I have never intended this blog to be nothing more than a repository of case law from the Court of International Trade and the Court of Appeals for the Federal Circuit. My goal is that this blog serves as a place to find analysis of developments in the area of customs law and compliance. Early on, I blogged on more general topics involving corporate compliance and regulatory changes. Lately, I have not had much inspiration to do so. I want that to change. In fact, for 2011 I resolve to post more often on regulatory and compliance developments. If you want to help me improve the blog for next year, feel free to send me questions or post ideas. My friends and readers out there have been of great assistance in making this blog work. So, to the Retired Customs Guy, the Broker in Texas, to Matt, and to Anonymous, keep the comments and questions coming. It helps keep the bold interesting for all involved. Now that I am done pleading with you, I will talk about a pleading case from the Cour

The Court of Appeals for the Federal Circuit has decided the appeal in Horizon Lines v. United States . Interestingly, the CAFC affirmed the Court of International Trade but found that the lower court had committed harmless error in its legal analysis. Since you follow these things, you probably remember that this case involved duties assessed by the United States for ship repairs undertaken outside the U.S. Horizon Lines challenged the duty assessment on the grounds that the work performed on the ship was not a dutiable repair but was actually a non-dutiable modification. I know this kind of semantic distinction makes non-lawyers crazy, but there it is. That is how the law is written and that is what Customs and the Court must apply. The modification in question was an improvement to the container guide system used to place containers in appropriate locations in the cargo hold. The change improved the speed and ease of loading the ship and improved safety during the loading opera

It looks like imports from Canada will be subject to the same requirements for fumigating or heat treating wood packing materials that apply to the rest of the world. FR Notice. Also, the ITC report on modifying the tariff treatment of certain festive articles has been delayed until December 13. Here is a CBP Fact Sheet on import safety. Updated list of countries cooperating in the Arab League Boycott.

Not a half hour after posting about the tiger trade, I saw this press release concerning illegal trafficking in sperm whale teeth and narwhal tusks. The conviction includes a count for violating the Lacey Act.That is up to 20 years in prison and $250,000 in fines. Somehow, I doubt peddling scrimshaw to tourists in Nantucket was worth it. For what it is worth, in my head, the defendant looks like the sea captain from The Simpsons.  Yar!

Long-time readers of this blog know I am interested in the illegal trade in animals. Usually, that manifests itself in posting articles about some guy arrested with 20 turtles in his pants or some similar oddity. Despite the News of the Weird aspects of it, the illegal trade in animals is an important issue. The people behind this are depleting the natural diversity of wild animals and threatening the wild population. The buyers of these animals are often simply idiots with little impulse control. Where I might want to splurge on some shiny electronic device, these folks want to own an exotic animal, usually illegally. Today, it was reported that five international enforcement agencies including the World Customs Organization and CITES have formed a consortium to fight the trade in tigers. Here is the press release: WCO - Press . Best of luck.

I always enjoy the Court of International Trade Judicial Conference, and the most recent edition was no exception. Granted, a lot of the personal enjoyment comes from having the opportunity to see friends and colleagues. But, there is plenty of substance to be absorbed as well. For whatever reason, the conference skewed somewhat to trade-related discussions over customs this time around. From a customs lawyer's perspective, it would appear that the single most vexing issue facing the trade bar is the issue of Commerce's policy of publishing liquidation instructions within 15 days of a final agency determination. This causes problems because the parties have 30 days in which to challenge the determination by filing a summons. In the ordinary case, the plaintiff gets to Court and asks for an injunction against liquidation to prevent that from happening.  Sometimes, Customs and Border Protection liquidates entries prior to the filing of a summons and request for an injunction. O

Pleading continues to be an issue in Court of International Trade litigation. In any other Court, that would not merit a comment. However, in the last two years or so, the CIT has issued several decisions focused on pleading, and that is a change from prior years. In United States v. Callanish, Ltd. , the United States alleged that the importer entered evening primrose oil without the required FDA approval. Because of this, Customs and Border Protection claimed the entries contained false or misleading statements or omissions, in violation of the penalty statute (19 USC 1592). Callanish, in particular, was the the manufacture of the product in Scotland and shipped the goods to the U.S. Apparently, the claim against Callanish is for aiding and abetting the allegedly fraudulent scheme. After being served with an amended complaint, Callanish failed to defend itself. As a result, the United States moved for a default judgment to the tune of $17 million, the domestic value of the mercha

Those of you who know me , also know that I spent (and unfortunately continue to spend) a lot of time of a single issue involving the tariff treatment is painting as an operation incidental to assembly under HTSUS item 9802.00.80. So, paint-related issues always catch my eye. Horizon Lines, LLC v. United States is a paint case of a different color. The issue here has to do with whether painting a U.S.-flag ship in a foreign port constitutes repair for purposes of assessing the 50%  duties applicable to repairs. While in China, the Horizon Lines Crusader  was painted above and below the water line. Below the water line, the painting was done in conformity with an international convention relating to the removal or sealing of environmentally destructive antifouling agents. Having had the occasion to apply copper-based antifouling paint to a a relatively tiny hull, I can tell you this is somewhat nasty stuff. Customs and Border Protection applied duty to all of this activity on the gro

Customs plays an important role in preventing the importation of merchandise that infringes U.S.-held intellectual property rights. That is an important job for the economy as well as for the health and safety of the public. You can usually be pretty certain that a company that is willing to rip off a brand name trademark is not too scrupulous about health and safety requirements. There are lots of dangerous counterfeit products out there, and we should all thank CBP for helping keep them out of the marketplace. But there are also non-counterfeit products that nevertheless infringe someone's trademark, trade dress, or other intellectual property right. Those products may or may not present health and safety concerns as well. But, they are legally different. Specifically, a "counterfeit" product is one bearing a mark that is "identical to or substantially indistinguishable from a registered trademark." 19 CFR sec. 133.21(a). These are the fake Coach and Prada

This case is very strange . It is also one of those interesting cases that involves the intersection of customs and trade law. Specifically, it involves Customs and Border Protection's treatment of entries subject to an antidumping duty order. As it happens, that treatment was wrong. By way of background, the salient facts are that Alden Leeds was the importer of chemicals that were subject to an antidumping duty investigation. At the time of entry, the importer was required to make a cash deposit of almost 25%. Because the producer requested an administrative review of the deposit rate, Commerce instructed Customs to suspend liquidation of the entries. The review subsequently found an assessment rate of about 4%. That should have made for a hefty refund to Alden. Unfortunately, it did not. Rather than withhold liquidation, Customs affirmatively posted an official bulletin notice stating that the entries had liquidated by operation of law (i.e., they were "deemed liquidate

By request, I am posting this by request, something I am happy to do. If you see customs-related news items, always feel free to forward them to me at customslawblog@gmail.com. It seems that the Australian government is hoping that travelers entering the country know pornography when they see it and report it when they are carrying it. This has caused a bit of a dust up down under because not all pornography is illegal to possess in Australia and not all is banned from importation. However, the two sets apparently do not coincide exactly. According to Australian Customs and Border Protection, travelers should just disclose what they have and let Customs sort it out. I am not sure on the law in Australia concerning border searches or self incrimination (feel free to comment if you are). Either way, it certainly seems like a bit of a stretch to assume that a traveler will arrive at the Customs desk Kingsford-Smith and open his or her bag of porn for the inspector to review. Maybe Aust

When Customs collects a tax for another agency, is it making a protestable decision? That is an important question. If the answer is yes, then the U.S. Court of International Trade has subject matter jurisdiction over the denied protest. If the answer is no, the importer has to look elsewhere for relief. That is also the question presented in Shah Brothers, Inc. v. United States , which involves entries of " gutkha ." Gutkha is a tobacco preparation containing betel nuts and various aromatic agents.Apparently, gutkha is a smokeless tobacco product and is, therefore, subject to excise tax as well as import duties. Smokeless tobacco comes in two varieties: chewing tobacco and snuff. The problem for the plaintiff is that the excise tax on snuff is higher than the excise tax on chaw  and the Alcohol and Tobacco Tax and Trade Bureau (the "TTB") concluded that this product is snuff. Customs, on the other hand, eventually agreed with the importer on the classification of

Customs and Border Protection assigns licensed customhouse brokers unique filer codes. These codes allow the broker to have electronic access to Customs.  The filer code, therefore, effectively permits the broker do business in a modern commercial environment. Absent an active filer code, the broker may as well have to operate using carrier pigeons and smoke signals. Consequently, when CBP threatened to deactivate its filer code, Lizarraga Customs Broker went on the offensive. The issue reached the Court of International Trade. The procedural status of the case is a little tangled. It appears that plaintiff wanted an injunction to prevent CBP from deactivating its filer code. While that request was pending, the parties submitted their complaint and answer. Eventually, the United States government filed a so-called "Confession of Judgment" in favor of Lizarraga. According to the government, this should have resolved the case because the US has agreed not to suspend the file

We have been following along with Gilda Industries, Inc. v. United States since the early days of this blog ( here and here ). Remember back when I would also blog about spiders in my basement and and Spore creatures ? I kind of miss those days. I know my extended family does too. Gilda involves 100% retaliatory duties assessed on Gilda's imported toasted bread products. The duties were in response to a European policy to block imports of U.S. beef after the WTO found that the ban was not supported by scientific evidence. The procedure for continuing the retaliation required that a representative of the  benefiting U.S. industry request the continuation of the retaliation. In 2007, no one from the beef industry made such a request. As a result, Gilda argues that the retaliatory duties expired. The Court of International Trade agreed and ordered that the duties collected after the 2007 expiration be refunded with interest. This is the decision on appeal to the Court of Appeals

I have been remiss again, but not for wont of effort. I have just been on the road while also sick. That is a bad combination. In terms of follow-up information, you should know that on October 4, the Supreme Court denied certiorari in Totes-Isotone r. That is the case challenging the constitutionality of gender- and age-specific tariff rates. It remains to be seen whether that is the end of the issue. The critical legal determination to date has been that the distinctions drawn in the tariff schedule are not facially discriminatory. As a result, a plaintiff needs to prove not just the an improper distinction is drawn but also that it was done for an inappropriate purpose. That makes the case much more difficult to prove. I suspect there were sighs of relief throughout Customs and Border Protection. The Court of International Trade has issued three customs-related decisions that I will summarize as soon as possible. For those of you who might not be members of the Customs and In

Sometimes, we all have to take a big breath, close our eyes, and wade into a 64 page Court of International Trade Opinion. In this case, that opinion is United States v. Pressman-Gutman Co. The substance of this case is interesting in that it deal with the liability a surety has when the importer breaches the terms of its customs bond. In particular, Customs was seeking $120,000 for Pressman-Gutman's failure to redeliver merchandise to Customs. When the importer failed to redeliver, Customs sought liquidated damages from Pressman-Gutman. This is the usual course of action because merchandise is, more often than not, already gone by the time the importer received the Notice to Redeliver. When Pressman did not pay the liquidated damages, Customs sought payment from American Motorist Insurance Co, or AMICO the surety. The surety also refused to pay and moved for additional collateral to protect it from what it viewed as impending liability and also for attorneys fees related to the

Recently, I mentioned that nothing of interest has been going on. That was a mistake. For weeks, I have been working on several fronts on an issue of interest to all importers. I think because I have been involved for a while, and because the issue started slowly enough, I did not notice that lots of people now seem to care. So, consider this a catch up post. The issue in question is whether Customs and Border Protection can use the common Request for Information (CF28) or Notice of Action (CF29) as the record of the commencement of an investigation and evidence proving that an importer has received notice of the commencement of an investigation. This matters for several reasons. Most important, importers who discover violations of certain customs laws may protect themselves from civil penalties (in excess of interest on unpaid duties) by completing a voluntary prior disclosure. In the disclosure, the importer sets out the incorrect and the corrected information, tenders duties owe

This is just a reminder that I am still here, in case you were wondering. I have been on the lookout for something interest to post. Lately, there have been slim pickings. The ACLU is pursuing another lawsuit challenging Customs and Border Protection's policy and practice of relating to searches of digital storage devices including laptops and phones at the border. Here is their press release . I wish them luck, but they have a very tough legal row to hoe. The advantage that the ACLU has in its case is that the plaintiff is a much more sympathetic character than the child porn smuggler usually caught up in these cases. On top of that, I should alert you to a couple upcoming speaking gigs, both NAFTA related. First, I will be talking about NAFTA verifications at the International Trade Club of Chicago on Friday, September 24. Then, I am really excited to be doing a full-day presentation on NAFTA, internal reviews, and planning for compliance for the Midwest Global Trade Assoc

I have an article in the latest edition of BNA Tax Planning International, Indirect Taxes (Vol. 8, No. 8, Aug. 2010). The article is entitled "Challenging Customs in the United States Court of International Trade." I'd provide a link to the article, but it is in an old-school paper publication and the on-line version requires a subscription. So, run out and look for the article on the newsstand. I hope it is next to something with Kim Kardashian on the cover.

I do a lot of NAFTA work. For years, there have been unanswered questions concerning the ability of producers or exporters to allocate non-originating good to domestic customers and originating goods to customers in other NAFTA countries. That would maximize the benefit to the customers but might result in otherwise dutiable merchandise never being the subject to duty. The Canadian International Trade Tribunal recently got a crack at part of that question in Tara Materials, Inc. v. President of the Canada Border Services Agency , Appeal No. AP-2009-016 (Aug. 3, 2010). Tara exports artists’ canvases from the United States to Canada. Apparently, it dual sources fungible fabric used to make the canvases and some of it comes from outside of North America. In an on-site verification by CBSA, it was determined that Tara’s production resulted in goods that are originating 72% of the time and non-originating 28% of the time. In these circumstances, the NAFTA permits the producer to employ an

There have been several recent customs-related decisions from the Court of International Trade recently. I have read them and generally don't find much in any that require comment. At the same time, I don't want you to think that I am slacking off. So, here are short summaries. Aromont USA, Inc. v. United States , involves the classification of a viscous "stock"  made from animal bones or vegetables. The issue was whether Customs and Border Protection properly classified the merchandise as soups and broths rather than as other food preparations. Initially, the Court had to hold that because the merchandise at issue in this case was not identical to merchandise that had been the subject of a previous Customs ruling, the ruling did not bind Customs and Border Protection. The primary difference seems to be the commercial designation of the merchandise. Here, the goods were called "stock," which is said to be equivalent to a "demiglace." I will check

[Tip of the hat to my partner David Forgue , who has been thinking about this issue out loud longer than me.] At what point is compliance with a trade agreement so risky that it becomes unworkable? Do the powers that be know that the trade agreements they negotiate might be effectively nullified by the cost of compliance? These are questions raised by the Federal Register Notice Customs and Border Protection published today . Nominally, the notice finalizes changes to the regulations implementing the Dominican Republic-Central America-United States free trade agreement. However, the response to one comment is particularly telling. Here is the relevant text: Comment: The commenter asserted that Sec. 10.585(a)(1) and (a)(2) impose impossible obligations on the importer. These provisions state that an importer who makes a claim for preferential tariff treatment under the CAFTA-DR (1) will be deemed to have ``certified'' that the good is eligible for such treatment; and (2) i

A few news items on note: Festive Articles Customs and Border Protection has asked the ITC to study a proposed tariff change to correct the tariff treatment of so-called festive articles that have utilitarian functions. This follows from successful litigation undertaken by my firm that showed that holiday-themed articles, even those that have utilitarian functions, can be entitled to duty-free entry under Chapter 95 of the tariff schedule. The problem is that in an effort to "correct" what Customs viewed as this erroneous classification decision, the modifications to the 2007 tariff schedule made non-revenue neutral changes, which is not a favored result. This tariff study is aimed at correcting that by changing the tariff classification but preserving the duty-free status of the goods. Should this happen, the change will be effective for goods entered on or after February 3, 2007. Lacey Act APHIS has published a proposed definition of "common cultivar"

Am I the last person to see the new Federal Circuit web site ? It is a major improvement over the previous page. Thanks to whatever federal IT workers did the job. The main element of the new  home page is an attractive photograph of one of the Court's impressive courtrooms. There are navigation links above and below. The links at the top have scrolling submenus that appear when the cursor hovers over them. The links at the bottom are direct links to the referenced information. It is simple, but it works. On a quick look, it is not clear why the navigation tools are organized as they are. For example, "The Court" at the top has a submenu for "Judges," which is also a standalone item on the bottom right. Daily dispositions is also in two places, but that might just make the information easier to find. The Federal Circuit hears appeals from the Court of International Trade concerning decisions by Customs and Border Protection. Consequently, I visit this site r

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?

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 b

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

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.

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 t