Customs Law

Union Pacific Railroad has been fighting the good fight with U.S. Customs and Border Protection over whether it is liable for penalties for illegal drugs imported via railcars that were being used by unrelated Mexican railroad companies. UP's role was to forward the electronic manifest data to CBP and pick up the railcars after CBP clearance. Keep in mind that CBP does not accept electronic manifest transmissions from Mexican railroads. In an interesting opinion , the Eighth Circuit Court of Appeals has held that CBP lacks the authority to penalize UP for the actions of Mexican drug cartels on railcars UP neither owned nor controlled. According to the opinion, UP has no railroad operations in Mexico and no control over the Mexican railroads involved. It has no ability to control employees of the Mexican railroads and no authority to secure or search trains inside Mexico. When a train arrives at the border, CBP inspects it and sends the Mexican locomotive and crew back to Mexico. ...

One of the issues I have long had with Customs' enforcement activities is what I perceive to be a lack of effort to differentiate between counterfeit goods, which should be seized, and unauthorized parallel imports, which are usually (but not always) perfectly admissible. Parallel imports, also known as gray market goods, are legitimate goods that are purchased abroad and imported without the authorization of the U.S. trademark or copyright holder. Image finding a case of expensive brandy at a fire-sale price in Iceland. If you think you can make a buck reselling the goods in the U.S., buy the goods, and import them, you are a parallel importer (and there is nothing wrong with that). Unless, as is often the case, the goods really are counterfeit and you are being duped, but that is not what we are talking about here. The problem is that when your brandy arrives at the port, Customs and Border Protection has to decide whether you are entitled to import the goods. As a general...

OK, I have bad news for the Twitter side: I like my blog and my blog readers like me. I'm having a hard time balancing both. In the morning, I scour my usual sources to look for items to tweet. In the past, those would have been blog fodder. Well, they need to be again. So, here is a catch up post. After this, I'll do my best to get back to more substantive posts here. Whether that means fewer tweets, we'll have to see. First thing, according to testimony at a House Committee on Small Business, fraud and lax enforcement of laws relating to textile imports and preference programs is harming U.S. producers. I have no serious reason to doubt this, but I do wonder about what level of diligence can reasonably be expected of importers. I think importers need to spend some time thinking about their purchase order terms and conditions. I'd be looking for enforceable indemnity clauses for civil penalties and associated costs. I'd also try and negotiate a contra...

This story was tipped to me from a couple sources in response to my previous post about how C-TPAT is being marketed wrong.  I'll give the nod to the Blog Man O' Law for the link .  The article shows that yes, indeed, smuggling happens in commercial shipments.  Apparently, it also happens in the Free and Secure Trade (FAST) environment. Keep in mind, my point was not that this does not happen.  My earlier point was only that Customs and Border Protection's presentations rely too heavily on non-commercial, terror- and drug-related shipments to make the point in an audience of sophisticated business people.

I have absolutely no doubt that C-TPAT, the Customs-Trade Partnership Against Terrorism, makes America a safer place. Every participating importer, carrier, warehouse, foreign manufacturer, etc. agrees to take reasonable steps to insure the safety of the supply chain. This means, for example, limiting the access to shipping containers, using secure container seals, and vetting truck drivers. Logic dictates that C-TPAT makes it more difficult for a terrorist organization to slip weapons, components of weapons, or even people into the supply chain of an unknowing importer. I am glad that Customs has this program and I appreciate the efforts of the voluntary participants. My problem is the way Customs sells the program. I've had the opportunity to sit through lots of C-TPAT recruitment sessions and they all proceed along the same lines. First and foremost, there is the reminder that the horrors of September 11 are the origin of C-TPAT. This, of course, puts the audience into a s...

Customs and Border Protection has published a 2008 year in review of its Customs-Trade Partnership Against Terrorism program.  Here are some interesting 2008 statistics: Certified 1,448 new members Validated 3,469 supply chains Added 50 supply chain specialists Suspended 121 members Removed 118 members Completed 52 appeals (26 denied, 18 approved, 8 reduced suspensions For those of you who may not know, C-TPAT is a voluntary program under which members agree to undertake reasonable steps to secure their supply chain from container stuffing to delivery to the ultimate consignee.  The program requires considerations of physical security to the merchandise, plant location security, network access security, and personnel policies including background checks at hiring and appropriate measures when an employee leaves. The benefits of membership include fewer intensive examinations at the time of entry and the possible participation in the Importer Self Assessment program. And, as they say, ...

On Wednesday, I did a talk for IPC , the trade association for the printed circuit board industry. The talk went well, I think. Afterwards, I sat down for a short interview about trade issues. You can watch that interview here . Note: The link takes you to a landing page. You'll have to click on the link on the right side of the page to get my interview. Here are the highlights: Profile is not the most flattering view What is happening to my hair? Remember when I exercised? Do I always sound like Kermit the Frog? Other than that, you can judge for yourself.

Here's news: Customs and Border Protection has finally secured the ability to have its people do C-TPAT validation in China. Until now, CBP has planned to rely on private third parties to conduct the validations. Now, CBP personnel will do it. I'm not sure that there is much practical significance to this but it does alleviate the concern about business proprietary information being in private hands. By the way, for Google purposes, C-TPAT is the Customs-Trade Partnership Against Terrorism.