Customs Law

Today is Saturday, but I needed to take care of some things at work. So, I rode into the office. I am not on the Lakeshore path very much on the weekends. All I can say is "Oh, the humanity!" There are too many people to ride comfortably. Including a bunch of groups of runners in training who seem not to understand the concept of "single file." I used to be one of them. I wish I could again, but my knees disagree. Now, I just want to get them the heck of what I call "the bike path." I was going about 16 MPH when I came upon a knot of traffic. I slowed and discovered the slow down was caused by a small boy--maybe 6 years old--on a bike with training wheels following behind his Dad. Normally, that might be cute, but in traffic it was a bit dangerous. Still, we must share the trail and do so with a smile. I did exactly that with a polite "On your left," as I passed. But, to my horror, I discovered that the Dad, who was not wearing a helmet, was carr...

Yesterday, CBP published a Federal Register notice completing a project we started about five years ago. The idea was to interpret the NAFTA rules of origin in a way that encourages the recycling of industrial equipment in North America by granting NAFTA-originating status to the reclaimed parts. The typical scenario is this: You make locomotives. Turns out, no one wants to throw out old locomotives. They are difficult to get to the curb and the trash guys have a hard time tossing them into the truck. Instead, you take apart old locomotives, collect any useful parts you can, fix them up as necessary, and use them in your service and repair operation. Anything that is left is scrap. That is called "remanufacturing." The problem is that your remanufacturing operation might be in Canada or Mexico and it is going to cost you money in duties to get the old locomotive or parts there and the fixed up parts back here. One solution is to apply the NAFTA rules and say that when you d...

There are a number of things I wish I could do better. 1. Standing up to traffic. I watch cyclists navigate traffic. We fall into two categories: those who follow the rules in a fairly strict sense and those who shoot the half-ton motorized rapids. I am more the former than the latter. When I come to an intersection with a 4-way stop, I rarely stop. I slow, look both ways and proceed. The skilled or stupid never slow down. They seem to get to the intersection, fade a bit to the right to get into the flow of oncoming traffic, wait for a clearing, do a U-turn to get back to the intersection and go right to finish crossing. It takes just a second and is a beautiful thing to see. Only now and then do they get plastered by a minivan. 2. Stand up to Gravity. Another thing some cyclist can do is stop without ever really stopping. They creep ahead, waiting for traffic to clear or the light to change, without ever putting a foot on the ground. Often, they stop completely, cock the front wheel a...

Sometimes, the good guys win. Recently, the importer came away with significant wins over Customs in decisions from the Court of International Trade and the Court of Appeals for the Federal Circuit. In the CIT case, called International Custom Products, Inc. v. U.S. , an importer did exactly what Customs tells importers to do: it got a ruling before it started bringing in merchandise. In this case, it got the ruling years ago and set up its business according to the allegedly binding advice from Customs. Trouble is, at some point, Customs decided it did not like the results of the ruling. Coincidentally, I'm sure, Customs' new position increased the duties by some 2400%. The opinion indicates that there may have been some legitimate reason to think that the ruling is, in fact, wrong, but that is not the point. Once Customs decides that it no longer thinks a ruling is right, there is a process it needs to undertake to revoke or modify the ruling. That involves public notice and ...

It turns out we might get a CAFTA-DR deal after all. At least as far as the important House Ways & Means Committee is concerned. On June 15, the Committee worked out a compromise bill to send to the House. Implementing legislation still needs to get through the full House and the Senate. This follows a June 14 informal poll of the Senate Finance Committee showing support for the pact. When passed, CAFTA-DR will eliminate tariffs on $33 billion in trade between the US and Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. The agreement will also increase sugar imports to the U.S. by 50% over 15 years making dentistry a growth industry. NAFTA, on the other hand, is getting a minor make over. On June 21, the International Trade Commission announced a study into whether there should be adjustments to the rules for a bunch of sundry goods including cocoa and cocoa preparations; cranberry juice; ores, slag and ash; leather; cork and articles of cork; pre...

I have not been able to ride to work in a while because my bike was in the shop. Why? Because I broke a spoke on my rear wheel, again. That is about the third time in a year and that is three times more than most people ever see. I took the bike to my reliable mechanics at Turin and got a reasonably technical explanation about the geometric arrangement of the spokes not being ideal because of the design of the hub. I think it comes down to the fact that I am heavier than, shall we say, the anticipated rider; I put a relatively high number of miles on the bike; and many of the roads I travel are rough. So, now I have a new Mavic cxp 33 rear wheel and I am back on the road. Wednesday, I rode to and from work. The ride in was cold and cloudy but pleasant. I made great time and had the wind at my back most of the way. But, on the way home, it rained. Started out as a drizzle and I decided to tough it out. By the time I was at the top of the Lake Shore trail, I had a small waterfall runni...

Last night, I was at U.S. Cellular Field (AKA "The Joan") watching the Arizona Diamondbacks pummel the White Sox. Waiting in line for food, the following occurred. In front of me were two girls (maybe the better word would be proto-women). They might have been 20, but just barely. Girl number 1 is short, with stringy hair the color of nothing. It was not brown and not blond. It was indeterminate. She was wearing a halter top that was too tight and too short for her slightly buldgy size. Girl number 2 had curly brown hair and looked something like Chelsea Clinton circa the impeachment. She had one of those excessively bright smiles in a shade of white not known in nature. Girl 1: Why do they only have kosher dogs? What's the difference? Girl 2: It just means they don't have pork. They're all beef. Girl 1: But I want a hot dog, not a Jew-dog. Me: Snort, eyes rolling, head shaking. Apparently, I made enough of a noise or a big enough gesture for Girl 2 to notice. She...

And, Steven Spielberg is the thief. To my knowledge, there are no great movies in which Customs has played a major role. There are a few good ones and one terrible film called The Terminal which I have only had the recent misfortune to see. This movie is the dim witted offspring of two much better movies: Moscow on the Hudson and Cast Away . I have no doubt that is how it was pitched to studios in the meetings. Don't dismiss this as coming from one of those people who watches a movie related to his or her profession and can't get past the technical defects in the script. You know, the lawyers who cannot watch a courtroom drama without periodically shouting "Objection!" at the screen. This also applies to ER docs who harrumph at fake CPR and military people who complain about everything that happens in a war movie. I'm not like that as long as the movie is interesting and internally consistent. The Terminal is neither. The movie is about a guy named Navorsky--play...

I think we have heard enough about customs valuation for now, but I want to make good on my promise to cover three things: deductive value, computed value, and reconciliation. For various reasons discussed below, I am going to give each topic short shrift. Later, I will look up exactly what "shrift" means. Deductive value is just not used that often. That is not to say it is never used, but it is fair to call it rare. The first reason for that is that Customs rarely rejects transaction value when there is a sale (but it does happen). Next, before an importer can ever get to deductive value, Customs has to find that there is no transaction value of similar or identical merchandise available to stand in as the transaction value for the entry in question. So, not only are we talking about goods that are not sold at arm's length, but goods that really have not been sold to anyone recently. Second, importers have the option of applying computed value rather than deductive valu...

I know more than a handful of folks have found this site via the very helpful Blawg.Org. But, no one has rated the site. I know I may live to regret this, but how about some instant feedback via ratings on Blawg.Org ? Or, use the fancy new button on the right. Preferably favorable ratings, of course. Also, I'll take requests for posts on a specific topic as well (mindful of the Important Disclaimer at the top of this page).

The New York Times ran a good article today on the sugar lobby and the future of the Central America Free Trade Agreement. The article is notable in that it focuses on three of my favorite things: sugar, trade, and Chicago. The gist is that the powerful sugar lobby, which has been fighting CAFTA, is losing its clout to sugar consumers like the candy and soft drink industries. This is a truism of all trade disputes: for every producer of raw materials that wants trade-related protection, there is a consumer industry trying to get cheaper access to the same product. The winner is usually industry with more clout. Chicago, a center of candy production, is on the front lines of this particular fight. The article is worth reading.

The Supreme Court has decided (5 to 4) that the "check off" fee assessed against the importation or sale of beef cattle is not unconstitutionally compelled private speech. Darn! If it were, the collected fees might be subject to recovery and a great many customs lawyers would be celebrating with steak dinners and planning for retirement. That is because the fee (collected by Customs on imports) would likely have been recoverable (with interest) following a protest of the liquidation of the entry. Alas, it seems that it shall not be. Justice Scalia's opinion finds that the fee is used to fund government speech in support of the beef industry. As a result, it is unlike cases involving fees compelling speech on behalf of private interests. Consequently, the fees do not violate the First Amendment. Since the mushroom fee was unconstitutional but the beef fee is not, beef stroganoff manufacturers are suffering mixed results. Similar fees on watermelon, cotton, avocados and ot...

There is a good article in the May 25, 2005 New York Times on some of the troubles Customs is having in securing the supply chain. It is worth a read, here is a link .

Well I don't know why I came here tonight, I got the feeling that something ain't right, I'm so scared in case I fall off my chair, And I'm wondering how I'll get down the stairs, Clowns to the left of me, Jokers to the right, here I am, Stuck in the middle with you. --Stealers Wheel Remember that transaction value is the price paid or payable for the goods when sold for export? Well, what happens if there are two or more sales for export? Believe it or not, that happens a fair amount. The most common scenario is where the U.S. customer buys from a reseller who, in turn, buys from the manufacturer. Generally speaking, the price from the manufacturer to the middleman will be less than the sale from the middleman to the importer. So, for customs valuation purposes, guess what the importer wants to use as the sale for transaction value? By the same token, guess what sale Customs wants to use? The answer is that Customs is often quite happy to apply duty to the middlema...

From seat 16F, 30,000 feet. I don’t watch a lot of TV. In fact, now that Enterprise is cancelled and The Amazing Race is over, I have nothing to watch but the 10:00 news. I don’t have cable, so don’t go on about what great stuff there is on Bravo and A&E or the History Channel. I fear cable. When I am in a hotel, cable can completely hypnotize me. I will often find myself channel surfing well past midnight just for the curious sensation of seeing all those channels go by. I don’t need that at home. Anyway, I had read that Smallville is a good series and recently became the bailee of the complete collection of the first three seasons on DVDs. I am now about half way through season two. It is, in fact, a good series if you have even the slightest fondness for comic-book superheroes. I write to make a few observations: First, if I were in high school, I would be deeply infatuated with Lana Lang . This may be good timing as I am now deprived of Science Officer T’Pol , my previous infa...

Sometimes people assume that since my job is nominally “customs and international trade lawyer,” I must get to go to glamorous and exciting foreign locations to hammer out important deals over expensive meals in even more expensive hotels. My title seems to conjure images of London cabs, Tokyo Sushi bars, and good beer in Brussels. No such luck. For me, the typical business trip is to an industrial-grade Rust Belt city or, more likely, to a factory in the almost rural area outside Rust Belt City which I think may be between Center City and Edge City. My current transportation travail is a perfect example of the true nature of business travel for me. Yesterday, I left home at about 9:00 AM to get to O’Hare for a flight to a city I will not name. Why? Because Heisenberg’s uncertainty principal does not apply to airline schedules. If you are smart enough to search the readily available public record of customs rulings and Court of International Trade decisions, you could easily compile a ...

We already know that transaction value is the price paid or payable for the merchandise. That seems appropriate. After all, people tend to sell things at a profit and pay what the merchandise is worth to acquire it. Your law and economics types call that acting rationally. Customs knows, however, that not all transactions fit Adam Smith's market forces model. The obvious place this breaks down is where there is no sale. If someone sends you 10 pounds of Vegemite as a gift, at least two things are going on. First, you are not going to pay for it so there is no price paid or payable. Second, the sender probably does not really like you much. Where there is no sale, the customs laws say there is no transaction value. If it is your Australian Mum sending the Vegemite but she expects you to pay for it, there may be a sale. Also, she definitely does not like you. Customs, however, is going to assume that the relationship between you and your Mum affected the price. In this case, she may...

For any of you who were worried, I did get the bike home from work the next day. Turns out that when I fell, I broke a rear spoke so it had to go to the shop. Seems like I should learn how to fix that and true up the wheel myself. The mechanic recommends replacing the rear wheel before too long. Today was the Tour of the North Shore Half Century. My friend and I started early in a cold wind. It was about 50 degrees when we started. The ride is not what I would call a model of organization and parts were not well marked. One would think after doing this for 30 years, it would be old hat. We got off the route two or three times. I blame signage for that. I did get through it for a total of 53 miles in 3:38:12. By no means fast. But, considering my level of conditioning, I am not complaining. The route took us along bike paths and suburban streets through some very affluent areas. So, there were nice houses to see along the way and the occasional glimpse of the lake. To see the route, lo...

As I mentioned earlier, commissions need to be included in the value of merchandise reported at the time of entry (or later reconciled, but that is a whole other point). But, as if to make this complicated, not all commissions are dutiable. The statute says that: The transaction value of imported merchandise is the price actually paid or payable for the merchandise when sold for exportation to the United States, plus amounts equal to . . . any selling commission incurred by the buyer with respect to the imported merchandise . . . . There are two kinds of commissions: dutiable selling commissions and non-dutiable buying commissions. The thing about dutiable selling commissions is that the buyer is paying a cost associated with selling the goods. Think of it as the buyer paying the commission to the sales staff. Why does that happen? Don't ask me, but it does. So, if it is not added to the entered value, that value is understated because it is a cost the seller would otherwise have ...

First, I need to set the proper mental image for you. When picturing me in your head, picture the character on the Simpsons generally known as Comic Book Guy . I know I don't really look like that. I don't have a beard and my complexion is less yellow, otherwise, it's close enough. Weather permitting, I commute to work on my bike . Since this is Chicago, the weather does not permit often and I spent much of the fall and winter doing little more than eating. Hence, today I tipped the scale at 20 pounds more than the last time I rode to work. Still, I was excited to start the new season. Plus, I am planning to do a 50 mile ride ("half century") next Sunday, so I need to get warmed up. I had much anticipation as I packed my pannier last night. Even though I tried to exercise through the winter, I generally failed. I knew it would be a bit hard, so I promised to take it easy. No hammering the flats, as they say. The whole ride is 20 miles of city streets and bike path...