Customs Law

It is funny how market segments you might not think of as "industries" in and of themselves can sometimes turn into important players in the trade debate. Take, socks, for example. This article discusses the plight of a Canadian company that invested in a sock factory in Honduras in part to take advantage of access to the U.S. market afforded under the CAFTA-DR. Unfortunately for them, there is now a lobbying battle going on over whether socks should be subject to safeguards. Under the safeguard provisions of most free trade agreements, a party can put duties back onto a newly duty-free product if there has been a surge in duty-free imports causing harm to domestic producers. The point of safeguards is to serve as an escape valve for the unintended consequences of free trade agreements. The problem is that imposing safeguards has a negative impact on U.S. investments in Honduran sock factories and also on U.S. cotton growers who supply those factories. This is why tra...

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.

Lately, I have lots of conversations about food and product safety. Everyone knows this is a big deal issue. Here is a recent example . It crosses all kinds of interests from child welfare, to public health, to international trade. The question I get is whether it is a Customs law issue. Clearly it is not one of the core legal areas of customs compliance. By that I meaning it does not impact classification, value, duty assessments, etc. But, to the extent you are trying to fill contracts or secure the release of merchandise, any hang up in Customs immediately becomes a "customs law issue." What you need to keep in mind is that Customs and Border Protection is the border enforcement arm for dozens of other government agencies including FDA and CPSC . An importation that is contrary to U.S. law is subject to seizure and forfeiture. That means you might lose your merchandise. There is also the possibility that your entry documents contain material false statement or omissions (...

Yesterday, I had to visit a Halloween store to find the all important Ninja Ice Wolf costume. Yes, it is part of the culture of violence in America. Yes, it is far more materialistic than the happy hobo, zombie, or greaser costumes we used to cobble together as a kid. I've decided to lower the bar of my moral outrage and let my principles float. While there, I scoured the shelves looking for festive articles from a customs classification perspective. As far as I am concerned everything in that store is a festive article. Two things struck me as a I wandered among the decapitated ghouls , gravestones, and ghosts: Halloween is far more extreme than when I made the rounds of my neighborhood with my friends and a pillowcase for candy. The gore factor is very much ratcheted up. I guess this is the trickle-down of Hollywood special effects and makeup technology. But it is not just the realism, it is also the context. Look at this picture I took with my cell phone; it depicts a plastic h...

Sunday's vote narrowly passed the CAFTA in Costa Rica. USTR Schwab had this to say on the occasion: The United States welcomes the outcome of the Costa Rican referendum on the free trade agreement that Costa Rica signed with the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States (CAFTA-DR). "We believe, and history confirms, that countries that open their markets have greater success in generating economic growth and development. We are pleased that Costa Rica will be joining the other CAFTA-DR countries in reaping the benefits of greater regional economic integration and market opportunities that the CAFTA-DR provides. "We look forward to working with the Government of Costa Rica as it completes the necessary steps to implement the agreement, so that the CAFTA-DR can enter into force for Costa Rica as soon as possible. Apparently, a Senate vote is scheduled for next week on the proposed U.S.-Peru FTA. The draft agreement has already be...

Yesterday, Costa Ricans went to the polls to vote on a referendum on implementing the CAFTA. As we previously discussed, there have been massive demonstrations against the agreement. Let the counting begin. In the meantime, Exxon Mobile and Murphy have given notice of their intention to pursue NAFTA Chapter 11 arbitration against Canada. The issue is interesting because it relates to performance requirements and dovetails with litigation that is still pending in Canada. The basic issue is that the NAFTA originally allowed Canada to continue certain existing performance requirements. However, in 2004, the Canada-Newfoundland Offshore Petroleum Board imposed certain research requirements or, in the alternative, payments into a fund. Exxon and Murphy claim the new requirements are illegal performance requirements and violate a number of NAFTA provisions including: Article 1106 on performance requirements Article 1108 which prevents the amendment of grandfathered measures to create ...

There is still no NAFTA Superhighway. But, Chris Hayes, who wrote a piece on the myth of the superhighway for The Nation, has apparently had second thoughts about the Security and Prosperity Partnership. Here is an exchange on the topic from his blog, which includes a link to his original article. I am not at all sure what to make of it. Even though it goes against my basic anti-conspiracy theory premise, I am putting it here in an effort to continue dialog (or possibly to fill space).

A Mayan statute was seized at O'Hare in Chicago. Here is the NPR story . Birds were recently seized from hunters after a bird flu outbreak in Canada. Bloggers are reporting major anti-CAFTA demonstrations in Costa Rica leading up to the referendum on Oct. 7. Some report marches of as many as 150,000 demonstrators. This Rueters report says 100,000.

The District Court in El Paso has issued a decision denying Ford's motion to dismiss the complaint against it for failing to produce NAFTA backup documents. [I'll post a link when I have one. Feel free to put a link in comments.] Customs and Border Protection had issued an administrative summons to Ford requesting the documents. Ford refused to produce them on the grounds that the documents are not (a)(1)(A) entry documents. Instead, they are backup documents the certifying exporter is required to keep. Ford even pointed to one of CBP's internal manuals, which expressly stated that the importer is not required to keep backup to the CO. I am in London right now and without certain resources I often employ when crafting blog posts. Chief among those is absolute sobriety and sleep. Still, here goes: In administrative law, there is a principle that an agency action should be reviewed based on its underlying actual rationale, not a post-hoc rationale dreamed up by agency counsel...

I'm not sure I know the answer to that. It does not seem like defendants are having much luck proving their case in Court. The latest big penalty comes in Inn Foods, Inc. The gist of this case is that one person's preliminary pricing may well be another person's double invoicing scheme. Also, there is a textbook example of piercing the corporate veil involved in the case. There is not much in the way of interesting or novel legal analysis to be had from the case. However, the fact that the result is a $7.5 million penalty for fraud is lesson enough. I have no idea what happened behind the scenes. But, one has to wonder whether there was some point at which this could have been settled for a lesser sum. It is entirely possible that the company involved could not absorb even a settlement amount and decided to bet the farm on litigation. Again I don't know and don't doubt that the lawyers laid out all the options. Sometimes, there are no good options. I am ...

I am feeling bad about not posting in a while. Believe me when I say that. I would, however, feel worse about not getting work done for actual clients. I'm sure you understand. In the meantime, please read my most recent article for the NCBFAA CCSContact on-line magazine. This time, I made it to the front page. Enjoy.

I did not want to become an advocate for Mexican trucking. Really. I just passed on the news that after 13 years, the NAFTA requirement to permit Mexican trucks on U.S. roads was about to be implemented. Then, I updated the post to note that a measure had been introduced in the Senate to block the trucks. Now comes the news that the Senate has voted to block appropriations necessary to support the pilot program. If signed into law, this would effectively stymie Mexico's efforts to provide international transportation services outside the border region. Jeez. I get that this is a populist issue that can be spun as pro-safety, pro-jobs, and pro-environment. Personally, I am pro all those things. I also get that NAFTA as a whole is not particularly popular at the moment. But, can we take a step back and look at this legally? The U.S. (via President George H. W. Bush) agreed to let the trucks in. Are we going to live up to our word? Maybe not. If not, there will be consequences. This...

At the U.S.-Mexican border, there is usually a lot of shifting cargo from one truck to another. This is because Mexican truck carriers have been prohibited from operating more than 25 miles into the United States. That means that the Mexican carrier often turns the goods over to a domestic carrier who finishes the delivery. This has lead to the development of a lot of distribution center businesses along the southern border. Back in 1994, the U.S. agreed to eliminate this obvious choke point in the supply chain by giving Mexican trucks the right to make deliveries throughout the U.S. in the same way Canadian trucks do. It's right there is the agreement as part of Chapter 12 which states, at Article 1202 : Each Party shall accord to service providers of another Party treatment no less favorable than that it accords, in like circumstances, to its own service providers. The treatment accorded by a Party under [the above] paragraph means, with respect to a state or province, treatment ...

Chicago-area compliance people, I'll be speaking at the International Trade Club of Chicago on September 21. The title is "NAFTA and Other FTAs - Internal Controls for Compliance." More information and registration is available here . Also, I will be in London for the ABA Section of International Law Fall Meeting October 3-6. My job is to moderate a panel on outsourcing and trade laws. Here is the brochure blurb: Buying Trouble: Avoiding Purchasing and Outsourcing Traps in Customs, Trade and Export Laws Tracks: Customs/Trade, Corporate/Finance, Corporate Counsel Corporate outsourcing of manufacturing and services is growing rapidly. Many American and European companies have expanded their purchasing horizons to include unfamiliar suppliers and service providers in possibly unfamiliar countries. Companies new to international procurement, including companies outsourcing production and service functions previously done in-house, face a complicated array of legal questi...

On the eve of the Labor Day weekend, I post these odds and ends: 1. Fox News laughs off the North American Union (as it should). 2. This is one peeved Customs and Border Protection employee. 3. What the heck is this ? It looks like something Dr. Evil would dream up. "I shall call it: Aqua-Lung." I understand the theoretical benefits of smuggling with a submarine. I also understand that a fast boat would be useful for this endeavor. But why would someone want a semi-submarine? The thing is still visible and must be slow. Maybe the thinking was that it would be literally below the radar. I hope CBP publishes a picture of this thing out of the water. Have a good long weekend.

You can keep your religious images on underpasses and tortillas . This is a picture of salvation. The power is on. The phone works. We have a DSL connection. Life is good. We finished cutting back the drywall and pulling out insulation this morning. In the middle of that, one sump pump gave up the ghost and had to be replaced. The required two trips to the hardware store. We made a third trip to buy a dehumidifier, which is now happily sucking moisture from the air. The A/C is running. I consider that a blessing although I am worried about whether the pump that moves the water from the condenser is still working. The last thing I want in the basement now is another puddle. It looks like the sofa is shot. Professional and amateur opinion is that it is irredeemable.

Today was day five without power. But, things are progressing. When wer arrived home this morning, the electrician was there to re-connect the power lines to the back of the house. Granted, there is no electricity running through those lines, but at least they are connected. We also have phone service. I'm not sure about data. The plumber/HVAC guy came by to bleed the water out of the gas line and restart the water heater. He also inspected the furnaces. Luckily, they can be repaired. One needs a new set of electronics plus a motor. The other, just needs the electronics. The big issue continues to be moisture in the basement. All of the carpeting and padding is out and we scrubbed the floor down with diluted bleach. The real question is what might be lurking behind the walls . We have had a diversity of opinion on how to deal with that issue. Some have suggested just using heating fans and dehumidifiers. While that might be a reasonable approach, it is a non-starter (literally) unt...

Here's to the lumber jacks who tote logs all day. Here's to the butcher who manhandles sides of beef. And, here's to the mob capo who has to move the deadest of dead weight. You are my heroes. I spent today cutting and pulling up soaked carpet. It was, I am certain, the hardest manual labor I have ever done. My muscles ache. I feel like I have the flu. I have more to do tomorrow. The paint is bubbling and literally falling down the wall. The doors are already warping. I need to figure out how to disinfect and prevent mold. I am told we need to cut down the dry wall at least part way up the wall. Usually, I keep references to family to a minimum. But, I need to say my wife toted wet dead weight today as well as I did. Also thanks to all four grandparents for entertaining Jr. My brother is coming to help tomorrow. This is going to sound studip, but I am half comatose, so what the hell. Usually, I am not shy about spending money to solve a problem. I have tried ...

The problem with blogs like this one is that it crosses back and forth between personal and professional. That means my family is bored to tears reading about the finer points of HS classification. Customs compliance professionals, on the other hand are left wondering "who is this guy and why do I care about the spider in his basement or his theories on Clifford the Big Red Dog?" It's a risk I take and I hope the professionals will continue to indulge me with the promise that I will get back on topic soon. The Great Chicago Hurricane of 2007 brought 70 MPH winds through my neighborhood. More than four inches of rain fell in only an hour or so. This follows a solid month of rain, so the ground was saturated the water had nowhere to run, except into my basement. For those of you not familiar with the midwest, it is flat here. Water accumaltes under foundations. To avoid basements that resemble turtle habitats, we have sump pumps. These pumps are great so long as you have po...

Today was a crazy weather day. At three o'clock it was black as midnight with rain pouring down in buckets. In the suburbs, tornado sirens sounded and people headed to shelter. My train home was delayed. Think about that. How much rain does it take to delay a train--by 50 minutes? There was high water on the road home. I was only confident I would make it when I followed a Civic through the water. When I got home, I found the power and phone out and toys, carpet, and the botton six inches of a not inexpensive sofa floating in my basement. I am at a loss. I don't know where to start. I put on sailing foul-weather boots and moved dry stuff to higher ground. Now I am waiting for a plumber at close to midnight. It is going to be a long weekend.