Customs Law

I don't moderate comments. I don't get enough to worry about and almost all have been on point and respectful. I've noticed that I am attracting a few more spammy comments and at least on company that sells a NSFW product has posted numerous spam comments. For now, I am going to leave the situation alone. Rather than moderate comments, I'll assume everyone understands that anonymous comments don't come from me. If it does get worse, I'll move to moderating comments. Unless anyone can tell me whether I can block comments from a specific visitor in Blogger. That would be the better solution.

Over at Public Citizen's Eye on Trade blog, they are complaining that CAFTA has no means by which the US can eject a country that has undertaken some anti-democratic action, failed to adopt the rule of law, or otherwise misbehaved. The blog compares that to AGOA, a program in which the President has exactly that power. Recently, Niger, Guinea, and Madagascar lost AGOA benefits following undemocratic transfers of power . Why not, Public Citizen wonders, do the same under CAFTA where Honduras has had a similar experience. The reason is that AGOA, GSP, and other unilateral preference programs belong to the United States. The US made the rules and can kick out a country that fails to satisfy the rules. CAFTA, like NAFTA and the other bilateral or multilateral trade agreements, are different. The rules were negotiated between and among the parties. Since no one will agree to negotiate and implement a trade agreement from which they might be ejected, the agreements contain no suc...

As the 2009 winds down, the Court of International Trade appears to be clearing its collective desk. Storewall, LLC v. United States involves the classification of wall panels used as store display systems. The panels are made of plastic and affix to a wall via a plastic locator tab. The panels are grooved to accept shelves, baskets, and other display items. The importer claims that the merchandise is classifiable as furniture in Heading 9403, while Customs asserts that the correct classification is as articles of plastic in Heading 3926. The problem for the plaintiff is that Chapter 94 Note 2 defines furniture as something designed to be placed on the floor or ground. The display systems mount on a wall. But, the note contains an exception for items designed "to be hung, to be fixed to the wall or to stand one on the other." That exception is intended to cover "cupboards, bookcases, other shelved furniture and unit furniture." The wall-mounted panels are cl...

This case follows in the footsteps of the decision in Aectra Refining and involves the question of what is necessary to perfect a claim for drawback. In this case, the claim was for the drawback of the Harbor Maintenance Tax and the Merchandise Processing Fee. It is also a good life lesson about the importance of the confirming memos we lawyers use to get things on paper (real or virtual) when others are content to leave them un-memorialized. As background, you need to understand that in Aectra, the plaintiff did not claim drawback on MPF and HMT because, at the time of the initial claim, the law did not support the drawback-ability of those fees. Following a Federal Circuit decision in Texport Oil Co., the law provided for drawback of MPF but not HMT. Congress made HMT eligible for drawback in 2004 and retroactively applicable to pending claims. The specific issue in Aectra was whether Aectra’s protest was enough to establish a claim for drawback of HMT and MPF that was not assert...

Agro Dutch Industries is technically a dumping case, but it deals with the issue of the impact of liquidation by Customs and Border Protection, so I will deal with it here. This case involves the review of the dumping order covering preserved mushrooms from India. Commerce issued its determination and Agro sought to challenge it. To preserve its rights, Agro moved for an injunction with the consent of the United States. The injunction was necessary to prevent Customs from liquidating the entries. The general rule is that once liquidation happens, there is no relief available and the case is moot. So, the injunction was important and both sides knew it. In the background is the fact that Agro waited beyond the allowed 30 days to seek the injunction, but that provides context more than anything else. At the request of the government, the injunction included a five day grace period before it became effective. The grace period was intended to prevent Customs people from accidentally...

Often, I disagree with a position adopted by U.S. Customs and Border Protection. That is the nature of my job. Sometimes I am right, sometimes, I am wrong, and often reasonable minds may differ. What I don't do is see everything that CBP does through the lens of Washington policy makers. That is primarily a result of years of experience dealing with the agency and also my Midwestern practicality. Rarely do I see any coordinated conspiracies. For example, there was a lot of hubbub a while back about a CBP proposal that would have effectively banned the importation of a category of pocket knives that have spring assisted opening mechanisms but have not heretofore been classified as illegal switchblades. Some people believed this to be a stealth effort by the Obama administration to slowly limit personal rights which would ultimately result in the repeal of the Second Amendment and the loss of gun rights for all Americans. I seriously doubt that. In fact, I am willing to bet th...

Customs and Border Protection has posted its annual report on the seizure of counterfeit merchandise. Here are some highlights: Almost 15,000 seizures of counterfeit merchandise The seizures amounted to $260 million in domestic value There was a small decline in seizures, which was far smaller than the decline in overall imports China was the leading source for counterfeits Footwear was the leading commodity seized Here is a link to the full report .

Customs has seized a $1.6 million in counterfeit toys. The merchandise included "knockoff" Barbie dolls and riding toys with unauthorized Jeep labels. Here is the news story . IN a separate event, Customs and Border Protection seized $1.7 million in merchandise bearing counterfeit sports team logos. Wayla-guy would be offended to know that Cubs logos were included among the counterfeits. Here is that news story . Normally, I would not post simple news reports on seizures. But, I just taught on this topic last night. So, this is to let my student know that these things really happen in the real world. My student, I hope, also now understand how very difficult it can be for a good faith buyer to differentiate between a counterfeit and legitimately imported gray-market goods. For all you budding retail entrepreneurs, note that this is a risky business.

Just when I thought there was nothing new to blog about . . . . According to news reports , the Gibson Guitar company has been raided by federal agents of the Fish and Wildlife Service enforcing the Lacey Act amendments. The underlying investigation appears to be focused on imports of rosewood from Madagascar. Under the Lacey Act, importers of many products that are or include plant materials are required complete a declaration identifing the botanical genus and species being imported and to certify that the plant materials were harvested and exported legally. From a corporate compliance stand point, that can be difficult because the direct supplier often will not know the origin or legal status of the wood it purchased. This requires that importers set up a system a tracking the plant material back to it's origin. It is not unlike NAFTA tracing for automotive companies.

Sometimes it takes a while for things to actually hit the front of my brain. Such is the case with a June 2009 decision of the Seventh Circuit Court of Appeals involving an appeal from a criminal conviction under ITAR. In the spirit of "better late than never," here is a summary of U.S. v. Pulungan (No. 08-3000, decided Jun. 15, 2009). Mr. Pulungan tried to export some riflescopes to Indonesia. Believing there to be an arms embargo on Indonesia, he planned conceal the actual destination by transshipping via Saudi Arabia. In reality, the embargo had been lifted in 2005, two years before the attempted export. The scopes, however, are arguably controlled by the International Traffic in Arms Regulations as riflescopes "manufactured to military specifications." Importantly, the law provides that the designation "in regulation" of items as defense articles is not subject to judicial review. As a result, the district court instructed the jury to accept th...

Here is an interesting footnote to my recent post on Customs and Border Protection's enforcement of intellectual property rights. First, I received an e-mail from some well-respected customs lawyers expressing concerns over Customs' enforcement. The concerns included the timing of infringement decisions and, surprisingly, the fact that Customs' has seized legitimate merchandise bearing registered a trademark on the theory that the registered trademark infringed another registered trademark. That sounds like CBP has stepped into the Patent and Trademark Office's territory. Another interesting point is this post by Seattle Trademark Lawyer Michael Atkins. According to the post, another Seattle trademark lawyer has filed a suit under the Freedom of Information Act seeking the release of all seizure notices relating to counterfeit merchandise. From the post, it is not clear whether the suit goes so far as to seek records of detentions and Notices to Redeliver. Either ...

It has been a while since I have done a purely off-topic post. For purposes of efficiency and recognizing that most visitors to this blog are looking for specific and useful information, I have avoided the "whatever strikes my fancy" kind of post. Facebook has also given me a more appropriate outlet for those topics. That said, I am moved to write about an episode of Batman: The Brave and the Bold . I am not a fan of classic American musical theater. I would rather do just about anything than sit through another production of Oklahoma!, Camelot, or Bye Bye Birdie. On the other hand, I have enjoyed more modern musicals including Rent, and Les Miserables. The stage production of Tommy was one of the best musicals I have seen. That is background. The next piece of background is that I read comic books, or "comics" as we in the know say. Specifically, I read a couple series on the DC side of things (although I am dabbling in Marvel's effort to bring Captain ...

I'm only posting this link because I know there continues to be interest in the policy questions surrounding Customs and Border Protection warrantless searches of electronic storage devices such as laptops and phones. This guy was pulled from the customs line following a cruise. He was already a convicted sex offender. That, no doubt, accounts for the heightened scrutiny. When CBP reviewed the contents of his computer, it found child pornography. As a result, the passenger is now headed to prison for 15 years. The article makes the usual references to civil libertarian concerns and possible statutory changes. The problem with the cases is that the defendants are so unsympathetic. Who in Congress will stand up for the rights of perverts and terrorists to be free from border searches. The problem, of course, goes much deeper because it is not just perverts and pornographers who might be searched. It is everyone and that means privileged medical records, attorney-client commu...

Customs and Border Protection has established a new continuous bond category for intellectual property rights holders to use to secure the release of samples of allegedly infringing merchandise. This will simplify the process of getting samples for analysis for companies that often work with CBP to interdict counterfeits or infringing merchandise. Rights holders can also use a single transaction bond, if they prefer. Here is the notice from Customs, which includes an contact number for more information. While we are talking IPR, Customs has also finally republished the Informed Compliance Publication on CBP Enforcement of Intellectual Property Rights . All this activity is probably evidence of Customs' continuing focus on IPR enforcement. Here is a nagging question I have. Does anyone in Customs represent the innocent legitimate importer in enforcement policy. The reason I ask is that I have seen clients with legitimate, non-infringing merchandise suffer very serious expense an...

The Court of International Trade has once again dashed the hopes of Arthur Schick to regain his customhouse broker’s license without re-applying for a license from scratch. I previously reported on Mr. Schick’s plight . He had his license summarily revoked after failing, due to illness, to file his triennial status report as required by 19 U.S.C. 1641(g). Mr. Schick’s lawyers made a valiant effort, raising a number of arguments that Customs and Border Protection improperly revoked the license without a hearing and, therefore, the revocation is invalid. These arguments were based upon the customs regulations, the Administrative Procedure Act, and the Fifth and Eighth Amendments to the Constitution. The latter arguments were based on the premise that the lack of a hearing violated Mr. Schick’s due process rights and that the revocation was an excessive punishment. In the first opinion from the Court of International Trade, the Court dismissed the case finding that it had no ...

I know this is short notice, but if anyone is going to be in Miami tomorrow for the ABA Section of International Law Fall Meeting, please say hello to me. I will be helping to moderate a panel on transfer price for customs and income tax Thursday at 8:30 AM. Apparently, the ABA felt the driest possible topic should start off the morning. Friday there is a tour of MIA Customs and Border Protection cargo facility. I am not sure if I will make that because I have a flight to catch Friday evening. While I am thinking of it, if you are in Chicago next week, I'll be introducing U.S. Court of International Trade Judge Timothy Stanceu at the annual DiCarlo lecture. This lecture is named in memory of "my judge," Dominick L. DiCarlo who was Chief Judge of the Court of International Trade. Judge DiCarlo had three successive John Marshall grads as law clerks. Judge Stanceu is, I think, the eight judge to speak in the series. Information is available here .

It's been a pretty busy couple of weeks and will continue to be. Earlier this week, I participated as co-counsel for the plaintiff in a mock trial sponsored by the Customs and International Trade Bar Association . The trial went reasonably well, although I was surprised by a document I created on which I failed to check the math. Note to self: Don't do that in real life. There have been a couple developments recently that deserve some blog coverage: Here is video of testimony on the Customs Reauthorization bill. Customs and Border Protection has published a Federal Register Notice regarding the use of sampling methodologies and offsetting overpayments in audits. This is interesting because statistical sampling in audits and prior disclosure perfections has been somewhat ad hoc. The issue has generally been whether the importer and the auditor could come to an agreement on a reasonable means of calculating the duties owed. Both sides generally understand that it is ofte...

Recently, I answered a question posted on the ICPA listserv. The question was interesting enough that I will review the substance of it here. Most people generally think of the NAFTA preferences in terms of criteria A through D. These cover the vast majority of compliance issues with B being the leader. The ICPA question was about preference criterion E. What, you ask? Never heard of it. Well, it is of limited use, but if you are in the IT sector, it is a terrific rule. Preference E states simply that certain goods listed in NAFTA Annex 308.1 are considered originating simply by virtue of having been imported duty paid into the NAFTA region. [If you struggle with tariff shifts and RVCs, pick your jaw up off the ground.] What this means is that a 100% Japanese content computer imported duty paid into Mexico, for example, is originating when it is later transferred to the United States or Canada. In other words, for the IT sector, NAFTA sets up a mini customs union. That's...

This is a tricky question that was answered in Funai Electric Co. v. United States . The underlying issue has to do with a determination by the International Trade Commission that certain imported digital televisions infringed a U.S. patent. As a result, the ITC issued an exclusion order requiring Customs and Border Protection to prohibit entry of the infringing televisions. This all happens under 19 U.S.C. sec. 1337 in what is called a 337 case. Following the exclusion order, some of the infringers developed a work-around to produce what they believed to be non-infringing televisions. They then went to Customs to get a ruling confirming the admissibility of the new televisions. Customs provided the ruling . Seeing the value of their exclusion order evaporate, the patent holder went to the Court of International Trade seeking a declaratory judgment or other relief holding that Customs has no authority to determine the scope of an ITC exclusion order. Rather, that task should fal...

I read Rodrogue, so you don't have to. United States v. Rodrogue involves a technical issue in which the United States attempted to cure defective service on the defendant. Service is the means by which a defendant is notified of a claim against it. If service is not made properly, the Court does not have jurisdiction. In this case, the US sought leave of the Court to extend the 120-day service period by an additional 90 days and to permit service by public notice. Public notice service is based on the legal fiction that people actually read the legal notices buried in the back of the newspaper. The gist of the facts is that Customs repeatedly tried to serve the defendant's at the wrong addresses. One defendant was finally served, but after the statute of limitations and the 120-day period for service had run. The other defendant was never served. The upshot is that the United States needed to show good cause for its failure to serve. If it does show good cause, the Cou...