Customs Law

Usually, I do not cover breaking personnel news, but this is interesting, relevant, and good news for the customs and trade bar. Here is an article from The Blog of Legal Times  stating that Judge Wallach may be moving to the Federal Circuit. Here is what the White House had to say (which is easier than writing something myself): WASHINGTON, DC – Today, President Obama nominated Judge Evan Jonathan Wallach to the United States Court of Appeals for the Federal Circuit.  Judge Wallach is currently a judge on the United States Court of International Trade. “Judge Wallach has distinguished himself throughout his legal career in both the public and private sectors,” said  President Obama .  “He possesses a keen intellect and a commitment to fairness and integrity that will serve him well as a judge on the Federal Circuit.” Judge Evan Jonathan Wallach:  Nominee for the United States Court of Appeals for the Federal Circuit Judge Evan Jonathan Wallach has been a ...

Secretary of State Clinton was quoted in the New York Times today warning our Asia trading partners to avoid a multitude of inconsistent and complicated trade deals. Rather, she encouraged a broader regional approach to avoid creating difficulties for businesses. According to Mrs. Clinton: "There is now a danger of creating a hodgepodge of inconsistent and partial bilateral agreements which may lower tariffs, but which also create new inefficiencies and dizzying complexities,” Mrs. Clinton said. “A small electronics shop, for example, in the Philippines might import alarm clocks from China under one free trade agreement, calculators from Malaysia under another, and so on — each with its own obscure rules and mountains of paperwork — until it no longer even makes sense to take advantage of the trade agreements at all. Instead, we should aim for true regional integration." Think about that for a minute.  Mrs. Clinton is so far into the pot calling the kettle black territor...

The question in National Presto Industries v. United States , is whether an adult diaper-making machine is classified in 8441 as other machinery for making up paper pulp, paper, or paperboard or in 8479 as other machinery having an individual function, not specified or included elsewhere in Chapter 84. Typically, one would assume that 8441 will apply because it is more specific than 8479, which is a basket provision. But, that analysis skips past General Rule of Interpretation 1. If the goods fit in 8441, they go there. Presto, the plaintiff in this case, reasoned that because Customs classifies diapers as articles of paper pulp, the machine that makes a diaper must fall within 8441. Presto backs this up with Customs and Border Protection rulings saying that paper pulp provides the essential character to diapers. In addition, the Explanatory Notes to 8441 broadly state that 8441 covers machinery for producing made up articles of paper pulp. The government, argues that because paper...

According to this article , U.S.-based energy guy T. Boone Pickens feels that he has been unfairly cut out of a deal for the sale of electricity to Canada via wind production. I have no idea about the underlying facts, but I am always happy to see investors invoking the NAFTA Chapter 11 provisions, the corresponding investment provisions in other Free Trade Agreements, or free-standing bilateral investment treaties. In the case of NAFTA, Mr. Pickens will need to prove that a Canadian governmental entity undertook a "measure" that violated a protection provided to U.S. or Mexican investors in Canada. Those protections include: National Treatment:  This means that the investor must receive treatment that is no less favorable than would be afforded to a similarly situated domestic investor. Most Favored Nation Treatment:  This means that the investor must receive treatment that is no less favorable than would be afforded to a similarly situated investor from any other coun...

Customs and Border Protection has posted an updated Importer Self Assessment Memorandum of Understanding. You can read that document here . I don;t want to sound like a curmudgeon; I am at least two years away from that status. But, I have long had questions about the value of ISA participation. Looking at this MOU, the ISA member agrees to a number of things including: Agreeing to comply with applicable CBP laws and regulations Perform annual risk assessments Make appropriate disclosures Maintain results of testing for three years and make test information available to CBP upon request Maintain an audit trail from financial records to CBP declarations, or an alternate system that ensures accurate values are reported to CBP So, the ISA member has to perform annual testing and maintain the records for review by CBP.  An importer that is not in ISA but behaves as if it were would undertake annual (or more often) risk assessments. Those reports, however, if done at the direct...

It's a long weekend here. I am catching up on e-mail and news. Here are a couple interesting things. Australian Customs and Border Protection foils a plot to smuggle reptiles in teddy bears . More smuggling in teddy bears ; this time it's cash. Detroit area boater finds Czech national swimming to US. UPS package contained nearly $1 million in allegedly counterfeit watches . Here is Steve Chapman in the Chicago Tribune dissing Trade Adjustment Assistance . The point I think he missed is that the difference between someone in Pennsylvania losing a job to someone in Texas and the same worker losing a job to Brazil is that no affirmative change in policy by the federal government helped the job move to Texas. Since the U.S. government entered into a trade agreement that ultimately cost that American a job, it seems only decent to provide some benefits to help the worker adjust. Chapman also forgets that tariffs are only one variable in a complex decision on where to locat...

I rarely mention specific judges of the Court of International Trade. I generally never want my blog posts to be personal and I certainly do not want to risk having a judge think I am taking pot shots. But, I presently feel compelled to call out Judge Timothy Stanceu. Happily, it is because he is my hero of the moment due to his decision in CBB Group, Inc. v. United States . Anyone interested in how Customs and Border Protection treats merchandise detained, excluded, and ultimately seized for alleged intellectual property violations should read this case. The important point of background is that Customs can’t hang on to imported merchandise indefinitely without going through several procedural steps. When merchandise first arrives, Customs has five days in which to release it. After that, it is considered to be “detained.” Detention is sort of importer limbo. But, after 30 days of detention, the goods are considered to have been “excluded.” Keep in mind that “exclusion” is not a seiz...

Usually, when a federal agency takes some action, it provides a statement of legal authority. While this may look like boilerplate, it can be important. For example, the statute providing legal authority might include procedural steps that must be followed before the action can be taken. Or, the legal authority might dictate whether a court has jurisdiction to review the action. Almond Bros. Lumber v. United States , is an example of the latter. This case from the Court of Appeals for the Federal Circuit involves the long-running dispute between the United States and Canada over softwood lumber imports to the U.S. Softwood lumber is possibly the Jarndyce v. Jarndyce of the trade world. [Note: I never actually read Bleak House, I just like the metaphor.] All you need to understand this case is the gist, and that is all I will give you. Canada sells lots of softwood lumber to the U.S. Back in 1986, a coalition of U.S. lumber producers filed a petition seeking the imposition of counter...

Did you know that Customs had previously ruled that imported business cards required country of origin marking on every card, not just the box? If not, scroll down to page 16 in this Bulletin . Happily, the notice is a revocation of the rulings. In the revocation, Customs agrees that marking on the box in which the cards reach the purchaser is enough. Customs has reminded (?) the trade that if you are making a post-entry NAFTA claim that includes a change in tariff classification, the HTSUS change needs to be handled via either a protest or a PEA. The NAFTA change is to be handled via a 520(d) claim. So says CBP here . I have three decisions on my desk to review and possibly blog. At least two are interesting to me. One involves a jurisdictional dispute over an intellectual property seizure. Another involved a denied drawback claim. The third is a penalty case. You tell me which you want first. Lastly, and very important, is a note that the Border Patrol (a unit o...

The Court of Appeals for the Federal Circuit has decided the appeal in Camelbak Products LLC v. United States . And, in this case, the Camelbak is the winner. You may recall we discussed this case earlier here . In that post, my main gripe was that the Court of International Trade did not perform much of an analysis of whether the combined backpack/hydration system was a composite good for tariff purposes. It turns out that I was basically right, though the Court of Appeals went further than I thought it might. This is a very interesting opinion. The Federal Circuit first had to deal with the question of whether the Court of International Trade was correct that the backpack/hydration system falls within the scope of the eo nomine provisions for travel, sports, and similar bags in HTSUS heading 4202. If it does, then the goods are classifiable there pursuant to GRI 1. On the other hand, there is also an eo nomine provision for beverage bags. In deciding whether Customs and Border Pr...

I have a bad habit of assuming that people who visit this site are completely up to date on what is going on administratively. So, I failed to let people know about something fairly important: Customs issued new guidance to the ports on the proper use of the CF 28 (Request for Information) and CF 29 (Notice of Action) and how those documents relate to the commencement of an investigation. I posted about the issue her e. Due to my confirmed belief that there is no copyright in works created by the federal government, I am posting the notice in its entirety. Note, I have no idea why there are numbers throughout. GUIDANCE:   PASS TO:        Please pass this information to port directors, assistant port directors, import specialists, entry specialists, brokers, and importers.5 CONTACT:     For questions regarding this memorandum, please contact Ms. Laurie Dempsey,   Chief, Entry, Summary, and Drawback at (202) 863-6509, laurie.demps...

The Court of Appeals for the Federal Circuit has vacated and remanded the decision of the Court of International Trade concerning the tariff classification of video monitors that are most likely used with computers but have standard connections for use with other video sources. My post on the original decision is available here . This is one of those cases that makes tariff classification more than just checking a ruling or the index to the Harmonized Tariff Schedule. Classification is a lot like a Sudoku puzzled. In order to get to the right result, the classifier has to apply all the rules in the right order. Skip a step or misunderstand a rule, and you are likely to get the wrong result. That is what that Federal Circuit says happened at the Court of International Trade. The CIT appears to have focused on Note 5(E) to Chapter 84 to the exclusion of Note 5(B). Note 5(E) provides that "Machines incorporating or working in conjunction with an automatic data processing machine...

This is not the trade law blog, but when push comes to shove it is usually Customs that enforces the trade laws. That means that trade issued often come up for importers who were never directly involved in an antidumping or countervailing duty case. Take, for example, the large number of companies that have discovered that the aluminum extrusions they purchase from China are three times as expensive as they had planned. Whether the commodity is an aluminum extrusion or anything else, importers are often caught off guard by dumping or CVD orders. First, some background. An antidumping case results when a domestic producer petitions the U.S. government for trade relief. The petition has to provide some basis for believing two things. First, that the product is being sold in the United States at a price (properly adjusted) that is below the cost that similar goods (properly adjusted) are being sold in the home market. Second, that the "below normal value" sales are causing (or...

Graphite Sales v. United States  is a classification case involving electric heating resistors. These are metal elements connected by wires to a power source. When electricity flows, the element heats up. If you are having trouble picturing that, look inside your toaster when it is on. We are talking about the red things, except that the resistors at issue are more compact are are used in gas appliances like stoves and clothes dryers. They heat up and ignite the gas in the appliance and serve as an alternative to a pilot light. The classifications in play at the Court of International Trade were Heading 9613, "Cigarette lighters and other lighters, whether or not mechanical or electrical," and Heading 8516, "Electric heating resistors," among other things. The duty for 9613 is 3.9% and for 8516 is free. Now, please don't send me e-mails complaining that I am not dragging the classifications out to 10 digits. In this case, the headings are the only thing that m...

In CBB Group Inc. v. United States , the underlying issue has to do with plush toys that Customs and Border Protection detained as piratical copies. "Piratical" in this sense has nothing to do with Jack Sparrow or Black Beard. Rather, it refers to products the production of which, if made in the U.S., would constitute copyright infringement. So, DVDs holding a copy of Pirates of the Caribbean: On Stranger Tides , produced in China without the express written consent of Disney, would be piratical (in two senses). This decision is entirely procedural. It involved another defense motion to stay discovery pending the Court's decision on a motion for judgment on the pleadings. Apparently, the government is so convinced that there is nothing to this case, that it does not want to bother with discovery. Rather, it thinks the Court of International Trade should dismiss. This is one of those cases where the decision is basically entirely up to the discretion of the judge. Here...

I have another FOIA case to post. But, while I have been steadily (and happily) busy at work, the Courts have been busy too. Here is an update. United States v. American Home Assurance Co. is a penalty case that is in the early stages. The defendant, a surety, asked the court to grant summary judgment in its favor and to stay any further discovery until the court acts on the summary judgment motion. The United States has also asked for a stay, but it wants a stay of the summary judgment motion until discovery is complete. The basis for the defendant's motion is that Customs apparently suspended liquidation of the relevant entries but never notified the surety of that suspension. According to the surety, that means the suspension was ineffective. This case involves merchandise subject to an antidumping duty order. The importer's entries were, like all entries subject to the case, suspended when someone requested an administrative review. Customs should have notified the sur...

A legal think tank known as The Constitution Project , has issued a report on the practice of searching digital devices carried by passengers at ports of entry. This has been a hot-button issue that has pitted privacy advocates against Customs and Border Protection's security and law enforcement mandate. Here is a link to the report . The report concludes with a recommendation that the Department of Homeland Security amend its existing policy to require a reasonable suspicion of wrongdoing before conducting a digital search. Further, the report recommends that DHS secure a warrant before it is able to retain copies of data or seize the device for further review beyond a reasonable period. There are other recommendations including some dealing with potential racial profiling, privileged information, and the possibility that other law enforcement agencies will piggy back on Customs border search authority to get information that would otherwise not be available without a warrant.

This blog has a history with spiders . And, with animal smuggling ( here  and here , for example). Thus, there is no way I was going to pass up this story . Yes, you can guess the gist of it. A German national has been found guilty of illegally importing spiders, tarantulas in particular, into the United States. Among his merchandise was the protected Mexican red-knee variety. I guess it is a good business, except for the part that involves six months in jail and a $4,000 fine.

There have been a couple of recent Freedom of Information Act cases that touch on trade issues and caught my attention. The first is Watkins v. Customs and Border Protection . This case involves an intellectual property lawyer who made a number of requests to several ports for copies of seizure notices issued to trademark owners when Customs seizes counterfeit goods. These notices include the name and address of the importer, the exporter, and the manufacturer (if known) and other information. Customs eventually provided some of the requested documents, but they had been highly redacted. The plaintiff appealed the limited release to the District Court and then to the Ninth Circuit. By way of background, the Freedom of Information Act creates a public right to access public documents that have been unnecessarily shielded from the public. The Supreme Court has said that the purpose of the act is "to ensure an informed citizenry, vital to the functioning of a democratic socie...

The Federal Circuit has decided Dell Products v. United States , a case we previously discussed here . Not much changed in the analysis between the Court of International Trade and the Federal Circuit's decision affirming the CIT. The facts are simple. Dell imported a laptop computer kit (via a foreign trade zone) that contained an extra battery. The battery was added to the order by the customer and not by Dell. The bottom line is this: According to both courts, when General Rule of Interpretation 3(b) talks about articles "put up in sets for retail sale," they are referring to collections of goods selected by the seller rather than collections of goods selected by the buyer. In the former case, the goods have been "put up" for retail sale. In the latter case, they have simply been selected. This is a perfectly reasonable reading of the law, which will likely stand as the final word on this question. Divorced from the business of actually processing entri...