News in Global Trade Law

U.S. Repeals Ban on Imports from Burma

President Obama issued Aug. 7 an executive order repealing the provisions of a previous order that implemented a broad ban on imports from Burma under the Burmese Freedom and Democracy Act, which expired July 28. The State Department had waived these provisions as part of the process of easing economic sanctions against Burma in response to the reforms the government of that country has implemented over the past two years.

The ban on imports of jadeite and rubies mined or extracted from Burma and articles of jewelry containing such gems remains in effect. This ban applies to any jadeite classifiable under HTSUS 7103, any rubies classifiable under HTSUS 7103, any article of jewelry classifiable under HTSUS 7113 that contains jadeite or rubies, and any article of jadeite or rubies classifiable under HTSUS 7116.

U.S. Cuts Free Trade Preferences for Argentina.

The United States is removing tariff-free treatment for imports from Argentina under the GSP Free Trade Agreement citing the Argentinean government has ignored requests to pay $300 million plus interest in penalties.  

“The suspension of Argentina’s GSP eligibility is based on a finding that the country is not in compliance with the statutory GSP eligibility criteria set by Congress,” said Ambassador Kirk. “Specifically, the Argentine government has failed to pay two longstanding arbitral awards in favor of U.S. companies. We urge the Government of Argentina to pay the subject awards. This would allow us to consider reinstating Argentina’s GSP eligibility and promote the growth of a mutually beneficial U.S.-Argentina trade and investment relationship.”

The GSP a action will become effective 60 days after the publication of the presidential proclamation in the Federal Register.

This action is the result of an interagency U.S. Government review of two separate petitions submitted by U.S. companies. Argentina has failed to pay the fnes to the United States. Argentina's exports benefited from GSP treatment to the tune of $477 million USD (about 11 percent of total imports from Argentina) last year.

Los Angeles: An International Economy

California has always been known as an incubator of new ideas, new products and the entrepreneurial spirit. Southern California has led the way in celebrating and nurturing that spirit. Nowhere moreso than in Los Angeles. The international diversity, people, institutions of knowledge, great climate and infrastructure have enabled the Greater Los Angeles Area to emerge as a leading business, trade and cultural center and creative capital for the 21st century.

Los Angeles is now the largest major manufacturing center in the United States, with over 500,000 workers in manufacturing jobs. The largest components are textiles (68,300 jobs), computer and electronic products (60,000 jobs), transportation products (54,600 jobs), fabricated metal products (49,900 jobs), food products (44,800 jobs), and furniture (27,400 jobs). The last decade has witnessed a major economic expansion. Los Angele's three-tiered, traditional economy (aerospace, entertainment, and tourism) of the 1990's has now evolved into a well balanced, diverse, multi-tiered economic engine driven by unparalleled access to world markets. The Los Angeles combined statistical area (CSA) has a gross metropolitan product (GMP) of $831 billion (as of 2008), making it the third largest economic center in the world.

Steel fabrication is the second largest industry in manufacturing, followed closely by fashion apparel. In the United States, only Detroit produces more automobiles than the Los Angeles area, a fitting statistic for the city with more cars per capita than any other in the world. The big three U.S. auto manufacturers, along with Honda, Mazda, Nissan, Toyota, Volkswagen, and Volvo, have all located design centers in Los Angeles and the additonal manufacturing and design of heavy machinery for the agricultural, construction, mining, and oil industries contributes significantly to the local economy. Los Angeles is also a major producer of furniture and fixtures, as well as petroleum products and chemicals, print material, rubber goods, electronic equipment, and glass, pottery, ceramics, and cement products.

Los Angeles is the nation's largest port in terms of value of goods handled AND and tonnage. Proximity to the major Pacific manufacturing nations—China, Japan, Korea, and Taiwan—and easy access to NAFTA transcontinental rail and truck shipping, plus the large commercial facilities available at Los Angeles International Airport and Long Beach make the Los Angeles Customs District the largest in the nation. The city's prominence in international trade is evidenced by thousands of U.S. headquarters of foreign companies located in the area.

The banking and finance industry in Los Angeles is one of the largest in the United States. More than 100 foreign and countless domestic banks operate branches in Los Angeles, along with many financial law firms and investment banks. This goes without mentioning the entertainment industry, in the form of film, television, and music production, is the biggest and best known industry in Los Angeles and the WORLD, focusing worldwide attention on the city and making Los Angeles a major tourist destination. Tourism employs more than 468,000 people in the LA metropolitan area alone.

Other prominent industries in the Los Angeles area include health services, education, science, design, high-technology research and development, professional fields such as architecture and engineering, and a large construction business, both commercial and residential.

As mentioned International Trade is a major component of the Los Angeles area economy. The Los Angeles Customs District (including the ports of Long Beach and Los Angeles, Port Hueneme, and Los Angeles International Airport) is the nation's largest, based on value of trade. In 2003, this totaled $235 billion. And import and export shipping through Los Angeles International Airport (LAX) is expected to jump 140 percent by 2015. With its increasingly expanding air cargo system, LAX started a major expansion in 2006. Several major transcontinental rail systems, used by a number of rail shipping companies, also terminate in Los Angeles. The Alameda Corridor, a $2.4-billion, high-speed cargo rail system linked to the Port of Los Angeles was completed in 2002, making it even easier to ship products across the globe. All of the major interstate truck companies maintain large facilities in the metropolitan area.


U.S. Customs and Border Protection Import Trade Trends Fiscal Year 2010 Mid-Year Report is Included Below:
Click here to view


MARCH 19th, 2009

Beginning today Mexico is reimposing tariffs on a wide range of U.S. exports in retaliation for the recent termination of a pilot project that allowed Mexican long-haul trucks to operate beyond specified border zones. This action is consistent with NAFTA and will result in Mexican import tariffs of 10% to 45% on almost 90 different products, including the following.

- Christmas trees - 20%
- Onions, cabbage, pasta - 10%
- Almonds, dates, peanuts - 20%
- Fresh grapes - 45%
- Fresh pears, apricots, cherries and strawberries - 20%
- Frozen potatoes and peas - 20%
- Fruit and vegetable juices - 20%
- Wine and other alcoholic beverages - 20%
- Health and beauty items - 15%
- Tableware, kitchenware and glassware - 20%
- Various printed matter - 20%
- Manmade fiber yarn - 15%
- Carpets - 20%
- Jewelry - 20%
- Home appliances - 15-20%
- Cordless phones - 20%
- Sunglasses - 15%
- Pens and pencils - 20%


As a result of the U.S. Safe Port Act, and regulations issued by U.S. Customs, a new program will be implemented beginning January 26th 2009 which will directly impact the importation of all products shipping via ocean freight into the U.S.

All importers of ocean cargo into the U.S. will be required to electronically transmit the following data elements to U.S. Customs (CBP)

This data must be filed 24 hours prior to cargo loading overseas on board a vessel bound for the U.S.

  • Manufacturer or supplier name and address
  • Seller name / address
  • Buyer name/ address
  • Ship to name / address
  • Container stuffing location (LCL/FCL)
  • Consolidator / stuffer name/address
  • Importer of record number
  • Consignee number
  • Country of origin
  • HTSUS number to first 6 digits
  • Bill of Lading Number  (to tie the information to manifest)
  • Commercial invoice and packing list

Failure to comply with the new requirement can cause delays in shipment of cargo overseas, a potential for monetary penalties, and an increase in cargo examinations by U.S. Customs. U.S. Customs will begin issuing fines of $5000.00 per shipment for each house bill starting 01/26/2010 for any shipment in which an ISF filing is not filed 24 hours before loading for export.

We are sending out this information to make our clients and suppliers more aware of the new requirement. This effort is intended to avoid delays throughout the supply chain and to give suppliers who export to the U.S. an opportunity to plan for this change.

I suggest this is implemented immediately.

In order to get your suppliers / importers prepared, Michael S. Cooke, CHB should receive the commercial invoice and packing list at the same time we receive the ISF information so that we can determine the correct tariff numbers and other legalities. We suggest at least 4-5 days in order to get your suppliers in the habit of doing this every single time.   

The most important thing is that we must receive the ISF information, the commercial invoice and packing list 4 to 5 days before the freight is loaded on the vessel. This should be enough time to resolve any last minute issues that may come up before the deadline.

The following links have additional information on the ISF:

If you have additional questions about this new requirement please do not hesitate to contact us.


Certificates of conformity must accompany all shipments of consumer goods

New import requirements for consumer goods will take effect Nov. 12 as a result of the Consumer Product Safety Improvement Act of 2008, which became law Aug. 14. Beginning on that date manufacturers and importers must certify in writing that products being imported for warehousing and/or consumption conform with the rules, bans, regulations or standards administered by the Consumer Product Safety Commission. This requirement applies to nearly all categories of consumer goods, including fabrics, wearing apparel, toys, jewelry, sporting goods, refrigerators, furniture, hazardous materials, all-terrain vehicles - even pharmaceuticals subject to child-resistant cap standards.

The new certificates of conformity:

1) Must be based on a "reasonable" testing program;

2) Must be issued jointly or separately by two and sometimes three participants in the supply chain (i.e., manufacturer, importer and any private labeler, as appropriate);

3) Must accompany the product or the shipment of the product; and

4) Thereafter must be furnished to each distributor or retailer of the product.

5) A separate certificate (or certificates) is required for each product in a container. If no certificate is issued, or if a false certificate is found to be on hand, the shipment may be refused admission and destroyed.

6) Certificates of conformity must include the full contact information of the manufacturer and importer, as well as the person maintaining records of the test results upon which the certification is based; must reference the specific standard to which the product is subject; and must indicate the place and date of manufacture.

Effective Date of Certificate Requirement. CPSC officials have indicated that the certificate of conformity requirement applies to imported goods manufactured or produced on or after Nov. 12. However, no advice has yet been provided as to how the CPSC or U.S. Customs and Border Protection will determine the manufacture or production dates of importations arriving after Nov. 12.

Other New Statutory Requirements. In addition to the certificate of conformity requirement, the CPSIA :

1) Requires manufacturer and importer certification of third-party testing by an accredited laboratory of all children's products, beginning by the end of 2008;

2) Lowers permissible levels of lead content in children's products and paint;

3) mandates a reduction in the amount of certain phthalates in children's products;

4) requires permanent tracking labels on children's products;

5) increases civil penalties for violations of consumer product safety laws; and

6) provides for potential criminal liability for such violations for corporate officers.  

For more information about the CPSIA and its potential impact on your business, or to schedule an in-house seminar, please contact the offices of Michael S. Cooke, CHB today.


Declarations to be Required at Entry Beginning Dec. 15th 2008

As of Dec. 15th, 2008 importers of any plant or plant product, including wood and wood products, must comply with a sweeping new requirement to bring their goods into the U.S. The Farm Bill enacted on July 15 includes a provision requiring such importers to submit upon entry a declaration that includes the genus and species of the plant(s) used, the value and quantity of the importation, and the country of origin of the imported product.

The scope of this new requirement is extraordinarily broad, as it applies to quote:

"any wild member of the plant kingdom, including roots, seeds, parts, and products thereof."

Although the scope has not been precisely defined, based on the language of the law it appears products will include furniture (of wood, particle board, etc.), textile and apparel products of rayon, cookware with wooden handles, items of clothing with wooden buttons, paper, toothpicks and many others.

Michael S. Cooke, CHB, keeps on top of changes in U.S. Customs and International Trade Law which can significantly impact your business and affect your supply chain.  

Please call our office today for further details.

CBP Textile Enforcement Seizures and Penalties on the Rise.

U.S. Customs and Border Protection just released May 1st statistics on its enforcement of textile and apparel rules during the first and second quarters of fiscal year 2008. CBP states that textiles and apparel continue to be politically and economically sensitive commodities due to complex regulations and the increasing number of free trade agreements and trade preference programs, which create opportunities for fraud. As a result, CBP recently designated this industry as a priority trade issue for 2008 and is focusing its enforcement efforts on combating the threat of transshipment, quota/visa evasion and improper/misleading country of origin markings.

CBP’s enforcement accomplishments for the first and second quarters of FY 2008 include the following.

• Quota-related seizures increased from 88 (worth $13.8 million) to 132 (worth $20.5 million).

• The number of intellectual property rights-related seizures increased from 1,361 to 1,393 but the value of these seizures declined from $6.95 million to $6.91 million.

• Twelve commercial fraud penalties valued at $2.6 million were assessed in the second quarter, up from 14 penalties worth $165,460 in the first quarter.

• To investigate illegal transshipment, CBP jump teams visited 42 factories in two countries in the first quarter and 266 factories in five countries in the second quarter. The percentage of investigated factories that were discrepant was 59 percent and 67 percent, respectively.

• There was one jump team visit to a DR-CAFTA country in the first quarter to investigate trade preference claims; 21 factories were visited and 38 percent were discrepant. Similar visits to 18 factories in two AGOA countries in the second quarter found an 11 percent discrepancy rate.

• CBP examinations declined from 2,922 to 2,531 but the discrepancy rate climbed from 15 percent to 18 percent.

• CBP initiated 10 audits and completed two in the first quarter, with recommended recoveries valued at $3,720. In the second quarter CBP initiated 51 audits and completed seven, with recommended recoveries worth $7,472.

• The percentage of samples found to be discrepant in laboratory testing dropped from 43 percent to 41 percent.

• Three special enforcement operations were initiated and two were completed in the first quarter, compared to four and one, respectively, in the second quarter.

CBP Issues Proposed Law on “10+2” Cargo Security Filing

U.S. Customs and Border Protection is seeking comments by March 3 on a proposed rule that would establish 12 additional data elements that CBP wants importers and ocean carriers to submit before oceanborne cargo is brought into the U.S. This Security Filing proposal is focused on data elements that further identify the entities involved in the supply chain and their locations or provide a corroborating and potentially more precise description of the commodities shipped.

CBP indicates that it needs this additional information to ensure that its cargo security programs continue to operate effectively. The Container Security Initiative, the 24-Hour Rule and the Customs-Trade Partnership Against Terrorism are all cornerstones of CBP’s comprehensive strategy for enhancing national security while protecting the economic vitality of the U.S.. Additionally, CBP has developed cargo risk assessment capabilities in its Automated Targeting System to screen all maritime containers bound for the U.S. before they are loaded aboard vessels in foreign ports. Each of these initiatives is dependent on data supplied by trade entities, including carriers, non-vessel-operating common carriers, customs brokers, importers and their agents. But the data elements currently supplied by these entities are the same ones originally established by the 24-Hour Rule, which for the most part come from the carrier’s or NVOCC’s cargo declaration. CBP states that while this was a sound initial approach to take, internal and external government reviews have concluded that more complete advance shipment data would produce even more effective and more vigorous cargo risk assessments.


CBP is proposing to require importers or their agents to transmit an Importer Security Filing to CBP, for cargo other than foreign cargo remaining on board, no later than 24 hours before cargo is laden aboard a vessel destined to the U.S. Because FROB is frequently laden based on a last-minute decision by the carrier, the Importer Security Filing for FROB could be filed any time prior to lading.

For purposes of this proposed rule, “importer” means the party causing goods to arrive within the limits of a port in the United States. For FROB, the importer is construed as the carrier. For immediate exportation and transportation and exportation in-bond shipments, and goods to be delivered to a foreign-trade zone, the importer is construed as the party filing the IE, T&E or FTZ documentation with CBP.

For shipments other than those consisting entirely of FROB or goods intended to be transported in-bond as an IE or T&E, the following 10 additional data elements would have to be provided , unless specifically exempted. The manufacturer (or supplier) name and address, country of origin and commodity HTSUS number would have to be linked to one another at the line item level.

• The name and address of the entity that last manufactures, assembles produces or grows the imported commodity, or the name and address of the supplier of the finished goods in
the country from which the goods are leaving; in the alternative, the name and address of the manufacturer (or supplier) that is currently required by U.S. import laws, rules and regulations (this is the information that is used to create the existing manufacturer identification number for entry purposes).

• The name and address of the last known entity by whom the goods are sold or agreed to be sold, or, if the goods are to be imported otherwise than pursuant to a purchase, the name and address of the owner of the goods.

• The name and address of the last known entity to whom the goods are sold or agreed to be sold, or, if the goods are to be imported otherwise than pursuant to a purchase, the name and address of the owner of the goods.

• The name and address of the first deliver-to party scheduled to physically receive the goods after they have been released from customs custody.

• The name and address(es) of the physical location(s) where the goods were stuffed into the container, or, for breakbulk shipments, the name and address(es) of the physical location(s) where the goods were made “ship ready.”

• The name and address of the party who stuffed or arranged for the stuffing of the container, or, for breakbulk shipments, the name and address of the party who made or arranged to make the goods “ship ready.”

• The Internal Revenue Service number, Employer Identification Number, Social Security Number or CBP-assigned number of the entity liable for payment of all duties and responsible for meeting all statutory and regulatory requirements incurred as a result of importation; for goods intended to be delivered to an FTZ, the IRS number, EIN, SSN or CBP-assigned number of the party filing the FTZ documentation with CBP.

• The IRS number, EIN, SSN or CBP-assigned number of the individual(s) or firm(s) in the U.S. on whose account the merchandise is shipped.

• The country of manufacture, production or growth of the article, based on U.S. import laws, rules and regulations.

• The duty/statistical reporting number under which the article is classified in the HTSUS (the HTSUS number is required to be provided to the six-digit level but may be provided up to the 10-digit level).

For shipments consisting entirely of FROB or goods intended to be transported in-bond as an IE or T&E, the following five additional data elements would have to be provided.

• The name and address of the party who is paying for the transportation of the goods.

• The port code for the foreign port of unlading at the intended final destination.

• The city code for the place of delivery.

• The name and address of the first deliver-to party scheduled to physically receive the goods after they have been released from customs custody.

• The duty/statistical reporting number under which the article is classified in the HTSUS.


CBP is proposing to require carriers to submit the following information.

• Vessel Stow Plan – A vessel stow plan is used to transmit information about the physical location of cargo loaded aboard a vessel. CBP would have to receive the stow plan for vessels transporting containers and/or breakbulk cargo no later than 48 hours after departure from the last foreign port. For voyages less than 48 hours in duration, the stow plan would have to be received prior to the vessel’s arrival at the first port in the U.S. Bulk carriers would be exempt from this requirement for vessels exclusively carrying bulk cargo.

The vessel stow plan would have to include standard information relating to the vessel and each container and unit of breakbulk cargo laden on the vessel. Vessel information would have to include vessel name (including International Maritime Organization number), vessel operator and voyage number. With regard to each container or unit of breakbulk cargo, the information would have to include the container operator and equipment number, size and type, if the cargo is containerized; stow position; Hazmat-UN code; port of lading; and port of discharge.

• Container Status Messages – Carriers would be required to submit container status messages daily for certain events relating to all containers laden with cargo that are destined to arrive within the limits of a port in the U.S. by vessel. Specifically, carriers would have to submit a CSM when any of the following events occurs, provided the carrier creates or collects a CSM in its equipment tracking system reporting that event.

• the booking relating to the container is confirmed

• the container undergoes a terminal gate inspection

• the container arrives or departs a facility

• the container is loaded on or unloaded from a conveyance

• the container departs from or arrives at a port

• the container undergoes an intra-terminal movement

• the container is ordered stuffed or stripped

• the container is confirmed stuffed or stripped

• the container is shopped for heavy repair

Each CSM submitted would have to include the event code being reported, the container number, the date and time of the event being reported, the status of the container (empty or full), the location where the event took place and the vessel identification associated with the message.

Because it may be cost beneficial for some carriers to transmit all CSMs, rather than those relating only to containers destined to the U.S. or only to the required events, CBP is proposing to allow carriers to transmit such “global” CSM messages. However, carriers who transmit CSMs other than those required by the proposed rule would be authorizing CBP to access and use the data they include.

Court of International Trade Penalizes Importer for Voluntary Disclosure of Unpaid Merchandise Processing Tax.

The Court of International Trade imposed a monetary penalty of $250,840.21 against National Semiconductor Corporation as a result of it's negligent submission of entry documents. The Court of International Trade had initially awarded U.S. Customs the same amount in compensatory interest, but the Court of Appeals for the Federal Circuit overturned that decision and remanded the case to the Court of International Trade to determine the appropriate penalty amount.

This case arose after National Semiconductor Corporation discovered during an internal customs compliance review that it had undervalued certain entries. National Semiconductor Corporationoluntarily then voluntarly disclosed the error to U.S. Customs and timely tendered nearly $950,000.00 in unpaid merchandise processing fees that CBP determined were due on the subject entries. CBP ruled that negligent violations of 19 USC 1592(a) were the cause of the erroneous entries -  and assessed the maximum statutory penalty available. The CIT reversed that determination, ruling that partial mitigation was appropriate and imposing an “interest-only” penalty of $10,000. However, it also awarded U.S. Customs compensatory interest under 19 USC 1505(c), which requires interest to be assessed on underpayments or overpayments from the date of entry to the date of liquidation or reliquidation. That decision was then overturned by the CAFC, which said there is nothing in the prior disclosure statute (19 USC 1592(c)) about the recovery of non-penal compensatory interest in an action to collect an interest penalty. The court also found no authority for applying 19 USC 1505(c) in this case, rejecting the CIT’s theory that CBP’s acceptance of the amounts tendered by National Semiconductor Corporation as repayment of the underpaid MPF tax amounted to a reliquidation of the underlying entries.

According to the CIT, the CAFC’s action to throw out the compensatory interest award means that CBP is no longer adequately compensated for National Semiconductor Corporation violation. As a result, the CIT has reversed its previous determination that the $10,000 interest-only penalty was sufficient to “further the policy of deterrence” and has also imposed the maximum civil penalty available. The court rejected National Semiconductor Corporation's argument that this punishes negligence at the same level as gross negligence as "absurd", stating that the interest-only penalty “is a form of mitigation in its own right” and that assessing a penalty less than the statutory maximum would encourage non-compliance.

The CIT also awarded CBP pre-judgment interest on the monetary penalty. NSC had argued that pre-judgment interest has only been awarded in the past in connection with 19 USC 1592(d) demands for unpaid duties and/or for liquidated damages. But the court said it is within its discretion to take this action, noting that although pre-judgment interest is precluded on damages that are considered punitive, the penalty being assessed here is not punitive but rather a compensatory form of liquidated damages.

MPF tax exemptions are few and far between (NAFTA/US Goods Returned etc). Therefore not paying MPF tax and allowing it to continue is surely negligance. However this case goes against the basic understanding in the import community which is that  voluntarily disclosing errors as they are discovered will eliminate or lessen the amount of any possible penalty.

In our opinion the only thing this judgement will deter are voluntary disclosures to U.S. Customs of unpaid duties.


CBP announced the implementation of the Intellectual Property Rights e-Recordation (IPRR) online system. This new system allows Intellectual Property right holders to electronically file IPR recordation applications, thus significantly reducing the amount of time required to process paper applications.


It is well known that the US cattle industry continues to use synthetic hormones and steroids in its meat production. On the contrary, European Union farmers tend to use traditional methods of raising cattle that do not involve the use of synthetic hormones and steroids. This is well known. The overwheming majority of the population in EU member nations DO NOT WANT SYNTHETIC HORMONES AND STERIODS IN THIER MEAT. As a result, several years ago when a similar C/O meat labeling program was introduced by the EU; The US responded with a 100% duty against EU meats.

The meat country-of-origin labeling provision was originally enacted in 2002; However President Bush has delayed implementation twice. Although polls continue to show the U.S. consumer wants country-of-origin labels on meats they purchase - the meatpacking and grocery industries have lobbied for repeal of the country-of-origin labeling program, because of what they allege are unjustified costs - President Bush has supported the special interests on these labeling laws in spite of a landslide of U.S. public opinion to the contrary.


Apparel importers who have signed on to the Importer Self-Assessment program could be at higher risk for penalties as a result of a new U.S. Customs and Border Protection policy.

The ISA program benefits importers that implement documented, CBP-approved internal controls for customs compliance by removing them from the pool of companies that may be subject to a Focused Assessment audit. But a new detention policy for ISA participants, which was developed on the theory that they should be even more compliant than non-participants, creates a big disincentive for apparel importers to join this program. The new policy provides that while shipments from factories considered high-risk for transshipment as a result of a visit by a Textile Production Verification Team (jump team) will not be detained pending the submission of production records, CBP will impose an automatic penalty in the event those records are deemed inadequate.

Normally when a shipment identified as high-risk for transshipment arrives, it is detained pending submission of production records to substantiate origin. If CBP finds the documents inadequate, the shipment is refused admission. Rarely is the importer assessed a penalty in such cases. Under CBP's new detention policy for ISA participants, issued in TBT-07-021 (Nov. 13, 2007), such shipments will be conditionally released pending submission of production records. If such records are deemed inadequate, a redelivery notice will be issued and liquidated damages will be claimed if the goods cannot be redelivered. (This applies in any case where a shipment that was conditionally released is later determined to be inadmissible because CBP believes the production records do not substantiate origin and the goods were otherwise subject to quota). However, for ISA participants, in addition to liquidated damages, a penalty case under 19 USC 1592 will be initiated. Even if the importer h as maintained custody of the goods and is able to redeliver them, a penalty will be initiated. In addition, the importer can be removed from the ISA program in the event of a second violation.   

It should be noted that this new policy will not apply to shipments from factories identified by a CBP jump team as having:

(1) Falsely declared a country of origin.

(2) Been closed at the time of the visit and verified closed at the supposed time of production of the goods.

(3) Never existed. In those cases, the goods will not be released, but instead subject to detention and possibly seizure in accordance with CBP's standard practice.

For more information on CBP's new policy and how it may affect you, please contact the offices of Michael S. Cooke, CHB today.

Uncollected Anti-Dumping / Counter-vailing Duties Up Sharply in FY 2007

A report posted recently to the U.S. Customs and Border Protection Web site indicates that the amount of antidumping and countervailing duties uncollected by CBP increased sharply again in fiscal year 2007. The total for the year ending Sept. 30, 2007, was $236.9 million, up from $146.4 million in FY 2006 and $93.2 million in FY 2005 but still lower than the $260.1 million that went uncollected in FY 2004.

China accounted for nearly 90 percent of the FY 2007 amount at $211.2 million, with significant shortfalls for crawfish tail meat ($77.9 million), fresh garlic ($50.8 million), honey ($39.5 million), preserved mushrooms ($15 million), frozen warmwater shrimp ($14.4 million), hand trucks ($4.7 million), brake rotors ($4.5 million) and bars and wedges ($1.4 million). Other products for which there were substantial amounts of uncollected duties included frozen fish fillets from Vietnam ($15 million), corrosion-resistant carbon steel flat products from Canada ($2.3 million), cut-to-length carbon steel plate from Romania ($1.8 million) and roller chain from Japan ($1.7 million).

The FY 2007 figures show that CBP is continuing to experience difficulties in collecting the duties owed on imported goods subject to AD or CV duty orders. In years past the problem has largely been attributed to CBP’s practice of allowing new shippers of such goods to post relatively inexpensive bonds to cover anticipated AD/CV duties, which the shippers subsequently avoid by disappearing or declaring bankruptcy. The Bush administration’s response was to enact a new law suspending new shipper bonding privileges for three years. However, the 62 percent increase in uncollected AD/CV duties from FY 2006 to FY 2007 indicates that the new law has been ineffective.


A recommended action plan presented by the Interagency Working Group on Import Safety on Nov. 6th 2007, and an accompanying food protection plan offered by the Food and Drug Administration, would impose new and substantive burdens on the international trade community. These plans are a response to the food and consumer product safety concerns that have dominated headlines this year. They include provisions such as liability for Shippers, Customs Brokers, Freight Forwarders and others, increased penalties and importer bond amounts, possible additional trade data requirements, mandatory certification of foreign-made products, and voluntary certification of importers for possible expedited clearance and sample processing.

Some of the administration's proposals will require legislative action. Others can be implemented by administrative or regulatory means. In addition, new partnerships will need to be forged between federal agencies and the private sector industry and importing communities.

Importer Alert: Don't Think Reporting Exact Total Invoice Value Is Important?
Talk To Tri-State Inc.

When questioned about things like exact total invoice value on duty free merchandise some importers may have a tendency to be completely careless and think things like:

"Who cares if the value is not exact? It's duty-free."

U.S. Customs cares. And when U.S. Customs cares and you don't you can wind up in a serious situation that will require deep pockets. The most recent corporation to fall victim to technical regulatory mistakes is "Tri-State Inc"; a Michigan importer of hospital equipment. Tri-State's tragic epic starts in 1994, when the U.S. Customs Service (now CBP) opened up a civil and criminal investigation on them. Tri-State, through its Customs Broker, declared the price on supplies that it was importing was reflected on the accompanying invoices. But guess what? The broker over statated the value because it did not allow for the rebates Tri-State received from its Pakistani suppliers. The supplies were not subject to duty, and the United States lost no revenue as a result of the inflated (yes inflated) invoices. So U.S. Customs should not have minded right?

Wrong. Customs did mind. From Customs vantage importers are obligated to be truthful and accurate and if not Customs will (under 19 USC 1592) penalize importers "without regard to whether the United Sates is or may be deprived of all or a portion of any lawful duty." Tri-State's lawyers met with Customs Officials in DC to push their "no harm-no foul" argument; but to no avail. Customs issued a final penalty notice for $3 million dollars. Tri-State refused to pay. The Department of Justice then sued in the Court of International Trade to collect the $3 million penalty, but lost.

Tri-State then sued for malicious prosecution and to force the U.S. Government to reimburse it for its attorney’s fees. Federal District Judge Kennedy dismissed the lawsuit, not finding any malicious prosecution, and as a result - insulated Department of Justice and Customs officials in perpetuity.

 Here are a few lessons to be taken from this case.

 1) Importers must report the correct invoice value and must comply with any applicable combination of any government regulations pertaining to their imported products. The fact that it is "duty free" or that there "is no revenue loss” as Tri-State asserted is insignificant.

 2) Fighting the government takes massive amounts of money and time. In almost every case it costs your business everything but it costs them nothing. Customs levied a $3 million penalty against Tri-State, and even though Customs never collected the penalty Tri-State paid at least $3.5 million to its attorneys; an amount which Judge Kennedy refused to order the US Government reimburse Tri-Sate. Was the thirteen years (1994-2007) of fighting Customs worth it all? Is it better to pay all that money to your attorney? Or the government?

 As I have said time and time again it is better to PAY FOR and LISTEN to a professional, astute, quality CUSTOMS BROKER as a cost of doing business. Yes you heard me. A cost of doing business. If you are having a hard time understanding that statement then you should probably not be importing anything whatsoever. If you want to be cheap or you see your Customs Broker as nothing more then a "necessary evil" and don't care about paying a professional that knows the law; or worse, you think you are going to play dumb or talk your way out of anything that may arise in the future, guess what? It won't work. You will pay. The cheaper you are the MORE you will end up paying in the end. Especially if you hire the wrong person or only work with unlicensed "data entry writers" and consider that sufficient enough.  

 3) Keep your importing record clean. Customs keeps a permanent record of all importer penalties. If you have previous penalties, Customs may increase the amounts you now owe. Even letting a penalty slide or letting Customs seize and keep your merchandise (aka just keep it) without putting up some sort of effort might come back to haunt you. This came up in the Tri-State case when the Judge Kennedy was trying to determine the Government's motivation for going after Tri-State in the first place.

 According to Judge Kennedy:

 "The penalty process is intended to investigate and impose penalties for customs violations; even taking the evidence in the light most favorable to Tri-State, there is no evidence that Customs officials were motivated by anything other than the punishment of a customs violation. That they were later unable to prevail in the end does not, in and of itself, render their conduct abusive. To conclude otherwise would be to hold that every losing party in a lawsuit is liable for abuse of process”.

 This case will set the precedent for future cases in the Court of International Trade.

U.S Government Targets Toys From China

The recent news of repeated recalls by US toy importers for goods made in China has resulted in
the introduction of several bills in Congress which, if passed, will have far-reaching affects on how
Chinese toy manufacturers and their US customers do business. Michael S. Cooke CHB is keeping tabs on these developments and anticipates several of these measures to move quickly once Congress returns from recess Congress will hold hearings, comments will be requested and bills will move forward and become
law. Here are just a few of the bills that are pending in Congress:

• S.1833 Children's Product Safety Act of 2007: Introduced on July 19, 2007, this bill would
require that ALL toys for children must be tested by an independent, third party and be
accompanied by a certificate of testing for importation. Any products lacking this documentation
will be prohibited from entering the United States.

• S. 1847 Consumer Product Safety Act of 2007: Introduced on July 23, 2007, this bill would,
among other things, reduce the time between manufacture notification and public disclosure of
recalls from 30 to 10 days while increasing the maximum civil penalty for failure to comply with a
recall order to $20 million.

• H.R. 1699: Danny Keysar Child Product Safety Notification Act: Introduced on March 26, 2007,
this bill would require manufacturers to provide postage paid registration forms to consumers and
maintain records of consumers for 6 years to facilitate recalls or safety alerts on durable infant and
toddler products.

To learn more about how our firm can help keep you informed of pending U.S. Government actions that directly affect your business, contact Michael S. Cooke CHB at any of the numbers listed on our website.

Textile shipments at high risk, priority trade issue

Textile and wearing apparel shipments account for 43 percent of the duties U.S. Customs and Border Protection (CBP) collects.

CBP designates textiles as a priority trade issue, placing increased scrutiny on these shipments than with other commodities. Textiles are responsible for CBP’s largest duty loss, primarily from non-compliance with free trade agreement regulations.

Last year, CBP seized more than $10 million in improperly described textile and apparel shipments. Some companies tried to avoid safeguard quotas from China by describing cotton merchandise as ramie.

During late 2005, CBP hired 45 additional employees to strengthen textile law enforcement efforts and conducted more than 2,000 additional examinations to identify smuggling and improperly described merchandise. In February 2006, CBP made 25 seizures, amounting to $4 million in illegal textiles attempting to enter the country. In addition to continuing enforcement efforts, CBP is initiating special operations to detect and deter fraudulent activity.

CBP personnel are also visiting high-risk foreign factories. Some factories were closed or refused CBP team admission, and others had evidence of engaging in illegal transshipments. Because of the high-risk nature of textiles, CBP may require importers to post a Customs bond equal to the following:

Single transaction bonds: If textiles are subject to quota or visa, the STB must be for three times the value. If no quota or visa, STB remains at value plus duty.

U.S. Customs Moving Forward on Acquiring More Trade Data

Importers have noticed Customs informational requirements have continued to change and increase since 9/11. This latest development should come at no surprise to most in the the Brokerage community. It is essential that importers, shippers and thier brokers take a proactive role in adhering and complying with the new laws and requirements from Customs to avoid potential delays and unforeseen costs.

If you care about you supply chain, your business, and most importantly your valued clients it is essential that you have a real relationship with a Professional Customs Broker or Customs Attorney. If you are drawing a blank while reading that last sentence you need to take action now.

Secretary of Homeland Security Michael Chertoff indicated last week that the federal government intends to move forward quickly on obtaining additional data to further improve supply chain security, suggesting that this could be the best option to counter propose new democratic mandates that could hinder the flow of trade.

Chertoff said information is the key component of the layered strategy Customs is using to manage the risks associated with cargo containers. “We use information as a substitute for the brute force of 100 percent physical inspection,” he said, “because the more information we have on a container, the less likely it is for us to have to waste a physical inspection". ” The department’s strategy includes initiatives such as the Secure Freight Initiative, which includes the overseas scanning program and the Security Filing or “10+2” proposal; the Customs-Trade Partnership Against Terrorism, along with the future recognition of authorized economic operators in potential mutual recognition systems; and the Container Security Initiative. “At the end of the day,” he said, “we want to combine all of these systems to allow us to receive, process and act upon commercial information in a timely way so that we can target, in a very specific fashion, the suspect shipments without requiring us to materially slow up the supply chain or cause our ports of entry to become clogged up.”

In addition, Customs is looking at ways to collect trade data “earlier and more comprehensively.” Currently that effort is being pursued through the “10+2” initiative, which outlines the additional data elements CBP wants from importers and ocean carriers. A proposed rule on this issue is currently under review within the DHS and will soon be sent to the Office of Management and Budget to complete the clearance process.

The next step, Chertoff said, is “piloting, on a voluntary basis, a system that would provide expanded global access to trade information.” This system would involve the submission of an even broader range of data by a wider variety of supply chain actors to a third-party global trade exchange (GTX) that could be accessed by government agencies. More information would allow CBP to be more precise in identifying risks and to thus conduct fewer and better-targeted container inspections. Chertoff stressed that the GTX operator would be a “trusted aggregator” and that there would be “a stringent rule set” to make sure that sensitive business information is not “divulged or shared to competitors.” He noted that CBP hopes to put out a request for proposal on such a system in the “very near future.”

Although some COAC members expressed concern about the GTX concept, largely because there are still so few details about it, Chertoff indicated that current trends are forcing CBP in this direction. “There is going to be, for a whole host of reasons, issues about terrorism, issues about import safety, an increasing demand for security with respect to what comes into the country,” he said. “Those of you who have seen the 100 percent overseas scanning requirements well understand that a simple argument like 100 percent physical inspection can have a lot of traction. And if we’re not prompt and reasonably energetic in coming up with an alternative model for how to do this, we may well find the model being dictated by people who have a very simple view of what ought to be done, which is open everything up.” The best way to avoid such a scenario is “the intelligent accumulation of information,” he added. “While I understand everybody always gets nervous when we talk about additional requirements, I think in this day and age with respect to the way in which data is accumulated and analyzed and the commercial setting, it would strike me as odd that we not seek to continue to get more and better data from a wider variety of people to make a more informed judgment about what to look at.”

U.S.T.R / U.S. Customs apply tariffs against Bulgaria and Romania

The Office of the United States Trade Representative (USTR) published a Federal Register notice today announcing that as a result of their January 1, 2007 accession to the European Union, Bulgaria and Romania are no longer designated as beneficiary developing countries under the Generalized System of Preferences (GSP) program. The notice stated that the change was effective on January 1, 2007.

"The GSP program grants duty-free treatment to designated eligible articles that are imported from designated beneficiary developing countries," the notice stated. "Countries that may not be designated as beneficiary countries for purposes of the GSP include, among others, EU Member States."

"In Proclamation 8098 (December 29, 2006), the President, pursuant to section 502(b)(1)(C) of the Trade Act of 1974, as amended, announced that "Bulgaria and Romania shall no longer be designated as beneficiary developing countries for GSP upon the date that each country becomes a European Union Member State. The United States Trade Representative shall announce each such date in a notice published in the Federal Register.'"

"The United States Trade Representative hereby announces that January 1, 2007 was the date on which Bulgaria and Romania became EU Member States and are no longer beneficiary developing countries for GSP," the notice added.

China Trade Surplus Hits Record High Despite Efforts to Narrow Gap

Chinese customs authorities announced July 10, 2007 that the country’s trade surplus hit a record high of $112.5 billion in the first half of 2007; an 84 percent jump from the same period a year before. The $26.9 billion monthly surplus in June was also a record, up 85 percent from June 2006. Imports into China grew by 14.2 percent in June to $76.4 billion, but exports soared 27 percent to $103.3 billion.

China’s trade surplus has continued to increase despite a number of measures imposed by Beijing to rein it in. In fact, one of the more recent such moves may have actually had the effect of accelerating the growth of the surplus. China’s Ministry of Finance announced several weeks ago that as of July 1st it would eliminate or reduce rebates of export taxes for thousands of products, and press reports indicate that many exporters rushed to get shipments out before the deadline.

In another move that took effect July 1, China’s State Administration of Foreign Exchange ended a program implemented in the wake of the 1997 Asian financial crisis to improve the management of foreign exchange settlement. That program offered benefits such as lower interest rates on loans, increased access to foreign trade development funds, bigger refunds of export taxes and greater flexibility in managing foreign currency revenue to companies that brought in large amounts of foreign currency. On the other hand, “high-risk” companies were threatened with revocation of their import and export licenses.

Observers say one of the reasons China has taken measures such as these is to ease pressure from the U.S. to revalue its currency. Press reports indicate that the yuan has increased nine percent in value against the dollar over the last two years but that U.S. lawmakers are continuing to push for a quicker rise.

U.S. and South Korea Free Trade Agreement

On April 2, the U.S. and South Korea struck a landmark bilateral free trade agreement — the first for the U.S. with a major Asian economy; and the biggest since the North American Free Trade Agreement in 1994 with Canada and Mexico.

If ratified, the agreement will immediately remove tariffs on more than 90 percent of all goods bilaterally traded, officials said.

South Korea agreed to phase out its 40 percent tariffs on beef over the next 15 years as well as resume American beef imports; which have been banned for three years because of mad cow disease.

South Korea will also remove an 8 percent duty on cars and revise its taxation system. Members also agreed to keep South Korea’s subsidized rice market out of any free trade deal, even though its citizens were buying rice for four times the global price.

Hyundai cars and Samsung flat-panel TVs, as well as Korean-made hats and clothes, will become cheaper in the United States. American beef and oranges, as well as Ford cars and Toyota vehicles built in the United States, will be more affordable in South Korea.

The deal will cost South Korean farmers tens of thousands of jobs and up to 2 trillion South Korean Won, or $2.1 billion in U.S. dollars, in lost revenue, as cheap American corn, soybeans and processed foods enter the country, according to studies by South Korean economists.

U.S. Removes Bulgaria and Romania from Duty Free Status

Anyone who received duty free status under GSP must now (retroactively) re-pay all duties starting from January 1, 2007. Failure to comply will subject your firm to Customs penalty's, interest, and future delays. Please contact us for futher details.


Customs new method for filing initial trademark and copyright recordation applications greatly decreases the time required to register for enforcement of your intellectual property rights via paper. The filing of an electronic application begins the administrative recordation process with CBP in a more expeditious manner. A separate application is required for each recordation sought. The recordation fee for copyrights is $190 and for trademarks $190 per International Class of goods.

Vietnam to Require Export Licenses:
U.S. textile shipments at high risk

Vietnam’s ministry of trade and industry will impose temporary export license requirements to monitor the quantity and price of various textile exports to the United States, in an attempt to eliminate the threat of anti-dumping lawsuits.

Licensing will assist with the ministry of trade’s goals in managing export growth, establishing export markets, protecting long-term interests of Vietnamese exporters and fighting against illegal transshipments and fraud trading.

Export companies must complete detailed forms on United States shipments. Traders violating laws on exporting apparels such as certificate of origin, documentation, manufacturing capability or quantity could have their export licenses revoked or become prohibited from exporting all apparel to the United States or all countries.

According to the American Chamber of Commerce in Vietnam, as of August 2006, the country was the defendant in 28 antidumping lawsuits, and lost 23, resulting in increased import duty rates.

The export licensing announcement from Vietnam’s ministry of trade coincided with the March 9 release of the U.S. Department of Commerce’s (DOC) statistics on textile and apparel imports from Vietnam.

In January, the DOC began monitoring five product categories of textile products from Vietnam: trousers, shirts, sweaters, underwear and swimwear, concurrent with Vietnam's accession to the World Trade Organization. The monitoring system will expire at the end of the current DOC administration in January 2009.

Every six months, the DOC will evaluate and post the information on its Web site. The DOC said it will self-initiate any anti-dumping duty investigation for the products if the goods are determined to be dumped into the United States market.

To view the DOC’s program on Vietnam textile imports, please visit:

Regulations regarding imported and exported goods are constantly shifting, and Michael S. Cooke CHB commits itself to your industry and keeps you up to date on any changes. Importing textile shipments is high-risk and Michael S. Cooke CHB department will be paying close attention to US Customs and DOC developments on Vietnam apparel shipments to ensure these goods are not subject to anti-dumping duty.

2007 Harmonized Tariff Schedule Changes

In 2007, the biggest revision of the Harmonized System will take place since its introduction in 1989.

The Harmonized Tariff Schedule (HTS) is a complete product classification system, which contains a hierarchical method for describing all goods in trade for duty, quota and statistical purposes. The HTS of the United States (HTSUS) is administered by the U.S. International Trade Commission (ITC).

More than 350 amendments to the Harmonized Tariff Schedule (HTS) Codes and notes have been made, affecting 83, or more than 85 percent, of the 97 chapters.

Many current headings and subheadings are being deleted, added or merged into new tariff headings. The chapters most affected are those dealing with industrial and technological products mostly in chapters 84, 85, 87 and 90. For example, changes in the classification of semiconductor manufacturing equipment will be set under one heading (8486), and multifunctional office machinery will be included under the heading for printing machinery (8443).

Updates occur every five years. Changes to the HTS are necessary to keep up with technological developments and changing patterns in international trade, as well as from classification questions or disputes that have arisen. This year’s update is extensive for technology products, with significant changes in other areas.

The changes have important implications for importers, exporters, customs brokers, freight forwarders and carriers, because the incorrect classification of goods can result in the seizure of shipments and the imposition of heavy fines. Some may find their HTS number databases to be out-of-date or that in certain cases, the duty for a product may change. NAFTA and other preferential duty treatment programs may also be affected.

Before the President can sign the changes into law, 60 legislative days (or days when Congress is in session) must pass from the time the U.S. International Trade Commission notifies Congress of the proposed changes. That period was completed the week of Dec. 4.

During its annual trade symposium on Dec. 13-15, CBP announced they will give the trade community 45 days to implement the changes incorporated in the 2007 HTSUS. The trade community had expressed concern that 15 days might not be enough time to update corporate classification and compliance systems given the large number of changes.

The export Schedule B should be published in January 2007. Schedule B is published once per year and this year’s changes include the deletion of nearly 1,200 obsolete numbers and then the addition of 1,100 numbers.

The complete ITC report on the changes to the 2007 may be found at:


With immediate effect, the Customs changes are as follows:

1. The Textile Declaration formerly required of certain textile products and wearing apparel has been eliminated.

2. A new requirement has been added to report the actual manufacturer of these items on the U.S. Customs entry via the MID.

3. All types of textile declarations have been eliminated. But It is critical that any commodity information that may have been provided on the textile declaration be incorporated into the Commercial Invoice or other shipper documentation.

4. There are no exceptions to this rule. The textile declaration is no longer required for any commodity.

5. CBP now requires a Manufacturer's Identification Number (MID) for the actual manufacturer of all textile or apparel items.

Importers should ensure that the Commercial Invoice contains all required information for textile commodities, as specified in the U.S. Customs regulations. General invoice requirements and specific information for certain commodities can be found in the U.S. Customs regulations at 19 CFR 141.86 and 141.89.


Effective November 28, the Committee for the Implementation of Textile Agreements (CITA) authorized the release of the following items from embargo for only five working days - November 28 to December 2::

•  Cotton knit shirts and blouses (category 338/339)

•  Cotton trousers, breeches, and shorts (category 347/348)

•  Cotton and manmade fiber underwear (category 352/652)

•  Manmade fiber knit shirts and blouses (category 638/639)

•  Manmade fiber trousers, breeches, and shorts (category 647/648)

Any such goods which are in a bonded warehouse within the customs territory of the United States or in a foreign-trade zone (FTZ). were entered for warehouse or sent to General Order within the customs territory of the United States or were admitted to an FTZ before November 8, and were, at the time of export from China, subject to a safeguard quota will be released.

Chinese-origin goods in the above categories which are not in a bonded warehouse or FTZ in the United States will not be permitted entry pursuant to this procedure.


The agreement between the US and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic eliminates tariffs and opens up the region to U.S. goods and services. Certain textile quotas will remain in place at the same time as a retroactive provision may allow to the refunds going back all the way to January 1, 2004. The agreement also lowers obstacles to investment in the area and strengthens protections for intellectual property.

Critics said the measure would cost U.S. jobs, particularly in the sugar and textile industries. Democrats overwhelmingly opposed CAFTA, with only 15 of that party voting for it. They argued that free trade agreements negotiated by both the Clinton and Bush administrations prompted the flight of American jobs overseas. They also said the labor rights provisions in CAFTA were too weak to protect workers in impoverished Central American countries from exploitation.

Effective dates will be negotiated the country to country basis.


On Dec. 31, 2004, China had ended most textile export quotas, as did other World Trade Organization (WTO) members, and surges in Chinese textile exports followed. We previously reported that in May and June 2005 the U. S. decided to impose limits on the import of Chinese shirts, blouses, trousers, cotton yarn, and underwear in various textile categories after a flood of garment caused significant market disruption in the first quarter of the year when they had been lifted.  The Committee for the Implementation of Textile Agreements (CITA), the Federal agency which makes such determinations, has already imposed with growth limited to 7.5 percent per year.

China also imposed limits on its own exports of certain textile products, to begin July 20, 2005.  This was in response to pressure from the United States and the European Union (EU) to limit textile exports following surges of Chinese imports beginning last January discussed above.

In negotiations with the EU, China agreed to cap the growth of textile exports to EU countries at rates ranging from 8 to 12.5 percent, depending on the textile category.


In April 2005 the U.S. Court of Appeals for the Federal Circuit lifted a preliminary injunction issued in Dec. 2004 by the U.S. Court of International Trade which barred the imposition of new limits on imported textile and apparel products from China. The injunction had prevented the Committee for the Implementation of Textile Agreements (CITA) from considering 12 safeguard petitions filed in 2004 from U.S. textile manufacturers.

The safeguard petitions would place limits on imported Chinese textile products based upon the threat of US market disruption. In issuing its injunction, the U.S. Court of International Trade had maintained that CITA could not consider the petitions until there was proof that an actual market disruption was occurring.   With the end of the first quarter activity for 2005, some proof may be on hand: according to the American Manufacturing Trade Action Coalition (AMTAC), during the four months when the injunction was in effect, the U.S. lost over 17,000 textile/apparel manufacturing jobs and, during the first quarter of 2005, U.S. imports of textiles and apparel from China increased by 63 percent over the comparable period last year.


Because the United States did not repeal the Byrd Amendment prior to May 1, 2005, the government of Canada has retaliated by imposing an additional duty of fifteen percent on the following eight goods of U.S. origin moving from the U.S. into Canada:

2402.20.00 CIGARETTES

The Byrd Amendment, which the World Trade Organization (WTO) ruled to be illegal under global law in 2003, permits U.S. companies to receive anti-dumping and countervailing duties collected by the U.S. government from foreign competitors. In 2004 the WTO granted Canada, Brazil, Chile, the European Union, India, Japan, Mexico and South Korea the right to retaliate against the U.S. for failing to comply with recommendations that it be repealed.


The U.S. has changed the rules of origin used to qualify goods under NAFTA. The changes make it easier for certain Canadian and Mexican products imported into the U.S. to qualify for NAFTA status. Applicable immediately to Canadian goods imported after January 1, 2005 , Mexican applicability is still not announced. The retroactive feature provides for refunds of duties and user fees on eligible Canadian goods classified in Chapters 9, 12, 13, 21, 71, 84, 85, 90 and 95 of the HTSUSA.

The expanded NAFTA rules of origin were announced in Presidential Proclamation 7870.


Fifteen tariff classifications of agricultural products that may incur drastically higher import duties when imported from the European Union starting March 1, 2005 were listed by the United States Trade Representative's office.  It has notified the WTO that tariff concessions on the products will be withdrawn unless an agreement can be reached with the EU over increased duties it adopted last year, allegedly effecting U.S. exports. Negotiations are continuing.

The Harmonized Tariff Schedule of the U.S. item numbers that would be impacted should tariff concessions be withdrawn are 04031090, 04063085, 07052100, 07108065, 08052000, 09042020, 09102000, 20019025, 20032000, 20049010, 20057050, 20057070, 20057075, 20059030, and 20087020. Products covered by these HTS items include certain dairy items, such as yogurt and cheese, some spices, certain vegetables such as Brussels sprouts, artichokes and olives, some citrus, sauerkraut, and peaches. The trade dispute arose because the EU changed its rice import regime on September 1, 2004, raising tariffs on some rice imports above the maximum permissible WTO rate of duty.


Up to 6 additional months to finalize certain entries is being provided by the Bureau of Customs and Border Protection (CBP) under changes to the Reconciliation process. As required by the Miscellaneous Trade and Technical Corrections Act of 2004 signed into law in December 2004, CBP is giving importers more time except in those cases involving NAFTA or US-CFTA issues. Once an importer declares his intent to file a Reconciliation Entry package, the time period for filing is extended from fifteen months to twenty one months.


The World Customs Organization (WCO) on December 8, 2004 adopted standards based upon principles designed and implemented by U.S. Customs and Border Protection (CBP) to secure and facilitate international trade. It is designed to encourage cooperation between 164 worldwide customs administrations to secure international supply chains and facilitate the movement of goods and to create an international, consistent system for identifying businesses that offer a high degree of security. Those acknowledged companies shall receive tangible benefits including the expedited clearance of low risk cargo through customs, akin to that implemented by the CBP Customs-Trade Partnership Against Terrorism known as C-TPAT.


Chief Judge Restani of the U.S. Court of International Trade (CIT) granted a Plaintiff's proposed order providing for an "injunction of liquidation until a final and conclusive court decision is reached." In Corus Staal BV v. United States , Slip Op. 04-132 (Oct. 19, 2004), Corus requested that the duration of an injunction issued by the CIT to stay liquidation of entries pending litigation in appeals of antidumping and countervailing duty proceedings be extended until all appeals have been exhausted. Customs argued that an injunction staying liquidation should only extend to the end of litigation in the CIT, but not elsewhere.

Judge Restani agreed with Corus and held, somewhat critically of Customs' conduct, that "given the recent difficulties in this court with liquidation in violation of court orders ... it seems prudent to attempt to avoid creating any opportunities for error and to bar any liquidation until all litigation is complete."


Customs has published an updated fact sheet, entitled "Frequently Asked Questions & Answers Regarding CBP Procedures under the Bioterrorism Act (BTA)." It includes general information and FAQ's regarding Customs' enforcement of the U.S. Food and Drug Administration's prior notice requirements for food imported under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002.

CBP has also issued other fact sheets and guidance documents regarding implementation of the prior notice and food facility registration requirements under the Bioterrorism Act.


On July 9, 2004, U.S. Customs and Border Protection (CBP) announced a major change to its policy in determining bond requirements for imports of agriculture and aquaculture products that are subject to antidumping (AD) or countervailing duty (CVD) cases. This change in policy will mean increased bond requirements for importers of agriculture and aquaculture products such as garlic, honey, tomatoes, crawfish and shrimp.

Present minimum bond amounts equal 10% of the duties paid by the importer during the previous year. However, in a number of recent cases the final liquidation rate was significantly higher than the cash deposit rate and the bonds posted by importers were insufficient to protect the revenue when some importers were unable to meet their financial obligations for the increased duty liability.

As a result, CBP will begin reviewing the level of continuous bonds for importers who import agriculture and aquaculture merchandise subject to AD and CVD cases and obtain larger bonds if necessary. Rather than requiring a bond equal to 10% of the duties paid during the prior year, CPB will determine the amount of the bond by multiplying the rate found in the Commerce Department's AD or CVD order by the importer's value of imports of merchandise subject to the case during the previous year. For example, if an importer imported $1 million worth of products during the previous 12 months and the ADD duty rate for the products was 40%, the importer’s continuous bond amount will be increased by $400,000. Under the previous system, the bond amount would have been only $100,000.


Customs penalties are officially subject to uniform regulation, obviously, and one would hope they would be handled the same way nationwide.  However the fact is that different ports continue to interpret and implement Procedure, Inspection, Detention, Seizure, and other enforcement rules differently. Here, briefly, are the best five things you can do to minimize any hypothetical fines or liquidated damages:

1. React immediately if you suspect that a potential problem is forthcoming. Often an officers interpretation of your complex situation may be erroneous. They may be applying general training to sophisticated situations. They are intelligent people, and may be made to understand the merits of your particular case (depending on the situation) possibly without taking any further action involving seizure or penalty or your merchandise. Do not delay on your response.

2. Carefully study the allegation. Often the language of a Customs Penalty says one thing, while the code or regulation cited as having been violated relates to something different. Somtimes Customs personnel can get too used to using general statutes. Therefore there is the chance of an irrelevant section being cited when issuing a penalty.

4. Heed deadlines in letters and formal notices. Even responding one day late may preclude relief in a case where a timely filing might have resulted in cancellation of the notice.  At the same time, you may be able to request expedited handling if your response is within particular timelines.

5. Be thorough and honest in your response.  Only in rare cases do you get more than two chances to petition, and since the second one will probably not be replied to sooner than eight or nine months after the initial seizure or issuance of penalties, it is important that the first petition, which you may expect a reply to in 90 -120 days, be sufficient to allow the remedy you seek.

Handling Customs penalties is part of our business. We advise you contact us if this unfortunate situation arises. Some importers feel they may be able to prepare and submit the first petition on thier own in accordance with thier own knowledge and experience. However we strongly advise against this. Under no circumstances is it advisable to submit the second (supplementary) petition by yourself.  That is your final chance at avoiding litigation, payment, and/or forfeiture. This is far too important to be undertaken independently.