Scott McBride talked about transshipment and how it is evasion and how fraud is not covered by circumvention laws but rather by CBP.
This presentation discussed 226b, 226d, and 226f.
226b discusses self-initiation and how a notice will be issued if the government initiates it.
226d allows rejection of circumvention injury and identifying problems where parties can fix the issues.
In this case, if commerce does not identify the issue, commerce must issue determination and if it is extraordinarily complicated, it can be expanded up to a full year.
Angel Omar explained how all products are required to meet the same standards as domestic goods/products.
Drugs and devices must be safe and effective and require a fee application prior to importation.
Every product must meet performance requirements and must contain a label that is presented in English.
Food, Drugs, and Cosmetics Act has an import section that allows for refusal for import electronics and products that fail to meet the applicable standards.
Appearance is very important and based on the standard, the FDA can refuse the entry of goods that appear to be misbranded.
Section 708 allows the FDA to destroy products without an opportunity to export/refuse if the product is valued at $2500 or less.
FDA’s import alerts allow for detentions without physical examination to prevent products from entering the United States and ensure that products entered in the U.S. are in compliance.
The importer must provide documentation or information which will help overcome the alleged violative nature of the product.
A history of violations by corporations, of certain commodities, or from a geographic area are all factors are taken into consideration (as import alerts are listed by product, industry, country, and/or company).
There is a very specific process to be removed from an import alert list including submitting a Petition for the removal of your company from an Import Alert list.
Maria Navarro of CBP’s Office of Trade focused primarily on educating the audience on international statistics regarding forced labor which predominantly occurs in Southeast Asia, showing how 24.9 million people are victims of forced labor.
Navarro defined forced labor as all work or service which is exacted from any person under the menace of penalty for its nonperformance and for which the worker does not offer voluntarily. Perpetrators of forced labor may push threats of violence, withheld wages, and threats of deportation. Involuntariness includes the requirement to perform a different job than what was previously agreed to in the recruitment process and prevents the worker from quitting the job.
In response to the rise in international forced labor, the Tariff Act Statutory Authority and TFTEA were put in place to prohibit the importation of goods that were manufactured using forced labor. U.S. Customs and Border Protection have a process for enforcement concerning forced labor.
This process includes a receipt of allegation or self-initiation, evaluation to determine whether to issue a WRO, CBP Commissioner evaluation of Withhold Release Order (WRO) issuance, issuance of a WRO, detention of merchandise, export, contest, or protest, finding/customs bulletin and federal register, seizure, and FPF processing.
H.R. 6256: Uyghur Forced Labor Prevention Act (UFLPA), signed Dec. 23, 2021, expanding upon Section 307 of the Tariff Act.
The commonly exported commodities from this region include textiles, agriculture, electronics, chemicals, and equipment.
UFLPA establishes a rebuttable presumption that any good produced in whole or in part in Xinjan Uyghur Autonomous Region contained forced labor. In addition, UFLPA gives CBP authority to determine exceptions to the rebuttable presumption where clear and convincing evidence is given.
UFLPA gives CBP authority to determine exceptions in the following cases:
First one must provide FLETF guidance (guidance available June 21)
Completely and substantively responded to all inquiries by CBP
Provides clear and convincing evidence that their supply chain is free of forced labor
CBP has now issued a UYGHUR FORCED LABOR PREVENTION ACT OPERATIONAL GUIDANCE FOR IMPORTERS.
Chief Customs Entry Officer John Dobbs and the Supervisory Customs Entry Officer Fabian Mora discussed the Harmonized Tariff Schedule and the notion of “advanced in value/improved in condition” where products would not be subject to the duty-free treatment granted under statutory authority.
For example, a plain chicken breast exported to a foreign country with an addition to make it a breaded chicken breast would be an improved condition.
Under the 19 CFR 10.1, shipments valued over $2500 and claimed to be free of duty under 9801, certain declarations must be filed at the time of entry/ This declarations include a declaration by the foreign shipper (19 CFR 10.1 (a)(1)) and a declaration by the owner, importer, or consignee (19 CFR 10.1 (a)(2)).
Some products do not need a declaration, such as aircraft and aircraft parts and equipment along with non-consumable vessel stores.
CBP may ask for additional documents for U.S. made goods only such as U.S. expert invoice and a bill of lading evidencing the U.S. origin of the articles.
Declarations can be waived.
19 CFR 10.1 (d) states that if the center Director is Reasonably satisfied and the articles are imported in circumstances meeting requirements, the director may waive them.
19 CFR Sec. 10.3 (a)(2)-Drawback; Internal-revenue tax where a Drawback may be allowed if the documentation is readily available.
Trade Policies and Programs
USMCA is the most utilized trade agreement in the U.S. and has replaced NAFTA as the agreement between the U.S., Mexico, and Canada as the presence criteria A-D are identical from NAFTA
USMCA contains special provisions for automotive goods with an increased regional value content (62.5% à 75%).
USMCA introduces four new provisions related to automotive goods including Regional Value Content = 62.5%, Steel Content = 70%, Aluminum Content = 70% and Labor Value Content = 25% for passenger vehicles or trucks. The same rules of Origin Application are used for new and used vehicles.
In general, USMCA’s recordkeeping requirements are the same as in NAFTA.
An importer must maintain records and documentation related to the following areas and render them available upon request for a period of no less than five years of the date of the imported good:
importation (entry docs, certification of origin), origin of good, and compliance (transit and transshipment).
Key changes to the recordkeeping requirements include that recordkeeping documents can be maintained in any format and requirements apply even if the importing party does not require a certification of origin or if the requirement is waived.
The difference between registration and recordation entails that registration relates to the act of filing (1) a tm with USPTO, or (2) a customs recordation refers to recording an active registration with CBP.
There is a $190 CBP fee per international class, per TM registration. In order to record with CBP you must have a valid TM or copyright registration.
The fee for e-recordation of a copyright is $90. Recordation can be renewed for another term for fee of $80.
Recordation has additional benefits such as enforcement against “Confusingly similar” marks, names and addresses of the parties, and Section 1526 (f) penalty available to deter future violations.
Gray market goods are foreign made goods that bear genuine trademark and are intended for sale in a market other than the US and imported with or without authorization from the U.S. TM owner.
The general rule is that the importation of gray market goods is permissible unless there is a recorded mark that explicitly states gray market importations are restricted.
In 2022, CTPAT will begin accepting new Trade Compliance applicants with the intention to redesign and update member benefits and program benefits.
CTPAT’s 2022 fiscal year priorities are intended to increase collaboration, advance digital capabilities, and expand the program.
Collaboration will be increased by sharing trends and information with its members, working across internal groups, expanding global reach, and engaging with other AEO programs.
Digital capabilities will be advanced by using data analytics to enhance the program’s operational effectiveness through two dashboards: the Member Incident Dashboard (MID) and the MSC Performance Tracker (MPT). Digital capabilities will also be advanced by including virtual validations, CTPAT applications, and a CTPAT portal.
The program will be expanded by including Trade Compliance, entity expansion, and enhanced benefits.
The next CTPAT conference will take place from July 18-20, in Anaheim, California.
The CTAC works to secure trade lines with a mission to reduce illicit trade and promote trade that meets recognized standards.
The following process is used by CBP:
identify import safety risks,
joint agency exams and reporting,
analyze exam findings/lab testing,
risks are mitigated or targeting continues.
Overlapping agency authorities can be leveraged to prioritize high-risk commodities, aligning product risk and authority. Safety risks are managed into categories: higher risk: IS, counterfeits; medium risk: trade intelligence, unknown entities; lower risk: inherent risk of product.
Non-conforming vehicles can be imported, provided that they are determined eligible for importation and are imported by a registered importer under the Department of Transportation conformance bond.
If the manufacturer fails to demonstrate that it has exercised “reasonable care” in certifying the vehicle or equipment item to the standard in question, it is subject to civil penalties.
Penalties are currently set at just over $22,992 per violation.
The penalties have a maximum of just over $114,954,525 for a related series of violations. With respect to each vehicle or equipment item that does not comply, a separate violation exists.
Before exporting its products to the United States, manufacturers of conforming vehicles must:
identify themselves and their products to NHTSA pursuant to 48 CFR Part 566,
submit VIN deciphering information to the NHTSA pursuant to 49 CFR Part 565,
designate a U.S. resident as its agent for service of process pursuant to 49 CFR Part 551, subpart D. Manufacturers of tires, brake hoses, and glazing must also affix unique identifying numbers or marks to their products.
CPSC is automating the notification of its investigators and its system coordination of the HTS codes of interest.
Out of over 2 million shipments, only about 10 thousand shipments are directed to manual review.
Whenever CPSC requests a certificate from an importer, the importer has 24 hours to provide that certificate.
CPSC proposed establishing a permanent E-filing program (as a result of Alpha Pilot). At the moment, E-Filing is only required upon request, but the CPSC’s goal is to make it permanent.