International Trade: Customs and Other Regulatory Agencies

LawCustoms Blog Found a New Home

2011-12-04T10:28:00.003-05:00

Dear Friends and Visitors:

Thank you for your interest and participation in LawCustoms articles and perspectives. Our blog has moved to a new home at WordPress. We think our new home will allow us to deliver and manage the information in a technologically superior way.

LawCustoms looks forward to you visits and interaction at our new Home: http://lawcustoms.wordpress.com/blog.

15 CFR 764.2(h) Intepretation and Application

2010-10-07T08:30:00.000-04:00

An interesting article appeared on ExportLawBlog with respect to 15 CFR 764.2(h) application ("No person may engage in any transaction or take any other action with intent to evade the provisions of the EAA, the EAR, or any order, license or authorization issued thereunder."). It is a good reading for those who like to engage in interpretative methodology of EAR regulations. Based on the facts of discussed settlement, it seems that one violates 15 CFR 764.2(h) if one acts as a broker for party or parties subject to denial orders... irrespective of intent prong? Read the posting.

Gambling Spat US v. Antigua

2010-07-08T10:10:00.001-04:00

A quick comment on the article that appeared in the Caribbean 360 post. The on-line gambling trade dispute, which the United States lost in the WTO forum, is one of the few cases of continued lack of compliance by the United States (other major one is the zeroing practice in the antidumping duty calculation by the Department of Commerce). What makes the case interesting, and it is not mentioned in the article, is that this case is the testing ground for WTO permission in granting sanctions that would legalize intellectual property rights (IPR) violation (in a form of reciprocal sanctions). Imposing trade barriers, in the case of Antigua, will not more harm to Antigua than the United States. Therefore, the traditional remedy or reciprocal sanctions normally granted by WTO (e.g. raising the tariff for selected goods), will not work in the case of Antigua. The Antigua knows that, and petitions hard for WTO approval of IPR violations. Of course, the United States has traditionally been very proactive in the IPR enforcement, and legalization of IPR violations would set a troubling precedent for the current world's hegemon. How this show plays out remains to be seen. For the official dispute settlement drama, visit the WTO's dedicated page.

BIS posts Complying with US Export Controls webinar series on On-Line Training Room

2010-07-03T13:46:00.001-04:00

Folks that are new or need refresher on BIS side of export regulations should visit this official BIS training page. It is a good overview, and may provide basis (if followed) for mitigation of penalties.

Correction to "CPSC + CBP = ?"

2010-06-15T09:42:00.000-04:00

The editor of this blog would like to make a correction to the statement posted few days ago about CBP/CPSC joint webinar presentation. In the blog notice, it was stated that "one cannot make any specific conclusions about CPSC / CBP cooperation procedural applications to its business." That is incorrect statement. Procedurally, notices of detention will come not from CBP pursuant to 19 USC 1499, but rather from CPSC pursuant to CPSIA of 2008. CBP will still act as a custodian (i.e. it will hold on to the goods, until CPSC gives a green light), but the importer will need to deal with CPSC officials before asking CBP officials to release the goods. According to CBP/CPSC MOU, CBP offices will be staffed with CPSC personnel ("CPSC has dedicated employees serving at 10 of the biggest ports of entry alongside CBP inspectors"), so on the surface it may look like communication is done with one entity. It is not.

Read "Procedural Changes for Shipments Detained for Product Safety Violations", and "CPSC to Begin Issuing Import Detention Notices instead of Customs" for further acquaintance with the matter.

Preferential Trade Agreements and the WTO: Impetus or Impediment

2010-06-13T18:59:00.002-04:00

I am pleased to recommend a very interesting article (click here) published by NYC Bar Committee on International Trade that explores tensions and benefits of two competing types of trade agreements: bilateral and multilateral. Special thanks to principal drafters: Helena Sullivan, Stuart Shroff, Mark Du, and Albert Bloomsbury.

The article joins a contemporary list of discussions about the potency of international trade agreements. Among other individuals who discuss bilateral-multilateral tensions is a Columbia University professor Jagdish Bhagwati, who is particularly favored by the editor of this blog for his book "Termites in the trading system: how preferential agreements undermine free trade" Professor Bhagwati argues that bilateral trade agreements are detrimental to the progress of international trade and should be disfavored.

CPSC + CBP = ?

2010-06-10T08:41:00.000-04:00

CBP posted a 06/08/10 webinar slides of CPSC presentation. Overall, the slides appeared to create a joint statement, by both agencies, to cooperate with one another. General procedural policies, as applied to CPSC, appear to be in the same application line as with FDA, but not with USDA. That observation is based on the fact of "conditional merchandise release" under CBP bond pending results of examination.

Perhaps, most interesting part of presentation relates to CPSC sampling methodology. Unfortunately, CPSC went no further than to site statutory authority 15 USC 2066 and 15 USC 1273. Nothing in the slides mentions how will CPSC will apply the Congressional authority in practice (perhaps, because CPSC is not quite certain about the application itself).

Overall, the presentation is dissapointing from the point of view of practitioner, because one cannot make any specific conculsions about CPSC / CBP cooperation procedural applications to its business.

RFID Technology Classification: Methodology & Analysis Review

2010-06-05T20:26:00.002-04:00

Radio-frequency identification (RFID) is the use of an object (typically referred to as an RFID tag) applied to or incorporated into a product, animal, or person for the purpose of identification and tracking using radio waves. Radio-frequency identification is comprised of interrogators (also known as readers), and tags (also known as labels or transponders).

Classification of readers/interrogators

CBP tends to treat readers/interrogators as ADP units. Relatively recent CBP ruling, NY M84377 (2006), classified RFID reader in the residual category of output units. The RFID reader was a “complete, self contained, freestanding unit that is connectable to other systems by a cable.” Therefore, CBP concluded “the card reader is classified as a separated unit that uses contactless technology provided for under heading 8471.”

The problem with NY M84377 lies with the fact that the reader in question fails to meet ADP unit criteria under legal note 5(C)(i) – The unit is to be regarded as being part of ADP if it is of a kind solely or principally used in ADP processing system. The reader in question was for point-of-sale system, which are specifically provided under 8470.50.0020 (HTSUS 2010). The point-of-sale system is usually pre-programmed technology, and therefore, fails ADP requirement of legal note 5(A)(ii) – ADP machine must be capable of being freely programmed in accordance with the requirements by the user. Without even questioning whether point-of-sale system is indeed an ADP of heading 8771, CBP prematurely concluded that the reader is classified as the unit thereof. It is important to note that "freely programmed" requirement existed in 2006 HTSUS version.

The premature conclusion creates a problem with quasi-precedent binding ruling system of CBP. The ruling has not been overruled and remains a good authority. As the society moves closer to informational paradigm shift, more and more technology would come in “pre-programmed” packages designed for use by low-skilled or low-trained personnel. Such technology would fail legal note 5(A)(ii) requirement.

Classification of tags / transponders / labels

HQ H086456 (2010) sets forth a good contemporary analysis for RFID tags classification methodology. In sum, it is a semiconductor device of heading 8523, subject to caveat to Chapter 85 legal note 4(b). One good question to ask, when determining classification of the tag, is whether it comes with a capacitor (or similar passive or active circuit element). If capacitor or similar device is present, the RFID tag is precluded from classification as “smart card” under 8523.52.00 (2010 HTSUS).

Phalates

2010-05-25T22:13:00.004-04:00

Rationality of phalates requirement of PL 110-314, Sec. 108(a) is discussed in CBS 60 Minutes presentation "Phalates: Are they safe?" aired on May 23, 2010. The video is available at this link.

CBS concludes that dangers posed by phalates (decreased male masculinity) is questionable at best due to mixed results of animal testing. Nonetheless, Congress passed Consumer Product Safety Improvement Act of 2008 banning phalates in certain children's products, effectively raising the cost of doing business for toy / children's articles manufacturers.

For specific's regarding applications of phalates to children's products see CPSIA Questionnaire portion "Children's Articles" produced by the editor of this blog.

CBP Free Webinars

2010-05-05T11:17:00.003-04:00

CBP issued an email notification yesterday about the launch of free webinar. One of them ISF/”10+2” Webinar for East Coast Small to Medium Sized Importers/Brokers is already filled up. Another, CBP Outbound Issues Webinar, still has spaces available.

Webinars have attained gaining popularity in the trade community. Citrix, with its "gotowebinar" and "gotomeetings" products seemingly dominating the market. While Citrix is offering various service levels, the most sophisticated version allows only 1000 people to attend (see http://www.gotomeeting.com/fec/webinar/gotowebinar_pricing). This is very limited space, considering CBP's nationwide reach (and possibly worldwide interest).

Schedule B Search Engine

2010-04-18T11:31:00.000-04:00

Foreign Trade Division rolled out a new search engine, designed and supported by 3CE, a private software company. Trade Division, however, does a poor job of reconciliation of 3CE's search engine with general rules of interpretation, which should be dispositive in determination of harmonized code (Schedule B included). 3CE engine produces false positives, even for simple products. If one, for example, would try to determine Schedule B number for steel cable ties, 3CE search engine would direct to 7302.90 (Railway or tramway track construction material of iron or steel, the following: rails, check-rails and rack rails, switch blades, crossing frogs, point rods and other crossing pieces, sleepers (cross-ties), fish-plates, chairs, chair wedges, sole plates (base plates), rail clips, bedplates, ties and other material specialized for jointing or fixing rails: Other). Steel cable ties should be classified in the residual category of that chapter (7326). Another example are o-rings. 3CE gives you a choice to classify it as an "article for technical use" or as a "part." No guidance on either definition is provided. Therefore, if I choose part, I will land somewhere in the landscape of Section XVI, without even knowing about Note 2 requirements of that section.

Trade Division made a step in right direction, providing a more sophisticated tool. Yet, Trade Division needs to emphasize that this is just another tool for exporter. Instead, it appears that Trade Division endorses 3CE's search tool as the sole means for Schedule B determination without regard to false positives and complexities of GRI application.

Manifest Confidentiality

2010-04-13T14:04:00.001-04:00

Anyone filing Sec.103 manifest confidentiality request is aware that CFR state the request should be mailed to the "Disclosure Law Officer, Headquarters, U.S. Customs Service, 1300 Pennsylvania Avenue, NW., Washington, DC 20229." Well, those folks have an new temporary home at 799 9th St. N.W. Washington DC 20001.

Internally, they have been moved under Office of International Trade, and today formally known as "Privacy Act, Policy & Procedures Branch." Individuals and companies wishing to know the status of their request may call general number 202-325-0280. Do not be surprised if it soon changes again.

Importation of meat for personal consumption

2010-04-02T07:48:00.002-04:00

As an international traveler, I wonder if one can bring some beef purchased from the corner butcher shop in the old country? Correct answer – depends on the agriculture inspector at the port of entry. Politically correct answer – probably not.

FSIS Recent directive “IMPORTATION OF PRODUCTS FOR OTHER THAN COMMERCIAL PURPOSES” states that FSIS regulations allow three classes of products covered by the FMIA, PPIA, or EPIA to be imported from any country without meeting all FSIS requirements. These product classes are (1) products for personal consumption; (2) products for laboratory examination, research, evaluative testing, or trade show exhibition; and (3) shipments destined for sale in foreign commissaries located in the United States.

FSIS’s regulations, 9 CFR 327.16 would allow a person to bring a 50 lb case of meat from the old country: “Any product in a quantity of 50 pounds or less which was purchased by the importer outside the United States for his/her own consumption, is eligible to be imported into the United States from any country without compliance with the provisions in other sections of this part but subject to applicable requirements under other laws, including the regulations in part 94 of this title. However, Program employees may inspect any product imported under this section to determine whether it is within the class eligible to be imported under this paragraph.”

So, the problem is not FSIS, the problem appears to be APHIS. The directive states that “These three classes of products are required to meet Animal and Plant Health Inspection Service (APHIS) import requirements (http://www.aphis.usda.gov/import_export/index.shtml).” Under APHIS, an international traveler would need to apply for the permit with Veterinary Services. In the process, it would be required to submit information that is not likely obtainable from the corner butcher shop in the old country (e.g. treatment of the material prior to importation in the US, see Import Permit). But even if obtainable, one takes a risk of having APHIS-VS football you back to FSIS (see VS processing changes related to FSIS exempted foods).

Thus, unless you really must bring that meat with you, it is probably better to eat it abroad.

CPSC's Reasonable Testing Program

2010-03-16T10:37:00.002-04:00

CPSC's recent webinar slides provide brief preview of minimum compliance standards for non-children products that importer is required to comply with. Those importers that would like to keep their expenses to the minimum, thereby forgoing third party testing fees, must base their certification on a "reasonable testing program," which should contain:

product specifications
applicable certification tests
production testing
remedial action plan
program design and implementation documentation

The above guidelines, without more, seem to be very lax, so long as you know what is meant by "applicable." In other words, one should know what to test for, and that requires knowledge of CPSIA and other CPSC regulations. To make the compliance easier, lawcustoms designed questionnaire. The questionnaire, however, is a work in progress and is currently in the process of being updated.

WTO Decisions in U.S. Courts

2010-03-15T14:21:00.002-04:00

Much of international trade literature is devoted to decisions of World Trade Organization pertaining to trade disputes. Indeed, WTO serves as an important forum for resolutions on issues ranging from intellectual property rights to antidumping duties. However, once WTO publishes its decision, the next step is for the country to implement it. In the United States, the role of compliance with WTO decisions has been devoted to administrative apparatus (i.e. executive branch), which includes Department of Justice. However, the system of checks and balances, a backbone of the U.S. political system, has no place in the international trade arena. The U.S. trade lawyers made attempts to introduce checks on executive branch concerning international trade matters through resurrection of Charming Betsy doctrine and other means, but with limited success. Recent attempts and struggle for a more predominant role of the judiciary branch in fulfilling its function as a "check" on the executive is accessed in my recent paper "Enforcement of World Trade Decisions Through Private Cause of Action in the U.S. Courts," which concludes that for time being, the WTO decision implementation is the exclusive domain of the executive branch.

ACE: an exclusive medium for post-entry work?

2010-03-04T09:33:00.002-05:00

Folks who specialize in post entry work, especially prior to liquidation, would probably agree that those who are not acquainted with ACE, should probably start doing so. "ACE Overview and Status Update" presentation released by CBP on March 3d, depicts a good sneak preview that ACE familiarity is of paramount importance.

Of specific interest is the following CBP outlook:

The next release will address post summary corrections. Today there is no automated way to correct entry summaries. A paper submission is required. It is almost impossible to track the submission or to know the number of submissions. CBP will be embarking on automating that process. For ACE entry summaries, this new ACE Business Process will replace the paper-based post entry amendment (PEA) process.

The Post Summary Correction (PSC) transaction will be a full replace of the existing ACE entry summary as a new version
It will be submitted for ACE entry summaries, types 01 and 03 only
It will replace the existing Post Entry Amendment (PEA) hardcopy process for ACE entry summaries
It will provide the ability for the trade to submit corrections to ACE entry summaries via Electronic Data Interchange (EDI)
PSCs will be processed through all existing validations including Census warnings
Liquidation will be automatically unset for PSCs so they can be processed

Am. Furniture Mfrs. Comm. for Legal Trade v. United States

2010-03-02T09:50:00.004-05:00

This is an odd case because both parties seem to agree on the end result: when Commerce publishes amended results (for antidumping review), the six month operation of law liquidation period begins from the date of the publication of the amended results, as opposed to the date of preceding "final review." Even the judge could not help but notice: "In losing the battle, however, Plaintiff in fact wins the war." I wonder what really went on behind the scenes?

FDA "help desk"

2010-02-02T17:21:00.001-05:00

If you call the FDA “help desk” 1-800-216-7331 and hang up with the feeling of not being helped, you are not alone. Try, for example, calling that number and asking whether the U.S. agent for the foreign facility can be an entity other than individual person (e.g. corporate entity). You will be told that you may not. Basis for such advise are Registration of Food Facilities Step-by-Step Instructions Section Seven, which requires “The first name and last name (surname) of the person acting as U. S. Agent for the foreign facility being registered.”

What about our Congress? “U.S. Agent must be a person (as defined in section 201(e) of the Federal Food Drug and Cosmetic Act (21 U.S.C. 321(e))) that resides or maintains a place of business in the United States whom a foreign facility designates as its agent…” as stated by FDA itself in Summary Report of the U.S. Food and Drug Administration's Initial Test of the Accuracy of the Emergency Contact. 21 U.S.C 321(e) defines “person” as follows: “The term ‘person’ includes individual, partnership, corporation, and association.”

Please be aware, that if you try to help FDA “help desk” and advise them of such law, do not expect to have them thank you.

CPSIA Prominence in Regulatory Compliance Sector

2010-02-02T10:45:00.000-05:00

On January 28, 2010 attorneys from Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP (GDLSK), Alan R. Klestadt (aklestadt@gdlsk.com) and Frances P. Hadfield (fhadfield@gdlsk.com) issued a flyer called “Product Safety Duty Refund Opportunity.” The gist of the flyer was the Volkswagen v. US, CIT 2009 case, its related CAFC opinion, and its application to Consumer Product Safety Improvement Act of 2008 (CPSIA). I would normally scan through the flyer just as many others, dismissing it into the vacuum of potentially useful, but immediately irrelevant information, if it was not for interesting foresight suggested by folks at GDLSK and my utmost respect for the firm (GDLSK was the first firm in New York to organize a discussion forum, at Fashion Institute of Technology, addressing regulatory concerns under CPSIA). The timing of the flyer, surprisingly coincided with much publicized Toyota recall.

Much appreciated foresight came in the form of structural changes recognition that are taking place in regulatory sector of international trade. With GATT and WTO tariff reductions, regulatory focus is increasingly shifting to “non-traditional” barriers. One such barrier, formally recognized under WTO (in large part owing to the US lobby) are antidumping duties. Another, duly noted by GDLSK, is the focus on product safety. Those folks that make their living in the field of international trade regulatory compliance, must develop and become competent in product safety and antidumping / countervailing duties in order to maintain a competitive edge (in addition to common knowledge of CBP regulations and somewhat specific FDA, USDA, DEA, BIS and other 3-letter agencies).

Court of International Trade (CIT) held in Volkswagen that warranty repairs made in response to government-mandated safety recalls qualify for 19 CFR §158.12 allowance. Furthermore, CIT created a importer friendly rebuttable presumption for government mandated safety recalls, where burden of proof shifts to the government to prove that defects did not exist at the time of importation (“very nature of a government mandated safety recall established the high likelihood that any defects repaired pursuant to the recall existed at the time of importation”). In light of CIT and CAFC opinions, the importer is entitled to 19 CFR §158.12 allowance for the cost of repairs if (1) it is government-mandated safety recall, and (2) repairs are made prior to protest of liquidated duties. If the recall is not government-mandated, such as in the case of current Toyota recall, importer faces a higher burden (unless Saab’s “proximity of the port repairs to the time of importation is established”) of proving that defect existed, more likely than not, at the time of importation and not due to damage occurring after importation (mere evidence of warranty agreement is insufficient). To reach that end, importer would probably need to persuade the court that damage after importation was not likely to occur, or in other words, prove the negative (which have always been a more difficult task).

Returning to Volkswagen application to CPSIA, importer must establish that (1) it is government-mandated safety recall, and (2) repairs are made prior to protest of liquidated duties. Quick review of CPSC recalls for January 2010 reveals that predominant majority of goods are recalled due to laceration, fire, fall and lead/chemical exposure hazard. I invite readers to prove me wrong, but with possible exception of the fall hazard, it is not economically feasible to perform repairs of conceivably defective product. From liability and financial point of view, the disposal of the product, or exportation thereof if permitted, seems to be better alternative. Therefore, depending on the volume and cost, duty drawback with much more favorable 3 year period, not Volkswagen’s allowance presents a more appealing alternative.

The flyer also implicitly touched a more sensitive question of CPSIA benefit distribution. Who, in regulatory compliance sector is the primary beneficiary of the CPSIA (as in the form of consulting fees)? While this is still a developing topic, one may take a look at the ever growing list of Accredited Testing Laboratories for such answer.

I was unable to locate the flyer on GDLSK website, nor can I reproduce one on this blog due to copyright issues. I am certain if readers would contact above mentioned attorneys, they would gladly provide you with a copy.

Freight Forwarder Guidance Update from BIS

2010-01-12T10:30:00.000-05:00

BIS updated “Freight Forwarder Guidance” material on its website. The text carries vagueness about circumstances when the “agent” (i.e. freight forwarder) may get into trouble when it takes upon itself the task of Export Control Classification Number (ECCN) determination. According to the guidance: “Agents should avoid making commodity classifications for which it lacks technical expertise, and should obtain support documentation for ECCNs and other material.” The phrase is self-defeating because almost all agents would lack “technical expertise” for majority of the items on EAR. One would have to be a software engineer specializing in encryption to correctly advise specifics of EAR Category 5, for example, while at the same time possessing “technical expertise.” On the other hand, guidance says as long as the PPI provides agent with sufficient technical information for ECCN, and agent relies on it in “good faith,” it is protected from liability in case something goes wrong. So, the key words are “sufficient technical information,” and forwarder’s “good faith reliance” on it. While BIS does not go into details about “good faith reliance,” it gives an example of bad faith reliance: “…the careless use of pre-printed ‘No License Required’ forms or unsupported entries can get an agent into trouble.”

Integrated Sourcing Initiative of the U.S.-Singapore Free-Trade Agreement

2009-12-11T10:37:00.005-05:00

U.S.-Singapore FTA was signed in 2003 and came into force in 2004. After more than 5 years, surprisingly little attention was given to the practical saving potential companies can, and are utilizing from the pact.

Much of attention was given to country of origin effects of the ISI part of the agreement, where specific goods may be considered originating goods for purposes of the agreement when shipped between the U.S. and Singapore, regardless of whether they satisfy the applicable rule of origin. Among criticized effects are labor and IPR rights, investment flows to the surrounding region, externalities for the South East Asian IT and medical sectors.

Country of origin effects, under ISI, are less paramount than Merchandise Processing Fee (MPF) savings. Under 9999.00.84 (statistical provision for ISI), origin of the country is still reported (see sample shot of the entry summary). However, if the product subject to ISI provision, was not transshipped through Singapore, MPF in the amount of 0.21 percent of the declared merchandise would have to be paid (up to $485 per entry). It is worth noting that ISI qualified goods, enumerated under subsection (m) of the HTSUS (see GN p.201), are generally duty free items, which tend to be high value and low cube commodities. Therefore, if volumes justify it, it may be a good business strategy to transship goods through Singapore to capitalize on MPF.

Quotas

2009-09-10T09:27:00.000-04:00

CBP “updates” to its website that came this August do not bring much new. There is still work to be done for “Other Agencies” section, for example, that does not list upland cotton program administered by USDA’s AMS Cotton Division. Of some value, one may find CBP contact information with respect to quotas (202-863-6560; hq.quota@dhs.gov). Tariff Schedule, it seems, remains the most reliable guidance for quota applications.

Relevant links: Commodities Subject to Import Quotas; Quotas Administered by Other Agencies; Are My Goods Subject to Quota?; Quota Administration

Food products with less than two percent of meat / poultry ingredients: bouillon cubes, extracts, and soup mixes, etc.

2009-07-01T09:27:00.002-04:00

It appears that jurisdictional issues regarding dry “chicken” soup mixes and like products cause much confusion not only among importers, but also within government circles. The “clarification” that went out is the second attempt to figure out who is responsible for what. About two years ago, Veterinary Services (VS) published 2% rule “clarification” that talked about this very issue, which has now been removed.

It seems that following is the most substantive statement of the clarification:

“Beginning on June 22, 2009, importers of food products that contain small amounts of meat or poultry will not be granted an import permit by the USDA Animal and Plant Health Inspection Service (APHIS) unless a determination is first made by FSIS that the meat, poultry, or egg product ingredient was prepared under specific conditions that will ensure that these ingredients are not adulterated. Once the determination has been made, food products that contain only a small amount of a meat, poultry, or egg product ingredient are no longer subject to the jurisdiction of FSIS and are then subject to the jurisdiction of the Food and Drug Administration.”

CBP echoes above clarification: “USDA import permit will now be required for FSIS-exempted food products containing small amounts of meat and/or poultry ingredients from countries considered by USDA to be affected with animal diseases of concern. Products from these countries, such as bouillon cubes, extracts, and soup mixes, which have previously gained entry solely under a health certificate indicating product being concentrated by boiling, will now also require a USDA import permit. CBP enforcement of this APHIS policy change is scheduled to start on June 22, 2009.”

One may figure, and probably be correct that obtaining an import permit would make importer’s life much easier notwithstanding the fact that supplier countries are NOT “affected with animal diseases of concern.” This is simply because some officials may understand enforcement out of the context, e.g. “USDA import permit will now be required for FSIS-exempted food products containing small amounts of meat and/or poultry ingredients from countries (period),” and it may take time to explain and persuade CBP to release the product (which may costs much more than hurdles of getting the product released from USDA Hold / Exam).

Getting the Import Permit, is the art in itself. It is possible, but difficult, to persuade VS to grant you a permit, not based on specific supplier, but based on specific country. VS would hesitate to do that, but if a supplier succeeds, than it may save time and money when conducting actual border clearance (again, depending on the port) for products that come from a vendor that often changes suppliers (a common, free-market like phenomena).

In general, however, same procedures that have been in place will remain there. It is the enforcement aspect of it that is probably affected.

NYSBA's overview of U.S. Foreign Corrupt Practices Act

2009-06-17T08:26:00.008-04:00

International Section of the New York State Bar Association (NYSBA) has published a good article on FCPA in its 2009 Spring issue (subscription required), with its supplemental overview, of International Law Practicum. Perspectives of many experts on the contemporary effects of FCPA were introduced. Not only domestic DOJ actions, but also a frank view of British policy with respect to anti-bribery enforcement. In summary, the article echoes the recent trend of increased FCPA enforcement by DOJ and SEC. In light of very few cases, there is very little authoritative guidance, other than that of DOJ, which tends to construe the statute broadly. Panel of legal practitioners provides insight of what can private companies do in order to not run afoul with the statute, which includes views of how one can interpret an inappropriate payments and contracts or relationships with the government officials. Panelists also discussed the issue of knowledge, which is a constructive (as opposed to actual) and deals with question of probabilities.

One of the panelist neatly broke the FCPA focus into 6 elements, which focus on the "(i) payment, offer, or promise of (ii) anything of value to (iii) certain - people - who include not just foreign officials but also candidates for political office and others - (iv) with corrupt intent (v) for the purpose of influencing that official to act or not to act or to influence somebody else (vi) to assist in obtaining or retaining business."

An excellent supplement material to NYSBA's FCPA perspective is the April 7, 2009 PBS Frontline edition of Black Money, which consists of set of interviews of U.S., British, Swiss, and Saudi officials in line with the rhetoric of the NYSBA's publication.

CPSIA's Ballpoint Pens - Don't Market To Children?

2009-06-10T10:09:00.006-04:00

On June 4^th opinion letter, CPSC’s Office of General Counsel attempted to clarify the meaning of children’s product with respect to ball point pens. It appears to be an industry standard to have lead in excess of CPSIA standards. The starting point of analysis, according to CPSC, is that a pen is considered as a general purpose item. It is the marketing and advertisement that may convert the general purpose pen into a children’s product. The opinion letter, then focuses on what type of marketing and/or advertisement would NOT constitute turning of a general purpose pen into a children’s product:

Once a year “back to school” marketing
Novelty pens
Cartoon character pens

Yet, these examples appear as the very type of marketing directed at children. While, there is no one set definition for “novelty,” it seems acceptable to use Wikipedia definition: “small manufactured adornment, especially a personal adornment.” Similarly, one could argue that cartoon characters (notable exception of adult cartoons) is the very type of advertisement directed at children. Obviously, it is very difficult to argue that “back to school” marketing is not directed at children. Here, the Office implicitly acknowledges it, and carves out “once a year” exception. Does CPSC have an authority to create such exceptions?

The letter would provide much more clarity if it were to focus on non-permissive examples rather than permissible ones. Yet, in light of relative newness of CPSIA enactment and the fact that CPSC administrative policy is still in transitional stage, the Office has stricken a political balance at the expense of businesses who source their writing products to younger population.

LED lights

2009-06-01T11:57:00.002-04:00

If one tries to bring LED light bulbs, she may rely on 8539.39.0000 classification based on N020620 (2007), which is presumptively valid 2.4% duty category. Mr. Campanelli, a CBP National Import Specialist who issued this ruling, said that LED bulbs belong neither to discharge, nor to electric filament category. This very issue is currently under review in CBP HQ, that leans toward the British interpretation of LED light emitting bulbs - 8543.70 (electrical apparatus, having individual functions n.e.s.o.i.). See in www.uktradeinfo.com for further information If this goes through, this would effectively raise the U.S. import duty by 0.2%

OFAC Symposium Presentations

2009-05-29T10:39:00.005-04:00

Office of Foreign Assets and Controls (OFAC) posted .pdf screen shots of its presentation symposium. Most of information is a form of restatement of governmental policies. There are some interesting points worth noting with respect to BIS.

If OFAC authorizes an export to Iran, no BIS license is required
Luxury goods to N. Korea include: luxury automobiles; yachts; gems; jewelry; other fashion accessories; cosmetics; perfumes; furs; designer clothing; luxury watches; rugs and tapestries; electronic entertainment software and equipment; recreational sports equipment; tobacco; wine and other alcoholic beverages; musical instruments; art; and antiques and collectible items including but not limited to rare coins and stamps.
OFAC and BIS share jurisdiction with respect to Sudan

BIS Contact List for Clarifications and Questions:

Main (Foreign Policy Division a.k.a. FPD)

(202) 482-4252

Director, FPD Joan Roberts

(202) 482-0171

jroberts@bis.doc.gov

Cuba, Iran, Syria Tony Christino

(202) 482-3241

tchristi@bis.doc.gov

N. Korea, Sudan, Burma Susan Kramer

(202) 482-0117

skramer@bis.doc.gov

Classifying Goods In The Absence of Necessary Information

2009-05-22T16:29:00.001-04:00

All importers and exporters need to assign a statistical reporting number (harmonized tariff modified to reporting requirements of an overseeing agency) to their goods. In the case of imports, it is Harmonized Tariff Schedule Of The United States (HTSUS). For exports, it is Schedule B. While HTSUS and Schedule B are being administered by different offices, International Trade Commission and Census Bureau respectively, the determination guidelines for deriving appropriate statistical reporting number is the same – General Rules of Interpretation (GRIs). Census explicitly directs exporters to GRIs and section notes before attempting to locate the correct commodity number. (“The General and U.S. Rules of Interpretation and Definitions, as well as the notes appearing in the sections and chapters of Schedule B, should be reviewed before attempting to locate the correct commodity number.” (See Schedule B Introduction)

GRIs consist of six main points, with one additional US specific point for HTSUS. GRIs were designed to be applicable for any tangible product. The rules are broadly construed and reasonably prudent classifiers often disagree on assignment of reporting numbers for the same commodity. To deal with disagreements, CBP established a commodity specialist division (a.k.a. Office of Regulations and Rulings), whose main job focuses on clarifying the commodity classification through binding rulings. These rulings are presumed correct. Van Dale Industries v. United States, 50 F.3d 1012 (C.A.Fed.1995). CBP Headquarters and Court of International Trade bear further burden to resolve disagreements over application of GRIs.

Despite broad GRI construction, an experienced classifier can utilize information efficiently if she knows “necessary” information about the product. The term “necessary” usually means the product’s use and make, including manufacturing process and material component breakdown. However, once the classifier is deprived of “necessary” information, she is left without effective means to apply GRIs to determine the product classification.

The absence of “necessary” information can have a fatal classification outcome. Official HTSUS authority of first instance – CBP Office of Regulations and Rulings – declines to issue rulings if left without “necessary” means. (see NY E84253, where CBP refused to issue a ruling for a welded bolt due to insufficient knowledge with respect to material component breakdown; N027179, where CBP refused to provide classification for “joints and miscellaneous parts because of insufficient information”; NY 888333, where CBP declined the classification request for the yarn citing inadequacy of information). One may therefore conclude that, so long as the product information is inadequate, the GRIs may not be applied.

Once CBP admits that GRIs are useless, when the information is inadequate, then commodity classifier, if faced with insufficient product information, is put in a tough spot. Unlike CBP, a classifier may not be in position to refuse classification. Pressing clearing necessity, business model viability, overseas communication breakdown, and corporate pressures are but a few reasons why classifier is often left with no choice but to assign HTS number notwithstanding inadequacy of information.

Often, a classifier will be a CBP license holder (broker), who has additional duties to ensure that the product is classified properly. Under 19 CFR Sec. 111.32, a “broker must not file any document… known by such broker to be false.” The same section further reads that a broker “must not knowingly give, or solicit or procure the giving of, any false or misleading information or testimony in a matter pending before the DHS or any representative of the DHS.” While Sec. 111.32 limits false information to matters pending before CBP and the knowledge must be the actual knowledge, Sec. 111.39 imposes a requirement of “due diligence to ascertain the correctness of any information which he (broker) imparts to a client.”

What can a classifier do to meet “due diligence” in the absence of “necessary” information to make a definitive classification? Statutes are not very helpful. They impose a rigid obligation to make a “correct” determination and obtain the information necessary for that determination. 19 USC Sec. 1481(a), an invoicing statute, broadly imposes requirement of “detailed description of the merchandise.” The Reasonable Care Informed Compliance Publication (2004) suggests the “reliable procedures” to ensure correct tariff classification pursuant to 19 USC 1484. Sec. 1484, however, does not provide recommendation to situations where classifier does not have the necessary means to make a classification. A statistical enumeration part of the statute, Sec. 1484(f), simply requires an accurate statement in terms of detailed enumeration. The detailed enumeration leads back to HTSUS and Schedule B, which point you back to GRIs. The loop closes and the classifier is stuck with GRIs that she is not in position to apply.

Two CBP publications provide a classifier with a guideline that she may use to fulfill her duty of diligence and her responsibilities to a client: Importing into the United States and Reasonable Care ICP. The guideline is posed in form of a question: “Where merchandise description or tariff classification information is not immediately available, have you established a reliable procedure for providing that information, and is the procedure being followed?.” Thus, a classifier, needs to have a procedure for obtaining that information. The procedure must be reliable, and must be followed. CBP acknowledges that “the facts and circumstances surrounding every import transaction differ--from the experience of the importer to the nature of the imported articles.” (Reasonable Care ICP, 7 (2004)) A classifier may find herself in circumstances, where she has a limited ability to obtain the “necessary” information, timely or otherwise. Accordingly, that classifier needs to establish procedure that is reliable and is being followed within the constraints of her working environment. A classifier shall follow that procedure, even if others do not follow. The procedure must be reliable to the extent of enabling a classifier to make an accurate classification provided cooperation of other parties to the transaction ensues.

Classification Methodology Narrowly Tailored To Fit the Reasonable Care Requirement

In the course of developing procedure, a classifier with insufficient information on hand (and in no position to delay HTS assignment) may adopt a set of presumptions. The presumptions are designed to enable a classifier to classify within recognized framework of GRIs. Presumptions must be sufficiently explicit as to enable the party with information to either affirm or rebut the presumption employed. These presumptions must be communicated to a responsible party as a part of procedural framework.

Determination of Presumption

A classifier should develop a particular analysis for derivation of the presumption. The analysis should be consistently applied to all classifications, it must not be arbitrary, and have reasonable basis. One such approach is probabilistic and poses a question: If one was to pick a product from that category of products, what characteristics would that product be most likely to have? The sources for establishing probabilistic presumption can vary. One classifier may have a database that already has sufficient amount of data from which presumptions can be reasonably drawn, while another classifier may have no data. A classifier, may opt to build on the established success of Google® search algorithm which returns search results based on popularity (i.e. use frequency) of a web source. Input of a product in the Google® search engine will return the most popular products in that category. A classifier would use the characteristics of the most popular product for the product she needs classify presuming that product classified is more likely then not to have characteristics of the product which is most popular. While sources for probabilistic derivation vary based on circumstances, the methodology stays the same – the product that needs to be classified is presumed to have characteristics akin to the most commonly used product from the data set that classifier uses.

The legitimacy of probabilistic approach is backed by the U.S. Supreme Court jurisprudence that used notion of presumed impermissibility with respect to laws with racial classification (Suspect Classification Doctrine in later developed into Strict Scrutiny Doctrine). Doctrines presumed that all laws of racial classification were probably adopted due to racial antagonism, and therefore are deemed impermissible (shifting the burden on the government to prove that it had legitimate purpose, such as public emergency, safety, or remedial measures).

Application Of Presumption

Once presumption is determined, classifier would use that presumption to fill in the voids for the information necessary to adequately apply GRI principles. Then communicate the presumption (can be in the form of question) to the responsible party for affirmation or rebuttal. If the responsible party comes back with rebuttal, classifier has a duty to reapply GRIs based on new facts provided. If the responsible party fails to come back with the information, a classifier has fulfilled her reasonable care duties by informing the responsible party about set of presumptions and providing the opportunity to comment on factual presumptions for the product in question.

FOIA Presumption of Openness

2009-03-27T13:10:00.003-04:00

DOJ amended guidelines to executive agencies not to withhold information strictly for procedural reasons. This applies to CBP. The goal appears to be both accelerate administrative efficiency and narrow number of denials.

Two years ago, I made a FOIA request to CBP at Dallas Fort Worth. It took them just under two months to respond. How this will play out remains to be seen.

For more information go to http://www.justice.gov/opa/pr/2009/March/09-ag-253.html

Blowout Preventer Valves (BOPs)

2009-03-25T11:06:00.004-04:00

The CBP decision in HQ H007677 regarding blowout preventers (BOP) is another example to the oilfield industry that customary practices of using "blanket" HTS for all of its products, such as 8431.43 (parts of offshore oil and natural gas drilling and production platforms; parts of oil and gas filed machinery) may not always work. At least in those situations where duty is involved.

The counsel tried really hard to persuade CBP that BOP is actually a part of the entire blowout preventer control system that is part of boring machinery (8431.43 / Duty Free). And it succeeded on the merits. CBP agreed thatt "BOPs are integral constituent component of oil and gas drilling activity and are in fact "parts" desinged for use therein. Counsel's argument, however, did not survive procedural scrutiny. Counsel cited Mitsibishi v. US, 22 F.3D 1102 (CAFC 1993), where slag box was found to be integral part of casting machine despite the fact that it was not involved in the casting process. While analagy parallels the issue, the thrust of the argument needed to focus on why Section XVI Note 2(a) should not be dispositive. Citing legal notes and expanatory text, CBP held that BOPs are appropriately classifed as valves.

Legal Principles

While the product may be regarded as a part of another product, it is to be classified in its own heading as specified under Section XVI legal note 2(a)

Once classification has been determined according to Note 2(a), there is not need to consider classifcation under remaining notes (Nidec Corp. v. US)

Section XVI Note 2(a)

Parts which are goods included in any of the headings of chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings

To support its proposition that "the oil and gas industry widely regards blowout preventers as a system of large valves," CBP relied on the following sources:

Schlumberger Oilfield Glossary
http://www.glossary.oilfield.slb.com

Lexicon of Oil & Gas Terms
http://www.maverickenergy.com

HowStuffWorks
http://www.howstuffworks.com/oil-drilling.htm

OSHA
http://www.osha.gov/SLTC/etools/oilandgas/index.html

Exports to International Waters (vessels, buoys, offshore iinstallations)

2009-02-18T10:08:00.005-05:00

I highly reccomend to review news posted by Douglas N. Jacobson. Yersterday, Mr. Jacobson recited Census Bureau memorandum called FTR Letter No. 3. Several issues worth noting and for some of us revisiting. First, the AES filers must utilize new "IW" export information code. Second, if one exports BIS licensed commodity, filer must use country of destination and ultimate consignee as indicated on that license. Third, if one exports non-BIS licensed commodity, then filer must use "nationality of the person(s) or entity assuming control of the item(s)." Lastly, AES filers are to report only those commodities that are valued over $2500 / Shedule B and/or those commodities that are subject to license (regardless of value).

Phalates 0.1% US Ban is Tomorrow

2009-02-09T08:59:00.002-05:00

The emergency stay request, CPSC opinion letters, and finally SDNY court ruling point to the sign that the American plastic toy industry is really caught off guard. Additionally, the record high oil prices from earlier 2008, along with record low prices of today, create an incentive for business managers to shore up on inventory rather then continue to rely on increasingly expensive supply chain.

Starting tomorrow, February 10th 2009, it is unlawful to import or sell any or all children’s toy or child care article which contains more then 0.1 % concentration of: di-(2-ethylhexyl) phthalate (DEHP), dibutyl phthalate (DBP), or benzyl butyl phthalate (BBP); and under some conditions, diisononyl phthalate (DINP), diisodecyl phthalate (DIDP), or di-n-octyl phthalate (DnOP) as well. According to February 5th SDNY ruling, that also applies to products currently on the shelves, in the warehouses, or otherwise held in inventories.

If you are among the effected group, consider checking cross-referencing CPSC questionnaire.

Encryption ECCN for Software and Hardware Bundles

2009-02-06T09:35:00.002-05:00

One of the puzzling situations that are not explicitly answered by the Commerce Control List (CCL), or other part of the EAR, are the software/hardware bundles commonly exported overseas.

Looking at the plain language of the CCL, one may reason that the hardware having encryption (PC or the server), typically under 4A994 category, must also be crosschecked pursuant to Category 4 Note 3 (“Computers, related equipment and ‘software’ performing cryptographic, cryptoanalytic, certifiable multi-level security or certifiable user isolation functions, or that limit electromagnetic compatibility [EMC], must also be evaluated against the performance characteristics in Category 5, Part 2 [‘Information Security’]). Category 5, Part 2 may tell you Category 5 applies in lieu of Category 4, but does not tell you what to do if both controls within Category 5 are applicable. Publicly available information, such as “Classification of computer preloaded with TSU-eligible encryption software” advisory opinion, is not very helpful because one may interpret it as limited to TSU exceptions only. Phone conversations with BIS team did not help much either, as I received conflicting answers (depending on the person I spoke with) regarding the reporting requirements – ranging from reporting of two ECCNs per one commodity to single ECCN relating to hardware portion.

To resolve this issue, I drafted an advisory opinion request (which is not published as of the time of this writing) to confront the issue directly. I realize that some of the biggest trade names in the industry do not have the answer to this, so the reproduction of the advisory opinion below may be helpful to the trade community.

Advisory Opinion Request

Inquiry

1) When the product is a bundled software and hardware item, where hardware is controlled under 5A002, and software is controlled under 5D002, what ECCN(s) must be reported to BIS upon export?

2) Same question as above, but the ECCN for hardware is 5A992 and the product is exported to non AT1 country. The software ECCN remains the same, 5D002.

Response

If 5D002 software is loaded onto 5A002 hardware, then the ECCN is 5A002.
If 5D002 software is loaded onto 5A992 hardware, then the ECCN is also 5A002.

Hope this answers your question.

Regards.

Aaron Amundson
U.S. Department of Commerce
Bureau of Industry and Security
Tel: (202) 482-5299
Fax: (202) 501-0784
aamundso@bis.doc.gov

Trade Agreements Interactive Database

2009-01-30T08:44:00.003-05:00

The WTO has launched a new database on regional trade agreements. Its' utility is questionable and subject to time test. However, one may find it useful in preliminary planning.

It is interesting to see this coming from WTO, as it has been an institution that traditionally opposes regional agreements. Institution's philosophy has been a global trade barrier reduction on multi-lateral basis (as opposed to bi-lateral).

Importer’s Role under CPSC

2008-12-29T19:06:00.000-05:00

After attending lectures, discussions with logistics managers, as well as importers, I got a sense of big confusion that is occurring in the trade community regarding their responsibilities and regulations under CPSC. This belief was solidified by browsing (on Google) through various “Certificates of Compliance,” in which some listed absurdly general statements such as “Consumer Product Safety Act” in the applicable CPSC section, while others shifted this burden on producers, neglecting the regulatory language that explicitly provides this burden on importers.

Perhaps, one can make better sense of it if s/he departs from the mentality of customs broker, at least for time being. Do not try to associate harmonized tariff with specific regulations. Unlike previous OGAs/PGAs (FCC, FDA, FWS, etc.), CPSC scope of jurisdiction – consumer - goods is very broad. See 16 CFR 1145.1, where scope is broadly established to extend to any consumer product from which the risk of injury could occur (and try to fit it in the reasonable HTSUS range). Or take 16 CFR 1500 definition of solid flammable (including exceptions), and again one comes across unclear and broad range of products that can fall under it. While establishing very broad scope of consumer goods jurisdiction, CPSC teases customs broker mind by providing specifics: mattresses, matchbooks, swimming pool slides. But then, it departs from specifics by only citing some furniture but not all, or citing some gloves, but not all. The key ingredient that is CPSC missed, and importers are now paying the price, is the clearer guidance on the interpretative methodology one should adopt (something like GRIs in classification).

What interpretative methodology should one use in jurisdiction determination under CPSC? There is not clear rules on how it should be read, which means there may be more then one correct answer. But I would recommend not to look at others for an answer (at least for those of us who make a living of it) and determine which one bests suits you, but try to figure it out on your own (and only then compare it with others). It would be difficult and time consuming at first, but then would become more and more clear.

Maybe, it would help to start by looking at the original text – 5 Acts that CPSC claims to have jurisdiction over. While reading these Acts, it would be helpful to pose various questions (What products does this Act cover? How are this products different / similar to other products in different Act? Is the product jurisdiction under this Act exclusive or concurrent?) and make notes. Then, go to regulations (upon which these statutes are based). Read them, and see how CPSC interpreted the statutes and codified them. Then, go to advisory opinions, review voluntary standards, frequently asked questions, and other literature that further expresses CPSC views on regulations (that in turn express CPSC views of the statutes under the Act). If one looks at CPSC opinions before becoming familiar with statutes, there is ample room for confusion due to lack of regulatory background and interpretative methodology.

Personally, I found it easiest to go Act by Act. “Certificate of Compliance” imposed knowledge responsibility of all Acts by the importer: “certificate shall identify separately each applicable consumer product safety rule under the Consumer Product Safety Act and any similar rule, ban, standard or regulation under any other Act enforced by the Commission that is applicable to the product.” See 16 CFR 1110. All potentially applicable questions / clauses are broken down to questions or tables. The product specifics of the Act are further broken down into sections (I like to call them dimensions), which may have the overlap with other sections. Once finished with first Act, I would go to the next, and continue until finished. While the resulting product is still messy, it makes a lot of sense (because it is though of not in terms of general jurisdiction, but rather specific subsection of the specific Act of Congress).

Feel free to examine this strategy by clicking here, but remember, it is your own adaptation that would work best for you.

Happy New 2009!

Scope of License Exception AVS (drilling rigs/platforms)

2008-09-11T07:53:00.001-04:00

For the purposes of 15 CFR 740.15, do offshore oil drilling rigs / platforms qualify as Vessels?

Offshore drilling rigs and platforms do not constitute "vessels" for the purposes of License Exception AVS eligibility, as described in Section 740.15 of the Export Administration Regulations (EAR) (15 CFR Parts 730-774).

The items that are eligible for export or reexport under License Exception AVS are, for the most part, those necessary for the proper operation (e.g., propulsion, navigation) of an aircraft or vessel or those intended for use as plane or ship stores. The scope of items that may be necessary for the proper operation of an offshore drilling rig or platform (even one that is self-propelled) might well include platform stabilization and drilling or oil exploration equipment that would go well beyond the scope of items contemplated under License Exception AVS as eligible for export/reexport to, or on board, vessels and aircraft.

For additional information on the EAR requirements described in this e mail, you may wish to view the EAR on-line, at:
www.access.gpo.gov/bis/index.html. Should you have additional questions about the requirements in the EAR, you may wish to contact the Outreach and Educational Services Division, at: (202) 482-4811.

Scope of ECCN 2B999.g controls

2008-09-11T07:49:00.001-04:00

This inquiry concerns control 2B999.g of the Commerce Control List.
Specifically, the list provides for 304 and 316 stainless steel valves, piping, tanks and vessels. One possible interpretation of the control is that the whole product in its entirety must be made from 304 or 316 stainless steel. Another possible interpretation of the control is that only those products that contain 304 or 316 stainless steel that perform essential function of the product (e.g. inner part of the piping that comes into direct control with the liquid or gas; valve that is made from bronze, but contains 316 stainless steel parts such as butterfly disc).

The BIS position on the 2B999.g?

The ECCN 2B999.g controls on 304 and 316 stainless steel valves, piping, tanks and vessels should be interpreted consistent with the controls on chemical manufacturing equipment described in ECCN 2B350.

Therefore, if all surfaces of the valves, piping, tanks and vessels that come in direct contact with the chemical(s) being processed or contained are made from 304/316 stainless steel, they would be controlled under 2B999.g -- in this instance, the entire item would not have to be made of 304/316 stainless steel in order for it to be controlled under 2B999.g.

For additional information on these EAR requirements, you may wish to view the EAR on-line, at: www.access.gpo.gov/bis/index.html. Should you have additional questions about these requirements, you may wish to contact the Chemical and Biological Controls Division (CBCD), Office of Nonproliferation and Treaty Compliance, at: (202) 482-3343.

Airfield Lighting

2008-08-14T13:06:00.003-04:00

In an obscure NY M86452, CBP classified airfield lighting under

8530.80.0000
9405.40.6000
9405.60.6000

CBP provided no explanation of why classification of heading 9405 was used for lighting equipment clearly used for electrical signaling airfield installations.

Hydraulic Torque Wrenches

2008-08-14T09:57:00.004-04:00

If the machine is designed to not to be held in hand then it is classified under Schedule B 84.79.89.9898 (8479.89.9897 HTSUS) pursuant to NY L86502.

If it is designed to be held in hand during its use, it is classified under Schedule B 8467.11.5040 (Tools for working in the hand, pneumatic, hydraulic or with self-contained electric or nonelectric motor, and parts thereof: other: other wrenches)

Lubricating Preparations

2008-08-13T11:24:00.000-04:00

Major question that distinguishes whether these substances belong to heading 3403 or 2710:

Does the product contain 70% or more by weight of petroleum oils or oils obtained from bituminous minerals?

USB cable and Ethernet cable

2008-08-13T09:45:00.003-04:00

CBP is proposing to issue HQ H029719 in order to revoke NY N007536 and reclassify the cables under HTS 8544.42.2000, as electric conductors "of a kind used for telecommunication” rather than under HTS 8544.42.9000 as other electric conductors, "other."

CBP proposes this change as a correction based on the fact that USB and Ethernet cables are used for the two-way transfer of data between a personal computer and various other devices.

By application of GRI 1, the USB cable and the Ethernet cable are specifically provided for and should be classified under HTS 8544.42.2000, which provides for: “Insulated . . . wire, cable . . . and other insulated electric conductors, whether or not fitted with connectors . . . Other electric conductors, for a voltage not exceeding 1,000 V: Fitted with connectors: Other: Of a kind used for telecommunications.”

Proposed: 8544.42.2000, duty-free; current: 8544.42.9000, 2.6%

Actuator

2008-08-08T10:52:00.002-04:00

Actuator may be, prima facie, a part of the valve with which it is used, but actuators for valves, imported / exported separately are not provided in the valve heading 8481. Actuator is a gear assembly and is more specifically provided in heading 8483.

Actuator, when presented separately, is 8483.40.5010 HTSUS or 8483.40.4010 Schedule B, which provides for fixed ratio speed changers

Source: N025719

Internal Blowout Pressure Valve (IBOP)

2008-08-08T10:38:00.002-04:00

An IBOP is typically a ball valve or other type of valve that is connected in line with the drills string. It can be closed to isolate the kick inside the drill string. Because an IBOP and its associated actuator is connected in line with the drill string, it will rotate with the drill string during drilling operations. Typically, IBOP's are pneumatically powered. The air source, typically a pressurized cylinder, is generally stationary. Thus, the challenge is to get the air power from the stationary source to the rotating IBOP actuator. It is noted that often drilling is stopped before the IBOP is actuated, but for safety reasons, the IBOP must be connected to an air supply at all times during drilling operations.

Source

Dateline NBC's Program on CBP

2008-08-06T09:27:00.002-04:00

Dateline's report on Customs and Border Protection.

Mandatory Country of Origin Labeling

2008-08-05T09:23:00.003-04:00

The Agricultural Marketing Service has issued an interim final rule1, effective September 30, 2008, requiring the mandatory country of origin labeling (COOL) for the following agricultural goods (collectively, covered commodities):

muscle cuts of beef (including veal), lamb, chicken, goat, and pork;
ground beef, ground lamb, ground chicken, ground goat, and ground pork;
perishable agricultural commodities;
macadamia nuts, pecans, and peanuts; and
ginseng.

(Note that the COOL regulatory requirements for wild and farm raised fish and shellfish are already in effect (and were published in the October 5, 2004 Federal Register).

The interim final rule contains definitions, the requirements for consumer notification and product marking, and the recordkeeping responsibilities of both retailers and suppliers for covered commodities.

Comments must be submitted on or before September 30, 2008.

Press Release on Interim Rule

According to an AMS press release, the following are highlights of the interim final rule:

Covered commodities under COOL regulations must be labeled at retail to indicate their country of origin. However, they are excluded from mandatory COOL if they are an ingredient in a processed food item;

Definition of a processed food item under 7 CFR 65.220 is revised to provide additional clarity to as to items derived from a covered commodity that have undergone a physical or chemical change (e.g., cooking, smoking) or that have been combined with other covered commodities or other substantive food components (e.g., chocolate, tomato sauce) and are therefore excluded from COOL labeling;

Recordkeeping retention requirements for suppliers, etc. are reduced to one year (instead of two years as originally proposed);

Specific criteria that must be met for a covered commodity to bear a "U.S. country of origin" declaration are prescribed;

Penalties for both suppliers and retailers found in violation of the law are up to $1,000 per violation.

CBP Border Searches of IT Equipment

2008-08-04T09:27:00.005-04:00

The guidelines instruct CBP officers to seek assistance from other Federal agencies or entities in Translation and Decryption matters. This may take to mean that the individual subject to search is not obligated to provide translation and decryption assistance to CBP. Therefore, if a CBP officer requests you to provide a password in order to log in and inspect you PC, that person may advise the officer to follow the instructions in the guidelines and request decryption services from other Federal agencies or entities. The guidelines do not require CBP officer to have “individualized suspicion” in order to seek translation or decryption. The guidelines instruct the completion of the search in the “reasonable time” and “as expeditiously as possible.” The time is capped at 15 days with possible 7 day extensions if necessary.

The guidance provides exemptions for “sealed letter class mail” (must be in the postal system, and the warrant is required), and attorney-client privileged material. In order to invoke the privilege, an individual must assert that claim. Although guidance states that legal materials are “not necessarily exempt,” it nevertheless instructs CBP officer to seek advice from the Associate / Assistant Chief Counsel or the appropriate U.S. Attorney’s office before conducting a search of the document.

Exporting/Importing Carnet Shipments under the New Foreign Trade Regulations

2008-07-31T12:33:00.001-04:00

A carnet or ATA Carnet is an international customs document issued by 70 countries that participate in the carnet program. The document is presented when entering a Carnet country with merchandise or equipment that will be re-exported within 12 months.

Upon presentation, the Carnet permits the equipment or merchandise to clear customs without the payment of duties and taxes. Payment is not necessary because the Carnet guarantees that the merchandise or equipment will be re-exported within a year. The use of a Carnet is a way of temporarily importing into foreign countries without payment of duties and taxes. Carnets also serve as the U.S. registration of goods so that the goods can re-enter the U.S. without payment of duties and taxes.

When goods are exported out of the U.S. on a Carnet, or imported into the U.S. on a Carnet, under the new Foreign Trade Regulations that were published on July 2, 2008, the Electronic Export Information (EEI) is no longer required for Carnet shipments. Unless the Carnet is being exported in conjunction with an export license issued by any U.S. Government Agency, the EEI must be transmitted in AES.

The Foreign Trade Regulations allow for Carnet exports to be exempt from the EEI transmission by applying the exemption legend on the transportation documents. A U.S. origin Carnet shipment being exported would be exempt by citing the exemption NO EEI 30.37(q). For foreign Carnets, when the goods are re-exported back to their country of origin, the proper exemption to apply is NO EEI 30.37(r).

Exporters can seek more information about this program via the website www.atacarnet.com.

Attorney Fees Using Blocked Funds Guidance

2008-07-29T09:07:00.002-04:00

The Office of Foreign Assets Control posted a guidance entitled "Guidance on the Release of Limited Amounts of Blocked Funds for Payment of Legal Fees and Costs Incurred in Challenging the Blocking of U.S. Persons in Administrative or Civil Proceedings."

Oil & Gas Drilling and Exploration Commodities That May Require Export License

2008-07-24T09:47:00.049-04:00

The following are examples of oil and gas exploration industry items that are described under various Export Control Classification Numbers (ECCN’s) and may require an export license:

Antenna (see Radio)

Bars

questionnaire

Bearings

questionnaire

Belts: Weight (see Diving)

Boring equipment

capable of drilling holes greater than two feet in diameter

2B999.h.1

Boots (see Equipment: Protective & Detection)

Breathing Apparatus: Self Contained (SCBA)

1A995.b

Protective and detection equipment and components not specially designed for military use and not controlled by ECCN 1A004 or ECCN 2B351, as follows (see List of Items Controlled)

Equipment limited by design or function to protect against hazards specific to civil industries, such as mining, quarrying, agriculture, pharmaceuticals, medical, veterinary, environmental, waste management, or to the food industry

§ Note: This entry (1A995) does not control items for protection against chemical or biological agents that are consumer goods, packaged for retail sale or personal use, or medical products, such as latex exam gloves, latex surgical gloves, liquid disinfectant soap, disposable surgical drapes, surgical gowns, surgical foot covers, and surgical masks. Such items are classified as EAR99.

Cable: Fiber Optic

5A001.c.1

Optical fiber communication cables, optical fibers and accessories, as follows:

Optical fibers of more than 500 m in length specified by the manufacturer as being capable of withstanding a proof test tensile stress of 2 x 10^9 N/m^2 or more

Technical Note: Proof Test: on-line or off-line production screen testing that dynamically applies a prescribed tensile stress over a 0.5 to 3 m length of fiber at a running rate of 2 to 5 m/s while passing between capstans approximately 150 mm in diameter. The ambient temperature is a nominal 293 K (20 degrees C) and relative humidity 40%. Equivalent national standards may be used for executing the proof test.

5A001.c.2

Optical fiber communication cables, optical fibers and accessories, as follows:

Optical fiber cables and accessories designed for underwater use

Note: 5A001.c.2 does not control standard civil telecommunication cables and accessories

5A991.d

Telecommunication equipment, not controlled by 5A001

Optical fibers and optical fiber cables of more than 50 m in length designed for single mode operation

Cameras

Not underwater

6A003

questionnaire

6A203

questionnaire

6A993

questionnaire

Underwater cameras

8A002.d (underwater vision systems)

see questionnaire

8A992.d (other underwater camera equipment, n.e.s.)

see questionnaire

Circuit Boards: Printed

2B998.c

Assemblies, units or inserts specially designed for machine tools controlled by 2B991, or for equipment controlled by 2B993, 2B996 or 2B997

Specially designed printed circuit boards with mounted components capable of upgrading, according to the manufacturer's specifications, "numerical control" units, machine tools or feed- back devices to or above the levels specified in ECCNs 2B991, 2B993, 2B996, 2B997, or 2B998

Compasses (see Diving)

Computers

4A994.b

"Digital computers" having an "Adjusted Peak Performance" ("APP") equal to or greater than 0.00001 Weighted TeraFLOPS (WT))

Need to know the type of processor to figure out APP of a computer

Intel Processors APPs

BIS Control Levels for Computers and Computer Technology and Software (as set forth in the April 24, 2006 amendment to the EAR)

8A992.i

Dive computers (see Diving)

Diving / Scuba Gear

8A992.h

Vessels, marine systems or equipment, not controlled by 8A001, 8A002 or 8A018, and specially designed parts therefor

Other self-contained underwater breathing apparatus (scuba gear) and related equipment, n.e.s.

8A992.i

Vessels, marine systems or equipment, not controlled by 8A001, 8A002 or 8A018, and specially designed parts therefor

Life jackets, inflation cartridges, compasses, wetsuits, masks, fins, weight belts, and dive computers

Displays: color (see Monitors)

Earth moving equipment used in mining industry

2B999.h.2

Equipment: Protective & Detection

1A004

Protective and detection equipment andcomponents not specially designed for militaryuse as follows

Gas masks, filter canisters anddecontamination equipment therefor designed ormodified for defense against biological agents orradioactive materials adapted for use in war orchemical warfare (CW) agents and speciallydesigned components therefor
Protective suits, gloves and shoes speciallydesigned or modified for defense againstbiological agents or radioactive materials adaptedfor use in war or chemical warfare (CW) agents
Nuclear, biological and chemical (NBC)detection systems specially designed or modifiedfor detection or identification of biological agentsor radioactive materials adapted for use in war orchemical warfare (CW) agents and speciallydesigned components thereof

Note: 1A004 does not control

Personal radiation monitoring dosimeters
Equipment limited by design or function to protect against hazards specific to civil industries, such as mining, quarrying, agriculture, pharmaceuticals, medical, veterinary, environmental, waste management, or to the food industry

Note

Protective equipment and components are classified as 1A004 if they have been tested and proven effective against penetration of BW/CW agents or their simulants using test protocols published by a U.S. Government Agency, such as the National Institute of Occupational Safety and Health (NIOSH) or the U.S. Army, for use by emergency responders or evacuees in chemical, biological, radiological or nuclear environments and labeled with or otherwise identified by the manufacturer or exporter as being effective against penetration by BW/CW agents even if such equipment or components are used in civil industries such as mining, quarrying, agriculture, pharmaceuticals, medical, veterinary, environmental, waste management, or the food industry.

1A995

Protective and detection equipment and components not specially designed for military use and not controlled by ECCN 1A004 or ECCN 2B351

Personal radiation monitoring dosimeters
Equipment limited by design or function to protect against hazards specific to civil industries, such as mining, quarrying, agriculture, pharmaceuticals, medical, veterinary, environmental, waste management, or to the food industry.

Note

1A995 does not control items for protection against chemical or biological agents that are consumer goods, packaged for retail sale or personal use, or medical products, such as latex exam gloves, latex surgical gloves, liquid disinfectant soap, disposable surgical drapes, surgical gowns, surgical foot covers, and surgical masks. Such items are classified as EAR99

Engines

Marine

8A992.g

marine engines [both inboard and outboard] and
submarine engines, n.e.s.; and specifically designed parts therefor, n.e.s.

9A002

marine gas turbine engines with an ISO standard continuous power rating of 24,245 kW or more and a specific fuel consumption not exceeding 0.219 kg/kWh in the power range from 35 to 100%, and specially designed assemblies and components therefor

The term "marine gas turbine engines" includes those industrial, or aero-derivative, gas turbine engines adapted for a ship's electric power generation or propulsion

Diesel

9A990

Diesel engines, n.e.s., and tractors and specially designed parts therefor, n.e.s.
Diesel engines, n.e.s., for trucks, tractors, and automotive applications of continuous brake horsepower of 400 BHP (298 kW) or greater (performance based on SAE J1349 standard conditions of 100 Kpa and 25 degrees)
Off highway wheel tractors of carriage capacity 9 mt (20,000 lbs) or more; and parts and accessories, n.e.s.
On-Highway tractors, with single or tandem rear axles rated for 9 mt per axel (20,000 lbs.) or greater and specially designed parts

Fins (see Diving)

Fluids: Hydraulic: Lubricating (see Oil)

Foam: syntactic for underwater use

Footwear (see Equipment: Protective & Detection)

Generators (and parts)

2A994

Portable electric generators and specially designed parts

Gloves (see Equipment: Protective & Detection)

GPS (see Navigational instruments and software)

Gyros

Hydraulic fluids containing synthetic hydrocarbon oils

Hydrophone (and specially designed components)

6A001.a.2.a

Acoustics

Hydrophones having any of the following characteristics:

Note: The control status of hydrophones specially designed for other equipment is determined by the control status of the other equipment.
6A001.a.2.a.1

Incorporating continuous flexible sensing elements

6A001.a.2.a.2

Incorporating flexible assemblies of discrete sensing elements with either a diameter or length less than 20 mm and with a separation between elements of less than 20 mm

6A001.a.2.a.3

Having any of the following sensing elements:

6A001.a.2.a.3.a

Optical fibers

6A001.a.2.a.3.b

Piezoelectric polymer films other than polyvinylidene-fluoride (PVDF) and its co-polymers {P(VDF-TrFE) and P(VDF-TFE)}

6A001.a.2.a.3.c

Flexible piezoelectric composites

6A001.a.2.a.4

A hydrophone sensitivity better than -180dB at any depth with no acceleration compensation

6A001.a.2.a.5

When designed to operate at depths exceeding 35 m with acceleration compensation

6A001.a.2.a.6

Designed for operation at depths exceeding 1,000 m

Technical Notes:

1. ‘Piezoelectric polymer film' sensing elements consist of polarized polymer film that is stretched over and attached to a supporting frame or spool (mandrel).
2. ‘Flexible piezoelectric composite' sensing elements consist of piezoelectric ceramic particles or fibers combined with an electrically insulating, acoustically transparent rubber, polymer or epoxy compound, where the compound is an integral part of the sensing elements.
3. Hydrophone sensitivity is defined as twenty times the logarithm to the base 10 of the ratio of rms output voltage to a 1 V rms reference, when the hydrophone sensor, without a pre-amplifier, is placed in a plane wave acoustic field with an rms pressure of 1 Pa. For example, a hydrophone of -160 dB (reference 1 V per Pa) would yield an output voltage of 10-8 V in such a field, while one of -180 dB sensitivity would yield only 10-9 V output. Thus, -160 dB is better than -180 dB.

6A991

Marine or terrestrial acoustic equipment, n.e.s., capable of detecting or locating underwater objects or features or positioning surface vessels or underwater vehicles; and specially designed components, n.e.s.

Inflation cartridges (see Diving)

Information security devices and software

Lasers

Laser, MIG, or E-Beam welding equipment

Life jackets (see Diving)

Liferaft (see Raft)

Masks (see Diving)

Monitors

4A994.h

Color displays or monitors having more than 120 resolvable elements per cm in the direction of the maximum pixel density;

Note 1: 4A994.h does not control displays or monitors not specially designed for electronic computers.
Note 2: Displays specially designed for air traffic control (ATC) systems are treated as specially designed components for ATC systems under Category 6.

Navigational instruments and software

Antenna (for helicopter landing beakon)

7E994 ("Technology", n.e.s., for the "development", "production", or "use" of navigation, airborne communication, and other avionics equipment)

7A005

Global navigation satellite systems (i.e. GPS or GLONASS) receiving equipment, and specially designed components therefor. (These items are subject to the export licensing authority of the U.S. Department of State, Directorate of Defense Trade Controls. See 22 CFR part 121.)
22 CFR § 121.1 General. The United States Munitions List

Category XV—Spacecraft Systems and Associated Equipment

§ (c) Global Positioning System (GPS) receiving equipment specifically designed, modified or configured for military use; or GPS receiving equipment with any of the following characteristics:

(1) Designed for encryption or decryption (e.g., Y-Code) of GPS precise positioning service (PPS) signals;
(2) Designed for producing navigation results above 60,000 feet altitude and at 1,000 knots velocity or greater;
(3) Specifically designed or modified for use with a null steering antenna or including a null steering antenna designed to reduce or avoid jamming signals;
(4) Designed or modified for use with unmanned air vehicle systems capable of delivering at least a 500 kg payload to a range of at least 300 km.

§ Note: GPS receivers designed or modified for use with military unmanned air vehicle systems with less capability are considered to be specifically designed, modified or configured for military use and therefore covered under this paragraph (d)(4).)

Any GPS equipment not meeting this definition is subject to the jurisdiction of the Department of Commerce (DOC). Manufacturers or exporters of equipment under DOC jurisdiction are advised that the U.S. Government does not assure the availability of the GPS P-Code for civil navigation. It is the policy of the Department of Defense (DOD) that GPS receivers using P-Code without clarification as to whether or not those receivers were designed or modified to use Y-Code will be presumed to be Y-Code capable and covered under this paragraph. The DOD policy further requires that a notice be attached to all P-Code receivers presented for export. The notice must state the following: “ADVISORY NOTICE: This receiver uses the GPS P-Code signal, which by U.S. policy, may be switched off without notice.”

GLONASS
Inertial navigation equipment and software
Satellite Phone (see Radio)

Oil

1C006

Fluids and lubricating materials, as follows

Hydraulic fluids containing, as their principal ingredients, any of the following compounds or materials:

Synthetic silahydrocarbon oils, having all of the following (Technical Note: For the purpose of below, silahydrocarbon oils contain exclusively silicon, hydrogen and carbon):

A flash point exceeding 477 K (204 degrees C)
A pour point at 239 K (-34 degrees C) or less
A viscosity index of 75 or more
A thermal stability at 616 K (343 degrees C)

Chlorofluorocarbons, having all of the following (Technical Note: For the purpose of below, chlorofluorocarbons contain exclusively carbon, fluorine and chlorine):

No flash point
An autogenous ignition temperature exceeding 977 K (704 degrees C)
A pour point at 219 K (-54 degrees C) or less
A viscosity index of 80 or more
A boiling point at 473 K (200 degrees C) or higher

Lubricating materials containing, as their principal ingredients, any of the following compounds or materials:

Phenylene or alkylphenylene ethers or thio-ethers, or their mixtures, containing more than two ether or thio-ether functions or mixtures thereof; or
Fluorinated silicone fluids with a kinematic viscosity of less than 5,000 mm2/s (5,000 centistokes) measured at 298 K (25 degrees C);

Damping or flotation fluids with a purity exceeding 99.8%, containing less than 25 particles of 200 æm or larger in size per 100 ml and made from at least 85% of any of the following compounds or materials:

Dibromotetrafluoroethane;
Polychlorotrifluoroethylene (oily and waxy modifications only); or
Polybromotrifluoroethylene;

Fluorocarbon electronic cooling fluids, having all of the following characteristics:

Containing 85% by weight or more of any of the following, or mixtures thereof:

Monomeric forms of perfluoropolyalkylether- triazines or perfluoroaliphatic-ethers;
Perfluoroalkylamines;
Perfluorocycloalkanes; or
Perfluoroalkanes;

Density at 298 K (25 degrees C) of 1.5 g/ml or more;
In a liquid state at 273 K (0 degrees C); and
Containing 60% or more by weight of fluorine.

1C981

Crude petroleum including reconstituted crude petroleum, tar sands & crude shale oil listed in Supplement No. 1 to part 754 of the EAR

1C982

Other petroleum products listed in Supplement No. 1 to part 754 of the EAR that were produced or derived from the Naval Petroleum Reserves (NPR) or became available for export as a result of an exchange f any NPR produced or derived commodities

1C996

Hydraulic fluids containing synthetic hydrocarbon oils, having all the following characteristics:

1. A flash point exceeding 477 K (204 degrees C)

2. A pour point at 239 K (-34 degrees C) or less

3. A viscosity index of 75 or more

4. A thermal stability at 616 K (343 degrees C).

Optical sensors

Phone: Satellite (see Radio)

Pipes & fittings

high-vacuum service

2B999.k

monel equipment

2B999.f

stainless steel 304 and 316

2B999.g

Power converters and inverters

Power supplies: DC: high power or high voltage

3A226

High-power direct current power supplies, other than those described in 0B001.j.6, having both of the following characteristics

Capable of continuously producing, over a time period of 8 hours, 100 V or greater with current output of 500 A or greater; and
Current or voltage stability better than 0.1% over a time period of 8 hours

3A227

High-voltage direct current power supplies, other than those described in 0B001.j.5, having both of the following characteristics

Capable of continuously producing, over a time period of 8 hours, 20 kV or greater with current output of 1 A or greater; and
Current or voltage stability better than 0.1% over a time period of 8 hours

Pumps

for industrial service and for use with electrical motor of 5 HP or greater

2B999.j

vacuum

Radio

Intercom

5A991.g

Mobile communications equipment, n.e.s., and assemblies and components therefor

7E994

"Technology", n.e.s., for the "development", "production", or "use" of navigation, airborne communication, and other avionics equipment

Satellite Phone

5A991.b.6.a

Radio equipment operating at input or output frequencies exceeding 31 GHz for satellite-earth station applications

5A991.g

Mobile communications equipment, n.e.s., and assemblies and components therefor

Recorder: Data (a.k.a. "Black Box"). Example: VoyageMaster II S-VDR

3A991

Electronic devices and components not controlled by 3A001 (was advised of this ECCN by Northrop Grumman Export Compliance Department for VoyageMaster II S-VDR)

Raft

8A992.f

Vessels, n.e.s., including inflatable boats, and specially designed components therefor, n.e.s.

Receiver: navigational warnings and weather forecasts (commodity example)

7E994

"Technology", n.e.s., for the "development", "production", or "use" of navigation, airborne communication, and other avionics equipment

Rectifier: silicon controlled

3A001.g

Solid-state pulsed power switching thyristor devices and thyristor modules using either electrically, optically, or electron radiation controlled switch methods, having any of the following:

A maximum turn-on current rate of rise (di/dt) greater than 30,000 A/ s and off-state voltage greater than 1,100 V; or
A maximum turn-on current rate of rise (di/dt) greater than 2,000 A/ s and all of the following:

An off-state peak voltage equal to or greater than 3,000 V; and
A peak (surge) current equal to or greater than 3,000 A.

3A001.g includes Silicon Controlled Rectifiers

Rods (see Bars)

Robots

Scuba Gear (see Diving)

Shaft

8A002.o.1.e

Water-screw propeller or power transmission systems, as follows, specially designed for surface effect vehicles (fully skirted or rigid sidewall variety), hydrofoils or small waterplane area vessels controlled by 8A001.f, 8A001.g, .8A001.h or 8A001.i:

Power transmission shaft systems, incorporating "composite" material components, capable of transmitting more than 1 MW

8A002.o.2.d

Water-screw propeller or power transmission systems, as follows, specially designed for surface effect vehicles (fully skirted or rigid sidewall variety), hydrofoils or small waterplane area vessels controlled by 8A001.f, 8A001.g, .8A001.h or 8A001.i:

Power transmission shaft systems, incorporating "composite" material components, capable of transmitting more than 2 MW

Shoes (see Equipment: Protective & Detection)

Solenoids

3A001.e.3

"Superconductive" electromagnets and solenoids specially designed to be fully charged or discharged in less than one second, having all of the following:...

3A201.b

Superconducting solenoidal electromagnets having all of the following characteristics:...

Suits (see Equipment: Protective & Detection)

Test Equipment, Electronic

Accelerometers: angular or rotational
Frequency meter

3A992.a (Electronic test equipment, n.e.s.)

Gravity meters
Magnetometers
Megger: meter

3A992.a (Electronic test equipment, n.e.s.)

Pressure Gauge & Sensor;

3A992.a (Electronic test equipment, n.e.s.)

Salinometer

3A992.a (Electronic test equipment, n.e.s.)

Toxic gas monitoring systems
Transmitter

Telephone: Satellite (see Radio)

Thruster (see Engines: Marine)

Thyristor

3A001.g

Topdrive (see Boring equipment)

Tractors (see Engines)

Transducers: pressure

Valves

Stainless Steel: Austenitic

2B999.n

Stainless Steel: 304 & 316

2B999.g

Nickel Alloys

2B350.g
2B999.f (Monel)

Glass Lined

2B350.g.4

Titanium / Titanium Alloy

2B350.g.6

Vacuum

2B999.k

Vessels: submersible and supporting equipment

Welders: MIG (Metal Inert Gas)

2B999.d

MIG Welders

Wetsuits (see Diving)

Defense Trade Electronic Licensing System (D-Trade)

2008-07-24T09:18:00.003-04:00

The State Department's Directorate of Defense Trade Controls (DDTC) has posted to its Web site an updated guidance about license applications for the export or temporary import of defense articles pursuant to the International Traffic in Arms Regulations (ITAR).

WTO 2008 World Trade Report

2008-07-18T08:50:00.002-04:00

The World Trade Organization has posted its World Trade Report 2008: Trade in a Globalized World. It is an annual publication that aims to deepen understanding about trends in trade, trade policy issues and the multilateral trading system.

Bearings

2008-06-23T15:40:00.000-04:00

Below are useful questions when assessing Schedule B and ECCN determination. While most of them would belong under EAR99, a small minority may be subject to stricter BIS controls.

Schedule B

What type of bearing is it? (ball w/ integral shaft; ball unground; ball thrust; ball linear; ball angular; ball radial; tapered; spherical; needle; cylindrical)

ECCN

(2A001) If the bearings is of Radial Ball Type, please advise on each point [yes / no answers only!] whether it is / it has: (1) tolerances specified in accordance with ISO 492 Tolerance Class 2 or better (or ANSI/ABMA Std 20 Tolerance Class ABEC-9, or other national equivalents) and; (2) inner ring bore diameter between 12 and 50 mm; (3) outer ring outside diameter between 25 and 100 mm, and a width between 10 and 20 mm; (4) tolerance specified in accordance with ISO 3290 as grade 5 or worse; (5) made from monel or beryllium; (6) tapered roller bearing; (7) active magnetic? (2A991) If the ball bearings / solid ball bearings have the tolerance specified by the manufacturer in accordance with ABEC 7, ABEC 7P, or ABEC 7T, or ISO Standard Class 4 or better, please advise on each point [yes / no answers only!] whether it is / it has: (1) manufactured for use at operating temperatures above 573 K (300 C) either by using special material or by special heat treatment; (2) with lubricating elements or component modifications that, according to the manufacturer’s specifications, are specially designed to enable the bearings to operate at speeds exceeding 2.3 million DN (bearing bore diameter in mm x bearing rotational velocity in rpm); (4) solid tapered roller bearings, having tolerances specified by the manufacturer in accordance with ANSI / AFBMA Class 00 (inch) or Class A (metric) or better; (5) manufactured for use at operating temperatures below 219 K (-54 C) or above 423 K (150 C); (6) gas lubricated foil bearing manufactured for use at operating temperatures of 561 K (288 C) or higher and a unit load capacity exceeding 1 MPa; (7) active magnetic bearing; (8) fabric-lined self-aligning or fabric-lined journal sliding bearing manufactured for use at operating temperatures below 219 K (-54 C)? (1C999) Is the bearing of type of hardened steel and carbide precision ball bearings [yes / no answers only]?

Application for Further Review (AFR) Criteria under 19 CFR §174.24 (b)

2008-06-23T11:37:00.003-04:00

The application for further review has been incorporated into the latest version of the protest form (CBP 19) Section V. The criteria for review is set forth under 19 CFR 174.24 / 174.25. Pursuant to §174.24 (and corresponding Block 16 of the protest form CBP 19) protesting party must provide justification.

Parties can make the claim pursuant to 19 CFR §174.24 (b); Is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts. Commonly made mistake is to either fill out the form (i.e. simply mark the check boxes) without providing any justification narrative. Or providing a general narrative somewhere along this lines: “Application for further review is made because there are factual or legal issues that have not been ruled on by this port or the Commissioner of Customs.”

Most of the time it will work. However, knowledgeable CBP officials will deny such AFR (on the grounds of §174.25(b)(3)) citing that the justification does not provide specific information as to which question of law or fact has not been ruled on. They also may cite that it does not meet criteria of §174.24 and §174.25. Most importantly, CBP officials may cite relevant CBP rulings that they use as a guidance for their determination. One such ruling is HQ 966916.

In HQ 966916, the protestant made an application for further review merely alleging that the application “involves questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts.” The AFR was denied on the grounds that protestant did not provide specific information. Moreover, CBP shifts the burden of production and persuasion on a protesting party (“protestant has not provided this office with information indicating which question of law or fact has not been ruled upon … protestant must provide specific information to meet its claim that AFR is warranted”).

To fulfill §174.24 (b) protest criteria protestant must simply be more specific in its justification. When composing justification narrative provide a specific statement along the following lines: Application for further review is made due to questions of law / fact that involve classification/valuation… etc. ____________ (provide specifics of what law or what fact) of product/merchandise _________ (provide specifics: SKU, part number, purchase order, product name … etc. Otherwise increase the risk of the "substantially similar" argument as in HQ 966810). These specific questions pertaining to the specific merchandise in question have not been ruled by this port; have not been ruled by the Commissioner of Customs or his designee; have not been ruled by the Customs courts (Court of International Trade; Court of Appeals for the Federal Circuit).

It is important not to merely cite the regulation and treat the justification as the pro-forma statement of the CFR.

For further information refer to HQ 966916, HQ 966550, HQ 966810.

Camera BIS Controls

2008-06-20T17:25:00.004-04:00

Cameras are listed on BIS Commerce Control List under categories 6 and 8. A lot of details that may not be covered even on the Data Sheet of an equipment. Following questions are helpful guide for ECCN determination.

Cameras (not underwater)

6A003

6A203

6A993

Is the camera capable of recording at rates exceeding 1,000,000 frames/s for the full framing height of 35 mm film, or at proportionately higher rates for lesser frame heights, or at proportionately lower rates for greater frameheights? Is the camera capable of having writing speeds exceeding 10 mm/ μs? Is the camera capable of having a speed exceeding 1,000,000 frames/s? Is the camera capable of having an electronic shutter speed (gating capability) of less than 1 μs per full frame? Does the camera have a read out time allowing a framing rate of more than 125 full frames per second? Is the camera equipped with plug-ins that are specially designed for instrumentation cameras which have modular structures? Does this camera incorporate solid state sensors, having a peak response in the wavelength range exceeding 10 nm, but not exceeding 30,000 nm? Does the camera have more than 4 x 106 "active pixels" per solid state array? Does the camera incorporate three solid state arrays? Does the camera have more than 12 x 106 "active pixels" for solid state array? Does the camera have any "Deformable mirrors" having either continuous or multi-element surfaces, and specially designed components therefor, capable of dynamically repositioning portions of the surface of the mirror at rates exceeding 100 Hz? Does the camera have any optical control equipment having steering, tracking, stabilization or resonator alignment bandwidths equal to or more than 100 Hz and an accuracy of 10 rad (microradians) or less? Does the camera incorporate gimbals that have a maximum slew exceeding 5? Does the camera incorporate gimbals that have a bandwidth of 100 Hz or more? Does the camera incorporate gimbals that have an angular pointing errors of 200 rad (microradians) or less? Does the camera have the capability for annotating internally generated camera tracking data (this includes: 1) the horizontal angle the camera line of sight makes with respect to the earth's magnetic field direction and; 2) the vertical angle between the camera line of sight and the earth's horizon)? Does the camera have a peak response in the wavelength range exceeding 10 nm, but not exceeding 30,000 nm? Does the camera have linear detector arrays with more than 8,192 elements per array? Is the camera capable of mechanical scanning in one direction? Does the incorporate image intensifier tubes? Does the camera incorporate "focal plane arrays"? Does the camera include "focal plane arrays" combined with sufficient signal processing electronics, beyond the read out integrated circuit, to enable as a minimum the output of an analog or digital signal once power is supplied? Does the camera incorporate linear "focal plane arrays" with twelve elements or fewer, not employing time-delay-and-integration within the element, designed for any of the following: (a) Industrial or civilian intrusion alarm, traffic or industrial movement control or counting systems; (b) Industrial equipment used for inspection or monitoring of heat flows in buildings, equipment or industrial processes; (c) Industrial equipment used for inspection, sorting or analysis of the properties of materials; (d) Equipment specially designed for laboratory use; or (e) Medical equipment? Does the camera have a maximum frame rate equal to or less than 9 Hz? Does the camera have a minimum horizontal or vertical Instantaneous-Field -of-View (IFOV is a lesser figure of the Horizontal FOV or the Vertical FOV; Horizontal IFOV = horizontal Field of View (FOV)/number of horizontal detector elements; Vertical IFOV= vertical Field of View (FOV)/number of vertical detector elements) of at least 10 mrad/pixel (milliradians/pixel)? Does the camera incorporate a fixed focal-length lens that is not designed to be removed? Does the camera incorporate a direct view display (‘Direct view' refers to an imaging camera operating in the infrared spectrum that presents a visual image to a human observer using a near-to-eye micro display incorporating any light-security mechanism)? Does the camera have facility to obtain a viewable image of the detected field-of-view? Is the camera designed for a single kind of application and designed not to be user modified? Does the camera have recording rates greater than 225,000 frames per second? Is the camera capable of writing speeds greater than 0.5 mm per microsecond? Is the camera capable of 50 ns or less time resolution? Is the camera capable of 50 ns or less frame exposure time?

Underwater Cameras

8A002

8A992

Is it a television camera? What is the resolution (measured in air lines)? Is the camera designed or modified for remote operation with a submersible vehicle? Does it have image intensifier tube with a peak response in the wavelength range exceeding 400 nm but not exceeding 1,050 nm? Does it have image intensifier tube with a microchannel plate for electron image amplification with a hole pitch (center-to-center spacing) of 12 m or less? Does it have image intensifier tube containing any of the following photocathodes: S-20, S-25 or multialkali photocathodes with a luminous sensitivity exceeding 350 A/lm; GaAs or GaInAs photocathodes; or Other III-V compound semiconductor photocathodes? Does it have image intensifier tube containing compound semiconductor photocathodes with a maximum radiant sensitivity of 10 mA/W or less? Does the camera have more than 150,000 active pixels per solid state area array? Is the camera (camera system) specially designed or modified for remote operation with an underwater vehicle, employing techniques to minimize the effects of back scatter, including range-gated illuminators or "laser" systems? Is the camera capable of annotation of the film with data provided by a source external to the camera? Is the camera capable of automatic back focal distance correction? Is the camera capable of taking photographic still images? Is the camera specially designed or modified for underwater use below 150 m? Is the camera capable of having a film format of 35 mm or larger? Is the camera capable of automatic back focal distance correction? Is the camera equipped with Automatic compensation control specially designed to permit an underwater camera housing to be usable at depths exceeding 1,000 m? Is the camera capable of storing digitally more than 50 exposed images? Does the camera have autofocussing or remote focusing functions specially designed for underwater use?

Chemicals and Metals Tariff Guidance

2008-06-11T08:36:00.002-04:00

The EU tariff website has an HTS look up feature for chemicals and metals based on CAS#. Some CBP employees use this as a source for additional guidance (to six digit level).

http://ec.europa.eu/taxation_customs/dds/cgi-bin/eciquer?Periodic=0&Lang=EN

Recoup of CBP presentation at JFK (05/21/2008)

2008-05-21T15:38:00.000-04:00

Common mistakes / misunderstandings

The 180 day period is counted without regard to Saturdays, Sundays, or holidays. Day 1 is the day after liquidation.

If the last day for filing a protest or other administrative claim falls on Saturday, Sunday, holiday, snow day…etc, then the protest may be filed on the first succeeding day the CBP location is open. This practice is in line with Federal Rules of Civil Procedure under Treasury Decision 53961 (1), dated November 25, 1955.

Declaration must be filed with each protest: To the best of my knowledge, the entry (entries) is (are) not subject of drawback, nor the entry (entries) has (have) been referenced on a certificate of delivery or certificate of manufacture and delivery so as to enable a party to make such entry (entries) the subject of drawback.

Amendment to already filed protest should be marked at the top “AMENDMENT TO PROTEST (PROTEST #)

Application for Further Review (AFR)

The filing of AFR on a protest does not preclude a preliminary examination by the local port. If preliminary review results in a full allowance of the protest, then the protest will be decided locally, and the AFR becomes moot and will not be considered. If the preliminary review indicates that the protest would be denied in whole or in part by the port, then the port must give full consideration to the AFR, and it must be forwarded to designated port staff to determine if it meets the criteria under 19 CFR 174.25/26

Application must be made within the same time period in which to file the protest
The questions on the protest form (Block 15) are required to be answered only when one is making an AFR.
An application for further review is not a mechanism whereby a protestant can seek a second level of review on a previously filed protest that has been denied. In order to seek further review, the AFR must be part of the one and only protest allowable for an entry under the law

Accelerated disposition (19 USC 1515 [b], 19 CFR 174.22)

· If CBP fails to decide at the end of 30 day period, protest is deemed denied by operation of law

· File request via certified or registered mail

· Designed to accelerate access to judicial review at CIT

Exception to the “one protest per entry” rule (19 USC 1514 [d])

The reliquidation of an entry shall not open such entry so that a protestmay be filed against the decision of the Customs Service upon any question not involved in such reliquidation.

Protest may be filed against a reliquidation (even though one also may have been filed against the original liquidation) as long as the protest against the reliquidation does not bring to bear any new issues that were not the subject of the original protest. Essentially, the liquidation of the entry became final as to any matter not covered on the original protest; hence, those matters cannot now be raised on a protest against the entry’s reliquidation.

Anytime CBP liquidates or reliquidates an entry, that event can be the cause of action for a new protest – even though it may be a second or third filing on the same entry. Fore example, CBP errs in the reliquidation pursuant to a protest approval / court order: that reliquidation would be grounds for a new protest challenging the errors made at the time of that reliquidation.

19 USC 1515 (c), (d)

Under subsection (c) Commissioner can void the denial if the Application for Further Review was erroneously or improperly denied. The request must be filed with the Commissioner of Customs, attention: Executive Director, Regulations and Rulings, Office of International Trade, Customs Headquarters, within 60 days after the date of the notice of denial. HQ must review the matter, based solely on the information before CBP at the time of AFR and protest were denied, and issue a determination within 60 days of the request. If appropriate, the denial of the AFR may be set aside and the denial of the protest voided.

Subsection (d) allows the local port, on its own initiative, or upon a written notice within 90 days after denial of the protest, to void the denial of a timely and properly filed protest if said denial is found to contrary to proper instruction. Request of this nature should be filed on company letterhead with the port where the protest was filed and decided.

Relief above is primarily available due to procedural errors or the failure to follow established rulings, policies, regulations, or statutory requirements.

Denied Entities Databases for Exports

2008-05-15T08:20:00.000-04:00

· Denied Persons List: The BIS publishes the names of individuals and entities that have been found to have violated the U.S. export laws and regulations, and that have been denied export privileges for a certain period of time. U.S. citizens and corporations are prohibited from exporting merchandise to these individuals and entities. An updated version of this list may be found on the BIS’ website at:

http://www.bis.doc.gov/DPL/default.shtm.

· Unverified List: This list includes names and addresses of foreign persons who in the past were parties to an export transaction, and the BIS could not conduct a pre-license check or post-shipment verification. The involvement of a person designated on the Unverified List in an export transaction will raise a “red flag” with the BIS; therefore, U.S. exporters have an affirmative duty to inquire, verify or substantiate the proposed export transaction with such individuals to ensure compliance with all export laws and regulations. An updated version of this list may be found on the BIS’ website at:

www.bis.doc.gov/enforcement/unverifiedlist/unverified_parties.html.

· Entity List: The BIS also publishes a list of foreign end users involved in proliferation activities—an export license is required for export to these entities. An updated version of this list may be found the BIS’ website at:

http://www.bis.doc.gov/Entities/Default.htm.

· Specially Designated Nationals List: The Office of Foreign Assets Control (OFAC) administers a series of laws that impose economic sanctions against hostile countries, individuals and entities that pose a threat to U.S. foreign policy and national security. OFAC restricts financial trade transactions with certain individuals and entities that have been designated as Specially Designated Nationals (who are involved in terrorism, narcotics-trafficking, etc.). U.S. citizens and companies are prohibited from engaging in any financial dealings with these individuals and entities. An updated version of this list may be found on OFAC’s website at: www.treas.gov/offices/eotffc/ofac/sdn/index.htm

· The Debarred Parties List: The DDTC publishes a list entities and individuals that have violated the U.S. export laws and regulations and which are prohibited from exporting from the United States or receiving merchandise that was exported from the United States. (Even though this list pertains to violators of the International Traffic in Arms Regulations pertaining to defense articles and services, we believe that it is a good idea to screen against this list as well.) An updated version of this list may be found on the DDTC’s website at: http://pmdtc.org/debar059.htm.

Anti-Boycott

2008-05-15T07:49:00.002-04:00

It is illegal for a U.S. person to support an unsanctioned foreign boycott by:

Agreements to refuse or actual refusal to do business with countries that are the subject of a boycott or sanction or with blacklisted companies.
Agreements to discriminate or actual discrimination against other person based on race, religion, sex, national origin, or nationality.
Furnishing information about business relationships with countries subject of a boycott or sanction or with blacklisted companies.
Furnishing information about the race, religion, sex, or national origin of another person

Paying, or otherwise implementing letters of credit that include requirements to take boycott-related actions prohibited by the Anti-Boycott regulations.

Anti-Boycott Red Flags

The following are Anti-Boycott red flags that should trigger additional scrutiny:

· Any request or instruction that contains the word "boycott" or "blacklist," any reference to Israel, Israeli goods or Israeli nationals, or any reference to national origin, ethnicity, religion or gender should be considered boycott-related

· Any request to not do business with a certain country (i.e., a country boycott requirement)

· Any request to take discriminatory action (e.g., not hire or use anyone of Israeli descent to work or provide services on a contract)

· Any request to furnish prohibited information (e.g., ethnicity of a person working on a current or past deal)

· Any request to pick subcontractors for a boycotting country project from a white list (i.e., a list excluding blacklisted companies)

· The word "Jew," "Jewish,” or "Zionist" in the document.

Boycotting Countries

The U.S. Department of Treasury publishes a quarterly list of boycotting countries. On March 13, 2008, it published its most recent list consisting of Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, United Arab Emirates and Yemen. The Treasury Department noted that while Iraq was not included on the March 2008 list, its status with respect to future lists remains under review.

Other countries from which recent reportable boycott requests and prohibited contract conditions have arisen include: Algeria, Bahrain, Bangladesh, Indonesia, Iran, Malaysia, Nigeria, Oman, Pakistan, Saudi Arabia, Sudan, and Tunisia. Business transactions with, and requests from, these countries should also be carefully reviewed, as U.S. parties continue to receive boycott requests from a number of countries, including the ones listed above.

Reporting Requirements

The U.S. Department of Commerce's Office of Antiboycott Compliance requires companies and individuals to file quarterly reports of all requests that were received to take actions to comply with or support an unsanctioned foreign boycott (on form BIS 621P for single transactions; BIS 6051P for multiple transactions received in the same calendar quarter). Certain requests are reportable even if it is permissible for the U.S. person to comply with them.

The TRA does not prohibit specific actions but rather requires U.S. taxpayers (and their related companies) to report on an annual basis (i) "operations" in, with, or related to a boycotting country or its nationals and (ii) requests received to participate in or cooperate with an international boycott. TRA reports are filed on the due date of the annual tax returns on IRS Form 5713 in duplicate (one form is sent to the IRS Service Center, Philadelphia, PA 19255, and the other form is attached to the company's income tax return). If a company receives an unsolicited invitation to bid for a contract that contains a request to participate in or cooperate with an international boycott, Form 5713 would be filed only if the company accepts the invitation to bid.

Reportable Boycott Requests

The following are examples of reportable boycott requests:

"Goods of Israeli origin not acceptable"

"Company must comply with the Israeli boycott"

"Certificate of origin covering goods originating in Israel is not acceptable"

"Certificate issued by the shipping company certifying that the carrying vessel is allowed to enter the Lebanese port."

"Certificate from insurance company stating that they are not blacklisted"

"Prohibited entry" or "prohibited country of origin"

"The vendor must ensure that all products supplied do not contravene the regulations in force with regard to the boycott of Israel. "

"Vendor shall comply with the Israel boycott laws in performing his contractual obligations"

"The seller shall not supply goods or materials which have been manufactured or processed in Israel nor shall the services of any Israeli organization be used in handling of transporting the goods and materials"

REFERENCES:

(a)    15 CFR Part 760

(b)    65 FR 17002

(c)    Quality Manual

Carnet Shipments – What is the purpose of the ATA or TECRO/AIT Carnet?

2008-05-14T08:21:00.000-04:00

A carnet or ATA Carnet is an international customs document issued by 70 countries that participate in the carnet program. It is presented when entering a Carnet country with merchandise or equipment that will be re-exported within 12 months.

Upon presentation, the Carnet permits the equipment or merchandise to clear customs without the payment of duties and taxes. Payment is not necessary because the Carnet guarantees that the merchandise or equipment will be re-exported within a year. The use of a Carnet is a way of temporarily importing into foreign countries without payment of duties and taxes. Carnets also serve as the US registration of goods so that the goods can re-enter the US without payment of duties and taxes.

There are two types of Carnets. The ATA Carnet is used to temporarily import commercial samples, professional equipment, and goods for exhibitions and fairs. They facilitate international business by avoiding extensive customs procedures, eliminating payment of duties and value-added taxes (minimum 20% in Europe, 27% in China), and replacing the purchase of temporary import bonds. The TECRO/AIT Carnet is used between the U.S. and Taiwan only. It appears similar to and serves the same function as the ATA Carnet. TECRO/AIT Carnets result from a bilateral agreement between the US and Taiwan, covering only commercial samples and professional equipment. Merchandise entering countries in addition to Taiwan may also be accompanied by an ATA Carnet.

When goods are exported out of the US on a Carnet, the Electronic Export Information (EEI) is still required to be transmitted in the Automated Export System (AES) if the value exceeds $2500 per Schedule B/HTS code or under any type of export license. The Carnet is not a substitute for the AES transmission. At the time of export, the Carnet is taken Customs at the port of exit for a signature of the Customs official certifying the export of the goods. Upon importation of the cargo, the Carnet is presented to Customs again for signature of its return.

If the goods are foreign origin being imported into the US for a trade show or exhibition, upon the re-export of the cargo the Carnet is presented to Customs for a signature. The AES is still required to be transmitted if the value exceeds $2500 per Schedule B/HTS code or under a license. The USPPI in this case would be the broker who presented the Carnet to Customs upon importation.

Exporters can seek more information about this program via the website www.atacarnet.com.

$FESTIVE$

2007-06-26T17:48:00.000-04:00

Wilton Industries Inc., v. United States case caused a great deal of excitement in the import and legal communities. After all, provided that certain criteria are met, utilitarian articles were eligible for duty free treatment all these years, and the CBP official interpretation was, at best, misleading? The practical benefits, usually coming in the form of duty refunds, are marginal for those importers that are/were not directly involved in these cases. The commodities addressed in Wilton, would not qualify for chapter 95 if entered after February 3rd, 2007, the time when chapter 95 note 1 (v) came in force. Then, one has to consider limitation of Park B. Smith invoked by CBP on April 5th, 2006. It is very important to note, that the question of limitation had almost no mention in Wilton. In the slip opinion it is briefly noted that “neither party has relied in any way on Customs’ recent action seeking to limit the application of Park B. Smith to the entries before the courts in that case.” There are good reasons for no mention: your protests are likely to be denied on the basis of that limitation. With this in mind, the procedural timeline does not leave you a lot of room. Average entry liquidates in 314 days. Affected party can file a protest within 180 days after liquidation. As of the time of this writing, June 26, 2007, 447 days have passed since April 5th, 2006. That means, on average, your window of opportunity is only 47 days, as of today. In other words, goods with date of entry falling between February 17th, 2006 and April 5th, 2006, may be subject to the favorable outcome of the protest.

Apart from pessimistic timetable, Wilton case outlined some useful clarifications. Specifically, non-disposable goods associated with private special occasions fall within the festive scope.

Current criteria for festive qualification is that the article must be:

1) Closely associated with a festive occasion, and
2) Used or Displayed principally during that festive occasion, and
3) Its use on routine occasions would be “aberrant,” and
4) Article in question cannot be tableware, kitchenware, toilet articles, carpets and other textile floor coverings, apparel, bed linen, table linen, toilet linen, kitchen linen and similar articles having a utilitarian function

Commodity specific nuances are abundant. I highly suggest to, at least, become familiar with the following literature before seriously undertaking any festive classification project:
Wilton Industries Inc., v. United States
Park B. Smith
Midwest of Cannon Falls
Limitation of the application of the decisions of the Court of International Trade and the Court of Appeals for the Federal Circuit in Park B. Smith v. United States
Guidance on the Classification of Festive Articles

Best wishes!

Failure to file Antidumping Reimbursement Certificate with Customs Entry: once duties double at liquidation, what to do?

2007-06-12T00:18:00.000-04:00

Background

In the importing community most everyone knows that failure to provide reimbursement certificate (stating that importer was not reimbursed) may double importer’s antidumping duties upon liquidation. This is the law, it is codified in 19 CFR 351.402. The same statute also provides for presumption of reimbursement, and thereby doubling of antidumping duties, if the certificate is not provided prior to liquidation. The statute states that Customs and Border Protection (CBP) may presume that reimbursement have occurred, however, some CBP officers at some ports interpret “may” as “must.” As a result, antidumping duties double, regardless of the fact that the importer was not reimbursed. Number of rulings and protests filed for further review published in CROSS indicates that a substantial number of importers got burned due to the lack of knowledge and/or control over the administrative process. CBP Headquarters further augmented the issue by publishing Guidance for Certificates of Reimbursement on November 18, 2005.

The best way to avoid doubling of antidumping duties is to play by the rules. File or instruct you broker to file the certificate with every entry packet. Make sure that the certificate is in acceptable format. File the blanket certificate with relevant CBP team at the port where you do the clearance as a back up. Unfortunately, no matter how well you established reimbursement filing procedures, it is prone to failure. The failure may have multiple causes. More often than not, it is a result of human error: new employee at the brokerage office, misplacement of the blanket certificate at a Customhouse, incorrect format to begin with, or simply someone just having a bad day.

What happens next?

If you a lucky, you may get a courtesy call from CBP Import Specialist or receive a form CBP28, request for information. You are less lucky if you receive form CBP 29, notice of action. Your luck have run out when you received courtesy notice of liquidations with duties liquidated at a higher amount, followed by the bill. In the former two cases, be quick to file the certificate. Follow up with the import specialist, make sure s/he received it and everything is in order. In case of form CBP 29 it is especially important to follow-up, because if your statement does not conform to standards or there is a mistake on it, CBP may wait for 20 days, then reject your argument (you are given 20 days) and proceed with liquidation right away. Form CBP 29 may also mislead some importers. The mere phrasing “rate advance…” “action has been taken…” may mislead the importer to the conclusion that this has happened as in the past tense. Do not be misguided! The language construction is awful and grammatically not correct, but this is bureaucracy. What form CBP 29 does, is actually notifies that the action is in process of being taken and that you have 20 days to affect this action.

If you missed the opportunity to file the certificate or reimbursement prior to liquidation, and your duties have doubled you still have the chance, but it is going to be tough! You will need to file a protest.

Protesting doubling of antidumping duties

The protest must be carefully written. Antidumping entries usually liquidate as a result of administrative reviews or the end of the court proceedings. Pursuant to 19 U.S.C. 1504 (d), Customs shall liquidate entries within 6 months following the suspension removed from Department of Commerce (DOC). It is rare, but worth checking, if CBP liquidated entry after 6 months following the suspension removal by DOC, than the entry should have liquidated by law in the amount deposited. If that is the case, include this in your argument. Keep in consideration the Guidance for Certificates of Reimbursement memorandum. Especially the following excerpt:

Protests involving Reimbursement Certificates

Any protest of an entry made on and after April 27, 1989, in which the protestant argues that a reimbursement certificate filed after the bulletin notice of liquidation was posted complies with the time period set in 19 CFR 351.402 should be denied. CBP’s position for entries made on and after April 27, 1989, is that, in order for a reimbursement certificate to be considered timely filed, it must be filed before liquidation of the entry, i.e., before the date that the bulletin notice of liquidation is posted in the Customhouse

In contrast, a protest in which the protestant disputes the assessment under 19 CFR 351.402, that does not involve the timeliness of filing the reimbursement certificate, should be sent to the Department of Commerce for review and recommendation as to the disposition. Ports should follow the current procedure for sending protests to the DOC (Protest / Petition Processing Handbook, January 2002)

In the protest narrative, under no circumstances protest the “timeliness.” Try to avoid that word altogether. Instead, concentrate on the fact that you were not reimbursed for the antidumping duties. Yes, CBP correctly followed the instructions, but your entry is a “false positive” and doubling of antidumping duties does not apply to you.

Clearly indicate that pursuant to memorandum you are requesting that CBP send your protest to the Department of Commerce. Use statements from previous rulings and court cases that would favorably affect the outcome of disposition. It is very important to explicitly make a connection between the statement in the ruling and your argument. If you are vague, CBP will not apply a particular statement but the ruling as a whole, rejecting your argument as inapplicable.

Below is the list of rulings, statutes, and vocabulary excerpts that will help you write a good argument. Make sure to explicitly state that it is that argument, not the ruling as a whole, that sets a precedent for your situation. If using such words as clerical error, mistake of fact, mistake of law, inadvertence, be sure to know exactly what they stand for.

HQ 225163

Request for relief for failure to file reimbursement statement is denied because “…Customs should presume that reimbursement occurred.”

HQ 227609

The mere assertion that ultimately a reimbursement certificate was completed is insufficient to defeat the presumption in the regulation.

Availl of Texas v. United States 70 F. 3rd 1248 (Fed. Cir. 1995)

Importer believed that a reimbursement certificate has been filed.

HQ 228840

When double antidumping duties are accessed because no reimbursement certificate is timely filed the protestant has not established that the application of presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties were due to mistake of fact, clerical error, or inadvertence. Therefore, Customs was correct in deducting the amount of presumed reimbursement from the U.S. price, which resulted in a doubled antidumping duty.

...Protestant must present support for the position that the presumption should not be applied in this case...

...At no time prior to liquidation did the protestant believe there was filed or instruct another to file, a reimbursement certificate...

Finally, fill out the application for further review. By taking this step, you are having the protest reviewed higher up (usually assistant port director or a team leader / supervisor). If further review is not indicated, you may find yourself in the time entrapment. The CBP, by statute, has up to two years to review the protest and respond to the importer / filer (unless the situation deals with merchandise exclusion). Importer / filer has 180 after liquidation to file the protest (90 days if entry date is before February 28, 2004). If application for further review is not filled out, a CBP Import Specialist may hold on to the protest until 180 day period is expired and than mail out their disposition. As strange as it sounds, I have seen it happen.

Good luck!

Tableware Available in Specified Sets

2007-06-01T17:02:00.000-04:00

It appears that Customs and Border Protection (CBP) is changing its long time practice with regards to interpretation of Additional U.S. Note 6 (b) to Chapter 69 HTSUS, which dates back to August 8th, 1994, the date of issuance of HQ 955838. The practice pertains to the interpretation of nearest to maximum dimensions. CBP has regarded the word “maximum” in the note as meaning “the greatest possible quantity or degree”; the greatest quantity or degree reached or recorded; the upper limit of variation (Customs Bulletin Vol. 41 No. 23 Pg. 48). Ceramic article, therefore, cannot exceed dimensions specified in the Additional U.S. Note 6 (b). Importers who are bringing ceramic dinnerware / tableware in sets, were stuck to that dimensions or had to pay almost double the duty for articles as being not “available in specified sets.” CBP position now is that an article may exceed the dimensional descriptions of Additional U.S. Note 6 to Chapter 69 and be classified as being “available in specified sets.”

The change in interpretation was due to acceptance of several court cases as a precedent for the interpretation. Previously, CBP dismissed any court cases, legislative history and interpretations thereof by claiming that the meaning of the note is plain and unambiguous, and its meaning prevails. To support its position CBP cited cases such as: Muwwakkil v. Office of Personnel Management, 18 F 3d 921 (Fed. Cir. 1994); International Business Machines Corp. v. United States, 201 F3d 1367, 1372 (Fed. Cir. 2000; Timex V.I., Inc. v. United States, 157 F.3d 879, 882 (Fed. Cir. 1998); Brookside Veneers, Ltd v. United States, 847 F.2d 786, 788 (Fed. Cir. 1988); Koyo Seiko Co., Ltd. v. United States, 24 CIT 364, 110 F. Supp. 2d 934, 936 (2000). Now, CBP contends that interpretation under TSUS can be applied to HTSUS pursuant to Pima Western, Inc. v. United States (915 F. Supp. 399, 404-05, 1996).

Now, that the term “of the size nearest to” can be interpreted over, as well as under, once again, the question is how much over / under is appropriate. The answer given is rather ambiguous one. CBP states that the article may exceed the noted dimension so long as it is a reasonable variation. The example is provided where 8 inch diameter plate can be interpreted as “the size nearest to 6 inches in maximum dimension.” Or, in HQ H004625 a 20.3 cm plate was accepted as reasonable variation to 15.3 cm standard. So the variation of two inches or 5 cm can considered to be reasonable. No doubt that the term “reasonable” will remain to be questioned in the future.

Artist Canvas Country of Origin

2007-05-30T11:06:00.000-04:00

Since November 7th, 2005 artist canvas from People’s Republic of China is subject to antidumping duties of 264.09 percent, unless separate rate is applicable. International Trade Administration assigned case number A-570-899. If artist canvas is assembled in multiple countries that include China, one must be aware of intricacies that surround country of origin determination of this rate sensitive commodity. County of Origin Marking Requirements of Certain Artist Canvases publication in today’s Customs Bulletin issue proves that point. The key factor for the determination played the definition of “wholly assembled.”

Artist canvas in question is composed of 100 percent cotton which is woven and spun, and primed with gesso in India. It is then, in primed rolls, shipped to China where it is cut to size and stretched over a wooden frame.

Originally, CBP determined that the country of origin is India pursuant to section 102.21 (c) (4). CBP dismissed 102.21 (c) (2) because “no tariff shift occurs at all in this situation.” Section 102.21 (c) (3) was dismissed because subject merchandise is neither knit to shape, nor wholly assembled (in a single country).” In concluding the most important manufacturing and assembly process pursuant to 102.21 (c) (4), CBP outlined two aspects:

making of the fabric, itself, specifically, the weaving of the fabric in India
application of the gesso material

Then, CBP changed its position by arguing that the definition of “wholly assembled” was not applied properly. One-piece cotton canvas and a wooden frame satisfies “the § 102.21 (a) (6) requirement that there be at least two preexisting components.”

However, for ADD purposes, even knowing that the country of origin would be China, the product would still be outside the scope of the antidumping duty investigation. DOC federal register publication states the following:

"Additionally, we have determined that canvas woven and primed in India but cut and stretched in the PRC and exported from the PRC is not subject to the order covering artist canvas from the PRC."

Infrared Motion Detectors are not regulated by FDA

2007-05-19T14:43:00.000-04:00

Determination of jurisdiction for infrared products can get quite complicated but in the case of infrared motion detectors it is not difficult at all. Two federal agencies (other then Customs and Border Protection) should be thought of when importing similar type of product: Federal Communication Commission (FCC) and Food and Drug Administration (FDA). To distinguish the difference in regulatory oversight think in terms of electromagnetic (EM) spectrum. It is the is the frequency range of electromagnetic radiation with wavelengths from thousands of kilometres down to fractions of the size of an atom. Its range includes radio waves and infrared waves. Former is regulated by FCC and the latter, in some circumstances, by FDA.

During my tenure with regulatory compliance department for one of the large retailers, I noticed that a customs broker have been requesting and filing FDA 2877 for each motion detector with infrared censor. Customs broker has also been incorrectly using product code 89ILY, which is a medical device. FDA 2877 is required to be filed for each imported electronic product subject to radiation control standards. The table in 21 CFR 1002.1 gives the list of products subject to the performance standards. Since infrared motion detector is not listed in the table (directly or indirectly) and is used for non-medical purposes it is not subject to the performance standards and FDA 2877 is not required. Customs broker needs to disclaim these type of products.

FDA Electronic Products Branch Office of Communication, Education and Radiation Programs Center for Devices and Radiological Health confirmed this position. They can be contacted at 240-276-0269 if you have any further questions. Yet, some of FDA offices at various ports of entry may be of different opinion. If you, as an commercial importer or a customs broker, find yourself in this situation you need to reserve to the most practical resolution. If it is small one time shipment, then following FDA instructions at the port is most prudent. Yet, for a large and continuous importer, going to Headquarters and following regulations as they are would be more expedient, as it reduces the amount of administrative burden on your behalf.

Informed Compliance Publication on Agglomerated Stone

2007-05-18T17:12:00.000-04:00

We classify a lot of products, usually decorative figurines, that a claimed to be made from “polystone” sometimes mixed with “polyresin” binding material. Most of it goes into statistical reporting number 6810.99.0080.

This publication focused on narrowing the definition of artificial stone. It is not just the natural stone binded with plastic resins, cement, or lime… but it also must be “uniformly agglomerated together throughout the body of the article.” If it is not uniformly distributed, then GRI (3) is applicable, where if natural stone is essential character, then it goes into heading 6802. This effectively brings the duty up from zero to six percent. Publication further implies that in order for artificial stone to qualify for 6810, it must be made from “natural” stone.

As an example of non-natural stone, publication mentions calcium carbonate in the form of a synthetic chemical.

Interestingly, assumed percentage requirement by weight, is not a factor in determining the essential character of agglomerated article. For example, stone uniformly mixed with plastics (polystone/polyresin compound) is 6810 by GRI (1) regardless of weight predominance. Yet, it goes on to say that even in the absence of standard, if natural stone by weight is less than 20 percent it is not agglomerated stone. Informed compliance contradiction and acknowledgment of the "Absence of standard" leaves an area to be exploited by both sides. An importer will argue that GRI (1) is GRI (1) and CBP will point out to 20 percent guideline. It is safe to say that just like candle holders, this matter will be subject to further discussion.

This publication also talks about commercial terminology used for a lot for those articles: polystone and polyresin.

Pet Chews and Agriculture Specialists

2007-04-25T18:13:00.000-04:00

To get rawhide, porkhide, or avian pet products into the United States, you have to deal with FDA, USDA, and CBP regulations. In addition to regular commercial and shipping documents you also need to provide veterinary certificate and NCIE import permit if pet chews are not plain. A lot can be said about the process, but the purpose of this article is to focus on CBP Agriculture process.

Agriculture Specialists currently work under Department of Homeland Security, yet mostly deal with enforcement of regulatory statutes of the United States Department of Agriculture. When customs broker transmits an entry (for example using HTS 0511.99.2000), it goes on automatic hold and EDR (Entry Documents Required). Agriculture Specialist reviews the entry and then makes a decision (to release, to examine, to request further information). As a guidance for appropriate decision, Agriculture Specialists use the Animal Product Manual. Inspector in one of the ports provided a copy of the relevant page from this manual (see left image to your top right). Basically, it is a replication of USDA GUIDELINES FOR IMPORTATION #1119, only in a different format.

Sometimes events do not turn out as planned. For example, foreign government veterinarian did not lists porcine for the porkhide pet chews, or permit number is not referenced on the invoice, or USDA’s NCIE made a mistake on the permit. If you are in this situation, Agriculture Specialist may push you agree to export container. To increase pressure, may even issue Emergency Action Notification (PPQ Form 523, see page 25 of the manual).

For quicker resolution, I highly recommend to get National Center for Imports and Exports (NCIE). NCIE actually has a form (see image on the right) that instructs Agriculture Inspectors to release the shipment. Of course, additionally it would help to provide revised documentation as suggested by an inspector.

Also be mindful of USDA regulatory statutes. 7 U.S.C. 7714 (d) prohibits inspectors to order exportation / destruction unless feasibility is established.

(d) Application of least drastic action

No plant, biological control organism, plant product, plant pest, noxious weed, article, or means of conveyance shall be destroyed, exported, or returned to the shipping point of origin, or ordered to be destroyed, exported, or returned to the shipping point of origin under this section unless, in the opinion of the Secretary, there is no less drastic action that is feasible and that would be adequate to prevent the dissemination of any plant pest or noxious weed new to or not known to be widely prevalent or distributed within and throughout the United States.

Rack Size Paper Bound Books

2007-04-25T18:02:00.000-04:00

In today's issue of the Customs Bulletin, the dimension guidelines for HTSUS 4901.99.0075 were finally published.

"Rack size is approximately 6 3/4 inches - 7 inches by 4 1/8 or 4 1/4 inches"

FWS Declaration Exemption List

2007-04-24T20:07:00.000-04:00

Many members of trading community are not sure whether products that they bring into the United States are subject to FWS declaration. This uncertainty may result in unnecessary expenses. For example, an extra careful importer that brings feather products through the port of Savannah (where FWS Office is not present) will IT shipment in bond to Atlanta (closest FWS Office) for FWS purposes. The genus and species of feathers from which products are made is Pavo cristatus. As a result, that importer incurs unnecessary expense because Pavo cristatus is exempt from FWS regulations.Fish and Wildlife Services at the Port of Atlanta, GA kindly shared their procedures check sheet. The check sheet is a basic replica of 50 CFR 14.4. Even if your product is not subject to FWS regulations, it is still highly advisable to annotate scientific name on the commercial invoice.

Port of Savannah PEA / SIL worksheet

2007-04-24T20:04:00.000-04:00

Bureau of Customs and Border Protection in Savannah, GA use this worksheet to process PEA / SIL. It is interesting to note the $500 border line. If the request for refund is less than $500, then Entry Specialist is working on it. If the request for refund is more than $500 or it is ADD/CVD / Quota / Special Program entry, then the request is sent into the realm of Import Specialist. Obvious conclusion is that refund requests that are over $500 are subject to extra scrutiny.

Procedures for PEA / SIL are published on CBP website.

Revised Entry Summary (7501) Not Required for Protest

2007-04-23T18:51:00.000-04:00

I always protested entries without revised 7501. However, CBP at port of Savannah GA require revised entry summary to be included with the entry packet. My argument for not including revised 7501 was that since protests are codified in 19 CFR 174.13 where no provision for revised entry summary is mentioned, no revision is required. 1703 is different.

Recently I got a call from Newark entry specialist requesting the same thing. They, however, have teams that require and that don't.

All other ports don't require revisions to the best of my knowledge.