Customs and International Trade Law Blog : International Trade Lawyer & Attorney : Becker & Poliakoff Law Firm : Customs Law, Border Protection

So you are moving abroad and want to bring your car with you? To comply with the provisions of 19 CFR Part 192, you will need to report this export to the Federal Government by presenting both the vehicle itself as well as a specific set of documents to U.S. Customs and Border Protection (CBP) at least three (3) days prior to export.

The following documents are required when exporting a traditional used motor vehicle abroad:

1. Original Certificate of Title
2. Original Letter of Intent - for vehicles exported by sea or air, a letter provided by the carrier and identifying the date of export (be aware of 72 hour rule), destination, vehicle owner, vehicle identification number, and authorized signature
3. Export Power of Attorney - If the owner of the vehicle to be exported is not presenting the documents to CBP, a CBP Export Power of Attorney must be submitted and notarized, identifying the person submitting the documentation and signed by and identifying the ultimate purchaser/owner and the vehicle (by VIN).
4. Letter of Authorization - If the vehicle to be exported is owned by a corporation, company or business entity, it must be accompanied by a notarized letter on official business letterhead authorizing an agent to act on its behalf.
5. Lienholder Authorization - if the vehicle is leased or has a lien against it, there must be specific authorization allowing for the export of the vehicle on company letterhead.
6. Copy of the photo identification of the person presenting the export documents.
7. Copy of the photo identification of the owner of the vehicle if different from the presenter.

As always, if you are unsure, consult with a professional. Penalties for failure to comply with CBP’s export requirements, aside from the inability to export your vehicle, could include monetary fines, liquidated damages, seizure of the vehicle, and/or demand for redelivery of the vehicle.

For any questions, contact Melissa Groisman at mgroisman@becker-poliakoff.com.

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The simple answer to this question is: YES. 

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On September 8, 2011, from 2:00-3:00 p.m. EST, the Journal of Commerce will host a webinar entitled "Recovering Your Seized Cargo".  The speakers will be Dennis McKenzie, Director, Fines, Penalties, and Forfeitures Division, U.S. Customs and Border Protection (CBP), Washington, D.C., and Peter Quinter, Partner in Charge, Customs and International Trade Department, Becker & Poliakoff law firm.  The panel experts will explain the CBP detention and seizure process, as well as the administrative petition and judicial forfeiture process.

If you have ever had your money seized by Customs for failure to declare over $10,000, had merchandise seized for misdeclaring its value or not paying enough customs duties, had your bank account seized for alleged trade-based money laundering, or had any other items detained or seized by U.S. Customs for violating another Federal agency's regulations, you should sign up for this webinar.  

The fee is only $155 for this most informative webinar taught by experts with a comprehensive understanding of the internal policies and procedures of U.S. Customs and Border Protection.  A little knowledge now could save you time, frustration, and a lot of money by learning how to avoid a seizure, or when a seizure has already occurred, how to get your seized cargo back as quickly as possible.

Whatever the type of merchandise, whether it is an import or an export shipment, whether it will be sold in the United States or just moving in-transit through the United States, whether it needs a special import or export license, U.S. Customs seizes and forfeits tens of millions of dollars of merchandise every year.  Download the Powerpoint presentations, and get involved in the Q&A session. Click  "Recovering Your Seized Cargo" to register at the Journal of Commerce website.

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For questions or comments, please contact:

Peter Quinter, Partner, Customs and International Trade Department

pquinter@becker-poliakoff.com or (954) 270-1864

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The annual seminar "Practical Tools for Trade in the Food Industry" takes place at the Miami Seaport on September 7, 2011 from 8:30 a.m. to 12:30 p.m.  Sponsored by the Miami-Dade County Office of Economic Development & International Trade, and supported by the Port of Miami, this year we will again focus on what importers need to know about both U.S. Customs and Border Protection and U.S. Food and Drug Administration requirements.  There will  be special emphasis on the new Food Safety Modernization Act of 2011.

The seminar takes place at the beautiful Port of Miami Conference Room, 1015 N. America Way, Miami.  Registration may be done on-line.   Questions regarding REGISTRATION may be directed to Adam Peters, Trade Development Specialist at (305) 375-5420 or apeters@miamidade.gov.  Question regarding content of the seminar may be directed to me or Jennifer Diaz, Senior Attorney, Customs and International Trade Department, Becker & Poliakoff law firm (305) 260-1053.

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For questions or comments, please contact:

Peter Quinter, Partner, Customs and International Trade Department

pquinter@becker-poliakoff.com or (954) 270-1864

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Let's discuss some fundamental customs laws and policies first.  A bond is a contract between a principal (i.e. importer) and a surety (i.e. insurance company), with CBP serving as the beneficiary when an importer fails to pay any duties, taxes, and fees assessed by CBP on the imported merchandise.  The single transaction bond amount for the importer established by CBP is typically 1 to 3 times the total value of the imported merchandise for that particular shipment, plus duties, taxes, and fees.  If the importer does not pay the assessed amounts promptly, a liquidated damages claim is issued by the Fines, Penalties, and Forfeitures (FP&F) Office of CBP against the importer and the surety company.  

Although in theory, this type of insurance policy should pay CBP in full every time, it does not really work that way.  Blame it, in part, on anti-dumping and countervailing duty cases.  The U.S. Government Accountability Office (GAO) estimates that it takes over 3 years in anti-dumping or countervailing duty cases between the initial entry of merchandise subject to an anti-dumping or countervailing duty order, and when the final duty bill is issued to the importer.   Importers that are unwilling or unable to pay, or have already gone out of business, result in a loss of revenue to CBP. 

According to the OIG Report, CBP has written off tens of millions of dollars "because of inaccurate, incomplete, or missing bonds" such as a lack of signatures or inaccurate transaction numbers.   Moreover, it turns out that CBP is not doing a good job of keeping copies of the bonds, but often relies upon the customs brokers to do so.  The OIG Report concluded that "there is a potential for collusion between the broker and the importer."  Well, at least, for once, DHS and CBP don't blame this problem on those pesky customs lawyers.

So, you ask, what will happen now.  No surprise this time - CBP will certainly re-evaluate its current monetary guidelines, last significantly updated in November 2010, to establishing higher bond limits, especially for food and drug products regulated by the FDA which pose a potential threat to the public health and safety.  Importers should expect to see such letters from CBP's Revenue Division at the National Finance Center located in Indianapolis, Indiana, and more liquidated damages claims from the FP&F offices around the country.

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For questions or comments, please contact:

Peter Quinter, Partner, Customs and International Trade Department

pquinter@becker-poliakoff.com or (954) 270-1864

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In my recent blog post entitled "The 3 Dirty Words Unspoken by U.S. Customs Commissioner Bersin", I  had advised that U.S. Customs and Border Protection Commissioner Alan Bersin had established some priorities.  One of the most prominent action steps already implemented by Commissioner Bersin was to reassign Todd Owen from his position as Executive Director for Cargo and Conveyance Security at CBP Headquarters in Washington, D.C. to become the new Director of Field Operations in Los Angeles, California.

In his former role, Mr. Owen was responsible for all cargo security programs and policies for CBP, including the National Targeting Center-Cargo, and the 100% scanning initiative. In Mr. Owen's new position, he now has the responsibility over LAX, the ports of Los Angeles and Long Beach, as well as Las Vegas International Airport. 45% of the maritime cargo which enters the U.S. does so through LA/Long Beach.  By comparison, the next largest port is Port Elizabeth, at 11%.  LAX is also the second largest international airport behind JFK.

Many people first got to know Todd when he was appointed Director of the Customs-Trade Partnership Against Terrorism (C-TPAT), a position which he served from January 2005 to May 2006.  Todd has also held the position of Area Port Director in New Orleans, positions with CBP in Miami and Ft. Lauderdale, Florida, and started his career in 1990 as an Import Specialist in Cleveland, Ohio.  In addition to his impressive career achievements at CBP, he has excelled academically too.  Mr. Owen is a career member of the Senior Executive Service, and was a senior executive fellow at Harvard University’s John F. Kennedy School of Government. 

Todd's professional background and personal characteristics fit squarely into what Commissioner Bersin appears to be promoting at CBP- persons with (1) technical knowledge, (2) a reputation for fairness, (3) a willingness to listen to the international trade community, and (4) a keen understanding of the joint objective of economic security and national security.

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For questions or comments:

Peter Quinter, Partner, Customs and International Trade Department

pquinter@becker-poliakoff.com or (954) 270-1864

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At the annual meeting of the National Customs Brokers and Forwarders Association of America in Phoenix, Arizona, on April 4, 2011, U.S. Customs and Border Protection Commissioner Alan Bersin gave a surprisingly frank speech.  He used the familiar phrases of "global supply chain security," the need "to protect the homeland from dangerous people and dangerous things," and "risk management".  Only after he finished 60 minutes of speaking did I realize that he omitted saying the three dirty words that were the bedrock of every CBP Commissioner since the tragic events of 9/11. 

Those three dirty words are "terrorism," "counter-terrorism," and "anti-terrorism." In a radical departure from prior leaders of CBP, Commissioner Bersin stated:

We need to drive transaction costs down 10-15% to become more competitive with China, Brazil, and India...I need your help in making this happen.

I was shocked! Did I really just hear the top manager of the primary border enforcement agency for the United States talk about business and not  terrorism?  If you were surprised by that, then the next quote will really grab you. Commissioner Bersin described the international transportation process for both importing and exporting as "a series of bureaucratic mazes."

I have met and talked with every Commissioner since Carol Hallett in 1989, , and have never heard such candid, outspoken, and straightforward talk from a Commissioner as I had heard yesterday. 

Commissioner Bersin said that with 60,000 CBP employees and a $11.5 billion annual budget, he has 3 priorities.

1.  Re-establishing the credibility between CBP and the international trade community.  To this end, Commissioner Bersin has dedicated one day a month as "Trade Day" to meet with the various international trade-related associations, such as the NCBFAA.  He also hired a new Director of the Office of Trade Relations, Maria Luisa O'Connell.

2.  Getting the Automated Commercial Environment (ACE) back on track after being in development for 15 years and spending $3 billion.  He hired Cindy Allen who previously was in charge of the National Educational Institute for the NCBFAA, and is a licensed customs broker.  He emphasized coordination with other Federal agencies (USDA, FDA, EPA) to expedite the international transportation of cargo because he stated that 2 of 3 detentions by CBP are for the purpose of enforcing other agency regulations.

3.  Account-based review by CBP focused on a single identification number rather than line by line review on an import entry.

Commissioner Bersin is not new to Federal Government, and is experienced in running large agencies such as the United States Attorney's Office in Los Angeles, so I am very encouraged by his following assertion:

I don't see economic prosperity as any different from our national security!

Finally, those of us who have understood that seem to have a friend in high places.  Now, if only Commissioner Bersin could get his friend, the TSA Administrator to stop requiring passengers to remove their shoes when going through security, then we would really have something to celebrate. 

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Well, I just wanted to let you all know that Santa may not be coming this year to deliver all those wonderful holiday gifts.

Because of incorrect Incoterms and incomplete documentation, the gifts for all the world will have to be returned to the North Pole (at Santa's own expense).

Santa decided to ship everything DDP and even though he hired an international freight forwarder to handle all of the logistics to transport the gifts, the forwarder was unable to determine who the correct customs broker was for each individual importer.  There was also a question about whether the Power of Attorney required by U.S. Customs was correctly completed.

Determining the importer of record turned out  a nightmare since EVERYONE  in the world wants a visit from Santa but no one was willing to be the importer of record.

New laws and regulations regarding entry of exotic animals also had the U.S. Fish and Wildlife Service forcing Rudolph and his crew back out before they could
even land.

All the electronics needed prior FCC approval, and since the North Pole is nearest to Canada, Santa was trying to claim NAFTA. Obviously, U.S. Customs refused to clear any of it without detailed product literature regarding the country of origin.

Santa got tons of U.S. Census Bureau warnings because the dimensions and weight of the gifts were too unreal to calculate, and because Santa could not prove where the materials to make the toys came from (the North Pole is not on the approved country of origin list).

Santa incessantly tried to prove that he makes all of his own gifts, but since there are not defined tariff classifications in the HTSUS on "Santa-made" materials, U.S. Customs rejected Santa's entry.

My Customs and International Trade Department lawyers will have to help the little kids  fill out their own Post Entry forms to correct the misclassifications. 
 

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The National Customs Brokers and Forwarders Association of America (NCBFAA) is hosting a webinar on the topic of "EPA Import Compliance - What To Do When Things Go Wrong".

The webinar will focus on the practical import compliance policies and procedures of both the U.S. Environmental Protection Agency (EPA) and U.S. Customs and Border Protection (CBP) for the importation of mobile source equipment such as non-road and marine spark ignition engines in motorcyles, generators, and lawn mowers. 

An introduction to the EPA's enforcement of the Clean Air Act through its regulations will be discussed.  Learn about 'EPA Certificates of Conformity,' ' EPA Administrative Settlement Agreements,' and the proper use of EPA Form 3520.

Real-life examples of detentions and seizures by CBP will be used, along with a step by step "how to" resolve seizures and penalties by CBP and settle civil penalty cases with the EPA.

Registration may easily  be done on-line by clicking on this "Register Now"  link, or by calling Brian Barber, Director, NCBFAA Educational Institute, at (202) 466-0222.

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Peter Quinter, Partner, Customs and International Trade Department

pquinter@becker-poliakoff.com or (954) 985-4101

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WARNING!  U.S. Customs and Border Protection (CBP) has issued a record number of CBP Form 28s (Request for Information) and CBP Form 29s (Notice of Action) so far this year.  Import Specialists of CBP at ports of entry all over the United States are sending out these forms to importers demanding responses.  If the responses are not satisfactory, the CBP officer will demand payment of customs duties. What an importer states in its response to CBP may result in CBP taking no further action, assessing customs duties, issuing a monetary penalty notice, or even referring the case for criminal prosecution. 

A CBP Form 28 is entitled "Request for Information", and it demands that a response be submitted by the importer of record, in writing to CBP, within 30 days of the date of the Request.  The response is typically signed and dated by a company official, usually a corporate officer or manager.  Moreover, the company employee who signs the form certifies that the statements made by the company are true and correct.  The person who signs the CBP form is reminded that false statements on the form to CBP may result in criminal prosecution against that person.

CBP may demand records and assess penalties, demand payment of duties, or take other legal action up to 5 years after an entry of a shipment is made in the United States, according to 19 U.S.C. 1509, 19 U.S.C. 1621, and 19 CFR Part 151.  A Request for Information form may be the first step for CBP to discover violations committed by an importer.  Typically, the CBP officer demands proof that a certain product ((often a textile) qualified for the free trade agreement identified by the importer when it brought the shipment into the United States.  Another typical demand from CBP is an explanation from the importer why a shipment of a certain item from a certain country (often China) should not be subject to anti-dumping duties.  The most common problem remains that CBP believes that an importer failed to declare the proper tariff classification on the imported product, thereby attempting to avoid paying higher customs duties.

Why CBP is now issuing a record number of CBP Form 28s has not been disclosed to the public. Maybe it is the Federal Government's misguided effort to collect additional revenue, or maybe CBP discovered that importers are not properly declaring shipments as accurately as they did in prior years.  Whatever the reason, importers and customs brokers must be careful when drafting and filing a written response to CBP. 

I am regularly hired by importers or customs brokers only after CBP has taken action against the importer or broker which resulted from not carefully responding to a CBP Form 28.  Rather than getting hired after 'the horse is out of the barn,' it sure would be easier for a customs attorney like me to get hired to draft the response to the CBP Request for Information.

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I welcome your responses. Please click on the "COMMENTS" box below.

Peter Quinter, Partner, Customs and International Trade Department

pquinter@becker-poliakoff.com or (954) 270-1864

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The Customs and International Trade Department of the law firm of Becker & Poliakoff* regularly holds workshops. Attendees learn the most recent information regarding compliance with the import and export requirements of the various Federal agencies of the United States Government.  Our next workshops will focus on one of my favorite subjects - FOOD, and its increasing regulation by the FDA.  The workshops take place in both Miami and Ft. Lauderdale, Florida.

The 2010 Import/Export Fall Workshop Series hosted in cooperation with the Office of Economic Development  & International Trade of Miami-Dade County  (OEDIT) is entitled "Importing Food into the United States for International Trade Professionals".  The speakers are from the U.S. Food and Drug Administration's Miami Imports Branch and ABC Research Corp., a food testing laboratory, and the Customs and International Trade Department.  The presentation will be from 8 a.m. to 11:30 a.m. on Thursday, November 4, at the Miami Free Zone. The workshop will focus on food, but also include cosmetics, medical devices, and dietary supplements, all of which are also regulated by the FDA.  For more information, you may contact me or the OEDIT at 305-375-1254 or e-mail oedit@miamidade.gov.  The seminar is open only to Miami-Dade County companies.

On Tuesday, November 16, 2010, from 8 a.m. to 11 a.m., at the Port Everglades Administration Building, Ft. Lauderdale, Florida, my law firm, in cooperation with Broward County's Office of Economic and Small Business Development, and the City of Hollywood, will host "Importing Food Products in Compliance with FDA and U.S. Customs Rules".  The seminar is open to all persons and companies.  Registration for the seminar may be easily done on-line.  The seminar is interactive, and focuses on practical "what you need to know" information.  Handouts and real-life scenarios will be discussed regarding detentions by the FDA, liquidated damage claims by CBP, refusals by the FDA because a company is on an Import Alert, Nutrition Facts labeling and medical claims,  Bioterrorism Act registration of food facilities, etc.

I look forward to seeing you at both excellent seminars above.  Importers, customs brokers, attorneys, consultants, and anyone involved in the importation and logistics businesses will benefit.

*Becker & Poliakoff was honored to be listed in the 2010 U.S. News & World Report review of law firms in the area of FDA Law.  Peter Quinter was honored to be included in the "Best Lawyers in America" for 2009 in the area of FDA Law.

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Peter Quinter, Partner, Customs and International Trade Department

(954) 270-1864 or pquinter@becker-poliakoff.com

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U.S. Customs and Border Protection (U.S. Customs or CBP) seizes and forfeits hundreds of millions of dollars of merchandise every year.  The IRS, DEA, U.S. Postal Service, and other Federal agencies also have the legal authority to seize and forfeit merchandise that were allegedly used illegally or were proceeds of alleged illegal activity, but U.S. Customs administrative and judicial forfeiture procedures are unique.  The answer is that seizures by U.S. Customs typically are not included within the Civil Asset Forfeiture Reform Act of 2000 (CAFRA).

The difference between a seizure under CAFRA's  rules under 18 U.S.C. 983 - The General Rules for Civil Forfeitures, and the U.S. Customs rules under the Tariff Act of 1930 and the Supplemental Rules of Admiralty, is significant. These significant differences are often misunderstood, including by attorneys who do not regularly practice in seizure and forfeiture matters.   Under CAFRA, the U.S. Government must send an administrative seizure notice to affected persons within 60 days of the seizure, but for U.S. Customs cases, there is no such requirement. In fact, unfortunately, U.S. Customs often takes 90 to days to issue the Seizure Notice letter to affected parties such as the owner of the seized merchandise. Under CAFRA, a claimant has 35 days from the date of the notice of seizure to file its administrative claim or request judicial forfeiture.  For U.S. Customs cases, the claimant must file a Petition within 30 days of the seizure notice or, if seeking judicial review of the seizure, file a claim and cost bond equal to 10% of the value of the seized merchandise, up to a maximum of $5,000.  In CAFRA cases, no court bond is required.  Once in Federal Court, for CAFRA cases, the U.S. Government's burden of proof is by the preponderance of the evidence.  In U.S. Customs cases, the Government has a lower burden of proof by establishing probable cause for the seizure, and then the burden shifts to the claimant to establish, by the preponderance of the evidence, that the property may not be forfeited. 

There are other numerous differences, a few of which are set forth in a comparison chart. One big difference is that in U.S. Customs cases, a claimant may file an administrative Petition with U.S. Customs seeking to get the seized merchandise released, and if unsuccessful, then go to Court.  In non-U.S. Customs cases, a claimant who chooses to file a Petition with the Federal agency and loses cannot then seek relief in Federal Court.  In general, filing a Petition with U.S. Customs or other Federal agency is the preferred alternative because it is often (1) faster, (2) less expensive, and (3) gives the greatest chance of success in getting the merchandise released from seizure.

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For questions or comments, complete the form below or contact me directly.

Peter Quinter, Partner, Customs and International Trade Department

pquinter@becker-poliakoff.com or (954) 270-1864

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U.S. Customs and Border Protection is one of the leading Federal agencies responsible for stopping counterfeit products from entering the United States. U.S. Customs does a good job seizing counterfeit products at ports around the country on a daily basis.   These counterfeit products vary from sunglasses to handbags to pharmaceuticals to footwear.  But U.S. Customs' press releases always use an unrealistic, inflated number when describing the value of the seized merchandise.

For example, last week in San Francisco, U.S. Customs allegedly seized $100 million counterfeit Gucci, Dooney & Bourke, and various other illegally trademarked merchandise from the Fisherman's Wharf area.  It was originally reported in the San Francisco Chronicle, then appeared on the Associated Press wire to the Chicago Tribune, the Washington Post, and other newspapers around the country.  The Chronicle stated in part:

On Tuesday, they announced the seizure of more than 200,000 counterfeit retail items valued at $100 million - if they were genuine, that is - during what they called the largest-ever bust of retail counterfeiters on the West Coast.

Note the words, "if they were genuine, that is." U.S. Customs uses the Manufacturer's Suggested Retail Price (MSRP), which nobody pays, in reporting the value of the seized merchandise to the press.  So, for example, a blatantly counterfeit Louis Vuitton handbag that would have been sold to a customer at Fisherman's Wharf for $50 may be reported by U.S. Customs to be valued at $1,000, a multiple of 20 times the selling price.

Customs does a good job at identifying, intercepting, and seizing counterfeit merchandise - something it refers to as a "priority trade issue."  Know, however,  that the value U.S. Customs places on the seized counterfeit merchandise is almost always much higher than you and I would pay, even for the real thing.

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Any questions or comments, e-mail me at pquinter@becker-poliakoff.com, or complete the form below.

Peter Quinter, Partner in Charge, Customs and International Trade Department

Telephone (954) 270-1864

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U.S. Consumer Product Safety Commission  (CPSC) officers will target more imported merchandise for safety risk assessments using information filed with U.S. Customs and Border Protection by importers or their customs brokers. The CPSC is an independent health and safety regulatory agency that is responsible for protecting the American public from unreasonable risks of injury and death from about 15,000 types of consumer products. Since the passage of the Consumer Product Safety Improvement Act (CPSIA) of 2008, CPSC increased the number of staff co-located with U.S. Customs at U.S. ports of entry.  Recently, U.S. Customs Commissioner Alan Bersin and CPSC Chairman Inez Tenenbaum signed a memorandum of understanding to create an Import Safety Commercial Targeting and Analysis Center (CTAC). 

CTAC is the culmination of President Obama's Food Safety Working Group  focused on (1) prevention, (2) surveillance, and (3) responding to the attempted importation into the United States of unsafe products.  The authority of CPSC officers is modeled after the authority and actions by the U.S. Food and Drug Administration (FDA), and the U.S. Department of Agriculture's Food Safety and Inspection Service (FSIS). 

CPSC will soon issue its own Detention Notices, rather than having U.S. Customs do it, for imported cargo that is suspected of being unsafe.  CPSC will not only target and detain toys, games, and other children's' products, but also products previously screened only the FDA - food, cosmetic, medical devices, and dietary supplements. 

The $600,000 penalty that Target Corp., of Minneapolis, Minn. has agreed to pay to CPSC for allegedly violating the federal lead paint ban on toys is merely a prelude to the type of civil penalties to be assessed against importers for attempting to import and sell unsafe products.

Is the CPSC doing enough to keep unsafe products out of the United States, or being too aggressive and bureaucratic? Sound off with a comment below. 

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The annual conference of the National Customs Brokers and Forwarders Association of America (NCBFAA) just concluded in San Antonio, Texas. Several prominent speakers from U.S. Customs, the Federal Maritime Commission, the U.S. Census Bureau, the Bureau of Industry and Security, the Office of Foreign Assets Control, Transportation Security Administration, and the Department of Homeland Security discussed new policies and procedures that every customs broker and international freight forwarder should use to serve their import and export clients.

Deputy Commissioner for U.S. Customs, David Aguilar, used a new talking point in his repeated use of the phrase "protect the American way of life" which apparently has replaced "protect the border" in his description of the mission of the U.S. Customs and Border Protection.  U.S. Customs Senior Attorney Susan Terranova stated that in 2009, Customs had issued over 500 penalties against exporters and freight forwarders for failing to file timely or accurately complete Automated Export System (AES) filings. Each penalty was issued in the amount of $10,000.

Marc Rossi, Branch Chief, Certified Cargo Screening Program, Air Cargo Division, TSA, stated that there are 98 foreign flagged airlines that fly into the United States, over 4,000 indirect air carriers (IACs), 52 independent cargo screening facilities, and only 403 IACs certified by the TSA as Certified Cargo Screening Facilities (CCSF), in preparation for the August 1, 2010 100% screening of air cargo aboard passenger aircraft in the United States.  More information about the implementation of the 100% screening rule is available at www.tsa.gov/ccsp. 

Along with Brandon Fried, Director, Air Forwarders Association, I lectured at the NCBFAA Conference about Export Compliance for Freight Forwarders.  The focus of my presentation was on exactly how to mitigate penalties once a Proposed Charging Letter, Pre-Penalty Notice, or Notice of Proposed Penalty has been issued by BIS, OFAC, or TSA.  The Power Point presentation is available only upon request.

See you at next year's NCBFAA Conference at the Sheraton Wild Horse Pass Resort and Spa near Phoenix, Arizona.

Please contact me at pquinter@becker-poliakoff.com or (954) 270-1864.

Peter Quinter, Partner, Customs and International Trade Department, Miami, Florida

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Air and ocean carriers often unintentionally transport aliens into the United States who do not have a valid passport and/or an unexpired visa.  Carriers receive a fine from U.S. Customs and Border Protection of $3,000 for every such alien illegally transported.  Carriers get an automatic reduction of 50% of the fine by signing a Memorandum of Understanding (MOU) with U.S. Customs.  Carriers must obtain and submit a newly revised MOU to U.S. Customs on April 23, 2010. 

On February 22, 2010, U.S. Customs issued a General Notice that all air and ocean carriers which had signed an MOU with either the former U.S. Immigration and Naturalization Service or U.S. Customs will no longer be effective. Only by submitting a new Fines Mitigation MOU countersigned by U.S. Customs Headquarters may fines be automatically reduced.  Carriers need to prepare now to comply with the many new changes in the MOU.

The new MOU has many changes, but the essential paragraph 3.10 still provides:

The Carrier shall maintain a reasonable level of security designed to prevent passengers from circumventing any Carrier document checks.  The Carrier shall also maintin an adequate level of security designed to prevent stowaways from boarding the Carrier's aircraft or vessel.

Without the new MOU, fines will be issued against the carrier by U.S. Customs for violating the Immigration and Nationality Act, 8 U.S.C. 1323.   Reduction of the fine greater than 50% may be obtained by the carrier when a violation occurs by establishing that further mitigating or extenuating circumstances exited at the time of the violation that warrant the relief sought.  To do so, the carrier should carefully follow the guidelines set forth at 8 CFR Part 280.

In Florida , the U.S. Coast Guard has recently issued a directive notifying all carriers that every vessel arriving at port from Haiti will be subject to a boarding and examination.  As a result, the number of discovered stoways has increased dramatically, and fines are being issued to carriers.  

Carriers may contact me at pquinter@becker-poliakoff.com  or U.S. Customs Headquarters  to obtain a copy of the new MOU.

Peter Quinter, Partner, Customs and International Trade Department (954) 270-1864

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I attended the Advisory Committee on Commercial Operations of Customs and Border Protection (COAC) meeting on February 25, 2010 in Miami.  The 20 private sector members of COAC are jointly selected by the Department of Homeland Security and the Department of the Treasury, and include knowledgeable customs compliance and logistics personnel from such prominent companies as DHL, APL, Hasbro, and GE.  The COAC meets four times a year to discuss creating or changing the policies and procedures of U.S. Customs and Border Protection (CBP) as they affect the international trade community. 

The Miami meeting included an introduction by Acting Deputy Commissioner David Aguilar, referred to as "Chief" which is his title with the CBP component U.S. Border Patrol.  Chief Aguilar spoke about "security," "resilience," and "protecting customs and exchange" which apparently is the new terminology for the former "facilitating international trade".  His introduction focused on assessing and mitigating risks of people and cargo entering the United States.

Substantive presentations were made by, among others, Therese Randazzo, Director, IPR Policy and Programs, Office of International Trade on behalf of the IPR Subcommittee.  Therese discussed the new IPR sample bond form for trademark and copyright owners to use to get samples of detained or seized merchandise from CBP. 

Rich DiNucci, Director, Secure Freight Initiative, Office of Field Operations on the topic of Importer Security Filing, stated there were 2,300 ISF filers with 141,000 unique importer record numbers. Rich stated that the timeliness of the ISF or "10+2" filing has increased to 75%.  No penalties would be issued by CBP for ISF filing errors or failure to file...for now.

Bradd Skinner,  Director, Industry Partnership Programs, Office of Field Operations, spoke about C-TPAT (Customs-Trade Partnership Against Terrorism). Bradd announced that CBP now had 9,710 certified C-TPAT members, a dramatic increase from the original 7 members in 2001.  1,200 new members were added in 2009.  CBP Security Supply Chain Specialists conducted 14,000 validations so far in 87 countries.  297 companies were suspended or removed from C-TPAT in 2009.

The COAC is an excellent way for private sector persons and companies to interact with top level CBP and Treasury personnel regarding the critically important, and sometime competing, objectives of security and trade. Now more than ever, our Government needs to listen closely how to improve the daily lives of its citizens. Chief Aguilar, thanks for listening.

Peter Quinter, Partner, Customs and International Trade Department.

pquinter@becker-poliakoff.com or (954) 270-1864

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My friends tell me one of their favorite activities in China is to buy counterfeit items such as Gucci handbags or Montblanc pens. My friends do worry about U.S. Customs and Border Protection (U.S. Customs) officers looking through their luggage upon arrival at an airport in the United States, seizing the counterfeit items, and fining them.  The truth is that U.S. Customs allows the importation of counterfeit merchandise, but closely follow the rules as I explain them to you now.

First, know that it is generally illegal to import counterfeit merchandise into the United States.  The word "counterfeit" is defined in the Lanham Act at 15 U.S.C. 1124, and the U.S. Customs applicable law allowing for the seizure of counterfeit merchandise is 19 U.S.C. 1526.  That law gives your friendly U.S. Customs officers who are waiting for you at the airport the authority to look through your luggage, and seize counterfeit merchandise from you.  The U.S. Customs regulations at 19 CFR Part 133 give more specific guidelines to travelers interested in this topic. 

What the readers of this blog, and even many U.S. Customs officers, do not know is that it is perfectly legal for a person who visits China, or any other foreign country, to buy counterfeit merchandise there, including one counterfeit Gucci bag and one counterfeit Montblanc pen, declare it on the U.S. Customs declaration form, pass through U.S. Customs, and enjoy using the counterfeit items in the United States.   Of course, you generally get what you pay for, so the $2,000 Gucci bag that you purchased in China for $80 may not be such a bargain, but it can be a lot of fun to shop at a Chinese flea market, and compare the purchased products to the genuine items at your local U.S.-based retail store, or so I am told. 

According to Customs Directive No. 2310-011A dated January 24, 2000, "Customs officers shall permit any person arriving in the United States to import one article, which must accompany the person, bearing a counterfeit, confusingly similar, or restricted gray market trademark, provided that the article is for personal use and not for sale."  Moreover, the Directive states that "Customs officers shall permit the arriving person to retain one article of each type accompanying the person." 

Now, don't go crazy trying to bring too much counterfeit stuff into the United States at once. There are many restrictions.  You can only bring counterfeit stuff in every 30 days, it must "accompany" you which means no FedEx, UPS, or DHL packages, and it is only applicable to "one article of each type" which means, for example, if you attempt to bring in two counterfeit Gucci bags, they both will be seized by U.S. Customs. And "personal use" means for you the traveler only; no counterfeit gifts for your friends and family. 

Finally, please don't waste the U.S. Customs officer's time attempting to explain to him that the fancy watches you purchased are marked "Rolexx" so they are not counterfeiting the Rolex trademark because of the different spelling, or that you did not know that importing counterfeit merchandise was illegal, because now you have read this blog post from "Mr. Customs".  

Just in case you do bring in one too many counterfeit products, there is an administrative process to challenge all seizures made by U.S. Customs, as I described in a previous blog post.

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As of January 26, 2010, U.S. Customs and Border Protection (CBP) will require that all importers comply with the Importer Security Filing (ISF), also popularly known as "10 +2" because of the 10 elements required to be provided to CBP relevant to the importer and 2 elements required to be provided to CBP relevant to the carrier.  CBP has announced that as of January 26, 2010, it will also begin to issue penalties of either $5,000 or $10,000 against importers who fail to comply with ISF; something CBP calls its "enforcement phase". Importers who self-file ISF, or their agents, must understand the changes, comply with them, and, when a penalty is issued by CBP, respond in writing to mitigate the penalty.

Fortunately, on January 28, 2010, from 11:00 a.m. to 2:30 p.m., the South Florida Chapter of the Council of Supply Chain Management Professionals (CSCMP), is hosting a seminar entitled "ISF 10+2 Reality Sinks In...What's Next?"  To register or learn more about CSCMP, click on http://www.cscmp-sofl.org/events.shtml. The impressive panel includes customs brokers, importers, carriers, consultants, an attorney, and Richard DiNucci, Director, Secure Freight Initiative, CBP Headquarters. 

As you should know, the ISF is filed via the Automated Broker Interface (ABI) or the Automated Manifest System (AMS), and it is always sent to the Automated Targeting System (ATS) for analysis and review by CBP officials.  Hence, it is obvious that CBP will use the ISF information to target, stop, and examine imported shipments.  Incorrectly or incompletely filing ISF will result in increased delays of imported shipments.  Moreover, CBP has announced that as of January 26, 2010, it will selectively penalize the more severely non-compliant importers, and will only more frequently issue such penalties over time.

On December 24, 2009, CBP amended the Interim Final Rule on November 25, 2008 entitled "Importer Security Filing and Additional Carrier Requirements." See  http://edocket.access.gpo.gov/2009/E9-30570.htm.  The amended rule clarified the ISF Bond Terms for all importers.  Knowing all aspects of this important new rule is necessary for the international trade community.  Click http://www.cscmp-sofl.org/events.shtml to register.  To learn more about the South Florida Chapter of the CSCMP, please contact a member of the Board of Directors at http://www.cscmp-sofl.org/board.shtml.

Happy New Year to all.

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The annual CBP Symposium, held at the D.C. Convention Center, Washington, D.C. from December 8-10, 2009, was the 10th year of this very successful event.  Over 850 attendees were initially greeted by outgoing Acting Commissioner Jay Ahern.  The Symposium agenda was a smorgasbord of information that was appropriate for anyone with a serious interest in international trade and logistics. Highlights included presentations from Assistant Commissioner Dan Baldwin, Office of International Trade, Rich DiNucci, Director, Secure Freight Initiative ("10+2"), Bob Swierupski, Director, National Commodity Specialist Division, and Brenda Smith, Executive Director, Trade Policy and Programs, about what the international trade community should expect in 2010 from CBP.  Special Presentations were made by Jeremy Baskin, Office of General Counsel, U.S. Consumer Product Safety Commission, and Domenic Veneziano, Director, Division of Import Operations and Policy, U.S. Food and Drug Administration.

Mr. DiNucci's presentation on Importer Security Filing (ISF) stated that CBP has received from January 26, 2009 through December 6, 2009 3.65 million ISF filings from over 1,900 ISF filers representing 103,000 ISF importers. There is now a 95% acceptance rate on ISF filings.  As you know, the enforcement mode for ISF begins January 26, 2010, and there will be a $5,000 penalty issued by CBP for a violation per ISF transmission or $10,000 maximum per ISF filing.  Importers should be familiar with the ISF Interim Final Rule, the FAQ on ISF, and the Mitigation Guidelines issued by CBP.

Therese Randazzo, Director, IPR Policy and Programs Division, stated that CBP had issued over 1,000 fine notices, pursuant to 19 U.S.C. 1526(e), totaling $94 million against importers for attempting to import counterfeit merchandise.  However, only $2 million was collected from those importers.   Ms. Randazzo acknowledged that the U.S. Attorney's Offices are reluctant to pursue such cases because the importer has already been punished in that the merchandise was seized and forfeited, and adding a fine on top of that may be considered a violation of the "excessive fine" clause of the United States Constitution.  Charles Steuart, the new Intellectual Property Rights and Restricted Branch Chief, stated that CBP had  "targeting inefficiencies because of  lack of information of the international supply chain from trademark and copyright holders" who have recorded their trademarks, trade names, and copyrights with CBP.

Mr. Swierupski stated that his office had issued 6,821 Rulings pursuant to 19 CFR Part 177 in FY 2009, that Rulings from his New York office are issued within 30 days and those from CBP HQ are issued within 90 days.  Myles Harmon, Director, Commercial and Trade Facilitation Division, reminded persons submitting Ruling Requests to do so using CBP's new e-Rulings system, however, if a physical sample is submitted to CBP, the Ruling must still be made by paper, and not through the e-Rulings system. CBP has issued about 160,000 rulings available on CROSS.  Advance Ruling Requests are still the best method of predicting proper classification, valuation, country of origin, and other import requirements.

I look forward to next year's CBP Symposium. Be sure to sign up early as the event is always quickly sold out.

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Every day, U.S. Customs and Border Protection officers at the airports, seaports, and other border crossings, stop, examine, detain, and seize merchandise from both travelers and commercial cargo importers and exporters.  The process of getting back your property can be a harrowing one fraught with bureaucratic delays.  There is, fortunately, a set of rules that U.S. Customs must follow, and knowing those rules will give you an advantage.

Customs officers may examine cargo to look for illegal drugs, counterfeit merchandise, merchandise from a country with which the U.S. has an embargo, food or medical devices not approved by the FDA, or motorcycles not approved by the EPA, just to name a few examples. 

While the cargo is being held by U.S. Customs, it is transferred to a Centralized Examination Station (CES) where the cargo is separated and intensively examined by Customs officers.  U.S. Customs has 35 days from the date of arrival of the cargo in the United States to detain the merchandise for examination.  See 19 CFR 151.16.  During that period of time, it is the obligation of U.S. Customs to advise the importer, its customs broker, and/or customs attorney with an explanation for the detention.  A written Detention Notice stating the specific reason for the detention should be issued by the U.S. Customs officer.

After 35 days, the Customs Regulations require that the cargo must be seized or released.   Unfortunately, this is too often ignored.  The problem is that U.S. Customs must rely upon other Federal agencies to give it advice whether a violation has occurred. For example, if a shipment of  motorcycles is imported from China, but Customs suspects that they may not satisfy the Environmental Protection Administration (EPA) safety requirements, digital photographs and paperwork must be sent to EPA officials in Washington, D.C. for review and recommendation.  The communication is not directly from the front line U.S. Customs officer to the EPA attorney.  Instead, it will go through the chain of command which typically involves 5 sets of eyes and hands going up the chain and then down the chain.  35 days pass quickly with so many people handing off to each other.  Hence, despite the 35 day requirement, a determination to release or seize may not be made for 60 or more days after being detained by Customs.  Getting frustrated with or repeatedly calling a particular U.S. Customs officer may not be helpful as s/he may also be waiting for an answer from someone else.  Knowing who to call and when is the key to successfully getting cargo released.

The customs attorney hired to assist the importer needs to know the internal procedures of U.S. Customs as well as the laws and regulations it enforces to identify who and when to speak to a Customs officer or other U.S. Government official.  Getting involved early in the detention process is one of the best ways to assist Customs in identifying whether or not there is a violation, and avoiding a seizure or other negative action by U.S. Customs.   For example, if the product is a suspected counterfeit, showing an Import Specialist the license from Bluetooth or Apple could avoid a lengthy, expensive, and totally unnecessary seizure process with U.S. Customs.   Getting a Licensing Officer from the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce in Washington, D.C. to speak directly with the U.S. Customs officer on the Anti-Terrorism Trade Enforcement Team (AT-TET) to clarify any suspected discrepancy in the terms of the export license could avoid an unnecessary seizure.

If a violation does occur, the merchandise will be seized by U.S. Customs. The merchandise is then transported by U.S. Customs from the CES to a Seized Property warehouse.  The merchandise will remain in the warehouse until it is authorized to be released by Customs, and the warehouse is paid its storage fees.

Once the merchandise is seized, the file is forwarded by the U.S. Customs officer to the Fines, Penalties, and Forfeitures Office (FP&F).  The FP&F paralegal reviews the file and prepares a formal, written Seizure Notice. The Seizure Notice is mailed to the alleged violator.  My standard operating procedure is to notify FP&F of my representation of an importer or exporter whose goods have been seized by Customs so that the Seizure Notice is forwarded to me directly. The Seizure Notice will identify what and where the cargo was seized, as well as the legal basis for the seizure. See 19 CFR 162.31(b). 

Once a Seizure Notice is received, the "violator" is provided 30 days to file a Petition with Customs.  The Petition is the means by which the owner of the cargo may seek to persuade U.S. Customs to release the seized shipment.  The Petition may argue that a violation did not really occur, or that there was a violation, however, there were mitigating factors in favor of releasing the cargo.  The Petition should follow the guidelines set forth by U.S. Customs in 19 CFR Part 171.  U.S. Customs also published a very helpful handbook about seizure case processing.

Eventually, U.S. Customs will either grant and release the seized merchandise, or deny the Petition and not release the seized merchandise.  A Supplemental Petition or Offer in Compromise may then be submitted to U.S. Customs.

In summary, the administrative petition process with U.S. Customs can be a long one, however, there are a few key points to keep in mind:

1) Be as careful as possible to be sure imported merchandise complies with all relevant laws and regulations applicable to the particular product;

2) If U.S. Customs detains your products, contact a knowledgeable customs attorney or customs broker to actively demonstrate that there is no violation;  and

3) If U.S. Customs seizes your products, make sure your customs attorney knows the policies, procedures, and practices of U.S. Customs to pursue the release of the merchandise.

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This weekend, I visited both Lowe's and Home Depot looking for some new plants for my backyard. As I walked by all the newly arrived Christmas merchandise, I casually picked up a few to see where they were made.  You guessed it, from Santa to Rudolph, one by one they all clearly stated "Made in China". I finally did find one item that stated "Assembled in USA from foreign and domestic components." I was getting frustrated. After all, as a customs and international trade attorney for the past 20 years, including the first 5 as an attorney for U.S. Customs, I have made a living doing international trade. I wondered, what happened to our balance in international trade? What happened to "Made in America"?

Everyone knows that mountains of Chinese goods are daily shipped to and sold in the United States, but what about the reverse.  Fortunately, I also have that perspective, as I visit the People's Republic of China (PRC) at least once a year for U.S. based clients importing from China or Chinese companies selling to the United States. I travel to China on an airplane, am transported to the hotel by car, and sometimes go down to the bar to have a drink.  The plane is made by Boeing, the car is a Ford, the hotel is a Sheraton, and the drink is a rum and Coke (Bacardi and Coca-Cola).  All of those iconic names are pure Americana. 

With 1.4 billion people in China, no wonder American companies,and the rest of the world, are tripping over themselves to get into the Chinese consumer market.  On October 28-29, 2009, United States Department of Agriculture Secretary Tom Vilsack will participate in the U.S.-China Joint Commission on Commerce and Trade (JCCT) meeting in Hangzhou, China, along with U.S. Trade Representative Ron Kirk and U.S. Commerce Secretary Gary Locke.  Since China’s accession to the World Trade Organization in 2001, the country has become one of the fastest growing markets for U.S. agricultural, fish and forest exports. U.S. exports to China increased from $2.2 billion in 2001 to $13.2 billion in 2008. Today, China is the fourth largest market for U.S. agricultural exports, and the largest for soybeans, cotton, hides and skins.

Chinese culture is 4,000 years old, and it was the Chinese who invented the compass, writing paper, and gun power, among hundreds of other items.  More recently, the Chinese have contributed greatly to making items affordable at your local department store.   While I certainly admire the cultural achievements of China, and especially its incredibly rapid economic development over the past 20 years, for some reason, I am still perturbed that so many of the everyday items I use come from China - from books I check out at the local library which say "Printed in China" to the 13 different styles of bird feeders that I recent looked at while visiting a Wal-Mart. Every single one of the bird feeders was "Made in China"!

Don't get me wrong. I love to live in a world where my pasta is from Italy, my olive oil is from Spain, my asparagus is from Peru, my wine is from Australia, and my cheese is from France.  But why does it seem that so much of what you can buy in the stores, and not just bird feeders, is from China? From bicycles to basketballs...heck, even this Microsoft Wireless Comfort Keyboard 4000 that I am typing on right now is prominently marked "Made in China".  I challenge you to find a television that says "Made in USA".

Our trade balance with China is totally out of whack.  America needs to keep inventing, building, and selling its ideas and products to China, and to the rest of the world.   U.S. Government policies should encourage investment in the United States, and exports to China and the rest of the world.  Otherwise, in another 20 years, the powerful, American iconic companies such as GE, IBM, GM, Coca-Cola, Microsoft, Apple, and Boeing will dwindle and even disappear altogether, as Chinese companies continue to expand market share worldwide.

Did you know that in 2008, for the first time in history,  there was more foreign direct investment into China than the United States, or that China now graduates 10 times as many engineers from college compared to the United States.  Or that there are more Chinese people who speak English than the approximately 300 million Americans. Those are alarming statistics.

We need to be more sophisticated and welcoming of foreigners. Did you know that many of the street names in Beijing are in English as well as Mandarin? Can you imagine all the streets in Washington, D.C. being in English and Mandarin?  Two way, free and fair trade is the answer to creating a balance of international trade.

In conclusion, I sure do look forward to my next trip to Beijing. I love Peking Duck, the Forbidden City, and the Great Wall.  Hopefully, I will find on a restaurant menu a Napa Valley sauvignon blanc wine and Florida oranges, watch CNN International, admire the Chinese who increasingly follow the American traditions of Halloween and Valentine's Day, see Chinese children's books with Disney characters, and grab a mocha latte at the local Starbucks.  Yes, international trade and travel is a great thing. We just need more of it to be from America. 

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When the International Olympic Committee selected Rio de Janeiro, Brazil, over Chicago, to host the Summer Olympics in 2016, I was surprised and disappointed.  When the media started to report that one of the factors that led the Committee members not to vote in favor of the United States was our security policy toward international visitors, I was intrigued. When I read that Secretary of State Hillary Clinton had previously promised the Committee that the White House would set up a special office to oversee a host of federal agencies to make sure the customs and immigration process would be streamlined so athletes and other visitors would have no trouble getting to the games, then I realized something was seriously wrong.

A New York Times October 2, 2009 article entitled "Chicago's Loss: Is Passport Control to Blame?" stated the case well.  The CEO of the lobbying group U.S. Travel Association also stated on October 2, 2009 that we "need to change impressions of what the experience of travel to the U.S. is like for international visitors."  And he said that the very day after personally meeting with United States Department of Homeland Security Secretary Janet Napolitano.  

I wondered about the impressions that foreign visitors have of clearing the international arrival areas of our nation's airports, including being processed by the U.S. Customs and Border Protection (U.S. Customs).  The results were disturbing.

I randomly spoke to people I knew overseas who were frequent and experienced international travelers. They were Brazilians, Argentinians, Mexicans, Germans, Australians, and Colombians whom I asked for an honest assessment of their U.S. international entry experiences.  Many persons spoke of being selected for questioning by U.S. Customs personnel upon arrival in the United States, usually at an international airport such as New York's JFK, Los Angeles (LAX), or Miami International Airport (MIA).  Many had their baggage examined by CBP officers.   Although unpleasant, most persons did not seem to mind much even though they stated that the border security of the United States was a relatively poor experience compared to other countries.  Virtually everyone I spoke with had a story about a friend or colleague of theirs who was detained and questioned by CBP officers in the United States.  The result was suspicion, and even some hostility, toward the United States regarding its perceived unwelcoming attitude to business persons and vacationers coming to the United States.  Many of those person interviewed mentioned President Bush as the person to blame for their negative perspective.

Clearly, something needed to be done.  Fortunately, sometimes out of something bad comes something good. Within a week of the Olympics going to Rio instead of Chicago, the U.S. House of Representatives passed H.R. 1035, the "Travel Promotion Act of 2009,"  co-sponsored by U.S. Representatives William Delahunt (D-MA) and Roy Blunt (R-MO). The Act would create a public-private partnership to promote the United States as a premier travel destination, and better explain U.S. security policies to our overseas guests. The U.S. Senate already passed identical legislation also entitled the Travel Promotion Act of 2009  (S. 1023) earlier in September, so the Act should eventually become law. As stated explicitly in the Act, the primary purposes of the new organization would be "to identify, counter, and correct misperceptions regarding United States entry policies around the world."

Why does the United States need such an agency? What did we do wrong after 9/11 to have created such a bad impression around the world? In President Bush's National Strategy for Homeland Security issued October 5, 2007, he stated: 

"We have made our borders more secure and developed an effective system of layered defense by strengthening the screening of people and goods overseas and by tracking and disrupting the international travel of terrorists."

Whether "more secure" and "effective" is arguable, however, there certainly had been more aggressive screening of people both prior to their boarding aircraft overseas and upon arrival in the United States during President Bush's "War on Terror".

U.S. Customs has attempted to educate the international traveler by having useful information on its website entitled "Admission into the United States" and even a flow chart of the CBP Inspection Process.  From my own personal contacts, although certainly not any kind of scientifically proven study, I agree with the U.S. Travel Association that we lost the Olympics, in part, because of a perception (real or imagined) that our entry process is just not up to international standards of hospitality. 

While balancing the concepts of border security and facilitating trade is now an ongoing debate, I remain optimistic that the U.S. Congress, President Obama, and DHS Secretary Napolitano have already started to move the country in the right direction in re-evaluating our trade and border security policies and practices. For example, the phrase "War on Terror" is no longer in vogue.  I have personally recently heard both the U.S. Customs' Director of Field Operations for South Florida, Harold Woodward, and U.S. Customs'  Area Port Director for Tampa, Gary McClelland, talk about a renewed relationship with the international trade community to facilitate trade and travel.                                                                                                                                                                

My recommendations are:

(1) If an international traveler is selected, stopped, and questioned by CBP, preferably do it in the person's native language;

(2) With CBP's Treasury Enforcement Communications System (TECS) that includes the Department of Justice's National Crime Information Center (NCIC), the National Law Enforcement Telecommunications Systems (NLETS), U.S. Customs' Automated Targeting System (ATS), Border Crossing Information (BCI), and Advance Passenger Information System (APIS), all of which is provided in advance of the arrival of the airplane in the United States, questioning of passengers should be brief;

(3) anyone detained by CBP should have explained to him or her exactly why the person is being detained, and should be informed how to remedy any false or inaccurate information that may be in a U.S. Customs database; and

(4) invigorate the DHS's Office of Civil Rights and Civil Liberties to directly investigate and then remedy any shortcomings it identifies in the international arrivals process.

Finally, after a long international flight from somewhere such as China, it really is nice to hear a uniformed U.S. Customs officer say "Welcome to the United States."

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It is common for an importer to receive a CBP Form 28 (Request for Information) and then a CBP Form 29 (Notice of Action) for incorrectly classifying merchandise.  It is also relatively common for an importer to receive a Pre-Penalty Notice from U.S. Customs and Border Protection (Customs) alleging negligence, gross negligence, or fraud, and demanding tens or hundreds of thousands of dollars in monetary penalties and additional duties.  Don't panic.

When a CBP 28 or CBP 29 is issued by an Import Specialist of Customs to an importer, it may ultimately result in the issuance of a fraud penalty in violation of 19 U.S.C. 1592.  If Customs alleges fraud, then the penalty will be equal to the total invoiced value of the shipments affected.  For example, if a shipment of clothing valued at $100,000 was misdescribed or misdeclared in some way to Customs, and a fraud penalty is issued, the penalty will $100,000.  If the penalty is not paid, the case is referred by Customs to the U.S. Department of Justice to pursue litigation against the importer.  Sometimes, Customs seeks to collect money by personally naming the officers, shareholders, and/or managers of the company as well.  That means joint and several liability, so even if the company is no longer in business or does not have the money to pay, the U.S. Department of Justice will seek the payment of the penalty from the persons involved.

Whenever a CBP 28 or 29 indicates that the importer is under "formal investigation", those magic works should not be ignored.  You can be pretty sure that the matter will result in a penalty being issued by Customs against the importer for some form of fraud.  Import fraud comes in all shapes and sizes.  It could be that the wrong tariff classification in the Harmonized Tariff Schedule of the United States was used by the importer to get a lower or zero duty rate, or avoid import quotas.  Another common violation is the importer incorrectly stating that the imported product qualifies for one of the multi-lateral free trade agreements such as DR-CAFTA (Dominican Republic- Central American Free Trade Agreement) or a bilateral free trade agreement such as the U.S.-Australia Free Trade Agreement. Just as common is the violation whereby the importer accurately describes the merchandise and the country of origin, but greatly undervalues the merchandise to avoid Customs duties, excise taxes or other fees.

Procedurally, after the CBP 28s and CBP 29s have been issued, and the importer responds to each in writing, a Pre-Penalty Notice will be issued by Customs' Fines, Penalties and Forfeitures (FP&F) Office. The Notice is issued to the importer of record.  The Notice describes the violation, identifies the Customs entries involved, cites the laws and regulations allegedly violated, demands payment in full or provides the importer 30 days to file a Petition explaining why the violation did not occur or otherwise why the importer should not have to pay the penalty. 

The Petition is filed with the FP&F Office, and reviewed by the assigned Paralegal Specialist. Most likely, the Petition will also be reviewed by an Import Specialist at the port of entry who issued the CBP 28 and CBP 29.  In some situations, a Special Agent from the U.S. Immigration and Customs Enforcement (ICE) Office may be involved, or legal counsel for Customs.  Customs often agrees to allow an in-person meeting to discuss the Pre-Penalty Notice. Be sure to consult Appendix B to Part 171 of the Customs Regulations to identify and list any mitigating factors which could reduce the amount of the monetary penalty.  Familiarity with the FP&F Handbook is another vital tool to attempt to persuade Customs to cancel, or at least reduce, the penalty against the importer.

Hopefully, with the help of expert, legal counsel knowledgeable and experienced in Customs law, the Petition will be reviewed, and Customs will not issue a penalty.  Customs sometimes changes the culpability of the wrongdoing from fraud to gross negligence, or from gross negligence to simple negligence.  The lower the level of culpability, the lower the amount of the penalty.

If the Petition after the Pre-Penalty Notice is not successful, Customs will state so in a responsive letter called a Penalty Notice. Then, the importer may file another Petition alleging some new legal arguments or supplement the facts.  Usually, at this stage, these cases are referred by the FP&F Office to Customs Headquarters in Washington, D.C., where an attorney in the Penalties Branch reviews the case, and writes the analytical decision.  That decision is forwarded to the FP&F office which then forwards it to the importer's legal representative.  Hopefully, Customs will agree that there was no fraud, and the case is over. The whole process usually takes many months, and can take even longer.

 In summary,

(1) A CBP 28 or CBP 29 almost always precede a penalty notice, so be careful when replying;

(2) Whenever you read or hear the words "formal investigation", promptly get legal counsel because a fraud penalty is coming;

(3) Remember that penalties may be issued against individuals as well as companies; and

(4) Do your homework before claiming the duty free treatment of DR-CAFTA, NAFTA, or other trade agreement on Customs entries.

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How often do you think U.S. Customs and Border Protection (CBP) officials have heard an importer say, “. . . but I didn’t tell the manufacturer to put that trademark on there”? Ignorance may be bliss, but CBP will not accept that excuse as an acceptable reason to allow counterfeit merchandise to enter into the United States, or even allow it to move in-transit through the United States. This, however, is the often heard explanation when an importer does not do its due diligence.

There are a few steps every importer should take prior to doing business with a new manufacturer or importing into the United States a new product.

A reputable manufacturer should, and ultimately will, provide a sample. Inspect the sample thoroughly. If it is an electronic item, you may want to go as far as taking it apart to make sure that the inner workings do not contain any trademarks or logos or copyrights which either you did not request or the manufacturer is not licensed to produce. If your sample is different than the merchandise shipped, then you can at least say to CBP, “This is not what I ordered. I have a sample of what I was supposed to receive," and the correspondence with the manufacturer to support your claim. Even if you do not  get your merchandise back from CBP, it is important to understand that you may use your due diligence as a mitigating factor if and when you are fined by CBP.  Fines are routinely issued by CBP pursuant to 19 U.S.C. 1526(e) and equal the Manufactured Suggested Retail Price (MSRP).  Companies which or persons who get such fines may get them reduced by filing a Petition.  Knowing the factors that CBP considers when reviewing the Petition is critical.

Licensing agreements (on paper) can be falsely produced by anyone with a computer and printer. Just because a manufacturer shows you what appears to be a license while attending a reputable tradeshow, does not mean it’s valid.

Just keep the following in mind. Ask for a copy of the licensing agreement, and don’t take a manufacturer’s word that they have a license, verify. Obtain references or work with reputable manufacturers. Don’t think that you’re just getting a great deal, because if it’s too good to be true, then it probably is!  Many trademark and copyright owners maintain websites which list the approved companies authorized to manufacture products with the protected trademarks or copyrights.

And lastly, don’t think that you won’t get caught. Remember, it’s CBP’s job is to protect both you and the economy.  Counterfeits are not limited to cheap handbags at the flea market, but auto parts and aircraft parts,  and many more items that you would not want to be substituted (think medicines).

If a hold, detention, or worse yet, a seizure by CBP occurs at any port in the United States, an importer should promptly contact a customs attorney to file a Petition to attempt to persuade CBP to release the seized merchandise.  Common trademark and copyright counterfeiting is for Bluetooth, Microsoft, Intel, Apple, Underwriter's Laboratories (UL), and Tetris.  Petitions should contain specific information and attach certain types of documentation to convince CBP that it made an error in the initial seizure.  The Customs and International Trade Department attorneys of Becker & Poliakoff are very knowledgeable and experienced in these matters, and may assist companies with the process.   

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The past few days, I have been in Washington, D.C. meeting with several members of the U.S. House of Representatives to discuss issues of vital importance to the international trade community.  As part of the annual Government Affairs Conference (GAC) of the National Customs Brokers and Forwarders Association of America, Inc. (NCBFAA), I met with the highest level of the U.S. Customs and Border Protection, the Federal Maritime Commission, and spent an entire day on Capitol Hill.  The Representatives were interested in, and understood the importance of, international trade and the role of customs brokers and freight forwarders in that process.  We spent a lot of time talking about some of the details of the Trade Enforcement Act of 2009 (H.R. 496) and the Senate version's Customs Facilitation and Trade Enforcement Reauthorization Act of 2009 (S. 1631) which will hopefully re-balance the historical mission of U.S. Customs to regulate trade as much as it is to "secure the border".  We also discussed at length the Export Control Improvement Act (H.R. 3515).  The Food Safety Enhancement Act of 2009 that recently passed the House. (H.R. 2749) and exempts customs brokers from the onerous civil penalty provisions (up to $250,000 for inadvertent violations and $500,000 for knowing violations by importers) will still need to go to conference between the House and Senate versions, so that also was high on our list of priorities.  Just because imported food is determined by the FDA to be adulterated or contaminated and is refused entry into the United States should not result in a penalty against the customs broker who likely never even had possession of or saw the food.

Separately, most interesting was meeting with the Trade Counsel of the House Committee on Ways and Means and Staff Counsel for the Senate Finance Committee who were actually drafting the language to include in the Customs Reauthorization Act. Much discussion centered around Customs' delays in issuing detention notices to importers, Customs officers issuing defective and incomplete notices, delays by Customs in issuing formal Seizure Notices to importers, and the amount of time it sometimes takes Customs in making decisions on Petitions filed by importers, brokers, and lawyers in seizure cases.

In meeting with Robert (Bob) Jacksta, Deputy Assistant Commissioner for the Office of Field Operations, he stated that at this time U.S. Customs had 993 Import Specialists, and 21,000 CBP Officers (formerly called "Inspectors"). He stated there were 200 Importer Self-Assessment (ISA) members.  For C-TPAT, Mr. Jacksta stated there were about 9,400 certified members, which included 4,300 importers, 2,500 carriers, 811 customs brokers, , and 917 foreign manufacturers. Altogether, C-TPAT members comprised 51% of the value of imported merchandise into the United States.

Some very interesting statistics cited by Mr. Jacksta included a 4.6% marine cargo physical examination rate by Customs.  Also, the number of land border crossings by truckers with Mexico and Canada are down about 20% from a year ago.

I have noticed some new terminology recently used by both DHS and CBP officials. Both Daniel Baldwin, Assistant Commissioner, Office of International Trade, and Kimberly Marsho, Director, Office of Trade Relations, used the phrase "management by account".  Mr. Baldwin announced the creation of an Import Product Safety Center located in Washington, D.C., and staffed by CBP and U.S. Consumer Product Safety Commission (CPSC) personnel.  Ms. Marsho stated that the annual Customs Symposium would take place December 8-10, 2009, in Washington, D.C. at the Convention Center, and that an announcement would appear on the CBP website "in a couple of weeks".

Richard DiNucci, Director, Secure Freight Initiative, Office of Field Operations, CBP, who is leading CBP's Importer Security Filing initiative, commonly known as"10+2" or "ISF", reported that the compliance rate for ISF Filing is now over 95%, and that enforcement (i.e. penalties or liquidated damage claims) against importers will be issued starting in January 2010.  Most errors are invalid HTS numbers or invalid country codes. 1/3 of the ISF filers are C-TPAT members.

Finally, Kevin Delli-Colli, Acting Assistant Secretary for Export Enforcement with the Commerce Department's Bureau of Industry and Security, discussed the benefits of filing a voluntary self-disclosure (VSD) with the BIS to avoid the $250,000 penalties assessed against companies and individuals who violate the export controls laws and Export Administration Regulations (EAR) of the United States.  BIS is aggressively pursuing investigations and penalties against companies, and individuals, who do not obtain a license when required, or violate the terms of a license.  BIS penalties are now more often being assessed against international freight forwarders for aiding or abetting the illegal export of merchandise.

In summary, the GAC was an informative and rewarding experience.  The Florida Customs Brokers and Forwarders Association (FCBF), led by President Cari Cossio, and other NCBFAA Chapters from around the country, represented the international trade community well to our Congressional representatives. 

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Did you hear that Mexico replaced all 700 Customs Inspectors?  It did so because the Mexican Customs officers were considered corrupt, allowing undeclared merchandise (including drugs and weapons) to cross into and out of Mexico.  The replacement officers are allegedly specially trained to collect the tax revenues that the Mexican Government depends upon, and prevent undeclared merchandise from entering the country (i.e. smuggling).  Mexico depends upon collection of revenues by the Mexican Customs authorities much more than we do in the United States with the customs duties and fees collected by our U.S. Customs and Border Protection (CBP) officers.  Most importantly, the new Mexican Customs officials are supposed to be specially selected and trained so they will not be susceptible to the same enticements that corrupted the former 700 Mexican Customs officials.  Mexican Government officials say not to worry about  the new Mexican Customs officials as over 70% of the new Mexican Customs officials are colleged educated, as opposed to just 10% for those who were fired.

Do you believe any of this nonsense?  This is not the first time that the Mexican Government has fired huge numbers of its Customs officials.  It happened before and it will likely happen again.  Mexican Customs officials need better salaries and better working conditions, not college degrees.

In contrast, if an international passenger or importer or exporter attempted to bribe a U.S. Customs officer, the chances are excellent that the U.S. Customs officer would promptly arrest or take other similar serious and immediate action.  That is not to say there are not any bad apples within U.S. Customs -  there always have been and always will be, just like any other large organization.  Just recently, a U.S. Customs officer pled guilty to stealing a laptop computer from an international passenger who landed at the Philadelphia International Airport.

We're not going to address the operational inefficiencies that exist within CBP in this post, but when it comes to integrity, my opinion is that CBP passes the test with flying colors.  CBP identifes its "Core Values" as Vigilance, Service, Integrity. As a former attorney with the United States Customs Service in Miami, I still prefer the former core values of "Honor, Tradition, Service."

U.S. Customs has long had its own Office of Internal Affairs. Plus, U.S. Customs is an agency within the huge U.S. Department of Homeland Security which has an Office of Inspector General.  U.S. Customs enjoys a positive worldwide reputation among Customs Administrations throughout the world.  Who knows, maybe it's because all U.S. Customs officials have at least college, and perhaps masters or doctorate degrees.

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The U.S. Court of Appeals for the Federal Circuit just issued an important decision that will help all customs brokers who are facing a broker penalty action pursuant to 19 U.S.C. 1641 and 19 CFR Part 111.  The Court held that U.S. Customs and Border Protection (CBP) must consider all ten factors specifically identified at 19 CFR 111.1 when determining whether or not to mitigate a penalty issued by CBP against a customs broker for failing to excercise "responsible supervision and control."  CBP had argued to the Court that it only needed to consider those factors it thought were relevant.  The Court disagreed with CBP, and reversed the decision of the U.S. Court of International Trade. The Court stated:

"Because Customs did not consider all ten factors listed in 19 CFR 111.1, its determination that UPS violated 19 U.S.C. 1641 was improper. Accordingly, we vacate that portion of he Court of International Trade's judgment and remand for further proceedings."

So, even though the Court determined that UPS was wrong in its tariff classification of imported merchandise, and even though UPS paid CBP $15,000 in penalties for failing to exercise responsible supervision and control, it remains to be seen whether CBP will assess another $75,000 in penalties against UPS.   My guess is that CBP will pursue the remaining penalties against UPS which were also for alleged misclassification of the same merchandise on different entries.  The Court required CBP to at least consider all ten factors, but also explicitly stated that CBP has the discretion to weigh each of the factors as it deems appropriate in determining whether to mitigate a penalty against a customs broker.

If CBP does pursue the penalties, no doubt UPS will challenge them, especially because another remaining legal question will be whether the CBP regulation at 19 CFR 111.91 which limits penalties to a maximum of $30,000 will apply.  That is another issue of importance to all licensed customs brokers. If interested, please read the complete Federal Circuit decision.

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Exporting motor vehicles from the United States to foreign destinations is a common occurrence at many ports around the country, including South Florida’s ports. Whether exporting vehicles for business or personal use, it is important to know the procedures that U.S. Customs (“CBP”) expects you to follow. Not paying attention to the “rules of the road” can result in the seizure of your vehicle(s), and the imposition of hefty penalties.

If you are in the business of exporting cars, or plan to export a car to a foreign country for personal use, it is important to know two different sets of rules. Part 192 of Title 19 of the Code of Federal Regulations (“CFR”) contains the rules for exporting used vehicles. Used vehicles include any vehicle where legal title has been transferred by a manufacturer, distributor, or dealer to the person buying the car. These regulations explain the basic requirements for how to export cars, including the documentation that must be presented to CBP, such as a Power of Attorney, where a company or individual is shipping a motor vehicle on behalf of someone else. The regulations also describe how much it will cost in penalties if a person fails to submit the right documentation, or no documentation at all. The penalties can be severe - up to $10,000 where CBP determines the car was stolen, or the vehicle identification number (“VIN”) has been tampered with.

The second set of rules that you need to know are the port-specific requirements imposed by CBP. This can be tricky because the rules at different ports are not always the same. CBP's Miami Seaport Vehicle Export Section has published a helpful Information Bulletin to assist exporters. The Bulletin describes where, when and how an individual must present documentation for exporting a vehicle from the Port of Miami. The Bulletin also contains a list of the most likely reasons that CBP will reject the export documentation, and prohibit a person from exporting a vehicle.

Anybody who desires to export a motor vehicle should know these rules and follow them carefully. The rejection of documentation by CBP can cause unnecessary delays and additional transactional costs, including storage fees. Failing to follow the rules of the road can even result in seizure of the vehicle(s) by the Government, and the assessment of significant penalties against the exporter.

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More and more importers/exporters are being stopped and shipments detained and even seized by CBP (U.S. Customs). Many feel they are being targeted by CBP, simply for the type of merchandise or because of the country with which they may be doing business.

While you would think that electronics would be the most sought after, the fact of the matter is that electronics is a small piece of the seizure pie, with the biggest piece going to footwear! Talk about picking a product and running with it!

However, regardless of the industry, the primary reason for detentions is IPR (intellectual property rights) violations. You see, whether its shoes or cell phones, foreign manufacturers need to adhere to CBP protocols, as do U.S. importers and exporters.

One way to make sure that all of your ducks are in a row is to the become C-TPAT certified. Benefits are such that importers are 4 to 6 times less likely to incur a security or compliance examination by CBP. That in and of itself is almost reason enough. It’s not a complicated process as long as you are not dealing with fly by night manufacturers, but it is a process nonetheless. Do your due diligence. It’s fairly simple to confirm a licensing agreement. Most trademark and copyright holders have the pertinent contact information online. You could apply yourself, but it’s a little more involved than just that. You need to provide not only the manufacturer information, but also information on who ships your merchandise, how it’s packed and shipped, as well as information regarding your own company, such as security, HR, IT and other background information.

The bottom line here is that if CBP knows who is manufacturing your goods, where it’s coming from, where it’s headed and how it’s getting there, then that’s half the battle. If CBP knows that you are dealing with legitimate manufacturers that are properly licensed to produce your merchandise and who’s shipping it, then that’s the other half and your battle may be won.  Think seriously about joining C-TPAT, and run with it.

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