Thursday, October 19, 2017

The UGG Boots Story: How Recording Your Registered Trademark Can Lead to a Jail Sentence


Zheng created an elaborate scheme in order to receive and sell counterfeit UGG boots. From September 2016 through February 2017, Zheng received several shipping containers from an individual overseas, of which at least three containers were filled with counterfeit UGG boots. After the containers reached the Port of Entry, in this instance, Port of Newark, Zheng had individuals working at the port, remove the containers from the port before U.S. Customs and Border Patrol (CBP) could examine them. Once removed, the containers were delivered to other individuals, paid by Zheng to distribute the counterfeit boots in New Jersey and other places.

Lucky for the owners of the UGG brand, Deckers Outdoor Corporation (Deckers), CBP halted Zheng’s operation, in part as a result of Decker recording its registered trademark with CBP on June 7, 2016. After the recordation was processed, CBP began a more intense “guard dog watch” of the UGG brand merchandise at all Ports of Entry throughout the U.S. This meant that Deckers exercised its right to protect its word mark “UGG” at all U.S. borders. The recordation of the protected mark ultimately lead CBP to identifying counterfeit UGG merchandise and holding the culprit, Zheng, accountable for violating 18 U.S.C. § 2320, trafficking in counterfeit goods, because Zheng was never authorized by Deckers to import authentic UGG merchandise.

CBP encourages trademark owners to not only register their trademark with the U.S. Patent and Trademark Office (USPTO), but also to record their trademark with CBP. The cost of recordation is only $190 and provides trademark holders substantial benefits like CBP acting as your own personal trademark infringement policeman at the border. Deckers was able to assist CBP in comparing Zheng’s merchandise bearing the UGG logo with the recorded UGG word mark and determine that Zheng’s merchandise was counterfeit.

There are instances where the use of a protected mark is permissible under the “restricted grey market” exception. However, in this case, Zheng’s merchandise did not fall into a “restricted gray market article” exception. Restricted gray market articles are “foreign-made articles bearing a genuine trademark or trade name identical with or substantially indistinguishable from one owned and recorded by a citizen of the United States or a corporation or association created or organized within the United States and imported without the authorization of the U.S. owner.” These gray market articles may be imported if they fall under one to the exceptions outlined in 19 CFR § 133.23.

Zheng will be sentenced on January 23, 2018, and could face up to ten years in prison and a $2 million dollar fine.

If you have any questions about protecting your intellectual property rights and the CBP recordation process, we at Diaz Trade Law can help you navigate through the process of protecting your merchandise from being detained. Contact us today at info@diaztradelaw.com, or 305-456-3830.

Friday, October 6, 2017

UPDATE: FDA Delays Compliance Dates for the New Nutrition Facts Label Rule

In an earlier article, we detailed some of the new changes that would be implemented with the new Nutrition Facts Label rule. That article also provided the compliance dates for the rule. On September 29,2017, however, the FDA proposed yet another deadline extension for food companies to bring their products’ labeling into compliance with the new Nutrition Facts Label rule. Amid concerns of requiring more time to implement the final rules, raised by trade groups and companies, the FDA decided to further delay the compliance dates. The proposed extension dates are January 1, 2020, for companies with food sales of $10 million or more a year and January 1, 2021, for companies with less than $10 million a year in food sales.

 In a news release issued September 29, 2017, The FDA reiterated its commitment “to making sure that consumers have the facts they need to make informed decisions about their diet and the foods they feed their families.” Furthermore, because this extension is a proposal, the FDA will exercise discretion with respect to the current compliance dates of July 26, 2018, and July 26, 2019.

The FDA is accepting comments on the extension of the compliance dates for thirty (30) days, beginning on October 2, 2017. Comments should be identified with Docket No. FDA-2012-N-1210 for “Food Labeling: Revision of the Nutrition and Supplement Facts Labels; Extension of Compliance Date” or Docket No. FDA-2004-N-0258 for “Food Labeling:  Serving Sizes of Foods That Can Reasonably Be Consumed At One Eating Occasion; Dual-Column Labeling; Updating, Modifying, and Establishing Certain Reference Amounts Customarily Consumed; Serving Size for Breath Mints; and Technical Amendments; Extension of Compliance Dates,” and should be submitted to http://regulations.gov or to the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.

Because this is the second proposal for extending the deadline for the new Nutrition Facts Label rule, there is speculation that the compliance date will be postponed indefinitely. However, despite the delays, the FDA has stated that companies will still need to comply with the new Nutrition Facts Label rules.

Therefore, we recommend that you begin compliance effective immediately, as many products are perishable within 12 months from the date of packaging. This will avoid future costs of relabeling. Products packaged before the final rule’s effective date without the new labeling requirement are still required to be compliant by the new compliance date to avoid enforcement action by the FDA.


If you have any questions about FDA labeling, we at Diaz Trade Law can review your existing label to ensure that it is compliant with the new Nutrition Facts Label Rule. Contact us today at info@diaztradelaw.com, or 305-456-3830.

Monday, September 25, 2017

Essential Oils Company to Pay $760K for Lacey Act Violations

MONEY

The Justice Department announced YOUNG LIVING ESSENTIAL OILS, L.C., (the Company), headquartered in Lehi, Utah, plead guilty in federal court to federal misdemeanor charges regarding its illegal trafficking of rosewood oil and spikenard oil in violation of the Lacey Act and the Endangered Species Act.

Despite the company voluntarily disclosing its violations and cooperating with government investigators, it entered into a plea agreement, and the Company was sentenced to a fine of $500,000, $135,000 in restitution, a community service payment of $125,000 for the conservation of protected species of plants used in essential oils, and a term of five years’ probation with special conditions. The conditions include the implementation of a corporate compliance plan, audits, and the publication of statements regarding its convictions.
“The importation of illegally harvested wood and timber products harms law-abiding American companies and workers and threatens forest resources around the world,” said Acting Assistant Attorney General Jeffrey H. Wood of the Environment and Natural Resources Division. “Our Division was proud to work alongside the U.S. Attorney’s Office in the District of Utah, the U.S. Department of Agriculture, the U.S. Fish and Wildlife Service, and the Department of Homeland Security to bring this case to a positive conclusion.”

“While the natural resource violations by certain employees of Young Living were intentional and substantial, the Company’s decision to conduct an internal investigation, voluntarily disclose the initial violations to government enforcement authorities, and cooperate throughout the ensuing investigation is to be commended,” said U.S. Attorney John W. Huber for the District of Utah. “This sentence reflects both the seriousness of the offenses and the acceptance of responsibility and cooperation by the Company.”
Violations

From June 2010 to October 2014, several company employees and contractors harvested, transported, and distilled rosewood (Aniba roseaodora or Brazilian rosewood) in Peru and imported some of the resulting oil into the United States, through Ecuador. Peruvian law prohibits the unauthorized harvest and transport of timber, including rosewood. Neither the Company nor its suppliers, employees, or agents had any valid authorization from the Peruvian government. Peru also prohibits the export of species protected under the Convention on International Trade in Endangered Species (CITES), without the required permits. The Company did not obtain any CITES export permits from Peru. Between 2010 and 2014, a few Company employees harvested, transported, and possessed a total of approximately 86 tons of rosewood, all of which was harvested in violation of Peruvian law. The rosewood was intended for distillation and export to the United States and some had already been illegally brought over. The Company lacked an internal compliance program or formal procedures, training, or means to review and resolve problems and identify and stop potential violations. As a result, the Company hired outside counsel to conduct an internal investigation into the violations due to the illegal harvesting and shipping of plants that occurred in Peru and Ecuador. On July 20, 2015, once the internal investigation was complete, the Company made an initial written voluntary disclosure to the Government of various facts indicating their potentially illegal violations.

The investigation revealed that, in addition to the conduct disclosed by the Company, in December 2015, the Company exported spikenard oil harvested in Napal to the United Kingdom, without a CITES permit. The spikenard oil was previously imported from a company in the United Kingdom that had obtained a CITES export permit. The Company found the product to be unsatisfactory and shipped it back to the United Kingdom. On March 23, 2016, a Company employee filed an application for a CITES permit for this shipment after the fact, and without providing the required copy of the permit authorizing its original export from the United Kingdom.

The investigation also revealed that between November 2014 and January 2016, the Company purchased over 1,100 kilograms of rosewood oil from a supplier/importer in the United States without conducting sufficient due diligence to verify lawful sourcing of that oil.

The Government calculates the fair market retail value of the plant products involved in the violations and relevant conduct, including but not limited to product equaling approximately 1,899.75 liters of rosewood oil, to be more than $3.5 million but not more than $9 million.

The investigation was conducted by the Law Enforcement Offices of the U.S. Department of Agriculture, Office of the Inspector General, with assistance of the U.S. Fish and Wildlife Service and the Department of Homeland Security, Investigations. This case is being prosecuted by the Justice Department’s Environment and Natural Resources Division’s Environmental Crimes Section and the District of Utah’s U.S Attorney’s Office.

To learn more about Lacey Act and the Endangered Species Act contact info@diaztradelaw.com today.

Friday, September 1, 2017

CTPAT “Your Supply Chains Strongest Link”

ctpatI just attended the 2017 CTPAT conference in Detroit. After 2 days of CTPAT’ing, here a list of my top 10 takeaways including the changes I see coming to the CTPAT program.
  1. There is a new name. Notice the – is officially gone, no more C-TPAT (despite all of us conditioned to using the -, it is no more. CTPAT it is.
  2. There is a new slogan – CTPAT “Your Supply Chains Strongest Link”.
  3. There is a new woman at the helm. Elizabeth Schmelzinger is the Director of CTPAT.
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The biggest take away is ....

Tuesday, August 29, 2017

Don’t Miss FDA’s Upcoming Webinar on ITACS

fda-logo
On September 5th, 7th, and 11th the U.S. Food & Drug Administration will hold three identical webinars, which will provide information on the evolution of FDA’s Import Trade Auxiliary Communications System or ITACS system “to ensure that trade users are familiar with and understand the new ITACS Account Management functionality.”
 

Wednesday, August 9, 2017

C-TPAT Conference 2017

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U.S. Customs and Border Protection is proud to announce the 2017 C-TPAT Conference. The conference will be held in the Detroit Metropolitan Area. Two sessions will be offered: August 29 - 30, 2017 and August 30 - 31, 2017.  Both sessions will include a day of workshops and a day of general session.

Tuesday, June 20, 2017

6/22/17 EVENT - The Making of Global Cities: Can Miami Follow a Bold Strategy?

owitThe Organization of Women in International Trade (OWIT South Florida) is hosting an event you don't want to miss: The Making of Global Cities: Can Miami Follow a Bold Strategy?
 

Friday, June 16, 2017

President Trump Outlines New U.S. Policy on Cuba

trump
We’ve been patiently waiting for today’s announcement since President Trump took office on Friday, January 20, 2017. Some have speculated on whether President Trump’s stance on Cuba would further diplomatic relations following the steps of former President Barack Obama, while the majority have opined that Trump’s next steps could reverse some of the changes made by the former President. The speculation can now be put to the side as today President Trump delivered a speech in Miami (at the Manuel Artime Theater) today, a little over 90 miles away from the island of Cuba, outlining his new policy with the communist island. The announced changes do not take effect until the new OFAC regulations are issued. The forthcoming regulations will be prospective and will not affect existing contracts and licenses.  
Here is a summary of the MAIN changes, and background of why the President has signed an executive order making these changes in support of the Cuban people:

Monday, June 12, 2017

WHAT DO CONTACT LENSES, DENTAL FLOSS, AND PACEMAKERS HAVE IN COMMON?

One might naturally think of a product like a defibrillator as a medical device, but in our business, we find many companies unsure if its products are, in fact, medical devices.
The following is the first of a two part series which you may use as a helpful guide to get you through the medical device maze. First is a description of what medical devices are, and helpful hints so that you may identify if your product is regulated as a medical device. Second is a brief overview of FDA’s regulation of medical devices. The second part of the series will discuss the classes of medical devices, and the FDA registration process.
What is a Medical Device?

Tuesday, May 30, 2017

HELP! CBP Seized My Tobacco Products as Drug Paraphernalia, What Now?

Our office has increasingly received requests for guidance on importation of marijuana paraphernalia products to the U.S. where twenty-six (26) states have legalized the use of marijuana for medical purposes and/or personal consumption such as California, Massachusetts, Maine and Nevada. The purpose of this article is to dispel the confusion as to why paraphernalia products (grinders, storage containers, rolling paper, pipes, vape pens, etc.) are continuously being seized by U.S. Customs and Border Protection (CBP), even when such products may be used by tobacco smokers. It is important to address the realities between federal and state laws regulating drug paraphernalia products so importers can avoid CBP’s enforcement of U.S. Laws.

Why Does CBP Stop Drug Paraphernalia?
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      CBP secures America’s borders at and between ports of entry by stopping inadmissible people and illicit goods. The Tariff Act of 1789 provides one of CBP’s core functions: to act as the leading federal agency in determining the admissibility of goods that may enter the Commerce of the United States. Even though each State has internally legalized marijuana either for medical or recreational purposes, CBP still has the express power to authorize or not any merchandise that comes into the U.S. Thus, CBP can detain and seize “drug paraphernalia” even if you did not intend to use the product that purpose pursuant to 19 U.S.C. § 1595a(c) stating a violation of 21 U.S.C. § 863.

What Constitutes Drug Paraphernalia?

In 2014, a smoke shop owner imported different merchandise from China described as “glass hookahs and parts”. The Central District of California considered these products, which were valued at $82,933.64 as drug paraphernalia and thus detained and seized the merchandise pursuant to 19 U.S.C. § 1595a(c) for violations of 21 U.S.C. § 863. The U.S. sued the shop owner and the Court concluded that “despite…[the] erroneous characterization of the merchandise as ‘hookah pipes’…they are bongs, and are therefore barred from entry into the United States.”

To determine whether the product is drug paraphernalia, the Court will not only consider the Code, but also other relevant factors such as the existence and scope of legitimate uses of the product in the community and expert testimony concerning its use. Under 21 U.S.C. Section 863(e), the following items are used to determine if a product is drug paraphernalia:
(1) instructions, oral or written, provided with the item concerning its use;
(2) descriptive materials accompanying the item which explain or depict its use;
(3) national and local advertising concerning its use;
(4) the manner in which the item is displayed for sale;
(5) whether the owner, or anyone in control of the item, is a legitimate supplier of like or related items to the community, such as a licensed distributor or dealer of tobacco products;
(6) direct or circumstantial evidence of the ratio of sales of the item(s) to the total sales of the business enterprise;
(7) the existence and scope of legitimate uses of the item in the community; and
(8) expert testimony concerning its use.

There is no requirement that the violator had specific knowledge that the merchandise constituted drug paraphernalia. United States v. 160 Cartons of Glass Water Pipes, Case No. CV 12-8965- BRO (VBKx) (C.D. Cal. Mar.  10, 2014).

What Must You Refrain From Doing?

  •        Sell or offer to sell drug paraphernalia
  •          Mail drug paraphernalia or transport it through interstate commerce
  •          Import or Export drug paraphernalia


REMEMBER: CBP is the federal agency that has control over everything that is imported and exported to/from the U.S. and therefore, they have the power to detain and seize your products when it constitutes drug paraphernalia. This will continue to happen until Congress decides to enact a Federal Law that allows marijuana consumption on a federal level or drug paraphernalia within the U.S.

What Do You Do if CBP Detains and/or Seizes Your Merchandise?

CBP has the power to detain persons or merchandise and make admissibility decisions. If CBP believes merchandise should be detained, it is required to send a Notice of Detention no later than five (5) business days from the day of examination. Often, the Notice of Detention does not specify the circumstances of the detention or is not even issued. It is important during this detention phase to communicate with CBP to discuss why your merchandise should not constitute drug paraphernalia and should be released.

CBP also has the ability to seize your merchandise if it is contrary to law and CBP will send a Seizure Notice, which you will have 30 days to respond, and typically we respond in the form of a Petition. Seizure cases are complicated, it is best to hire an expert who knows the policies, internal procedures and practices of U.S. Customs. Most importantly, getting involved early in the detention process is the best way to tackle this issue.

Want to Know if Your Product Will be Considered Drug Paraphernalia Prior to Importing?

Prior to importing your product, we recommend you review your product with an expert and determine whether to request a Binding Ruling from CBP. In CBP Ruling HQ H150766, an importer inquired on whether its hookah and hookah components constituted drug paraphernalia. The major issue CBP decided was whether the hookahs are “primarily intended” for use with drugs since it is considered a multiple-use item. CBP ruled that hookahs are admissible merchandise into the United States and held that they are not considered drug paraphernalia based on the weight of the evidence addressing the 8 criteria as set forth in 21 U.S.C. § 863, specifically its intended use for tobacco and not drugs.



If you have questions on whether or not your product constitutes drug paraphernalia and are interested in requesting a binding ruling, or if CBP has detained or seized your product, contact our office at info@diaztradelaw.com or (305) 456-3830 for assistance.

Friday, May 26, 2017

Crash Course in the Harmonized Tariff Schedule of the United States

What is the HTSUS?
The HTSUS is the Harmonized Tariff Schedule of the United States.

This post will give a rundown of what the HTSUS is and why it is so                                                           important:
How is the classification determined?
  • The classification for the HTSUS is done in accordance with the General and Additional U.S. Rules of Interpretation. There are two columns for rates of duties. The first column is broken down into two subcolumns. Those subcolumns are “General” and “Special” rates of duties. The General subcolumn “sets forth the general or normal trade relations (NTR) rates”. The “Special” subcolumn “reflects rates of duty under one or more special tariff treatment programs”. Column two is “duty rates for products from” countries that do not have NTR with the United States. Currently there are only two countries on that list and those are Cuba and North Korea.
What is My Obligation as an Importer as it Relates to the HTSUS?
  • CBP published a terrific guide titled “Importing into the U.S.” “A Guide for Commercial Importers”.  The guide discusses the Trade Act of 2002 and the Customs Modernization Act (the “Mod Act”) and the responsibilities that came to fruition for importers as a result. A key feature of the Mod Act is a “relationship between CBP and importers that is characterized by informed compliance”. What this means is now there is ashared responsibility between CBP and the import community, wherein CBP communicates its requirements to the importer, and the importer, in turn, uses “reasonable care” to assure that CBP is provided with accurate and timely data. Bottom line, no “reasonable care” = BIG problem.
How Do I Prove I Used Reasonable Care?
If you have an answer for these 10 questions (from CBP’s Reasonable Care Checklist), then you can prove you used “reasonable care” as it relates to your HTSUS:
  1. “Have you provided or established reliable procedures to ensure you provide a complete and accurate description of your merchandise to U.S. Customs and Border Protection in accordance with 19 U.S.C. 1481? (Also, see 19 CFR 141.87 and 19 CFR 141.89 for special merchandise description requirements.)
  2. Have you provided or established reliable procedures to ensure you provide a correct tariff classification of your merchandise to U.S. Customs and Border Protection in accordance with 19 U.S.C. 1484?
  3. Have you obtained a Customs "ruling" regarding the description of the merchandise or its tariff classification (See 19 CFR Part 177), and if so, have you established reliable procedures to ensure that you have followed the ruling and brought it to U.S. Customs and Border Protection’s attention?
  4. 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?
  5. Have you participated in a Customs pre-classification of your merchandise relating to proper merchandise description and classification?
  6. Have you consulted the tariff schedules, Customs informed compliance publications, court cases and/or Customs rulings to assist you in describing and classifying the merchandise?
  7. Have you consulted with a Customs "expert" (e.g., lawyer, Customs broker, accountant, or Customs consultant) to assist in the description and/or classification of the merchandise?
  8. If you are claiming a conditionally free or special tariff classification/provision for your merchandise (e.g., GSP, HTS Item 9802, NAFTA, etc.), How have you verified that the merchandise qualifies for such status? Have you obtained or developed reliable procedures to obtain any required or necessary documentation to support the claim? If making a NAFTA preference claim, do you already have a NAFTA certificate of origin in your possession?
  9. Is the nature of your merchandise such that a laboratory analysis or other specialized procedure is suggested to assist in proper description and classification?
  10. Have you developed a reliable program or procedure to maintain and produce any required Customs entry documentation and supporting information?”
 What is a Customs Binding Ruling and Do I need One?
  • Considering an importer of record has a responsibility to use “reasonable care” when declaring the classification for merchandise upon entry to the U.S., CBP has a binding ruling program in place where importers can receive a binding determination from CBP on issues relating to classification prior to importation.
  • A binding ruling can only be given by the National Commodity Specialist Division (NCSD) of the Office of Regulations and Rulings. We routinely advise importers to research the HTSUS first, and ask CBP for the HTSUS you believe best fits your product when requesting a binding ruling. It’s important to remember, the decision is BINDING. Not following it is not an option. There is a reconsideration process, but, it takes a considerable amount of time, whereas binding ruling requests for an HTSUS are generally issued within 30 days.
How Would CBP Know I’m NOT Using the Correct HTSUS?
  • CBP has the right to check up on importers and ensure you are using “reasonable care” in regard to the classification of merchandise entered into the U.S.  CBP often verifies that an importer is declaring merchandise entered into the U.S. properly by sending an importer a Request for Information, also known as Customs Form (CBP Form) 28. Upon receipt of a Request for Information, if an importer determines an inadvertent error took place, and an investigation by CBP has not yet commenced, filing a perfected Prior Disclosure may assist in drastically reducing potential penalties from CBP.  A CBP Form 28 is NOT friendly. It can (and often does lead to enforcement by CBP). This is where you get counsel involved to ensure you respond adequately to the CBP Form 28, and if advised by counsel, submit a Prior Disclosure as a response.
Need help with complying with the proper HTSUS so you do not receive a penalty? Then contact Diaz Trade Law at info@diaztradelaw.com to make sure you have the correct HTSUS.

Thursday, May 25, 2017

FDA Launches New Webpage to Promote Use of Symbols in Labeling of Medical Device

Today the U.S. Food and Drug Administration (FDA) launched a new webpage to assist the public understand the Use of Symbols in Labeling Final Rule. The final rule was issued by the FDA in June 2016 and became effective three months later.
FDA intends the final rule to be an attempt to “harmonize the U.S. device labeling requirements for symbols with international regulatory requirements. As the medical device industry has requested the ability to use stand-alone symbols on domestic device labeling, consistent with their current use on devices manufactured for European and other foreign markets.” This is exciting news for our clients who are Medical Device Manufacturers or Importers – as of September 2016 all medical device labeling may use stand-alone symbols!
What does the Use of Symbols in Labeling Final Rule provide for?
  • Permits the use of symbols in all medical device labeling without adjacent explanatory text. This means "stand-alone symbols" may be used, but only if certain requirements are met.
  • Stipulates the use of symbols, accompanied by adjacent explanatory text is still permitted. This means companies are not required to relabel their products, even if they meet the requirements for the use of "stand-alone symbols".
  • Revises prescription device labeling regulations, now permitting to use the symbol statement “Rx only” or “℞ only” in the labeling for prescription devices.
  • The final rule does not apply to product graphics or pictograms, such as graphics showing the steps for using a device.
Ultimately a Device Manufacture has three options to choose from:
  1. Do not use symbols
  2. Use symbols with adjacent explanatory text, or
  3. Use stand-alone symbols
What are “stand-alone symbols”?
What is required to qualify for use of “stand-alone symbols”?
  • Under the final rule there are two possibilities to permit a medical device label to carry “stand-alone symbols” without adjacent explanatory text.
  1. As long as the standard symbol is recognized by FDA under its authority under section 514(c) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 360d(c)) and the symbol is used according to the specifications for use of the symbol set forth in FDA's section 514(c) recognition, OR
  1. If the symbol is not included in a standard recognized by FDA under section 514(c) or the symbol is in a standard recognized by FDA but is not used according to the specifications for use of the symbol set out in the FDA section 514(c) recognition, the device manufacturer otherwise determines that the symbol is likely to be read and understood by the ordinary individual under customary conditions of purchase and use in compliance with section 502(c) of the FD&C Act (21 U.S.C. 352(c)) and uses the symbol according to the specifications for use of the symbol set forth in the SDO-developed standard.
  • In either case, the symbol must be explained in a symbols glossary that is included in the labeling for the medical device and the use of symbols must also comply with other applicable labeling requirements in the FD&C Act.
Who benefits from the Use of Symbols in Labeling Final Rule?
  • Device Manufacturers
  • Importers
  • International trade community
Manufacturers or Importers who have questions about implementing the Symbols final rule are encouraged to contact our office at info@diaztradelaw.com or 305-456-3830.

More information is available at:


Wednesday, May 24, 2017

Here's a Recap of Part II of our #WorldTradeMonth Seminar Series for Compliance Professionals on FDA FSMA and FSVP

Yesterday, we at DTL, had the pleasure of hosting Part II of our #WorldTradeMonth Seminar Series for Compliance Professionals. The second seminar focused on FDA FSMA (Food Safety Modernization Act) Compliance for Importers with expert speakers from the U.S. Food and Drug Administration (FDA) and industry. We had a packed house with an array of attendees such as importers of food, beverages, and medical devices, along with customs brokers, freight forwarders / NVOCCs, lawyers, consultants, and others. We received requests for a re-cap from those who attended and industry members who were not able to attend. You asked and we deliver. Here is our recap:


The morning kicked off with a networking breakfast where experienced and novice industry members were able to engage in meaningful dialogue about overlapping issues they experience in their respective workplaces in dealing with the topic of FSMA. We heard comments from small to large business on their current implementation strategies in place to ensure they meet FSMA requirements by FDA’s compliance dates.

The seminar promptly began at 9:00 am with introductory remarks by our own President, Jennifer Diaz. We had all attendees introduce themselves and include why this seminar was important to attend. We were glad to hear from majority of attendees that their reason for participating was to further their education on FSMA. One attendee commented, “Excited to hear from FDA about FSVP requirements and what the broker’s role is in the process.”

Next Representatives of Miami Free Zone explained their role in international business solutions as it provides users and visitors with convenient international business resources including turnkey FTZ solutions for distribution; a wholesale marketplace; an international business center environment; and premium showroom, office, and warehouse spaces. As well as providing FTZ users with flexible control over their domestic and foreign inventory, duty elimination and deferment, and high security standards for their businesses and valuable merchandise.

The first speaker was Elena O. Asturias, is a licensed U.S. Customs Broker, and Certified Customs Specialist providing customs brokerage services for imports. Elena provided top tips for custom brokers as she has been involved in logistics for over fifteen years, and has experience handling a broad range of commodities. Some helpful tips from here presentation include:
  • Make sure food facilities that must be registered with the FDA pursuant to the Bioterrorism act are registered to avoid delays upon entry into the U.S.
  • A major issue causing FDA to detain food products are product labeling violations
  • Ensure you use correct Affirmation of Compliance (AofC) Codes
    • When the entry is filed with FDA, use AofC codes to affirm the products meets specific import requirements.
    • Depending on the product type, many AofC’s are required, and must be submitted upon time of entry.
    • The AofC is a 3 letter indicator, then the qualifier which will vary in format. In some cases no qualifier is required.
  • FSVP – Unique facility identifier (UFI)
    • As of May 30th, you will need to add the UFI (Unique Facility Identifier) when you transmit the entry.
    • The AofC code being added is FSV, which will require the following:
      • DUNS number (as acceptable UFI)
      • Importer name & address
      • Email address
      • If the importer doesn’t have a DUNS number yet, you can transmit UNK “unknown” temporarily.
    • ENTRY DATA TRANSMISSION PROCESS:
Lundy Patrick followed Mrs. Asturias’ presentation and echoed the significance of being familiar with the importation process. Mr. Patrick is Lieutenant Commander serves as a U.S. Public Health Officer assigned to the Florida District Office of the FDA as an Imports Compliance Officer.  There were questions and answers during his presentation as the attendees had submitted questions prior to the seminar.  Here are highlights from the discussion:
  • Articles are expected to be in compliance AT THE TIME OF ENTRYTherefore, you need to exercise due diligence to make sure the products you intend to import are in compliance PRIOR to the importation of the goods.
  • The following food imports require Prior Notice:
    • Food imported for use, storage, or distribution in the U.S. (including gifts and trade and quality assurance/quality control and market research samples)
    • Food transshipped through the U.S. to another country
    • Food imported for future export, or food for use in a Foreign Trade Zone, unless it is on the list of exemptions
  • If you fail to provide Prior Notice, the food shipment is subject to refusal and, if refused, must be held at the port of entry unless directed to another location. The importing or offering for import into the U.S. of an article of food in violation of Prior Notice requirements is a "Prohibited Act" under the laws FDA administers.
  • If a food product is assigned for examination/sampling, FDA will examine and will collect samples. Historically between 1-2% get examined/sampled.
  • Lieutenant Commander Patrick echoed the importance of product label compliance and stressed FDA does not pre-approve labels for food products.
  • He stated that the State of Florida, the third busiest district, has had over 8,000+ detention and 2200+ Refusals and provided the top reasons for food product detentions:
    • Labeling Issues:
      • Incorrect or missing statement of identity/name of the food
      • Failure to List potential allergens
      • Failure to declare ingredients
      • Failure to bear nutrition labeling or the nutrition label is in incorrect format.
    • Most common Import Alerts the FDA sees in Florida:
      • IA 16-81 - "Detention Without Physical Examination of Seafood Products Due to the Presence of Salmonella“
      • IA 99-05 - "Detention Without Physical Examination Of Raw Agricultural Products for Pesticides"
    • If Refused Goods are sold and Cannot be Redelivered for Export / Destruction, you may face:
      • Liquidated Damages and/or 19 USC 1592 Penalties
Thereafter, Giselle Jordan took the floor to discuss the hot topic of FSMA Compliance and Foreign Supplier Verification Program. Giselle is a Consumer Safety Officer at the Division of Import Operations of FDA. In August 2016, she joined the newly established Food Safety Verification Program Team. Here are highlights from her presentation:
  • Resources:
    • FDA/FSMA   ß SIGN UP (there is a subscription feature available)
  • FSMA Sec. 301 requires importers to have FSVPs and FDA to issue regulations.
    • The goal for FSMA is FOOD SAFETY
  • Key Principles of FSVP Rule
    • Establishes explicit responsibility for importers to ensure the safety of imported food
    • Risk-based (according to types of hazards, importers, and suppliers)
    • Alignment with PC supply-chain provisions
    • Flexibility in meeting requirements (assessing activities conducted by others)
  • Purpose of an FSVP
    • To provide adequate assurances that:
      • Foreign suppliers produce food using processes and procedures providing same level of public health protection as FSMA preventive controls or produce safety provisions
      • Food is not adulterated or misbranded (as it relates to allergen labeling)
    • Who Must Comply?
      • “Importer” is U.S. owner or consignee of a food at time of U.S. entry.
      • If no U.S. owner or consignee at entry, importer is U.S. agent or representative of the foreign owner or consignee, as confirmed in signed statement of consent to serve as the importer under FSVP (“FSVP Importer”).
      • Note that the responsibility for FSVP compliance lies with the FSVP Importer and the FSVP Importer can be different from the Importer of Record.
    • FSVP Exemptions
      • Firms subject to juice or seafood HACCP regulations
      • Food for research or evaluation
      • Food for personal consumption
      • Alcoholic beverages and alcoholic beverage ingredients (7%)
      • Food transshipped through U.S.
      • Food imported for processing and export
      • “U.S. foods returned”
      • Meat, poultry, and egg products subject to USDA regulation at time of importation
      • Low acid canned food facilities (microbiological hazards only)
    • Appropriate Verification Activities
      • Must document determination, performance, conduct, review and assessment of results
      • Verification activities include:
      • Onsite audits (qualified auditor), sampling and testing of the food, a review of foreign supplier relevant food safety records, other appropriate activities
    • To qualify as a “Very Small Importer”:
      • Must meet definition of a very small importer
      • Less than $1 million/yr. in human food sales
      • Less than $2.5 million/yr. in animal food sales
      • Annually documentation of eligibility
    • Compliance Dates
      • The final FSVP rule was published on November 27, 2015
      • First compliance date: May 30, 2017
      • Last compliance date: July 27, 2020
      • FSMA Food Guidance Regulation
Jennifer Diaz concluded the seminar with best practices for due diligence and best practices for responding to enforcement actions and FDA Notice of Action. Check out DTL’s TOP 10 TIPS for importing food products into the U.S.

For more information on how we can help you through the maze of importing and FSVP email us at info@diaztradelaw.com.

A special thanks to all our prize winner for participating during the seminar. We appreciate your involvement and interest! For pictures of the event LIKE us on Facebook.

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Our next Live Broadcast webinar will be held on Wednesday, May 24, 2017 to discuss Intellectual Property Rights Violations and the U.S. Customs & Border Protections Enforcement. More information is available here.

DTL will also be at the NEI will be hosting the 3rd annual Global Trade Educational Conference held on August 7-8. NEI is bringing customs brokers, freight forwarders, NVOCCs, OTI, service providers, importers, exporters and all global logistics professionals an opportunity to update themselves on industry developments and connect with colleagues old and new. To RSVP - Read more. . .

*****This document is provided for informational purposes only and does not constitute legal advice nor does use of this constitute the formation of an attorney-client relationship.******