Impact of Government Shutdown

Co Authored by Omar Franco 

The impact of the federal government shutdown, which began October 1, 2013, will be deeply felt by importers and exporters alike. Most government services deemed "essential" by the federal agencies will continue, but “non-essential” services will be discontinued until funding is restored.

This early on, there is no obvious resolution of the budget dispute to tie the FY-2014 government funding to Affordable Care Act (ACA) reforms. Both the House and Senate are entrenched in their positions and they are not scheduled to negotiate any time soon. One side will have to capitulate or bipartisan negotiations will have to lead to a resolution. We feel that negotiations will probably not occur this week as both sides need to assess how the markets and voters will respond to the federal government shutdown. Depending on the public response, we will see movement by one side, probably by Republicans, if the reaction is seen as damaging. As of today, the Dow was up, so the market reaction has been subdued. The reaction from voters is still unknown, but if it is subdued as well, the shutdown will be prolonged. We anticipate the shutdown will last through this week at a minimum.

Some lawmakers are considering broadening the debate by including the debt ceiling. Pressure from resolving the government shutdown could also resolve the debt ceiling issue. The longer the shutdown continues, the more likely the resolution will be tied to the debt ceiling. We do foresee a resolution emerging, however, we do not have any real idea as to what the time frame will be.

To get a glimpse of the impact on the importing and exporting community, we've included updates from the BIS and ITC below.

For example, on the export side, the Department of Commerce's Bureau of Industry and Security (BIS) has this note on its website -- they are completely SHUT DOWN, and not accepting licenses - except for emergencies.  See more here:

The Federal Government is currently shut down due to a funding lapse. As a result, the Department of Commerce's Bureau of Industry and Security (BIS) is no longer accepting export license applications, classification requests (CCATS), encryption reviews, encryption registrations, or advisory opinion requests. Similarly, BIS will not be issuing any final determinations. The SNAP-R application on BIS's Website is not available and will not reopen until the Federal Government shutdown ends. All pending export license applications, commodity classification requests, encryption reviews, encryption registrations, and advisory opinion requests will be held without action by BIS until the shutdown ends.
Applicants may request emergency processing of export license applications for national security reasons by submitting email requests to Deputy Assistant for Export Administration Matthew Borman.

The subject line of the email should read "Request for Emergency License" and the email must identify the applicant (including point of contact), intermediate and ultimate consignees, and end user(s), items, end use, and national security justification for the emergency processing.

On the import side, the impacts are distinctly felt with the U.S. International Trade Commission (ITC).  The interactive HTS that I love is not active - and ADD/CVD investigations are tolled.  CUSTOMS Info Global Data Mining has taken the opportunity to present a PDF copy of the HTSUS during the ITC's hiatus here (note you will have to provide your contact information).
See the latest from the ITC's website:

The U.S. International Trade Commission will shut down its investigative activities for the duration of the absence of appropriation. These activities include, but are not limited to, proceedings conducted under the authority of Title VII of the Tariff Act of 1930, including antidumping and countervailing duty investigations and reviews; investigations and ancillary proceedings conducted under the authority of section 337 of the Tariff Act of 1930; and investigations conducted under the authority of section 332 of the Tariff Act of 1930.

Investigations tolled 

During shutdown, the schedules and deadlines for all investigative and pre-institution activities will be tolled. All hearings and conferences will be postponed, subject to the exceptions described below. Once the Commission receives funding and the period of the shutdown ends, all schedules will resume starting with the day on which the Commission recommences operations. For example, if the shutdown lasts four days (e.g., October 1-4), then the deadline for the filing of any document on October 4 would be extended four days to October 8. If a rescheduled deadline falls on a nonbusiness day, the deadline will be extended to the next business day. The agency may reconsider schedules after resuming operations.

Exceptions

Notwithstanding the general tolling of schedules:
The staff conferences in preliminary phase antidumping and countervailing duty investigations scheduled to take place on October 7, 2013 and October 9, 2013 will take place as scheduled if the Commission resumes operations by October 3, 2013. Should the shutdown not end before October 3, 2013, all conferences will be rescheduled pursuant to the general tolling provisions described above.

The hearing in the Hot-Rolled Steel five-year reviews scheduled for October 3, 2013 will take place as scheduled if the Commission resumes operations by October 2, 2013. Otherwise, this hearing will be rescheduled upon further notice.

The hearing for Investigation No. 332-541, Trade Barriers that U.S. Small and Medium-Sized Enterprises Perceive as Affecting Exports to the European Union, scheduled to take place on October 8, 2013 will take place as scheduled if the Commission resumes operations by October 3, 2013. Otherwise, this hearing will be rescheduled upon further notice.

Website

During shutdown, the online services provided on the Commission's World Wide Web site, at www.usitc.gov, will be unavailable. This includes:

• USITC website
• EDIS
• DataWeb
• HTS Online Reference Tool
• All phone communication with USITC staff
• Restoration of service is expected as quickly as possible after appropriations become available.

If you have an questions on how the shutdown will impact your business contact Omar or me anytime.

FDA Finally Issues Definition of "GLUTEN FREE"!

FDA issued the update below DEFINING the term "Gluten Free".   As a Celiac, this is extremely exciting news! The reason this is a HUGE deal?  Us Celiac's need to know we can trust food products that are labeled "gluten free".  If they are not, the repercussions are severe, ranging from serious health problems, including nutritional deficiencies, osteoporosis, growth retardation, infertility, miscarriages, short stature, and intestinal cancers...

My sincere hope is FDA will now test imported products that make "GLUTEN FREE" claims, and assure these companies are legitimately using the gluten free claim.  Meaning, I hope FDA will enforce and penalize those that are importing misbranded product and not correctly utilizing the gluten free claim!  The enforcement tools I will look for include FDA detaining imported product making gluten free claims, and sending them to FDA's own laboratories to check the parts per million of gluten in the product.  If the product contains more than 20 parts per million of gluten, FDA should refuse admission of the product - meaning it would need to be exported or destroyed within 90 days of the refusal, otherwise, companies would face a liquidated damages claim. I also hope FDA will take the added step of adding non-compliant companies to the FDA's Import Alert (black list) so that the products are AUTOMATICALLY stopped before entering the U.S. and the importer is forced to prove compliance prior to getting FDA to release the goods.

The "Compliance Date" for this final rule is August 5, 2014. If consumers see products labeled "gluten free" we should be able to TRUST that those products legitimately do not contain gluten. Now, we have a standard. Products labeled gluten free must contain LESS than 20 parts per million of gluten to be legitimately labeled so.

This is a fantastic start!!! Here's what the FDA had to say, and the actual FINAL RULE is included as a hyperlink at the end.

FDA defines “gluten-free” for food labeling
New rule provides standard definition to protect the health of Americans with celiac disease
The U.S. Food and Drug Administration today published a new regulation defining the term "gluten-free" for voluntary food labeling. This will provide a uniform standard definition to help the up to 3 million Americans who have celiac disease, an autoimmune digestive condition that can be effectively managed only by eating a gluten free diet.

“Adherence to a gluten-free diet is the key to treating celiac disease, which can be very disruptive to everyday life,” said FDA Commissioner Margaret A. Hamburg, M.D. “The FDA’s new ‘gluten-free’ definition will help people with this condition make food choices with confidence and allow them to better manage their health.”

This new federal definition standardizes the meaning of “gluten-free” claims across the food industry. It requires that, in order to use the term "gluten-free" on its label, a food must meet all of the requirements of the definition, including that the food must contain less than 20 parts per million of gluten. The rule also requires foods with the claims “no gluten,” “free of gluten,” and “without gluten” to meet the definition for “gluten-free.”

The FDA recognizes that many foods currently labeled as “gluten-free” may be able to meet the new federal definition already. Food manufacturers will have a year after the rule is published to bring their labels into compliance with the new requirements.

“We encourage the food industry to come into compliance with the new definition as soon as possible and help us make it as easy as possible for people with celiac disease to identify foods that meet the federal definition of ‘gluten-free’” said Michael R. Taylor, the FDA’s deputy commissioner for foods and veterinary medicine.

The term "gluten" refers to proteins that occur naturally in wheat, rye, barley and cross-bred hybrids of these grains. In people with celiac disease, foods that contain gluten trigger production of antibodies that attack and damage the lining of the small intestine. Such damage limits the ability of celiac disease patients to absorb nutrients and puts them at risk of other very serious health problems, including nutritional deficiencies, osteoporosis, growth retardation, infertility, miscarriages, short stature, and intestinal cancers.

The FDA was directed to issue the new regulation by the Food Allergen Labeling and Consumer Protection Act (FALCPA), which directed FDA to set guidelines for the use of the term “gluten-free” to help people with celiac disease maintain a gluten-free diet.

The regulation was published in the Federal Register.

Join FDA in Miami to Discuss Major FSMA Proposed Rules

The U.S. Food and Drug Administration (FDA) announced it will hold two additional public meetings to discuss the Food Safety Modernization Act (FSMA) Proposed Rules on Foreign Supplier Verification Programs (FSVP) and the Accreditation of Third-Party Auditors/Certification Bodies. 

The two proposed rules are designed to strengthen assurances that imported food meets the same safety standards as food produced domestically.  The FSVP proposal provides requirements for importers to verify that their foreign suppliers are implementing the modern, prevention-oriented food safety practices called for by the FSMA, and achieving the same level of food safety as domestic growers and processors. This will create a new burden for importers to know and trust their manufacturers.  I believe we can expect to see enforcement and penalties from FDA - if you have not met your manufacturer yet, now is the time!

The second proposed rule on the Accreditation of Third-Party Auditors/Certification Bodies provides for the strengthening of quality, objectivity, and transparency of foreign food safety audits on which many U.S. food companies and importers currently rely to help manage the safety of their global food supply chains.

The purpose of the FDA’s public meetings is to solicit public comments on the proposed rules and to inform the public about the rulemaking process (including how to submit comments, data, and other information to the rulemaking dockets), and to respond to questions about the proposed rules.

If you are interested in commenting on these proposed rules, contact me to discuss the process. Please note the timeline below to submit comments to the FDA. 

These two added meetings will take place in Miami, FL and Long Beach, CA.

Register here!

• Miami meeting - October 10-11, 2013, at the Hyatt Regency Miami, 400 SE Second Avenue, Miami, FL 33131.

October 10, 2013

8:30 a.m. – 5:00 p.m.

October 11, 2013

8:30 a.m. – 12:30 p.m.  

• Long Beach meeting - October 22-23, 2013, at the Hilton Long Beach & Executive Meeting Center, 701 West Ocean Boulevard, Long Beach, CA  90831

October 22, 2013

8:30 a.m. – 5:00 p.m.

October 23, 2013

8:30 a.m. – 12:30 p.m.

Please note the following important dates for the meetings in Miami, FL and Long Beach, CA:

• Meeting in Miami, FL
  
  
  
  • September 24, 2013: Closing date for request to make oral comment
  
  
  • September 24, 2013: Closing date to request special accommodation due to a disability
  
  
  • October 1, 2013: Closing date for advance registration

• Meeting in Long Beach, CA
  
  
  
  • October 1, 2013: Closing date for request to make oral comment
  
  
  • October 1, 2013: Closing date to request special accommodation due to a disability
  
  
  • October 8, 2013: Closing date for advance registration

• November 26, 2013: Closing date to submit either electronic or written comments to FDA’s Division of Dockets Management; for the proposed rule on Foreign Supplier Verification Programs, see Docket No. FDA-2011-N -0143. For the proposed rule on Accreditation of Third-Party Auditors/Certification Bodies, see Docket No. FDA-2011-N-0146.

If you manufacture or import food products you MUST stay on top of FSMA and the new rules FDA will implement.  For assistance in commenting on these important new changes, contact me.  See you at the Miami meeting.

REGISTRATION OPENS for CBP's 2013 East Coast Trade Symposium in D.C.

Mark your calendars for the CBP 2013 East Coast Trade Symposium, scheduled for October 24 – 25, 2013, at the Washington Hilton Hotel in Washington, D.C. This year’s theme is “Increasing Economic Competitiveness Through Global Partnerships and Innovation”.

Based on the overwhelming interest received by CBP for participation at the Symposium, CBP is limiting attendance to three (3) participants per company to afford equal representation from all members of the international trade community. If a company exceeds the limitation, subsequent registrations will automatically be placed on the waiting list.

Registration for onsite participation is $108, and is open as of September 18, 2013 at 12:00 p.m. EST. Act fast, this event sells out quickly!

Attendance at the Symposium is an excellent opportunity to meet with all levels at CBP, so take advantage of this opportunity! For a sneak peak at what to expect in DC, see the agenda here. See you at the CBP Symposium!

An added bonus:

• As a special opportunity for U.S. citizens participating in this year’s CBP 2013 East Coast Trade Symposium, U.S. Customs and Border Protection (CBP) will be on-site to conduct interviews for those interested in enrolling in the Global Entry program. Act within the next week, in order to be eligible for on-site enrollment. This offer is only available to those who have completed the online application, paid the $100 application fee, and are pre-approved through the Global Online Enrollment System.
• Interested attendees must apply for Global Entry by Friday, October 10.
• When applying, be sure to only select the Global Entry option. Global Entry is extremely popular with frequent international travelers because approved travelers use a kiosk to enter the U.S. rather than waiting in line to see an officer. For U.S. travelers, Global Entry approval also allows you to enroll in the Transportation Security Administration’s (TSA) PreCheck trusted traveler program, which expedites screening through TSA checkpoints at participating airports.

This is a terrific benefit I hope you will take advantage of.  I am a HUGE advocate of the TSA PreCheck program, check out my blog post regarding this wonderful program here.

Jen Diaz Honored as Rising Star by DBR

On July 18, 2013, the Daily Business Review (DBR) announced the 40 young Florida lawyers chosen as 2013 Rising Stars by a panel of DBR judges. I'm proud to announce I have been selected as one of the 40 Rising Stars!
The article stated:

Our panel carefully reviewed more than 125 nominations of attorneys 40 years old and under who have established themselves as top contributors to the practice of law and their communities, and are in a position to become tomorrow's top lawyers and leaders.

See the list of the 40 Rising Star honorees.

Profiles of all the Rising Stars will appear in a DBR special section on Wednesday, Sept. 18, and an event honoring their accomplishments will be held that night from 6 p.m. to 9 p.m., at the Bankers Club in downtown Miami, One Biscayne Tower, Biscayne Room, 14th Floor.
For those who wish to attend the event to honor the Rising Stars, please contact Andre Sutton at asutton@alm.com or (757) 721-9020. The event's main sponsor is Ice Legal.

Congratulations to the 2013 Rising Stars.

-David Lyons, Editor in Chief
-Chris Mobley, Publisher

I'm honored to have been selected and invite you to join me as we celebrate on September 18th at the Bankers Club.

BEWARE - Liquidated Damages WILL be Imposed for 10+2 Violations

For those who thoughts CBP's “measured and commonsense” approach for those that weren’t fully complying with the Importer Security Filing (ISF or 10+2) rules would last forever, think again!

Effective, July 9, 2013, CBP advised it would start the liquidated damages phase of the Importer Security Filing (ISF) enforcement process. CBP will now make use of the newly activated cargo holds in the Automated Cargo Environment (ACE) system to address non-compliance with the ISF rule. CBP may also withhold the release or transfer of non-compliant ISF shipments at the terminal until the required ISF is filed. For carrier violations of the vessel stow plan requirement, CBP may refuse to grant a permit to unlade the merchandise. Once the ISF data is received and a security assessment is made, additional enforcement actions including a Non-Intrusive Inspection (NII) and/or intrusive exams may be initiated.

Liquidated Damages

CBP may also assess liquidated damages of up to $5,000 per violation for the submission of an inaccurate, incomplete or untimely filing. CBP Dec. 09-26 discusses "Guidelines for the Assessment and Cancellation of Claims for Liquidated Damages for Failure to Comply with the Vessel Stow Plan, Container Status Message, and Importer Security Filing Requirements."  First violations may be mitigated to $1,000-$2,000 - depending on the presence of aggravating or mitigating factors.  Some mitigating factors for the failure to file a complete, accurate and timely ISF include evidence of progress in the implementation of ISF during the "flexible enforcement period," small number of violations compared to number of shipments, Tier 2 and 3 C-TPAT status, remedial action....  CBP has advised that "no relief will be granted if CBP determines that law enforcement goals were compromised by the violation."  Aggravating factors include multiple errors on your ISF!  If you do receive a Liquidated Damages claim, it is important you consult with an expert to file a timely, persuasive Petition to CBP and address all relevant mitigating factors to assure you receive the maximum reduction possible.

What's ISF Again?

The ISF rules require importers and vessel-operating carriers to provide additional advance trade data on cargo shipments to CBP 24 hours prior to vessel lading, pursuant to Section 203 of the Security and Accountability for Every Port (SAFE Port Act) of 2006.

Importers must report the following 10 data elements on each ISF:

1. Manufacturer (or supplier) name and address
2. Seller (or owner) name and address
3. Buyer (or owner) name and address
4. Ship-to name and address
5. Container stuffing location
6. Consolidator (stuffer) name and address
7. Importer of record number/foreign trade zone applicant identification number
8. Consignee number(s)
9. Country of origin
10. Commodity Harmonized Tariff Schedule (HTS) number

From the carrier, 2 data elements are required:

1. Vessel stow plan – required for arriving vessels with containers.
2. Container status messages – required for containers arriving via vessel.

Hence, 10+2!

For shipments consisting entirely of freight remaining on board (FROB) cargo or goods intended to be transported in-bond as an immediate entry or transportation and exportation entry, the following 5 data elements are required:

1. Booking party name and address
2. Ship-to name and address
3. Commodity Harmonized Tariff Schedule (HTS) number
4. Foreign Port of Unlading
5. Place of delivery

In order to avoid liquidated damages and untimely delays with your cargo, full ISF compliance is now required.  Since we're talking compliance, do you have your pre-compliance plan established?  If not... Let's talk!


If you have any questions on the listed requirements or need assistance with cargo detained as a result of this new enforcement phase, please feel free to contact me, and I'm happy to assist you with any ISF or CBP related question!  

Say Goodbye to GSP, ATPA and ATPDEA

The question of the day... Will GSP be extended?  Yes, no, maybe??

July 31, 2013 is the date when the expiration of the Generalized System of Preferences (GSP), Andean Trade Preference and Act  (ATPA) and the Andean Trade Promotion and Drug Eradication Act (ATPDEA) will take place.

Read on to ensure that you get your refunds expeditiously when/if GSP is renewed, likely after July 31, 2013.

CBP's notice today states:

Barring Congressional action, the Generalized System of Preferences (GSP), special program indicator (SPI) “A” and “A+,” the Andean Trade Preference Act (ATPA), SPI “J,” and the associated Andean Trade Promotion and Drug Eradication Act (ATPDEA), SPI “J+,” are due to expire for goods entered or withdrawn from warehouse after midnight, July 31, 2013.

Special Procedures for GSP-Eligible Goods:

• Importers should pay the normal trade relations (column 1) duty rate but continue to flag GSP-eligible importations with the applicable SPI (“A” or “A+” until further notice. If the program is renewed with a retroactive clause, use of the SPI will allow CBP to process automatic duty refunds. No corresponding procedure is available for the ATPA or ATPDEA programs. [MAKE SURE YOU DISCUSS THIS WITH YOUR BROKER AND DO SO!]

Clarification for African Growth and Opportunity Act (AGOA) Eligible Goods:

• Goods eligible for preference under African Growth and Opportunity Act (AGOA) may continue to receive preference on tariff items displaying SPI “A,” “A+” or “D” in the “Special” column of the Harmonized Tariff Schedule of the United States (HTSUS).

To receive AGOA preference on a good with SPI “D” in the “Special” column of the HTSUS, the importer will continue to file the entry summary with SPI “D” and without duty. To receive AGOA preference on a tariff item with the SPI “A” or “A+” in the “Special” column of the HTSUS (and thus no “D”), the importer will file the entry summary with the SPI “A” but without duty.

Impact on the Merchandise Processing Fee (MPF): 

• The expiration of GSP has no impact on the payment/non-payment of the merchandise processing fee (MPF).

OTI's - July 31 is Deadline to Voice Opinion on FMC's Proposed Changes

Now's the time to apply to become a non vessel operating common carrier (NVOCC) and/or ocean freight forwarder (OFF).  FMC has proposed major changes to its regulations and application requirements for Ocean Transportation Intermediaries (OTIs).   Get your application in now to avoid those changes, and/or, learn the changes and spend the time to comment on them while you can.  Detailed summaries of those changes are below.  July 31, 2013 is the cutoff to have your voice heard!

FMC issued an Advanced Notice of Proposed Rulemaking (ANPRM) that would significantly amend the regulations governing the licensing, bonding and duties of NVOCCs and ocean freight forwarders. The ANPRM is 117 pages long!! You can review the ANPRM in FMC’s Docket No. 13-05, Amendments to Regulations Governing Ocean Transportation Intermediary Licensing and Financial Responsibility Requirements, and General Duties. 

The major changes are:

• Qualifying Individual (QI) Changes – Included in the proposed changes are changes to many definitions - this one impacts what it will take to become a QI.  The standards will be tougher.  For one, the QI’s 3 years of relevant experience will only qualify if one has worked for a licensed, bonded, registered OTI. Experience obtained while the individual was employed by a licensed domestic OTI, a vessel operator, or a registered foreign-based NVOCC would be acceptable.
• All Owners will now be Vetted – Background checks will now not be limited to the QI, all owners will go through background checks (and my two cents, your application will take that much longer to be processed with every additional owner)..
• All Licenses will now be Online – FMC proposes to go green in its application process.  Application fees are much cheaper online, $250 vs. the paper application fee of $850.   
• License Renewal Every 2 Years! – All licenses, both forwarder and NVOCC, be renewed every two years, regardless of how long a company has held a license. As part of that renewal process, the licensee would be required to pay a filing fee in an amount yet to be determined. As proposed, the information to be provided would include the name of the current Qualifying Individual, all shareholders, officers and directors (and, their social security numbers), and require the production of corporate good standing certificates. Each company would be required to submit an application for renewal at least 60 days prior to the scheduled expiration dateof its current license. 
• Suspension/Revocation of Licenses – Under the current regulations, a license can be suspended or revoked for failing to respond to a lawful order, making materially false or misleading statements, or failing to have a current tariff or bond. The ANPRM now proposes to also subject licenses to revocation if the OTI “knowingly and willfully accepts cargo from, processes, books, or transports cargo” for, an NVOCC that is either unlicensed or fails to have the required bond. The Commission also proposes to“streamline” the appeals process for any revocation of licenses by eliminating an OTI’s right for a full evidentiary hearing. Indicating that such proceedings are “often lengthy and expensive,” the ANPRM proposes to establish a procedure by which appeals could be handled by a hearing officer on a written record, without any apparent right of discovery concerning matters that may be in the Commission’s files.
• Foreign Registered NVOCCs – The ANPRM would require foreign registered NVOCCs to submit a detailed registration form and a filing fee, with those registrations only valid for a period of two years. Under current regulations, and as is the case with existing OTI licenses, registrations are valid for an indefinite period. The foreign NVOs would be required, in their registration forms, to provide their legal name, any trade names, their principal business address with contact information, a contact person with an email address, and their U.S. resident legal agent.
• Increase Bond Requirements - Citing incidents in which two NVOCCs went out of business owing significantly more than the $75,000 bond, which meant that claimants were unable to recover all monies owed, the ANPRM proposes to increase all OTI bonds as follows: Ocean Forwarder $50,000 $75,000, Licensed NVOCC $75,000 $100,000, Registered NVOCC $150,000 $200,000, Group Bond $3 Million $4 Million
• Tiers for Claims on Bonds - The ANPRM would establish three tiers of payment priorities for claims against the bond.
• FMC Website Publication of Claims - The Commission would publish these notices and claims on its website, which would be available to the general public as well as the various sureties. 
• Prohibit Surety From Payment of 20%+ of Bond - Another proposal would prohibit the surety from paying any claims that amount to more than 20 percent of the face amount of the bond for a period of at least five months after the date the claim is received.
• License Revocation when Bond Termination Occurs – In this proposed rule, FMC licenses and registrations could be revoked “without hearing or other proceeding” in the event the required bond is terminated.
• New Class of NVOCCs for Household Goods – The commission seeks comments on such a change, not an actual proposal at this time.

How do you feel about these changes?  Think they are fair?  Want to comment to the FMC?  Make sure you speak up before July 31! Ready to submit your application? Contact me today at jdiaz@becker-poliakoff.com.  

Do You Know the Top 10 Tips When Importing?

Do you know the top 10 tips when importing to ensure compliance? If not, here's why you should listen to my Compliance Online webinar that took place on June 27, 2013 at 10:00 a.m., EST.

If you import merchandise into the U.S., you are the responsible party and must be aware your requirements and potential liability. In this presentation, we will discuss how to comply with U.S. Customs and Border Protection’s (CBP's) vast laws and regulations. By the end of the webinar you will know and understand the importance of:

• Tariff classification;
• Customs valuation;
• Country of origin marking;
• Intellectual Property Rights (IPR) Protection and CBP Enforcement; and
• Free Trade Agreements (FTA) you should be taking advantage of.

You will also learn basic customs concepts and terms like:

• CBP Form 3461 & CBP 7501;
• Protests;
• Seizure cases;
• Liquidated damage claims, Penalties/Fines;
• Prior disclosure; and
• FP&F Petition Process.

Learn key best practices and hear real life case studies. Learn what to do, and more importantly, what NOT to do, and what the consequences are for non compliance.

To hear the recorded version of this webinar, that took place on June 27, 2013, click here.

Florida Companies Convicted and Sentenced

Co Authored by Robert Becerra

In another example of the government’s continuing use of the criminal justice system to enforce international trade laws, three Florida companies and their management were recently convicted and sentenced for importing smuggled toys from China containing lead and containing counterfeit trademarks.

LM Import-Export, Inc., Lam’s Investment Corp., and LK Toys Corp., Hung Lam and Isabella Kit Yeung plead guilty to charges of conspiracy to traffic and smuggle toys containing hazardous substances such as lead, and one count of trafficking in counterfeit goods, in violation of 18 U.S.C. Secs. 371 and 2320, respectively. Co-defendant Yeung plead guilty to one misdemeanor count of submitting a false country of origin label, in violation of 19 U.S.C. Sec. 1304(a). The information, or charging document filed in court, against all defendants, as well as the plea agreements for each defendant can be found on the website of the District Court for the Southern District of Florida. (If you have trouble getting these documents, email me and I'd be happy to share them with you).
The facts underlying the charges, as stated in court documents, are that from April, 2000, until May 2011, a span of 11 years, the corporate defendants conspired to sell children’s products imported from China in violation of the Consumer Product Safety Act 15 U.S.C. Sec. 2068, and the Federal Hazardous Substances Act, 15 U.S.C. Sec. 1263. Some of the toys contained lead, while others presented various hazards such as choking, aspiration or ingestion. The products were imported using false statements on Customs declaration forms and with false country of origin labeling.

Hung Lam was sentenced to 22 months incarceration, 3 years of supervised release and a $10,000 fine. The corporations were sentenced to 5 years of probation. Yeung was sentenced to 1 year probation and a $1,000 fine. An order was entered mandating the forfeiture to the government of $862,500 and all products imported by the defendants that were seized by the government. The press release from the Consumer Products Safety Commission and Department of Justice discussing the case can be found here and here respectively.

This case is extremely important for importers to be familiar with and understand that:

1. It is vital for importers to retain counsel to assist with pre-compliance before you import.
2. When you receive any violation notice from the federal government, retain counsel immediately and be sure to address all violations with remedial action and enhanced compliance procedures in an attempt to keep administrative penalties or forfeiture cases from turning into potential criminal matters.
3. Resolving a civil action through a consent decree with the government does not absolve you of criminal liability.
4. Once contacted by government officials, retain counsel immediately. Any evidence you provide or any statements you make will be used against you in court.
5. Repeated misconduct and federal regulatory law violations over a period of years will often result in criminal prosecution of both companies and their individual employees, resulting in federal prison sentences and substantial fines and forfeitures.