FREE Webinar Series on Intellectual Property Rights

Do you want to learn more about intellectual property rights (IPR)? Do you want to understand how IPR and U.S. Customs mix (and don't mix)? Do you want to understand how to properly protect your brand internationally and domestically and what type of enforcement action U.S. Customs can take against infringers? If so, this 3 part FREE seminar series is especially for you. Act now, and reserve your FREE seat while they last. Did we mention it's FREE??

Date and Time:

Wednesday, January 29, 2020

12:00 PM EST to 1:00 PM EST

FREE Webinar!

Session Highlights:

33,810 IPR Seizures in 2018!

U.S. Customs and Border Protection (CBP) is tasked with the monitoring of and enforcement of intellectual property rights (IPR). In CBP's FY 2018 Seizure Statistics, CBP advised that it enforced trademarks and copyrights pertaining to over 17,641 active recordations, including 2,289 new recordations and 812 renewals of expiring recordations.

In fiscal year 2018, 381 individuals were arrested by CBP or ICE for violations related to IPR violations and 260 convictions related to intellectual property crimes proceeded. The total number of IPR seizures decreased by 333 seizures from the previous year. Surprisingly, while the number of seizures decreased from 34,143  in 2017 to 33,810 in 2018, the total estimated manufacturer’s suggested retail price (MSRP) of seized goods, had they been genuine, increased $1.4 billion.

China Trade War Intensifies

 

 Today, the Trump administration’s China trade war intensified as it announced plans to increase tariffs on Lists 1, 2, 3, and 4! The president connected the additional tariff hikes to China’s new retaliatory tariffs (as a result of US’s imposition of List 4 tariffs) on $75 billion-dollar in US products, mainly impacted the agricultural and auto industries, or President Trump’s base (as previously reported here). So what are the changes?

TOP 5 Strategies to Mitigate the Impact of Tariffs

Many importers, exporters, and international businesses alike may be unaware that avenues exist to ensure that their products remain unabated by protectionist trade policies (think China tariffs).

This blog provides an easy reference overview of five (5) proven and legitimate options for duty-saving opportunities.

We recommend U.S. importers, exporters, and manufacturers to consider these five (5) options as they apply to all products from virtually any country subjected to a tariff, including Section 201 tariffs for solar systems, Section 232 tariffs for aluminum and steel, and the infamous Section 301 Tariffs in place for Chinese originating goods and violations of trade agreements, as well as acts, policies or practices that are unjustifiable,  unreasonable, or discriminatory and that burden or restrict U.S. commerce.

U.S. and China Reach ‘Phase 1 Deal’

 Today, President Trump and the Chinese government announced a “Phase 1 Deal” and suspended the proposed increase in tariffs for products (on Lists 1, 2, and 3) that were set to begin on October 15. The scheduled tariff was set to increase from 25 to 30 percent on $250 billion worth of Chinese imports. In exchange, the Chinese government will buy $40-50 billion worth of American agricultural goods, and the agreement will include terms on both intellectual property rights and financial services.

Trump to Impose Tariffs on All Imported Goods From Mexico

As a result of the immigration crisis intensifying at the border of the United States and Mexico, President Trump announced a five (5) percent tariff to be levied on all goods from Mexico starting June 10^th. 

The tariffs are set to continue to increase by five percent each month up to twenty-five percent. The tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory.

The effective date of the imposition of the additional tariffs are as follows:

CATCH UP ON DTL’S TOP BLOGS FROM 2018!

We want to make sure you stay up to date with the hottest trade topics from 2018. below is a summary of what you missed by category. Enjoy!

Why You Need Your VERY OWN ACE Account

The Automated Commercial Environment (ACE) is a U.S. Customs and Border Protection (CBP) system designed to facilitate legitimate trade while enhancing border security. ACE improves collection, sharing, and processing of information submitted to CBP and government agencies.

You can now double check your entries filed by your broker  with CBP & directly (or via a trusted consult) interact with CBP via ACE!

Chinese Telecom Giant, ZTE, Faced with Largest Penalty Ever Levied

In our previous post, we discussed ZTE’s record penalty for selling technology with US-origin chips to North Korea and Iran, in violation of US trade laws. The company initially received a $1.19 billion in penalties and was ordered to reprimand the executives responsible for the malfeasance's as a condition to re-enter the United States (US) market after a three-year suspension. Despite telling the US government that the guilty executives had been properly punished, it became clear that they were instead rewarded with bonuses. This violation triggered an automatic ban of ZTE from the US market for seven (7) years. As the 4^th largest seller of cell phones to the US, the ban on ZTE serves as a means of protecting American production.

After the announcement, the ensuing backlash from Beijing, as well as trade talks in China, President Trump stated that he and Chinese president Xi Jiping are working together to bring ZTE “back into business”.

Now, the Trump administration threw a metaphorical lifeline to this tech giant, seemingly easing tensions with Beijing. Secretary Ross announced a $1.4 Billion dollar settlement with ZTE.

ZTE has agreed to severe additional penalties and compliance measures to replace the U.S. Commerce Department’s Bureau of Industry and Security (BIS) denial order imposed as a result of ZTE’s violations of its March 2017 settlement agreement.  Under the new agreement, ZTE must pay $1 billion and place an additional $400 million in suspended penalty money in escrow before BIS will remove ZTE from the Denied Persons List. These penalties are in addition to the $892 million in penalties ZTE has already paid to the U.S government under the March 2017 settlement agreement.

The announcement of a deal stirred up controversy in Washington, due to the administration’s uncertain stance towards China. The deal provides ZTE the opportunity to buy American parts, so long as it complies with specific parameters. The US not only levied over 1 Billion in penalties against ZTE, but also placed $400 million in escrow, in the event it reneged on the deal. The agreement will be enforced by a handpicked US compliance team, which will serve at the US Commerce Department for the next decade. The team is tasked with overseeing ZTE’s replacement of its entire board of directors, as well as oversight of general compliance.

The conditions set on ZTE to reenter the US are the toughest sanctions ever to be placed on a public or private company. Although the move faced backlash in Washington, “analysts say the ban is likely to have cost ZTE billions of dollars in lost revenue, tarnished its brand and strained its relationships with customers around the world”. As one of the largest and most profitable companies in China, ZTE, touting over 160 corporate and governmental clients worldwide, plays a vital role in the China’s functioning.

The initial announcement of ZTE’s ban, included “Commodity, Software or Technology” products as items prohibited to be sold or exported to ZTE. Effectively, the ban would do more than just tarnish the brand, rather it would have potentially ended ZTE’s ability to function as a mobile electronics production company.

While seemingly gracious for the Chinese government and the Chinese economy, the deal sets a precedent that sanction violators may never face severe consequences. Although the company must pay over $1 Billion in penalties, it was granted a gift. Assuming that they work within the confines of the deal, the penalties will be a minuscule price to pay, while ZTE maintains its position and its prowess.

Top International Law Blogs To Follow in 2018

We're ecstatic to announce Diaz Trade Law's Customs and International Trade Law blog was included in TOP 30 International Law Blogs! We were chosen from thousands of International Law blogs on the web using search and social metrics because we actively work to educate, inspire, and empower our readers with frequent updates and high-quality information.

International Trade Day - May 23, 2018 - Port Miami

Miami World Trade Week is all about showcasing the importance of international trade, logistics, services and port operations to the South Florida economy and promotes Miami as the “Trade & Logistics Hub of the Americas”. World Trade Week includes a full of International Trade information at International Trade Day hosted by the World Trade Center Miami and U.S. Customs and Border Protection (CBP).

Over 300 international executives representing more than 150 companies have registered to attend. Top officials from CBP and other participating government agencies (e.g.  FDA, USDA, APHIS, PPQ, USFWS, CPSC, etc.) will be present and respond to your questions.

OFAC Increases Civil Monetary Penalties

On March 19, 2018, the Office of Foreign Assets Control (OFAC) adjusted its maximum civil monetary penalties for inflation (per the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015). The rationale for this increase is to maintain and improve the effectiveness and deterrent effect of civil monetary penalties. Any increase applies to penalties assessed after the effective date regardless of whether the violation occurred prior to such date. 

How much did civil monetary penalties increase?

Increases to penalties were assessed as follows:

• Violations of the Terrorism Risk Insurance Program will be assessed a maximum penalty of $1,360,525 up from $1,333,312.
• As codified at 31 C.F.R. § 598.701, any violation of the Foreign Narcotics Kingpin Designation Act and the Foreign Narcotics Kingpin Sanctions Regulations will be assessed a maximum penalty of $1,466,485 – increasing from its previous maximum penalty of $1,437,153.

• A penalty amounting to the greater of $295,141 or twice the amount of the underlying transaction will be assessed for a violation of the International Emergency Economic Powers Act and any of the following:
  • Iranian Assets Control Regulations
  • Narcotics Trafficking Sanctions Regulations
  • Sudanese Sanctions Regulations
  • Weapons of Mass Destruction Trade Control Regulations
  • Zimbabwe Sanctions Regulations
  • Syrian Sanctions Regulations
  • Cote d’Ivoire Sanctions Regulations
  • Weapons of Mass Destruction Proliferators Sanctions Regulations
  • Darfur Sanctions Regulations
  • Democratic Republic of the Congo Sanctions Regulations
  • Belarus Sanctions Regulations
  • Lebanon Sanctions Regulations
  • Hizballah Financial Sanctions Regulations
  • Iraq Stabilization and insurgency Sanctions Regulations
  • Magnitsky Act Sanctions Regulations
  • Western Balkans Stabilization Regulations
  • Global Terrorism Sanctions Regulations
  • Terrorism Sanctions Regulations.

• Violations of the Foreign Terrorist Organizations Sanctions Regulations will be assessed a penalty amounting to the greater of $77,909 or twice the amount of which a financial institution was required to retain possession or control pursuant to 31 C.F.R. § 597.701(b).
• A penalty of $86,976 per violation on any person violating any license, order, or regulation issued under the Trading with the Enemy Act (TWEA), as codified at 31 C.F.R. § 501.701.
• Finally, any violation of the Clean Diamond Trade Act and the Rough Diamonds Control Regulations will be assessed a penalty of $13,333, up from $13,066.

To read the final rule, click here: OFAC Final Rule on Inflation Adjustment of Civil Monetary Penalties.  For more information about this announcement please contact us at 305-456-3830 or via email at info@diaztradelaw.com.

Making E-Commerce Safer: CBP Releases New E-Commerce Strategy

On December 1, 2016, we wrote about U.S. Customs and Border Protection’s (CBP) new E-Commerce and Small Business Branch, which was created to help consumers and merchants safely navigate the complexities associated with the steady rise of global e-commerce. CBP defines e-commerce as high-volume, low-value shipments purchased via electronic means. E-commerce shipments pose the same health, safety, and economic security risks as containerized shipments, but the volume is higher and growing. Additionally, transnational criminal organizations are shipping illicit goods to the U.S. via small packages due to a perceived lower interdiction risk and less severe consequences if the package is interdicted. 

In an effort to combat those risks and have a stronger trade posture in the e-commerce environment, the CBP released its e-commerce strategy. The new e-commerce strategy addresses the growing volume of imported small packages and the challenges it presents for the U.S. economy and security. 

 The strategy includes efforts to educate the public and trade community to ensure they understand their responsibilities as importers to comply with customs regulations. 

What New Challenges Does E-Commerce Pose to the U.S.

What Keeps You Up at Night - Webinars for Compliance Professionals

We took a poll to capture ALL of the topics that you wanted to learn about and decided to host 8 webinars for compliance professionals (FREE for clients) with leading experts on topics ranging from Importing 101/201, Exporting 201, to CTPAT, and FDA Compliance and more!

Check out our complete list of topics, and click on the topic for more information on the specific learning objectives of each webinar and your expert speakers.

Did I mention that clients of Diaz Trade Law and Diaz Trade Consulting join for FREE? Please email info@diaztradelaw.com for your code!

A Smoother Road to Exporting Vehicles: CBP’s New Electronic Validation Export Program

In our previous post “Knowing The Rules Of The Road: Exporting Cars From The U.S.”, we discussed CBP’s laws and regulations that must be followed to successfully export vehicles from the United States to foreign destinations. Failure to do so could result in the imposition of severe penalties — up to $10,000. Additionally, we provided a quick guide on how to export your vehicle form the United States, which provided all the documents required to successfully export your vehicle.

My Freight Forwarder Is Requesting A Shipper’s Letter of Instruction, Now What?

Clients who export often ask us for guidance on whether to complete a Shipper’s Letter of Instruction (SLI). It’s important for our readers to understand the benefits of correctly completing the SLI provided to you by your freight forwarder.

The main benefit of an SLI is federal regulatory compliance! Prior to your goods being exported, Foreign Trade Regulations require a freight forwarder to transmit certain information to U.S. Customs and Border Protection on your behalf. To efficiently gather the required authorizations to act on your behalf and the information needed to be transmitted, the trade community developed a SLI.

2018 Seminars - We Want to Hear from YOU!

DTL is Planning Our 2018 Seminars AND WANTS YOUR Input!!

We want our 2018 Seminars to answer the import/export questions you have! Please provide your

comments by voting below!

Please VOTE here! 

If you have any specific comments you want to share with us, please email us at info@diaztradelaw.com.

President Trump Outlines New U.S. Policy on Cuba

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:

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:

• The HTSUS was established in 1989 through an act of Congress. This new tariff classification replaced the old Tariff Schedule of the United States.
• The “HTS comprises a hierarchical structure for describing all goods in trade for duty, quota, and statistical purposes.”
• The hierarchical structure is based on the international Harmonized Commodity Description and Coding System (HS). This system was created by the World Customs Organization, which is based out of Brussels, Belgium.
• The HTSUS contains 10 numbers, grouped by chapter, heading and subheadings.
• The first 6 digits of the HTS are universal throughout the world.
• The HTSUS is the primary source for determining the proper tariff classification for goods that are imported into the United States.
• The HTSUS assists importers in deciphering what duties are owed for imported goods.
• It is an importers obligation to utilize “reasonable care” in ascertaining the correct HTSUS.
• Experts use the HTS, in conjunction with explanatory notes, general notes, general rules of interpretation and Customs Binding Rulings to determine the correct HTS.
• Penalties for non-compliance with the HTSUS (i.e., randomly picking the HTSUS with the lowest duty rate) can be severe! 19 U.S.C. 1592 is the statute CBP references when issuing penalties for negligence, gross negligence or fraud – depending on the degree of culpability CBP believes you had at the time of your non-compliance.

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.

Hate Unfair Demurrage Charges? Want to Do Something About it?

Now's the time to make your voice heard. Below details what demurrage charges are and a trade initiative that FMC is currently requesting comments on.

What is Demurrage?

• Demurrage is "a penalty charge against shippers for delaying a shipment/container at a port of loading or destination beyond the allowed free".

How Much Time is Provided for Free?

• "Free time is the grace period for which neither of these charges will be incurred." There is no standard amount of free time. Free time can change from carrier to carrier, from port to port and sometimes from container type to container type. Normally it is anywhere between 3-5 calendar days.
• Free time is supposed to include a realistic time period to assemble cargo for loading, and provide consignees a realistic time period to retrieve cargo at a terminal after unloading.
• The fee charged after the expiration of the "free time" varies. For example, for one carrier, the per diem fee can range anywhere between: $200 to $800 per day!

 What is Being Done to Change this Demurrage Fee?

• Back in December, "the Coalition for Fair Port Practices, a group of 25 members that represent shippers, receivers, motor carriers, port draymen, freight forwarders, third-party logistics companies and customs brokers", petitioned the Federal Maritime Commission (FMC) in hopes that the FMC would issue a ruling on extending the free time for container storage and equipment use that is disrupted by events outside of their control. Such events could be poor infrastructure, weather events, a carrier bankruptcy, port labor issues, etc.