Enforce and Protect Act (EAPA) Now In Effect

EAPA was passed in February 2016 and has been in effect for over a year. It establishes formal procedures for submitting and investigating alleged evasion of antidumping (ADD) or countervailing (CVD) duties by U.S. importers.  Several of our clients have been subject of these investigations.  I will outline the system lightly below.

Investigations may be begun on Customs’ own initiative or after receipt of a complaint making a reasonable suggestion of evasion, in which case only 15 business days are allowed before initiation of the case. Three hundred days are allowed for conclusion.

CBP may take interim measures, potentially punitive, during the investigation if there is a “reasonable suspicion” that the importer entered covered merchandise into the Customs territory of the United States through evasion, which could be via any of the following methods or others:

  • transshipping or misdeclaring the country of origin;
  • misclassifying a product – even unknowingly;
  • misidentifying the manufacturer, even in the correct country;
  • undervaluing or changing the marks on goods.


If CBP decides that there is a reasonable suspicion of evasion, then:

(1) For entries that remain unliquidated, CBP will:

(i) Suspend the liquidation of each unliquidated entry of such covered merchandise that entered on or after the date of the initiation of the investigation;

(ii) Extend the period for liquidating each unliquidated entry of such covered merchandise that entered before the date of the initiation of the investigation; and

(iii) Take such additional measures as CBP determines necessary to protect the revenue of the United States, including requiring a single transaction bond or additional security or the posting of a cash deposit with respect to such covered merchandise.

(2) For entries that are liquidated, CBP may initiate or continue any appropriate measures separate from this proceeding.


If CBP makes an affirmative determination of evasion, CBP will:

(1) Suspend the liquidation of unliquidated entries of the covered merchandise that is subject to the determination;

(2) extend the period for liquidating the unliquidated entries of covered merchandise that entered before the initiation of the investigation;

(3) when necessary, notify Commerce of the determination and request that Commerce determine the appropriate duty rates for such covered merchandise;

(4) require importers of covered merchandise to post cash deposits and assess duties on the covered merchandise; and/or

(5) take such additional enforcement measures as CBP deems appropriate, including (but not limited to) modifying CBP’s procedures for identifying future evasion, reliquidating entries as provided by law, and referring the matter to ICE for a possible civil or criminal investigation.

If Customs’ EAPA decision is unsatisfactory to either the complainant or alleged evader, a de novo administrative review can be requested within 30 days of the decision.  CBP then has 60 business days to review and issue a final administrative determination.  If that review is still “unsatisfactory” to one of the interestd parties may, within 30 days of the final determination, request judicial review by the U.S. Court of International Trade (CIT), which requires the party bringing this action to use attorneys with special admission to that court, such as ourselves.

The Mooney Law Firm Merging with Pennington, P.A.

We are proud to announce that Neil B. Mooney and Shanshan “Shannon” Liang of the Mooney Law Firm have joined Pennington P.A.

As of September 18, 2017, Neil Mooney and Shanshan “Shannon” Liang have both joined the law firm Pennington, P.A. For more than forty years, with thirty-six attorneys and offices including Tampa and Miami (Doral), Pennington has been one of Florida’s premier law firms. Neil will Chair the International Trade Practice and Shannon is on a partnership track. The Mooney Law Firm, LLC will continue in existence, but only to wind down certain far-along matters or represent a handful of clients having an annual retainer. Litigation and hourly work will transfer to Pennington, P.A. to be performed by Neil and Shannon with others there. Karla Eckardt has embarked on a new career working for The Florida Bar itself.

Active clients have been contacted with regard to their present representation. However,  we hope all our clients will continue to work with Shannon and me at Pennington. The purpose and effect of the merger is to offer a vastly larger array of professional services through more expert attorneys and additional offices at the same cost.

Sincere thanks for your past – and I hope continued – confidence in Shannon and me. Through Pennington, P.A. we look forward to offering you everything you have come to expect, and more than we ever could before.

We continue to receive all calls and emails at the Mooney Law Firm office. However, If you wish to contact us directly at Pennington, you can reach Shanshan and Neil at sliang@penningtonlaw.com and nmooney@penningtonlaw.com, respectively.

Liability Kits for Customs Brokers, Freight Forwarders and NVOCCs

We always encourage our customs broker, freight forwarder, NVOCC or warehouseman clients (we will refer to these people as “logistics providers”) to have terms and conditions that limit their liability for the services they provided. We routinely review or design liability kits for our clients. Two of our recent experiences prove that it works.  In one case, we helped one of our warehouse operator clients collect its storage charges by enforcing the warehouse lien (a warehouse lien is statutory, meaning you don’t need anyone’s agreement to get it.  However, in order to have a valid lien on charges due on a previous shipment, the terms and conditions should specifically provide so.)  In the other, we helped one of our customs broker/NVOCC clients to collect freight charges, customs brokerage fees, storage and our legal fees, as well, by enforcing the contractual lien provided for in its Terms and Conditions of Service.

A liability kit is a collection of documents that provide for the same limitation of liabilities and lien opportunity for a logistics provider and that are signed and returned to the logistics provider by an authorized employee of its customer. The goal of a liability kit is to get a written document from the customer agreeing to the logistics provider’s terms and conditions that limit its liability, and at the same time obtain a lien on the merchandise for charges due from the customer to the logistics provider. Depending on the types of services the logistics provider performs, the kit can include Terms and Conditions of Service, Bill of Lading Terms and Conditions, Credit Application Terms and Conditions, Warehouse Terms and Conditions. Other documents such Customs Power of Attorney, Credit Application, Shipper’s Letter of Instruction, Invoices, and Booking Confirmations should also refer to the Terms and Conditions so as to put the customer undeniably on notice of the Terms and Conditions the logistics provider is operating under.

Terms and Conditions are routinely upheld by courts across the country. The following is just a small list of cases among those where the Federal Courts upheld the Terms & Conditions of Service:

  • Insurance Company of North America, v. NNR Aircargo Service (USA), Inc., 201 F.3d 1111 (9th Cir. 2000);
  • Calvin v. Trylon, 892 F.2d 191 (2nd Cir. 1989);
  • Independent Machinery v. Kuehne & Nagel, 867 F. Supp 752 (N.D. Ill. 1994);
  • Capitol Converting Equip., Inc. v. LEP Transp., Inc., 965 F.2d 391 (7th Cir. 1992)
  • Government of UK v. Panalpina, 1 F. Supp. 2d 521 (D. Md. 1985);
  • Expeditors v. Wang Lab., 1995 WL 791935 (D. Mass. 1995);
  • Byrton Dairy Prod., Inc. v. Harborside Refrigerated Servs., Inc., 991 F. Supp. 977 (N.D. Ill. 1997)
  • K.D. Imports, Inc. v. Karl Heinz Dietrich GmbH & Co. Int’l Spedition, 36 F. Supp. 2d 200, 204 (S.D.N.Y. 1999)
  • Elec. Co. v. Harper Robinson & Co., 818 F. Supp. 31 (E.D.N.Y. 1993)
  • Prima U.S. Inc. v. Panalpina, Inc., 223 F.3d 126, 130 (2d Cir. 2000)
  • Hoogwegt U.S., Inc. v. Schenker Int’l, Inc., 121 F. Supp. 2d 1228 (N.D. Ill. 2000)


If you are seeking to limit your company’s liabilities, we suggest you review the documents listed above to ensure they all have or refer to the same/consistent terms and conditions and provide for the same lien right. You should make sure that these documents are duly signed by your customer’s appropriate representative. If you would like us to review your documents in order to minimize your liabilities, do not hesitate to reach out to us.

Travel to Cuba: New Policies and Regulations

Former President Obama began the process of softening the harsh relationship between America and Cuba in December 2014. His measures included steps to increase travel, commerce and the flow of information to and from the island. While maintaining the trade embargo, Obama authorized travel in 12 licensed categories previously more strictly limited: (1) family visits; (2) official business of the U.S. government, foreign governments, and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and professional meetings; (5) educational activities; (6) religious activities; (7) public performances, clinics, workshops, athletic and other competitions, and exhibitions; (8) support for the Cuban people (more commonly known as “people to people”); (9) humanitarian projects; (10) activities of private foundations or research or educational institutes; (11) exportation, importation, or transmission of information or information materials; and (12) certain authorized export transactions. Click HERE to see how each category has been defined.

On June 16, 2017, President Trump decided to roll back elements of Obama’s plan for opening Cuba to America and its citizens with the stated goals of enhancing Cuba’s compliance with U.S. law, empowering the Cuban people to develop greater economic and political liberty, and furthering the national security and foreign policy interests of the U.S. In order to achieve this, the new policies seek to funnel economic activities away from Grupo de Administración Empresarial (GAESA), which is a Cuban military enterprise that monopolizes most travel-related activity in Cuba.  Trumps change still allow individuals and American groups to develop economic ties with the local, small business sector of Cuba.

One of the bigger effects Trump’s policies have for travel opportunities is that undertaken  with a “people to people” license. Americans traveling to Cuba under the eighth category listed above will no longer be able to do so independently, rather they will have to go as part of a group. This change is done in part to ensure GAESA does not profit from Americans visiting Cuba. Every other category for travel to Cuba remains intact and legal. For example, an individual may still visit relatives in Cuba or a journalist may visit to research and write an article. In fact, the Office of Foreign Asset Control (OFAC) has already issued a FAQs document in which it states that the new policy will not result in any changes to the authorizations for travel. Specifically, group “people-to-people” travel will still be permitted. Click HERE to see OFAC’s full responses to some FAQs.

It’s summer, which means vacation time for many people who already planned their trips to Cuba months ago. Fear not, you can still visit Cuba under your original plans, even if you plan to be a solo “people-to-people” traveler, because the announced changes do not take effect until OFAC issues new regulations. This means that any travel plans to Cuba that include direct transactions with GAESA (like staying at one of their hotels) will be permitted, provided that those travel arrangements were made prior to the issuing of the new regulations.

Trump has ordered the Treasury and Commerce departments to begin the process of issuing new regulations within 30 days of his June 16th notice. Once the process is started, it can take several months to enact new regulations. Until the departments have finalized their regulations, the policy changes will not take effect. It’s hard to say how new individual “people-to-people” travel plans will be affected in the time before the new regulations are out. However, it is clear that during this awkward waiting period, and even after there are new regulations for travel to Cuba, individuals may still travel to Cuba under any of the 11 other categories.

UPDATE: July 25, 2017

Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued new and updated Frequently Asked Questions regarding Cuba in follow-up to the President’s announcement on June 16, 2017.


Have A Billion Dollar Export Penalty? Let’s Not.

A record-setting payment of $1,190,000,000.00 by ZTE Corporation of Richardson, Texas (“ZTE”) shows the enormous risks today of underestimating U.S. export enforcement. The International Emergency Economic Powers Act gives the President of the United States broad authority to regulate international transactions and exports. Pursuant to two Executive Orders issued by President Clinton in the mid 1990’s, the Iranian Transactions and Sanctions Regulations (“ITSR”)  was created that prohibit, among other things, exportation or re-exportation of U.S. products to Iran without a license from the Office of Foreign Asset Control (“OFAC”).

Almost a year ago,  the Obama administration accused ZTE of violating ITSR and the Export Administration Regulations (“EAR”), restricting the export of products that could make a significant military contribution to Iran or other countries. Fast forward to today, and ZTE has plead guilty to charges of unlawful conspiracy to export U.S. goods (to both North Korea and Iran), obstruction of justice and knowingly and willfully making a materially false statement during the investigation. ZTE settled the lawsuit for the largest sanctions penalty in history: $1.19 billion divided between the U.S. Department of Justice, OFAC and the Bureau of Industry and Service (“BIS”). Below are some ideas of how to avoid becoming the record holder for the largest trade sanctions penalty:

What ZTE did: Senior management was aware of, and even condoned, illegal activities and non-compliance with trade laws.

Best Practices: Create a company culture of honesty and compliance, starting with top level management. It is up to senior management to establish clear company policies regarding compliance with all export policies because they, better than anybody else, understand the high risks associated with non-compliance. Senior management behavior is an example for the rest of the company so it should clearly show what are acceptable export practices.

What ZTE did: ZTE sought out and used “isolation companies” to re-export U.S. products to embargoed countries in order to hide ZTE’s involvement.

Best Practices: Take a look at the process third parties which you may employ use to complete their business.  Request written verification that they comply with trade laws and memorialize this via a contract in which the third party commits to complying with U.S. trade laws. The main point is to create and maintain transparency – with teeth –  regarding interactions between your company and any third party involved in your business transactions.

What ZTE did:  Incredibly, once the investigation had begun, ZTE asked its employees to sign nondisclosure agreements to conceal the illegal trade with Iran.

Best Practices:  Concealment is almost always worse than the initial crime! Create a company plan that empowers employees to report compliance issues. Even if it turns out there is no compliance issue at the moment, you are given the chance to address a minor problem before it turns into a major (record setting) compliance issue.  See our January 20, 2016 post regarding Voluntary Disclosures, which can greatly lessen or even eliminate penalties  (“New BIS Export Enforcement Guidelines”.)

What ZTE did: After learning of the impending charges, ZTE instituted a “contract data induction team” whose purpose was to identify and remove data related to the Iran transactions.

Best Practices:  Again, the concealment activity failed and brought on a Billion Dollar (!) penalty. When establishing an effective compliance plan for your company, it should include a method of safe and reliable record keeping. The plan should include the types of records to keep and when they can be destroyed as well as steps to be taken should the company face an accusation of violating laws.

Ultimately, your goal should be to establish company policies that respect and enforce compliance best practices.  If an issue should arise, the company is then prepared to assist with and minimize the effect of any violation and/or investigation, rather than hinder and thereby compound it.

Last Chance To Protest

Until now,  CBP has denied all protests filed with regard to Preference Programs (e.g. Free Trade Agreements (FTA)) and Special Trade Legislation programs (STL) that did not have an explicit statutory post-importation mechanism set forth under 19 U.S.C. § 1520(d). They were rejected as “nonprotestable” and no decisions – meaning no relief – were rendered.

An importer of vacuum bottles objected to Customs’ policy and pursuant to a favorable decision it received from the Court of International Trade (CIT) in Zojirushi American Corp v. U.S., slip Op. 16-78 (August 4, 2016), CBP must now permit the use of the protest mechanism set forth in section 19 U.S.C. § 1514 for those Preference Programs.  Examples of these programs are:

  • African Growth and Opportunity Act (AGOA),
  • Australia FTA (AUFTA),
  • Bahrain FTA (BHFTA),
  • Caribbean Basin Economic Recovery Act (CEBRA),
  • Caribbean Basin Trade Partnership Act (CBTPA),
  • Civil Aircraft Agreement (CAA),
  • Generalized System of Preferences (GSP),
  • Insular Possessions, Israel FTA (ILFTA),
  • Intermediate Chemicals on Trade in Pharmaceutical Products (Pharma), and
  • Singapore FTA (SGFTA).

In order to assist CBP in processing protests previously rejected as non-protestable, Protestants who wish this matter to be reconsidered are required to re-submit their protests within one hundred eighty days (180) of the issuance of the February 15, 2017 memorandum, i.e. on or about August 14, 2017.   This means you only have two months remaining to submit claims.

If the original protest submission claiming preferential tariff treatment after importation was rejected as non-protestable, Protestants may request re-liquidation of the entry through a new protest or through a letter which should include the following:

  • Statement that this is a resubmission of a previous preference claim that was rejected as non-protestable.
  • Copy of the original protest showing that it was rejected as non-protestable.
  • Certification of origin (or data elements) for the tariff-shift model FTAs that are subject to section 514. They are: Australia FTA (AUFA) and Singapore FTA (SGFTA)
  • Affidavit in lieu of a certification of origin for the following Free Trade Agreements: Bahrain FTA (BHFTA), Israel FTA (ILFTA), Jordan FTA (JOFTA), and Morocco FTA (MAFTA)
  • Affidavit in lieu of a certification of origin for the following Special Trade Legislation programs: African Growth Opportunity Act (AGOA), Caribbean Basin Economic Recovery Act (CBERA), Caribbean Basin Trade Partnership Act (CBTPA), Civil Aircraft Agreement (CAA), Generalized System of Preferences (GSP), Insular Possessions, Intermediate Chemicals for Dyes (Intermediate Chemicals), Agreement on Trade in Pharmaceutical Products (Pharma), etc.

Re-submission may be done electronically through the ACE Protest Module via the ACE Portal or paper to the CBP Port of Entry.

Unliquidated entries under the aforementioned programs may be processed in accordance with current Post Entry Amendment (PEA) and Post Summary Correction (PSC) procedures.

For preference programs that by law have a post-importation provision, a 520(d) post-importation claim remains the only appropriate mechanism to seek preference when not claimed at the time of importation. To help you, we summarized Programs in the left column which can now be protested under 19 U.S.C. § 1514; and Programs in the right column which can only be claimed through 19 U.S.C. § 1520(d) claims.

Protest under 1514 1520(d) post-importation claim
  • Australia FTA (AUFTA)
  • Singapore FTA (SGFTA)
  • Bahrain FTA (BHFTA)
  • Israel FTA (ILFTA)
  • Jordan FTA (JOFTA)
  • Morocco FTA (MAFTA)
  • African Growth and Opportunity Act (AGOA)
  • Caribbean Basin Economic Recovery Act (CEBRA)
  • Caribbean Basin Trade Partnership Act (CBTPA)
  • Civil Aircraft Agreement (CAA)
  • Generalized System of Preferences (GSP)
  • Insular Possessions
  • Intermediate Chemicals for Dyes (Intermediate Chemicals)
  • Agreement on Trade in Pharmaceutical Products (Pharma)
  • Dominican Republic-Central America FTA (CAFTA-DR),
  • Chile FTA (CLFTA),
  • Columbia TPA (COTPA),
  • Korea TPA (UKFTA),
  • North American Free Trade Agreement (NAFTA),
  • Oman FTA (OMFTA),
  • Panama TPA (PATPA),
  • Peru TPA (PETPA))

Willful Blindness: Hear No Evil, See No Evil, Speak No Evil

Last week a client called with an interesting query. One of their customers had changed names six times in the past year. The company changed name three times in the first five months of 2017 alone! The goods were not contraband, correct duties were being paid, and accounts receivable and payables were up to date.  Nevertheless, my client wanted to know if I smelled something funny, as they did. The only answer was an obvious “yes”.  Something strange is going on if your client has to change names every two months, regardless of whether the goods appear to be accurately described and valued to Customs and you, and regardless of whether they are subject to any unusual import restrictions.

Similarly, a freight forwarding client of ours called to ask whether there was any problem with it filing shipper export declarations (SEDs) using the shipper’s information, even though the values seemed incredibly low. The forwarder had no way of knowing if the goods were undervalued, and if they were it would never know what the actual value should be. But the forwarder wanted to be safe and avoid misstatements, which was another case of a responsible intermediary making sure that it was acting within the parameters of the law.

In both cases, my answer was to stop doing business with the importer and exporter. There is a general principle in law prohibiting what is known as “self blinding”. You can’t say to someone with a shipment to Dubai, “I don’t want to know where these goods are really going!” or “Don’t tell me anything I shouldn’t know, but I’ve never seen a Mercedes at a price like that!”.

To refuse to acknowledge the obvious creates a legal implication of fraud by the party which wishes to be blinded. It’s not illegal to be unaware of the value of cargo. Forwarders are shipping intermediaries, not sellers of merchandise, so how should they know what something is worth? What if a person comes to you with new 2017 Mercedes 550 SEL and shows you an invoice with a value of $21,000?  The $90,000 discount should raise a red flag.

46 C.F.R. § 515.31, among other regulations, prevents any FMC-licensed shipping intermediary from making any “false statement”. Failure to comply, that is, willfully making a false statement which you either “knew or should have known was false can bring penalties of tens of thousands of dollars. Similarly, a Customs Broker is licensed by the Bureau of Customs and Border Protection to provide “a valuable service to importers”. It has been held repeatedly that the broker is in breach of its duty as a licensee when it enables an importers’ conduct which violates Customs’ regulations. The penalty to a Customs Broker for irresponsible management of its Customs brokerage business is minimum of $30,000 per event.  Who needs that?

The two entities mentioned above are excellent examples of firms exercising their legal and ethical obligations. But beside the avoidance of legal problems, there is a business advantage to this behavior.  There is no question that conducting your business on an ethical basis at all times will cause it to grow consistently year by year.  Your staff, your customers, your vendors and the industry as a whole will respect and recommend you.  At the same time, there is no question that if you start to make (even the smallest) exceptions to what you believe are proper ethical canons, you will fall into a trap whereby your reputation will suffer and long-term your business will fail to prosper.  Doors fly open when the ethical businessman approaches, and close tightly before those with unethical reputations. So act ethically, use common sense, respect your license obligations, and if you don’t know how to proceed in a given circumstance, feel free to call us for a short discussion of your obligations.

Enhanced Enforcement of Antidumping and Countervailing Duties, New Petitions

  1. Executive Orders

President Trump issued two Executive Orders on March 31, 2017, signaling the new administration’s opposition to unfair trade practices. The first Executive Order (See Original Document Here) directs the Department of Commerce (“DOC”) and the United States Trade Representative (“USTR”) to conduct a broad review of differential tariffs, non-tariff barriers, injurious dumping, injurious government subsidization, intellectual property theft, forced technology transfer, denial of worker rights and labor standards, etc. The second Executive Order (See Original Document Here) aims at the collection of antidumping and countervailing duties. Both address  enforcement of violations of U.S. trade laws.

The U.S. estimates that uncollected AD/CVD duties for 2015 reached $2.3 billion. CBP is directed develop a plan requiring  “covered importers” of subject merchandise who pose a risk to the revenue of the United States to provide security through a bond or other legal measure. “Covered importers” are defined as new importers or importers for which the agency has a record of incomplete or late payment of antidumping or countervailing duties. Those benefiting from low bonds should be careful now to ensure timely and sufficient payment of the AD/CVD duties  or otherwise be subject to the increased bond requirements.

CBP must “develop and implement a strategy and plan for combating violations of United States trade and customs laws for goods and for enabling interdiction and disposal, including through methods other than seizure, of inadmissible merchandise entering through any mode of transportation.” What “methods of interdiction and disposal other than seizure” means is unknown.

Regarding the protection of intellectual property rights at the border, now  the government will share with rights holders, to the extent permitted by law, information necessary to determine whether there has been an IPR infringement and information regarding merchandise that has been abandoned before seizure. Previously that “commercial proprietary information” was withheld. The change may allow rights holders to sue infringers in U.S. courts or to seek exclusion orders from the International Trade Commission

The Department of Justice (“DOJ”) must “allocate appropriate resources to ensure that Federal prosecutors accord a high priority to prosecuting significant offenses related to violations of trade laws.”  Normally, U.S. trade enforcement attorneys who deal with penalty cases are in the Civil Division at DOJ and are not called “prosecutors.” It seems that the Executive Order refers to prosecution of criminal violations.  As we know, federal laws impose criminal sanctions on a wide spectrum of illegal activities, such as fraudulent and/or knowing importation (or facilitation of such importation) of counterfeit merchandise or merchandise whose importation is “contrary to law,” false claims for refund of duties, false classification, false statements, smuggling, etc. We may see more prosecutions of individuals for trade-related cases.

2. Recent AD/CVD Development

AD/CVD cases had already increased under the Obama Administration. In Fiscal Year (FY) 2016, $14 billion in imports were subject to AD/CVD, and CBP collected $1.5 billion in AD/CVD cash deposits.  CBP’s collection of AD/CVD cash deposits increased over 25 percent since FY 2015 and by almost 200 percent since FY 2014.  As of the end of FY 2016, $2.8 billion of AD/CVD duties were owed to the U.S. government for imports going back to 2001. With the new emphasis on combating unfair trade practices, we can expect to see continued AD/CVD cases during the Trump Administration.

Below are highlights of recent new AD/CVD petitions:

  • April 19, alleging that cold-drawn mechanical tubing from China, Germany, India, Italy, Korea, and Switzerland is sold at less than fair value in the U.S. market and that such goods from China and India are benefitting from countervailable subsidies. The petition alleges dumping margins of 88.82 percent to 188.88 percent for China, 70.53 percent to 148.32 percent for Germany, 25.48 percent for India, 37.23 percent to 69.13 percent for Italy, 12.14 percent to 48.61 percent for Korea, and 40.53 percent to 115.21 percent for Switzerland. (Scope of Investigation Can Be Seen Here).
  • April 11 alleging that metal tool chests and cabinets with drawers from China and Vietnam are sold at less than fair value in the U.S. market and that such goods from China are benefitting from countervailable subsidies. The petition alleges dumping margins of 167.5 percent for China and 58.2 percent for Vietnam. (Scope of Investigation Can Be Seen Here).
  • March 31 alleging that carton-closing staples from China are sold at less than fair value in the U.S. market. The petition alleges dumping margins ranging from 15.8 percent to 148.8 percent. (Scope of Investigation Can Be Seen Here).
  • March 28 alleging that carbon and alloy steel wire rod from Belarus, Italy, Korea, Russia, South Africa, Spain, Turkey, Ukraine, the United Arab Emirates, and the United Kingdom is sold at less than fair value in the U.S. market and that CASWR from Italy and Turkey is benefitting from countervailable subsidies. The petition alleges dumping margins of 179.07 percent to 304.94 percent for Belarus, 26.36 percent for Italy, 41.72 percent to 53.09 percent for Korea, 216.50 percent to 821.40 percent for Russia, 159.35 percent to 164.08 percent for South Africa, 32.64 percent for Spain, 45.1 percent for Turkey, 21.64 percent to 61.64 percent for Ukraine, 69.57 percent for the UAE, and 88.25 percent for the UK. (Scope of Investigation Can Be Seen Here).
  • March 23 alleging that biodiesel from Argentina and Indonesia is sold at less than fair value in the U.S. market and/or benefitting from countervailable subsidies. The petition alleges numerous subsidy programs in each country as well as dumping margins of 23.3 percent for Argentina and 34.0 percent for Indonesia. (Scope of Investigation Can Be Seen Here).
  • Aluminum Trade Enforcement Working Group filed a petition on March 9, alleging that aluminum foil from China is being sold at less than fair value in the U.S. market and/or benefitting from countervailable subsidies. The alleged dumping margins range from 37.57 percent to 134.33 percent. (Scope of Investigation Can Be Seen Here).
  • March 7 alleging that silicon metal from Australia, Brazil, Kazakhstan, and Norway is sold at less than fair value in the U.S. market and/or benefiting from countervailable subsidies. The alleged dumping margins are as high as 52.81 percent for Australia, 134.92 percent for Brazil, and 45.66 percent for Norway. The petitioners have also identified several programs in Australia, Brazil, and Kazakhstan as providing unfair subsidies. (Scope of Investigation Can Be Seen Here).

Some other trade remedy cases:

  • A Section 201 Petition was filed with USITC for global safeguard relief from imports of crystalline silicon photovoltaic (“CSPV”) cells and modules. Under Section 201 of the Trade Act, domestic industries seriously injured or threatened with serious injury by increased imports may petition the USITC for import relief. The USITC determines whether an article is being imported in such increased quantities that it is a substantial cause of serious injury, or threat thereof, to the U.S. industry producing an article like or directly competitive with the imported article. If the Commission makes an affirmative determination, it recommends to the President relief that would prevent or remedy the injury and facilitate industry adjustment to import competition. The President makes the final decision whether to provide relief and the amount of relief. Section 201 investigations do not require a finding of an unfair trade practice such as under the antidumping and countervailing duty laws. In this case the petitioner is seeking the following.
    • an additional tariff starting at $0.40/watt per CSPV cell and falling incrementally to $0.33/watt in year four
    • a minimum price starting at $0.78/watt per module and falling incrementally to $0.68/watt in year four
    • a new economic investment development program funded with the safeguard tariffs
    • an equitable distribution of AD and CV duties collected in two existing AD/CV cases
    • bilateral and multilateral negotiations to reduce global excess capacity

Some of these measures would likely be in violation of U.S. obligations as a member of the World Trade Organization.

  1. Concerns for Your Business

Expanded AD/CVD enforcement can have widespread and varied effects depending on your company’s position in the market.  If you are a domestic manufacturer who suffers from unfair trade competition, going forward you may find it easier to file AD/CVD petitions with increased likelihood of success.  If you are a U.S. importer, you should scrutinize your supply chain, making sure the products you import are not subject to the AD/CVD orders or if they are, paying adequate cash deposits. If you are a foreign manufacturer and/or producer exporting subject products to the United States, you may want to participate in the investigation or reviews so you may be qualified for a lower rate.  We can help in each case, should you so desire.

April a Good Month for the FMC’s Stakeholders

April is shaping up to be a very good month for maritime Intermediaries and Carriers alike.   Not only (as of this writing) have there been no settlements announced (read: penalties assessed) but the Federal Maritime Commission (“FMC”) has announced its wish to lighten the regulatory burden on all OTIs at the same time as it has done so for NVOCCs and vessel operators.

First, a final rule by the FMC amending requirements for Service Contracts and NVOCC Service Arrangements (NSAs) was published in the Federal Register on Tuesday, April 4, 2017. It will become effective on Friday, May 5, 2017.   46 CFR Part 530.14, regarding effective dates, now reads:

(a) Generally. Performance under an original service contract may not begin before the day it is effective and filed with the Commission. Performance under a service contract amendment may not begin until the day it is effective, provided that the amendment is filed with the Commission no later than thirty (30) calendar days after the effective date.

I have underlined the new language.   The change eases regulatory burdens and reduces the costs of compliance with the agency’s regulations, giving a wider window in which to file amendments to contracts.  Note, however, that this relates to amendments only: initial implementation of such agreements must wait until they are signed and filed with the agency, as before.

Second, enjoy some quotable quotes from Acting FMC Chairman Michael Khouri at the NCBFAA conference in New Orleans this month.  They pretty well speak for themselves:

  • “I am committed to continuing to identify rules that are outdated, or impede the efficient operation of business, and eliminating them whenever possible. And further, I am committed to facilitating a process that petitions for relief filed with the Commission get more expeditious consideration,”
  • He said he intends to make the question ‘Is there a better, less burdensome, less intrusive, less costly way to do this?’ “standard operating procedure,” at the Agency, so that industry is “not overly regulated and competition is encouraged and preserved.”
  • And finally, what OTIs have wished for decades may be a little closer as the agency reconsiders tariff filing:     He said, “When one asks the question – where and how does the ‘filed rate doctrine’ fit with twenty-first century container shipping practices – the answers get weaker and weaker, down to faint whispers. I understand and appreciate the utility of rules tariffs, but rate tariff – not so clear.”

Wow!  We can dream, can’t we?

When the Broker Must be the Importer of Record

The Importer of Record, or “IOR” has a lot of liability for entry.  Any penalties resulting from discrepancies relating to classification of the goods or admissibility issues, and the duties to be paid, must be covered financially by the IOR.   Changed from when I got my Customs broker’s license in 1978 is the fact that today the IOR must have a financial interest in the merchandise. No longer can it just be a nominal consignee.  This is to guarantee Customs that the importer is not a straw man, but has sufficient knowledge of the import so as to identify its appropriate duty rate, etc.   The sole exception to the rule is that a licensed Customs broker an always serve as IOR, though most are justifiably loathe to do so.

We encountered a very unusual case in which a CHB was put in the position of being the only possible importer of a DDTC licensable product.  In this case, European aircraft parts were being imported by an American company. The American repair station requested that the basis for delivery be “DDP” which means that the seller would have sole responsibility for making sure that the product properly clears customs and was delivered, “duty paid”.  Because the agreement was that it would be DDP, the consignee repair station refused to be the IOR. However, the goods were DDTC licensable.  Because the a DDTC license is only given to U.S.-located companies, the European seller could not be the IOR either. This leaves only one individual who is able to accomplish both: the Customs Broker.

The customs broker was left in the unenviable position of having to serve as the IOR for their European client.  Given the broker’s understandable lack of knowledge of the intricacies of aviation spares, it runs the risk of being responsible for any penalties from a mistake on the entry it files. In order to avoid this, we recommended indemnification.  Indemnification ensures that if something goes wrong, the broker will be put in the same position they’d have been in had they not agreed to assist- meaning that the seller will cover any monetary penalties, legal fees, etc. in the event of any demand.

The below paragraph was the language we suggested to our client’s customs broker, in order to make them feel comfortable that they are indemnified against all liabilities arising from the  agreement to serve as IOR. This absolves the broker from any responsibility if the duty is found to be incorrect or other problems arise, and it is among standard CHB terms and conditions.

Where a bond is required by U.S. Customs to be given for the production of any document or the performance of any act, the Customer shall be deemed bound by the terms of the bond notwithstanding the fact that the bond has been executed by the Company as principal, it being understood that the Company entered into such undertaking at the instance and on behalf of the Customer, and the Customer shall indemnify and hold the Company harmless for the consequences of any breach of the terms of the bond. (b) On an export at a reasonable time prior to the exportation of the shipment the Customer shall furnish to the Company the commercial invoice in proper form and number, a proper consular declaration, weights, measures, values and other information in the language of and as may be required by the laws and regulations of the U.S. and the country of destination of the goods. (c) On an export or import the Company shall not in any way be responsible or liable for increased duty, penalty, fine or expense unless caused by the negligence or other fault of the Company, in which event its liability to the Customer shall be governed by the provisions of paragraphs 8 – 10 below. The Customer shall be bound by and warrant the accuracy of all invoices, documents and information furnished to the Company by the Customer or its agent for export, entry or other purposes and the Customer agrees to indemnify and hold harmless the Company against any increased duty, penalty, fine or expense including attorneys’ fees, resulting from any inaccuracy, incomplete statement, omission or any failure to make timely presentation, even if not due to any negligence of the Customer.