Featuring Kevin H. McCabe, Chief of Seaport Enforcement, U.S. Customs and Border Protection
If your goods pass through this port, you don’t want to miss this opportunity to hear Chief McCabe address OWIT-NY (Organization of Women in International Trade - New York) members and guests about port counter-terrorism and narcotics operations. Other topics for discussion will include:
• Advanced Targeting Information
• Container Security Initiative (CSI)
• Customs Trade Partnership Against Terrorism (C-TPAT)
• Radiation Screening, Detection and Mitigation
• Non-Intrusive Inspections (container x-ray)
• Physical Examination of Cargo
• Internal Conspiracy Threats
• Cargo Examinations
• Special and Joint Operations
Time: Networking and refreshments at 6:00pm. Program commences at 6:30pm.
Location: Law offices of Baker & McKenzie at the Grace Building, 1114 Avenue of the Americas (between Fifth and Sixth Avenues), New York, New York. The entrance is on 42nd Street directly across from Bryant Park.
*** Cost ***:
OWIT-NY will donate all proceeds from this event to support the earthquake relief effort in Haiti.
$20 for OWIT members*, students, and government employees
$25 non-members
*MEMBERS PLEASE NOTE: Any OWIT-NY member accompanied by an importer, exporter, or freight forwarder will be awarded a free pass (valued up to $25) to a future OWIT-NY event.
To attend, register on-line by clicking on the “Events" section at www.owitny.org. Online registration is available up to 24 hours before the event. If you miss the on-line registration, you can choose to pay by cash or a check at the door provided there is still space available. Please note that the event is limited to 45 people.
Hope to see you there!
Saturday, January 30, 2010
Saturday, January 23, 2010
ISF (“10+2”) Enforcement Begins 1/26/10 – Updates Given at JFK Quarterly Broker's Meeting
To date:
- Over 4.5 million ISFs have been filed
- Over 2100 filers have participated
- There has been a 95% acceptance rate across filings
- 85% of ISFs are submitted through ABI
- 12% of ISFs are submitted through AMS
On Thursday I attended the quarterly Customs Brokers meeting at JFK which provided updates on matters under US Customs (CBP) , US Dept. of Agriculture (USDA), and the Food and Drug Administration’s (FDA) jurisdiction.
The topic everyone wanted to hear about was provided by Joe Mortella from US Customs, who has been giving seminars on 10+2 throughout the New York port area and possibly beyond. He gave a detailed update on the Importer Security Filing (ISF) [19 CFR Part 149], the enforcement of which begins next week on January 26, 2010.
Also known as “10+2,” this refers to the filing of data elements (for ocean cargo) no later than 24 hours before the cargo is laden on board a vessel at the foreign port. [See my Sept. 29, 2009 blog post for more information]
Mr. Morella stated that the enforcement of 10+2 will be a graduated one for the first 6 months, with warnings being issued to those who are non-compliant. During the first 6 months, there are no current plans to issue liquidated damages (a rule that is subject to change), and for the first year, all penalty and liquidated damages claims will be reviewed by Customs Headquarters. For those entities that are already in compliance, Mr. Morella indicated his belief as to a “seamless transition” for those parties, once the enforcement period begins.
An update to the Lacey Act and its amendments under the Food and Conservation Act of 2008 was also provided. These amendments mandate the identification and declaration of various elements about imported plants and plant products, including its scientific name, genus, species and country of origin. These elements must be declared at the time of importation on CBP Form 505, or through Customs’ Automated Broker Interface (ABI).
Enforcement of this declaration began in April 2009, however Customs expressed that it has not been, nor plans to, hold up shipments where a CBP Form 505 has not been submitted. The reason for this, we were told, is because the USDA is the agency responsible for investigating unsubmitted or incorrect information, and therefore that agency would be the one to prosecute violations.
Joanne Alba Foster, a USDA supervisor at JFK airport’s Plant Inspection Station (and Plant Protection Quarantine) invited the trade community to contact either herself or, another supervisor, Victor Jacobson, both at (718) 553-3500, with any questions relating to issues involving the Lacey Act, including:
- Propogated material
- Bio-tech regulatory services permits
- Plant pest products, or
- Phyto-sanitary certificates (for exports)
Moving onto the FDA, John Moore advised the trade community to pay close attention to the labels on shipping boxes to ensure compliance with the federally regulated cosmetics, drugs, and nutritional acts, as non-compliant labels are a major cause of delays and detentions.
Mr. Moore specifically mentioned that he wanted to dispel what he called, the “urban legend,” that there was a “50 Mile Radius” rule when it came to moving cargo off of the pier to be held for an FDA inspection. He said that as long as cargo was under a bond, it could be moved to a warehouse or the importer’s designated facility (which may be at a location more than 50 miles away from the port) rather than staying on the pier and accruing demurrage.
Curiously, when answering a broker’s question, John Moore of the FDA, said that should the cargo be moved outside of the port’s territory, in this case, the example was specifically to Boston, that due to the distance, if they were unable to get another FDA office to do the inspection for them, that they (his FDA office) would have to decide if an inspection “was really necessary,” and might decide in the end that it was not necessary to do so given the time and manpower it would take to conduct an inspection at a distant location.
Lastly, Mr. Moore said that routine assessments for compliance with ISF filings (“10+2”) were being conducted on paperless filers. For those filers with an error rate of 11%, corrective action plans were done together with him personally, and thereafter an assessment of the corrective action plan was later done. He invited the trade community to email him with questions about ISF Filings and corrective actions at john.moore@fda.hhs.gov.
Questions/comments? Post below or email me at clark.deanna@gmail.com
- Over 4.5 million ISFs have been filed
- Over 2100 filers have participated
- There has been a 95% acceptance rate across filings
- 85% of ISFs are submitted through ABI
- 12% of ISFs are submitted through AMS
On Thursday I attended the quarterly Customs Brokers meeting at JFK which provided updates on matters under US Customs (CBP) , US Dept. of Agriculture (USDA), and the Food and Drug Administration’s (FDA) jurisdiction.
The topic everyone wanted to hear about was provided by Joe Mortella from US Customs, who has been giving seminars on 10+2 throughout the New York port area and possibly beyond. He gave a detailed update on the Importer Security Filing (ISF) [19 CFR Part 149], the enforcement of which begins next week on January 26, 2010.
Also known as “10+2,” this refers to the filing of data elements (for ocean cargo) no later than 24 hours before the cargo is laden on board a vessel at the foreign port. [See my Sept. 29, 2009 blog post for more information]
Mr. Morella stated that the enforcement of 10+2 will be a graduated one for the first 6 months, with warnings being issued to those who are non-compliant. During the first 6 months, there are no current plans to issue liquidated damages (a rule that is subject to change), and for the first year, all penalty and liquidated damages claims will be reviewed by Customs Headquarters. For those entities that are already in compliance, Mr. Morella indicated his belief as to a “seamless transition” for those parties, once the enforcement period begins.
An update to the Lacey Act and its amendments under the Food and Conservation Act of 2008 was also provided. These amendments mandate the identification and declaration of various elements about imported plants and plant products, including its scientific name, genus, species and country of origin. These elements must be declared at the time of importation on CBP Form 505, or through Customs’ Automated Broker Interface (ABI).
Enforcement of this declaration began in April 2009, however Customs expressed that it has not been, nor plans to, hold up shipments where a CBP Form 505 has not been submitted. The reason for this, we were told, is because the USDA is the agency responsible for investigating unsubmitted or incorrect information, and therefore that agency would be the one to prosecute violations.
Joanne Alba Foster, a USDA supervisor at JFK airport’s Plant Inspection Station (and Plant Protection Quarantine) invited the trade community to contact either herself or, another supervisor, Victor Jacobson, both at (718) 553-3500, with any questions relating to issues involving the Lacey Act, including:
- Propogated material
- Bio-tech regulatory services permits
- Plant pest products, or
- Phyto-sanitary certificates (for exports)
Moving onto the FDA, John Moore advised the trade community to pay close attention to the labels on shipping boxes to ensure compliance with the federally regulated cosmetics, drugs, and nutritional acts, as non-compliant labels are a major cause of delays and detentions.
Mr. Moore specifically mentioned that he wanted to dispel what he called, the “urban legend,” that there was a “50 Mile Radius” rule when it came to moving cargo off of the pier to be held for an FDA inspection. He said that as long as cargo was under a bond, it could be moved to a warehouse or the importer’s designated facility (which may be at a location more than 50 miles away from the port) rather than staying on the pier and accruing demurrage.
Curiously, when answering a broker’s question, John Moore of the FDA, said that should the cargo be moved outside of the port’s territory, in this case, the example was specifically to Boston, that due to the distance, if they were unable to get another FDA office to do the inspection for them, that they (his FDA office) would have to decide if an inspection “was really necessary,” and might decide in the end that it was not necessary to do so given the time and manpower it would take to conduct an inspection at a distant location.
Lastly, Mr. Moore said that routine assessments for compliance with ISF filings (“10+2”) were being conducted on paperless filers. For those filers with an error rate of 11%, corrective action plans were done together with him personally, and thereafter an assessment of the corrective action plan was later done. He invited the trade community to email him with questions about ISF Filings and corrective actions at john.moore@fda.hhs.gov.
Questions/comments? Post below or email me at clark.deanna@gmail.com
Monday, January 18, 2010
TSA Carriers Unilaterally Raise Shipping Rates Despite Already Existing Contracts with Shippers – Can They do This?
Effective January 15, 2010, Hanjin, a major container shipping line, and some of the other members of the Transpacific Stabilization Agreement (TSA) implemented an “emergency revenue program” as a method of recovering what it calls, “interim revenue.”
The associated Emergency Revenue Charges (ERC), which will expire upon the execution of new contracts later this year, are as follows:
- US$320 per 20-foot container (TEU)
- US$400 per standard 40-foot container (FEU)
- US$450 per high-cube FEU; and
- US$505 per 45-foot container
To rewind, TSA is self-described on its website as “a research and discussion forum of major ocean container shipping lines that carry cargo from Asia to ports and inland points in the U.S. TSA member carriers are authorized under the applicable shipping laws of U.S. and Asian governments to:
- Meet, exchange market information and jointly conduct market research
- Represent carrier interests in consultations with government regulatory bodies and with designated shipper organizations
- Develop voluntary, non-binding guidelines for rates and charges
- Discuss ways members can manage costs and improve efficiency
- Establish common terms of service and standards for certain documentation, information systems development and other activities in the public interest, also on a voluntary, non-binding basis.”
As a side note, just because TSA focuses on routes from Asia to the U.S., most of the members also have shipping routes throughout many other parts of the world, and have not applied the ERCs across all routes globally.
The Federal Maritime Commission (FMC) is the U.S. government agency that oversees ocean commerce. It is well known for its role in regulating the tariff rates vessels charge for transporting cargo and for its enforcement of the rules regarding the filing of tariffs and addressing other rate issues.
It is responsible for setting the rules and regulations of the players involved as well, including the operators of vessels (e.g., cargo ships), and what are known as “ocean transportation intermediaries”, which are commonly referred to as “NVOCCs” or "NVOs" i.e., non-vessel operating common carriers (which appear to the layperson as a vessel operating carrier in that they organize the transportation of cargo, and typically issue their own bill of lading, only they don't actually have their own vessels), and licensed freight forwarders.
The FMC is further responsible for enforcing these rules and regulations and is responsive to parties affected by the actions of any of these players.
Naturally, a unilateral rate hike covering only certain shipping routes has caused those affected by the increase to question its legality given that already existing contracts governing rates are already in place.
I therefore, recently spoke with the FMC to investigate whether, from its perspective, the Emergency Revenue Charges were permissible.
I was personally told that it is okay for groups, like TSA, to come together and agree upon rates and surcharges, and that unless people directly affected by the increase came to the FMC and asked it to investigate, it would not take an in-depth look into the matter and moreover, there was not otherwise, much else it could do.
The FMC explained that given current economic conditions, carriers are making less money now than they had been prior to the economic downturn. Due to a reduction in "traffic" in 2009, which was considerable, in order to keep their market shares, carriers kept reducing prices. The FMC had already recognized that at the end of 2008, there had already been a tremendous drop in rates and that vessels still remained below previous levels. Now, since carriers need increased revenue, over the last 3 to 4 months, various carriers have announced increased rates.
Essentially, the FMC appeared to be sympathetic to carriers and even went so far as to say that if an increase appeared to be an “unreasonable transportation cost” then it could assess it, however, I was told that it would be difficult for the FMC to make a finding that the ERC was unreasonable, and that it would be tough for FMC to sustain a court case that it’s unreasonable.
Given FMCs role historically in rate regulation, I was surprised at the “hands off” approach it appeared to be taking. Sympathetic to carriers? Really? And at who's expense?
Are rate increases only specific to certain shipping lanes legal?
Questions/comments? Post below or email me at clark.deanna@gmail.com
The associated Emergency Revenue Charges (ERC), which will expire upon the execution of new contracts later this year, are as follows:
- US$320 per 20-foot container (TEU)
- US$400 per standard 40-foot container (FEU)
- US$450 per high-cube FEU; and
- US$505 per 45-foot container
Naturally, this action prompted concern by shippers as to the raised costs of doing business since with the rate increase, it is considerably more expensive.
To rewind, TSA is self-described on its website as “a research and discussion forum of major ocean container shipping lines that carry cargo from Asia to ports and inland points in the U.S. TSA member carriers are authorized under the applicable shipping laws of U.S. and Asian governments to:
- Meet, exchange market information and jointly conduct market research
- Represent carrier interests in consultations with government regulatory bodies and with designated shipper organizations
- Develop voluntary, non-binding guidelines for rates and charges
- Discuss ways members can manage costs and improve efficiency
- Establish common terms of service and standards for certain documentation, information systems development and other activities in the public interest, also on a voluntary, non-binding basis.”
As a side note, just because TSA focuses on routes from Asia to the U.S., most of the members also have shipping routes throughout many other parts of the world, and have not applied the ERCs across all routes globally.
The Federal Maritime Commission (FMC) is the U.S. government agency that oversees ocean commerce. It is well known for its role in regulating the tariff rates vessels charge for transporting cargo and for its enforcement of the rules regarding the filing of tariffs and addressing other rate issues.
It is responsible for setting the rules and regulations of the players involved as well, including the operators of vessels (e.g., cargo ships), and what are known as “ocean transportation intermediaries”, which are commonly referred to as “NVOCCs” or "NVOs" i.e., non-vessel operating common carriers (which appear to the layperson as a vessel operating carrier in that they organize the transportation of cargo, and typically issue their own bill of lading, only they don't actually have their own vessels), and licensed freight forwarders.
The FMC is further responsible for enforcing these rules and regulations and is responsive to parties affected by the actions of any of these players.
Naturally, a unilateral rate hike covering only certain shipping routes has caused those affected by the increase to question its legality given that already existing contracts governing rates are already in place.
I therefore, recently spoke with the FMC to investigate whether, from its perspective, the Emergency Revenue Charges were permissible.
I was personally told that it is okay for groups, like TSA, to come together and agree upon rates and surcharges, and that unless people directly affected by the increase came to the FMC and asked it to investigate, it would not take an in-depth look into the matter and moreover, there was not otherwise, much else it could do.
The FMC explained that given current economic conditions, carriers are making less money now than they had been prior to the economic downturn. Due to a reduction in "traffic" in 2009, which was considerable, in order to keep their market shares, carriers kept reducing prices. The FMC had already recognized that at the end of 2008, there had already been a tremendous drop in rates and that vessels still remained below previous levels. Now, since carriers need increased revenue, over the last 3 to 4 months, various carriers have announced increased rates.
Essentially, the FMC appeared to be sympathetic to carriers and even went so far as to say that if an increase appeared to be an “unreasonable transportation cost” then it could assess it, however, I was told that it would be difficult for the FMC to make a finding that the ERC was unreasonable, and that it would be tough for FMC to sustain a court case that it’s unreasonable.
Given FMCs role historically in rate regulation, I was surprised at the “hands off” approach it appeared to be taking. Sympathetic to carriers? Really? And at who's expense?
Are rate increases only specific to certain shipping lanes legal?
Questions/comments? Post below or email me at clark.deanna@gmail.com
Saturday, January 9, 2010
The New Proposed Trans-Pacific Partnership Trade Agreement – Get Your Comments in by Jan. 25, 2010
The US intends to enter into negotiations on the Trans-Pacific Partnership Trade Agreement (TTP) which is a regional trade agreement between the US, Australia, Brunei Darussalam, Chile, New Zealand, Peru, Singapore and Vietnam. In furtherance of developing negotiation objectives, the US Trade Representative's Office (USTR) is seeking comments, which must be made by January 25, 2010, as further detailed below.
In addition to comments on the reduction or elimination of tariffs or non-tariff barriers on products of a TTP country, comments are also being sought regarding:
- General and product-specific negotiating objectives
- The economic effect of the removal of tariffs and reduction/removal of non-tariff barriers on goods traded in TTP countries on US producers and consumers
- An approach to tariff negotiations, including particular measures that should be addressed and the treatment of specific goods
- The adequacy of existing customs measures that ensure imported products originate in a TTP country
USTR further seeks comments on measures regarding, (a) rules of origin; (b) sanitary, phytosanitary and technical barriers to trade imposed by any of the TPP countries; (c) electronic commerce issues (d) intellectual property rights issues; (e) investment issues; (f) competition relation issues; (g) government procurement issues; (h) environmental issues, inc. protection and conservation; (i) labor issues, inc. worker's rights and protections; (j) approaches that would promote innovation and competitiveness; (k) encourage new technologies and emerging economic sectors; (l) increase the participation of small and medium sized businesses in trade; (m) support the development of efficient production and supply chains; (n) ways to use the agreement to facilitate trade and promote regulatory coherence; and, (o) cooperation throughout the the TPP region.
Keep in mind that comments may be submitted regarding any of these topics or any other areas that are of importance to the commenter. For example, if the implementation and oversight of laws regarding occupational safety and fair wages of workers in these countries are of concern to you, this is an opportunity to express this point to those who will be involved in the negotiation process.
The submission of comments may be done by sending in a hard copy or electronically at www.regulations.gov, or click here to go straight to the page where you may begin filling in the comment form. When making an electronic submission, though it is possible to fill in the "comments" field, the USTR prefers that submissions are provided in an attached document, in either MS Word or an Adobe Acrobat, i.e., a ".pdf" file, with all comments stated in that document, i.e., USTR does not want a separate cover letter also attached.
The comments are subject to strict rules which must be followed. They are:
1)Comments must be in English
2)The first page of the submission must state the “United States Trans-Pacific Partnership Trade Agreement”
3)Comments must be submitted on or by January 25, 2010
4)Submitted under docket: USTR-2009-0041 (when submitting electronically)
To see other comments submitted, click here. To date, there is only 1 comment that has been submitted which, not surprisingly, discusses how any new agreement will be injurious to US domestic manufacturers.
Questions/comments? Feel free to post below or email me at clark.deanna@gmail.com
As described by USTR to Congress on December 14, 2009, the motivation for entering into the TTP is with “the objective of shaping a high-standard, 21st century agreement with a membership and coverage that provides economically significant market access opportunities for America's workers farmers, ranchers, service providers, and small businesses.”
In addition to comments on the reduction or elimination of tariffs or non-tariff barriers on products of a TTP country, comments are also being sought regarding:
- General and product-specific negotiating objectives
- The economic effect of the removal of tariffs and reduction/removal of non-tariff barriers on goods traded in TTP countries on US producers and consumers
- An approach to tariff negotiations, including particular measures that should be addressed and the treatment of specific goods
- The adequacy of existing customs measures that ensure imported products originate in a TTP country
USTR further seeks comments on measures regarding, (a) rules of origin; (b) sanitary, phytosanitary and technical barriers to trade imposed by any of the TPP countries; (c) electronic commerce issues (d) intellectual property rights issues; (e) investment issues; (f) competition relation issues; (g) government procurement issues; (h) environmental issues, inc. protection and conservation; (i) labor issues, inc. worker's rights and protections; (j) approaches that would promote innovation and competitiveness; (k) encourage new technologies and emerging economic sectors; (l) increase the participation of small and medium sized businesses in trade; (m) support the development of efficient production and supply chains; (n) ways to use the agreement to facilitate trade and promote regulatory coherence; and, (o) cooperation throughout the the TPP region.
Keep in mind that comments may be submitted regarding any of these topics or any other areas that are of importance to the commenter. For example, if the implementation and oversight of laws regarding occupational safety and fair wages of workers in these countries are of concern to you, this is an opportunity to express this point to those who will be involved in the negotiation process.
The submission of comments may be done by sending in a hard copy or electronically at www.regulations.gov, or click here to go straight to the page where you may begin filling in the comment form. When making an electronic submission, though it is possible to fill in the "comments" field, the USTR prefers that submissions are provided in an attached document, in either MS Word or an Adobe Acrobat, i.e., a ".pdf" file, with all comments stated in that document, i.e., USTR does not want a separate cover letter also attached.
The comments are subject to strict rules which must be followed. They are:
1)Comments must be in English
2)The first page of the submission must state the “United States Trans-Pacific Partnership Trade Agreement”
3)Comments must be submitted on or by January 25, 2010
4)Submitted under docket: USTR-2009-0041 (when submitting electronically)
To see other comments submitted, click here. To date, there is only 1 comment that has been submitted which, not surprisingly, discusses how any new agreement will be injurious to US domestic manufacturers.
Questions/comments? Feel free to post below or email me at clark.deanna@gmail.com
Friday, January 8, 2010
International Trade - Why Aren't More Students Being Taught About It?
Last night I was over at the New York County Lawyers Association (NYCLA) interviewing candidates competing for judicial clerkship placements as part of the Minority Judicial Internship Program. NYCLA's Minorities and the Law Committee organizes the annual clerkship and as a member of the committee, I was happy to sit and interview 7 candidates out of the almost 30 which were chosen for interviews.
I suppose I shouldn't have found it surprising that only 2 out of the 7 mentioned anything that had to do with issues related to international law, and no one spoke of international trade. Though vaguely described, one candidate spoke of international human rights issues, namely that of human trafficking. The other, while she had an extensive background in overseas activities, had little to share in terms of envisioned future endeavors that related in any way to working with international issues.
Reflecting on my own experience, I realize that as a law student it is difficult to know about international trade as little to no exposure is provided in law schools. Having gone to Tulane Law School with its renowned Admiralty and Maritime L.L.M. Program meant that I was able to partake in courses such as the Law of the Sea and International Sales of Goods. I recall when being in the latter class, wondering when, if ever, I would use any of the INCOTERMS or apply other concepts, such as letters of credit and bills of lading.
The students reminded me that the aspirations of a student do not necessarily coincide with the realities of today. Over 15 years ago, I first learned of the concept of fair trade, and as a trade practitioner, I can safely say that little progress has been made in that realm. “Why is that?” I ask myself. Part of that answer is exposure.
Given the level at which we consume foreign goods and services here in the U.S., not to mention how increasing globalization - whether for better or for worse – is today's reality, it is important to expose and educate America's populace about international trade, and global issues generally, so that there is an awareness as to the impact our consumer decisions have, and we can make informed decisions.
That being said, weaving into an international sales of goods type of course the concept of “fair trade” (not free trade), which addresses equitable wages and worker safety issues, etc., is also something that schools have failed to seriously address for at least two decades. This is surprising given that trade agreements the U.S. considers entering into, which I will write about in my next blog article, appears to strive to address some of these issues, at least on its face.
I came across a blog written by a former attorney, now professor, entitled Trade Voices which discusses more of these issues. I encourage you to check it out if you are interested in learning more about the impact of international trade on everyday people around the world.
Questions or comments? Post below or email me at clark.deanna@gmail.com
I suppose I shouldn't have found it surprising that only 2 out of the 7 mentioned anything that had to do with issues related to international law, and no one spoke of international trade. Though vaguely described, one candidate spoke of international human rights issues, namely that of human trafficking. The other, while she had an extensive background in overseas activities, had little to share in terms of envisioned future endeavors that related in any way to working with international issues.
Reflecting on my own experience, I realize that as a law student it is difficult to know about international trade as little to no exposure is provided in law schools. Having gone to Tulane Law School with its renowned Admiralty and Maritime L.L.M. Program meant that I was able to partake in courses such as the Law of the Sea and International Sales of Goods. I recall when being in the latter class, wondering when, if ever, I would use any of the INCOTERMS or apply other concepts, such as letters of credit and bills of lading.
The students reminded me that the aspirations of a student do not necessarily coincide with the realities of today. Over 15 years ago, I first learned of the concept of fair trade, and as a trade practitioner, I can safely say that little progress has been made in that realm. “Why is that?” I ask myself. Part of that answer is exposure.
Given the level at which we consume foreign goods and services here in the U.S., not to mention how increasing globalization - whether for better or for worse – is today's reality, it is important to expose and educate America's populace about international trade, and global issues generally, so that there is an awareness as to the impact our consumer decisions have, and we can make informed decisions.
That being said, weaving into an international sales of goods type of course the concept of “fair trade” (not free trade), which addresses equitable wages and worker safety issues, etc., is also something that schools have failed to seriously address for at least two decades. This is surprising given that trade agreements the U.S. considers entering into, which I will write about in my next blog article, appears to strive to address some of these issues, at least on its face.
I came across a blog written by a former attorney, now professor, entitled Trade Voices which discusses more of these issues. I encourage you to check it out if you are interested in learning more about the impact of international trade on everyday people around the world.
Questions or comments? Post below or email me at clark.deanna@gmail.com
Thursday, January 7, 2010
Court Finds that US Customs Abused its Discretion
It is not often publicly stated that US Customs abused its discretion.
In an opinion dated December 15, 2009, this is precisely what Judge Jane Restani of the U.S. Court of International Trade (USCIT) stated in her decision in the case of Delphi Petroleum, Inc. v. the United States (Slip Op. 09-139).
This case deals with Customs denial of an extension of time for Delphi to file a drawback claim on certain petroleum products it imported, and then exported, as finished petroleum derivatives which qualified as an acceptable substitute. It was undisputed by Customs that Delphi was entitled to drawback of 99% of the duties it paid on these petroleum products under 19 USC 1313(p), which is a specific provision dealing with finished petroleum derivatives.
Under 19 USC 1313(r)(1), a drawback claimant has three years from the date of exportation or destruction of merchandise to file a drawback claim. The final clause of this statute states that “no extension [of the 3 year filing limit] will be granted unless it is established that Customs was responsible for the untimely filing.
The USCIT found that Customs' failure to extend the time for Delhi to file its claims to that of when it ultimately did so during the post-liquidation protest period, was an abuse of discretion for the following reasons.
First, despite the statute providing for an extension, Customs had yet to create and publish a regulation that indicated the circumstances or protocols that would apply to an extension request where Customs actions caused a claim to be delayed. Therefore, requesting one was an impossibility as no administrative procedure existed for a claimant to do so. Citing Alyeska Pipeline Serv. Co. v. United States, 643 F.Supp. 1128 (CIT 1986) (which, under a non-drawback claim, permitted a Protest where Customs made the filing impossible), the USCIT found that Customs agreed that where Customs makes a filing “impossible,” an extension should be granted.
Secondly, Delphi sought clarification as to how to effectuate the proper procedure for an extension – to no avail. Ultimately, it relied upon the advice of the Port of New York's Supervisory Drawback Liquidator who explained a procedure to follow in light of the regulations not permitting the claims.
Though indicating its willingness to present complete claims, Delphi was instead told not to present the claims until other events occurred, namely, liquidation at which time a Protest could be filed. Specifically at issue was Delphi's exclusion of an application for drawback on harbor maintenance taxes (HMT) and merchandise processing fees (MPF) in its drawback claims, which the supervisor had advised Delphi to exclude from its application pending a resolution under the case of Texport Oil Co. v. United States, 185 F.3d 1291, 1296 (Fed. Cir. 1999).
When further inquiries were made by Delphi regarding the sufficiency of its drawback claims, that correspondence was subsequently routed to the same Supervisor, who agreeing with his own advice, provided no response in return to Delphi.
The USCIT therefore held that “[i]n light of these facts, under 19 USC 1313(r)(1), Customs [wa]s deemed responsible for Delphi's delayed HMT and MPF filings because Delphi had no clear administrative path to follow and a responsible official unknowingly misled Delphi as to the proper course.”
Any noncompliance was therefore Customs responsibility.
As an aside, this case involved five drawback claims which were filed between 1998 and 2002. While the full amount of duty drawback was refunded in May 2003, it's taken more than 8 years for Delphi to recover the HMTs and MPFs for these claims, and I can't help but wonder if the benefits of this decision outweigh the costs of obtaining it – in terms of both manpower and dollars.
Any thoughts? Feel free to write me at clark.deanna@gmail.com or post your comment below.
In an opinion dated December 15, 2009, this is precisely what Judge Jane Restani of the U.S. Court of International Trade (USCIT) stated in her decision in the case of Delphi Petroleum, Inc. v. the United States (Slip Op. 09-139).
This case deals with Customs denial of an extension of time for Delphi to file a drawback claim on certain petroleum products it imported, and then exported, as finished petroleum derivatives which qualified as an acceptable substitute. It was undisputed by Customs that Delphi was entitled to drawback of 99% of the duties it paid on these petroleum products under 19 USC 1313(p), which is a specific provision dealing with finished petroleum derivatives.
Drawback, under 19 USC 1313(j), is the repayment of duties on previously imported products that are used in the manufacture or production of “commercially interchangeable” goods that are subsequently exported or destroyed.
Under 19 USC 1313(r)(1), a drawback claimant has three years from the date of exportation or destruction of merchandise to file a drawback claim. The final clause of this statute states that “no extension [of the 3 year filing limit] will be granted unless it is established that Customs was responsible for the untimely filing.
The USCIT found that Customs' failure to extend the time for Delhi to file its claims to that of when it ultimately did so during the post-liquidation protest period, was an abuse of discretion for the following reasons.
First, despite the statute providing for an extension, Customs had yet to create and publish a regulation that indicated the circumstances or protocols that would apply to an extension request where Customs actions caused a claim to be delayed. Therefore, requesting one was an impossibility as no administrative procedure existed for a claimant to do so. Citing Alyeska Pipeline Serv. Co. v. United States, 643 F.Supp. 1128 (CIT 1986) (which, under a non-drawback claim, permitted a Protest where Customs made the filing impossible), the USCIT found that Customs agreed that where Customs makes a filing “impossible,” an extension should be granted.
Secondly, Delphi sought clarification as to how to effectuate the proper procedure for an extension – to no avail. Ultimately, it relied upon the advice of the Port of New York's Supervisory Drawback Liquidator who explained a procedure to follow in light of the regulations not permitting the claims.
Though indicating its willingness to present complete claims, Delphi was instead told not to present the claims until other events occurred, namely, liquidation at which time a Protest could be filed. Specifically at issue was Delphi's exclusion of an application for drawback on harbor maintenance taxes (HMT) and merchandise processing fees (MPF) in its drawback claims, which the supervisor had advised Delphi to exclude from its application pending a resolution under the case of Texport Oil Co. v. United States, 185 F.3d 1291, 1296 (Fed. Cir. 1999).
When further inquiries were made by Delphi regarding the sufficiency of its drawback claims, that correspondence was subsequently routed to the same Supervisor, who agreeing with his own advice, provided no response in return to Delphi.
The USCIT therefore held that “[i]n light of these facts, under 19 USC 1313(r)(1), Customs [wa]s deemed responsible for Delphi's delayed HMT and MPF filings because Delphi had no clear administrative path to follow and a responsible official unknowingly misled Delphi as to the proper course.”
Any noncompliance was therefore Customs responsibility.
As an aside, this case involved five drawback claims which were filed between 1998 and 2002. While the full amount of duty drawback was refunded in May 2003, it's taken more than 8 years for Delphi to recover the HMTs and MPFs for these claims, and I can't help but wonder if the benefits of this decision outweigh the costs of obtaining it – in terms of both manpower and dollars.
Any thoughts? Feel free to write me at clark.deanna@gmail.com or post your comment below.
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