THE C-AIR TIMES
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 ISSUE 101 - 01/05/2010 | ||||||
NVOCCs. Vessel operators are responsible for filing the ISF-5 for FROB shipments, but there have been questions as to whether non-vessel-operating common carriers are included within this requirement. CBP states that until this issue is addressed through the regulatory process, filers of ISF-5 FROB data will be treated with wide discretion relative to ISF enforcement issues provided that CBP receives the required data. Carries must submit the ISF-5 for FROB shipments if they have direct access to the data as the entity that received the booking directly from the shipper. In those instances where an NVOCC is filing manifest data via AMS, the NVOCC may file the ISF-5 for the appropriate transactions without obtaining a power of attorney from the carrier. CBP will receive these transactions and process them using standard data edits and messaging. Splits/Diversion/Rolling. If a shipment is split and sent to new destinations after a vessel departs for the U.S., no new ISFs are required for the split shipments. However, if new bills of lading are introduced into AMS for these shipments, the original ISF will need to be updated. In the case of shipments split onto two different vessels or shipments rolled by the carrier for its convenience, the shipments must each be assigned a unique bill of lading number so two separate ISFs can be filed. Broad Impact on Duty-Free Programs Resulting from Customs Withdrawal of Proposed Ruling Modification - Grunfeld Desidiero Lebowitz Silverman & Klestad LLP
In a Notice published in the Customs Bulletin of January 27, 2010, U.S. Customs and Border Protection withdrew an outstanding proposal to revoke a ruling under the Singapore Free Trade Agreement (FTA). The withdrawal and the underlying rationale will have potentially broad implications for the qualification of certain goods for duty-free entry under various FTAs when such goods incorporate non-originating (i.e., non-FTA) materials.
Under many (but not all) FTAs (and subject to certain exceptions), only the component that determines the tariff classification of a textile garment or "made-up" article (e.g., linens, towels, home furnishing articles, etc.), in Chapters 61, 62 and 63, HTS, needs to satisfy the FTA?s duty-free eligibility rules. In many instances, foreign origin secondary components are disregarded. Thus, in March 2008, Customs ruled that a cotton shirt cut and sewn in Singapore, from body fabric knitted in Singapore from U.S. yarns, qualified for duty-free entry under the Singapore FTA. The fact that the fabric for a cotton pocket on the shirt was knitted in China did not disqualify the garment.
In August 2009, Customs proposed to revoke the March 2008 ruling on the theory that the cotton material (comprising both the body and pocket fabrics) was a single "component" dictating the classification of the garment (thus disqualifying the article from duty-free eligibility because of the Chinese origin of the pocket fabric). In the January 2010 Notice, Customs has withdrawn its proposal, acknowledging that the cotton fabric is not a "component", thus restoring FTA eligibility to the article.1
This action may have broad applications to duty-free eligibility determinations of apparel and made-up articles under FTAs (where the articles contain non-FTA inputs). It may also prove to have significant implications for other Customs issues (e.g., tariff classification) for other classes of commodities where the status of a "component" (as opposed to a material) is at issue. 1 Each case must be considered on its own merits. To illustrate, in a 2002 ruling, Customs held that a 100% polyester knit jersey comprised of several NAFTA originating panels and several non-originating panels was not eligible as a NAFTA product.
Senate Passes Bill to Expand and Impose New Restrictions on Trade with Iran
Broker Power Inc. On January 29, 2009, the Senate passed S. 2799, the ?Comprehensive Iran Sanction, Accountability, and Divestment Act? by a voice vote without amendment. The bill, which is the result of bipartisan negotiations between Senate Banking Committee Chairman Christopher Dodd (D) and Ranking Minority Member Richard Shelby (R), would strengthen existing sanctions against Iran, as well as imposing significant new restrictions on imports from Iran.
S. 2799 contains many similar provisions to H.R. 2194, the ?Iran Refined Petroleum Sanctions Act? that was passed by the House on December 15, 2009, but also contains some stricter provisions. The two bills will now either go to a conference committee to resolve differences between them or one chamber could choose to accept the other?s language as their own. New Prohibitions Would be Imposed on Imports/Subsidiaries/Procurement S. 2799 would place new prohibitions on imports from Iran and U.S. subsidiaries, and would impose new restrictions on the federal government with regard to procurement. Prohibitions on imports and exports. S. 2799 would prohibit imports of any products of Iranian origin either directly or indirectly into the U.S. However, the ban would not apply to imports from Iran of information and informational products. (Note: This would be a change from current restrictions on Iranian imports. Currently, there are exceptions on the restriction on Iranian imports for gifts valued at $100 or less, foodstuffs intended for human consumption that are classified under HTS Chapters 2-13, carpets and other textile floor coverings and carpets used as wall hangings that are classified under HTS Chapter 57 or HTS 9706.00.0060, and for information or informational materials (this exception would remain). If S. 2799 is enacted, the exceptions for the aforementioned gifts, foodstuffs, and carpets and other textile floor coverings would be eliminated, unless the President or the Treasury Department declared that maintaining them was in the ?national interest? of the U.S.) Exports to Iran, either directly or indirectly, would continue to banned, as they are currently. The exceptions for exports of food, medicine, humanitarian aid, and the exchange of informational materials would remain in place. The current ban on exports includes any brokering function from the U.S. or by U.S. persons (defined to include individuals and companies), wherever located. Sanctions on certain subsidiaries. The bill would require U.S. companies to be sanctioned for the activities of their subsidiaries (that are established specifically to circumvent sanctions). The President could waive these sanctions if he determines that it is in the interest of the U.S. and reports to Congress on the reasons for his determination. Procurement ban ?tie-in? to exports. Under S. 2799, the U.S. government would be prohibited from purchasing goods from companies that export ?sensitive technology? to Iran. Sensitive technology is defined in the bill to include hardware, software, or any technology that the President determines will be used to restrict the free flow of unbiased information in Iran or that will be used to disrupt, monitor, or otherwise restrict the speech of the people of Iran. Existing Sanctions Would be Strengthened or Expanded In addition to imposing new restrictions on Iranian trade, S. 2799 would strengthen or expand several existing restrictions. Investment threshold for imposition of sanctions. S. 2799 would lower the existing investment threshold from 40 million to 20 million per year for the imposition of sanctions against persons (defined to mean either individuals or companies) that have made an investment that directly and significantly contributes to Iran?s ability to develop its petroleum resources.1 The threshold for a combination of investments during any 12-month period also would be lowered to 5 million per investment and 20 million per year from the current 10 million per investment and 40 million per year. Freeze on assets. The bill would strengthen and codify into law the Treasury Department?s freeze on assets of Iranian officials and associates who support terrorism and proliferation activities. Mandatory sanctions. The bill would direct the President to impose sanctions if certain conditions are met. Currently, the President may impose sanctions, but is not required to. Mandatory sanctions would be required if the President determines that a person has provided Iran with refined petroleum products; provided ships, vehicles, or other means of transportation to deliver refined petroleum products to Iran; has provided services related to the shipping or other transportation of refined petroleum products to Iran; has underwritten or otherwise provided insurance or reinsurance for shipping or transportation activities; or financed or brokered shipping or transportation activities. Sanctions also would be required if the value of such products, goods, services, technology, information, or support exceeds $200,000 (or $1 million in any 12-month period). Additional available sanctions specified. S. 2799 would also amend the Iranian Sanctions Act of 1996 to specify additional sanctions the President may impose. These sanctions include:
Other Miscellaneous Sanction Provisions
In addition to the above provisions, S. 2799 contains several miscellaneous sanctions provisions:
Report to Congress. Not later than 180 days from the date of enactment and annually thereafter, the bill would require the President to report to Congress a list of companies that are subject to sanction under the bill and whether or not sanctions will be applied. Divestment from companies that invest in Iran. The bill would authorize states, local governments, and mutual funds to divest from firms that invest in Iran?s energy sector and protects private asset managers from lawsuits over fiduciary duties resulting from such divestments. Prevention of black market proliferation. The bill would require the U.S. to assist Iran?s trading partners in preventing the re-export of sensitive dual-use technology to Iran through third countries, and to subject such countries to significant restrictions on their exports if they refuse U.S. assistance. Legislation Opposed by Business Coalition
On January 26, 2009, a coalition of business groups sent a letter to Obama Administration officials expressing concern that the scope of the House and Senate Iran Sanctions bills is too large and that enactment of the legislation would undermine U.S. interests by inciting economic, diplomatic, and legal conflicts with U.S. allies, which could frustrate joint action against Iran. The coalition is also concerned that imposing sanctions on entities in foreign countries that are assisting the U.S. could result in the imposition of blocking statutes and other measures to counteract the threat of U.S. penalties.
1Petroleum resources include petroleum, oil, or liquefied natural gas; oil or liquefied natural gas tankers; and products used to construct or maintain pipelines used to transport oil or compressed or liquefied natural gas.
 FTC Warns Retailers to Stop Labeling and Advertising Rayon Textile Products as Bamboo - Sandler Travis & Rosenberg PAThe Federal Trade Commission has sent letters to 78 retail companies nationwide warning them that they may be breaking the law by selling clothing and other textile products that are labeled and advertised as ?bamboo? but are actually made of manufactured rayon fiber. The FTC sued several companies in 2009 for allegedly committing similar violations. ?While we have seen action by some retailers to correct mislabeled clothing and textile products,? said David Vladeck, director of the FTC?s Bureau of Consumer Protection, ?our hope is that these warning letters will serve as a wake-up call to all companies, regardless of their size.?
Rayon is a manmade fiber created from the cellulose found in plants and trees and processed with harsh chemicals that release hazardous air pollution. Any plant or tree, including bamboo, could be used as the cellulose source, but the fiber that is created is rayon. The FTC has pursued complaints against retailers for not only falsely labeling products as ?bamboo? but also making other deceptive claims, including that the products retained the bamboo plant?s antimicrobial properties, were made using environmentally friendly manufacturing processes and are biodegradable. The FTC can seek civil penalties of up to $16,000 per violation against any company that receives information concerning the improper use of a fiber name but fails to correct its advertising and labeling. The FTC letters outline the requirements for proper labeling and advertising of textile products derived from bamboo. ?Rayon, even if manufactured using cellulose from bamboo, must be described using an appropriate term recognized under the FTC?s Textile Rules,? the letters state. ?Failing to properly label and advertise textiles misleads consumers and runs afoul of both the Textile Rules and the FTC Act.? The Commission advises companies to review the labeling and advertising for the textile products they are selling and to remove or correct any misleading bamboo references. The FTC has made available a publication that provides businesses with guidance on this issue.  DOT Revises Hazmat Packaging Requirements, Proposes Significant Fee Increase - Sandler Travis & Rosenberg PAHazmat Packaging Requirements Amended. The Department of Transportation?s Pipeline and Hazardous Materials Safety Administration has issued a final rule amending the packaging requirements in the Hazardous Materials Regulations to enhance compliance flexibility, improve clarity and reduce regulatory burdens. Specifically, this rule:
The effective date of this final rule is Oct. 1. While compliance with the rule?s requirements is authorized as of March 4, PHMSA cautions that these requirements could be revised as a result of the agency?s evaluation of any appeals that might be received.
Proposed Increase in Hazmat Registration Fees. The Department of Transportation?s Pipeline and Hazardous Materials Safety Administration is proposing to adjust the registration and fee assessment program for persons who transport or offer for transportation certain categories and quantities of hazardous materials. Under this proposed rule, for registration years beginning in 2010-2011 the annual fee to be paid by those registrants not qualifying as a small business or not-for-profit organization would increase from $975 (plus a $25 administrative fee) to $2,975 (plus a $25 administrative fee). The fee for small businesses and not-for-profit organizations would remain $250 (plus a $25 administrative fee). Comments on this proposal are due by March 4.
Country of Origin Transshipment Probes Can Be Expected by Importers of Goods Covered by Antidumping Orders - Grunfeld Desidiero Lebowitz Silverman & Klestadt LLP / Robert B. Silverman
Importers of products that are subject to antidumping duties (?ADD?), but who do not pay ADD because their goods are purchased from vendors in countries not covered by a dumping order, can expect increased country of origin inquiries/investigations from Customs. (See excerpt from news article below). For example, steel hangers made in Vietnam are not subject to ADD, but steel hangers from China are subject to ADD. Customs has received, and is continuing to receive, information about products like hangers that were imported with false origin claims to avoid ADD.
It is the importer of record that will bear the burden of increased duties and penalty assessments if the country of origin claimed on the entry is false. Country of origin compliance reviews can be performed to confirm the origin of products before such inquiries/investigations are launched. These due diligence reviews provide an opportunity to ensure that the manufacturer?s documentation is complete and fully supports country of origin claims. They are best conducted without the time pressures that exist after an inquiry/investigation has been commenced. If you have any questions about these issues, or if we can be of service with respect to this matter, then please feel free to contact our firm.
U.S. MANUFACTURERS REPORT COMPELLING EVIDENCE OF EVASION OF ANTIDUMPING DUTIES ON IMPORTED STEEL WIRE PRODUCTS WASHINGTON, Feb. 1 /PRNewswire/ -- A coalition of U.S. manufacturers has compiled compelling evidence that certain companies subject to antidumping orders are costing the U.S. Treasury at least $84 million annually due to their deliberate evasion of the antidumping duties. In addition, more than 275 jobs have been lost in the innerspring and hanger industries alone, and additional jobs are threatened by these ongoing schemes to avoid antidumping duties. The information is being presented to Members of Congress, the U.S. Department of Commerce, and U.S. Customs and Border Protection to seek stronger enforcement of existing antidumping orders that are designed to maintain a level playing field for U.S. manufacturers and their workers.
These U.S. industries have developed compelling evidence detailing how certain foreign manufacturers are evading duties. In some cases, they are shipping these products to the U.S. via third countries and then falsely designating it as the country of origin to evade the duties, a practice termed ?transshipment.? In other cases, an inconsequential modification is made to the product in third countries to avoid the duties. In yet other situations, false labels displaying a different country of origin are placed on shipments of products actually made in China. There is growing evidence that these evasion schemes are being used in other industries, further threatening jobs and the U.S. economy.
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The Coalition for Enforcement of Antidumping and Countervailing Duty Orders provided the examples of the antidumping duty evasion schemes, documented through extensive records research, interviews and, in some cases, on-site location inspections with respect to steel hangers, uncovered innersprings, and steel nails, but these are just examples of the products that will be under continuing scrutiny once this project is launched.
Press Release Source: The Coalition for Enforcement of Antidumping and Countervailing Duty Orders On Monday February 1, 2010, 11:45 am EST
CBP Begins its Transition to Enforced ESTA Compliance For the Visa Waiver Program
Broker Power Inc. U.S. Customs and Border Protection has announced that as of January 20, 2010, it has initiated a 60-day transition to the enforcement of Electronic System for Travel Authorization compliance for air carriers.
It is not known if there will be an ESTA enforcement transition period for ocean carriers. (ESTA is an automated system that assists in determining the eligibility of individuals from certain countries1 to travel to the U.S. under the Visa Waiver Program (VWP), and whether such travel poses any law enforcement or security risk. Upon completion of an ESTA application, a VWP traveler is notified of his or her eligibility to travel to the U.S. under the VWP2.) CBP Intended a One Year "Informed Compliance" Period for Air & Ocean Carriers As of January 12, 2009, all VWP travelers were required to obtain a travel authorization via ESTA prior to traveling to the U.S. under the VWP via airplane or vessel. VWP travelers who did not receive an ESTA approval could be denied boarding, experience delayed processing, or be denied admission at a U.S. port of entry. However, CBP sources state that it gave travelers and carriers a one-year "informed compliance" period while it continued its outreach campaign through 2009. CBP to Transition to Enforced Compliance for Air Carriers, Ocean Carriers Get Additional Time Beginning January 20, 2010, CBP began its 60-day ESTA compliance transition for air carriers. According to CBP sources, ocean carriers are granted additional time as CBP does not have an interface in place to communicate with vessel carriers if an ESTA was received for those attempting to board. It is not known if ocean carriers will receive their own compliance transition period. Travelers Can Complete ESTA Application Online VWP travelers are encouraged to log onto the ESTA website and complete an online application. The web-based system prompts applicants to answer basic biographic and eligibility questions typically requested on a paper I-94W form. ESTA is expected to completely replace the paper I-94W in the coming months. Approved Applications Valid Up to 2 Years, for Multiple Entries ESTA applications may be submitted at any time prior to travel, and once approved, generally will be valid for up to two years or until the applicant?s passport expires, whichever comes first. Authorizations are valid for multiple entries into the U.S.
1 The following countries participate in the VWP: Andorra, Australia, Austria, Belgium, Brunei, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Iceland, Ireland, Italy, Japan, South Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, the Netherlands, New Zealand, Norway, Portugal, San Marino, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, and the United Kingdom
2 An approved ESTA is not a visa. Individuals who possess a valid visa will still be able to travel to the U.S. on that visa for the purpose for which it was issued; individuals traveling on valid visas are not required to apply for an ESTA.
CBP Outlines its 2009 C-TPAT Accomplishments - Sandler Travis & Rosenberg
CBP has issued a notice outlining its 2009 Customs-Trade Partnership Against Terrorism program accomplishments. Strong validation numbers, continued member growth and increased quality assurance highlight C-TPAT accomplishments in 2009. (Notice, dated 02/03/10, available at http://www.cbp.gov/xp/cgov/newsroom/news_releases/national/02032010_2.xml)
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