Grosfillex submitted false forms to Customs and Border Protection (CBP) claiming that furniture parts made of extruded aluminum from China were not subject to AD/CVD. The company attempted to hide the aluminum extrusions by falsely packing them as sham “furniture kits.” Additionally, for a different subset of extrusions, the company failed to correct customs forms it had submitted previously, even after learning that the forms contained false information.

The investigation arose from a whistleblower lawsuit filed under the False Claims Act by a former employee of Grosfillex. Under the False Claims Act, private citizens can sue on behalf of the government and share in any recovery. In this case, the whistleblower will receive $962,662.74.

Duty Evasion is on the Rise

This case is just one example of the growing incentive to cheat that comes with higher tariffs. Whether it’s through misclassifying goods, undervaluing imports, or using deceptive transshipment routes, some companies think they are being creative, but, instead, are participating in outright illegal strategies to reduce their tariff liability.

Higher tariffs have even contributed to the emergence of a cottage industry of “tariff reduction” companies that suggest ways to cut import costs. However, many of these so-called strategies amount to evasion, putting importers at serious civil and criminal risk.

The Department of Justice (DoJ) and U.S. Customs and Border Protection (CBP) have both made clear that duty evasion is a top enforcement priority.

Now more than ever, it is critical for importers to examine their import compliance programs and ensure that adequate procedures are in place to correctly enter goods into the United States. Importers should proactively conduct extensive due diligence in their supply chains to ensure they can detect, report, and remedy any noncompliance with customs requirements. In addition, if an importer becomes aware of the fraudulent conduct of a competitor, they should contact counsel to discuss options for reporting it to the government.

Diaz Trade Law can assist importers in developing compliance plans and guide importers in the event of a customs investigation. Contact us at 305-456-3830 or info@diaztradelaw.com.

Learn more: 

• CIT Hands Down $3.4M Penalty for Duty Evasion
• DOJ Targets Trade Fraud: Importers Now on Notice as Criminal Division Ramps Up Enforcement
• Bloomberg Law: What is an Importer’s Reasonable Care Standard?
• Bloomberg Law: Voluntary Self-Disclosures: Recent Guidance From BIS, OFAC & DOJ
• Bloomberg Law:  Submitting a Prior Disclosure to CBP
• Webinar: The False Claims Act
• Webinar: Importing 101: A Crash Course in CBP Compliance and Best Practices
• Webinar: Basics on Tariff Classification
• Webinar: Building and Maintaining an Effective Import Compliance Plan

The Case

The government’s case was filed in 2023, alleging that the importers had falsely declared that Chinese-origin goods as Thai origin to evade duties. The government asserted this false declaration avoided payment of ordinary 6% duties, Section 301 duties ranging from 10% to 25%, and 234.51% antidumping duties. 

The government asked the court to impose a penalty for negligence. The penalty amount is twice the loss of revenue or the domestic value, whichever is lower. After the importer failed to answer the complaint (a huge mistake), the U.S. moved for summary judgment.

The CIT granted the government’s motion and ordered the importer to pay a nearly $3.4 million penalty as well as all unpaid duties, taxes, and cash deposits on the unliquidated entries in question.

Duty Evasion is on the Rise

This case is just one example of the growing incentive to cheat that comes with higher tariffs. Whether it’s through misclassifying goods, undervaluing imports, or using deceptive transshipment routes, some companies are turning to creative or outright illegal strategies to reduce their tariff liability.

These incentives have even contributed to the emergence of a cottage industry of “tariff reduction” companies that suggest ways to cut import costs. However, many of these so-called strategies amount to evasion, putting importers at serious civil and criminal risk.

The Department of Justice (DoJ) and U.S. Customs and Border Protection (CBP) have both made clear that duty evasion is a top enforcement priority.

Now more than ever, it is critical for importers to examine their import compliance programs and ensure that adequate procedures are in place to correctly enter goods into the United States. Importers should proactively conduct extensive due diligence in their supply chains to ensure they can detect, report, and remedy any noncompliance with customs requirements. In addition, if an importer becomes aware of the fraudulent conduct of a competitor, they should contact counsel to discuss options for reporting it to the government.

Diaz Trade Law can assist importers in developing compliance plans and guide importers in the event of a customs investigation. Contact us at 305-456-3830 or info@diaztradelaw.com.

Learn more: 

• DOJ Targets Trade Fraud: Importers Now on Notice as Criminal Division Ramps Up Enforcement
• Bloomberg Law: What is an Importer’s Reasonable Care Standard?
• Bloomberg Law: Voluntary Self-Disclosures: Recent Guidance From BIS, OFAC & DOJ
• Bloomberg Law:  Submitting a Prior Disclosure to CBP
• Webinar: The False Claims Act
• Webinar: Importing 101: A Crash Course in CBP Compliance and Best Practices
• Webinar: Basics on Tariff Classification
• Webinar: Building and Maintaining an Effective Import Compliance Plan

According to the Department of Justice, Ford engaged in a scheme to avoid higher duties by misclassifying cargo vans. Between 2009 and 2013, the company imported Transit Connect cargo vans into the United States but presented them to Customs and Border Protection (CBP) with temporary seats and other features to make them appear to be passenger vehicles. The seats were never intended to carry passengers and Ford removed them as part of post-importation processing. The inclusion of the seats allowed Ford to avoid paying the 25% duty rate for cargo vehicles and instead they paid a duty rate of just 2.5%.

This case dates back to February 2012 when the Port of Baltimore advised Ford it was initiating an investigation into Ford’s classification practices. (Typically, prior to investigating an entity, CBP sends a request for information first. For more information on how this process typically begins read “Now, More than Ever, Be Wary of and Responsive to a CBP Form 28!”).

In 2013 Customs determined that the vans were improperly classified and liquidated the vehicles at the 25% duty rate. Ford protested, and Customs denied the protest. Ford then filed a complaint with the U.S. Court of International Trade (CIT). The CIT agreed with Ford, finding that Ford engaged in legitimate tariff engineering. The government appealed to the United States Court of Appeals for the Federal Circuit where the Court reversed CIT’s decision. Ford appealed to the Supreme Court but the Court denied to hear the case.

The settlement is one of the largest customs penalty settlements in recent history.

This case, as well as other similarly controversial ones, highlight the need for a cautious, concerted effort to both modify the imported good, while fully adhering to US law.

Diaz Trade Law has successfully assisted multiple clients in their tariff-engineering efforts, resulting in a legal avoidance of potentially crippling duties.

Read more about undervaluing and mitigating tariffs here:

• Customs Undervaluation – It’s a Crime
• Customs Valuation 101
• Importing 101
• 5 Strategies to Mitigate the Impact of Tariffs

United States District Judge Maame Ewusi-Mensah Frimpong handed down the sentence, which also includes a restitution payment of $6,390,781.

The fraudulent operation involved importing clothing from China and presenting U.S. Customs and Border Protection (CBP) with a fraudulent second invoice with a lowered value. At Ghacham’s direction, Chinese suppliers would prepare two invoices for orders – a true invoice with the actual price paid and a fraudulent invoice with an understated price. Ghacham submitted the false invoices to CBP, allowing them to avoid millions of dollars in duties for over a decade.

Ghacham also faced charges related to conspiring to engage in transactions with a known narcotics trafficker.

The sentencing of Ghacham and his company concludes a comprehensive investigation by Homeland Security Investigations and CBP, with assistance from the U.S. Department of Commerce Office of Export Enforcement, the Treasury Department’s Office of Foreign Assets Control, and IRS Criminal Investigation.

This case underscores the U.S. government’s unwavering commitment to enforcing its customs laws and the severe consequences for those who choose to circumvent them.

Interested in learning more about CBP enforcement? Check out our upcoming webinar on the False Claims Act (FCA). We will discuss damages and criminal liability for making false claims to the government, whistleblower provisions of the FCA, and more!

• Webinar: False Claims Act

Read more about undervaluing here:

• Customs Undervaluation – It’s a Crime
• Customs Valuation 101
• Importing 101

Underpaying Through Duplicate Invoices

ADCO, a Dallas-based importer of industrial products, the company owner Raymond E. Davis, customs broker Calvin Chang, and Chinese companies Xiamen Atlantis MFC Co., Ltd. and Xiamen Taft Medical Co., Ltd conspired to underreport the value of goods they were importing.

The scheme involved falsifying invoices with low values for goods ADCO was importing from China. The company used a separate set of invoices that contained the correct value of goods to ensure that ADCO paid its suppliers the actual value of the goods.

In investigating the scheme, the U.S. Attorney’s Office and CBP’s Consumer Products and Mass Merchandising Center of Excellence and Expertise reviewed over 1,000 import entry lines.

Qui Tam Lawsuit

The settlement with the government resolved a “qui tam” lawsuit filed under the False Claims Act (FCA). A qui tam lawsuit is one that is brought by a private citizen or company against a defendant or defendants that owe money to the government.

When a qui tam lawsuit is successful, the party that initiated the case—called a “relator”—is entitled to a substantial monetary reward, ranging between 15% and 30% of the amount recovered for the government.  A qui tam lawsuit also engages the U.S. Department of Justice (“DOJ”) in the case, and typically results in the opening of an investigation by DOJ into the allegations made in the case.

In this case, the whistleblowers will receive $500,000 as part of the settlement.

A Customs Attorney Can Help Implement Compliant Valuation Practices

In this case, the parties involved were knowingly and willfully perpetrating a fraud to lower their duties liability. However, undervaluing (even if not knowing and willful) is still a serious violation of U.S. Customs laws.

All importers should have robust compliance measures in place to ensure they are valuing imports properly. The process should be periodically re-evaluated to ensure it is up to date with the latest CBP rulings and guidance.

A customs attorney can help you value specific goods, but also help you set up a system to ensure compliance going forward.

Diaz Trade Law has significant experience in a broad range of import compliance matters, including customs valuation. Contact us at info@diaztradelaw.com or call us at 305-456-3830.

Want to learn more? 

Relevant webinars:

• Basics on Tariff Classification
• Introduction to Importing
• Building and Maintaining an Effective Import Compliance Program

Relevant blog posts:

• Customs Undervaluation – It’s a Crime
• Customs Valuation 101

Many companies mistakenly believe that registering a trademark or copyright with the U.S. Government provides sufficient protection and remedies. However, there is an additional step that can significantly enhance protection—recording trademarks or copyrights with U.S. Customs and Border Protection (U.S. Customs).  

This blog explores the distinct goals of these processes and the advantages of recording intellectual property with the U.S. Customs. 

I. Registering with USPTO and Recording with U.S. Customs: Different Goals

• Registering with the U.S. Patent and Trademark Office (USPTO) or U.S. Copyright Office gives public notice of ownership. 
• Recording with U.S. Customs aims to prevent unauthorized importation of merchandise bearing the registered intellectual property. 
• U.S. Customs serves as a critical partner in halting counterfeit and infringing products from entering or leaving the United States.

II. Benefits of Recording Trademarks or Copyrights with U.S. Customs

Seizure and Monitoring: 

• U.S. Customs monitors and seizes infringing merchandise at ports of entry, alleviating the burden on trademark or copyright holders. 
• This proactive approach eliminates the need to individually locate and prosecute every unauthorized importer, distributor, or retailer, safeguarding intellectual property rights.

Impressive Results in IP Protection: 

• In 2021, U.S. Customs seized over 27,000 shipments with an estimated manufacturer’s suggested retail price (MSRP) of $3.3 billion. 
• Collaboration with the Intellectual Property Rights (IPR) Center led to 388 arrests, 155 indictments, and 100 convictions related to IP crimes. 

• Apparel/accessories accounted for 30% of seized merchandise, with watches and jewelry valued at over $1.18 billion. 
• Notably, U.S. Customs seized counterfeit and unapproved COVID-19 products, reflecting their adaptability to emerging challenges. 
• Approximately 57% of counterfeited goods seized in 2021 were manufactured in China, amounting to an estimated MSRP value of $1.9 billion.

Authority to Issue Fines and Prosecute: 

• U.S. Customs possesses the authority to impose monetary fines on individuals involved in facilitating the introduction of seized and forfeited counterfeit merchandise into the United States. 

• U.S. Customs can request the U.S. Attorney’s Office to criminally prosecute those engaged in illegal activities under the Trademark Counterfeiting Act of 1984. 
• Penalties for first-time violators include up to ten years imprisonment and/or a $2 million fine, while repeat offenders face up to 20 years imprisonment and/or a fine of up to $5 million. 

International Raids and Cooperation: 

• U.S. Customs collaborates with foreign law enforcement agencies and coordinates raids on counterfeit production facilities globally. 
• Customs officers stationed at American embassies worldwide regularly share information for the criminal prosecution of manufacturers and exporters of counterfeit goods. 

III. Customs e-Recordation System and Gray Market Protection
 

Trademark and copyright recordations are filed online through the U.S. Customs’ IPR e-Recordation system, adhering to the regulations outlined in 19 C.F.R. Part 133. 

The following is a checklist of the information necessary to submit an trademark or copyright recordation with CBP: 

• Description of trademark or copyright registered with the USPTO 
• USPTO Registration Number 
• Country of manufacture of protected goods bearing the trademark or country of manufacture of genuine copies or phonorecords of the protected copyright work 
• Names of any parent companies, subsidiaries, or other entities that are under common control with, or share any type of ownership interest or relationship with, the U.S. trademark owner, or names of all parties authorized to use or reproduce the copyrighted work 

For those eligible, it is worthwhile to pursue “gray market” protection, which pertains to genuine products bearing a trademark or brand name approved for use in a country other than the U.S. Gray market goods are different from goods bearing counterfeit markets because goods bearing counterfeit marks are never genuine. According to CBP guidance, CBP provides limited protection to trademark owners against importations of certain gray market goods. Only trademarks and trade names that are recorded with CBP are entitled to gray market protection, and gray market status is determined at the time of recordation with CBP. Gray market protection is only offered if you have the following in place: 

• The U.S. and foreign trademarks are not owned by the same person 

• The U.S. and foreign trademark owners are not a parent or subsidiary, or otherwise subject to common ownership or control 

Currently, Phillip Morris is an example of a company that has been able to meet this stringent burden and CBP offers its trademarks gray market protections. The image below is a search result from the CBP IPRS database. 

As a final thought, it is extremely beneficial for a company to record its registered trademark or copyright with CBP, as CBP may be a company’s greatest, and most cost effective ally, when it comes to trademark and copyright enforcement. For help with any pre-compliance matters such as the CBP recordation process or for assistance with enforcement actions such as seizures and penalties, please contact info@diaztradelaw.com and visit our website www.diaztradelaw.com.

UFLPA

The Uyghur Forced Labor Prevention Act (UFLPA) establishes a rebuttable presumption that goods mined, produced, or manufactured wholly or in part in the Xinjiang Province of China or by an entity on the UFLPA Entity List are prohibited from importation into the United States under 19 U.S.C. § 1307. However, if an Importer of Record can demonstrate by clear and convincing evidence that the goods in question were not produced wholly or in part by forced labor, fully respond to all CBP requests for information about goods under CBP review and demonstrate that it has fully complied with the guidance outlined in this strategy, the Commissioner of CBP may grant an exception to the presumption.

Clear and convincing evidence is a higher standard of proof than a preponderance of the evidence, and generally means that a claim or contention is highly probable. See e.g., Colorado v. New Mexico, 467 U.S. 310 (1984) (a forced labor case holding that complainant did not meet “clear and convincing” burden of proof because it failed to show that the evidence is highly and substantially more likely to be true than untrue; rather, the fact finder must be convinced that the contention is highly probable).

CBP will employ a risk-based approach, dynamic in nature, that prioritizes the highest-risk goods based on current data and intelligence. Currently the highest-risk goods include those imported directly from Xinjiang into the United States and from entities on the UFLPA Entity List. CBP will also prioritize illegally transshipped goods with inputs from Xinjiang, as well as goods imported into the United States by entities that, although not located in Xinjiang, are related to an entity in Xinjiang (whether as a parent, subsidiary, or affiliate) and likely to contain inputs from that region.

Below is a list of high-priority sectors for enforcement:

1. Apparel
2. Cotton and Cotton products
3. Silica-Based Products (including polysilicon)

• Silica is a raw material that is used to make aluminum alloys, silicon, and polysilicon, which is then used in buildings, automobiles, petroleum, concrete, glass, ceramics, sealants, electronics, solar panels, and other goods.

4. Tomatoes and downstream products

In addition for general guidance on how CBP will be implementing the UFLPA, please refer to our prior article “Uyghur Forced Labor Prevention Act (UFLPA): What You Need To Know.”

DHS Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the PRC.

On June 17, 2022, per statutory requirement , the U.S. Department of Homeland Security (DHS) published the Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China. The purpose of this publication is to provide guidance as to how the UFLPA will be implemented, and how it plans to prevent the importation of goods made with forced labor to enter into the United States. Below is a summarized guidance for importers with recommendations and guidance as to what evidence importers may provide to rebut the presumption that the goods were made with forced labor under the UFLPA as mentioned by DHS’ June 17, 2022 and earlier guidance published on June, 13, 2022 by CBP  of evidence required. The guidance for importers provided information on three topics:

1) Due Diligence,

2) Supply Chain Tracing, and

3) Supply Chain Management

What does due diligence mean?

DHS stated that for purposes of the guidance, due diligence includes assessing, preventing, and mitigating forced labor risk in the production of goods imported into the United States. An example of effective due diligence, may include the following elements:

• Engage stakeholders and partners
• Conduct a Forced Labor Risk Assessment
• Develop a written code of conduct

To perform a forced labor risk assessment, importers map their supply chains to identify any steps within the chain at risk of using Forced Labor. Such factors used to determine whether a risk exists are, but not limited to:

• Origin of imported goods or any raw materials or components in the imported good.
• Transactions among entities along the supply chain tied to the specific imported goods.
• Locations and identities of entities in the supply chain.

A written code of conduct should provide a framework on how you address the risk of forced labor in you supply chain. In addition, DHS recommends the written code of conduct be incorporated into supplier contracts. We separately recommend that you include your conditions on your purchase order as well.

Importantly, DHS noted that for supply chains that touch the Xinjiang or involve entities that use labor transferred from Xinjiang, the code of conduct MUST explicitly forbid the use of forced labor. Furthermore, as mentioned in our prior DTL post “U.S. Customs Targets Use of Forced Labor ,” importers should review the DOL’s Comply Chain  principles and create a compliance system as a business practice.

What Does it Mean to have an Effective Supply Chain Tracing System?

DHS has defined supply chain tracing, as the ability to demonstrate chain of custody of goods and materials from the beginning of the supply chain to the buyer of the finished product. An effective Supply Chain Tracing system is one that identifies who their suppliers are and labor sources at all levels of the supply chain system. Generally, there are three common practices importers may engage in for effective supply chain tracing:

1. Mapping: Importers should be able to map out their entire supply chain, including suppliers of raw materials used in the production of the imported good or material. Mapping allows the importers to identify who is doing the work at each step in the process of the supply chain and under which conditions the work is being done.
2. Identity preservation: This requires importers to preserve each product input to be packaged, processed, and traced separately from other product inputs or modifications throughout the supply chain. However, under this method product inputs are not allowed to be commingled at any point in the supply chain.
3. Segregation: This approach allows importers to commingle inputs, as long as each input to be commingled is fully traced and documented. It is essential to demonstrate that the inputs are free of forced labor prior to commingling. As an example, importers should have readily available evidence that indicates the source of each component of the good and documents showing how the imported goods was made from raw materials to finished good, by what entity, and where.

Supply Chain Management Measures

Importers should also have Supply Chain Management Measures in place, that reflects the measures taken to prevent and mitigate identified risks of forced labor. DHS identified that effective measures include:

1. Having a process to vet potential suppliers for forced labor prior to entering a contract with them; requiring that supplier contracts necessitate corrective action by the supplier if forced labor is identified in the supply chain; and
2. Outlining the consequences if corrective action is not taken, such as termination of the contractual relationship.
3. Having access to documentation, personnel, and workers for verification of the absence of forced labor indicators, including at the recruitment stage.

DHS noted as well that, under 18 U.S.C. Section 1589 (b), failure to take appropriate remedial action could expose an importer to potential criminal liability if the importer continues to benefit, financially or by receiving anything of value, from participating in a venture engaged in forced labor, while knowing of or recklessly disregarding the forced labor.

For additional guidance as to the type and nature of evidence that CBP will require if the goods are subject to the UFLPA, please refer to the following:

• Xinjiang Supply Chain Business Advisory
• DTL Article: “Importers: If you Can’t Answer these 12 Questions on Forced Labor You’re In Trouble”
• U.S. Department of Labor Sweat & Toil App 

Contact Us

Diaz Trade Law has significant experience in a broad range of import compliance matters including forced labor issues. For assistance with importer due diligence in relation to forced labor requirements; or for assistance in submitting documents to dispute the use of forced labor, contact our Customs and International trade law attorneys at info@diaztradelaw.com or call us at 305-456-3830.

Below we share some of our top 2021 success stories with you.

Successfully Mitigated Liquidated Damages Claims 

• For failure to timely refile rejected entries subject to AD/CV duties:
  • After DTL’s strategic involvement CBP substantially mitigated approximately $5 MILLION in claims down to $26,365.00, successfully saving our client over $4.7 MILLION dollars
  • Our client received 36 liquidated damages notices from CBP totaling over $567,000. After Diaz Trade Law’s successful negotiation with CBP, all 36 cases were canceled by CBP, saving our client $over $567,000!!
• CBP sent our client a liquidated damages claim in the amount of $150,000. As a result of Diaz Trade Law’s successful petition, CBP mitigated the liquidated damages claim down to $1,500!
• CBP issued a liquidated damages claim in the amount of $50,000.00. After DTL successfully petitioned CBP, the claim was cancelled!
• CBP issued a liquidated damages claim in the amount of $36,033.00. After DTL successfully petitioned CBP, the claim was mitigated to $360.33 (the best potential mitigation!).

CBP Detention Assistance 

• Mere days after being retained, Diaz Trade Law successfully assisted in negotiating with CBP and numerous trademark owners proving that our clients detained goods (collectively valued over $1,000,000.00) were legitimate, receiving either consent TM holder, and/or convincing CBP to release legitimate merchandise that should not have been detained.
• After CBP detained our client’s electronic merchandise to verify admissibility with the Department of Transportation (DOT)
  • CBP released the electronic goods after DTL proved the merchandise, LED driving lights, were eligible for an “off road” use exception and DOT providing such confirmation.
• After CBP detained our client’s electronic merchandise to verify the validity of a trademark on the product packaging.
  • Diaz Trade Law proactively communicated with the trademark holder and CBP, who, with the authorization of the trademark holder, permitted the importer to manipulate the merchandise and import the goods saving our client from a costly and lengthy seizure case that potentially exposed our client to CBP penalties.
• After CBP detained our client’s electronic merchandise to verify the validity of a trademark on the product packaging.
  • After Diaz Trade Law’s immediate involvement in arguing the product was “confusingly similar” and not counterfeit, DTL persuaded CBP to apply the relief afforded to “confusingly similar” seized merchandise and ultimately CBP permitted the exportation – which is relief that is rarely granted for detained products. DTL saved our client from a seizure case and potential penalties.
• CBP detained 28 containers of our client’s cargo.
  • Diaz Trade Law successfully negotiated with CBP to permit the goods to be reexported and avoid substantial demurrage expenses.

4647 Responses 

• CBP issued our client a CBP Form 4647 – Notice to Mark, because its electronic car accessories labels had both a country of origin marking and a “Designed in the USA” claim (in separate locations on the label).
  • After 48 hours of Diaz Trade Law’s successful escalation and negotiation with the Electronic Center of Excellence and Expertise, CBP granted a rarely used marking waiver permitting the merchandise to be imported as is, saving our client both money and time.
• CBP issued our client a CBP Form 4647 – Notice to Mark, because over 1,000 electronic car accessory units did not bear a country of origin marking.
  • Diaz Trade Law successfully and efficiently guided our client through the marking process. Ultimately, the goods were marked and authorized for distribution within recording timing – less than 10 days from the issuance of the 4647, saving our client both money and time.
• CBPO’s at Port Everglades detained two of our client’s shipments and issued two separate CBP Form 4647s – Notices to Mark because the imported merchandise valued at $98,744.00 did not bear a country of origin marking.
  • Diaz Trade Law successfully and efficiently guided our client through the marking process. Ultimately, the goods were marked and authorized for distribution with record timing – within 7 days from the issuance of the 4647, saving our client both money and time.
• Diaz Trade Law successfully assisted our client in responding to CBP’s Notice to Redeliver (CBP Form 4647) and provided CBP confirmation that the intellectual property rights displayed on the goods was authorized and our client’s merchandise was released in record timing!

Successfully Assisted Numerous Importers Battle Alleged Intellectual Property Rights Violations

• Our client’s merchandise was seized by CBP due to an alleged trademark violation.
  • After Diaz Trade Law’s successful petition, CBP issued a decision authorizing our client to relabel and export its legitimate merchandise.
• CBP detained several shipments of our client’s cargo for both Country of Origin (COO) and Intellectual Property Rights (IPR) reasons.
  • Diaz Trade Law advocated for our client and within less than one week convinced CBP to release our client’s legitimate merchandise detained at numerous ports of entry nationwide.
• Our client’s designer handbags were seized by CBP due to an alleged counterfeit violation.
  • After Diaz Trade Law’s successful petition, proving that the handbags were legitimate, CBP released our client’s legitimate merchandise.
• CBP detained our client’s goods valued at $98,744.00 for an alleged IPR validation.
  • Our firm immediately communicated with the appropriate CBP CEE and submitted evidence supporting the legitimacy of the imported goods requesting their immediate release. The CBP CEE agreed with our request and recommended the local port release the shipment, saving our client from a costly and lengthy seizure case.
• Diaz Trade Law successfully negotiated with CBP on behalf of an aftermarket car part importer to permit the exportation of goods detained for alleged IPR violations, saving the importer from a costly and lengthy seizure and potential penalty.
• Our client imported electronic merchandise which contained a trademark-violating processing system.
  • After Diaz Trade Law’s successful intervention, Diaz Trade Law received authorization from the trademark holder to permit the violative components to be removed and destroyed, and the larger shell merchandise to be imported in its current form. CBP agreed to these terms, and issued a disposition order authorizing the manipulation and release of the goods as Diaz Trade Law had requested.

Successfully Mitigated Penalty Actions Issued by CBP to our Clients 

• For importing noncompliant Wood Packaging Material:
  • $91,714 mitigated to 3% of penalty to $2,751.42, saving our client $88,962
  • $69,900 mitigated to 3% of penalty to $6,990, saving our client $60,000
  • $28,478 mitigated to 10% of penalty to $2,847, saving our client $25,631
  • $27,857 mitigated to 10% of penalty to $2,786, saving our client $25,071
  • $19,980.00 mitigated to 10% of penalty to $1,998, saving our client $17,982
• For filing incorrect Electronic Export Information (EEI)
  • $14,194 mitigated down to $500 (the best possible relief)!
  • $14,194 mitigated to 10% of penalty to $1500, saving our client $12,694

CBP 28 / CBP 29 Responses / CBP Investigations and Rejections

• Our client received a CBP 28 for a U.S. Australia Free Trade Agreement verification.
  • After Diaz Trade Law filed a successful response proving the imported goods were eligible for preferential duty-free treatment, CBP closed the 28 with a positive CBP 29 (Notice of Action).
• Our client received a CBP 28 Request for Information from U.S. Customs to verify GSP eligibility.
  • After Diaz Trade Law submitted a substantive response proving the GSP claim was valid, CBP issued a CBP 29 determining that the merchandise qualifies for GSP and no duties are owed to CBP!
• Our client received a Request for Information (CBP 28) from CBP.
  • Diaz Trade Law filed a 28 response which included a Prior Disclosure. The 28 was closed out, and the disclosure was accepted by CBP resulting in no 1592 penalties being issued to our client.
• CBP physically inspected our client’s cargo at the time of entry and identified that the commercial invoice and packing slip submitted to CBP did not include one model number included in the cargo. Diaz Trade Law immediately negotiated with CBP to accept an updated invoice and packing list. CBP accepted and released the complete cargo with no further enforcement action taken, saving our client costly demerge fees and other expenses.
• CBP rejected and refused an importation of tires because CBP alleged the importer did not have a right to make entry. After three uphill battles with CBP and DTL’s strategic recommendation to change the import transaction model, the importer was successfully able to act as IOR and its merchandise was admitted into the US.

USTR/China Tariffs

• Diaz Trade Law assisted over 100 importers in filing complaints with the Court of International Trade challenging Section 301 tariffs imposed for imported goods under for List 3 and List 4a, requesting full refunds.
• Diaz Trade Law filed numerous exclusions for goods subject to the Section 301 List 3 and List 4. USTR agreed and granted our client’s exclusion!
• Numerous clients that were subject to 301 duties used Diaz Trade Law to actively monitor 301 exclusions to ensure they were notified when refunds were a possibility. Diaz Trade Law assisted with not only actively monitoring the relevant exclusions, but also interpreting the applicability, and fighting for refunds via the Protest or PSC process. CBP has accepted numerous Protests, and hundreds of thousands of dollars of refunds were sent to our clients!
• As a result of Diaz Trade Law’s closely monitoring Section 301 China tariff exclusions, Diaz Trade Law found an applicable exclusion for our client to use and filed two Protests with CBP requesting that CBP refund the China tariffs paid. Our client’s protests were approved by CBP, resulting in a refund of $64,678.00.

Export Compliance and Enforcement Mitigation Assistance

• Diaz Trade Law is actively assisting exporters:
  • Vetting proposed export transactions
  • Providing voluntary self-disclosures to Census and OFAC
  • Developing an effective export compliance plan
  • Developing export compliance training
  • Mitigation and corrective action
  • Presenting export report cards to clients based upon an analysis of ACE data
  • Analyze export trade data
  • With mitigation of export seizures and penalties
• Our client needed urgent assistance to ensure it understood the requirements to properly export hazardous materials. Diaz Trade Law successfully and expeditiously secured Competent Authority Approvals for the hazardous material from the U.S. DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration (PHMSA) as well as the Competent Authority of Turkey and Finland.

OFAC/FAA/HSI 

• Our client’s incoming wire payments of $842,918.92 from Venezuela were blocked by its U.S. bank for possible violations of U.S. sanctions laws.
  • After Diaz Trade Law filed a specific license application with the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), OFAC issued a specific license authorizing the legitimate funds to be unblocked and returned to our client.
• Our client was being investigated by FAA as a result of a hazardous materials incident.
  • As a result of Diaz Trade Law’s successful involvement, the FAA closed the matter with an informal action!
• Our client was being investigated by HSI for possible criminal liability.
  • After Diaz Trade Law’s intervention, HSI closed its investigation into our client.

 Protests

• Diaz Trade Law successfully assisted our client in filing two Protests with CBP. These approvals saved our client over $600,000!!
• After Diaz Trade Law’s successful Protest of CBP’s AD/CVD bills, our client’s protest was approved by CBP, saving our client over $200,000!!

Binding Rulings

• Diaz Trade Law successfully requested and received binding rulings for numerous clients confirming:
  • the correct country of origin for its prospective imported merchandise.
  • the correct harmonized tariff schedule (HTSUS) for its imported merchandise.
  • both the origin of their merchandise and appropriate CBP country of origin marking
  • the applicability of a free trade agreement.

Assisted Numerous Importers in Filing Prior Disclosures and Voluntary Self-Disclosures Accepted by CBP 

• Diaz Trade Law successfully submitted a perfected prior disclosure for underlying classification, valuation, quantity, and 301/China tariff errors. While reviewing ACE data, we identified offsets for the duties owed to CBP. Ultimately, CBP agreed with our assessment and accepted our prior disclosure and tender, resulting in a refund of over $25,000 to our client and ensuring no future penalties would be assessed for our client’s past importing errors.
• After discovering Electronic Export Information (EEI) filing errors made by one of our clients, Diaz Trade Law assisted our client in proactively filing a Voluntary Self-Disclosure (VSD) with the U.S. Census Bureau and assisting our client in fixing all past errors. The VSD filing was accepted and resulted in the U.S. Census Bureau closing out the matter without penalties being assessed.
• On behalf of a client, Diaz Trade Law filed a voluntary disclosure with the Office of Foreign Assets Control (OFAC), disclosing potential sanctions violations.
  • Diaz Trade Law worked proactively with OFAC and received this “No Action letter” with no penalties assessed to our client.
• Diaz Trade Law successfully assisted our client in filing a Voluntary Self-Disclosure (VSD) with the U.S. Census Bureau for violations of the Foreign Trade Regulations.
  • Diaz Trade Law proactively worked with the Census Bureau and corrected past filing errors. The VSD was successfully closed out with no penalties assessed.
• Diaz Trade Law successfully assisted our client in filing a Prior Disclosure. CBP accepted the prior disclosure with no 1592 penalties being assessed!

Bonded Warehouse

• After Diaz Trade Law’s successful application, our client’s Bonded Warehouse Application was approved!
• After its bonded warehouse was activated by CBP, our client realized it wanted to change the total square footage. Diaz Trade Law successfully assisted our client alter its customs bonded warehouse space.

Successfully Assisted Numerous Importers in Various Seizure Cases 

• CBP seized our client’s vehicle after believing it could have been used to import illegal substances. After Diaz Trade Law’s successful petition proving our client’s innocence, CBP released the vehicle with no penalty assessed
• $20,868.81 of our client’s currency was seized by CBP. After Diaz Trade Law’s successful petition, $19,868.81 was returned to our client!
• $15,795 of our client’s currency was seized by CBP. After Diaz Trade Law’s successful petition, $14,795 was returned to our client!
• $12,157.95 worth of jewelry was seized by Customs after our client failed to declare it. After Diaz Trade Law’s successful Petition, CBP released the jewelry within 22 days.

Awards

• In 2021, Diaz Trade Law founder Jennifer Diaz was again Chambers ranked in International Trade: Customs – USA – Nationwide

Publications

Key publications written by Diaz Trade Law in 2021 were:

• Bloomberg Law, Introduction to U.S. Export Controls: Part 2, November, 2021.
• Bloomberg Law, Protecting Intellectual Property Rights in China, October 2021.
• Bloomberg Law, Incoterms 2020, May 2021.
• Bloomberg Law, Submitting Voluntary Self-Disclosures to Bureau of Industry & Security, May 2021.
• Bloomberg Law, Submitting a Voluntary Self-Disclosure to Census, April 2021.
• Bloomberg Law, Submitting a Voluntary Self-Disclosure to OFAC, April 2021.
• Bloomberg Law, U.S. Customs Targets Use of Forced Labor, January 2021.
• Customs and International Trade Bar Association, An Overview of China’s New Export Controls Regime,
• Customs and International Trade Bar Association, COVID-19’s Impact on 2020 Trade Flows,

Customized Training Programs & Webinars

Key compliance programs taught by Diaz Trade Law in 2021 were:

• Intellectual Property Rights and Customs – Amazon Brand Registry
• CTPAT Program: Is CTPAT a Right Fit
• Successfully Navigating the U.S. Customs Detention and Seizure Process
• How to Navigate FDA Enforcement Action: Detentions, Warning Letters, and Import Alerts
• Requests For Information (CBP Form 28) and Prior Disclosures
• How to Build and Maintain an Effective Import Compliance Plan
• How to Build and Maintain an Effective Export Compliance Plan
• Importing Food in Compliance With U.S. FDA and Surviving A FSVP Audit
• Importing Medical Devices in Compliance With U.S. FDA
• 6 Months In – Insights on Biden & Congress on Trade
• Is it a Cosmetic, a Drug, or Both? FDA Enforcement Actions
• ACE: Auditing Your Export History
• ACE: Auditing Your Import History
• Introduction to Export Controls
• Importing 101 – Introduction to U.S. Customs
• Anti-Circumvention / EAPA / Dumping Duties & the Spreadability of Cases (Coated Paper)
• Other Trade Remedies 101 – Every Administration has a Favorite!
• Basics on AD/CVD
• Cleaning for Covid-19 – Importing Cleaning Products: Who Regulates You?
• Forecasting the Next 4 Years of Biden on Trade

Diaz Trade Law values you and appreciates your trust in us to be your Customs and International Trade Law Expert! Contact us at info@diaztradelaw.com to schedule your consultation or customized training today.

CBP 

• In Fiscal Year 2021, CBP at the LA/Long Beach Seaport seized More Than $760 Million in Counterfeit and Prohibited Products, a 652% increase over the previous year.
• CBP issues guidance regarding the extension of product exclusions from additional Section 301 China duties on certain medical-care products to address COVID-19.
• With changes to the HTSUS classification systems possibly coming as early as January 1, 2021, U.S. importers should review their classifications and ensure compliance with U.S. regulations

BIS

• The Bureau of Industry and Security (BIS) requests public comment regarding areas and priorities for U.S. and EU export control cooperation under the Trade and Technology Council.
  • Comments are due by January 14, 2022
• On November 26, 2021, the Department of Commerce’s Bureau of Industry and Security (BIS) published a final rule adding 27 foreign entities and individuals to the Entity List for engaging in activities that are contrary to the national security or foreign policy interests of the United States.

China

• In their most substantial talk since President Biden took office, Chinese President Xi Jinping has warned that encouraging Taiwanese independence would be “playing with fire”.
• On November 12, 2020, the President declared a national emergency to deal with the extraordinary threat to the national security, foreign policy, and economy of the United States constituted by certain companies of the People’s Republic of China.
• Airbnb subject to regulatory risk under U.S. law with more than a dozen homes available for rent in China’s Xinjiang region on land owned by an organization sanctioned by the U.S. government for complicity in genocide and forced labor.
• On December 6, 2021, President Biden announced a U.S. diplomatic boycott of the 2022 Beijing Winter Olympic Games over concerns about China’s human rights record.

Commerce Department

• The Department of Commerce invites the general public to comment on proposed, and continuing information collections to allow for submission of exclusions requests from the remedies adjusting imports of steel and aluminum into the United States.
• Comments are due by January 24, 2022.
• On December 1, 2021, the Department of Commerce announced the opportunity to request an annual administrative review for products that are currently subject to antidumping and countervailing duties.

FDA

• The FDA is sharing a grant opportunity to cover COVID-19-related expenses for eligible FDA-regulated food producers, processors and growers.
  • Applications are due November 22
    • How to Apply – USDA’s Pandemic Response and Safety Grant Program – YouTube
    • Eligibility – USDA’s Pandemic Response and Safety Grant Program – YouTube
    • DUNS Number Registration – USDA’s Pandemic Response and Safety Grant Program – YouTube

Export Controls/Sanctions

• On November 18, 2021, the U.S. Department of the Treasury’s Office of Foreign Assets Control sanctioned senior Houthi military officer Saleh Mesfer Alshaer, for the seizure of property in Yemen valued at greater than 100 million dollars, using a variety of unlawful tactics, including extortion.
• On November 18, 2021, the U.S. Department of the Treasury’s Office of Foreign Assets Control sanctioned six Iranian individuals and one Iranian entity for attempting to influence the 2020 U.S. presidential election.
• On November 24, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) amended the Syrian Sanctions Regulations to expand the authorizations for nongovernmental organizations (NGO) to engage in certain transactions and activities that ensure the continued provision of humanitarian assistance, including certain early-recovery activities, that benefit the Syrian people.
• On November 24, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Venezuela-related General License 8I, authorizing  limited transactions with Petróleos de Venezuela, S.A. or the wind down of operations in Venezuela for certain entities.
• On December 2, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced the expansion of sanctions against Belarus to include 35 new designations to the Specially Designated Nationals and Blocked Entities List and the issuance of a related wind-down license, General License 5.
• On November 8, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned 57 cryptocurrency addresses and one exchange for facilitating ransomware and money laundering

DST and Section 301 Investigations

• As part of the to address tax challenges arising from the digitalization of the world economy, the U.S. Trade Representative has determined to terminate the Section 301 Digital Services Tax Investigations of Austria, France, Italy, Spain, and the United Kingdom.
• U.S. and India reach agreement regarding the treatment of Digital Services Taxes prior to full implementation of Pillar 1 of the Organization for Economic Co-operation and Development (OECD) agreement.  As part of the agreement the United States will terminate the currently suspended additional duties on goods of India that had been adopted in the DST Section 301 investigation.
• On November 22, 2021, the U.S. Department of the Treasury (Treasury) issued a joint statement with Turkey regarding a transitional approach to Turkey’s Digital Service Tax (DST) prior to entry into force of Pillar 1. The joint statement reflects a political agreement in which the U.S. Trade Representative has determined to terminate the section 301 action taken in the investigation of Turkey’s DST.

USTR/Trade Policy

• On November 17, 2021, the United States and Japan announced the formation of the “U.S.-Japan Partnership on Trade” to deepen cooperation between the two countries and reaffirm their alliance through regular engagement on trade-related matters.
• United States Trade Representative Katherine Tai and United States Secretary of Commerce Gina Raimondo published an op-ed touting the agreement reached with the European Union that preserves the long-term viability of our steel and aluminum industries by tackling global excess capacity and creates a framework for reducing the carbon intensity of those sectors.

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Did you know in FY2020, U.S. Customs seized more than 26,000 shipments worth more than $1.3 BILLION due to alleged intellectual property rights (IPR) violations? Ensure you’re on the right side of CBP enforcement and register for Diaz Trade Law’s next webinar “Intellectual Property Rights (IPR) and Customs (Including an Update on the Amazon Registry) – Amazon Brand Registry“ taking place on December 15, 2021. This one-hour webinar will provide best practices and TOP tips on how one can protect their IPR using U.S. Customs and Border Protection (CBP) and effective methods to go after IPR infringers.

Register today to hear directly from DTL’s president, Jennifer Diaz, Associate Attorney, Denise Calle and Of Counsel and IPR Specialist, Augusto Perera, as they teach attendees about intellectual property rights and the best ways to protect them.

Why Should I Register for this Webinar?

In FY2019 and FY2020, U.S. Customs (CBP) seized more than 53,000 shipments worth more than $2.8 BILLION because of alleged IPR violations. The vast majority of goods seized have come from China and Hong Kong. During FY2020, CBP reported 18,757 active recordations – more than each of the previous two years.  Importers must be aware of how to import in compliance with IPR laws as well as how to protect their own intellectual property rights

In response to enforcement discussed above, Diaz Trade Law is hosting a NEI accredited webinar, “Intellectual Property Rights and Customs – Amazon Brand Registry” to train industry on top tips to avoid enforcement, and best practices to proactively protect their own brands.

In this webinar, you will learn the basics of intellectual property considerations for your business, how to use Amazon Brand Registry to build your brand, how protecting your brand is an ongoing commitment and the steps you need to take to ensure you do so proactively.

Importers, in-house legal counsel, owners, executives, marketing professionals, and others interested in intellectual property are encouraged to attend either live on December 15, 2021 at 12:00 PM, or on demand thereafter. Register HERE!