1. Review Import Data for Accuracy

Begin with a thorough audit of your import data. Confirm that HTS classifications are correct and current, declared values accurately reflect your transactions, and country-of-origin determinations are well documented. Small mistakes can lead to large penalties.

2. Reassess Tariffs and Duty Exposure

Year-end is the ideal time to evaluate whether you are paying unnecessary duties and explore your options for tariff mitigation strategies. Consider what exclusions have changed, whether tariff engineering may reduce costs, or whether sourcing strategies should be updated. Many importers discover duty-saving opportunities simply by reassessing their tariff positions annually.

3. Strengthen Forced Labor Compliance

With UFLPA enforcement intensifying, importers must confirm that supplier information, ownership structures, and supply chain documentation are up to date. Now is the time to verify traceability records, refresh internal training, and assess whether high-risk suppliers require additional review.

4. Update Written Compliance Procedures

If your compliance manual or SOPs haven’t been updated this year, they’re likely outdated. Written processes should reflect current regulations, product updates, tariff changes, and internal workflow adjustments. CBP expects importers to document their compliance efforts clearly and accurately.

5. Conduct a Recordkeeping Audit

Recordkeeping is a key part of an importer’s duty to use reasonable care. Ensure you can quickly retrieve all required import documents from invoices and packing lists to HTS support, bills of lading, and supplier certifications. Recordkeeping failures are one of the most common issues CBP flags during audits, and year-end is the perfect time to clean up files.

6. Update Internal Training

Import compliance is only as strong as the people involved. Year-end is an excellent opportunity to refresh your team’s understanding of classification, valuation, country-of-origin rules, reasonable care, and forced labor compliance. Well-trained teams help prevent mistakes and reduce future risk.

7. Assess Audit Readiness

Consider how prepared your company is to respond to a CBP Form 28 or 29, a Focused Assessment, or a forced labor detention. If gaps or uncertainties exist, year-end provides the chance to correct them, strengthen documentation, or make a plan to improve your readiness approach over the coming weeks. 

8. Set Compliance Goals for the Upcoming Year

Finally, look forward. Establish measurable goals for the new year, whether it’s improving classification accuracy, reducing filing errors, tightening supplier oversight, implementing new technology, or enhancing training. Strategic goals help transform compliance from a reactive function into a competitive advantage.

Contact Diaz Trade Law for Compliance Help

A year-end compliance review is one of the most valuable things an importer can do to reduce risk, control costs, and prepare for the evolving trade environment. Diaz Trade Law has decades of experience helping importers with pre-compliance. With an increased focus on enforcement expected in 2026, NOW is the time to get your compliance strategy in order. Contact us today for assistance. 305-456-3830 or info@diaztradelaw.com.

Learn more:

• Bloomberg Law: CBP Recordkeeping Requirements
• Bloomberg Law: Responding to a CBP Form 28 or 29
• Bloomberg Law: What is an Importer’s Reasonable Care Standard?
• Band-Aid or Stitches? What’s Your Compliance Approach?
• UFLPA DHS Forced Labor Guidance – What Importers Need to Know
• Know Your Supply Chain: Forced Labor
• Webinar: Tariff Mitigation Strategies
• Webinar: Importing 101 – Introduction to U.S. Customs
• Webinar: ACE: Auditing Your Import History
• Webinar: CBP 201 – Building & Maintaining an Effective Import Compliance Plan

The employees were arrested and charged with one count of conspiracy to commit wire fraud and were detained. The company co-owner, who was also charged, remains in Indonesia and has not yet been arrested.

The defendants allegedly engaged in a complex scheme to import over $1.2 billion of jewelry and illegally defraud the United States out of more than $86 million in customs duties and tariffs. 

The alleged scheme included two parts:

• First, UBS Gold made jewelry in Indonesia and shipped it to Jordan, which had a Free Trade Agreement with the United States, before sending it to the United States. The defendants then falsely claimed that UBS Gold jewelry had been manufactured in Jordan, which avoided the duty that would otherwise apply.
• Second, when the U.S. announced additional tariffs on Indonesia and Jordan earlier this year, the company began shipping scrap gold from the U.S. to Jordan, which they falsely claimed was gold jewelry that simply needed to be assembled or finished in Jordan. Instead, the defendants and co-conspirators swapped the scrap gold for UBS Gold jewelry made in Indonesia, which they then shipped from Jordan to the U.S. The defendants falsely claimed that the jewelry had been manufactured in the U.S., so they could avoid paying the tariffs that would otherwise apply.

The wire fraud conspiracy charge carries a maximum of 20 years in prison and a maximum fine of either $250,000 for the individual defendants or $500,000 for the corporate entity or twice the gain or loss from the offense, whichever is greater.

​​This case demonstrates the government’s focus on enforcement and the importance of prioritizing compliance programs. Although this case was egregious, importers can still face substantial fines and penalties when they fail to exercise reasonable care and misclassify goods or misstate the country of origin. 

Diaz Trade Law can help create an import compliance plan for your business or review and update an existing one. To learn more about how we can help, contact us at info@diaztradelaw.com or call us at 305-456-3830.

Learn more:

• Crash Course in the Harmonized Tariff Schedule of the United States
• A Primer on Customs Classification
• Webinar: Importing 101 – Introduction to U.S. Customs
• ACE: Auditing Your Import History
• Why Pre-Compliance is a MUST
• 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

IEEPA Tariffs at the Supreme Court

The Supreme Court (SCOTUS) heard oral arguments in Learning Resources, Inc. v. Trump on November 5, 2025. The case challenges whether the President has the authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). The Administration relied heavily on IEEPA to impose new tariffs – including fentanyl tariffs on China, Canada, and Mexico, and global reciprocal tariffs. Many trade lawyers are predicting that the Court will rule in favor of importers and find that IEEPA does not grant the President the authority to impose sweeping tariffs. 

Potential Refunds & What Importers Should Do

Although it remains unclear how CBP will handle refunds (should SCOTUS agree with the lower courts), it is likely that once an entry is liquidated and the liquidation becomes final, CBP may not grant a refund of duties paid, regardless of SCOTUS’s outcome. It will likely be the position that CBP only has to grant refunds to those parties that have a Court order ordering the refund. During the pendency of all of the Court cases, CBP may expedite the liquidation process for entries that are not subject to an injunction or agreement in Court with respect to prospective refunds.

To preserve their right to future refunds, importers should:

1. File Suit in the CIT. File a preventative Court Challenge in which the lack of legality of the Tariffs is presented on behalf of specific importers. This would be filed on a prospective basis and would not wait for the liquidation of an entry and the denial of a protest. This would mean that if the tariffs are ultimately struck down, but only for those that are in Court, you would also benefit from the ruling without having to pursue a long additional post-decision process.
2. Monitor liquidation dates closely. CBP must continue liquidating entries unless directed otherwise, so importers should track when each entry, especially those subject to IEEPA tariffs, is scheduled for liquidation.
3. File protests on liquidated entries. If an entry has been liquidated, importers should submit a formal protest promptly to argue that IEEPA duties were unlawful. Properly filed protests preserve their right to a refund and pave the way for judicial review if needed.
4. Seek extensions or delayed liquidation when feasible. Importers may request liquidation extensions or delay the process for entries impacted by IEEPA tariffs, which may buy time and help maintain eligibility for refunds, especially if “good cause” can be shown.
5. Maintain thorough records. Proper recordkeeping will be essential in a future administrative process to recover duties paid. Missing entry summaries or proof of duty payments could jeopardize refunds.

Diaz Trade Law can assist importers with preserving their opportunity for duty refunds while the IEEPA case is pending. Contact us today to learn more. 305-456-3830 or info@diaztradelaw.com.

Follow our tariffs & trade deals page to keep up with the latest trade news.

Read more:

• Tariffs at the Supreme Court!
• High Tariffs, High Stakes: The Rise in Customs Fraud and Enforcement Risk
• Courts Say Trump Tariffs are Unlawful, Now What?
• Bloomberg Law: Tariff Classification Basics
• ICYMI: Trump Administration Imposes 25% Steel and Aluminum Tariff
• ICYMI: President Trump Signs America First Trade Policy
• Trump Administration Announces Plan for Reciprocal Tariffs
• New Tariffs on Mexico, Canada, and China: Key Updates for Importers
• Navigating Tariff Increases: Strategies to Minimize Tariff Costs Under the Trump Administration
• Webinar: Navigating Tariff Challenges: Mitigation Tools & Tactics
• Breaking Trade News: 10% Tariff, NTE Report, CIT Settlement
• Trump Administration Announces Reciprocal Tariffs
• The Latest on Tariffs, Key Information for Importers – Automobile and Venezuela Oil Update

The dashboard includes serious adverse event reports submitted by responsible persons for cosmetic products under requirements established by the Modernization of Cosmetics Regulation Act of 2022 (MoCRA), as well as voluntary adverse event reports submitted to the FDA by healthcare professionals, consumers, salon professionals, cosmetologists, and others. 

This announcement follows a recent launch of real-time reporting of adverse event and medication errors data for drugs and therapeutic biologics. 

In the announcement, the FDA stated these real-time reporting tools are part of the agency’s commitment to transparency and providing greater insight into the safety and regulation of the products consumers use every day.

Note: Reports in this dashboard have not been verified by the FDA, and their publication does not indicate that the FDA has concluded the product caused the adverse event. 

Diaz Trade Law provides assistance with FDA pre-compliance as well as assistance in successfully navigating FDA enforcement actions. For assistance with cosmetics compliance requirements, required registration, reporting, or other FDA matters, contact us at 305-456-3830 or info@diaztradelaw.com.

Learn more:

• A New Era in Cosmetics Regulation: The Modernization of Cosmetic Regulations Act
• FDA – Is it a Cosmetic, a Drug, or Both? Mitigating FDA Enforcement Actions
• Webinar: Getting MoCRA Compliant
• FDA Issues New Rules on Use of the Term “Healthy” on Food Labeling
• FDA Issues Proposed Rule on Front-of-Package Nutrition Labeling

• Coordinated National Response: Rather than each port conducting manual reviews of certain entries on its own, specialized teams now coordinate their efforts across the country to more quickly identify and stop dangerous products.

• Harmonized Real-Time Alert System: If the FDA detects a high-risk product at one port, such as contaminated infant formula or counterfeit drugs, alerts are immediately shared across all ports so they can watch for the same threats.

• Improved Efficiency: Built on a successful 2022 pilot, the NER program has sped up processing by 70% and increased detection of high-risk products by 36%.

• Expanded Reviewer Capacity: The program allows for more FDA reviewer availability and collaboration across the national network. 

The FDA’s current evaluative standards, regulatory requirements, and admissibility thresholds remain the same. 

The FDA has also published a communications guide that includes general contact protocols, hot shipments handling, email formatting requirements, and FAQs.

Diaz Trade Law provides assistance with FDA pre-compliance as well as assistance in successfully navigating FDA enforcement actions. For assistance with NER requirements or other FDA matters, contact us at 305-456-3830 or info@diaztradelaw.com.

Learn more:

• A New Era in Cosmetics Regulation: The Modernization of Cosmetic Regulations Act
• FDA – Is it a Cosmetic, a Drug, or Both? Mitigating FDA Enforcement Actions
• Webinar: Getting MoCRA Compliant
• FDA Issues New Rules on Use of the Term “Healthy” on Food Labeling
• FDA Issues Proposed Rule on Front-of-Package Nutrition Labeling

Background

The Census Bureau is responsible for collecting, compiling, and publishing import and export trade statistics for the United States. As part of this responsibility, the Census collects Electronic Export Information (EEI) in concert with the export control and enforcement functions of U.S. Customs and Border Protection (CBP) of the Department of Homeland Security (DHS), the Bureau of Industry and Security (BIS), and the Directorate of Defense Trade Controls (DDTC).

Public Law 107-228 directed the Census to publish regulations requiring exporters to file Shippers’ Export Declarations. As a result, the bureau experienced an increase in the number of inquiries regarding in-transit movements. Accordingly, in October of 2024 the Census solicited comments on a proposed rule to clarify its regulations governing in-transit shipments. The bureau received 11 letters and emails commenting on the proposed rule.

Key Changes

In addition to making definitional, grammatical and style changes, the rule: (i) clarifies who is the USPPI; (ii) makes changes to mandatory filing requirements; (iii) makes changes to voluntary self-disclosures.  

Who is the USPPI

The U.S. Principal Party in Interest (USPPI) is the person or legal entity in the United States that receives the primary benefit, monetary or otherwise, from an export transaction. The rule clarifies which party is the USPPI when goods are entered into the United States for consumption or warehousing then stored in a warehouse or storage facility, admitted into an FTZ, or entered into a bonded warehouse before exportation. 

When these movements occur prior to exportation, the USPPI may be one of the following: 

• A customs broker
• An operator of the warehouse, storage facility, FTZ, or bonded warehouse 

When the customs broker is the USPPI and supports the preparation or filing of the EEI, the customs broker must have consent from the importer of record to disclose confidential information to third parties. When a warehouse, storage facility, FTZ or bonded warehouse operator is the USPPI, they are responsible for the EEI based on information they have or have received from other parties to the export transaction.

Changes to Filing Requirements

The Rule makes several changes to the mandatory filing requirements for EEI.

The rule clarifies that an EEI filing is not necessary when goods are moving in-transit through the United States, Puerto Rico, or the U.S. Virgin Islands from one country or area to another where goods do not enter the United States for consumption or warehousing.

It also amends the “General Filer Requirements” to clarify that that the filer must be located physically in the United States when filing the EEI, and that the EEI must be filed completely, accurately, and timely.

Voluntary Self-Disclosure

The rule clarifies that foreign persons may not submit a Voluntary Self-Disclosure (VSD) and states that parties will not be deemed to have made a VSD unless the individual making the disclosure did so with the full knowledge and authorization of senior management. The Bureau will not accept a disclosure from a Foreign Principal Party in Interest (FPPI) or legal counsel or other party representing a FPPI.

The rule also amends the Census Bureau’s actions when responding to a VSD. The Bureau is no longer required to notify CBP, Immigrations and Customs Enforcement (ICE), and the Office of Export Enforcement (OEE) of the receipt of the VSD. In addition, the rule relaxes the requirements for the Bureau when issuing a letter in response to a VSD. Instead of issuing a warning letter or letter setting forth corrective measures required, the Bureau may now simply issue a letter.

All importers and exporters involved in in-transit shipments should review the rule and ensure their internal processes and procedures are updated accordingly. Get in touch with Diaz Trade Law to learn more about how this new rule may impact your business: 305-456-3830 and info@diaztradelaw.com.

Learn more:

• Census Proposes Changes to Foreign Trade Regulations Filing Requirements
• Submitting a Voluntary Self-Disclosure to Census
• Webinar: What is Electronic Export Information (EEI) and Why Does it Matter?
• Webinar: Building and Maintaining an Effective Export Compliance Plan

Pre-planning and investing in regulatory compliance measures are key to success

The US is the most lucrative wellness market in the world – and for some small and medium-sized enterprises (SMEs) that produce supplements, the potential for growth and a bigger bottom line is difficult to ignore. 

And who would blame them? The US wellness sector is valued at US$2tn and is poised to continue growing, recording an average annual growth rate of 8.3% between 2019 and 2023, according to research by the Global Wellness Institute. 

In contrast, China’s market, ranked the second-largest in the world, trails at a more modest US$870bn, followed by Germany at $310bn.

However, rushing in without being fully compliant could result in products being blacklisted or seized at the border, says Jennifer Diaz, an attorney and founding partner at Miami-based Diaz Trade Law, which specializes in customs and US Food and Drug Administration (FDA) laws and compliance.

Here, Diaz offers her top five tips for new brands to stay compliant and off the FDA’s blacklist.

1. Know the regulators

One of the first steps for SMEs planning to import supplements into the US is to register with the FDA, as they are considered a food product, Diaz says.

Companies also need to designate a US agent to act on their behalf before shipments begin.

“Most entities also don’t realize that the US has 47 regulatory agencies that can regulate imports and exports, so you may be dealing with multiple federal regulatory agencies that regulate your product,” she adds.

For example, the FDA, Federal Trade Commission (FTC) and US Customs regulate the imported supplements market, she says.

2. Beware of being blacklisted

One underestimated risk for SMEs launching their supplements in the US is the FDA’s import alert system, which Diaz describes as a blacklist for companies that have failed to comply with regulations.

This could be anything from mislabeling products to not using English on labels, making false medical claims, or failing to register with the FDA, Diaz explains, adding that it is time-consuming and costly to be removed from the list.

“Many SMEs don’t have the ability to survive the enforcement because the full weight of the government on you when you’re non-compliant is big,” she says.

“The government does not have the resources to hold your hand and help you when it comes to compliance – the expectation is that the product is already compliant and you’re smart enough to pick the right business partners and agents before you launch.”

3. Be wary of influencers

Marketing claims, even those from third parties such as influencers, also fall under FDA and FTC regulations, according to Diaz.

“What many don’t realize is that the FDA can legally make your life miserable over your marketing claims, in addition to what’s on your product,” Diaz says.

For example, suppose a business sends a supplement to an influencer to promote it on social media and they claim that it cured their cancer. In this case, the company is deemed liable if they don’t “de-escalate” the claim, Diaz explains.

“The FDA has the legal ability to issue a company a warning letter for the claims that they make on their website or for the claims that influencers make on their behalf on social media.”

4. Set a budget for compliance

Not spending the time or money on pre-compliance preparation can also lead to costly errors, says Diaz.

“It could be hundreds of thousands of dollars if your goods are seized or you receive an FDA audit or warning letter,” she says.

Diaz recommends that SMEs conduct independent testing in a laboratory to verify ingredient claims, as well as taking out product liability insurance to protect against litigation and organizing a legal review of all labels, ingredients and marketing content.

5. Protect your brand

Diaz also recommends that SMEs protect their brands by registering them with the US Patent and Trademark Office.

“Once you register your trademark, you should also record it with US Customs and then teach them how to spot copies of your brand, such as unique packaging,” Diaz says. 

“Customs then logs it in its secret database and it goes to all customs officers – there are 60,000 customs officers in the country at 328 ports of entry – and they will fine the offender and alert you if they spot a fake.”

With trade policy in flux, now is the time to ensure you are on solid footing by auditing your compliance strategies, reassessing tariff exposure, and ensuring your business is prepared for what’s ahead.

Audit Your Business Before CBP Does

Conducting an audit of your business to check for import compliance is an essential step to avoid costly penalties, thwart supply chain disruptions, and to minimize legal risk. An audit helps identify potential compliance gaps, ensuring that your existing business practices are in compliance with all applicable regulations. It also allows businesses to proactively address issues before they escalate.

Import Report Card

Diaz Trade Law can provide a customized ACE report card to give you an overview of your import compliance. The report contains a summary of your import transactions and identifies potential issues in your business’ processes as well as substantive recommendations to ensure compliance. The report provides information like:

• Your last 5 years of import history
• List of HTS’s you use
• Total amounts paid in AD/CVD
• Manufacturer ID’s reported to Customs
• Inconsistencies in reporting
• Total value of imports and duties paid by year
• Review of countries of origin of your imported merchandise
• Use of Free Trade Agreements
• Your surety, bond coverage, and bond type
• And more!

Lastly, the Report Card service includes a one hour debrief with a Customs and Trade Law expert on the findings and recommendations.

Pre-Compliance – Plan Now or Pay Later

Many mistake the ease of importing to mean there is no liability or obligation on the part of the importer. Whether your company is new to importing, or has been in the business for years, CBP expects importers to use “reasonable care” to ensure compliance with relevant rules and regulations.

Reasonable care requires importers to conduct themselves as a reasonable importer would under the circumstances with respect to importing goods into the United States.

Reasonable care requires importers to:

• Meet the standard to enter, classify and determine the value of imported goods
• Provide other information necessary to aid CBP in properly assessing duties and collecting accurate statistics
• Determine whether other applicable legal standards and requirements have been met

Diaz Trade Law has significant experience in a broad range of trade compliance matters, including helping companies customize their own import compliance program. The program can entail developing import compliance documents, ongoing training for various departments in your business, regular internal audits, record keeping, and more. Such a program can help you not only avoid penalties and potential criminal liability but can also help in the mitigation process should a violation be discovered. Remember, just because your goods have been allowed to enter the U.S. in the past, doesn’t mean those importations were compliant or that Customs will never pursue additional duties for those entries. 

Tariff Minimization

Tariff increases have a significant impact on businesses involved in importing goods into the U.S. However, importers are not without options. There are several legal ways to minimize tariff costs, including:

• Temporary Importation under Bond (TIB)
• Incoterms
• Duty drawback
• Tariff engineering
• Country of origin change
• First sale
• Duty deferral
• Free trade agreements
• Moving some manufacturing to the U.S.

Importers exploring options to minimize tariff liability should always work with an expert to ensure they comply with all U.S. Customs regulations before making any changes. Duty evasion, even if unintentional, is a serious matter and can result in hefty monetary penalties or even prison time in the case of fraud.

A Customs Attorney Can Help You Prepare and Adapt

Diaz Trade Law has significant experience in a broad range of trade compliance matters and can help your business navigate constantly changing trade policy. From evaluating your existing practices to building a compliance program from scratch, we can help. Contact us at info@diaztradelaw.com or call us at 305-456-3830.

Learn more:

• Webinar: Navigating Tariff Challenges: Mitigation Tools and Tactics
• Webinar: Navigating CBP Regulations: Essential Practices for Import Success
• Webinar: Building and Maintaining an Effective Import Compliance Plan
• Webinar: CBP: ACE – Auditing Your Import History
• Webinar: Introduction to Importing
• Bloomberg Law: What is an Importer’s ‘Reasonable Care’ Standard?
• Bloomberg Law: Customs Administrative Enforcement Process: Fines, Penalties, Forfeitures and Liquidated Damages
• Bloomberg Law: Tariff Classification Basics

How Did We Get Here?

December 8th, 1993, the Dow Jones reached a record high of 3734.53, Janet Jackson’s “Again” remained number one on the charts, and President Bill Clinton signed the Customs Modernization Act (Mod Act). The Mod Act altered the import compliance landscape by making it the responsibility of the importer to classify items, determine their value, etc. The law also imposed a legal obligation to use “reasonable care” in doing so, or else Customs could (and would) impose penalties.

What Exactly is “Reasonable Care”?

Reasonable care requires importers to conduct themselves as a reasonable importer would under the circumstance with respect to importing goods into the United States.

Reasonable care requires importers to:

• Meet the standard to enter, classify and determine the value of imported goods
• Provide other information necessary to aid CBP in properly assessing duties and collecting accurate statistics
• Determine whether other applicable legal standards and requirements have been met

CBP is required to provide the public with guidance on their legal obligations regarding customs and trade regulations. CBP’s Informed Compliance Publication, What Every Member of the Trade Community Should Know: Reasonable Care, provides valuable insights for importers to utilize in ascertaining whether their current processes follow CBP’s reasonable care standard.

Import Compliance is a Continuous Process

Trade is a constantly changing industry. Regulations and guidelines are updated frequently, and supply chains shift often. Below are practical compliance tips on key topics under the umbrella of reasonable care.

Merchandise Descriptions & Classifications 

Importers must also be specific with descriptions included on their commercial invoices. CBP recently sent CSMS 60011750 titled “Announcement of Vague Merchandise Description Cargo Messages”. CBP advised the trade community that CBP regulations require a precise, or specific, description of the merchandise and that CBP is aiming to address vague cargo descriptions such as:

• General merchandise
• Gift
• Parts
• Accessories
• Consolidated

Deleon Trade LLC compiled a useful list of vague commodity descriptions to avoid here. The Canada Border Services Agency also provides a helpful resource on not acceptable/acceptable commodity descriptions here.

All merchandise imported to the U.S. is either subject to, or free of, duties in accordance with the Harmonized Tariff Schedule of the U.S. (HTSUS). The HTSUS is used to determine an imported article’s duty rate and whether the article is eligible to use a free trade agreement or any other trade preference program.

Importers should:

• If relying on a broker for a HTSUS classification, double check their work
• Establish reliable procedures to provide a correct and complete description of merchandise
• Consult a customs attorney if you’re unsure of the appropriate HTSUS

Product Valuation

Determining the value of imported goods is essential to calculate the total duty to be paid and often the most complicated area of Customs law.

Importers should:

• Understand the terms of sale and whether or not charges like freight, insurance, assists, indirect costs, or royalties were (or should be) included in the value.
• Keep a complete set of records from the import transaction

If you are purchasing from a related party, as defined in 19 U.S.C. §1401a(g), importers must review CBP’s tests for determining the acceptability of related party pricing. CBP’s Informed Compliance publication “Determining the Acceptability of Transaction Value for Related Party Transactions” is a good resource.

• If you are importing from a related party, ensure you speak with counsel to confirm you’re using the appropriate valuation methodology.

Country of Origin

Determining a country of origin may seem straightforward, but often a final good has multiple components from multiple countries, making the analysis more complicated.

Importers should:

• Have a process to conduct ensure you know what raw material comes from what country and understand what specific process occurred in what country.
• Ensure every imported item is marked conspicuously and legibly.

Intellectual Property Rights

CBP works with rightsholders to prevent the unauthorized importation of merchandise which bears a recorded trademark or copyright.

When importing goods with a trademark or copyright registered with the USPTO, importers should:

• Check to see whether or not the trademark or copyright is registered with the USPTO and recorded with CBP.
• Document permission from the trademark or copyright holder.
• Importers should also always check to see if the merchandise is subject to a U.S. International Trade Commission or court ordered exclusion order.

Forced Labor

Section 307 of the Tariff Act of 1930 prohibits the importation of all goods and merchandise mined, produced, or manufactured wholly or in part in any foreign country by forced labor, convict labor, and/or indentured labor under penal sanctions, including forced child labor.

Importers should:

• Utilize the Sweat and Toil app to conduct research regarding goods produced with child labor and forced labor
• Have a process in place to track where your goods are made and under what labor conditions.
• Conduct periodic internal audits to check for forced labor in your supply chain.
• Vet new suppliers for forced labor risk.
• Put a comprehensive social compliance system in place.
• Establish a procedure to maintain and produce any required entry documentation.

Importers should also be prepared for unannounced audits of their supply chain for forced labor.

Penalties

Failing to use “reasonable care” in your import compliance plan can cost you. Pursuant to 19 U.S. Code § 1592, if Customs determines that you committed a violation, and it was the result of fraud, they can impose penalties up to the value of the import. In the case of fraud, there can also be criminal consequences, which can result in additional fines and jail time for the offender.

Failure to keep adequate records can result in more penalties. Pursuant to 19 CFR § 163.6, a willful failure to “maintain, store, or retrieve” said records (for a period of 5 years) could cost you 75% of the value of the import or $100,000, whichever is less.

Other Considerations 

Import compliance goes beyond the practices outlined above. Have you considered other agencies and their regulations? The FDA is always involved when you are importing food, cosmetics, medical devices, for example. You’ll need a permit from TTB to import alcohol. Do you know if your import is subject to quotas? What about countervailing or anti-dumping duties – did you check the about 700 scope rulings? Are there special labeling requirements? What about active sanctions with the country of origin? Compliance is a complex and continual process that requires the help of an experienced professional.

A Customs Attorney Can Help Your Business Set up an Import Compliance Plan

Diaz Trade Law has significant experience in a broad range of trade compliance matters, including helping companies customize their own Import Compliance Program. The program can entail developing import compliance documents, ongoing training for various departments in your business, regular internal audits, record keeping, and more.

Such a program can help you not only avoid penalties and potential criminal liability but can also help in the mitigation process should a violation be discovered. From evaluating an existing compliance plan to developing one from scratch, Diaz Trade Law can help. Contact us at info@diaztradelaw.com or call us at 305-456-3830.

Want live training on this topic?? Join us on May 23 at the World Trade Center Miami for a LIVE training: “Navigating CBP Regulations: Essential Practices for Import Success.” You will learn top tips for importing into the United States as well as basic customs concepts like protests, seizures, liquidated damages, and the Fines, Penalties, and Forfeitures process. Register here!

Learn more about import compliance:

Relevant blog posts:

• Band-Aid or Stitches? What’s Your Compliance Approach?
• PERSONAL LIABILITY FOR OWNERS OF IMPORTING COMPANIES!  
• UFLPA DHS Forced Labor Guidance – What Importers Need to Know
• Know Your Supply Chain: Forced Labor

Relevant on-demand webinars:

• Importing 101 – Introduction to U.S. Customs
• ACE: Auditing Your Import History
• CBP 201 – Building & Maintaining an Effective Import Compliance Plan

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.