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

The new eFiling program will apply to all imported consumer products subject to a mandatory safety standard, including de minimis shipments. Requirements impacting most imported consumer products and those produced domestically will take effect in July 2026.

Background – CPSC’s eFiling Proposal

Since 2008, importers have been required to maintain Certificates of Compliance stating that the product they are importing meets all applicable safety standards. However, these certificates did not need to be filed at the time of import.

In June 2022, CPSC announced a Beta Pilot test with CBP for eFiling of certificate data for regulated consumer products. In 2023, the CPSC and CBP began the test with 38 importer participants. In December 2023, the agencies published a notice expanding the Beta Pilot test to include up to 2,000 additional importer participants and to extend the test for up to three years. In announcing the expansion of the test, the CPSC also proposed a new rule that would require that importers of regulated consumer products eFile Certificates of Compliance at the time of import.

On November 22, 2024, the CPSC’s General Counsel circulated a staff briefing memorandum recommending approval and publication of a final rule implementing the eFiling proposal.

eFiling Requirements

The eFiling rule will impose new requirements for how importers manage product certificate data, not which products require a certificate. Any consumer product that is subject to a CPSC rule, ban, standard, or regulation will continue to require a Certificate of Compliance, which will be eFiled at the time of entry.

Importers will be required to transmit Message Set data into CBP’s Automated Commercial Environment (ACE) system at the time of entry.

There are two options to transmit this data:

1. Full PGA Message Set: The importer provides their broker with the full product certificate for the imported product and the broker files it in the CPSC PGA Message Set.
2. Reference PGA Message Set: The importer pre-enters the certificate data into the CPSC Product Registry and then provides their broker with certificate identifiers to be filed in the PGA Message Set.

What Importers Should Do

CPSC staff is recommending a 12-month implementation period for the eFiling requirements. However, importers should take steps now to familiarize themselves with the eFiling requirements and ensure they are prepared to file the required information.

The CPSC has published a variety of resources to assist importers in implementing this new requirement:

• eFiling Quick Start Guide
• eFiling Document Library
• eFiling Product Registry Guide
• eFiling Implementation Guide

Diaz Trade Law can help importers update their compliance programs to ensure they are meeting all CPSC requirements. Contact us today at info@diaztradelaw.com or 305-456-3830.

Read more:

• S. Consumer Product Safety Commission: Not Just Toys and Games
• CPSC to Begin Voluntary Stage of eFiling
• Webinar: Building and Maintaining an Effective Import Compliance Plan
• Pre-Compliance Plans
• Why Pre-Compliance is a MUST

Beginning in 2025, products regulated by the CPSC may be denied entry into the U.S. unless the importer electronically files a detailed product certification with Customs and Border Protection (CBP).

See a full list of CPSC regulated products here.

CPSC’s eFiling Proposal

Since 2008, importers have been required to maintain Certificates of Compliance stating that the product they are importing meets all applicable safety standards. However, these certificates did not need to be filed at the time of import.

In June 2022, CPSC announced a Beta Pilot test with CBP for eFiling of certificate data for regulated consumer products. In 2023, the CPSC and CBP began the text with 38 importer participants. In December 2023, the agencies published a notice expanding the Beta Pilot test to include up to 2,000 additional importer participants and to extend the test for up to three years. In announcing expansion of the test, the CPSC also proposed a new rule that would require that importers of regulated consumer products eFile Certificates of Compliance at import.

On November 22, 2024, the CPSC’s General Counsel circulated a staff briefing memorandum recommending approval and publication of a final rule implementing the eFiling proposal.

eFiling Requirements

The eFiling rule will impose new requirements for how importers manage product certificate data, not which products require a certificate. Any consumer product that is subject to a CPSC rule, ban, standard, or regulation will continue to require a Certificate of Compliance, which will be eFiled at the time of entry.

Importers will be required to transmit Message Set data into CBP’s Automated Commercial Environment (ACE) system at the time of entry.

There are two options to transmit this data:

Full PGA Message Set:

The importer provides their broker with the full product certificate for the imported product and the broker files it in the CPSC PGA Message Set.

Reference PGA Message Set:

The importer pre-enters the certificate data into the CPSC Product Registry and then provides their broker with certificate identifiers to be filed in the PGA Message Set.

When documents are uploaded into the Document Image System (DIS) they must be flagged as follows:

• Entry documents code “CPS”
• Test reports/CPCs code “CPS01”

Product Certification Requirements

The eFiling rule does not make any changes to which products require certifications. Products must be certified if they are:

• Finished products
• Subject to a consumer product safety rule, ban, similar rule, standard, or regulation;
• Imported for consumption or warehousing; or
• Distributed in commerce

There is no de minimis exemption for eFiling. Any product requiring certification must have an eFiled certificate, regardless of the value of the imported shipment.

What Importers Should Do

CPSC staff is recommending a 12-month implementation period for the eFiling requirements. However, importers should take steps now to familiarize themselves with the eFiling requirements and ensure they are prepared to file the required information.

The CPSC has published a variety of resources to assist importers in implementing this new requirement:

• eFiling Quick Start Guide
• eFiling Document Library
• eFiling Product Registry Guide
• eFiling Implementation Guide

Diaz Trade Law can help importers update their compliance programs to ensure they are meeting all CPSC requirements. Contact us today at info@diaztradelaw.com or 305-456-3830.

Read more:

• S. Consumer Product Safety Commission: Not Just Toys and Games
• CPSC to Begin Voluntary Stage of eFiling
• Webinar: Building and Maintaining an Effective Import Compliance Plan
• Pre-Compliance Plans
• Why Pre-Compliance is a MUST

Conditioning

The rule would require producers of these products to subject them to conditioning procedures to ensure their durability. These include exposing the products to various temperatures, chlorine and salt water environments, and ultraviolet light.

Minimum standards

To safeguard against unintentional submergence and restraint system failure, the rule proposes additional minimum standards.

Buoyancy Requirements

The Commission is proposing to require that all neck floats demonstrate a minimum upward buoyancy equal to or greater than 30 percent of the expected weight capacity. Additionally, the rule would require that inherently buoyant neck floats to not lose more than 5 percent of their initial buoyancy after being submerged for a 24-hour period.

Restraint Systems

To reduce the likelihood of a restraint system failure on a neck float, which can result in a child slipping through the product, the new rule Commission proposes requirements for the release mode of the fastening mechanism, and overall mechanical integrity of restraint systems.

Marking, Labeling, and Instructional Requirements

In the notice, the CPSC noted that the existing safety messaging for neck floats has  limited effectiveness for preventing the submersion hazard. The rule requires new on-product warnings that include:

• A description of the hazard;
• Information about the consequences of exposure to the hazard; and
• Instructions regarding appropriate hazard-avoidance behaviors

The rule also provides guidance on the content of the labeling and required instructional literature.

What Importers Should Do

The CPSC has opened a comment period for interested parties to weigh in on the proposed rule. Submissions are due January 21, 2025. Interested parties should make their voices heard by filing comments.

Additionally, the CPSC has warned against stockpiling imports of neck floats ahead of finalizing the rule. Firms are instructed to avoid importing noncompliant products in a given month at more than a rate of 105% of the base period. The base period is the average monthly manufacturing or import volume within the last 13 months of production that immediately precedes the month of promulgation of the final rule.

Diaz Trade Law can help importers submit a comment and determine how these new requirements will impact their business. Contact us at info@diaztradelaw.com or call us at 305-456-3830.

What is eFiling?

In November 2022, the CPSC launched a beta pilot test of an eFiling initiative. The initiative allows importers of regulated consumer products to file electronically with CPSC and Customs and Border Protection (CBP) certain data elements from a certificate of compliance.

The goal of the eFiling process is to expedite targeting of shipments that put people at risk, but also allow importers to establish a good history of safety and to move their products more quickly through the ports.

CPSC anticipates that full implementation of eFiling will occur in or around 2025.

How to Get Started with eFiling

Importers must transmit Message Set data into CBP’s Automated Commercial Environment (ACE) system at the time of entry. There are two options to accomplish this:

Full PGA Message Set: The importer provides their broker with the full product certificate for the imported product and the broker files it in the CPSC PGA Message Set. This is recommended if the importer imports a limited number of regulated consumer products or does not repeatedly import the same product. 

Reference PGA Message Set: The importer pre-enters the certificate data into the CPSC Product Registry and then provides their broker with certificate identifiers to be filed in the PGA Message Set.. This option is preferable if the importer repeatedly imports regulated consumer products covered by the same product certificates as the importer can leverage bulk upload features.

CPSC has published a Quick Start Guide to support importers in eFiling implementation.

Importer Responsibilities

Although brokers play an important part in the eFiling process, ultimately, the importer is responsible for product certification. Only importers may sign up for the eFiling initiative. Additionally, theFiling initiative does not change the CPSC requirements for a given product or shipment. CPSC provides various resources to support importers in understanding what testing and certification requirements apply to their imported consumer products. 

Currently, there is a wait-list to participate in the initiative and the first batch of importers will receive an invitation in the coming weeks. To be added to the waitlist to receive an invitation to establish a Business Account in the Product Registry, importers can email eFilingSupport@cpsc.gov with: 

• Company Name 
• Initial Business Account Administrator’s Name 
• Initial Business Account Administrator’s Email 
• Importer of Record Number(s) 
• Broker Filer Code(s) 
• Type of Products Imported 

If you need assistance establishing eFiling processes for your company, Diaz Trade Law can help.

U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC)

• The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List) based on OFAC’s determination that one or more applicable legal criteria were satisfied. 
• OFAC is publishing the names of one or more persons that have been placed on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) based on OFAC’s determination that one or more applicable legal criteria were satisfied. 
• OFAC is publishing the names of one or more persons that have been placed on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) based on OFAC’s determination that one or more applicable legal criteria were satisfied.
• OFAC is publishing the names of one or more persons that have been placed on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) based on OFAC’s determination that one or more applicable legal criteria were satisfied.
•  On November 26th, the Unitary Platform and the Maduro regime announced the resumption of talks in Mexico City; a humanitarian agreement focused on education, health, food security, flood response, and electricity programs that will benefit the Venezuelan people; and agreement on the continuation of talks focused on the 2024 elections. Following this announcement and consistent with U.S. government policy, OFAC issued Venezuela General License (GL) 41, authorizing Chevron Corporation to resume limited natural resource extraction operations in Venezuela.
• OFAC is issuing Venezuela-related General License 8K, “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for the Limited Maintenance of Essential Operations in Venezuela or the Wind Down of Operations in Venezuela for Certain Entities” and Venezuela-related General License 41, “Authorizing Certain Transactions Related to Chevron Corporation’s Joint Ventures in Venezuela”.  Additionally, OFAC is issuing two new Venezuela-related Frequently Asked Questions (FAQs 1098 and 1099).
• OFAC announced a settlement with Payward, Inc. d/b/a Kraken, a Delaware-incorporated virtual currency exchange with operations in the United States and elsewhere.  Kraken agreed to remit $362,158.70 to settle its potential civil liability for apparent violations of sanctions against Iran. 

U.S. International Trade Commission (USITC) 

• The U.S. International Trade Commission (USITC) has received a complaint entitled Certain Location-Sharing Systems, Related Software, Components Thereof, and Products Containing Same, DN 3655; the Commission is soliciting comments on any public interest issues raised by the complaint or complainant’s filing pursuant to the Commission’s Rules of Practice and Procedure.
• USITC has determined to review in part the final initial determination issued by the presiding chief administrative law judge  on September 9, 2022. The Commission requests briefing from the parties on certain issues under review, as indicated in this notice.
• USITC has determined to review in part the final initial determination issued by the presiding chief administrative law judge on September 9, 2022. The Commission requests briefing from the parties on certain issues under review, as indicated in this notice.
• USITC as received a complaint entitled Certain Cabinet X-ray and Optical Camera Systems and Components Thereof, DN 3656; the Commission is soliciting comments on any public interest issues raised by the complaint or complainant’s filing pursuant to the Commission’s Rules of Practice and Procedure.

U.S. Department of State (DOS)

• The Department of State (DOS) has submitted the information collection described below to the Office of Management and Budget (OMB) for approval. In accordance with the Paperwork Reduction Act of 1995 we are requesting comments on this collection from all interested individuals and organizations. The purpose of this Notice is to allow 30 days for public comment.

U.S. Consumer Product Safety Commission (CPSC)

• The U.S. Consumer Product Safety Commission (CPSC) has determined that there is an unreasonable risk of injury and death, particularly to children, associated with clothing storage units (CSUs) tipping over. To address this risk, the Commission is issuing a rule regarding the stability of CSUs. 

Department of Commerce (DOC)

• The Department of Commerce (DOC) updated two limits for the European Union Steel Tariff Rate Quota (TRQ) Program effective November 30, 2022 to align with production capabilities in Germany and Luxembourg. The effected steel HTS is 7301.10.0000 “Sheet Piling” under Chapter 99 HTS 9903.81.13. The quantity formerly listed for Country of Origin Germany has been reassigned to the quota limit for Country of Origin Luxembourg effective November 30, 2022.

United States Trade Representative (USTR)

• The U.S. Trade Representative  (USTR) modified the actions in the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation by excluding from additional duties certain medical-care products needed to address COVID, and subsequently extended certain of these exclusions. The current COVID exclusions — covering 81 medical-care products — are scheduled to expire on November 30, 2022. This notice announces the U.S. Trade Representative’s determination to further extend the 81 COVID exclusions for an additional three months.
•  USTR announced the United States and United Kingdom jointly hosted the 6^th U.S.-UK Small- and Medium-Sized (SME) Dialogue yesterday, bringing together business representatives from both sides of the Atlantic to identify ways to expand bilateral trade and investment and to enhance broad and inclusive SME participation in that trade and investment.

U.S. Customs and Border Protection (CBP) 

• U.S. Customs and Border Protection (CBP) personnel at all U.S. ports of entry will detain raw sugar and sugar-based products produced in the Dominican Republic by Central Romana Corporation Limited. CBP issued a Withhold Release Order (WRO) against Central Romana based on information that reasonably indicates the use of forced labor in its operations.
  • CBP identified five of the International Labour Organization’s 11 indicators of forced labor during its investigation:  abuse of vulnerability, isolation, withholding of wages, abusive working and living conditions, and excessive overtime.
• CBP released a reminder for transportation carrier companies that transact with CBP’s ACE systems to please pay the Annual SCAC Code Renewal fee for this year (2022) by Monday, December 5th, to the National Motor Freight Traffic Association (NMFTA) if you have not done so already.  The NMFTA SCAC Code Renewal web link is SCAC Renewal and Application Wizard (nmfta.org).  If you have any questions about the renewal, please email customerservice@nmfta.org

Ocean Energy Management Bureau 

• The Bureau of Ocean Energy Management (BOEM) will open and publicly announce bids received for blocks offered in the Cook Inlet Planning Area Outer Continental Shelf Oil and Gas Lease Sale 258 (Cook Inlet Sale 258), in accordance with the provisions of the Outer Continental Shelf Lands Act (OCSLA), as amended, and its implementing regulations.

U.S. Department of  Energy (DOE)

• The U.S. Department of Energy (DOE) announces the availability of the preliminary analysis it has conducted for purposes of evaluating the need for amended energy conservation standards for non-weatherized oil-fired furnaces (NWOFs), mobile home oil-fired furnaces (MHOFs‘), weatherized gas furnaces (WGFs), weatherized oil-fired furnaces (WOFs‘), and electric furnaces (EFs).

U.S. Department of Agriculture (USDA) 

• The United States Department of Agriculture’s (USDA) electronic system for propagative shipment processing will be offline for routine service maintenance, starting Friday, December 2, 2022, beginning at 6:00 p.m. EST, until Saturday, December 3, 2022, at 7:00 p.m. EST.
  • To ensure expedited agriculture clearance of propagative shipments during this time, we recommend the following:
    • For shipments requiring clearance on Saturday December 3, please contact the USDA plant inspection station that you currently work with regarding propagative shipments. This will avoid delays and ensure that all relevant information is available to conduct clearance activities. All shipments will be inspected per normal procedures; however, the document review, sample selection, and cargo release will take place outside of the system and will be processed electronically after the system is back online.

If you have questions about these updates, contact our Diaz Trade Law attorneys at info@diaztradelaw.com or call us at 305-456-3830.

To receive an email notification whenever a new post is published, please subscribe to our weekly blog here.

USITC

• On June 24, 2022, the U.S. International Trade Commission gave notice that it has received a complaint entitled Certain Mobile Electronic Devices, DN 3625; the Commission is soliciting comments on any public interest issues raised by the complaint or complainant’s filing pursuant to the Commission’s Rules of Practice and Procedure.
• On June 28, 2022, the USITC gave notice of the scheduling of the final phase of antidumping investigation No. 731-TA-1574 pursuant to the Tariff Act of 1930 to determine whether an industry in the United States is materially injured or threatened with material injury, or the establishment of an industry in the United States is materially retarded, by reason of imports of superabsorbent polymers from South Korea, provided for in subheadings 3906.90.50 and 3906.10.00 of the Harmonized Tariff Schedule of the United States, preliminarily determined by the Department of Commerce to be sold at less-than-fair-value.
• On June 28, 2022, the USITC determined to review in part a final initial determination (“FID”) of the presiding Administrative Law Judge (“ALJ”). On review, the Commission affirms the FID’s finding of no violation of section 337 of the Tariff Act of 1930, as amended, in this investigation of certain smart thermostats, HVAC systems and components thereof. The investigation is terminated.
• On June 28, 2022, the USITC gave notice of a complaint it received that, as supplemented, alleges violations of section 337 based upon the importation into the United States, the sale for importation, and the sale within the United States after importation of certain barcode scanners, scan engines, mobile computers with barcode scanning functionalities, products containing the same, and components thereof by reason of the infringement of certain claims of U.S.
• On June 29, 2022, the USITC gave notice of the scheduling of expedited reviews pursuant to the Tariff Act of 1930 to determine whether revocation of the antidumping duty order on large residential washers from China would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.
• On June 29, 2022, the USITC gave notice of the scheduling of expedited reviews pursuant to the Tariff Act of 1930 to determine whether revocation of the antidumping duty orders on certain polyester staple fiber from South Korea and Taiwan would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.

DOC

• On June 24, 2022, the U.S. Department of Commerce determines that urea ammonium nitrate solutions (UAN) from the Russian Federation (Russia) are being, or are likely to be, sold in the United States at less than fair value (LTFV).
• On June 24, 2022, the DOC received scope ruling applications, requesting that scope inquiries be conducted to determine whether identified products are covered by the scope of antidumping duty and/or countervailing duty orders that Commerce issued pursuant to those inquiries.
• On June 24, 2022, the DOC determined that countervailable subsidies are being provided to producers and exporters of urea ammonium nitrate solutions from the Republic of Trinidad and Tobago. The period of investigation was January 1, 2020, through December 31, 2020.
• On June 24, 2022, the DOC determined that countervailable subsidies are being provided to producers and exporters of urea ammonium nitrate solutions (UAN) from the Russian Federation (Russia).
• On June 24, 2022, the DOC determined that acrylonitrile-butadiene rubber (AB rubber) from France is being, or is likely to be, sold in the United States at less than fair value (LTFV). The period of investigation was April 1, 2020, through March 31, 2021.
• On June 24, 2022, the DOC determined that acrylonitrile-butadiene rubber (AB rubber) from Mexico is being, or is likely to be, sold in the United States at less than fair value (LTFV). The period of investigation was April 1, 2020, through March 31, 2021.
• On June 24, 2022, the DOC determined that acrylonitrile-butadiene rubber (AB rubber) from the Republic of Korea (Korea) is being, or is likely to be, sold in the United States at less than fair value (LTFV). The period of investigation was April 1, 2020, through March 31, 2021.
• On June 24, 2022, the DOC determined that urea ammonium nitrate solutions (UAN) from the Republic of Trinidad and Tobago (Trinidad and Tobago) are being, or are likely to be, sold in the United States at less than fair value (LTFV).
• On June 28, 2022, the DOC has determined that the manufacturers/exporters of crystalline silicon photovoltaic cells, whether or not assembled into modules, from China, sold subject merchandise in the United States at less than normal value during the period of review from December 1, 2019, through November 30, 2020.
• On June 28, 2022, the DOC conducted an administrative review of the antidumping duty order on polyethylene terephthalate film, sheet, and strip from Taiwan. The period of review was from July 1, 2020, through June 30, 2021. This review covers the following producers and exporters from Taiwan: Nan Ya Plastics Corporation (Nan Ya); and Shinkong Materials Technology Corporation (SMTC)/Shinkong Synthetic Fibers Corporation (SSFC). Commerce preliminarily determines that sales of subject merchandise have not been made below normal value (NV) by Nan Ya during the POR. In addition, we preliminarily find that SMTC/SSFC had no shipments during the POR.
• On June 28, 2022, the DOC determined that countervailable subsidies are being provided to producers and exporters of sodium nitrite from the Russian Federation during the period of investigation January 1, 2021, through December 31, 2021.
• On June 28, 2022, the DOC preliminarily determined that sodium nitrite from the Russian Federation is being, or is likely to be, sold in the United States at less than fair value. The period of investigation was January 1, 2021, through December 31, 2021.
• On June 14, 2022, the United States – Mexico – Canada Agreement Binational Panel issued its Decision in the matter of Certain Gypsum Board, Sheet, or Panel originating in or exported from the United States of America. The Binational Panel affirmed the Canadian Intentional Trade Tribunal’s Final Determination.

OFAC

• On June 28, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control designated 70 entities on the SDN List, many of which are critical to the Russian Federation’s defense industrial base, including State Corporation Rostec, the cornerstone of Russia’s defense, industrial, technology, and manufacturing sectors, as well as 29 Russian individuals. Today’s actions, taken pursuant to Executive Orders (E.O.s) 14024 and 14065, strike at the heart of Russia’s ability to develop and deploy weapons and technology used for Vladimir Putin’s brutal war of aggression against Ukraine.
• On June 29, 2022, The U.S Department of The Treasury’s Russian Elites, Proxies, and Oligarchs (REPO) Task Force leveraged extensive multilateral coordination to block or freeze more than $30 billion worth of sanctioned Russians’ assets, freeze or seize sanctioned persons’ high-value goods, and heavily restrict sanctioned Russians’ access to the international financial system.  REPO members have achieved these successes through close and extensive national and international coordination and collaboration.

CPSC

• On June 10, 2022, the U.S. Consumer Product Safety Commission (Commission or CPSC), in consultation with U.S. Customs and Border Protection (CBP), announced their joint intent to conduct a second test (a Beta Pilot) to assess the electronic filing of data from a certificate of compliance (certificate) for regulated consumer products under CPSC’s jurisdiction. Applications will be open until August 9, 2022. 

BIS

• On June 29, 2022, the Bureau of Industry and Security, U.S. Department of Commerce, through its Office of Export Enforcement, requested the issuance of an Order temporarily denying, for a period of 180 days, the export privileges under the Regulations of Russian airline Nordwind Airlines. OEE’s request and related information indicates that Nordwind is headquartered in Moscow, Russia.
• On June 29, 2022, the BIS, U.S. Department of Commerce, through its Office of Export Enforcement, requested the issuance of an Order temporarily denying, for a period of 180 days, the export privileges under the Regulations of Russian airline Pobeda Airlines. OEE’s request and related information indicates that Pobeda is headquartered in Moscow, Russia, and Aeroflot Russian Airlines JSC, a/k/a PJSC Aeroflot is Pobeda’s majority shareholder. The Russian Federal Government is the majority owner of Aeroflot, through its Federal Agency for State Property Management.

DOS

• On June 28, 2022, the U.S. Department of State submitted an information collection request to the Office of Management and Budget for approval regarding the statement of political contributions, fees, and commissions relating to sales of defense articles and defense services.

FCC

• On June 30, 2022, a member of the Federal Communications Commission requested that Apple and Google remove TikTok, a popular China-based app, from their app stores out of concern that the app could send sensitive U.S. user data back to Beijing. The member, Brendan Carr, stated that “TikTok’s pattern of conduct and misrepresentations regarding the unfettered access that persons have in Beijing…” is concerning.

If you have questions about these updates, contact our Customs and International trade law attorneys at info@diaztradelaw.com or call us at 305-456-3830.

To receive an email notification whenever a new post is published, please subscribe to our weekly blog here.

CBP 

• As the first two weeks of February are one of the busiest periods of the year for agriculture specialists, U.S. Customs and Border Protection agriculture specialists working at El Paso area ports of entry are busy tapping and shaking cut flower shipments to make sure that personal and commercial importations of Valentine’s Day flowers are free from insects, pests and diseases that could harm the agricultural and floral industries of the United States.

Census Bureau 

• On February 4, 2022, the Census Bureau announced it would continue the current EEI filing requirement for Puerto Rico and the U.S. Virgin Islands and continue to publish the U.S. Trade with Puerto Rico and U.S. Possessions (FT-895) Publication Series.

CPSC 

• On January 31, 2022, the U.S. Consumer Product Safety Commission (CPSC) announced that Core Health & Fitness LLC agreed to pay the civil penalty of $6.5 million, resolving CPSC’s charges that Core failed to immediately report to CPSC that its Cable Cross Over Machines and Dual Adjustable Pulley Machines contained a defect or created unreasonable risk of injury.

DOJ

• On February 8, 2022, the U.S. Department of Justice seized a record of more than $4 billion worth of stolen bitcoin. Officials also charged two people on Tuesday with attempting to launder the money which was stolen by a hacker who breached a cryptocurrency platform in 2016 and allegedly made off with nearly 120,000 Bitcoin, then valued at about $71m, but now exceeding $5bn.

OFAC 

• On February 8, 2022, The Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued the Ethiopia Sanctions Regulations to implement Executive Order 14046 of September 17, 2021, “Imposing Sanctions on Certain Persons with Respect to the Humanitarian and Human Rights Crisis in Ethiopia.” OFAC intends to supplement these regulations with a more comprehensive set of regulations, which may include additional interpretive guidance and definitions, general licenses, and other regulatory provisions.
• On February 8, 2022, OFAC is amended its regulations to implement for 2022 the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. This regulatory amendment adjusts for inflation the maximum amount of the civil monetary penalties that may be assessed under relevant OFAC regulations.
• On February 10, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Wilder Emilio Sanchez Farfan and Miguel Angel Valdez Ruiz pursuant to Executive Order (E.O.) 14059 for materially contributing to the illicit activities of major Mexican cartels to traffic cocaine into the United States.

Section 232

• On February 10, 2022 the Bureau of Industry and Security (BIS) announced it was seeking public comments regarding the Section 232 exclusions process and the responsiveness of the exclusions process to market demand and enhanced consultation with U.S. firms and labor organizations.
  • Comments are due March 28, 2022.
• On February 7, 2022, United States Trade Representative Katherine C. Tai and United States Secretary of Commerce Gina M. Raimondo announced a new 232 tariff agreement with Japan to allow historically-based sustainable volumes of Japanese steel products to enter the U.S. market without the application of Section 232 tariffs. This deal will help ensure the long-term viability of U.S. steel industry and protect American jobs.

USTR

• Since February 7, 2022, Senator Tom Carper and Rob Portman have been leading a group of 41 senators in their call for U.S. Trade Representative Katherine Tai to make more companies eligible for exclusions from tariffs from the Trump era on goods imported from China.

If you have questions about these updates, contact our Customs and International trade law attorneys at info@diaztradelaw.com or call us at 305-456-3830.

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The U.S. Consumer Product Safety Commission (CPSC) and U.S. Customs and Border Protection (CBP) Address Ongoing Litigation & Seizure of one of the hottest toys, the Hoverboard.

Hoverboards, as they are commonly known, are self-balancing two-wheeled electric scooters.  They are powered by controversial rechargeable batteries that have recently garnered attention for malfunctioning, causing devices to catch fire and destroy homes.  The lithium-ion batteries have been known to overheat, catch fire, and explode without warning.

Several airlines have begun to prohibit transportation of the boards aboard aircraft, due to safety concerns.  Amazon.com is placing safety first and offering consumers that have purchased a hoverboard from Amazon a full refund.  Hoverboards are also facing additional litigation from Mark Cuban, who potentially has a patent infringement claim against Walmart for selling the devices.

According to the United States Consumer Product Safety Commission, “The federal government continues to work in close coordination on this serious issue.  Officials from CPSC, U.S. Customs and Border Protection, the U.S. Department of Transportation and the Federal Aviation Administration are regularly sharing information and insights with a common goal of taking whatever steps are necessary to prevent injuries and property damage from fires and falls.”  They recommend having a fire extinguisher handy and keeping the device far away from combustible materials while charging.  There are not currently any safety standards in place for hoverboards, which would require proof of sound design, manufacturing, and quality control processes.  This lack of regulation adds to the danger of using hoverboards.

U.S. Customs and Border Protection (CBP) has been seizing hoverboards right and left, for intellectual property rights (IPR) violations. A recent seizure of over 200 hoverboards at PortMiami was highlighted in this Miami Herald article. In this case, the LG batteries were allegedly counterfeit. When the goods are detained, CBP makes an IPR determination. Often times, CBP discusses the merchandise with the trademark owner to assess whether or not goods are counterfeit. At this stage, it is important to get legal counsel involved to attempt to avoid a seizure case. This is especially true when you have a more complicated supply chain and don’t purchase goods directly from the manufacturer. Often times, you may not know who made what portion of the merchandise.

If the goods are seized, it’s a complicated seizure process (discussed more here). The link has a picture of the process – doesn’t it look intense? That’s because it is. You need an expert that understands it and will fight for you correctly. Depending on the case, I personally recommend filing a Petition or a claim and cost bond. Filing a Petition gives you a few bites of the apple (if you lose, you can file a Supplemental Petition, and thereafter, still file a claim and cost bond). Every case is different and must be evaluated on its own merit.

At www.diaztradelaw.com, we have a TOP 10 TIPS WHEN IMPORTING cheat sheet you can download for FREE. The Top 10 Tips discusses the importance of IPR compliance, and knowing who you are doing business with, as well as additional Customs requirements importers must be aware of. Diaz Trade Law can assist if you are dealing with a seizure by CBP – or if you want to avoid them with a robust pre-compliance program. Contact us today at info@diaztradelaw.com.

• CBP will unify CTPAT and ISA programs into a new “Trusted Trader” program.  Companies will still have the option to apply for CTPAT and opt out of the Trusted Trader Program, but, the ISA program will be replaced by the Trusted Trader program.  CBP aims to align the Trusted Trade program with Authorized Economic Operator (AEO) programs, which focus on a combined trade and security compliance model.
• CBP is collaborating with the U.S. Consumer Product Safety Commission (CPSC) and the U.S. Food and Drug Administration (FDA), to develop the new “Trusted Trader” program aims to “streamline the process through which importers can establish to CBP that they strive to secure their supply chains and strengthen their internal controls for compliance with the existing laws and regulations administered or enforced by CBP.” The 3 government agencies will collaborate, share information, streamline the application and validation process; and increase the efficiencies in the existing trade programs.
• CBP plans to utilize the Centers of Excellence and Expertise (CEE’s) to manage trusted trader accounts – which will assure CBP has a high level of industry product knowledge and further refine account-based processing
• CBP is putting additional incentives on the table, not currently offered to C–TPAT and ISA members.

What Will the Additional “Trusted Trader” Incentives be? The same CTPAT and ISA benefits discussed in those sections below, as well as these additional benefits:

1. (For FDA Importers) – Reduced FDA targeting/examination risk score;
2. A penalty offset upon request (part of a CBP penalty mitigation decision);
3. (For Reconciliation Participants) – authorization to flag and unflag entries for reconciliation retroactively after the entry summary is filed up to 60 days prior to the date for which liquidation of the underlying entry summary has been set. This would include retroactive flagging for the following four reconcilable issues, or ‘‘flag types:’’ (1) Value; (2) classification (only if under protest or subject to a court case); (3) 9802, Harmonized Tariff Schedule of the United States (HTSUS); and (4) the post importation claims;
4. CBP will reduce the number of Foreign Trade Zone (FTZ) on-site inspections;
5. (For Drawback claimants) – exempt from on-site visits from Drawback Specialists; Full desk reviews, conducted pursuant to 19 CFR 191.61, will be limited to no more than one (1) per year for drawback claimants;
6. CBP will exempt test participants from random Non-Intrusive Inspections (NIIs);
7. Where a Chemical Abstracts Service (CAS) number is required pursuant to 19 CFR 141.89 for a chemical compound classified in Chapters 27, 28, and 29 of the HTSUS, CBP will allow a quarterly submission of the CAS number, the use, and the description for the chemical compound in advance of the calendar year quarter;
8. CBP will process Post-Entry Amendments (PEA) on unliquidated entries within a ninety (90)-day timeframe.
9. Ability to choose an exam location, other than the port of arrival;
10. If you file an entry in ACE or ACS for merchandise arriving by vessel in multiple containers and a portion but not all of the merchandise covered by that entry is selected for examination, you will receive a release message and will be allowed to take possession of all merchandise except the merchandise subject to further examination.
11. (For CPSC Importers) –  CPSC will provide the participants with a product-specific CPSC point of contact; provide access to the participants with special training concerning product safety compliance, internal controls, and CPSC audit trails; allow the participants the opportunity to apply for external participation coverage of multiple business units (multiple IOR numbers); consider expansion of benefits to all products of approved participants if the entry line(s) contains all the applicable NEISS product code(s); reduce product safety tests on goods imported by the participants; CPSC laboratories will grant priority ‘‘front of the line testing’’ to participants when product safety testing is conducted; CPSC may allow products to be destroyed by participants in lieu of requesting redelivery to CBP of the product.
12. Additional benefits may be added as the program commences.

What is CTPAT? The C–TPAT program is a voluntary government-business initiative to build cooperative relationships that strengthen and improve overall international supply chain and U.S. border security. To apply, businesses must fill out a company profile as well as a detailed security profile – which is then reviewed, approved, and validated in person by CBP.  Many companies must make internal improvements to meet the required security standards the CTPAT program entails.  CBP encourages participation by providing incentives to participants meeting or exceeding the program requirements. As a result, the program helps CBP achieve its twin goals of improving security while facilitating the flow of global trade. Businesses eligible to apply for C–TPAT membership include:

• U.S. importers of record;
• U.S./Canada highway carriers;
• U.S./Mexico highway carriers;
• Air, rail and sea carriers;
• Licensed U.S. customs brokers;
• U.S. marine port authority/terminal operators;
• Third party logistics providers;
• U.S. freight consolidators;
• Ocean transportation intermediaries and non-vessel operating common carriers (NVOCCs);
• Mexican and Canadian manufacturers; and
• Mexican long-haul highway carriers.

C–TPAT importers enjoy certain incentives based on their tier status within a three tier structure. Tier I incentives are afforded to those importer partners that have been certified; Tier II level to those that have been certified and validated; and Tier III incentives to those that go above and beyond – and have exceeded the program’s requirements – exhibiting best practices. The big question that has been asked by CTPAT participants is – after going through the extensive security profile, making internal improvements, and being visited and validated by CBP domestically and internationally – are CTPAT (and other voluntary partners with CBP) members now not “Trusted Traders”?  This was a question raised by the Advisory Committee on Commercial Operations of Customs and Border Protection (COAC) in their last meeting held in Miami.  In it’s report, COAC reported “the term “Trusted Trader” in itself instills within the trade community a new approach to establishing trusted trader status. The COAC is concerned that many in the trade community believe they are considered as being a trusted trader by being members of voluntary programs such as CTPAT, or ISA and others.” What are the Benefits of Joining CTPAT? It’s important to note that there have been cost/benefit studies conducted discussing the vast effort a company must go through to be part of the program and whether the benefits offered were worthwhile.  Currently, the benefits offered are:

• Most important  is a reduced examination rate (since everyone knows examination rates have increased significantly since 2001);
• Access to the Free and Secure Trade (FAST) Lanes—Expedited border crossing privileges are granted to those C–TPAT highway carrier partners who are certified/validated;
• Exemption From Stratified Exams for importer partners—C–TPAT Tier III importer partners and C–TPAT Tier II importer partners that also participate in the ISA program are exempt from stratified exams;
• Front of the Line—C–TPAT shipments subject to examination receive ‘‘front of the line’’ treatment. To the extent possible and practicable, C–TPAT shipments are moved ahead of any non-C–TPAT shipments;
• In the event of a significant disruption/delay in CBP cargo processing operations, actions are taken to maintain communication and coordination with C–TPAT partners and foreign government stakeholders for business resumption; and
• Penalty mitigation offered for the late submission of data required under the Importer Security Filing requirements.

Two benefits not listed, but, have been instrumental in my client’s being part of the CTPAT program are:

• Ability to obtain additional business from CTPAT validated companies who would not do business with you if you are not part of the program;
• Assignment of a CBP Supply Chain Security Specialist, who vetted your company, and can assist if you have any CBP issues (and importantly, will respond to your calls and emails).

What is ISA? ISA is a voluntary program, open to both U.S. and Canadian importers, based on the premise that companies with strong internal controls achieve the highest level of compliance with customs laws and regulations. In order to get into the ISA program, you have to already be a CTPAT participant. As part of the ISA program, importers are responsible for monitoring their own compliance (self-policing and self reporting to CBP yearly) in exchange for benefits (the biggest one being CBP taking you off the list for Focused Assessments).  On October 5, 2012, CBP expanded the ISA program by creating an expedited path to ISA for importers who successfully have undergone a CBP Focused Assessment (FA) audit. A detailed synopsis of program application requirements and benefits may be found here. Who Can be Part of the Trusted Trader Program Test? Only 10 (or less) companies will get the honor of testing this program.  CBP wants (at least) 1 importer currently in CTPAT, 1 currently not in CTPAT (or any partnership program), and 1 or 2 who import items regulated by CPSC and FDA.  Do you qualify so far? If you’re thinking about being part of the test group – here are all of the boxes you need to check:

1. Must be an active U.S. importer or Non-Resident Canadian Importer
2. Have written policies and procedures pertaining to its import process;
3. Have a business office staffed in the United States or Canada;
4. Have an active Importer of Record (IOR) number or a CBP-assigned number;
5. Possess a valid continuous importation bond filed with CBP;
6. Have at least two (2) years of importing history;
7. Conduct an assessment of its supply chain based on C–TPAT’s security criteria ;
8. Implement and maintain security measures and supply chain security practices meeting security criteria established in the C–TPAT Importer Security Criteria document;
9. Have a designated company officer who will be the primary cargo security officer responsible for C–TPAT;
10. Create and provide CBP with a C–TPAT security profile, which identifies how the importer meets C–TPAT’s Importer Security Criteria;
11. Maintain books and records to establish compliance with the laws and regulations administered or enforced by CBP, including but not limited to, records sufficient to ascertain the correctness of any entry and to determine the duties, taxes and fees that may be due; and
12. Applicants requesting consideration for the Product Safety (CPSC benefits) must concurrently complete the product safety portion of the application.

What do you think about the proposed “Trusted Trader” program?  Do you think the new benefits included are worth the pain points of CTPAT and ISA?  Do you think the name “Trusted Trader” is misleading or dismissive of the vast efforts companies currently involved in CTPAT and ISA have implemented?  Are you ready to apply to be one of the less than 10 test companies?