UFLPA

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

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

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

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

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

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

4. Tomatoes and downstream products

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

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

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

1) Due Diligence,

2) Supply Chain Tracing, and

3) Supply Chain Management

What does due diligence mean?

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

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

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

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

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

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

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

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

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

Supply Chain Management Measures

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

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

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

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

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

Contact Us

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

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

Successfully Mitigated Liquidated Damages Claims 

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

CBP Detention Assistance 

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

4647 Responses 

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

Successfully Assisted Numerous Importers Battle Alleged Intellectual Property Rights Violations

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

Successfully Mitigated Penalty Actions Issued by CBP to our Clients 

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

CBP 28 / CBP 29 Responses / CBP Investigations and Rejections

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

USTR/China Tariffs

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

Export Compliance and Enforcement Mitigation Assistance

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

OFAC/FAA/HSI 

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

 Protests

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

Binding Rulings

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

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

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

Bonded Warehouse

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

Successfully Assisted Numerous Importers in Various Seizure Cases 

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

Awards

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

Publications

Key publications written by Diaz Trade Law in 2021 were:

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

Customized Training Programs & Webinars

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

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

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

Register today to to hear directly from Senior Trade Advisor, Don Woods, DTL’s president, Jennifer Diaz, and Associate Attorney, Denise Calle as they discuss real life stories, current trends/risks associated with the import process, proactive ways to stay compliant, and the importance of training to avoid costly encounters with CBP.

Why Should I Register for this Webinar?

CBP is actively enforcing its laws and regulations against non-compliant importers, as seen by the 70,683 seizure letters issued to importers in FY2021.  Importers are required to develop, maintain, and follow a compliant import plan. Importers must be aware of CBP’s various enforcement mechanisms, and more importantly,  how to avoid  such actions. CBP’s most common enforcement activities include seizures, detentions, and criminal prosecution.

In response to the increase in enforcement discussed below, Diaz Trade Law is hosting a NEI accredited webinar, Building & Maintaining an Effective Import Compliance Plan to train industry on top compliance tips to avoid enforcement, and best practices to maintain and effective and compliant import plan.

Seizures in FY21:

• With Fy21 yet to finish, the CBP has already had more than 70,000 trade seizures
• With Fy21 yet to finish, CBP has already had $2.5 billion worth of IPR Seizures – More than it has seized in each of the past 5 years!

Other Trade Enforcement Activities:

• 1,942 Trade Penalties Issued
• 16,302 Total Trade Liquidated Damages
• $16 million collected in Trade-related penalties and liquidated damages

In this webinar, you will learn the common risks associated with the import process and how to build and maintain an effective Import Compliance Plan . Presenters will discuss… The objective of the webinar is to teach participants how to create an effective import plan that allows importers to avoid CBP altogether.

Importers, Customs Brokers, Regulatory Affairs Professionals, and others engaged in the importation of goods into the United States are encouraged to attend either live on October 6, 2021 at 12:00 PM, or on demand thereafter. Register Here

Join us IN PERSON in Baltimore, MD, July 26-27, 2021. NCBFAA NEI and hotel staff will be complying with all state and venue COVID-19 protocols so you can feel safe attending the event! Virtual attendance is available, so you can gain knowledge from anywhere!

REGISTER TODAY!

All trade professionals, regardless of membership or affiliation, are invited to join to:

• Learn from industry subject matter experts on today’s pressing matters
• Get an opportunity to voice your questions to federal, state and industry experts about the latest issues affecting your business
• Acquire fresh ideas by networking with business colleagues while meeting new people

Diaz Trade Law is enthusiastic to announce that our President, Jennifer Diaz will be a featured speaker alongside Adrienne Braumiller on the topic “Update on CBP Enforcement Efforts: IPR, Section 301, 232, AD/CVD” taking place on July 27th from 9:00 am to 10:30 am EST.

As we all know, Intellectual Property Rights, AD/CVD, Section 301 and 232 are all things on CBP’s priority list for enforcement. What do you have in place to make sure you are complying with the regulations? What have you done to assure yourself that your imports are not affected by the rules, and if they are, how you are managing the additional complexity of these movements?

Learn More About Jen Diaz!

President and Founder of Diaz Trade Law, Jennifer (Jen) Diaz is a Chambers ranked, Board Certified International Attorney specializing in customs and international trade. For more than 15 years, Jen has provided legal advice and customized training on import and export compliance to industry, with a strong record of success in mitigating federal administrative enforcement actions.

Jen has received many accolades from the legal community, including being recognized by “Super Lawyers” as a Top International Attorney, having an AV rating of “Superb,” and serving as President of the Organization of Women in International Trade (2018-2019).

A frequent media commentator, Jen has authored book chapters, journal articles, and other articles for The Florida Bar, the American Bar Association, Bloomberg Law, and others. Jen is Editor of “Customs & International Trade Law,” a blog recognized by the U.S. Library of Congress as being an important part of the legal historical record.

REGISTER TODAY!

To date, CBP has collected $87.8 billion in China 301 tariffs. If you have paid Section 301 China tariffs on Lists 3 and 4 and you have joined the landmark lawsuit demanding full refunds on these tariffs paid, it is critical that you understand the extent of China tariffs that you have paid, and proactively look out for liquidations. Proactively and comprehensively auditing your ACE import data is the first step.

Whether you are new to importing or a seasoned professional, this one-hour webinar is a must attend. Register today to hear directly from our Diaz Trade Law President Jennifer (Jen) Diaz about audit risks and duty-saving opportunities. Jen is a Chambers ranked, Board Certified International Attorney specializing in customs and international trade.

This one-hour webinar describe the benefits of Automated Commercial Environment (“ACE”) import history audits and show audience how to analyze data. ACE is a U.S. Customs and Border Protection (“CBP”) system designed to facilitate legitimate trade while enhancing border security. ACE provides a single, centralized access point for the trade community to connect with CBP and its Partner Government Agencies (“PGAs”). It is the primary system through which the trade community reports imports and exports and the government determines admissibility. The presentation will discuss services offered by DTL including the import report card.

In This Webinar You Will Learn:

• How to setup An ACE account
• What is ACE and why is it important?
• WHAT you import
• WHERE you import
• How much you import
• Determine cost saving strategies
• Determine issues with your import processes based on the data

Who Should Attend:

• Importers
• Customs Brokers
• Regulatory Affairs Professionals
• In-House Legal Counsel
• Product Development Managers
• Others Interested in Importing

This webinar is eligible for continuing education credit from the NCBFAA Educational Institute. Space is limited, registration required! Access instructions will be provided after your registration is complete. Don’t just take our word for how awesome Diaz Trade Law webinars are. Click here to see what our past attendees had to say. Be sure to join us on May 19, 2021! To register, click here. 

Whether you are new to importing or seasoned, this one-hour webinar is a must attend. Register today to hear directly from this specialized, expert trio on the “Top 10 Tips When Importing to Ensure Compliance” with real case studies:

• President and Founder of Diaz Trade Law, Jennifer (Jen) Diaz is a Chambers ranked, Board Certified International Attorney specializing in customs and international trade,
• Trade Advisor at Diaz Trade Law, Donald Woods has worked in the express delivery, freight forwarding, and logistics industries for 34 years in both imports and exports. He retired from UPS after 34 years of service as the VP, Customs & Trade Compliance for the Customs Brokerage business unit.
• Associate Attorney of Diaz Trade Law, Denise Calle assists U.S. and foreign manufacturers, distributors, and importers, with a range of import compliance, regulatory compliance, and enforcement matters involving U.S. Customs.

This one-hour webinar describes the importer’s role as the responsible party for an import transaction. Our speakers will discuss how to comply with U.S. Customs and Border Protection’s (CBP) vast laws and regulations. By the end of the webinar, you will know and understand the importance of tariff classification, customs valuation, country of origin marking, intellectual property rights and free trade agreements.

You will also learn basic customs concepts and terms like CBP Form 7501, CBP 28, CBP 29, protests, detention and seizure cases, liquidated damage claims, penalties/fines, prior disclosures, and the FP&F process. Additionally, you will learn the top 10 tips when importing to ensure compliance. This webinar will provide valuable assistance to all importers, customs brokers, and all trade professionals.

In This Webinar You Will Learn:

• Importance of CBP Rulings for Classification, Valuation and Country of Origin.
• Cost Savings practices like utilizing Free Trade Agreements.
• Importance of protecting intellectual property rights.
• Basic customs concepts and terms.
• Top tips to proactively work with your Customs Broker.
• What to do if you encounter a CBP detention and/or seizure case Learn when to submit a prior disclosure to CBP Top 10 tips when importing to ensure compliance.
• Learn key best practices and hear real life case studies.
• Learn what to do, and more importantly, what NOT to do, and what the consequences are for non-compliance.

Who should attend:

• Importers
• Customs Brokers
• Regulatory Affairs Professionals
• In-house Legal Counsel
• Product Development Managers
• Other Trade Members

This webinar is eligible for continuing education credit from the NCBFAA Educational Institute. Space is limited, registration required! Access instructions will be provided after your registration is complete. Don’t just take our word for how awesome Diaz Trade Law webinars are. Click here to see what our past attendees had to say. Be sure to join us on May 5, 2021!

Thankfully, U.S. Customs and Border Protection has been working to curb this inhumane practice.

Ending the “consumptive demand” clause; 19 U.S.C. § 1307

The relatively recent push to fight forced labor came about with revisions to Section 307 of the Tariff Act of 1930. Section 307 of the Tariff Act of 1930 codifies into law the prohibition of importing items produced -wholly or in part- by the use of forced labor.

Previously, under the “consumptive demand” clause in 19 U.S.C. § 1307, the United States effectively allowed for the importation of goods that had been partially produced by forced labor. However, since the enactment of the Trade Facilitation and Trade Enforcement Act of 2015, which eliminated the “consumptive demand” clause, United States’ federal agencies have been greatly increasing active measures to combat this practice. Since its repeal, CBP, in partnership with U.S. Immigration and Customs Enforcement (ICE), has been actively investigating allegations of forced labor around the globe, examining various supply chains in order to curb the illicit practice. According to CBP, the agency does not target whole product lines or industries, rather it focuses on information regarding specific actors and their merchandise. The Forced Labor Division, established in 2017 within CBP’s Office of Trade, leads enforcement of the prohibition against importing goods made with forced labor.

Forced Labor Process

CBP provides the public with an infographic detailing the detention process if merchandise is in any way related to forced labor, and in violation of 19 U.S.C. § 1307. Below is a chart categorizing CBP’s detention process for merchandise related forced labor:

FORCED LABOR PROCESS
Step(s)	Description
(1)  Receipt of Allegation or Self-Initiation	The provisions of 19 C.F.R § 12.42 detail who may submit information
(2)  CBP Evaluation	CBP must determine or establish reasonable suspicion to issue a Withhold Release Order (WRO) or conclusively demonstrate that merchandise is prohibited to publish a finding.
(3)  Commissioner Review of WRO Issuance	If Commissioner approves a WRO, CBP detains subject merchandise.
(4)  Issuance of WRO	Port directors instructed to withhold release of subject merchandise.
(5)  Detention of Merchandise	CBP begins to detain all shipments within WRO parameters.
(6)  Export, Contest, or Protest	Importer may export, contest, or protest; CBP may release or exclude
(7)  Finding/ Customs Bulletin and Federal Register	If a finding is published, subject merchandise that has not been released from CBP custody shall be treated as an importation prohibited by 19 U.S.C. § 1307.
(8)  Seizure – Subsequent FPF Process	CBP will seize merchandise. Violator may petition for the release of merchandise
(9)  Judicial Forfeiture	CBP will commence summary forfeiture proceedings.

Withhold Release Order(s) WRO(s)

The strategic use of Withhold Release Orders (WROs) by CBP has been especially effective at identifying certain nations, industries, and companies that employ forced labor. CBP issues WROs after receiving information that reasonably indicates the use of prison or forced labor at any point in a product’s supply chain. Prior to TFTEA, the United States had only implemented 30 WROs in the past five decades. Since 2016, however, USTR has implemented over 20 WROs.

CBP provides the public with a list of all WROs and the findings of the investigations. The chart below details the WROs imposed since the abolition of the “consumptive demand” clause by country, alphabetically:

What Can You Do to Address Forced Labor?

Have you taken reliable measures to ensure that you are not inadvertently using forced labor at any point in your supply chain? Ask yourself these 12 questions.

According to CBP, importers must exercise reasonable care and due diligence to ensure that forced labor is not included in any aspect of their supply chain. To effectively do this, importers must include forced labor into their internal risk assessment. CBP recommends referencing the International Labour Organization’s eleven (11) Indicators of forced labor, which are:

1. Abuse of Vulnerability
2. Restriction of Movement
3. Withholding Wages
4. Deception
5. Isolation
6. Physical & Sexual Violence
7. Intimidation & Threats
8. Retention of Identity Documents
9. Debt Bondage
10. Abusive Working & Living Conditions
11. Excessive Overtime

Additionally, to further its strategic goal of stopping the importation of goods produced with forced labor, CBP recommends reviewing the Department of Labor Comply Chain principles to create a social compliance system as a best business practice:

Comprehensive Supply Chain Profile

• Does the importer have a complete understanding of the supply chain from the sourcing of raw materials (manufacturing factory, farm, mines, etc.) to packaging and shipping, to ensure that none of the production uses forced labor?

Written Code of Conduct

• Has the importer ‘developed and applied for a written code of conduct for all international interactions associated with the sourcing of foreign goods?
• Is the code of conduct shared with all suppliers in the global supply chain as a stand-alone document or as addendums to purchase orders, contracts, or letters of credit?
• Does the code of conduct include specific language as to minimum labor standards as specified by the United Nations International Labor Organization, other intergovernmental organizations, or multi-stakeholder initiatives?

Robust Internal Control Process

• Are the internal controls established according to professionally recognized objective audit standards?
• Does the US importer have sufficient internal controls in place to effectively deter and detect instances of noncompliance with the code of conduct and other best-practices?
• Does the U.S. importer conduct periodic compliance audits using in-house personnel or external audit professionals?
• Does the U.S. importer’s internal control process cover every level of the product supply chain including relevant business documents?
• Does the U.S. importer have adequate corrective action plans to address non-compliance and deter weak business practices?

Tips for importers whose shipment(s) has been detained under a WRO:

• Merchandise Subject to a WRO: If your product has been detained by CBP due to a WRO, you may export your shipment to another country within three (3) months of the initial importation.
• Merchandise Subject to a Finding: Within three (3) months of importation, the importer must submit “a certificate of origin and a detailed statement demonstrating that the subject merchandise was not produced with forced labor. If the proof submitted does not establish the admissibility of the merchandise, or if none is provided, the merchandise is subject to seizure for a violation of 19 U.S.C. § 1307”.
• Amendment or Revocation of a WRO/Finding: WROs have no expiration date and stay in effect until they are revoked. WROs may be revoked if CPB is presented with sufficient evidence that substantially proves that the “subject merchandise was not made with forced labor, is no longer being produced with forced labor, or is no longer being, or likely to be, imported into the U.S”.

For assistance with importer due diligence in relation to forced labor requirements; or for assistance re-exporting your detained merchandise, in submitting documents to dispute the use of forced labor, or for assistance with the revocation request process, contact our Customs and International Law attorneys at info@diaztradelaw.com or 305-456-3830.

The import was seized as a result of a June 17, 2020, Withhold Release Order (WRO) for “imported merchandise made wholly or in part with hair products produced by Lop County Meixin Hair Product Co. Ltd. (Meixin) in Xinjiang, China”.

According to CBP’s Executive Assistant Commissioner for the Office of Trade, there had already been evidence that reasonably indicated that the Chinese hair product company had been using prison labor to produce their merchandise, which is prohibited by Federal statute 19 U.S.C. 1307.

19 U.S.C. § 1307

Section 307 of the Tariff Act of 1930 codifies into law the prohibition of importing items produced -wholly or in part- by the use of forced labor. The Trade Facilitation and Trade Enforcement Act of 2015  ended the “consumptive demand” clause in 19 U.S.C. § 1307, which had previously allowed for the importation of goods that had been partially produced by forced labor.

Since its repeal, CBP, in partnership with U.S. Immigration and Customs Enforcement, has been actively investigating allegations of forced labor around the globe, examining various supply chains in order to curb the illicit practice. According to CBP, the agency does not target whole product lines or industries, rather it focuses on information regarding specific actors and their merchandise.

Pursuant to 19 C.F.R. § 12.42(e), if CBP is presented with reasonable (not necessarily conclusive) evidence of forced labor, the Commissioner can issue a Withhold Release Order (WRO). If CBP has sufficient evidence to make a determination that the merchandise in question was, in fact, produced whole in part by forced labor, the Commissioner will publish a formal finding in the Federal Register.

Importing? Proceed Cautiously:

Following the July 1^st seizure of the hair products arriving from China, DHS issued a Xinjiang Supply Chain Business Advisory. The advisory highlights that the Federal Government recognizes the harsh repression and illicit practices of the Chinese regime, and cautions US stakeholders– businesses, individuals, academic institutions, research service providers, and investors – that continue to operate their business with entities in Xinjiang.

Specifically, the advisory states that these companies “should be aware of reputational, economic, and, in certain instances, legal, risks associated with certain types of involvement with entities that engage in human rights abuses, which could include Withhold Release Orders (WROs), civil or criminal investigations, and export controls”.

Withhold Release Order(s) WRO(s):

According to CBP, investigations that lead to a Withhold Release Order may be initiated in a number of ways, including a self (CBP) initiated investigation, news reports, and tips from either the public or trade community.

Since 2016, the US has concertedly increased investigations and enforcement of forced labor violations. CBP provides the public with a list of all WROs and the findings of the investigations.

The recently seized shipment is not the first instance related to slave labor from China. Prior to the June 17^th WRO, CBP had already banned imports from five (5) other Chinese manufacture due to claims of forced labor. In October 2019, CBP issued detention orders for all garments produced by HetianTaida Apparel Co., Ltd. in Xinjiang, China, as well as four (4) other items from unrelated industries and produced in various countries:

Forced Labor in Your Supply Chain?

According to a  list of goods compiled by the Bureau of International Labor Affairs’ (ILAB), as of September 20, 2018, nearly 150 products from over 75 countries are suspected to be produced by forced labor.  Additionally, according to Annick Ferbery, the director of government relations for the Human Trafficking Institute, as of 2019, US imports of merchandise likely produced with forced labor totaled more than $400 billion each year.  

Since the recent seizure of illicit items from China is simply the newest situation in a string of surprisingly sinister stories, we can expect to see many similar stories surfacing soon. To vet your supply chain and effectively avoid the use of forced labor, companies should create their own system of compliance by reaching out to manufactures, suppliers, and other actors involved in the production of an item. CBP provides the public with fact-sheets, as well as other insightful resources to ensure that your supply chain is not corrupted with forced labor.

Tips for importers whose shipment(s) has been detained under a WRO:

• Merchandise Subject to a WRO: If your product has been detained by CBP due to a WRO, you may export your shipment to another country within three (3) months of the initial importation.

• Merchandise Subject to a Finding: Within three (3) months of importation, the importer must submit “a certificate of origin and a detailed statement demonstrating that the subject merchandise was not produced with forced labor. If the proof submitted does not establish the admissibility of the merchandise, or if none is provided, the merchandise is subject to seizure for a violation of 19 U.S.C. § 1307”.
• Amendment or Revocation of a WRO/Finding: WROs have no expiration date and stay in effect until they are revoked. WROs may be revoked if CPB is presented with sufficient evidence that substantially proves that the “subject merchandise was not made with forced labor, is no longer being produced with forced labor, or is no longer being, or likely to be, imported into the U.S”.

For assistance with importer due diligence in relation to forced labor requirements; or for assistance re-exporting your detained merchandise, in submitting documents to dispute the use of forced labor, or for assistance with revocation request process, contact our Customs and International Law attorneys at info@diaztradelaw.com or 305-456-3830.

One might naturally think of a product like a defibrillator as a medical device, but in our business, we find many companies unsure if its products are, in fact, medical devices.

The following is the first of a two part series which you may use as a helpful guide to get you through the medical device maze. First is a description of what medical devices are, and helpful hints so that you may identify if your product is regulated as a medical device. Second is a brief overview of FDA’s regulation of medical devices. The second part of the series will discuss the classes of medical devices, and the FDA registration process.

What is a Medical Device?

The technical definition of a medical device, found in section 201(h) of the Federal Food Drug & Cosmetic Act (FD&C Act) is:

an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory which is:

1) recognized in the official National Formulary, or the United States Pharmacopoeia, or any supplement to them,

2) intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or

3) intended to affect the structure or any function of the body of man or other animals, and which does not achieve any of it’s primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes.

If you are asking how you would know if your product fits that definition, keep reading. You could check the official National Formulary, or the United States Pharmacopoeia. If you do not have either book handy, the next step is to think about what your product is used for. For example, if you wanted to know whether or not contact lenses were considered a medical device by the FDA, you could first consider what contacts are used for. Dictionary.com defines contact lenses as “plastic disks that are held in place over the cornea by surface tension and correct vision defects inconspicuously”[1]. Utilizing this definition, contact lenses can be used to affect the function of a persons eye sight, or used therapeutically to assist in the treatment of an eye disease. We would then look back at the technical definition of a medical device, and realize contact lenses can fit in either (2) or (3) above, and would therefore fit into FDA’s definition of a medical device.

There is another way to go about this. This way is not foolproof, but it is not a bad place to start. The FDA has a “Classification Database,”[2] where you may search to see how medical devices are classified by the FDA. You can also utilize this website to work backwards to see if your product is regulated by the FDA as a medical device. For example, if you were to type “contact lens” in the search box, we would see “22 records meeting your search criteria returned – contact lens”. From the search result, it is a safe assumption that contact lenses are treated as a medical device by the FDA. The database contains other technical information, which will be discussed in Part 2 of this series, including the product code and device class.

Otherwise, consider consulting an experienced import compliance attorney already familiar with the process for a legal opinion.

FDA’s regulation of Medical Devices

FDA’s Center for Devices and Radiological Health (CDRH) is responsible for regulating firms who manufacture, repackage, relabel, and/or import medical devices sold in the United States. FDA regulates medical devices to assure the products safety and effectiveness. FDA’s legal authority to regulate medical devices stems from the FD&C Act. The FD&C Act contains requirements, which specify what level of control FDA will have over medical devices. The FDA implements regulations to implement the provisions of the FD&C Act. These regulations are initially published in the Federal Register (FR) for public comment. FDA reviews the public comments, and then issues a final regulation. The FR contains both the proposed and final regulations. Final regulations are subsequently placed or codified into the Code of Federal Regulations (CFR) on an annual basis. Most of FDA’s medical device regulations may be found in Title 21 CFR Parts 800-1299.

Conclusion

Now you can determine whether or not your product is in fact a medical device, and have an understanding of FDA’s regulation of medical devices. Stay tuned to learn more about FDA’s classes of medical devices, and the FDA registration process. For more information, please contact us at info@diaztradelaw.com or 305-456-3830.

[1] http://dictionary.reference.com/browse/contact%20lens

[2] http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfPCD/PCDSimpleSearch.cfm

Why Does CBP Stop Drug Paraphernalia?

• CBP secures America’s borders at and between ports of entry by stopping inadmissible people and illicit goods. The Tariff Act of 1789 provides one of CBP’s core functions: to act as the leading federal agency in determining the admissibility of goods that may enter the Commerce of the United States. Even though each State has internally legalized marijuana either for medical or recreational purposes, CBP still has the express power to authorize or not any merchandise that comes into the U.S. Thus, CBP can detain and seize “drug paraphernalia” even if you did not intend to use the product that purpose pursuant to 19 U.S.C. § 1595a(c) stating a violation of 21 U.S.C. § 863.

What Constitutes Drug Paraphernalia?

In 2014, a smoke shop owner imported different merchandise from China described as “glass hookahs and parts”. The Central District of California considered these products, which were valued at $82,933.64 as drug paraphernalia and thus detained and seized the merchandise pursuant to 19 U.S.C. § 1595a(c) for violations of 21 U.S.C. § 863. The U.S. sued the shop owner and the Court concluded that “despite…[the] erroneous characterization of the merchandise as ‘hookah pipes’…they are bongs, and are therefore barred from entry into the United States.”

To determine whether the product is drug paraphernalia, the Court will not only consider the Code, but also other relevant factors such as the existence and scope of legitimate uses of the product in the community and expert testimony concerning its use. Under 21 U.S.C. Section 863(e), the following items are used to determine if a product is drug paraphernalia:

(1) instructions, oral or written, provided with the item concerning its use;

(2) descriptive materials accompanying the item which explain or depict its use;

(3) national and local advertising concerning its use;

(4) the manner in which the item is displayed for sale;

(5) whether the owner, or anyone in control of the item, is a legitimate supplier of like or related items to the community, such as a licensed distributor or dealer of tobacco products;

(6) direct or circumstantial evidence of the ratio of sales of the item(s) to the total sales of the business enterprise;

(7) the existence and scope of legitimate uses of the item in the community; and

(8) expert testimony concerning its use.

There is no requirement that the violator had specific knowledge that the merchandise constituted drug paraphernalia. United States v. 160 Cartons of Glass Water Pipes, Case No. CV 12-8965- BRO (VBKx) (C.D. Cal. Mar.  10, 2014).

What Must You Refrain From Doing?

• Sell or offer to sell drug paraphernalia
• Mail drug paraphernalia or transport it through interstate commerce
• Import or Export drug paraphernalia

REMEMBER: CBP is the federal agency that has control over everything that is imported and exported to/from the U.S. and therefore, they have the power to detain and seize your products when it constitutes drug paraphernalia. This will continue to happen until Congress decides to enact a Federal Law that allows marijuana consumption on a federal level or drug paraphernalia within the U.S.

What Do You Do if CBP Detains and/or Seizes Your Merchandise?

CBP has the power to detain persons or merchandise and make admissibility decisions. If CBP believes merchandise should be detained, it is required to send a Notice of Detention no later than five (5) business days from the day of examination. Often, the Notice of Detention does not specify the circumstances of the detention or is not even issued. It is important during this detention phase to communicate with CBP to discuss why your merchandise should not constitute drug paraphernalia and should be released.

CBP also has the ability to seize your merchandise if it is contrary to law and CBP will send a Seizure Notice, which you will have 30 days to respond, and typically we respond in the form of a Petition. Seizure cases are complicated, it is best to hire an expert who knows the policies, internal procedures and practices of U.S. Customs. Most importantly, getting involved early in the detention process is the best way to tackle this issue.

Want to Know if Your Product Will be Considered Drug Paraphernalia Prior to Importing?

Prior to importing your product, we recommend you review your product with an expert and determine whether to request a Binding Ruling from CBP. In CBP Ruling HQ H150766, an importer inquired on whether its hookah and hookah components constituted drug paraphernalia. The major issue CBP decided was whether the hookahs are “primarily intended” for use with drugs since it is considered a multiple-use item. CBP ruled that hookahs are admissible merchandise into the United States and held that they are not considered drug paraphernalia based on the weight of the evidence addressing the 8 criteria as set forth in 21 U.S.C. § 863, specifically its intended use for tobacco and not drugs.

If you have questions on whether or not your product constitutes drug paraphernalia and are interested in requesting a binding ruling, or if CBP has detained or seized your product, contact our office at info@diaztradelaw.com or (305) 456-3830 for assistance.