This bulletin has been prepared especially for
clients of A. N. Deringer, Inc. by:
SERKO SIMON GLUCK & KANE LLP –
Customs & International Trade Law
September 8, 2006
CUSTOMS and BORDER PROTECTION (CBP)
- MPF
Exemption for NAFTA Imports: CBP is seeking comments by October 23,
2006 on a proposed rule requiring importers claiming the merchandise
processing fee (MPF) exemption for NAFTA originating goods to note the
Special Program Indicator (SPI) on the CF-7501, even when they do not
specifically claim NAFTA preferential treatment, i.e., when imports are
unconditionally duty free; MPF will be assessed even on NAFTA originating
goods if the SPI is lacking.
- New C-TPAT
Security Criteria for Foreign Manufacturers: CBP
posted to its web site new minimum security criteria for foreign
manufacturers already in the Customs-Trade Partnership Against Terrorism (C-TPAT)
program or for those wishing to join the program. The new criteria cover: business partner
requirements; container and trailer security; physical access to plants;
personnel security; security training; and information technology
security. Additional information
can be accessed at: http://www.customs.gov/xp/cgov/import/commercial_enforcement/ctpat/security_criteria/security_criteria_foreign_manuf/
- WCO
Security Guidelines: The World Customs Organization (WCO) recently
adopted guidelines for its Authorized Economic Operator (AEO) security
program under its Framework of Standards to Secure and Facilitate Global
Trade (SAFE Framework), a program similar to CBP’s C-TPAT program. Importers adopting optimal security
procedures within national Customs administrations should benefit from
expedited cargo releases (reduced transit time, lower storage costs) and
preferred participation in new cargo processing programs, among other
benefits. The guidelines can be
accessed at: http://www.wcoomd.org/ie/En/Topics_Issues/FacilitationCustomsProcedures/AEO%20Guidelines.pdf
- CBP
Makes Record Counterfeit Seizure: In the past month, CBP has made record
seizures of counterfeit Nike sneakers.
In one instance, CBP discovered counterfeit sneakers valued at $1
million in refrigerated containers labeled as kelp and jellyfish. In a far larger scheme, CBP charged six
people with counterfeiting in illegal goods after uncovering an alleged scheme
whereby shipments of counterfeit sneakers ostensibly destined for Mexico were diverted into the commerce of
the U.S. The value of the sneakers could
potentially reach $86 million and is one of the largest counterfeiting
schemes ever uncovered.
- Classification
Developments:
Rechargeable
Storage Batteries – CBP is revoking
its previous treatment of certain nickel cadmium rechargeable storage batteries
and battery chargers from classification under
heading 8507.30 (2.5% duty), HTSUS, the provision for “storage batteries;”
proper classification is under subheading 8504.40.9550 (1.5% duty), HTSUS, the
provision for “Electric transformers…Rectifiers and rectifying apparatus:
Other.”
TRADE TALK
U.S. and Colombia
– President Bush notified U.S. Congress of his intent to sign the U.S. – Colombia
Trade Promotion Agreement. The agreement
will make 80% of U.S. exports
to Colombia
duty free immediately with the remainder phased in over 10 years.
China and Chile
– China and Chile
have recently implemented a FTA, the first for China with a Latin American country.
- AD/CVD
Developments: The U.S. Department of Commerce recently
took the following actions:
Metal Calendar Slides – Made a final negative injury determination in its antidumping
(AD) investigation of certain metal
calendar slides from Japan.
Polyester Stable Fiber – Made a positive determination that a domestic
industry is being injured by polyester staple fiber from China.
AD on Shoes in Danger of Expiring - the EU’s
provisional AD duties on certain shoes from
China (19.4%) and Vietnam (16.8%) are in danger of expiring on October 7, 2006,
unless the EU-member states can agree on new AD duties. A proposal for AD duties of 16.5% and 10% for
China and Vietnam respectively has recently
been rejected by a majority of the EU states.
Plastic Bags – The EU is
considering new AD duties on plastic bags from China
(15.2%) and Thailand (14.3%).
WORLD TRADE ORGANIZATION (WTO)
- Japan Continues Byrd Amendment
Retaliation: Japan
notified the WTO that it will continue to impose a 15% retaliatory tariff
on certain U.S. exports,
through August 31, 2007, over the continued disbursement of the AD/CVD
duties collected by the U.S.
pursuant to the Continued Dumping and Subsidy Offset Act, also known as
the Byrd Amendment. While the U.S. has repealed
the Act, it will continue disbursements until October 1, 2007. Some of the goods covered by the
retaliatory tariffs include: certain transmission and conveyor belts; iron
or steel products; bearings; printing machinery; and navigational
instruments.
- Brazil Seeks Cotton Retaliation: Complaining
that the U.S. has not
completely repealed its cotton subsidy program as required by the WTO, Brazil recently requested a WTO Dispute
Settlement Body seeking approval for retaliatory tariffs on U.S. exports; the request was blocked by
the U.S.
BUSINESS BRIEFS
- Softwood
Dispute Between U.S.
and Canada Close to
Resolution: The Canadian Prime Minister recently
stated that he will shortly introduce legislation to implement the
recently initialed agreement with the U.S. regarding the AD and CVD
duties collected on Canadian softwood lumber. The agreement will: 1) end all
litigation involving this case; 2) replace U.S. import duties with a
Canadian export tax when the market price hits a certain target range; and
3) require the return of about $4 billion of the $5 billion in duties already
collected.
- CPSC Developments: Recall of Laptop Batteries – In the largest ever recall of
consumer electronics, the U.S. Consumer Product Safety Commission recently
announced that three computer manufacturers are recalling almost 10
million laptop computer batteries, as they can short circuit, overheat and
explode.
COURT CASES
- Festive
Clothing Are Duty Free: In Michael
Simon Design, Inc. v. U.S., the U.S. Court of International Trade (CIT)
reviewed the proper classification of knitted cardigans, blouses, and
ladies shirts decorated with festive motifs. The clothing encompassed images such as:
nativity scenes, Christmas trees, angels, starry night scenes, ghosts,
spiders, black cats, bats, jack-o-lantern, candy corn, and “Trick or
Treat.” CBP denied the importer’s
claim for duty free “festive” treatment,
relying on its long-held position that festive merchandise with
“utilitarian” uses are excluded from classification in Chapter 95. In addition, CBP argued that the amended
Explanatory Notes (EN) (effective August 1, 2003) explicitly exclude
articles with “utilitarian” use from classification in Chapter 95. However, the CIT found that in the Park
B. Smith and Midwest cases (Midwest successfully tried by SSGK
LLP), the U.S. Court of Appeals for the Federal Circuit (CAFC) made no
distinction for “utilitarian” articles when affirming that festive
merchandise is properly classified in Chapter 95. The CIT also ruled that while the EN’s
may be informative, they can’t be interpreted so as to contradict a body
of previous federal court rulings.
The CIT ruled that if the articles are: 1) so closely associated
with a festive occasion that its use during other times would be aberrant;
and 2) are used or
displayed principally during that festive occasion, they can be classified
under the duty free provisions of Chapter 95. It is not yet known whether CBP will
appeal the decision, but importers should be heartened that the courts are
consistently upholding the duty free treatment of imported festive
articles, regardless of any “utilitarian” use. Importers who wish to safegurad their
rights to potential duty refunds must file timely protests with CBP. Please contact us if you wish to discuss
this further.
Serko Simon
Gluck & Kane LLP
1700 Broadway, 31st Floor
New York, New York
10019
Phone (212) 775-005 Fax (212) 839-9103
Outside of New York
State: 1-800-46-TRADE
E-mail address: serko-simon@customs-law.com On the
internet at: www.customs-law.com
Note: This
information is current as of the date of this document, and is not, nor is it
intended to be, legal advice, which can only be provided by Serko Simon Gluck
&Kane LLP on a case-by-case basis. ©2006
This Trade Alert has been
prepared by Chaim Appel, Technical
Advisor.