CBP Proposes Ruling Revocation on Reusable Plastic Hangers
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
On May 18, 2016, U.S. Customs and Border Protection (CBP) published a proposed ruling revocation related to the tariff classification of certain plastic garment hangers imported with garments.
Generally, plastic garment hangers, when imported separately from garments, are classifiable under subheading 3923.90.00, HTSUS, dutiable at 3% ad valorem. For several years, CBP has held that plastic hangers imported with garments are separately classifiable under subheading 3923.90.00, so long as the hangers are clearly suitable for repetitive use. This allows importers to pay duty on hangers accompanying garments at the three percent rate instead of at the likely higher rate that would be applicable to the garment itself. If the hanger is not capable for repetitive use, then the hanger is subject to the garment’s duty rate.
In order to qualify for separate classification, CBP requires that (1) the hangers must be of a sufficiently substantial construction to be suitable for repetitive use; and (2) that information be available regarding the commercial reusability of the hangers (such as being designed and approved for use in a hanger recovery program such as VICS).
Historically, CBP has disqualified plastic hangers imported with garments if they featured an integral plastic top hanging hook, as opposed to a metal swivel hook. (CBP also uses additional criteria in determining whether a hanger’s construction is sufficiently substantial.)
It appears that CBP is now prepared to relax this restriction, at least somewhat. The proposed revocation would permit hangers described as “made from black plastic with an integral plastic top hanging hook” to be classified separately under subheading 3923.90.00, even when imported holding garments. It remains to be seen how far CBP will be willing to extend this seemingly relaxed standard.
CBP is accepting written comments on the proposed revocation until June 17, 2016. If you have any questions regarding this issue or if you would like assistance in preparing comments, please contact Joseph M. Spraragen ( jspraragen@gdlsk.com). We are also available to review samples in order to advise on eligibility for duty savings or retroactive duty refunds.
FDA Modernizes Nutrition Facts Label for Packaged Foods
Food & Drug Administration
Today (5/20/16), the U.S. Food and Drug Administration took a major step in making sure consumers have updated nutritional information for most packaged foods sold in the United States, that will help people make informed decisions about the foods they eat and feed their families.
“I am thrilled that the FDA has finalized a new and improved Nutrition Facts label that will be on food products nationwide,” said First Lady Michelle Obama. “This is going to make a real difference in providing families across the country the information they need to make healthy choices.”
“For more than 20 years, Americans have relied on the Nutrition Facts label as a leading source of information regarding calories, fat and other nutrients to help them understand more about the foods they eat in a day,” said FDA Commissioner Robert Califf, M.D. “The updated label makes improvements to this valuable resource so consumers can make more informed food choices – one of the most important steps a person can take to reduce the risk of heart disease and obesity.”
Key Updates
The new Nutrition Facts label will include the following.
- An updated design to highlight “calories” and “servings,” two important elements in making informed food choices.
- Requirements for serving sizes that more closely reflect the amounts of food that people currently eat. What and how much people eat and drink has changed since the last serving size requirements were published in 1993. By law, the Nutrition Labeling and Education Act, requires that serving sizes be based on what people actually eat.
- Declaration of grams and a percent daily value (%DV) for “added sugars” to help consumers know how much sugar has been added to the product. It is difficult to meet nutrient needs while staying within calorie limits if you consume more than 10 percent of your total daily calories from added sugars, and this is consistent with the scientific evidence supporting the 2015-2020 Dietary Guidelines for Americans.
- “Dual column” labels to indicate both “per serving” and “per package” calorie and nutrition information for certain multi-serving food products that could be consumed in one sitting or multiple sittings. Examples include a pint of ice cream and a 3-ounce bag of chips. With dual-column labels available, people will be able to easily understand how many calories and nutrients they are getting if they eat or drink the entire package/unit at one time.
- For packages that are between one and two servings, such as a 20 ounce soda, the calories and other nutrients will be required to be labeled as one serving because people typically consume it in one sitting.
- Updated daily values for nutrients like sodium, dietary fiber and vitamin D, consistent with Institute of Medicine recommendations and the 2015-2020 Dietary Guidelines for Americans. Daily values are reference amounts of nutrients to consume or not to exceed and are used to calculate the %DV that manufacturers include on the label.
- Declaration of Vitamin D and potassium that will include the actual gram amount, in addition to the %DV. These are nutrients that some people are not getting enough of, which puts them at higher risk for chronic disease. The %DV for calcium and iron will continue to be required, along with the actual gram amount. Vitamins A and C will no longer be required because deficiencies of these vitamins are rare, but these nutrients can be included on a voluntary basis.
- “Calories from Fat” will be removed because research shows the type of fat is more important than the amount. “Total Fat,” “Saturated Fat,” and “Trans Fat” will continue to be required.
- An abbreviated footnote to better explain the %DV.
The FDA is also making minor changes to the Supplement Facts label found on dietary supplements to make it consistent with the Nutrition Facts label.
Most food manufacturers will be required to use the new label by July 26, 2018. Manufacturers with less than $10 million in annual food sales will have an additional year to comply with the new rules. The FDA plans to conduct outreach and education efforts on the new requirements.
The iconic Nutrition Facts label was introduced more than 20 years ago to help consumers make informed food choices and maintain healthy dietary practices. In March 2014, the FDA proposed two rules to update the label, and in July 2015, issued a supplemental proposed rule. The Nutrition Facts label regulations apply to packaged foods except certain meat, poultry and processed egg products, which are regulated by the U.S. Department of Agriculture’s Food Safety and Inspection Service.
FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency is also responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.
Canadian-Iranian Citizen Sentenced to Three Years in Prison for Conspiring to Violate Iran Sanctions
U.S. Department of Justice
Ali Reza Parsa, 45, a Canadian-Iranian dual citizen and resident of Canada, was sentenced to three years in prison for his participation in a conspiracy to violate the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations (ITSR).
The sentence was announced by Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Preet Bharara of the Southern District of New York.
“Over the course of six years, Parsa repeatedly violated export control laws and aided Iranian entities in procuring high-tech electronic components that have both commercial and military uses,” said Assistant Attorney General Carlin. “With this sentence, he will be held accountable for circumventing important U.S. laws designed to protect our national security interests. One of our top national security priorities remains safeguarding our national assets from those who may wish to do us harm.”
“As he admitted in court, Ali Reza Parsa conspired to purchase high-tech electronic components – some used in the production of rockets and missiles – from American companies for eventual delivery to Iran through Canada,” said U.S. Attorney Bharara. “He has now been sentenced to three years in prison for his violation of federal law.”
Parsa was arrested in October 2014 following an investigation by the FBI and U.S. Department of Commerce’s Bureau of Industry and Security (BIS). He pleaded guilty on Jan. 20, 2016, before U.S. District Judge Ronnie Abrams of the Southern District of New York, who also imposed Friday’s sentence.
According to the indictment filed against Parsa and other court documents publicly filed in this case and statements made in court proceedings, including at Friday’s sentencing hearing:
Between approximately 2009 and 2015, Parsa conspired to obtain high-tech electronic components from American companies for transshipment to Iran and other countries for clients of Parsa’s procurement company in Iran, Tavan Payesh Mad, in violation of U.S. economic sanctions. To accomplish this, Parsa used his Canadian company, Metal PM, to place orders with U.S. suppliers and typically had the parts shipped to him in Canada or to a freight forwarder located in the United Arab Emirates, and then shipped from these locations to Iran or to the location of his Iranian company’s client. Parsa provided the U.S. companies with false destination and end-user information about the components in order to conceal the illegality of these transactions.
Parsa’s criminal scheme targeted numerous American technology companies. The components that Parsa attempted to procure included cryogenic accelerometers, which are sensitive components that measure acceleration at very low temperatures. Cryogenic accelerators have both commercial and military uses, including in applications related to ballistic missile propellants and in aerospace components such as liquid-fuel rocket engines.
In addition, following his arrest and while incarcerated, Parsa continued to violate the IEEPA and the ITSR by conducting business for Metal PM and Tavan Payesh Mad, including by ordering parts from German and Brazilian companies for Iranian customers. Parsa subsequently directed a relative to delete email evidence of his ongoing business transactions while in jail and emphasized the need for secrecy in their dealings.
Neither Parsa nor any other individual or entity involved in transactions that gave rise to his conviction applied for or obtained a license from the U.S. Department of the Treasury’s Office of Foreign Assets Control for the transactions.
Assistant Attorney General Carlin joined U.S. Attorney Bharara in praising the outstanding investigative work of the FBI and BIS.
This case was prosecuted by Assistant U.S. Attorneys Michael D. Lockard and Anna Skotko of the Southern District of New York, with assistance provided by Trial Attorney Mariclaire Rourke of the National Security Division’s Counterintelligence and Export Control Section.
FDA Issues Final Food Defense Regulation
U.S. Food & Drug Administration
The U.S. Food and Drug Administration today finalized a new food safety rule under the landmark, bipartisan FDA Food Safety Modernization Act (FSMA) that will help to prevent wide-scale public health harm by requiring companies in the United States and abroad to take steps to prevent intentional adulteration of the food supply. While such acts are unlikely to occur, the new rule advances mitigation strategies to further protect the food supply.
Under the new rule, both domestic and foreign food facilities, for the first time, are required to complete and maintain a written food defense plan that assesses their potential vulnerabilities to deliberate contamination where the intent is to cause wide-scale public health harm. Facilities now have to identify and implement mitigation strategies to address these vulnerabilities, establish food defense monitoring procedures and corrective actions, verify that the system is working, ensure that personnel assigned to these areas receive appropriate training and maintain certain records.
“Today’s final rule on intentional adulteration will further strengthen the safety of an increasingly global and complex food supply,” said Stephen Ostroff, M.D., incoming deputy commissioner for foods and veterinary medicine, FDA. “The rule will work in concert with other components of FSMA by preventing food safety problems before they occur.”
The rule was proposed in December 2013 and takes into consideration more than 200 comments submitted by the food industry, government regulatory partners, consumer advocates and others.
The FDA is committed to working with both industry and its state, local and tribal partners to ensure effective implementation of this new rule. Implementation of the Intentional Adulteration rule and all FSMA final rules will require partnership, education, and training. The FDA and others will provide industry with valuable tools to make compliance with the final rules easier, such as guidances, training courses and a technical assistance center.
Food manufacturers are required to comply with the new regulation within three to five years after publication of the final rule, depending on the size of the business.
The FDA has now finalized all seven major rules that implement the core of FSMA. The Intentional Adulteration final rule builds on the Preventive Controls rules for human food and animal food, the Produce Safety rule, Foreign Supplier Verification Program rule, Accreditation of Third-Party Certification rule and the rule on Sanitary Transportation of Human and Animal Food. These seven rules will work together to systemically strengthen the food safety system and better protect public health.
The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency is also responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.
U.S. Finalizes Trade Protections for Four Freshwater Turtle Species on World Turtle Day
U.S. Fish & Wildlife Service
The U.S. Fish and Wildlife Service today celebrates World Turtle Day by addressing the growing threat of unsustainable and illegal trade in native freshwater turtles through a final rule that will bring four native freshwater turtle species under the protection of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). The listing of the common snapping, Florida softshell, smooth softshell and spiny softshell turtles under CITES will require exporters to obtain a permit before shipping turtles overseas, helping the United States better control trade to ensure it is legal.
“World Turtle Day gives us the opportunity to celebrate and protect turtles and tortoises and their disappearing habitats around the world and to focus on stopping illegal trade in these species, which are threatened by unsustainable trade and wildlife trafficking. In 2013, we collaborated with international partners to adopt CITES protections for Asian freshwater turtles. Our own native species face the same global demand, so it is critical we protect them under CITES as well,” said Bryan Arroyo, the Service’s Assistant Director of International Affairs. “We will work closely with state wildlife agencies to protect native species and ensure trade is legal and sustainable, particularly for species at greatest risk of over-exploitation.”
Freshwater turtles and tortoises are collected, traded and utilized in overwhelming numbers. The Service supports a strategic, global approach to freshwater turtle conservation, as evidence shows that when protections for freshwater turtles are strengthened in one region, demand in other regions for unprotected species may increase.
“U.S. Fish and Wildlife Service law enforcement investigations have documented illegally exported softshell turtles to markets in Asia,” said Ed Grace, the Service’s Deputy Chief of Law Enforcement. “Listing these species under CITES will help engage our international partners to assist our special agents and wildlife inspectors in the fight against the illegal turtle trade, including investigating the criminals who profit from it.”
Trade in turtles is most common in East Asia, principally in China, with supplier countries feeding well-established legal and illegal trade networks. Turtles are used primarily as food and in traditional medicines, although a growing pet trade across the region and in other parts of the world is increasingly impacting a number of threatened species.
CITES is an international agreement signed by more than 180 governments that aims to ensure that international trade in specimens of wild animals and plants does not threaten their survival. Species are listed under one of three appendices depending on the severity of the threat presented by trade. Listed species may be traded internationally only when accompanied by permits.
The Appendix-III listings of the common snapping turtle and three North American softshell turtles follow the successful sixteenth meeting of the Conference of the Parties (CoP16) to CITES, where the United States collaborated with China and Viet Nam to increase protections for a number of Asian freshwater turtles. In total, three native turtle species and 44 species of Asian freshwater turtles received increased CITES protection at CoP16. Increased protections for freshwater turtles will continue to be a priority for the Service at the upcoming CoP17, which will take place in Johannesburg, South Africa, in September 2016.
For more information on CITES and how it operates, including Appendix-III listings, visit: www.fws.gov/international/cites/how-cites-works.html.
The final rule will publish in the Federal Register May 24, 2016. The listing will be effective Nov. 21, 2016.
FTC Approves Final Lord & Taylor Order Prohibiting Deceptive Advertising Techniques
Federal Trade Commission
Following a public comment period, the Federal Trade Commission has approved a final consent order with national retailer Lord & Taylor, prohibiting it from failing to properly disclose paid native advertising and online endorsements for its products.
According to the FTC’s complaint, issued against the company in March 2016, Lord & Taylor deceived consumers by placing a seemingly objective “news” article in the online publication Nylon and creating a Nylon Instagram post, without disclosing that the placements actually were paid native advertisements for the company’s 2015 new Design Lab clothing collection.
The Commission’s complaint also charged that as part of the Design Lab rollout, the company paid 50 online fashion “influencers” to post Instagram pictures of themselves wearing a paisley dress from the new collection, but failed to disclose they had given each influencer the dress, as well as thousands of dollars, in exchange for their endorsement.
The consent order prohibits Lord & Taylor from misrepresenting that paid ads are from an independent source or that an endorser is an independent or ordinary consumer. In addition, the company must ensure that its endorsers clearly disclose when they have been compensated in exchange for their endorsements.
The Commission vote approving the final order and responses to the public commenters was 3-0. (FTC File No. 152-3181; the staff contact is Robin Rosen Spector, Bureau of Consumer Protection, 202-326-3740.)