C-AIR TIMES ISSUE #683 - Friday, May 21, 2021 08:26

CBP Denies Apparel Importer Protest Challenging the Exclusion of Goods under XPCC Cotton Withhold Release Order - Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP

In a May 10, 2021 decision, CBP denied an apparel importer’s protest challenging the exclusion of goods pursuant to a Withhold Release Order (“WRO”) covering Cotton and Cotton Products from Xinjiang Production and Construction Corporation (“XPCC”) and its subordinate and affiliated entities.

CBP at the port and CEE levels determined that the importer had not submitted sufficient proof of admissibility and the goods were ultimately excluded. In the ruling, CBP acknowledged that the importer provided evidence that the raw cotton used to produce the garments was sourced from entities located in the U.S., Australia and Brazil. However, CBP concluded that the importer did not provide substantial evidence to establish that entities that processed the cotton into the subject goods did so without forced labor.

Thus, CBP’s decision hinged on the fact that adequate production records were not provided for each stage of the production (e.g., spinning, weaving / dyeing, garment make-up) to further negate the use of forced labor. Proof of the non-China source of the raw cotton was not enough. Significantly, CBP Headquarters denied the importer’s request for release without affirmatively finding that the goods were made with forced labor.

This ruling is indicative of the latest trend on the part of CBP in connection with its reviews of proof of admissibility provided in response to detentions under WROs. CBP officials have recently indicated that they are changing their review parameters. In the case of WROs on cotton and cotton products, CBP officials have suggested that the burden is on importers to not simply demonstrate the provenance of the cotton and track it through the various processors but to affirmatively demonstrate the absence of forced labor anywhere in the supply chain.

In light of the escalating position of CBP and the associated developments on the political and legislative fronts on the issue of forced labor, importers should examine their supply chains and consider whether they will be able to secure the requisite supporting records in the event that their goods are detained as the result of a forced labor allegation. .

Please do not hesitate to contact one of our attorneys to discuss further.

Federal Register Notices:

Joint United States – European Union Statement on Addressing Global Steel and Aluminum Excess Capacity - Department of Commerce

United States Trade Representative Katherine Tai, U.S. Secretary of Commerce Gina M. Raimondo, and European Commission Executive Vice President Valdis Dombrovskis today announced the start of discussions to address global steel and aluminum excess capacity. During a virtual meeting last week, the leaders acknowledged the need for effective solutions that preserve our critical industries, and agreed to chart a path that ends the WTO disputes following the U.S. application of tariffs on imports from the EU under section 232.

Ambassador Tai, Secretary Raimondo, and Executive Vice President Dombrovskis acknowledged the impact on their industries stemming from global excess capacity driven largely by third parties. The distortions that result from this excess capacity pose a serious threat to the market-oriented EU and U.S. steel and aluminum industries and the workers in those industries. They agreed that, as the United States and EU Member States are allies and partners, sharing similar national security interests as democratic, market economies, they can partner to promote high standards, address shared concerns, and hold countries like China that support trade-distorting policies to account.

They agreed to enter into discussions on the mutual resolution of concerns in this area that addresses steel and aluminum excess capacity and the deployment of effective solutions, including appropriate trade measures, to preserve our critical industries. To ensure the most constructive environment for these joint efforts, they agreed to avoid changes on these issues that negatively affect bilateral trade. They committed to engaging in these discussions expeditiously to find solutions before the end of the year that will demonstrate how the U.S. and EU can address excess capacity, ensure the long-term viability of our steel and aluminum industries, and strengthen our democratic alliance.

OTEXA: Announcements - Office of Textile & Apparel

[05/19/2021] – The United States and the European Union (EU) announce the start of discussions to address global steel and aluminum excess capacity. “To ensure the most constructive environment for these joint efforts, they agreed to avoid changes on these issues that negatively affect bilateral trade,” indicating the suspension of proposed EU retaliatory tariffs of 25 percent on certain imports from the United States (including apparel, home furnishings, and footwear) effective June 22 would be suspended. Tariffs on steel and aluminum imports from the EU were imposed by the United States in 2018 under Section 232 of the Trade Expansion Act of 1962.

36,000 Fake AirPods Worth $7.16 Million Seized by Cincinnati CBP - U .S. Customs & Border Protection

CINCINNATI –- On May 6, U.S. Customs and Border Protection (CBP) officers in Cincinnati inspected three large shipments from China and found what appeared to be tens of thousands of earbuds in violation of Apple’s protected configurations. After consulting with an import specialist from CBP’s Center of Excellence and Expertise, the items were found to be in violation of CBP trademark and copyright codes and were declared seized on May 11 and 13.

Apple has configuration trademarks on their AirPods and has recorded those trademarks with CBP. Furthermore, a company does not have to put the “Apple” wordmark or design on their products to violate these trademarks. In this instance, further inspection of the earbuds revealed that their shape and design replicated the protected Apple configuration.

Each shipment contained 12,000 fake AirPods, for a total of 36,000. Although each package had a declared value of $5,280, the Manufacturer’s Suggested Retail Price for all the AirPods would have been $7.16 million had they been genuine. The shipments were destined for an address in Dayton, KY.

“Counterfeit products can be deceiving at first glance,” said Cincinnati Port Director Richard Gillespie. “They’re often cheaper and can appear very similar to the real thing. However, inferior products can end up costing consumers more than if they purchased the genuine item because of the high likelihood of substandard materials and malfunctioning parts. Supporting legitimate businesses is the smart choice, and buying from trusted companies protects against potential human rights violations and damage to our economy.”

There are several ways consumers can protect themselves from purchasing fake merchandise. Companies often publish lists of authorized retailers online, and consumers should be aware that purchasing from an unauthorized vendor could easily mean the product is fake. Read all labels and check serial numbers or other forms of authentication with manufacturer databases. Additionally, using common sense about purchases that seem so cheap they are “too good to be true” can prevent consumers from wasting their hard-earned cash on an inferior product. Although fake products may be cheaper, supporting illegitimate enterprises can be far more costly than the real thing.

If you have information concerning counterfeit merchandise illegally imported into the United States, CBP encourages you to submit an anonymous report through the e-Allegations Online Trade Violation Reporting System.

Trilateral Statement of the USMCA Free Trade Agreement - Office of U.S. Trade Representative

Following the first meeting of the U.S.-Mexico-Canada Agreement (USMCA) Free Trade Commission (FTC) on May 18, 2021, United States Trade Representative Katherine Tai, Canadian Minister of Small Business, Export Promotion, and International Trade Mary Ng, and Secretary for Economy Tatiana Clouthier released the following statement:

“Today the United States, Canada, and Mexico held the first-ever USMCA FTC meeting. While this renewed Agreement is less than a year old, our countries are neighbors and friends, and have a longstanding shared history built on mutual respect and cooperation. The USMCA commits us to a robust and inclusive North American economy that serves as a model globally for competitiveness, while prioritizing the interests of workers and underserved communities. The Parties recognize that trade policies should foster broad-based and equitable growth, spur innovation, protect our shared environment, and have a positive impact on people from all walks of life. To accomplish this, the United States, Mexico, and Canada recommit to fully implementing, enforcing, and fulfilling the Agreement’s terms and high standards throughout the life of the USMCA.”

During the FTC, the Ministers reviewed the work already underway to advance our cooperation under the Agreement. Despite the challenges and hardships of the COVID-19 pandemic, committees established by the Agreement have convened virtually since entry into force on July 1, 2020, including the Committees on Origin and Origin Procedures, Textiles and Apparel Trade Matters, Trade Facilitation, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Transportation Services, Financial Services, Intellectual Property Rights, State-Owned Enterprises and Designated Monopolies, Small and Medium-Sized Enterprises (SMEs) Issues, Competitiveness, and Good Regulatory Practices. The Ministers took note of these committees’ progress and offered recommendations for future work to maintain progress. This work is critical to the Agreement’s continued implementation.

Recognizing the important role that SMEs play in our economies, the Ministers announced that the Committee on SME Issues will convene the first-ever USMCA SME Dialogue on October 13-14, in San Antonio, Texas, where our governments will engage directly with a diverse group of small business stakeholders, including those owned by women, Indigenous peoples, and other underrepresented groups, to help ensure that everyone is included in, and can benefit from, the Agreement.

Furthermore, Ministers directed the Committees to explore new approaches to better engage with underrepresented communities on trade issues so that the Agreement can best advance equity and opportunities for all stakeholders and to ensure that North America remains the most competitive region.

The United States, Mexico, and Canada also held robust forward-looking discussions on the USMCA’s landmark labor and environment obligations. These commitments set the standard for future trade agreements and should serve as examples to advance workers’ rights and the nexus between environmental issues and trade.

Labor
The Parties affirm their desire to champion trade policies that support good jobs that are protected by robust and fully enforced labor laws. The USMCA seeks to raise standards for workers in North America, including those related to freedom of association and the right to collective bargaining. The USMCA also provides us the opportunity to lead the fight against forced labor globally. Today, the United States, Mexico, and Canada discussed our shared obligation to ensure the Agreement’s prohibition of the importation of goods produced by forced labor and recommitted to working closely to promote a fair, rules-based international trading system where products made with forced labor do not enter the trading system. The Parties commit to using the processes established by the Agreement and continuing their productive dialogue on these and other labor matters through an upcoming Labor Council meeting.

Environment
The Parties acknowledge that trade and environmental policies are mutually supportive and that trade can provide legitimate and innovative opportunities to address environmental concerns such as wildlife trafficking, illegal logging and fishing, and marine litter. Additionally, the Parties commit to increase law enforcement cooperation, in particular in the areas of wildlife trafficking and illegal logging and associated trade. Today, we affirm our shared goal of full implementation of the USMCA environment commitments and continued engagement to address the most pressing environmental challenges, recognizing that a healthy environment is an integral element of sustainable development. The Parties discussed ways to address environmental issues and exchanged views on the possible exploration of areas to cooperate, including on trade-related climate change measures.

Free Trade Commission Decision No. 2
Today, the Parties also signed the second Free Trade Commission Decision under the USMCA. The decision adopts the Spanish and French versions of the Rules of Procedure and the Code of Conduct applicable to dispute settlement proceedings under the Agreement. It further adopts the Spanish and French versions of the Uniform Regulations. The decision also affirms our mutual understanding of the applicability of the Transitional Provisions under USMCA for binational panels under Chapter 19 of NAFTA and adopts amended Rules of Procedure for Article 10.12 of the Agreement and Rules of Procedure for Extraordinary Challenge Committees and Special Committees under Chapter 10 of the Agreement. These materials are integral to ensuring the Agreement’s operation. The Parties affirm their desire to work within the mechanisms established under the USMCA as we continue to work towards full and complete implementation of the Agreement. The Parties will complete Spanish and French versions of the Rules of Procedure for Binational Panels, Extraordinary Challenge Committees and Special Committees under Chapter 10 of the Agreement.

Next Steps
As our countries continue to combat the COVID-19 pandemic and continue our shared recovery from an economic downturn that has disproportionally impacted SMEs and underrepresented communities, we recognize that the USMCA has an important role to play in revitalizing our region. As we continue implementing the USMCA and ensuring that this Agreement benefits those that have historically been left behind by trade agreements, the Parties have agreed to continue to hold engagement meetings with underserved communities and to hold a Trade Deputies meeting before the end of this year to assess progress on the areas highlighted today and identify ongoing opportunities for future engagement.

CSMS #47852994 - Department of State Suspended Mexico’s Certification Pursuant to Section 609 and Finland Voluntarily Withdrew Request for Certification - U.S. Customs & Border Protection

The Department of State has suspended the certification of Mexico pursuant to Section 609 of Public Law 101-162. Finland has voluntarily withdrawn its request for certification. Therefore, shipments of wild-caught shrimp harvested in Mexico or in Finland with a Date of Export later than May 31, 2021, are not permitted entry into the United States.

For more information, please see the Federal Register notice:
https://www.federalregister.gov/documents/2021/04/30/2021-09077/bureau-of-oceans-and-international-environmental-and-scientific-affairs-annual-certification-of