Holiday Schedules:
• PNCT & Maher Terminal - will be closed on Monday, February 20, 2023
• PierPASS/PortCheck Service Center - will be closed on Monday 2/20 for the Presidents’ Day holiday. Please plan your claims accordingly to avoid any delays or issues over the holiday weekend________________________________________________________________________________
Court of International Trade Opines on the Use of The First Sale Rule - Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
On February 9, 2023 the U.S. Court of International Trade (CIT) issued an opinion (Meyer Corp. vs United States, slip op. 23-13) which may impact the use of the “First Sale” method of duty appraisement. The court ruling highlights the need for importers to provide sufficient information to CBP when seeking approval to use the First Sale to make entry.
The case involved an ongoing dispute between Meyer Corp. and CBP over the valuation (and GSP treatment) of merchandise imported from the People’s Republic of China and Thailand. The transactions at issue involved the manufacture and sale of cookware between Meyer’s related companies. At issue in the case was whether Meyer Corp. was required to provide access to its parent’s financial records in order to show that first sale values from China were not only arms-length but were also unaffected by China’s status as a nonmarket economy.
In a previous decision, the Court of Appeals for the Federal Circuit (CAFC) stated that the CIT had misinterpreted the first sale rule to require importers to consider the effects of a nonmarket economy on first sale values. The CAFC held that the first sale rule only requires that the goods be clearly destined for export to the United States, and that the relationship between the buyer and seller does not influence the transfer price. The CAFC had remanded the case back to the CIT to reconsider Meyer’s qualifications for first-sale duty treatment.
On remand, the CIT restated its opinion that the value statute does not necessarily contemplate that there is no distinction between sellers operating in market economies and those operating in nonmarket economies. The court noted that Meyer’s failure to respond to the government’s request for financial information regarding Meyer’s parent company did not allow the court to discern whether or not the parent company provided any form of assistance to reduce costs. The court held that the failure to provide financial information was an independent reason for the court to find that the relationship between the related parties may have influenced the price and therefore negated the use of transaction value and first sale appraisement.
The CIT’s decision, while limited to the specific facts of this case, is likely to embolden CBP to more routinely seek access to the supplier’s financial records and to more aggressively scrutinize related party pricing arrangements involving suppliers in non-market economies. Further analysis and additional judicial interpretation may be required to fully address these questions and provide clarity to importers.
Please feel free to contact Alan R. Klestadt (aklestadt@gdlsk.com) or any of the other attorneys in our office if you have any questions regarding the Meyer decision or the use of the first sale rule of appraisement.
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Federal Register Notices:
• Sales at Less Than Fair Value; Determinations, Investigations, etc.: Paper File Folders From the People's Republic of China, India, and the Socialist Republic of Vietnam: Postponement of Preliminary Determinations in the Less-Than-Fair-Value Investigations
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Tin Mill Products From the People's Republic of China: Initiation of Countervailing Duty Investigation
• Sales at Less Than Fair Value; Determinations, Investigations, etc.: Tin Mill Products From Canada, the People's Republic of China, Germany, the Netherlands, the Republic of Korea, Taiwan, the Republic of Turkey, and the United Kingdom: Initiation of Less-Than-Fair-Value Investigations
• Investigations; Determinations, Modifications, and Rulings, etc.: Ammonium Sulfate From China
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Xanthan Gum From the People's Republic of China: Final Results of Antidumping Duty Administrative Review and Final Determination of No Shipments; 2020-2021
• Certain Steel Nails From the Republic of Korea: Final Results of Antidumping Duty Administrative Review; 2020-2021
• Certain Carbon and Alloy Steel Cut-to-Length Plate From the People's Republic of China and the Republic of Korea: Continuation of Countervailing Duty Orders
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Certain Lemon Juice From Brazil and the Republic of South Africa: Antidumping Duty Orders
• Polyethylene Retail Carrier Bags From the People's Republic of China: Preliminary Determination of No Shipments and Rescission of Review in Part; 2021-2022
• Determination of Sales at Less Than Fair Value: Certain Freight Rail Couplers and Parts Thereof From Mexico: Postponement of Preliminary Determination in the Less-Than-Fair-Value Investigation
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Certain Lemon Juice From Brazil and the Republic of South Africa: Antidumping Duty Orders
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Certain Hardwood Plywood Products From the People's Republic of China: Final Results of Antidumping Duty Administrative Review and Final Determination of No Shipments; 2021
• Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review and Join Annual Inquiry Service List
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Brass Sheet and Strip From France, Germany, Italy and Japan; Scheduling of Expedited Five-Year Reviews
• Investigations; Determinations, Modifications, and Rulings, etc.: Gas Powered Pressure Washers From China and Vietnam
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Commerce Adds Six to Entity List for Supporting PRC Military Modernization, Intelligence, and Reconnaissance Activities - Bureau of Industry and Security
Entities tied specifically to the People’s Liberation Army’s aerospace programs including airships and balloons and related materials and components
WASHINGTON, D.C. – Today (2/18/23), the Commerce Department’s Bureau of Industry and Security (BIS) added six entities in the People’s Republic of China (PRC) to the Entity List for supporting the PRC’s military modernization efforts, specifically those related to aerospace programs, including airships and balloons and related materials and components, that are used by the People’s Liberation Army (PLA) for intelligence and reconnaissance.
Companies or other entities added to the Entity List are restricted from obtaining U.S. items and technologies without U.S. government authorization. This protects U.S. national security by imposing additional U.S. government oversight on exports of items subject to U.S. jurisdiction and sends a clear message to companies, governments, and other stakeholders globally that the entities on the list present a threat to national security.
“The Commerce Department will not hesitate to continue to use the Entity List and our other regulatory and enforcement tools to protect U.S. national security and sovereignty,” said Deputy Secretary of Commerce Don Graves. “The Entity List is a powerful tool for identifying and cutting off actors that seek to use their access to global markets to do harm and threaten American national security.”
“The PRC’s use of high-altitude balloons violates our sovereignty and threatens U.S. national security,” said Under Secretary of Commerce for Industry and Security Alan Estevez. “Today’s action makes clear that entities that seek to harm U.S. national security and sovereignty will be cut off from accessing U.S. technologies.”
“Designating companies engaged in activities contrary to U.S. national security and foreign policy on the Entity List enables us to screen all exports to them and gives exporters a tool to determine who poses security concerns,” said Assistant Secretary of Commerce for Export Administration Thea D. Rozman Kendler. “Today’s action furthers President Biden’s strong response to the PRC’s surveillance balloon’s violation of U.S. airspace and makes clear that we will not hesitate to act to protect Americans’ security.”
“Today’s action demonstrates our concerted efforts to identify and disrupt the PRC’s use of surveillance balloons, which have violated the airspace of the United States and more than forty countries,” said Assistant Secretary of Commerce for Export Enforcement Matthew S. Axelrod. “Export Enforcement will vigilantly monitor and prevent shipments to the listed parties and investigate any efforts to circumvent these restrictions.”
As a result of today’s rule, any transactions with these entities that involve items subject to the Export Administration Regulations (EAR) will require a license from the BIS, and applications for those licenses are likely to be denied.
The text of the rule released today, which includes the list of entities, is available on the Federal Register’s website here (link). The effective date for the rule is February 10, 2023.
Additional Background on the Entity List Process
These BIS actions were taken under the authority of the Export Control Reform Act of 2018 and its implementing regulations, the Export Administration Regulations (EAR).
The Entity List (supplement no. 4 to part 744 of the EAR) identifies entities for which there is reasonable cause to believe, based on specific and articulable facts, that the entities—including businesses, research institutions, government and private organizations, individuals, and other types of legal persons—that have been involved, are involved, or pose a significant risk of being or becoming involved in activities contrary to the national security or foreign policy interests of the United States. Parties on the Entity List are subject to individual licensing requirements and policies supplemental to those found elsewhere in the EAR.
Entity List additions are determined by the interagency End-User Review Committee (ERC), comprised of the Departments of Commerce (Chair), Defense, State, Energy, and where appropriate, the Treasury. The ERC makes decisions regarding additions to, removals from, or other modifications to the Entity List. The ERC makes all decisions to add an entity to the Entity List by majority vote and makes all decisions to remove or modify an entity by unanimous vote.
Additional information on the Entity List is available on BIS’s website at: https://bis.doc.gov/index.php/policy-guidance/faqs
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Indianapolis CBP Stops 3 Shipments Filled with Counterfeits in 5 Days Had These Been Genuine, They Would Have Been Worth Nearly $265K - U.S. Customs & Border Protection
INDIANAPOLIS — As Valentine’s Day approaches, U.S. Customs and Border Protection (CBP) warns consumers to make sure they’re getting their loved ones the real deal instead of knock-off goods. From January 26-31, CBP officers in Indianapolis seized three shipments containing a total of 207 pieces of counterfeit designer merchandise. If the items—which all originated in the Philippines—had been genuine, it would have been worth a Manufacturer’s Suggested Retail Price (MSRP) of $264,285.
On January 26, CBP officers detained two shipments heading to a residence in Pennsylvania. Officers inspected the parcels to determine the admissibility of its contents in accordance with CBP regulations. In the first parcel, officers discovered 84 counterfeit Chanel, Burberry, Dior, Gucci, Hermes and Louis Vuitton apparel and handbags with a MSRP of $73,565 if they were real. Officers found 64 more counterfeit items in the second package containing Balenciaga, Chanel, Fendi, Gucci and Louis Vuitton coats, sweaters, blankets, purses, and keychains. Had these items been real, the MSRP would have been $99,150.
Just five days later, on January 31, officers once again intercepted a package arriving from the Philippines headed to a residence in New York. This time officers found 64 counterfeit Burberry, Chanel, Dior, and Louis Vuitton outerwear, wallets, sleeves, sunglasses, and clothes. Had these items been real the MSRP would have been $91,570.
“This is just another example of the work our officers do that protects consumers and the U.S. economy,” said LaFonda D. Sutton-Burke, Director, Field Operations-Chicago Field Office. “As consumers increasingly purchase merchandise from online or third-party vendors, our officers are at the frontline to guard against violative individuals and entities expecting to make money by selling fake merchandise.”
CBP officers are trained to pay close attention to details like item and packaging markings, quality, and origin of the shipment to determine if a shipment is authentic or not when it comes to IPR shipments. In this case, some of the shipment was not authentic, therefore those items were seized. Officers in Indianapolis see a multitude of counterfeit merchandise to include counterfeit NFL championship rings, Rolex watches, and Apple electronics. During the last fiscal year, The Port of Indianapolis seized 7,901 counterfeits that would have been worth a Manufacturer’s Suggest Retail Price (MSRP) more than $115.5 million, had they been real.
“CBP protects the rights holder and the consumer from counterfeit goods,” said Indianapolis Port Director Jeremy Brodsky. “Counterfeit goods have a negative effect on businesses and the price of authentic goods for the consumer. Our officers do a very good job at stopping the flow of illegitimate shipments entering and exiting the United States.”
Recognize the red flags to look for when shopping for loved ones on Valentine’s Day this year by:
• Purchasing goods directly from the trademark holder, original manufacturer, or from authorized retailers.
• Educating yourself on current prices of the item you are shopping for. If the item is priced well below fair market value, the likelihood is higher that the merchandise being considered for purchase is counterfeit. If a price seems too good to be true, then it probably is.
• Staying away from web sites that do not offer customer service contact information, return policies, and legitimate phone numbers.
Reviewing CBP’s E-Commerce Counterfeit Awareness Guide for Consumers for more detailed information.
CBP has established an educational initiative to raise consumer awareness about the consequences and dangers that are often associated with the purchase of counterfeit and pirated goods. Information about the Truth Behind Counterfeits public awareness campaign can be found at here.
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First Rare Pest Discovery by CBP Agriculture Specialists at the Otay Mesa Cargo Facility - U.S. Customs & Border Protection
OTAY MESA, Calif. – U.S. Customs and Border Protection Agriculture Specialists found something unusual while examining a shipment containing fresh celery, the interception of a rare pest, a first-in-port discovery.
A shipment containing fresh celery, arrived at the Otay Mesa Cargo Facility, Jan. 16. During initial inspection, a CBP Officer referred the driver and cargo load for an intensive agriculture inspection.
At the inspection area, CBP Agriculture Specialists conducted thorough examinations and found one live chrysomelidae and one live lepidoptera within the shipment of celery. The pest was submitted to the United States Department of Agriculture (USDA) Plant Protection and Quarantine (PPQ) Identifiers for further identification. The traveler and shipment were then returned directly to Mexico.
On Jan. 18, the lepidoptera pest was identified by local USDA Animal and Plant Health Inspection Service (APHIS) PPQ Entomologist as actionable Copitarsia species. The chrysomelidae was also later identified by national specialists as actionable Isotes multipunctate (Jacoby). Per local USDA APHIS PPQ, this qualifies as a "first-in-port" for Isotes multipunctate (Jacoby) in the Otay Mesa Cargo Facility.
“Foreign insects, plant and animal diseases, and invasive plants, can be harmful to United States agriculture. It is an important part of the CBP mission to identify and stop pests and diseases at the border prior to entering the country,” said Rosa Hernandez, CBP Otay Mesa Port Director.
Although this not the first time finding this pest nationwide, it is a first-time discovery of this pest at the Otay Mesa Port of Entry. The impressive find demonstrates CBP’s efforts to prevent invasive species from entering the United States, and ways for industry to prevent conveyance contamination. CBP encourages travelers to declare all agricultural items to a CBP officer upon arrival. For more information, travelers are encouraged to visit the Bringing Agricultural Products into the United States section of the CBP website.
CBP officers at the border crossings in Southern California stop illegal activity while processing millions of legitimate travelers into the United States. Those statistics can be found here: CBP-enforcement-statistics
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Scams and Frauds - USA Gov
Learn how to protect yourself from and respond to scams and frauds.
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United States and Kenya Conclude Opening Round Under the U.S.-Kenya Strategic Trade and Investment Partnership - U.S. International Trade Representative
WASHINGTON - The United States and Kenya today concluded a week of productive meetings on the U.S.-Kenya Strategic Trade and Investment Partnership (STIP).
During the meetings, the two sides exchanged views on the key concepts to be addressed on almost all of the areas outlined in the July 14, 2022 joint statement announcing the initiative. The goal of the Partnership is to increase investment; promote sustainable and inclusive economic growth; benefit workers, consumers, and businesses (including micro-, small-, and medium-sized enterprises); and support African regional economic integration.
The joint statement identified a set of initial issues on which the United States and Kenya share the goal of negotiating high-standard commitments in order to achieve economically meaningful outcomes. in the following initial areas: (1) agriculture, (2) anti-corruption, (3) digital trade, (4) environment and climate action, (5) good regulatory practices, (6) micro, small, and medium size enterprises, (7) protecting worker’s rights and protections, (8) services domestic regulation;,(9) supporting the participation of women, youth, and others in trade, (10) standards collaboration, and (11) trade facilitation and customs procedures.
The U.S. delegation was led by Assistant United States Trade Representative for Africa Connie Hamilton. The Kenyan delegation was led by Trade Principal Secretary Alfred K’Ombudo. The U.S. delegation also included representatives from over 20 U.S. Government agencies.
The two sides agreed to hold additional meetings in the coming months