"First Sale Rule" remain in the U.S.

According to the news letter issued by international trade law firm, Danielo Desiderio on July 30, 2010, the 2008 CBP proposal to abolish the first sale rule will be formally withdrawn. This means the first sale rule will remain in place in the U.S.

This mechanism is indeed beneficial for U.S. importers allowing them to obtain substantial import duty savings, industries will welcome this decision.

Thanks, Danielo, for sharing useful information.

(Source: http://www.ddcustomslaw.com/index.php?option=com_content&view=frontpage&Itemid=1&lang=en )

U.S. CBP Helping Importers with 10+2 Rule

Noteworthy news to catch up the current status of US 10+2 rule enforcement.

(Source: UPS Trade Broadcast as of March 31, 2010)

Officials from U.S. Customs and Border Protection (CBP) are helping the trade community adjust to the Importer Security Filing rule, commonly known as "10+2" because of the 10 security data elements required from importers and two from carriers, which must generally be transmitted to CBP 24 hours before a U.S.-bound container is loaded aboard a ship. CBP began full enforcement of the rule on January 26, 2010 and plans to gradually step up enforcement measures throughout the year.

During a recent gathering of the Coalition of New England Companies for Trade, Richard DiNucci, director of the Secure Freight Initiative, reportedly told attendees that weekly filings of the 10+2 data have increased by 25 percent since January 26. DiNucci also reportedly stated that, "About 70 to 80 percent of importers are filing, and some ports are 95 to 100 percent compliant." He added that CBP is continuing to reach out to importers to explain the rules.

According to DiNucci, CBP will send out warning letters "shortly" to importers that are not in compliance with the rule but "will not penalize importers who have failed." At the same time, Cynthia Whittenburg, the director of the CBP Trade Facilitation and Administration Division, said the new Importer Security Filing rule would be integrated into CBP's ACE system, when it transitions to what she called "steady state" in 2011.

U.S. Chamber of Commerce Urges Obama to Focus on Trade

Below is the article of UPS Trade News for January 8, 2009.
Personally, I'm wondering the end of trade embargo against Cuba is realistic priority?
Probably, this is nothing more than "hope" of industry group...


(UPS Trade News for January 8, 2009)

The U.S. Chamber of Commerce is urging incoming president Barack Obama to remain focused on international trade as a way to help jump-start the U.S. economy.

Specifically, the industry group has outlined a number of items as priorities for the U.S. trade policy, including completing the Doha Round of WTO talks; doubling federal spending on programs to help U.S. exporters; ratifying new free trade agreements, such as pending pacts with Colombia, Panama, and South Korea; and ending the trade embargo against Cuba.

According to the group's president and chief executive, Thomas J. Donohue, "a lot of smart people" that "understand trade" will be part of the Obama administration, and there's a sense of optimism that the new president will be a strong supporter of international trade.

CBP Publishes 10+2 Rule

To help prevent terrorist weapons from being transported to the United States, vessel carriers bringing cargo to the United States are required to transmit certain information to Customs and Border Protection (CBP) about the cargo they are transporting prior to lading that cargo at foreign ports of entry.

This interim final rule requires both importers and carriers to submit additional information pertaining to cargo to CBP before the cargo is brought into the United States by vessel. This information must be submitted to CBP by way of a CBP- approved electronic data interchange system. The required information is reasonably necessary to improve CBP's ability to identify high-risk shipments so as to prevent smuggling and ensure cargo safety and security.

Effective Date: This rule is effective on January 26, 2009.

CBP will hold public forum and requests comments by June 1, 2009.

More details and comprehensive summary of this regulation change, please take a look:
http://www.bryancave.com/bulletins/ Trade Bulletin IRB No. 417 dated Nov. 25, 2008.

CBP Extends Grace Period for Automated Export System

An official with U.S. Customs and Border Protection (CBP) says the agency has extended the grace period before enforcement of rules requiring electronic filing of export documents.

Exporters were to begin using the Automated Export System (AES) on October 1, however CBP says it must first issue guidelines to field offices, which should occur within the next few weeks.

Fines for exporters filing paper forms instead of using AES range from $1,100 to $10,000 per violation.

(Source: UPS Trade News for October 2, 2008)

US CBP collect "First Sale" data

On August 20, US Customs and Border Protection ("CBP") announced that they will start to collect the statistics of using "First Sale" data in customs declaration. This is an interim rule and first step action for importer declaration requirement utilizing the "First Sale Rule".

The First Sale rule is a beneficial rule for importer because they can save duty amount based on the payment by first shipper to middle men, not by transaction price by importer to middle men.
CBP once tried to eliminate this rule in January 2008, but due to strong opposition from business society, CBP announced the withdrawal of their proposal.

In case an importer use "First Sale" price of goods when they declare in customs, they need to insert a single code "F" on CBP form 7501 at the line item level. This new rule is effective immediately but they have grace period until September 19, that means the input will not be rejected.

By collecting statistics how the First Sale rule affect customs and business, CBP may seek further action for this rule.

(Source: Bryan Cave LLP, International Regulatory Bulletin No. 400 on August 21, 2008 http://www.bryancave.com/bulletins/)

CBP Seeks to Ease Concerns on Border Searches of Electronic Devices

A senior U.S. Customs and Border Protection official moved this week to ease concerns about CBP's policies concerning searches of laptop computers and other electronic devices at U.S. borders. Deputy Commissioner Jay Ahern defended the policy and said the agency has specific measures in place to protect business and trade information.

In a document
[http://www.strtrade.com/wti/2008/august/08/search_authority.pdf] dated July 16, CBP "sets forth the legal and policy guidelines within which officers may search, review, retain and share certain information possessed by individuals who are encountered by CBP at the border, functional equivalent of the border, or extended border." These guidelines include the following provisions.

* CBP officers may examine documents, books, pamphlets, and other printed material, as well as computers, disks, hard drives, and other electronic or digital storage devices. These examinations are "a crucial tool" for detecting information in violation of copyright and trademark laws as well as evidence of embargo violations or other import or export control laws.

* In the course of a border search, CBP officers can review and analyze the information transported by any individual attempting to enter, re-enter, depart, pass through or reside in the U.S. without "individualized suspicion." They can also detain documents and electronic devices or copies thereof for a reasonable period of time to perform a thorough border search, either on-site or off-site. During this time information may be shared with other federal agencies or entities to assist with translation, decryption or subject matter analysis.

* If CBP officers determine there is probable cause of unlawful activity, based on a review of information in documents or electronic devices encountered at the border or on other facts or circumstances, they may seize and retain the originals and/or copies of relevant documents or devices.

* If CBP does not have probable cause to seize information after reviewing it, any copies must be destroyed. However, there is no limitation on the authority of officers to make written notes or reports or to document impressions relating to a border encounter.

The policy includes specific provisions governing how CBP handles business information and attorney-client privileged material. CBP officers encountering business or commercial information in documents or electronic devices are required to treat it as business confidential information and to take all reasonable measures to protect it from unauthorized disclosure. And although legal materials are not necessarily exempt from border searches, they may be subject to special handling procedures. Specifically, if a CBP officer suspects that the content of correspondence, court documents or other legal documents that may be covered by attorney-client privilege may constitute evidence of a crime or otherwise pertain to a determination within CBP's jurisdiction, the officer must seek advice from the associate or assistant chief counsel or the appropriate U.S. attorney's office before conducting a search of the document.

Although public concern about this policy has only been expressed fairly recently, Ahern noted in an Aug. 5 posting on CBP's Web site that the policy is in fact not new, that CBP has been searching laptops of those who warrant a closer inspection for years, and that the agency's authority to conduct suspicion-less laptop searches at the border has been upheld by U.S. courts. With respect to specific concerns that the policy could put trade information at risk, Ahern pointed to CBP's track record with the "thousands of commercial entry documents, shipping manifests, container content lists, and details pieces of company information" it receives each day as part of its mission to process entries and screen cargo shipments. "This information is closely guarded and governed by strict privacy procedures," he emphasized, and "information from passenger laptops or other electronic devices is treated no differently."

Nevertheless, some lawmakers are moving to put additional limitations on CBP's search authority. Rep. Zoe Lofgren, D-Calif., introduced July 23 legislation (H.R. 6588) that would prohibit searches of the electronic contents of a laptop or similar device based solely on the government's power to "search at borders or upon entry to the territory" of the U.S.

(Source: www.strtrade.com/wti/register.asp; Copyright 2008, Sandler, Travis & Rosenberg, P.A. Originally published in the Friday, August 8, 2008, issue of ST&R's WorldTrade\Interactive. Reprinted by permission.)

CBP Introduces Online Trade Violation Reporting Tool

Last month, US Customs and Border Protection (“CBP”) announced a new online system called “e-Allegations” for concerned members of the public to report suspected trade violations. The e-Allegations system is limited to possible violations of trade laws or regulations on the importation of goods into the United States and is not meant for security issues. The public now has a convenient tool to report violations such as errors in classification, false country of origin markings, incorrect valuation, and imports infringing on intellectual property rights.

CBP will accept e-Allegations submitted anonymously, however the reporter must provide, at a minimum, a description of the alleged violation, the products or goods involved and the alleged violator’s name and/or company. The reporter may submit other information on a voluntary basis. If the reporter provides an e-mail address, CBP will respond with an e-mail address where the reporter can submit photos or supporting documentation. Because of US laws requiring CBP to keep trade information confidential, the reporter will not be advised by CBP of any questions asked or action taken as the result of an e-Allegation.

With e-Allegations, CBP has now made it extremely easy for anyone to report import violations for any reason. Some e-filers may view this as an opportunity to take aim against a competitor. Former employees could use e-Allegations to criticize a former employer. The impact of e-Allegations on the import community will depend on how CBP evaluates and acts on the information received. Of course, agency procedures may evolve over time as CBP builds experience evaluating the accuracy of the reports received through e-Allegations. However, it seems likely that soon after the announcement, CBP will look to demonstrate that the new program shows results and has identified important errors.

All of these possibilities make the e-Allegations announcement a useful reminder for importers to review their import procedures – especially compliance with CBP’s recordkeeping regulations. Each importer should consider what supporting documents could be provided in response to a request from CBP to demonstrate that critical data such as classification number, value and country of origin were declared according to the requirements of CBP’s regulations, rather than according to “how it has always been done.”

The e-Allegation tool is available online at http://www.cbp.gov/xp/cgov/trade/trade_programs/e_allegations/.

For any issue that poses an immediate threat to the health and/or safety of the public, CBP asks the public to report by phone at 1-800-BE-ALERT.

No Further Action on First Sale Rule

At a June 24 hearing before the Senate Finance Committee, U.S. Customs and Border Protection Commissioner Ralph Basham said that his agency is not going forward with any further action to implement its proposal to revoke the First Sale Rule (FSR) or otherwise change the interpretation of the rule before 2011. Basham’s remarks are consistent with a provision in the recently-passed Farm Bill that forestalled any immediate CBP action on the rule. The committee hearing also addressed a range of issues related to the oversight of trade functions at CBP and other agencies.

The FSR allows import duties to be assessed on the value of the first sale when an import transaction involves a series of sales (e.g., from the factory to the middleman and then to the buyer). In late January, however, CBP proposed to eliminate the FSR and trade groups actively fought this proposal, arguing that it would increase consumer costs and raise concerns on issues such as supply chain security, business predictability, agency authority and trade policy.

Ranking member Charles Grassley, R-Iowa, also expressed concern over CBP’s recent steps to change longstanding practices, such as the First Sale Rule, without first consulting the Finance Committee. Basham acknowledged that CBP did not conduct the proper consultation with the committee for its interpretation of the rule and stated that CBP could have done a much better job in consulting with stakeholders before it published the proposal.

(Source: http://www.strtrade.com/wti/wti.asp?pub=0&story=31181&date=6%2F26%2F2008&company=)

U.S. to Tighten Visa-Waiver Program

Japan is one of the visa-waiver countries when visiting US, but pre-entry registration will be required from January 2009. I will need to do it next year for US business trip!!

(Source: Wall Street Journal: http://online.wsj.com/article/SB121246184786840497.html )

By SIOBHAN GORMAN, June 3, 2008.
WASHINGTON -- Starting in January, travelers to the U.S. from countries whose citizens aren't required to obtain visas will have to register with the Department of Homeland Security at least three days before their arrival.

The new electronic system for travel authorization will collect the same information now required from passengers on a form upon their arrival in the country, the Homeland Security official said. The information includes basic data such as name, date of birth and passport number.
"It's a 21st-century version of the 20th-century paper version that exists today," the official said. "We're not asking for new information.We're just getting it earlier."

The department for years has sought to tighten its visa-waiver program, and some Capitol Hill lawmakers have proposed shutting it down because of concerns that would-be terrorists will fly in from one of the 27 countries, especially because Islamic extremism has taken hold in Britain. Other countries in the program include Singapore, Japan and Australia.

Hault Elimination of First Sale Rule? (US Customs)

In a significant victory for U.S. consumers and businesses, Congress has moved to stop U.S. Customs and Border Protection from revoking the First Sale Rule. CBP proposed to eliminate this favorable import valuation methodology in January, a move that ignores 20 years of federal judicial precedent and could raise import tariffs by as much as 15 percent. CBP has been inundated with opposition from the private sector, including an industry coalition spearheaded by Sandler, Travis & Rosenberg, P.A., but lawmakers concerned about the lack of transparency in the process CBP used to develop this proposal and how it could affect a struggling domestic economy are acting to make sure that CBP does not go ahead with it.

The “First Sale” rule was established by the court in Nissho Iwai American Corp. v. United States, 982F.2d 505 (Fed. Cir. 1992) and set forth in Treasury Decision 96-87 (“T.D. 96-87”).
It applies in instances where merchandise is imported into the United States as a result of “back-to-back” sales. Typically, the first sale is from a foreign manufacturer to a foreign middleman and the second sale is from the foreign middleman to the U.S. importer. Under the “First Sale” rule, an importer can base the transaction value (or the appraised value) of the imported goods on the lower price that the middleman paid to the foreign manufacturer rather than on the higher price that the importer paid to the middleman, if a two-pronged test is met.
The court in the Nissho Iwai case ruled (1) that the goods must be “destined for the U.S. at the time of the first sale” and (2) that the sale represents a “viable transaction value.”
In practice, this meant that if the sale was an arm’s length sale and an importer could produce documentation that the goods were sold to the middleman as a result of a U.S. purchase order, the two-pronged test was met. The use of this rule has become increasingly popular since 1993 and has allowed U.S. importers significant duty savings over the past 15 years.

(Source: http://www.strtrade.com/ and Bryan Cave Publication http://www.bryancave.com/bulletins/ on Jan. 25, 2008 IRN No. 377)