Monthly Archives

August 2010


Forbidden Places for Tourism and Trade

posted by Jennifer Diaz August 30, 2010 3 Comments

Please make plans to attend the Forbidden Place-Tourism and Trade  seminar on Friday, September 24, 2010. This seminar will take place at the J.W. Marriott Hotel, Miami, Florida. This half-day seminar will address a variety of recent regulations administered by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury. Topics to be addressed include travel to and trade with restricted countries, immigration aspects of tourism to sanctioned countries, and representing a client who is the subject of an investigation or penalty by the OFAC.

Click on this highlighted link for a pdf of the full brochure for the agenda of the event.  Our featured luncheon guest speaker is Charles Bishop, Sanctions Coordinator, OFAC.  Mr. Bishop has primarily been involved with administering the Cuban Assets Control Regulations, including license applications for Service Providers, Carrier Service Providers, Travel Service Providers, and Remittance Forwarders.

Please call The Florida Bar’s International Law Section at 850-561-5831 to register over the phone, fax your registration to 850-561-5816 or register on-line at    Attorneys who attend will receive Continuing Legal Education (CLE) credits.

A block of rooms has been reserved at the J.W. Marriott Hotel Miami at the rate of $114 single/double occupancy. To make reservations, please call the hotel directly at (305) 329-3500. Reservations must be made by September 3, 2010 to assure the group rate and availability. Group rate is valid 3 days before and 3 days after the event, based on availability. After September 3rd, the group rate will be granted on a "space available" basis.

U.S. Fish and Wildlife Service

Caviar and U.S. Fish and Wildlife Service

posted by Jennifer Diaz August 27, 2010 0 comments

The U.S. Fish and Wildlife Service is responsible for regulating and managing the export and sale of paddlefish roe (caviar).  To obtain a paddlefish roe export permit, an applicant must establish that it properly harvested the roe, and that its export would not undermine the survival of the species. But what happens when the U.S. Fish and Wildlife Service has had the application for months, and has taken no action on it?

Paddlefish are 1 of 3 types of egg-bearing (roe) species native to the United States that are allowed to be commercially exported for their eggs, which are processed into caviar.  For Leisure Caviar, a wholesale dealer of paddlefish roe, and Bemka Corporation, a buyer of paddlefish roe, they had applied to the Fish and Wildlife Service for export permits for 4,074 pounds of roe worth $500,000.  The Fish and Wildlife Service had taken no action on the applications which had been filed from between 7 to 12 months earlier.  The shelf life of paddlefish roe is only 12 months. 

The applicant companies sued the U.S. Fish and Wildlife Service in Federal Court in Chattanooga, Tennessee, seeking to get the Court to order the U.S. Fish and Wildlife Service to review and grant the applications.  Instead, the Court dismissed the law suit.  The Court’s legal Opinion explained that the companies "had failed exhausted their administrative remedies, a prerequisite for bringing suit against the U.S. Government under the Federal Tort Claims Act…"  Moreover, upon appeal to a higher court, the appellate court stated:

The processing of applications under the Convention in International Trade in Endangered Species of Wild Fauna and Flora (CITES) amounts to a discretionary responsibility, one ineligible for mandamus relief.

In other words, the U.S. Fish and Wildlife Service could take whatever time it wanted in reviewing the export applications of the companies. The appellate court affirmed the lower court’s decision in dismissing the case.

To me, this is another arrogant example of "Government Gone Wild".  Did the U.S. Fish and Wildlife Service forget the meaning of the word "Service"?

ImportImport Alert

FDA Import Alerts for Seafood

posted by Jennifer Diaz August 23, 2010 0 comments

Americans are constantly bombarded with warnings that the seafood we eat is contaminated with salmonella, listeria, or some other antibiotic, fungicide, or microorganism that will make us sick.  The U.S. Food and Drug Administration (FDA) is taking more samples of imported seafood, holding more seafood for laboratory analysis, and rejecting more seafood than in past years. That is true of basa from Vietnam, crabmeat from Indonesia, and a variety of seafood from countries as far away as China, or as close to the United States as the Bahamas.

The FDA issues ‘Import Alerts’ to attempt to prevent  contaminated seafood (or specific products) from certain overseas suppliers from entering the food supply chain in the United States.  Seafood importers should be very familiar with Import Alert 16-81 – "Detention Without Physical Examination of Seafood Products Due to the Presence of Salmonella". 

The Obama Administration’s Import Safety Working Group Food Protection Plan encourages the FDA to issue more Import Alerts.  An Import Alert is an order to all FDA district officials to detain and examine imported seafood that is identified on an Import Alert, or to detain and examine any seafood shipped by an overseas company  that is listed on the Import Alert (i.e. the "Red List"). 

Import Alerts are issued on an almost daily basis by the FDA.  For Import Alert 16-81, the "Charge" reads as follows:

The article is subject to refusal of admission pursuant to Section 801(a)(3) in that the product appears to contain salmonella, a poisonous and deleterious substance, which may render it injurious to heath. [Adulteration, Section 402(a)(1).]

The explanation for such a food safety procedure was explained in a 2004 report to Congress by the U.S. General Accountability Office in Report 04-426 with a scathing criticism of the FDA’s "Food Safety" program.

More than 80% of the seafood that Americans consume is imported from an estimated 13,000 foreign suppliers in about 160 nations. If contaminated, imported and domestic seafood can cause foodborne illnesses with problems ranging from mild gastrointestinal discomfort to neurological damage.

Next year, when Congress passes, and the President signs, a new food safety law, suppliers, importers, warehouses, and transportation companies should all expect a lot more changes from the FDA.  The U.S. House of Representatives already approved H.R. 2749 entitled "Food Safety Enhancement Act of 2009," and the Senate is now debating S.B. 510 entitled "Food Safety Modernization Act of 2010." With reports that now 90% of our seafood is from overseas, the increased use of aquaculture, and the continuing threat of contaminated seafood, companies which are manufacturing, shipping, warehousing, and transporting seafood will have to face the reality of more government regulation.


Maersk Pays $3 Million for Trading With Iran and Sudan

posted by Jennifer Diaz August 16, 2010 0 comments

Maersk Line, Ltd. paid the U.S. Office of Foreign Assets Control (OFAC) $3 million to settle allegations of violations of the U.S. trade embargo with Sudan and Iran that Maersk committed between 2003 and 2007.   How the world’s largest ocean transportation company committed such violations is a good story. How Maersk’s lawyer was able to limit the payment to $3 million is also important to understand.

According to the OFAC Enforcement Information for July 28, 2010,

OFAC’s investigation alleged that Maersk provided unlicensed shipping services for 4,714 shipments of cargo originating in or bound for Sudan and Iran. These services involved the transportation of such cargo on vessels owned, operated, and/or chartered by Maersk’s parent, A.P. Moller-Maersk A/S on at least one leg of the cargo’s journey to or from Sudan and Iran.

This is very interestingly worded by OFAC.  As A.P. Moller-Maersk A/S, a Danish conglomerate, is not bound by the U.S. laws regarding trade sanctions with Sudan and Iran, it could provide unrestricted vessels services in those countries.  If, however, any part of the cargo to or from those countries were transported on a U.S.-flagged vessel, then a violation of the U.S. laws would occur.  Cargo is often shifted from ship to ship between the port of departure and the port of delivery, and A.P. Moller -Maersk did not carefully trace the cargo from Sudan and Iran as well as it should have to prevent the cargo from touching a U.S.-flagged vessel.

Using OFAC’s Economic Sanction Enforcement Guidelines effective November 9, 2009, the penalty against Maersk could have been $61 million.  Even though Maersk did not voluntarily self-disclosure the violations to OFAC, the Settlement and payment of only $3 million reflects the mitigating factors of:

  • the non-egregious nature of the violation;
  • no violations by Maersk in the prior 5 years;
  • substantial and effective remediation measures were implemented by Maersk; and
  • substantial and full cooperation with OFAC officials during the investigation.

For non-U.S. based multinationals, compliance with U.S. trade laws and regulations enforced by OFAC and the export controls enforced by the Bureau of Industry and Security of the U.S. Department of Commerce is often confusing.   Moreover, if the world’s largest, most sophisticated shipping company, and one with an excellent reputation for service and integrity, is doing business with Iran and Sudan, what does that say about the effectiveness of the U.S. sanctions and trade embargo programs?

FDA IssuesFood

FDA To Inspect Foreign Food Facilities Starting October 1, 2010

posted by Jennifer Diaz August 11, 2010 1 Comment

The U.S. Food and Drug Administration has issued notices to all foreign food facilities registered with the FDA that it will conduct an inspection of those facilities between October 1, 2010 and September 30, 2011.  Foreign food facilities that manufacturer, process, pack, hold, and ship food to the United States must have registered with the FDA pursuant to the Bioterrorism Act.  Foreign food facilities that do not properly respond to the FDA notices may have their registrations automatically terminated. In effect, that will result in a detention of any food that arrives in the United States from those canceled facilities.

It is no secret why the FDA is visiting foreign food facilities shipping food to the United States.  See blog post "The FDA is Flexing Its Enforcement Muscles".  The Foreign Food Inspection Team at the FDA’s Center for Food Safety and Applied Nutrition (CFSAN) based in College Park, Maryland, is responsible for coordinating the foreign food inspections.  The recent FDA notices state, in part:

The inspection will be conducted by an investigator of the FDA to determine if your facility is operating in accordance with U.S. Food, Drug, and Cosmetic Act and its regulations, including Title 21 CFR Part 110, Good Manufacturing Practices (GMP) regulations.

Any foreign food facilities not yet registered may register with the FDA using a website established and operated by my law firm for a fee.  It is very easy to register on-line in English, Spanish, Portuguese, or German.  Companies should properly prepare prior to the FDA inspection.


U.S. Customs Inflates Seizure Statistics

posted by Jennifer Diaz August 10, 2010 2 Comments

U.S. Customs and Border Protection is one of the leading Federal agencies responsible for stopping counterfeit products from entering the United States. U.S. Customs does a good job seizing counterfeit products at ports around the country on a daily basis.   These counterfeit products vary from sunglasses to handbags to pharmaceuticals to footwear.  But U.S. Customs’ press releases always use an unrealistic, inflated number when describing the value of the seized merchandise.

For example, last week in San Francisco, U.S. Customs allegedly seized $100 million counterfeit Gucci, Dooney & Bourke, and various other illegally trademarked merchandise from the Fisherman’s Wharf area.  It was originally reported in the San Francisco Chronicle, then appeared on the Associated Press wire to the Chicago Tribune, the Washington Post, and other newspapers around the country.  The Chronicle stated in part:

On Tuesday, they announced the seizure of more than 200,000 counterfeit retail items valued at $100 million – if they were genuine, that is – during what they called the largest-ever bust of retail counterfeiters on the West Coast.

Note the words, "if they were genuine, that is." U.S. Customs uses the Manufacturer’s Suggested Retail Price (MSRP), which nobody pays, in reporting the value of the seized merchandise to the press.  So, for example, a blatantly counterfeit Louis Vuitton handbag that would have been sold to a customer at Fisherman’s Wharf for $50 may be reported by U.S. Customs to be valued at $1,000, a multiple of 20 times the selling price.

Customs does a good job at identifying, intercepting, and seizing counterfeit merchandise – something it refers to as a "priority trade issue."  Know, however,  that the value U.S. Customs places on the seized counterfeit merchandise is almost always much higher than you and I would pay, even for the real thing.