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December 2010

U.S. Customs and Border Protection (CBP)

Santa’s U.S. Customs Problems

posted by Jennifer Diaz December 16, 2010 0 comments

Well, I just wanted to let you all know that Santa may not be coming this year to deliver all those wonderful holiday gifts.

Because of incorrect Incoterms and incomplete documentation, the gifts for all the world will have to be returned to the North Pole (at Santa’s own expense).

Santa decided to ship everything DDP and even though he hired an international freight forwarder to handle all of the logistics to transport the gifts, the forwarder was unable to determine who the correct customs broker was for each individual importer.  There was also a question about whether the Power of Attorney required by U.S. Customs was correctly completed.

Determining the importer of record turned out  a nightmare since EVERYONE  in the world wants a visit from Santa but no one was willing to be the importer of record.

New laws and regulations regarding entry of exotic animals also had the U.S. Fish and Wildlife Service forcing Rudolph and his crew back out before they could even land.

All the electronics needed prior FCC approval, and since the North Pole is nearest to Canada, Santa was trying to claim NAFTA. Obviously, U.S. Customs refused to clear any of it without detailed product literature regarding the country of origin.

Santa got tons of U.S. Census Bureau warnings because the dimensions and weight of the gifts were too unreal to calculate, and because Santa could not prove where the materials to make the toys came from (the North Pole is not on the approved country of origin list).

Santa incessantly tried to prove that he makes all of his own gifts, but since there are not defined tariff classifications in the HTSUS on "Santa-made" materials, U.S. Customs rejected Santa’s entry.

My Customs and International Trade Department lawyers will have to help the little kids  fill out their own Post Entry forms to correct the misclassifications.

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ExportU.S. Bureau of Industry and Security (BIS)

Save Money by Admitting Your Export Violations to the U.S. Commerce Department

posted by Jennifer Diaz December 12, 2010 0 comments

Sometimes it is beneficial for an exporter to voluntarily self-disclose its export violations to the U.S. Government.  Maybe an exportation of an item occurred without first obtaining the necessary license, or maybe the item was shipped to a company overseas other than allowed in a license. Both situations are violations of the Export Administration Regulations, and both violations could result in $250,000 penalties against the exporter. By voluntarily self-disclosing the violation, the exporter would reduce, and might even eliminate, such a penalty.

For a suspected violation of 15 CFR 764.2 of the Export Administration Regulations (EAR) enforced by the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce, an exporter may submit a voluntary self-disclosure (popularly known as a "VSD") to the Office of Export Enforcement of BIS at its Washington, D.C. headquarters office.  The contents of what must be included in a VSD are established in 15 CFR 764.5.

Procedurally, once a properly filed VSD is received by the BIS, it is investigated by a Special Agent from the Office of Export Enforcement. If a penalty or other sanction is contemplated, the case is referred to an attorney with the Office of Chief Counsel of BIS.  The BIS attorney will contact the exporter’s attorney, eventually resulting in a written Settlement Agreement between the exporter and the BIS.  Negotiating the terms of the Settlement Agreement is critical.

The Obama Administration is actively pursuing export control reforms. Importantly, Kevin Wolf, Assistant Secretary of Commerce for Export Administration, on November 9, 2010, at the Global Trade Controls Conference in London, England, stated:

Enforcement will become an even higher priority…We have long promoted the submission of voluntary self-disclosures (VSDs).  We view VSDs, along with internal compliance programs, as important mitigating factors. 

There will always be occasional errors by exporters.  Exporters should consult with knowledgeable and experienced international trade attorneys before submitting a VSD.  With more enforcement, there are sure to be more investigations and more penalties assessed by the Government against exporters, and likely more VSDs submitted to the Government by exporters.