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Customs and Trade News Weekly Snapshot

Here is a recap of the latest customs and international trade news: 

Customs and Border Protection (CBP)

  • CBP announced they are delaying the deadline for use of the Document Image System (DIS) as a method to submit the CBP Form 1302A Cargo Declaration. The new deadline is April 1, 2025.
  • CBP seized $268,000 in unapproved FDA drugs in Cincinnati.
  • Wilmington CBP officers seized $151k in counterfeit designer brand name handbags.
  • CBP announced they are centralizing drawback functions under one Center of Excellence and Expertise (Center). Effective October 1, 2024, Drawback Specialists and their respective functions will be managed by the Houston Field Office under the Petroleum, Natural Gas and Minerals (PNGM) Center.
  • CBP published a new Air Cargo Advance Screening (ACAS) implementation guide.
  • A subgroup of the Commercial Customs Operations Advisory Committee (COAC) Secure Trade Lanes Subcommittee laid out eight recommendations for how to improve communications among CBP’s Centers of Excellence and Expertise, brokers and other trade entities.

United States Trade Representative (USTR)

  • USTR issued a federal register notice announcing a docket for public comments on proposed tariff increases following the four-year 301 review. The docket opened on September 23, 2024 and will close on October 22, 2024.
  • USTR announced an enforcement action under the United States-Peru Trade Promotion Agreement (PTPA) Forest Sector Annex. USTR requested the Government of Peru to verify that five timber shipments exported to the United States from Peru complied with applicable Peruvian […]
By |2024-09-28T13:54:14-04:00September 28, 2024|Snapshot|Comments Off on Customs and Trade News Weekly Snapshot
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BIS Issues Final Rule on VSD Policies and Penalty Guidelines

BIS recently issued a final rule to amend the Export Administration Regulations (EAR), making several changes to their Voluntary Self Disclosure (VSD) policies, as well as updates to guidance on penalty determinations.

The rule codifies previously announced policy changes through several Policy Memoranda including an April 2023 memorandum on voluntary-self disclosures, and a June 2022 memorandum on strengthening administrative enforcement.

Revisions to Voluntary Self-Disclosures

The rule makes both substantive and procedural changes to the VSD policies:

  1. Addition of non-disclosure as an aggravating factor – the new rule makes clear that BIS will consider a deliberate decision to not disclose a violation as an aggravated factor when determining what administrative sanctions will be imposed.
  2. New dual track for processing VSDs – one track for minor or technical violations, the other for significant violations.
  3. Authorizes any person (not just the party submitting a VSD) to notify the Director of BIS’s Office of Export Enforcement (OEE) that a violation has occurred and to request permission to engage in corrective activities.

Revisions to Penalty Guidelines

This rule makes several changes to the BIS Penalty Guidelines, including:

  1. Changes the base penalty caps:
    1. Non-egregious VSD cases: was $125,000, now one-half of the transaction value.
    2. Non-egregious cases that are not initiated by a VSD: was $250,000, now the full transaction value.
  2. Permits BIS to use  non-monetary penalties to resolve cases that are not egregious and have not resulted in national security harm, but rise above the level of cases warranting a warning letter.
  3. Removes from the BIS […]
By |2024-09-26T15:59:58-04:00September 26, 2024|EAR, Export, U.S. Bureau of Industry and Security (BIS)|Comments Off on BIS Issues Final Rule on VSD Policies and Penalty Guidelines
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Customs and Trade News Weekly Snapshot

Here is a recap of the latest customs and international trade news:      

Customs and Border Protection (CBP) 

  • CBP released the August 2024 monthly update. Highlights: 
    • Stopped 400 shipments  or further examination based on the suspected use of forced labor. 
    • Identified estimated duties of nearly $7.5 billion. 
    • Seized 1,997 shipments that contained counterfeit goods. 
  • CBP provided examples of unacceptable vs acceptable cargo descriptions. The agency said this list will continue to be expanded as unacceptable descriptions are identified and acceptable descriptions are further refined. 
  • CBP has introduced a new benefit for Customs Trade Partnership Against Terrorism (CTPAT) participants. This benefit allows the use of Foreign Trade Zones (FTZs) to store goods that are subject to potential forced labor enforcement actions. 
  • CBP officers seized 277 counterfeit Lululemon Everywhere Belt bags in Delaware, that had they been authentic would have been worth about $13,000. 
  • The United States signed a Customs Mutual Assistance Agreement (CMAA) with the Republic of Uzbekistan, strengthening law enforcement and Customs support between the two nations.  
By |2024-09-23T09:16:20-04:00September 20, 2024|Snapshot|Comments Off on Customs and Trade News Weekly Snapshot
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FDA’s Proposed New National Drug Code – What You Need to Know

The Food and Drug Administration (FDA) is proposing to amend their regulations governing the format of the National Drug Code (NDC). The NDC is a standard for uniquely identifying drug products marketed in the United States. The current standard has several acceptable formats. If the proposal is finalized, it will standardize the format of all NDCs.

What is the NDC?

The National Drug Code is a unique, three-segment identifier that the FDA assigns to each drug on the U.S. market. It’s a universal product identifier that appears on all prescription and over-the-counter medication packages and inserts.

Current formats:

10-digit identifier

The FDA’s standard NDC is a 10-digit numerical identifier that includes a labeler code, product code, and package code.

There are 3 FDA-assigned formats for the standard NDC:

  • 4-4-2
  • 5-3-2
  • 5-4-1

HIPAA Format

The Health Insurance Portability and Accountability Act (HIPAA) adopted a uniform 11-digit NDC format that must be used when a HIPAA-covered transaction includes an NDC. This 11-digit format is standardized into a 5-4-2 format and created by adding a leading zero to either the labeler, product, or package code.

Upcoming 6-Digit Format

The FDA will run out of 5-digit labeler codes in 10-15 years. Per FDA regulations (21 CFR 207.33), once FDA runs out of 5-digit labeler codes, it will start assigning 6-digit labeler codes. Without this proposed change, there would be five NDC formats, 3 in 10- digits and 2 in 11-digits. There may be confusion […]

By |2024-09-20T10:06:39-04:00September 20, 2024|U.S. Food and Drug Administration (FDA)|Comments Off on FDA’s Proposed New National Drug Code – What You Need to Know
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USTR Finalizes Action on 301 Tariffs

The United States Trade Representative (USTR) announced final tariff modifications following their statutory review of the Section 301 investigation of the People’s Republic of China’s (PRC) Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. The final modifications include tariff increases on several products including critical minerals, batteries, and semiconductors.

301 Investigation Background

In August 2017, USTR initiated an investigation into China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. The agency released a report of its findings in March 2018 and in June 2018 began imposing additional duties on products of China in four tranches. 

Under the Trade Act of 1974, the USTR is required to conduct a four-year review if they receive an appropriate request to continue an action taken under Section 301. The agency is required to review:

  • (A) the effectiveness in achieving the objectives of section 301 of (i) such action, and (ii) other actions that could be taken (including actions against other products or services), and
  • (B) the effects of such actions on the United States economy, including consumers.

In accordance with this requirement, USTR announced in May 2022 that it was commencing this review and opened a docket for interested persons to submit comments. 

The agency […]

By |2024-09-17T15:54:25-04:00September 17, 2024|301 INVESTIGATIONS, China, Countries, U.S. Trade Representative (USTR)|Comments Off on USTR Finalizes Action on 301 Tariffs
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Customs and Trade News Weekly Snapshot

Here is a recap of the latest customs and international trade news:      

Customs and Border Protection (CBP) 

  • CBP announced that it is participating in a new program to enable airlines to recycle single-use aluminum, paper, and plastic products used during international flights arriving in the United States, aligning with CBP’s Green Trade Strategy. 
  • CBP deployed a new drawback claim substitution indicator for retail sales. The new claim enables drawback filers to indicate whether a retail sales claim is a substitution claim or direct identification claim. 
  • CBP’s Cargo and Conveyance Security (CCS) Directorate has issued additional guidance to the trade and cargo logistics industry regarding the reporting of Facilities Information and Resources Management System (FIRMS) codes when submitting the in-bond “arrival” notification in ACE. 
  • CBP instates Miguel A. Garza as Area Port Director for Charlotte. 

Office of Foreign Asset Control (OFAC) 

  • OFAC issued an update to the March 2019 OFAC Advisory to the Maritime Petroleum Shipping Community to highlight risks associated with shipments to Syria. 
  • OFAC put on public inspection an interim final rule to […]
By |2024-09-13T12:26:02-04:00September 13, 2024|news, Snapshot|Comments Off on Customs and Trade News Weekly Snapshot
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BIS Issues New Guidelines for Preparing Export License Applications Involving Foreign Persons (Deemed Exports/Reexports) 

The Bureau of Industry and Security (BIS) issued new guidelines to assist deemed export applicants in obtaining licenses. The guidelines primarily apply to employment situations; however, they also address other situations such as the release of controlled technology to foreign students participating in research. 

The guidelines cover basic requirements for applying and renewal and include an application checklist. 

Background on Licenses for Deemed Exports/Reexports 

The obligation to obtain an export license from BIS before releasing controlled technology to a foreign person is informally referred to as a “deemed” export. The release is considered an export to the person’s country or countries of nationality.   

The Export Administration Regulations (EAR), Section 734.13, defines a deemed export as releasing or otherwise transferring “technology” or “source code” to a foreign person in the United States.  

Typical organizations using deemed export licenses include universities, research institutions, bio-chemical firms, medical organizations, and computer companies.    

New Guidance 

 The basic guidance for filling out license applications is set forth in Supplement 1 to part 748 of the EAR. The new guidelines supplement the basic guidance and are intended to assist licensing officers in reviewing license applications more efficiently. 

Basic Requirements 

The guidelines reiterate that applicants must include all the necessary information and documentation required when submitting a license application. BIS will return applications with insufficient information.  

Basic documentation required: 

By |2024-09-13T11:58:26-04:00September 13, 2024|Export, U.S. Bureau of Industry and Security (BIS)|Comments Off on BIS Issues New Guidelines for Preparing Export License Applications Involving Foreign Persons (Deemed Exports/Reexports) 
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Bloomberg Law: CBP Recordkeeping Requirements – Retention, the (a)(1)(A) List, and More

Diaz Trade Law is enthusiastic to announce Bloomberg Law published another one of our articles, “Tariff Classification Basics“!

_______________________________________________________________________________________

Recordkeeping requirements have been part of Customs regulations since the beginning of the Federal government. Over time, Congress and Customs and Border Protection (CBP) have modernized the requirements to meet the needs of the community and utilize modern technology. All importers should have a recordkeeping program to ensure every shipment meets the requirements. Failure to produce records to CBP can result in significant penalties.

Regulatory History

Recordkeeping requirements date back to the 1700s. Back in 1789 importers were required to provide Customs with two copies of their manifests, original bills of lading, and even swear an oath as to the accuracy of their records. Failure to produce records or take the oath would result in a fine of five hundred dollars. Even the people working on the ship, if they were unloading it illegally, would face forfeiture of the goods, a $400 fine, and their names would be published in the local State gazette.

Later, Congress put in place more stringent measures to ensure compliance. In 1863, the “Act to prevent and punish Frauds upon the Revenue, to provide for the certain and speedy Collection of Claims in Favor of the United States, and for other Purposes” began requiring three copies of invoices and penalties jumped to a maximum $5,000 for making fraudulent records or concealing/destroying them along with up to two years in prison.

Today, Customs may impose a penalty of up to $10,000 for negligent […]

By |2024-09-12T10:51:58-04:00September 12, 2024|Bloomberg, Bloomberg Import|Comments Off on Bloomberg Law: CBP Recordkeeping Requirements – Retention, the (a)(1)(A) List, and More
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ICYMI: State Department Reaches $200M Settlement with RTX Corporation for Export Violations

The U.S. Department of State has reached a settlement with RTX Corporation to resolve 750 violations of the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR).

The settlement resolved multiple violations including:

  • Unauthorized exports of defense articles resulting from the failure to establish proper jurisdiction and classification
  • Unauthorized exports of defense articles, including classified defense articles
  • Unauthorized exports of defense articles by employees via hand-carry to proscribed destinations listed in 22 C.F.R. 126.1; and
  • Violations of terms, conditions, and provisos of Directorate of Defense Trade Controls (DDTC) authorizations

RTX disclosed the violations voluntarily and cooperated with the State Department’s review.

Under the terms of the agreement, RTX will pay a penalty of $200M. $100 million will be suspended and used for remedial compliance measures to improve RTX’s compliance program. RTX must also engage an external Special Compliance Officer to ensure compliance with the agreement for at least 24 months.

This settlement demonstrates the State Department’s priorities in enforcing export controls and the importance of prioritizing compliance programs.

Diaz Trade Law can help create a new export compliance plan for your business or review and update an existing one. To learn more about how we can help, contact us at info@diaztradelaw.com or call us at 305-456-3830.

Read more:

By |2024-09-10T15:41:13-04:00September 10, 2024|Export, ITAR, U.S. Department of State (DOS)|Comments Off on ICYMI: State Department Reaches $200M Settlement with RTX Corporation for Export Violations
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Customs and Trade News Weekly Snapshot

Here is a recap of the latest customs and international trade news:      

Customs and Border Protection (CBP) 

  • CBP issued guidance on Section 232 additional duties on certain aluminum imports from Mexico. The guidance provides specific HTSUS headings importers should declare and when filers may report “N/A” for the primary and secondary country of smelt. 
  • CBP has delayed the deployment of functionality related to ACE automation of the de minimis $800 threshold until Jan 11.  
  • CBP implements Air Cargo Advance Screening (ACAS) vague and unacceptable description rejection. 
  • Delaware CBP officers seize over $100k in unmanifested Apple products destined to China. 
  • CBP hosted a Virtual Career Expo on September 5. The expo highlighted law enforcement and mission support opportunities across the nation. 
  • The EPA Supplemental Guidelines document has been updated to version 17. The changes reflect language and text updates including Hydrofluorocarbons (HFCs) reporting requirements. 
  • The ACE Customer Satisfaction Survey is now open. The survey is voluntary and anonymous and closes on September 11, 2024. 
By |2024-09-06T13:16:18-04:00September 6, 2024|Snapshot|Comments Off on Customs and Trade News Weekly Snapshot
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