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Best PracticesCustoms ExpertEnforcementEventsInternational LawInternational TradeLabelingU.S. Food and Drug Administration (FDA)

Cleaning for COVID-19 – Importing Cleaning Products: Who Regulates You?

posted by Jennifer Diaz March 15, 2021 0 comments

Co-Authored by Denise Calle

A year into the COVID-19 pandemic, the U.S. Environmental Protection Agency (EPA) and The Food and Drug Administration (FDA) are in full enforcement mode carefully monitoring novel products claiming to treat, mitigate, or “kill” COVID-19. Compliance advisories issued at the beginning of the pandemic are now being replaced with enforcement advisories. Manufacturers, importers, distributors, and others engaged in the production or sale of products claiming to mitigate or “kill” COVID-19 should be more cautious than ever when developing product claims for both product labels and marketing material or alternatively, confirm products comply with the numerous regulations governing COVID-19 cleaning products.

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ExportU.S. Bureau of Industry and Security (BIS)U.S. Customs and Border Protection (CBP)U.S. Department of Homeland Security (DHS)U.S. Food and Drug Administration (FDA)

Federal Government Shutdown ENDS

posted by Jennifer Diaz October 17, 2013 0 comments

Co Authored by Omar Franco 

Last night Congress voted to end the first federal government shutdown in seventeen years and avert a default on U.S. debt. The deal brokered between Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) provides government funding through Jan. 15, 2014, at almost the same rate as in FY-2013 after automatic spending cuts. The debt limit would be extended through Feb. 7, 2014, if requested by President Obama. The legislation includes a mechanism to allow Congress to block the suspension through action on a resolution of disapproval. The Health and Human Services Department would be required to ensure that health-insurance exchanges verify the eligibility of all individuals applying for tax credits and cost sharing under the Affordable Care Act. Federal employees would be paid for furlough days resulting from the shutdown and members of Congress would be denied their cost-of-living increase in FY-2014.

The Senate passed the bill first with 81 senators voting in favor and 18 voting against the compromise. The House then passed the legislation 285-144, relying mostly on Democratic votes to pass the bill. Alongside the bill, the Senate agreed to a provision that House and Senate leaders would appoint a conference committee to negotiate a budget agreement by Dec. 13.

 

ExportU.S. Bureau of Industry and Security (BIS)U.S. Customs and Border Protection (CBP)U.S. Department of Homeland Security (DHS)U.S. Food and Drug Administration (FDA)

Impact of Government Shutdown

posted by Jennifer Diaz October 2, 2013 0 comments

Co Authored by Omar Franco 

The impact of the federal government shutdown, which began October 1, 2013, will be deeply felt by importers and exporters alike. Most government services deemed "essential" by the federal agencies will continue, but “non-essential” services will be discontinued until funding is restored. 

This early on, there is no obvious resolution of the budget dispute to tie the FY-2014 government funding to Affordable Care Act (ACA) reforms. Both the House and Senate are entrenched in their positions and they are not scheduled to negotiate any time soon. One side will have to capitulate or bipartisan negotiations will have to lead to a resolution. We feel that negotiations will probably not occur this week as both sides need to assess how the markets and voters will respond to the federal government shutdown. Depending on the public response, we will see movement by one side, probably by Republicans, if the reaction is seen as damaging. As of today, the Dow was up, so the market reaction has been subdued. The reaction from voters is still unknown, but if it is subdued as well, the shutdown will be prolonged. We anticipate the shutdown will last through this week at a minimum.

Some lawmakers are considering broadening the debate by including the debt ceiling. Pressure from resolving the government shutdown could also resolve the debt ceiling issue. The longer the shutdown continues, the more likely the resolution will be tied to the debt ceiling. We do foresee a resolution emerging, however, we do not have any real idea as to what the time frame will be.

To get a glimpse of the impact on the importing and exporting community, we’ve included updates from the BIS and ITC below.

For example, on the export side, the Department of Commerce’s Bureau of Industry and Security (BIS) has this note on its website — they are completely SHUT DOWN, and not accepting licenses – except for emergencies.  See more here: 

The Federal Government is currently shut down due to a funding lapse. As a result, the Department of Commerce’s Bureau of Industry and Security (BIS) is no longer accepting export license applications, classification requests (CCATS), encryption reviews, encryption registrations, or advisory opinion requests. Similarly, BIS will not be issuing any final determinations. The SNAP-R application on BIS’s Website is not available and will not reopen until the Federal Government shutdown ends. All pending export license applications, commodity classification requests, encryption reviews, encryption registrations, and advisory opinion requests will be held without action by BIS until the shutdown ends.

Applicants may request emergency processing of export license applications for national security reasons by submitting email requests to Deputy Assistant for Export Administration Matthew Borman.

The subject line of the email should read "Request for Emergency License" and the email must identify the applicant (including point of contact), intermediate and ultimate consignees, and end user(s), items, end use, and national security justification for the emergency processing.

On the import side, the impacts are distinctly felt with the U.S. International Trade Commission (ITC).  The interactive HTS that I love is not active – and ADD/CVD investigations are tolled.  CUSTOMS Info Global Data Mining has taken the opportunity to present a PDF copy of the HTSUS during the ITC’s hiatus here (note you will have to provide your contact information).

See the latest from the ITC’s website

The U.S. International Trade Commission will shut down its investigative activities for the duration of the absence of appropriation. These activities include, but are not limited to, proceedings conducted under the authority of Title VII of the Tariff Act of 1930, including antidumping and countervailing duty investigations and reviews; investigations and ancillary proceedings conducted under the authority of section 337 of the Tariff Act of 1930; and investigations conducted under the authority of section 332 of the Tariff Act of 1930.

Investigations tolled

During shutdown, the schedules and deadlines for all investigative and pre-institution activities will be tolled. All hearings and conferences will be postponed, subject to the exceptions described below. Once the Commission receives funding and the period of the shutdown ends, all schedules will resume starting with the day on which the Commission recommences operations. For example, if the shutdown lasts four days (e.g., October 1-4), then the deadline for the filing of any document on October 4 would be extended four days to October 8. If a rescheduled deadline falls on a nonbusiness day, the deadline will be extended to the next business day. The agency may reconsider schedules after resuming operations.

Exceptions

Notwithstanding the general tolling of schedules:

The staff conferences in preliminary phase antidumping and countervailing duty investigations scheduled to take place on October 7, 2013 and October 9, 2013 will take place as scheduled if the Commission resumes operations by October 3, 2013. Should the shutdown not end before October 3, 2013, all conferences will be rescheduled pursuant to the general tolling provisions described above.

The hearing in the Hot-Rolled Steel five-year reviews scheduled for October 3, 2013 will take place as scheduled if the Commission resumes operations by October 2, 2013. Otherwise, this hearing will be rescheduled upon further notice.

The hearing for Investigation No. 332-541, Trade Barriers that U.S. Small and Medium-Sized Enterprises Perceive as Affecting Exports to the European Union, scheduled to take place on October 8, 2013 will take place as scheduled if the Commission resumes operations by October 3, 2013. Otherwise, this hearing will be rescheduled upon further notice.

Website

During shutdown, the online services provided on the Commission’s World Wide Web site, at www.usitc.gov, will be unavailable. This includes:

  • USITC website
  • EDIS
  • DataWeb
  • HTS Online Reference Tool
  • All phone communication with USITC staff
  • Restoration of service is expected as quickly as possible after appropriations become available.

If you have an questions on how the shutdown will impact your business contact Omar or me anytime.

ExportIPR, Trademarks and LogosU.S. Bureau of Industry and Security (BIS)U.S. Office of Foreign Assets Control (OFAC)

Export Regulations and Cloud Computing…Beware!

posted by Jennifer Diaz May 28, 2013 0 comments

Co Authored by Perry Sofferman

Forrester Research predicts that the global market for cloud computing services will have increased from $40.7 billion dollars in 2011 to approximately $241 billion dollars by 2020. You can see the ZDNet article here.  This figure includes the Platforms as a Service, Infrastructure as a Service and Business Process as a Service delivery models. What this information reveals is that while cloud computing is already a significant part of operational strategy for many businesses (as well as governmental agencies), we should expect it to not only grow as a market but to become even more intertwined with the way we conduct business and store data on a daily basis. Consequently, businesses in general and export compliance officers in particular need to be vigilant and make sure that their use of this important technology is consistent with US export regulations.

When using cloud services, the user is uploading data to available servers in the cloud provider’s server facility(ies). The type of data uploaded and the location of the server where that data is stored can potentially trigger export compliance issues for the user. In fact, the ultimate location of the particular server used to hold the user’s data may be unknown to either the user or the cloud provider. Data can be redirected to various servers in different countries in order to properly allocate server space based on fluctuations of usage in different time zones.  It should be noted that this is only one example of several possible scenarios where the actual export of restricted data could occur inadvertently by the user.

Based on Advisory Opinions issued by the Bureau of Information and Security (“BIS”), there is guidance indicating that in scenarios where exports take place through means of cloud computing:

  • (i) the cloud computing provider is not the exporter (the user is) and
  • (ii) if foreign nationals employed by the provider access restricted data there may well be a deemed export of such data to such foreign national on the part of the user. 

If, however, a cloud computing service provider is aware that the service will be used to support certain proscribed activities, then the provider will be obligated to properly acquire the necessary license.    Neither the Directorate of Defense Trade Controls (DDTC) nor the Office of Foreign Asset Controls (OFAC) have yet provided substantive guidance on the subject of export regulations in relation to cloud computing, although OFAC has provided some limited guidance related to exports to Iran involving software and services incidental to personal communications. “Cloud Computing” remains an undefined term in the EAR, ITAR and OFAC regulations.

Top 5 Tips for Export Compliance Professionals in Regard to Cloud Computing 

  1. It is critical for compliance officers and others involved in export control management, including providers of cloud computing services, to take steps to better familiarize themselves with the many complex issues at play in this area. A good start would be a detailed review of the BIS advisory opinions, which can be found here.     
  2. In addition, users of cloud services should think about how to approach this issue with their providers. Users might consider gaining a good understanding of where their provider’s servers are located and whether the providers have instituted any safeguards to address export compliance issues. Likewise, providers may want to delve more deeply into the ITAR regulations with particular emphasis placed on the relation between cloud computing services and “brokering” activities.
  3. Compliance officers should make sure that members of their organizations are aware that export regulations are applicable to cloud services and that while the storage of data in the cloud might feel virtual, the penalties for export regulation violations remain brick and mortar.
  4. While exporters remain liable for violations of export regulations, compliance officers should work with their IT departments when negotiating terms to agreements with cloud services providers. For example, require the service provider to notify you in the event servers are added in geographic locations that might be problematic for you. See if it is possible to obtain a right to terminate in such instance. In addition, try to get the provider to indemnify you in the event there is an export violation as a result of a provider’s action or inaction.
  5. Make sure a review of how your organization uses cloud services is part of your standard compliance self-audit so as to identify any possible problems or lapses before they become significant.

In a speech in 2012, Under Secretary of Industry and Security, Eric Hirschorn, noted that a future project for the Bureau might be a review of “for clarification’s sake – the rules regulating cloud computing.”    For both users and providers, such a review should be anxiously awaited.

Best PracticesExportInternational TravelU.S. Office of Foreign Assets Control (OFAC)

Ready to Travel to Cuba? OFAC Simplifies Process

posted by Jennifer Diaz April 29, 2013 1 Comment

On April 18, 2013, the Office of Foreign Assets Control ("OFAC") announced its effort to streamline license processing procedures by accepting requests for licenses, license amendments, and interpretive guidance electronically. This will not only simplify the process for those that wish to travel to Cuba, this new electronic application program can also be used for applications to request the release of blocked funds and much more.

 

For those that are more "old school" – you still have the opportunity to submit applications by snail mail pursuant to 31 C.F.R. § 501.801.

 

The new electronic OFAC License Application Page will allow users to apply:

  1. to travel to Cuba (for many, though not all, categories of travel to Cuba);
  2. to export agricultural commodities, medicine, or medical devices to Sudan or Iran pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000;
  3. for the release of a wire transfer blocked at a U.S. financial institution; and
  4. for a license or interpretive guidance in all other circumstances (referred to generally as Transactional).

For those wishing to travel to Cuba in a jiffy, you must first consult an expert to review and assure you understand the Comprehensive Guidelines for License Applications to Engage in Travel-Related Transactions Involving Cuba.  Once you know that you can apply to OFAC for your specific category of travel – the next step is reviewing the online application page.

Thus far, the electronic form may be used to apply for licenses to travel to Cuba in the following categories of travel, which are not generally authorized pursuant to 31 C.F.R. 515:   

  • Journalistic Activities
  • Professional Research and Professional Meetings
  • Religious Activities
  • Support for the Cuban People
  • Humanitarian Projects Activities of Private Foundations  
  • Research or Educational Institutes Exportation
  • Importation
  • Transmission of Information or Informational Materials
  • Licensed Exportations

The OFAC has stated that they intend to update the online application system in the future so that all the categories of travel (including family visits, educational activities, public performances, clinics, workshops, competitions, and exhibitions) may be applied for using this streamlined online process.

 

If you want to travel to Cuba, want to export agricultural commodities, medicine, or medical devices to Sudan or Iran, have funds blocked by OFAC, or want interpretive guidance from OFAC, assure you consult a regulatory expert so you have the best chance for success with OFAC.

Customs Broker

Customs Broker License Denial for Poor Credit History

posted by Jennifer Diaz January 8, 2012 1 Comment

Hundreds of people apply every year to become a customs broker. Customs brokers are licensed by U.S. Customs and Border Protection (CBP). The process requires passing a rigorous multiple choice examination, and then passing a background investigation.  For many applicants who successfully pass the examination, they are denied a license because the background investigation revealed a poor credit history and rating. 

Although the application to be a customs broker is submitted to the local port, the decision letter granting or denying a broker license is issued by Allen Gina, Assistant Commissioner, Office of International Trade, CBP Headquarters in Washington, D.C.  A typical denial letter would state:

After careful evaluation of the information obtained from the background investigation, we must deny your application due to your financial history.

The denial letter always cites the CBP regulation at 19 CFR 111.16 – a failure to establish the business integrity and good character of the applicant.  Fortunately, the letter also cites 19 CFR 111.17 which provides the right of appeal of the denial of the customs broker license.

The appeal must be filed, in writing, and submitted to Mr. Gina no later than 60 days from the date of the denial letter. The appeal must persuasively argue why the applicant has business integrity and good character.  For example, if the applicant went through a divorce, and the former spouse failed to pay certain bills which negatively affected the applicant’s credit history and rating, that is an important fact that must be argued, and documented, in the appeal.  

There are numerous reasons why CBP may legitimately deny a customs broker license to an applicant who has a spotty financial history. Similarly, there are numerous reasons to explain to CBP that despite what appears to be a questionable financial history, the applicant has business integrity and good character, and should still receive the customs broker license.