Intellectual Property & Product Admissibility
Executive orders also direct CBP to develop and implement a strategy and plan to combat violations of trade and customs laws for goods and for enabling interdiction and disposal of inadmissible merchandise entering through any mode of transportation. Further, such orders enhance CBP’s authorization to share with intellectual property rights (“IPR”) holders any information to determine if there has been an infringement or violation or regarding goods that are voluntarily abandoned even if done so prior to seizure. Finally, the order directs the Justice Department to work with DHS to develop prosecution practices and to allocate resources to ensure that federal prosecutors place high priority to significant offenses related to trade law violations. Accordingly, brokers and forwarders need to ensure they collect and submit to CBP accurate product information to avoid not only border delays but also enforcement actions due to the attempted introduction of inadmissible merchandise.
For instance, in one case CBP detained counterfeit sneakers and sent formal requests to the customs broker to confirm whether they had verified the powers of attorney from the importer and to assess the broker’s level of contact with their customers. Because of the broker’s responses to the information requests, CBP provided the broker only with a warning along with suggestions on how to validate powers of attorney in the future.
As an example, the new FDA Foreign Food Supplier Verification (“FSVP”) rule now requires food importers to verify that their shipments meet U.S. safety standards. Noncompliant importers risk supply chain disruptions, entry processing and possibly the exclusion of products from the U.S. marketplace particularly if the broker does not properly identify the FSVP Importer at the time of entry. Meanwhile, now that the Automated Commercial Environment (“ACE”) is operational, other partner government agencies (“PGAs”) such as the Fish and Wildlife Service (“FWS”), Environmental Protection Agency (“EPA”) and Animal and Plant Health Inspection Service (“APHIS”) continue to contemplate what new or additional data they will require for admissibility or have already begun collecting it. These changes have led the PGAs along with CBP to re-examine how to enforce cases involving the attempted introduction of inadmissible merchandise.
For lower value, e-commerce type, shipments the de minimis exception increased the daily duty and entry exemption from $200 to $800 providing a huge opportunity to facilitate trade for smaller shipments. However, such duty exemptions are creating more challenges for intermediaries who still need to be mindful where product admissibility requirements apply, particularly due to a lack of clarity at this point from the various PGAs.