NEWS
Alert

News Importers, Exporters and Others Can Use

Mitchell Silberberg & Knupp International Trade Alert

April 2010

by Susan Kohn Ross 

Customs Proposes Eliminating Paper Liquidation Notices


Importers and brokers are reminded that comments are due to Customs no later than May 15 in response to the agency's March 16, 2010, Federal Register proposal to do away with providing courtesy notices of entry liquidation directly to importers. Customs claims it wants to save the cost of processing and mailing the notices and instead wants importers to rely on the data available in the new Automated Commercial Environment (ACE) computer system. The general consensus regarding ACE seems to be that, while strides have been made to ensure the general accuracy of current entries, the same is not the case with older entries. Also, in order to become an ACE account takes time and, more importantly, significant training as the reports function in ACE is not particularly user-friendly.

Unfortunately, Customs' proposal complicates the efforts an importer must make in order to learn the liquidation status of his entries. While this proposal will not end the distribution of electronic notices of liquidation to the filer (typically the customs broker, unless the importer self-files), Customs now wants to require that either the importer make arrangements with his broker to get the data (which raises cost and liability concerns) or the importer must become an ACE user. For smaller companies in particular, neither option seems desirable.

Importers have historically relied on these mailed liquidation notices to determine their legal rights. While the legal notice of liquidation arcanely remains the notice posted at the customhouse, receipt of these mailed notices allowed importers to do a variety of things. For example, information about the liquidation of an entry helps determine the deadline for filing any challenges (180 days, but also keep in mind the 90-day time period in which Customs may reliquidate an entry). Receipt of the courtesy notice also allows a company to review its account. If entries are regularly liquidating on the typical 314-day cycle, it means things are going smoothly. However, if the general liquidation cycle lags or significant blocks of entries are not routinely liquidating, that is a signal to importers they need to be concerned about possible errors or potential CBP claims of violations. Similarly, importers of goods subject to antidumping or countervailing duty could also track the progress of their entries by checking for liquidation notices. However, in the end, the most valuable role these courtesy notices play is to inform the importer that his contingent liability period for a particular entry had ended.

Do you want to lose these benefits and rely on ACE instead? Make sure to let Customs know your opinion by May 15th. For more details, see http://edocket.access.gpo.gov/2010/pdf/2010-5635.pdf.

BIS Issues New Guidance Documents

In January 2010, BIS posted on its website updated guidance for freight forwarders, see http://www.bis.doc.gov/complianceandenforcement/freightforwarderguidance.htm. More recently, BIS posted an updated version of its Export Management System. Now called the Export Management and Compliance Program, the new EMCP can be found at http://www.bis.doc.gov/complianceandenforcement/emcp_guidelines.pdf. Also of interest is the self-assessment tool which can be found at http://www.bis.doc.gov/complianceandenforcement/revised_emcp_audit.pdf. Together these tools allow exporters to benchmark how they are doing with their overall export compliance. Of course, these BIS materials only apply if your exports are subject to Commerce/BIS jurisdiction. If your goods are intended for the military or law enforcement or are of a similar nature and so subject to State/ITAR control, BIS' EMCP and self-audit materials are still valuable tools to use as a starting point to test your overall level of export compliance.

Are You Responsible for Counterfeit Goods?

Did you realize you could have your identity stolen and still be liable for the importation or distribution of counterfeit goods? Trademark holders generally are getting much more aggressive against importers of counterfeit goods, even importers whose good names may have been misappropriated by "bad guys" looking to import counterfeit products. If the importer cannot establish he did not order the goods and was otherwise not involved with the particular shipment, the trademark holder may seek damages. Similarly, when the customs broker handling a shipment could not show that due diligence was conducted in vetting the customer, one very aggressive trademark holder filed suit seeking damages from the customs broker separately and in addition to damages sought from the importer. The basis for the claim against both the importer and the customs broker is importing and/or distributing counterfeit goods.

Customs brokers, in particular, need to be aware their insurance policies (errors and omissions and general liability) may not cover such lawsuits, leaving them personally responsible to pay the considerable costs of defense and any judgment out of their own pockets.

From our research, we conclude these actions by trademark holders may not be well-founded, but why risk exposure to such potential liability and costs of defense? What are you doing to properly vet your business partners? Exporters and forwarders pay attention: 18 U.S.C. §554 makes it a criminal offense to export goods that violate U.S. law or regulation. Counterfeit goods offered for export is just such a violation.

Foreign Corrupt Practices Act Sentencing News

Much has been made in the general press about the 87-month sentence recently handed down to Charles Jumet in connection with bribes paid to former Panamanian government officials to secure contracts for his company, Ports Engineering Consultants Corp. (PECC), to maintain lighthouses and buoys. Jumet was also sentenced to pay a $15,000 fine and serve three (3) years of supervised release after his incarceration ends. This matter garnered a good deal of the notoriety simply because it is the longest sentence imposed to date for FCPA violations. What is remarkable is that the amount of the bribes is reported to be only approximately $200,000. Jumet's cohort, John Warwick, is scheduled to be sentenced on May 14, 2010.

Meanwhile, elsewhere in the world, two Siemens executives were found guilty of breach of trust and abetting bribery in Germany, but were let off much more easily earlier this month. One was given a sentence of two years' probation and a €160,000 fine, whereas the other was ordered to pay a €40,000 fine and had an 18-month suspended sentence imposed on him.

In the U.S., if $200,000 is worth an 87-month sentence, how long might the sentence be that will be imposed on Gerald and Patricia Green? The Greens were found guilty in September 2009 of multiple crimes, most related to FCPA violations, with bribes said to total $1.8 million. The Greens received contracts totaling $14 million to run the Bangkok Film Festival and for other services. The presentencing report proposed life in prison for Gerald Green, but the government has reduced its request to a sentence of 20 to 25 years! Sentencing has been delayed and is now scheduled for June 3. Given his age of 78, whatever sentence is handed down to Gerald Green is likely to be a life sentence.

Finally, the word is out that Panalpina has set aside a reserve of +/- 110 million dollars and, according to the company, is close to setting its FCPA issues with Justice and SEC.


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