Welcome to Foley’s International Trade, Enforcement & Compliance Recent Developments Update
The U.S. Government continues to send compliance messages in a variety of international trade areas. Recent developments include clarifications from the Court of International Trade regarding how country of origin is to be determined, increasing activity in investigating potential underpayment of antidumping and countervailing duties, a sharp increase in seized goods due to forced labor and human trafficking concerns, and the imposition of penalties for failure to report inquiries related to the Arab League Boycott of Israel. Rounding things out, the Department of Commerce removed the export control privileges from several companies for export control violations.
Customs Compliance
The Court of International Trade has clarified how importers should apply the “name, character, or use test” for determining when goods undergo sufficient processing to “substantially transform” them into new products, thus changing the applicable country of origin (and the amount of tariffs due).1 If your organization uses multi-country production, has your organization analyzed whether relevant substantial transformation or tariff-shift principles are applied to determine the appropriate country of origin for its imported products?
EAPA/Antidumping and Countervailing Duties
Customs is imposing a record number of findings of the evasion of antidumping and countervailing duties under the Enforce and Protect Act, which has allowed Customs to set up a separate unit focused on the enforcement of antidumping and countervailing duties. Has your organization reviewed its imports against the more-than-600 antidumping and countervailing duty orders in place, to ensure that it has identified all instances of goods subject to AD/CVD orders?
Forced Labor/Withhold Release Orders
Customs recently issued a Withhold Release Order, which detains goods at the border for a particular importer or source of imports, based upon allegations that a major importer was using forced labor. Customs has sharply increased its use of these orders to combat the use of forced labor in imports, which Customs has termed a top enforcement priority. Does your organization have a comprehensive supply chain integrity policy and due diligence measures and extend these measures throughout its supply chain, including for sub-suppliers?
Antiboycott
A large U.S. manufacturer paid a $50,000 penalty to settle allegations that it had failed to report a request that it not provide Israeli-made parts and components to a customer. U.S. law makes it not only illegal to agree to support the Arab League boycott but also imposed a reporting requirement for any company that receives a boycott-related request, even if it turns it down.2 If your organization operates in, sells to, or purchases from the Middle East, or deals with Middle Eastern countries, does it maintain an antiboycott compliance policy and conduct training for relevant personnel?
Export Controls
The Department of Commerce has issued orders barring three individuals and four companies from exporting from the United States due to violations of the Russian export control regulations.3 Does your organization maintain procedures designed to prevent illegal exports, including screening protocols and stop, hold, and release procedures?
1 https://www.cit.uscourts.gov/sites/cit/files/23-24.pdf
2 https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3330-09-07-antiboycott-penalty-pr-final/file
3 https://www.govinfo.gov/content/pkg/FR-2023-09-07/pdf/2023-19332.pdf
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