International Trade, Enforcement & Compliance Recent Developments Update (June 7, 2023)
Did you read this week’s article on supply chain integrity? If so, you won’t be surprised to see this week’s International Trade update includes a timely reminder regarding avoiding the use of forced labor in its supply chain, as well as some updates on Customs tariff management, a reminder that the Federal Trade Commission is becoming increasingly aggressive in policing unsubstantiated claims for products that claim they are “Made in the USA,” and a reminder of just how expansive the extraterritorial application of U.S law can be.
Forced Labor Import Compliance
Customs and Border Protection (CBP) increasingly has been using Withhold Release Orders to require the detention of goods that CBP suspects have been produced using forced labor. CBP also recently issued Headquarters Ruling H330077, which has increased the level of evidence required to clear goods detained for potential reliance on forced labor.1 Does your organization track all aspects of its supply chain, including sub-suppliers, to confirm that it can justify the ethical use of labor throughout the supply chain?
Customs Tariff Management
The Court of International Trade recently held that an importer’s failure to individually protest each impacted entry on a timely basis precluded any refund of duties that might otherwise have been lawfully due.2 Does your organization conduct regular post-entry audits, and maintain procedures to ensure that Post Summary Corrections and protests against liquidation are timely filed so that no valuable tariff refunds are lost?
Extraterritoriale jurisdictie
The Fifth Circuit recently ruled that international regulations, such as anti-money laundering, can result in criminal charges even where a non-U.S. person undertakes the activities to consummate the violation entirely outside of the United States. According to the court, Congress intended that jurisdiction can exist for non-U.S. activities because “[t]here is no physical-presence requirement” required to exert U.S. jurisdiction. U.S. v. Bleuler, case number 21-20658, and U.S. v. Murta, case number 22-20377. Does your organization extend its international regulatory compliance measures and training worldwide, especially in high-risk jurisdictions?
Federal Trade Commission / “Made in USA”
The FTC has applied its updated “Made in USA” regulations to impose an $816,000 penalty on an importer that switched to using non-U.S. textiles in its products but failed to update its “Made in USA” claims to reflect the switch.3 The FTC also imposed similar penalties in two different enforcement actions for companies that supplemented their U.S. production with imports from China to meet a surge in demand, without changing their “Made in USA” claims, which implied that all of the company’s goods were of U.S. origin.4 5 Under the new regulations, effective August 2021, companies cannot use unqualified “Made in USA” claims unless: (1) the final assembly or processing, and all significant processing that goes into the products, occur in the U.S.; and (2) “all or virtually all ingredients or components of the products are made and sourced in the U.S.” Has your organization reviewed all of its “Made in USA” claims to ensure that you meet the current standard and that you maintain documentation to support the use of the claim?
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1 https://www.customsmobile.com/rulings/docview?doc_id=HQ%20H330077&highlight=category%3ACarriers
2 https://www.cit.uscourts.gov/sites/cit/files/23-51.pdf
