On February 26, the Federal Maritime Commission (FMC) issued its long-awaited final rule for Demurrage and Detention Billing Requirements. The issuance and processing of detention and demurrage invoices by common carriers and marine terminal operators has long been a contentious issue in the logistics industry. The FMC deserves credit for taking this issue on and working to bring some standards to the process. The final rule will be effective as of May 28, 2024. Some of the key elements of the final rule are:

• A list of required minimum information that must be included on any invoice for detention or demurrage. If any of this information is missing, that will eliminate the obligation for the billed party to pay.

• An invoice for detention or demurrage must be issued by a billing party to either the consignee or the person for whose account the billing party provided ocean transportation or storage of cargo and who contracted with the billing party for the ocean transportation or storage of cargo.

• A billing party must issue a demurrage or detention invoice within thirty (30) calendar days from the date on which the charge was last incurred. If billed after thirty (30) calendar days, then the billed party is not required to pay.

• If the billing party is a non-vessel-operating common carrier (NVOCC), then it must issue a demurrage or detention invoice within thirty (30) calendar days from the issuance date of the demurrage or detention invoice it received. If the NVOCC issues an invoice after thirty (30) calendar days, then the billed party is not required to pay.

• The billing party must allow the billed party at least thirty (30) calendar days from the invoice issuance date to request mitigation, refund, or waiver of fees from the billing party. The billing party must then resolve such a request within thirty (30) calendar days of receiving the request or at a later date as agreed upon by both parties.

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Customs and Border Protection (CBP) recently released an update to its 1991 Directive 3510-004 – Monetary Guidelines for Setting Bond Amounts. The updated guide is entitled "A Guide for the Public: How CBP Sets Bond Amounts”. The new guide brings the previous directive up to date by amending many minimum bond requirements, adding information on bond activity codes that were not included in the earlier directive such as for Importer Security Filing bonds and Marine Terminal Operator bonds, and adding information on ACE eBond procedures.

A large tractor and agricultural equipment manufacturer agreed via a stipulated judgment to pay $2 million in penalties for falsely labeling wholly-imported replacement parts as “Made in the USA”. It was also agreed that the company would submit compliance reports and notices to the Federal Trade Commission (FTC) for the next 20 years. The FTC had initiated the proceeding against the company to enforce its Made in USA Labeling Rule. This rule states that for items to be labeled as “Made in the USA”, the final assembly or processing of the good, and all significant processing that goes into the good, must occur in the United States. Further, all or virtually all ingredients or components of the good must be made and sourced in the United States.

A Florida couple were sentenced to 57 months in prison and were ordered to pay over $42 million in forfeitures, as well as reimbursing the government for over $1.6 million in storage costs, after pleading guilty to conspiring to import plywood in violation of the Lacey Act and customs laws and conspiring to sell the illegally imported plywood. An employee of theirs was also sentenced to 3 years probation and ordered to pay a $3,000 fine. From 2016 to 2020, the couple, via several companies set up for the purpose, imported numerous containers of plywood products and falsely declared the species, country of origin and country of harvest to avoid paying antidumping and countervailing duties that had been instituted on such products from China in 2017. Some of the plywood was shipped to Malaysia from China and re-loaded in containers to appear to be of Malaysian origin. False Lacey Act declarations were then made upon entry into the U.S.

On February 12, Customs and Border Protection (CBP) announced in the Federal Register that the Global Business Identifier (GBI) Evaluative Proof of Concept (EPoC) will be extended to February 23, 2027. The test is also being expanded to include entries of merchandise classifiable under any subheading of the Harmonized Tariff Schedule and for merchandise of any country of origin. Previously, the test was limited to certain categories of merchandise from only 10 specific countries of origin. The purpose of the test is to evaluate a possible replacement for the Manufacturer Identification Code (MID). The MID is a code that is required to be submitted on all customs entries to identify the manufacturer or shipper involved. For the test, all or one of three alternative codes can be used to identify the manufacturer, shipper, and seller on entries. These alternatives are the nine (9)-digit Data Universal Numbering System (D–U–N–S®), thirteen (13)-digit Global Location Number (GLN), and/or twenty (20)-digit Legal Entity Identifier (LEI). All of these alternatives provide more detailed and specific information on the parties involved and would create greater visibility into supply chains.

The long negotiated United States initiative, the Indo-Pacific Economic Framework For Prosperity (IPEF), finally had one of its agreements enter into force on February 24, 2024. The Supply Chain Resilience Agreement was negotiated “to establish a framework for deeper collaboration to prevent, mitigate, and prepare for supply chain disruptions, such as those experienced in recent years from the COVID-19 pandemic”. The IPEF has 14 countries as participants - the United States, Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. The first step in implementation of this agreement will be the establishment of three bodies, the Supply Chain Council, Crisis Response Network, and Labor Rights Advisory Board, with a goal of “identifying and notifying partners of each country’s list of critical sectors and key goods for cooperation under the Agreement by no later than 120 days after the date of the entry into force for each country”.

Recently at the Logan Airport in Boston, a passenger who was returning from the Democratic Republic of Congo had a suspicious piece of baggage screened. The passenger advised the Customs and Border Protection (CBP) Agriculture Officer on the scene that the baggage only contained dried fish. However, upon further inspection, the officer found four dead and dehydrated bodies of monkeys in the baggage. Minimally processed wild animal meat such as this is often referred to as “bushmeat”. Bushmeat can come from a variety of wild animals and can, therefore, carry numerous germs and viruses, such as Ebola, which can pose a significant heath risk. The bushmeat in this case, however, might not have been discovered if there was not another officer on the scene, CBP K9 Buddey! K9 Buddey is a part of one of the 180 canine teams that assist CBP officers at air passenger terminals, border crossings, cruise terminals and other locations. The CBP officer handlers and their canine partners undergo 10 to 13 weeks of intense training together before being deployed in the field. Beagles and beagle mixes are the preferred breed of dog for use as K9’s since beagles have a very keen sense of smell and have a gentle disposition towards the public. They are usually trained to alert handlers of contraband by sitting near or pawing at the offending baggage. Next time you see a K9 in action, salute them for their service, but hope that they do not come and sit down next to you…

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The Bureau of Industry and Security (BIS) released its Export Enforcement Review for last year stating that 2023 was the year with the highest number ever of convictions, temporary denial orders and post-conviction denial orders. Some of the actions taken that the BIS highlighted were:

• Imposed the largest standalone administrative penalty in BIS history – a $300 million penalty related to the continued shipment of millions of hard disk drives to a sanctioned entity even after other competitors stopped shipping due to the foreign direct product rule.

• Obtained a guilty plea from a program administrator for a NASA contractor who secretly funneled sensitive aeronautics software to a Chinese University, which was on the Entity List for its involvement in developing Chinese military rocket systems and unmanned air vehicle systems.

• Imposed a $2.77 million penalty on a 3D printing company related to its sending export-controlled blueprints for aerospace and military electronics to China.

• Worked with the Department of Justice to bring eight separate indictments charging 14 people for their role in procuring items for the Russian military and Russian security service.

• In coordination with the Office of Foreign Assets Control, imposed a $3.3 million combined penalty against a major U.S. software firm for alleged and apparent violations of U.S. export controls and sanctions laws, including violations involving Russia, Cuba, Iran, and Syria.

BIS also emphasized the launch of the Disruptive Technology Strike Force with the Department of Justice “to protect U.S. advanced technologies from illegal acquisition and use by nation-state adversaries like Russia, China, and Iran. The Strike Force brings together experienced agents and prosecutors in fourteen locations across the country, supported by an interagency intelligence effort in Washington, D.C., to pursue investigations and take criminal and/or administrative enforcement action as appropriate”.

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Wine aficionados and importers should take notice of the recently initiated Antidumping Duty (AD) and Countervailing Duty (CVD) investigations of “Certain Glass Wine Bottles”. The AD investigation covers wine bottles from Chile (Case # A-337-808), China (Case # A-570-162) and Mexico (Case # A-201-862), while the CVD investigation covers bottles from China only (Case# C-570-163). What is alarming is that the U.S. entities that filed the petition are claiming that the dumping margins, which would determine the amount of additional duties to be instituted if the petitions are approved, should be a whopping 610% from Chile, up to 301% from China and up to 97% from Mexico! Additional duties of that magnitude on wine bottles would certainly have an effect on the overall price of wine itself. All interested parties should diligently follow the course that these investigations take. The AD/CVD process can be very lengthy and with the claimed dumping margins being so high, the results could be dramatic.

In a notice published in the Federal Register on January 16, Customs and Border Protection (CBP) announced that it is amending the ACE Entry Type 86 Test to require filing of these entries prior to or upon arrival of the cargo. The Entry Type 86 is a test allowing the electronic filing of entries for low-value shipments meeting the requirements for admission under the administrative exemption in 19 U.S.C. 1321(a)(2)(C). The traditional entry time frame of permitting filing of an entry up to 15 days after arrival of the cargo was used initially for the Entry Type 86 test. However, CBP has determined that that time frame “has proven to be inconsistent with the expedited process envisioned for the ACE Entry Type 86 Test”, and this has led to enforcement challenges and various violations such as entry by parties without the right to make entry, incorrect manifesting of cargo, misclassification, and delivery of goods prior to release from CBP custody. The requirement to file Type 86 entries prior to or upon arrival of the cargo will go into effect on February 15, 2024.

The Transportation Security Administration (TSA) advised that 2023 was a record year for the interception of firearms at airport security checkpoints. A record 6,737 firearms were intercepted at airport checkpoints during 2023, with 93%, or close to 6,265 firearms, being loaded at the time of interception. Firearms are strictly prohibited in carry-on baggage. They are allowed in checked baggage, however, they must be unloaded and packed in a locked hard-sided case and the presence of the firearm must be declared at the check-in counter. Upon discovery of a firearm at a checkpoint, the TSA officer will contact local law enforcement, who will remove the passenger and the firearm from the checkpoint. The passenger involved could then be arrested or cited. In addition, the passenger will be liable for a fine of up to $15,000 for possesing the firearm at the checkpoint.

On a lighter note, or maybe not so lighter note, the TSA also published a list of the Top Ten prohibited items discovered in traveler’s carry-on baggage in Idaho airports in 2023. Among the top items were a hatchet, a Ninja throwing star, a crow bar, and a grenade-shaped bottle of hot sauce.. (pictures are below).

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This month we launch a new feature of our monthly newsletter – JAS WANTS TO KNOW! - A short one question poll to receive our readers’ input and advice. Our poll this month is concerning compliance challenges. Click below to let us know!

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Laurie Arnold, JAS Vice President of Compliance, and Leah Ellis, JAS Compliance Operations Manager, were on the move this month attending the National Customs Brokers and Forwarders Association’s (NCBFAA) quarterly board meeting held in Los Angeles. Laurie serves as the Treasurer of the NCBFAA and Leah is the Legislative Committee Chair. During their time in Los Angeles, Laurie and Leah were also given an extensive tour of the Port of Los Angeles by invitation of the Los Angeles Customs Brokers and Freight Forwarders Association.

See below for pictures of the tour.

While regular practitioners of tariff classification well know this, the World Customs Organization (WCO) recently issued a 30 page report, The Exploratory Study on a Possible Strategic Review of The Harmonized System, which concluded that the tariff classification process is a very complex system which requires a high level of skill to use appropriately. The purpose of the report was to explore the feasibility of possible structural changes to the system to improve the accuracy and consistency of the process and make it more “user-friendly”. One of the issues noted was that key words are often not defined in the tariff schedule or, if defined, the location of definitions can be hard to find. The complex nature of the process was illustrated by a discussion on how to classify a plastic covered textile, a truly difficult proposition. One interesting note was that the WCO did a survey and found that a majority of respondents do not really use or do not really understand how to use the General Rules of Interpretation, which are supposed to explain how to classify. Lets hope the report leads to some improvements.

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