Trade News Snapshot - Volume 5, Issue 1

Contents

• EAC's Message
• I. Office of Trade Activity
  • Success! CBP Modifies Forced Labor Enforcement Actions
  • It’s Official: Ian Saunders is U.S. Choice for WCO Secretary General
  • Justice Department Announces $22.8 Million Settlement with Vitamin Importer
  • New Year, New Flag
  • CBP Highlights Trade Accomplishments for Fiscal Year 2022
• II. Outreach
  • EAC AnnMarie R. Highsmith Chats with EMTC Chief Operating Officer
  • OT Leaders Address Brokers in Laredo
  • CBP, DHS Participate in Forced Labor Discussions in Japan
  • DHS Honors CBP UFLPA Team
• III. News You Can Use
  • Briefly
    • Something Fishy in There: Officers Find Dolphin Skull in Luggage
    • Cash and Carry? Chicago Officers Seize Fake Cash and Merchandise
    • 3 Packages, 5 Days: Indianapolis Officers Stop Counterfeits in Mailed Packages
    • Louisville Officers Seize 5,000 Pairs of Fake Chanel Earrings Worth $1.3 Million if Real
• Trade Statistics
  • January Stats
  • FY 2022 Wrap Up
  • FY 2022 Numbers: Chicago Officers Seize $23 Million in Counterfeits, Conduct more than 45,000 Agricultural Inspections

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I. Office of Trade Activity
 

Success! CBP modifies forced labor enforcement actions

Recent CBP actions – modifications to a Withhold Release Order and an unrelated Forced Labor Finding – demonstrate the success of the Office of Trade’s forced labor enforcement programs, CBP officials said. The modifications, one in January and the other in February, were made based on evidence that the entities involved have successfully remediated forced labor issues cited in the original enforcement actions:

• A Jan. 28, 2002, WRO on synthetic disposable gloves manufactured by YTY Industry Holdings in Malaysia.
• A Jan. 28, 2022, Finding on palm oil and derivative products produced by Sime Darby Plantation Berhad in Malaysia. That Finding expanded on a WRO CBP issued Dec. 30, 2020.

Now that CBP has issued the modifications, and presuming their shipments are otherwise in compliance with U.S. law, CBP will no longer detain YTY Group’s synthetic gloves or Sime Darby Planation palm oil and derivative products at U.S. ports of entry.

In response to the modifications, Office of Trade Executive Assistant Commissioner AnnMarie R. Highsmith said, “We are witnessing a global shift in behavior from importers and businesses as they identify and eliminate forced labor from their supply chains so that they can do business in the U.S. We are proud to be a part of this positive change that directly impacts so many lives, and we will continue to prioritize this work until forced labor ceases to exist in U.S. supply chains.” She further explained that these modifications are proof of how CBP’s role in forced labor enforcement has become a catalyst for global action, improving living and working conditions for tens of thousands of workers worldwide. 

In FY 2022, CBP received the highest number of petitions ever received in a single year seeking modification or revocation of WROs. Seven producers filed petitions seeking modification of WROs after taking corrective measures to improve working and living conditions for thousands of workers. Last year CBP modified a WRO against Natchi Apparel Ltd. garments manufactured in India after remediation of all 5 of the 11 International Labour Organization indicators of forced labor that CBP found during its investigation. That modification occurred one month after CBP issued the WRO, representing swift and successful collaboration between civil society, the company and CBP.

“We see every modification as a tremendous success,” said CBP acting Commissioner Troy Miller. “CBP is setting the global standard for responsible business practices through our forced labor enforcement.” 

Read more in the press releases: YTY Modification and Sime Darby Plantation. See also: Feb. 2 Highsmith interview with Reuters correspondent David Lawder on the Sime Darby Plantation modification and keep an eye out for a Highsmith Interview with CNBC reporter Andrea Day on the Uyghur Forced Labor Prevention Act as part of a series CNBC conducted with CBP personnel assigned to the Office of Field Operations and Laboratories and Scientific Services.
 

It’s official: Ian Saunders is US choice for WCO secretary general

In an announcement Jan. 26, International Customs Day, acting CBP Commissioner Troy A. Miller formally announced that Ian Saunders, deputy assistant secretary of the U.S. Department of Commerce and a former CBP leader, has officially been nominated for the position of secretary general of the World Customs Organization. 

The WCO touches customs facilitation and enforcement activities across all modes of transportation by supporting efforts to enhance customs effectiveness and efficiencies. Mr. Saunders has a longstanding track record of fostering trust-based, mutually beneficial public-private collaboration. He has first-hand experience developing strong U.S. public-private partnerships through CBP’s Commercial Customs Operations Advisory Committee and has developed a new perspective on trade relations in his current role at the Department of Commerce. The SAFE Framework of Standards, which he helped to promote through the development and launch of novel capacity building approaches responsive to its content, is one example of a key WCO initiative established on the importance of partnership, both customs-to-customs and custom-to-private sector. 

Saunders began his career more than 30 years ago as a student trainee at the former U.S. Customs Service and worked his way up to leadership roles in the Senior Executive Service. Along the way, he held senior positions at CBP and the Federal Highway Administration, where he oversaw international policies and capacity building, information sharing and global technology exchange programs.

While serving as CBP assistant commissioner for the Office of International Affairs, Saunders led multiple U.S. delegations to the WCO, and from 2018 to 2020 he chaired the organization’s Permanent Technical Committee, an open-member WCO entity responsible for developing and promoting the implementation of trade tools and instruments, enhancing customs-to-customs cooperation and providing capacity building in the field of trade facilitation. For more information, read the CBP press release.
 

Justice Department Announces $22.8 million settlement with vitamin importer

The United States Attorney for the Southern District of New York, along with Office of Trade Executive Assistant Commissioner AnnMarie R. Highsmith and Francis Russo, director of CBP Field Operations for the New York Field Office, announced a $22.8 million settlement with vitamin importer International Vitamins Corporation, which underpaid customs duties for years. The settlement resolves claims the company defrauded the United States by misclassifying more than 30 of its products to avoid paying duties under the Harmonized Tariff Schedule. 

The company admitted that between 2015 and 2019 it used HTS classifications for 32 products it imported from China that carried duty-free rates even though those products, if accurately classified, would have been subject to the payment of duties. IVC also admitted that even after it retained a consultant in 2018 who informed IVC that it had been misclassifying the covered products, IVC did not implement the correct classifications for over nine months and never remitted duties that it had underpaid to the United States because of its misclassification.

“This case reflects a pattern of behavior in which this company knowingly misclassified imported merchandise to avoid paying duties. They did so despite clear prior rulings by CBP on the correct classification for this specific type of product,” said CBP Executive Assistant Commissioner AnnMarie R. Highsmith. “Their failure to adhere to the customs laws, which are designed to protect U.S. revenue and U.S. consumers, will now cost the company more than $22.8 million under the terms of a civil settlement with the United States.” Read the full press release.
 

New year, new flag

To kick off the new year, the Office of Trade has announced it has a new flag, which represents the Office of Trade’s past, present and future. 

• The red and white stripes are a tribute to the original U.S. Customs ensign dating back to 1799, when the first U.S. Congress mandated that U.S. revenue cutters and customs vessels fly the flag as an indicator of their authority to enforce federal laws and regulations. 
• The six stars on the new flag represent the legacy customs office destroyed September 11, 2001, where it stood at 6 World Trade Center in New York.
• The grey bar holding the stars clearly separates our foundational history, represented by the ensign stripes, from our present - a reminder of what we lost on that tragic day and a symbol of the moment in history that propelled us into our current state.
• The globe symbolizes the international scope of CBP’s modern trade operations.
• The eagle is the same eagle found in the official CBP and Department of Homeland Security seals, identifying OT as a member of both.

 

CBP highlights trade accomplishments for fiscal year 2022

CBP has recognized major accomplishments during FY 2022 by the Office of Trade. Those accomplishments, as well as the accomplishments of other CBP components, are listed in a Jan. 30 press release. The trade-related highlights include:

• Implementing the Uyghur Forced Labor Prevention Act. The UFLPA was signed into law Dec. 23, 2021, but just six months later CBP began enforcing the rebuttable presumption that allows CBP to assume imported goods mined, produced or manufactured (wholly or in part) in the Xinjiang Uyghur Autonomous Region of China were made with forced labor and therefore prohibited from importation into the United States. In FY 2022, CBP stopped 3,605 shipments valued at $816.5 million for forced labor concerns, including 1,592 entries valued at nearly $500 million stopped under the UFLPA. Read more.
• Launching the Green Trade Strategy. The Green Trade Strategy is a framework to incentivize green trade, strengthen CBP’s environmental enforcement posture, accelerate green innovation and improve climate resilience and resource efficiency. The Strategy establishes a proactive model to combat the negative impacts of climate change and environmental degradation on the agency’s trade mission. At the same time, it will strengthen existing enforcement activities against environmental trade crimes, including illegal logging; wildlife trafficking; illegal, unreported, and unregulated fishing; and illegal mining. It also defines goals for environmentally sustainable trade policies, programs and infrastructure within the agency. Read the Strategy.
• Global Business Identifier. Through a partnership with 13 government agencies, this pilot program will test the concept of a single business identifier solution to improve the U.S. government’s ability to efficiently identify high-risk shipments and simultaneously facilitate legitimate trade. Volunteers from the trade community will provide CBP with entity identifier codes used widely in various industries. The information provided will enable CBP to have more comprehensive insight into shipper, seller and manufacturer data. Read about the pilot.
• Truck Manifest Modernization. Fully implemented in June 2022, TMM allows for seamless integration between CBP systems for non-intrusive inspection, passenger processing, targeting, examination findings and commercial processing. Today, more than 99 percent of the 45,000-50,000 trucks released daily clear primary processing in less than 30 seconds. Before TMM, less than 40 percent of truck manifests did so. Find more information about TMM, including training on processing a manifest.
• Entry Summary Findings. CBP uses a modernized application that has replaced the legacy Automated Commercial Environment process for recording entry summary reviews. It allows CBP to effectively track entry status and clear trade more efficiently. Get more details.
• Modernized Customs Broker Regulations. These changes align regulations with contemporary business practices, improving the efficiency in the customs broker process. Find more information on those changes. 

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II. Outreach
 

EAC AnnMarie R. Highsmith chats with EMTC chief operating officer

Marianne Rowden, chief executive officer at the E-Merchants Trade Council interviewed Office of Trade’s Executive Assistant Commissioner AnnMarie R. Highsmith about her 30-year CBP career, the burgeoning e-commerce industry and what’s ahead for the trade community. The EMTC, a trade association that represents micro, small- and medium-sized online sellers, is dedicated to driving global trade policy initiatives that simplify trade for members and reduce risk when they import or export goods and services in a digital economy, according to the EMTC website. Watch the full interview on vimeo.
 

OT leaders address brokers in Laredo

Executive Assistant Commissioner AnnMarie R. Highsmith, along with Office of Trade executive directors Brandon Lord and James Byram, travelled to Laredo, Texas, to address customs brokers attending the Southern Border Conference. In FY 2022 the value of imports coming through the Southwest Border totaled $424 billion, an increase of almost 16.5 percent over the previous year, Highsmith said. 

She discussed changes in broker regulations that went into effect Dec. 19, 2022, based on recommendations of the Commercial Customs Operations Advisory Committee, while Lord, who heads the Trade Policy and Programs directorate, spoke about the 21st Century Framework to modernize the trade environment. Byram provided updates on the ACE 2.0 system, which will eventually replace the Automated Customs Environment. The conference met January 17-20.

 

CBP, DHS participate in forced labor discussions with Japanese officials

Executive Assistant Commissioner of CBP’s Office of Trade AnnMarie R. Highsmith and U.S. Department of Homeland Security Alejandro Mayorkas met with Japanese industry representatives and government trade officials, including Japan’s Minister of Economy, Trade, and Industry Yasutoshi Nishimura in Washington, D.C. Mayorkas and Nishimura continued their discussion that began last October on the importance of collaboration between the two countries to eradicate forced labor from global supply chains. The two signed an updated memorandum of cooperation on cybersecurity that, among other things, will enable the United States and Japan to continue sharing best practices with DHS Indo-Pacific partners, according to a DHS press release.

Later, Highsmith moderated and participated in a roundtable discussion with representatives of Japan’s business community to address issues such as upholding human rights by preventing the use of forced labor in supply chains; DHS/CBP enforcement of the Uyghur Forced Labor Prevention Act; and adequate supply chain due diligence requirements to meet the ‘clear and convincing’ evidence standard for requesting an exception to the UFLPA rebuttable presumption that all goods made in whole or in part in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China are made with forced labor.

 

DHS honors CBP UFLPA team

Office of Trade and CBP, executives and staff alike, were honored Jan. 31 as part of the first ever U.S. Department of Homeland Security Annual Awards in Countering Human Trafficking. Each January is Human Trafficking Prevention Month. Members of the Uyghur Forced Labor Prevention Act Implementation Team received the Outstanding Engagement or Training in Countering Human Trafficking award for their diligent efforts to quickly establish the implementation framework for the UFLPA. 

Among the 26 UFLPA Implementation Team members were representatives from the Office of Trade, the Office of Field Operations, the Centers for Excellence and Expertise and the Office of Chief Counsel. “To successfully implement the UFLPA in the short time allowed by Congress, CBP and DHS policy personnel worked tirelessly and spearheaded critical collaborations with NGOs, industry and federal partners. Thanks to the outstanding efforts of these teams, implementation took place on time and with minimal disruption to the trade community,” the presentation brochure said of the award. Watch the video of the DHS Annual Awards in Countering Human Trafficking ceremony or get more information on UFLPA.

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III.  News You Can Use

Briefly

Something fishy in there: officers find dolphin skull in luggage

Romulus, Mich. – A piece of international luggage that was inadvertently separated from its owner at Detroit Metropolitan Airport Feb. 3 yielded a skull that CBP and U.S. Fish and Wildlife Service officials determined was from a young dolphin. Certain fish and wildlife, including products made from them, are subject to import and export restrictions, prohibitions, permits or certificates and other requirements. The dolphin skull was turned over to Office of Law Enforcement inspectors within the U.S. Fish and Wildlife Service for further investigation. For more information, read the press release.

 

Cash and carry? Chicago officers seize fake cash and merchandise

Chicago – In separate incidents Feb. 1, CBP officers at Chicago O’Hare International Airport’s International Mail Facility seized more than $76,000 in counterfeit currency and counterfeit merchandise that would have been worth $465,000 had it been genuine. The officers inspected five packages from China and found the counterfeit bills in denominations ranging from $1 to $100. The shipments were heading to Houston and Mission, Texas; Greenbush, Minn.; Oklahoma City, Okla.; and Morris, Ill.

Even though the counterfeit bills were marked and were going to be used as prop money, it is a violation of federal law to reproduce currency. The counterfeit currency was turned over to Homeland Security Investigations and U.S. Secret Service for investigation. Meanwhile, at another terminal in the airport, a U.S. citizen returning from Turkey told officers he had purchased $1,000 worth of gifts for family and friends. Those ‘gifts’ were 61 counterfeit items, including watches, clothing, handbags, phone cases, sunglasses and jewelry. CBP said counterfeiting and intellectual property rights piracy cost the U.S. economy between $200 billion and $250 billion per year. They are responsible for the loss of 750,000 American jobs and pose a threat to health and safety of American consumers.

 

 3packages, 5 days: Indianapolis officers stop counterfeits in mailed packages

Indianapolis – CBP seized the contents of three international packages that originated in the Philippines in late January. The packages contained counterfeit clothing, bedding, purses, wallets, sunglasses and keychains with a suggested retail value – had they been genuine – of $265,000. In total, between January 26-31, officers found 207 pieces of counterfeit designer merchandise: Chanel, Burberry, Dior, Gucci, Hermes, Louis Vuitton and Fendi. Two of the packages were addressed to a Pennsylvania resident, while the third was intended for a New York resident. “As consumers increasingly purchase merchandise from online or third-party vendors, our officers are at the frontline to guard against violative individuals and entities expecting to make money by selling fake merchandise,” said LaFonda D. Sutton-Burke, director of Field Operations in the Chicago Field Office, which includes Indianapolis operations.

 

Louisville officers seize 5,000 pairs of fake Chanel earrings worth $1.3 million if real

Louisville, Ky. – It has become a nightly occurrence for CBP officers here to find counterfeit jewelry arriving from locations known for producing such fakes. On Jan. 1, officers seized 4,920 pairs of counterfeit Chanel stud earrings from China destined for Maryland. Had they been genuine, they would be worth $1.37 million. “This just goes to show you how criminals are using express consignment facilities to ship their items to unsuspecting consumers, damaging our economy,” said LaFonda D. Sutton-Burke, director, Field Operations-Chicago Field Office.

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Trade Statistics

January Stats

In January 2023 alone, CBP processed more than 2.6 million entry summaries valued at more than $265 billion, identifying about $7.3 billion in duties to be collected by the U.S. government. Trade via the ocean environment accounted for more than 44.15 percent of the total import value, followed by air, truck and rail. CBP identified 282 shipments valued at more than $69 million for further examination based on the suspected use of forced labor. CBP seized 1,514 shipments that contained counterfeit goods valued at more than $186 million.

Also in January, CBP completed 27 audits that identified $7.7 million in duties and fees owed to the U.S. government for goods improperly declared. CBP collected over $7 million of this identified revenue and from previous fiscal years’ assignments.

FY 2022 wrap up

During fiscal year 2022, nationwide, CBP processed 39.1 million entries valued at $3.35 trillion and facilitated the collection of more than $111.9 billion in revenue for the U.S. government. That represents a 19-percent increase over FY 2021. The agency also collected approximately $104.6 billion in duties, a 22.42-percent increase over the previous fiscal year. Trade via the ocean environment accounted for more nearly 41 percent of the total import value, followed by air, truck and rail. Overall, CBP collected approximately $111.9 billion in duties, taxes and other fees on behalf of the U.S. government, representing a 117-percent increase over a five-year period and demonstrating the steady uptick in trade over this period. 

FY 2022 numbers: Chicago officers seize $23 million in counterfeits, conduct more than 45,000 agricultural inspections

Chicago – During fiscal year 2022, CBP officers intercepted 281 shipments of counterfeit merchandise, primarily handbags, watches and jewelry. Had the items been genuine, they would be valued at about $23 million. Meanwhile, agricultural inspectors conducted more than 45,000 inspections of food products. Agricultural inspections play a vital role in preventing infestations of pests or spreading diseases that could devastate U.S. crops, CBP officials said. “The knowledge and unwavering dedication displayed by our uniformed officers, agriculture specialist, import and entry specialist and those employees that support frontline operations is key to our success,” said LaFonda Sutton-Burke, Director Field Operations-Chicago. For more information, read the press release.