CBP Announces Decrease in Interest Rates Applicable to Overpayments and Underpayments of Customs Duties

As a result of falling short-term interest rates, U.S. Customs and Border Protection announced in today's Federal Register a decrease in the interest rates used to calculate interest on overdue accounts (underpayments) and refunds (overpayments) of customs duties.

For the calendar quarter beginning January 1, 2009, the interest rates for overpayments will be 4% (decrease from 5%) for corporations and 5% (down from 6%) for non-corporations. The interest rate for underpayments will be 5% (decrease from 6%) .

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Export Control Reform Study Finds U.S. Export Control System is Broken and Should be Restructured

In the latest study of the U.S. export controls system, the National Research Council of the National Academies last week released a report entitled "Beyond Fortress America: National Security Controls on Science and Technology in a Globalized World."

The report, which was written by a committee co-chaired by Stanford University president John Hennessy and retired general Brent Scowcroft, not surprisingly found that the current U.S. export controls system is broken and should be restructured.

The report made the following three broad recommendations:

1. The President should restructure the export control process within the federal government so that the balancing of interests can be achieved more efficiently and harm can be prevented to the nation’s security and technology base; in addition to promoting U.S. economic competitiveness. Among other things, the report recommends the creation of two new entities to make the export control process run more smoothly and to resolve disputes when they occur: (1) Coordinating Center for Export Controls to coordinate interactions with businesses or universities seeking export licenses and manage agency processes with respect to granting or denying export licenses; and (2) An Export License Appeals Panel, comprised of active or retired federal judges, would hear disputes on licensing decisions and "sunset" requirements. The report suggests placing both entities within the National Security Council structure, with the director of the Coordinating Center reporting to the national security adviser.
2. The President should direct that executive authorities under the Arms Export Control Act and the Export Administration Act be administered to assure the scientific and technological competitiveness of the United States, which is a prerequisite for both national security and economic prosperity.
   
3. The President should maintain and enhance access to the reservoir of human talent from foreign sources to strengthen the U.S. science and technology base. Recommended actions include streamlining the visa process for credentialed short-term visitors in science and technology fields and extending the duration of stay for science and engineering graduates with advanced degrees.
   

The committee recommends that the President should issue an Executive Order to implements these recommendations as one of the first orders of business in January 2009.

While the National Academies charges a fee to download the entire report, the individual chapters of the report can be read free of charge here and the PDF version of the Executive Summary can be found here.

Earlier this year, an analyst at a Washington, DC think tank said that there were 18 separate export control reform studies currently underway.

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OFAC Issues December 2008 Monthly Civil Penalties Report

On December 31, 2008, the Treasury Department's Office of Foreign Assets Control (OFAC) issued its monthly report (pdf) of civil penalties imposed on companies and individuals for allegedly violating the sanctions regimes administered by OFAC.

Companies - OFAC announced the following three settlements with companies:

• Fidelity National Information Services of Maitland, Florida, the successor to Certegy Card Services, remitted $12,260.86 to settle allegations of violations of the Foreign Narcotics Kingpin Sanctions Regulations. OFAC alleged that on or about June through July, 2004, and prior to the February 2006 acquisition of Certegy by Fidelity, Certegy processed transactions on behalf of an individual whose property was blocked pending investigation, pursuant to the Foreign Narcotics Kingpin Designation Act, without an OFAC license. As a remedial measure, upon learning of that failure, Fidelity deployed its OFAC compliance program in order to prevent future violations. Certegy did not voluntarily disclose this matter to OFAC.

• Eni Petroleum Co. Inc. of Houston, TX remitted $6,562.79 to settle allegations of violations of the Iranian Transactions Regulations occurring in 2003. OFAC alleged that Eni engaged in a trade-related transaction with Iran by facilitating the exportation of goods or services, directly or indirectly, to Iran without an OFAC license. Eni did not voluntarily disclose the matter to OFAC but cooperated with OFAC’s investigation.
  

• OFAC imposed a $7,500 civil penalty on Premier Agency Inc. of Queens, New York for allegedly violating the Burmese Sanctions Regulations related to a funds transfer. As indicated by OFAC's penalty notice, Premier failed to respond to OFAC's requests for information regarding the funds transfer.
  

Individuals - OFAC settled one case involving individuals (OFAC does not release the names of individuals involved in civil penalty cases):

• One individual was assessed a penalty totaling $7,500.00 for violating the Burmese Sanctions Regulations after OFAC received no response to two letters requesting information regarding the funds transfer involving Burma. [the individual appears to be the president of Premier Agency Inc., who is named in the penalty notice cited above].
  

In 2008, OFAC concluded 99 civil enforcement actions and imposed a total of $3,504,533 in civil penalties.

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CBP Announces 10+2 Outreach Schedule

U.S. Customs and Border Protection (CBP) is hosting trade outreach events in various locations around the country to provide the trade community with an opportunity to learn more about the new Importer Security Filing and Additional Carrier Requirements (a.k.a. "10+2") that will go into effect on January 26, 2009.

Programs will be held in the following cities in January 2009:

Oakland/Burlingame, CA - Wednesday January 14, 2009
( Oakland/Burlingame, CA Registration )
Baltimore, MD - Thursday January 22, 2009
( Baltimore, MD Registration )
Philadelphia, PA - Friday January 23,2009
( Philadelphia, PA Registration )
Charleston, SC - Wednesday January 28, 2009
( Charleston, SC Registration )
Savannah, GA - Thursday January 29, 2009
( Savannah, GA Registration )

Programs will be held in the following cities in February 2009:

Houston, TX - Wednesday,February 4th, 2009
( Houston, TX Registration )
JFK Area, NY - Thursday, February 5th, 2009
( JFK Area, NY Registration )

Specific event information with location details and further instructions will be emailed to registrants after completion of the on-line registration process.

Dates for the following cities will be announced in the near future:

Boston, MA
Miami/Port Everglades, FL
Long Beach, CA
Chicago, IL
Norfolk, VA

CBP has stated that it will show restraint in enforcing the rule as long as importers are making satisfactory progress toward compliance and are making a good faith effort to comply with the rule to the extent of their current ability. This "flexible enforcement period" will last for 12 months after the effective date.

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2009 Version of U.S. Harmonized Tariff Schedule and Schedule B Numbers Now Available

The 2009 version of the Harmonized Tariff Schedule of the United States Annotated (HTUSA) is now available and can be found here on the U.S. International Trade Commission's website.

Among other things, the 2009 HTSUSA contains the rules of origin for the U.S.-Oman Free Trade Agreement that went into effect on January 1, 2009 and other changes made to the HTSUSA during 2008.

The 2009 version of the Schedule B codes for use in filing Electronic Export Information via the Automated Export System can be found here. AES will accept shipments with outdated 2008 codes during a grace period for 30 days beyond the expiration date of December 31, 2008. Reporting an outdated 2008 code after the 30 day grace period will result in a fatal error.

Current HTSUSA numbers that are invalid for use in AES as of January 1, 2009 can be found here.

Export codes (which the U.S. calls Schedule B) are administered by the U.S. Census Bureau. Import codes are administered by the U.S. International Trade Commission (USITC).

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Lethal Technology Making Way From U.S. to Iran Via Front Companies

In connection with a series of export control case studies issued by the Washington, DC-based Institute for Science and International Security (ISIS), today's Washington Post reports on the various networks used by Iran and Pakistan to obtain U.S. and European products via front companies.

The article notes that "many of the schemes unknowingly involve U.S. companies that typically have no clue where their products are actually going." "The schemes are so elaborate, even the most scrupulous companies can be deceived," said David Albright, president of ISIS and co-author of the case studies.

The ISIS case studies, some of which are based on information contained in the September 2008 grand jury indictment against a number of foreign individuals and companies involved in procuring items for Iranian entities through Dubai and Malaysia-based trade networks, include copies of invoices, contents of e-mails from companies looking to buy U.S. and European products and detailed diagrams. These case studies are very useful for export compliance training purposes.

The PDF versions of the ISIS case studies by David Albright, Paul Brannan and Andrea Scheel can be found at the following links:

• Iranian Entities' Illicit Military Procurement Networks

• Detecting the Barrage Approach to Illicit Procurement

• How Cooperation between a Company and Government Authorities Disrupted a Sophisticated Illicit Iranian Procurement

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U.S. Revokes Antidumping Order on Rebar From Turkey

After being in effect for nearly 12 years, on January 5, 2009 the Commerce Department revoked the antidumping order on steel concrete reinforcing bars (rebar) from Turkey.

This action was taken after the U.S. International Trade Commission determined in a sunset review that revocation of the antidumping order would not be likely to lead to continuation or recurrence of material injury to an industry in the U.S. within a reasonably foreseeable time.

As a result of the revocation of the antidumping order, U.S. Customs and Border Protection will discontinue suspension of liquidation and collection of cash deposits on entries of the subject merchandise entered or withdrawn from warehouse on or after March 26, 2008, the effective date of revocation of the antidumping duty order.

The goods covered by this antidumping order included all stock deformed steel concrete reinforcing bars sold in straight lengths and coils (classifiable under subheadings 7213.10.000 and 7214.20.000 of the Harmonized Tariff Schedule of the U.S.). Plain round rebar, further worked or fabricated rebar and coated rebar were excluded from the scope of the antidumping order.

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