Ruling of the Week 2017.1: Geeks Will Eat Anything

It is a new year and a lot has changed in the world. People in my field are either excited about the possibilities of major changes in trade policy or are horrified by the possibilities of major changes in trade policy.

I have had several calls about whether the U.S. will withdraw from NAFTA, impose new duties on goods made in Mexico by U.S.-based companies, and raise tariffs on goods from China. My answer so far has been, "I wish I knew." The new President and the new Congress will have a lot of authority under domestic law. The bigger questions will relate to how our trading partners respond. The U.S. has agreed many times to hold or lower duties. Going back on those promises will mean violating WTO obligations and multiple free trade agreements. Some people may not care. The U.S. remains fully sovereign and can violate any international agreements it choses. As a former partner used to say, "The WTO has no army."

But, the WTO has the ability to authorize trade retaliation. That means our trading partners will likely raise tariffs on U.S. goods in retaliation for stiffer U.S. tariffs. That makes it harder for U.S. companies to export. Add to that the impact of U.S. tariffs making it harder to import. We could end up with a situation in which domestic producers face higher costs for imported raw materials and components and then can't export their finished goods. That is a bad scenario.

Despite those two paragraphs, I tend to be an optimistic person by nature. I don't really expect the professionals who will be running White House trade policy and Congress to brazenly flout trade agreements and obligations. I don't think anyone wants to start an old fashioned trade war. But, as I said, I can't see the future. It's possible.  We all need to be watching closely. No matter your business needs and policy desires, this is a good time to make sure you have your Senators and Representative on speed dial.

Happy New Year. 2017 will be interesting.

Which brings me to the ruling of the week, N126516 (Oct. 19, 2010), in which we learn that human beings will eat just about anything. In this case, we are talking about snacking on arthropods.

Item 1: Giant toasted leafcutter ants.

Via Wikipedia

Item 2: Oven-baked tarantula spiders.

Also Via Wikipedia

According to the importer, the ants are "grown specially for human consumption" and have a "nutty, bacon-like taste." The spiders, on the other hand are "crisp, crunchy, ready-to-eat snacks." The importer also requested a ruling on scorpions that have been farm raised, detoxified, and are uncooked. For whatever reason, CBP decided it was lacking the necessary information to rule on that tasty snack.

The actual classification of the ants and spiders did not seem to controversial. These are food items prepared and packaged for human consumption. There not being a more specific place these delicacies, CBP classified them as "other prepared or preserved meat, meat offal, or blood." When canned, the classification would be 1602.90.9080; un-canned it is 1602.90.9080.

The importer here is a company called Think Geek Inc. I believe this is its website. Let me just say that this is right in my wheelhouse. I would like one of these and this and this (XL) and even this. Take all my money. I might even trade tariff classifications for gift cards. What I don't want is to eat tarantulas. And, yes, I am fully aware that arthropods provide a valuable source of protein and calories. The fact of the matter is that I get too many calories as it is. Unlike Chicago-mix popcorn and frozen yogurt, I can pass up the spiders and ants.

Customs Law: Presidential Edition

Next week we in the U.S. will have a new president-elect. Getting there has been an unusually disheartening referendum on the mood and direction of the country. Voting always matters, but it might matter more this year than in a very long time.

With that, we take a quick look at Von Stade v. Arthur, 28 F. Cas. 1274 (S.D.N.Y. 1876)(I cannot find a fee link). Here is the decision in its entirety:

SHIPMAN, District Judge.  The second section of the act of June 6, 1872 (17 Stat. 231), provided, that, on and after August 1st, 1872, the existing duties upon the articles which are enumerated in the section should be reduced ten per centum.  The section specifies, among the enumerated articles, "all wools, hair of the alpaca goat, and other animals, and all manufactures wholly or in part of wool, or hair of the alpaca and other like animals, except as hereinafter provided." The question in this case is, whether the duty of fifteen cents per pound upon hogs' bristles was reduced by virtue of the act which has been cited.

Waiving the question, whether it was the intention of congress to reduce the duty upon the hair of all animals, whether such hair was used or not in the manufacture of textile fabrics, I am of opinion, that, in the tariff acts, the article of bristles is separately classified, and is regarded as a different article from hair. This will appear from the act of June 30, 1864 (13 Stat. 212), which prescribes a duty upon bristles of fifteen cents per pound, and upon hogs' hair of one cent per pound. The language of the Revised Statutes of 1874 (page 480) is "Bristles, fifteen cents per pound;" "hair of hogs, one cent per pound." The term "bristles" is used in the tariff acts to denote a separate and distinct article from hair, and the bristles are not included in the general words "the hair of an animal," but have a distinct classification.

Let judgment be entered for the defendant. 

The issue here is whether a bill reducing the duty on certain animal hair applies to hog bristles? My initial thought was, are bristles hair? It turns out that they are, but that they are a unique variety of short, stiff hair. Most important to the decision is that the Tariff Act of 1864 had a separate and more specific paragraph covering bristles. By this early application of the rule of relative specificity, the Court upheld the higher duty collected by Customs.

Why is this my "Presidential Edition?" This is why:

The defendant in this case is the Collector of Customs in New York, a man known as Chester A. Arthur. President Grant had given Republican New York Congressman Roscoe Conkling authority to dole out the federal patronage jobs in New York. The Collector was the plum appointment. In that position, Arthur was able to hire hundreds of customs officers to collect duties at the then-busiest port in the country. The Collector earned as much as any federal official at the time including a portion of the value of seized property and penalties assessed. That created an incentive to find real or imagined violations. Eventually, this stopped and Customs employees became members of a professional civil service with regular salaries.

Arthur continued to rise through Republican ranks. He eventually became the leader of the party in New York and then Vice President to James Garfield. Things did not go well for Garfield.

Garfield, shot by Charles J. Guiteau, collapses as Secretary of State Blaine gestures for help. Engraving from Frank Leslie's Illustrated Newspaper

Thus, the Collector of Customs becomes President of the United States.

Ruling of the Week 2016.14: Something Fishy

Did you ever see a marlin or other game fish proudly displayed as a mounted trophy and wonder exactly how one goes from landing the fish to hanging it over the mantel? I have always assumed that some portion of that trophy is the actual fish that was murdered caught through the skill and patience of the angler. I pictured a taxidermy shop where meat and entrails were scooped out and skin carefully laid over some sort of interior structure. This was, in my mind at least, a gruesome art form.

It turns out that in at least one case, modern anglers do not rely on the real fish at all for their mounted trophies. Apparently, a mounted fish trophy can now be made based entirely on the recollection of the one that got away (or was released). Don't get me wrong, in an era of over fishing and increasing sensitivity to the needless destruction of animal life, this makes perfect sense. Why kill the fish when you can have a replica made and mounted?

For our purposes, the question is whether the plastic "fish blank" that is painted to become the "release mount" is classifiable as an article of plastic in Heading 3926 or in Heading 9705 as a collector's piece of zoological interest. This was tackled (see that?) in HQ H188945 (May 9, 2016).

Any guesses?

The importer claimed that the plastic fish mounts are used "in the taxidermy industry" to make replicas of game fish and are akin to taxidermied fish mounts in construction, purpose, and channels of trade.

Customs had previously classified fish mounts in 9705. See HQ 952687 (Apr. 30, 1993). In that case, the mount was used as a base to which actual fish parts were attached. Specifically, the skin, teeth, fins, and tail of a once live fish were attached to the plastic mount. Here, the process completely dispenses with the organic fish parts.

Rather than be zoological specimens, according to Customs, these are mass produced from molds made of fish that have been caught, molded, and released. Further, these are decorative items, not likely to be used in, say, museums for scientific or educational reasons. Consequently, Customs classified the plastic fish release mounts in 3926.40.00 as "Other articles of plastic . . . statuettes and other ornamental articles."

Of course, this also dispenses with potentially troublesome compliance issues such as the Convention on Traffic in Endangered Species and APHIS clearance. It also means I can get a mounting of a purely fictional fish like the shark from Jaws or Dory.

Final Exam 2016: Identity Crisis Edition

You may recall that last year my final exam for Trade Remedies was an elaborate, cinematic fact pattern involving the DC superhero universe. See here for that. Read the comments, which are really quite good.

This year, I was not able to string together quite as detailed a fact pattern for my Customs Law class. I did, however, ask this question. Tell me what you think is the correct answer. I will be flexible, but you should not need to stretch too much.

I'll be back soon. I promise.


QUESTION 3: 25 POINTS

Ralph Dibny is the CEO of Plastico, which imports plastic in various forms from suppliers all over the world into the United States. To find suppliers, Ralph relies on two representatives. Reed Richards is responsible for suppliers in South America. Patrick “Eel” O’Brian is responsible for suppliers in Asia. Neither representative is an employee of Plastico.

When Plastico wants to purchase materials from South America, Dibny contacts Richards who then finds suppliers that can provide the necessary material. Richards facilitates the transaction by locating and approving suppliers to Plastico’s standards, creating Plastico Purchase Orders, reviewing supplier invoices for Plastico, approving payment by Plastico, and arranging transportation. For these services, Richards earns a fee of 5% of the invoice price Plastico pays to the supplier. That amount is not shown on the commercial invoice for the imported product and has not been declared to Customs as part of the dutiable value of the merchandise.

Purchasing from Asia is a different process. Eel O’Brian has relationships with several plastic manufacturers throughout Asia. When a manufacturer in Asia has excess inventory, it contacts O’Brian and asks him to sell it to customers in the U.S. The supplier dictates the lowest acceptable price and usually refuses to take responsibility for the cost of shipping and transportation insurance, which must be paid by the customer, including Plastico. O’Brian will then contact Dibny and offer the merchandise to Plastico. If Plastico wants to purchase the merchandise on O’Brian’s terms, it agrees to purchase it from O’Brian. At that point, Plastico will create a Purchase Order naming O’Brian as the supplier. O’Brian places the order with the supplier, who ships the merchandise directly to Plastico in the United States according to the terms of Plastico’s P.O. with O’Brian. The supplier invoices O’Brian who then sends Plastico an invoice showing O’Brian as the seller and including a markup to add his profit. Plastico may not know the identity of the supplier until it receives the shipment, if even then. O’Brian has similar arrangements with several U.S. customers. He negotiates prices with the U.S. customer to maximize his income. The O’Brian’s markup is included in the commercial invoice used for entry and, therefore, has been declared to Customs as part of the dutiable value of the merchandise.

Plastico is always the importer of record and is not related to Richards, O’Brian, or to any foreign manufacturer of plastics. Transaction value is the applicable basis of appraisal.

Dibny has asked for your legal advice on whether the fee paid to Richards and O’Brian’s markup are legally part of the dutiable value of the merchandise. Dibny also wants to know whether there are adjustments Plastico can make to ensure that the amounts paid to Richards and O’Brian’s markup are not dutiable.

Hey, look over there

Dear Lex Luthor,

This is in response to your implied inquiry concerning the importation of a large sample of kryptonite into the United States. You can find my response here, as published by the fine folks over at Law and the Multiverse.

That will be $3 million for service. An itemized invoice may be provided if you so request.

Very sincerely,

Larry Friedman

Ruling of the Week 2016.8: Silence of the Borg

By my calculation, this is week 10 of 2016 and this is ROTW 8, I am getting close.

Today's ruling might make the squeamish among you go "Eww," but it shouldn't. The product in question is a three-dimensional reconstructed human epidermis. When I read that, I pictured a fully human-shaped skin ready for taxidermy or some more nefarious use. The reality is far more mundane and much more scientifically cool.

The ruling is NY N270364 (February 19, 2016). The product turns out to be an "in vitro " epidermis grown from human skin and other cells cultured on a polycarbonate substrate. Here is the technical lowdown on it. The commercial purpose of this is not to build Buffalo Bill-style human skin suits or to give Mr. Data goosebumps. The idea is to have an in vitro model for testing drugs, cosmetics, etc.

Star Trek: First Contact

According to Customs, this item is classified as "Human blood . . . vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products" in HTSUS item 3002.90.5150, which is duty free.

Customs and Border Protection noted that this product may be subject to regulations of the Centers for Disease Control and Prevention, which should make us all happy.

Ruling of the Week 2015.22: Beam Me Up

I see we are close to perfecting the Star Fleet-style impulse engine. It also appears that we are working on teleportation, one atom at a time. That got me wondering what Star Trek inspired devices might have been the subject of a Customs classification ruling. What I found is the Star Trek Flash Badge imported by the Kellogg Company to be included as a prize in boxes of cereal.

The plastic badges mimic the Star Fleet divisional insignia for Command, Engineering and Science plus insignia of the Klingon and Romulan Empires. Each badge contains a battery. switch and an LED. When the switch is depressed, the LED lights, illuminating the badge. According to Customs, the badges could not be worn and lacked any kind of pin to connect it to a uniform. Customs also noted that their entertainment value outweighed any utility.

Here's the interesting part. The badges were imported in bulk and then sent to cereal packaging plants to be inserted in boxes. The badges were not individually marked with their country of origin.

Let me stop here for a few observations. This ruling is from 2008 and these look to be J.J. Abrams-era badges. Here is the whole set, with a four-fingered Tony the Tiger Vulcan salute:

Here is another image of the whole set:

Of course, we should let our Geek Flag fly a little and mention that in the era during which recent Academy graduate James T. Kirk had command of the U.S.S. Enterprise (NCC-1701), the insignia was nothing more than part of the uniform. Its only function was to identify the wearer as being assigned to Command, Science, or Operations (which includes Engineering as well as Security). If you were unlucky enough to be assigned to a red-shirted job in Security, you were likely to be killed off without so much as a screen credit.

I'm concerned about this because these badges are "functional" in that they light up. That seems to indicate that they are mimicking some function in the original of which they are a model. That would lead to the conclusion that Kellogg's had somehow crossed the timeline and put a communicator badge of the sort used 80 years later on the NCC-1701-D by Captain Jean-Luc Picard and his crew into the context of a young Captain Kirk. Of course, the Picard-era badges did not light up, but let's put that aside.

There are a number of ways this may have happened. An easy hypothesis is that Q somehow sent them to Kellogg in 2008. This is contrary to the facts of the ruling, which state that the badges were made in China. Another possibility is that a member of the NCC-1701-D crew stumbled through a Guardian of Forever portal, thereby making a Next Generation communicator available to the reboot crew to be used by J.J. Abrams and Kellogg. I suspect that it the correct answer.

Because the badges were primarily articles of amusement, rather than actual communication devices, Customs classified them in HTSUS item 9503.00.00 as other toys, which are duty free.

But, what about the marking? In the ruling, Customs and Border Protection tells Kellogg that the badges are not properly marked with their country of origin. Do we agree with that? One might argue that if Kellogg is the purchaser and the outermost container that reaches Kellogg is marked "Made in China," which I am assuming it was, isn't that enough? After all, is the average cereal buying American concerned about the country of origin of the free toy included in the box?

That, however, is not the correct analysis. The prime directive of marking law [see what I did there?] is that every article of foreign origin must be marked with its country of origin in a conspicuous, legible, and permanent manner so as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin. 19 CFR 134.11. Who is the ultimate purchaser of a free give-away? This ruling does not provide much analysis, but Customs has consistently held that it is the recipient, not the purchaser. For example, little shampoo bottles given to hotel guests must be marked with their country of origin. Umbrellas given to race track patrons also much be marked with their country of origin. So, Customs did Kellogg a favor and pointed this out.

I don't want to tread too far into the jurisdiction of Law and the Multiverse, but I do wonder about customs formalities in the 24th century. I don't ever recall hearing about the Enterprise transmitting a cargo manifest for review by local authorities. Nor do I recall hearing anything about duties being paid. Is that because Star Fleet is essentially a military operation? Keep in mind that much of the machinations of the Star Wars universe is driven by trade regulations. I suspect Lando Calrissian is all over the Cloud City customs regulations.

I feel like there is a future article in the application of customs law to Star Fleet and the Star Wars universe, but that will have to wait.

In the meantime, if you are a fan who enjoys a detailed rehash of all things Star Trek including an analysis of the morals, messages, and meaning of each episode, check out the Mission Log podcast. It makes Thursday my favorite commute into work (excluding days I ride).

More on Zombies

I got a nice shout out from Law and the Multiverse today. The post is about a law review article on using zombies as teaching tools in law school. Read the post and then read the full article.

Ruling of the Week 2015.21: Coconut Wraps

Is there still a trend surrounding eating raw to allegedly preserve nutrients and avoid bad karma? I never understood it, nor do I believe there is any science behind it. I remember seeing a woman on a news show talking about how the enzymes in fruit dissolve unhealthy body fat, but she could not identify the enzymes or explain the mechanism. If you tell me you are on a juice cleanse, I will do my best not to scoff.

If, however, you are looking for a raw alternative to an otherwise delicious tortilla, you might try a "Pure Wrap," which is composed mainly of coconut meat that has been pulverized into a slurry and dehydrated into flat wraps. According to the folks at the company:

Pure Wraps believes that food is medicine and illness begins with nutritional deficiencies. In order to support wellness and fight disease we need clean food from a clean environment. Therefore, we are committed to unlocking the value of food by combining the ancient wisdom about nourishment with nutrient-rich ingredients and safe preparation techniques.

So much for the germ theory. Ancient wisdom also said that we get sick when our vital humors are out of whack. I'm not interesting in getting my bile and phlegm adjusted next time I get the flu.

But, what I am interested in the tariff classification of these sheets of coconut. There are two flavors at issue: plain and curry.

The first issue is whether the additional of salt at about 33 mg per gram of product is sufficient to kick it out of HTSUS Heading 0801, which is the eo nomine heading for coconuts. Note 3 to Chapter 8 permits the additional of materials for preservation or stabilization, provided the product retains its character as dried coconut. 

According to Customs' laboratory, the amount of salt added to the coconut was above the amount necessary for preservation and stabilization. Consequently, it is a flavoring. That is sufficient to push the product into Heading 2008 ("fruits, nuts, and other edible parts of plants, otherwise prepared or preserved . . . .).

The plain wraps are classifiable in 2008.19.15 as coconuts not elsewhere specified or included.

That leaves the curry wraps. The added spices include products of seeds or nuts. If they matter, then the product can't be coconuts. It would be "Other, including mixtures" in HTSUS item 2008.19.85. This is the interesting part.

It occasionally happens that a product is mixed or adulterated with other material in a way that might change its tariff classification. The question is whether there is some lower limit at which the additional material does not impact classification. Yes, there is. It is the de minimis level. 

Here, Customs found that the curry spices were merely incidental or immaterial to the overall product. While they do impart flavor, the nature and use of the product remains the same. Also, the value is not changed. As such, Customs treated the additional materials as de minimis and applied the same classification.

The ruling is HQ H247587 (May 14, 2015).

Ruling of the Week 2015.17: The Drinking Dead

You may recall, I previously posted about my concerns for the proper means of entering the shambling undead. It appears U.S. Customs and Border Protection has already contemplated the tariff treatment of drinkable zombies mixes.

In NY N008597 (Apr. 13, 2007), the product was, among other things, a coffin-shaped cardboard box containing a bottle of "Citrus Zombie." The drink was about 70% water and 30% sugar with small amounts of flavoring a citric acid. The bottle included instructions to mix with equal parts of tequila, which is odd since a zombie cocktail is traditionally made with rum.

According to CBP, this product is a food preparation not elsewhere specified or included, classifiable in 2106.90.9972. Helpfully, CBP pointed out that the item was not properly marked with its country of origin and that the food preparation is subject to FDA regulation.

All of which is a segue into this cartoon from yesterday's paper. For copyright reasons, I'm just giving the link. It is a cartoon by Harry Bliss showing a man at the stove while a woman and cat relax behind him. The man says "Honey, quick -- the demi-glace is about to simmer -- pass me a shot of Don Julio 1942 tequila."

Here's the thing, I own and very much enjoy my bottle of Don Julio 1942. I also do some of the cooking in the house and I know what demi-glace means. I don't think I have ever made a demi-glace, but I watch a lot of Chopped, so I know these things.

I don't want to be overly defensive, but I am trying to see if I missed a joke in which I am the punchline. It's possible there is no joke here. Maybe the cartoonist was simply depicting a scene typical of his house. On the other hand, maybe I am a tool. Either is possible.

Happy Tariff of Abominations Day

May 19th is a holiday for customs and trade professionals. I know that because I declared it to be so. If you don't recall, read this post.

Ruling of the Week 2015.15: The Festive Penguin

Several alert readers have pointed me in the direction of the May 6, 2015 Customs Bulletin & Decisions in which U.S. Customs and Border Protection proposes to revoke NY N035321 (Aug. 18, 2008). In that ruling, Customs considered the classification of a 14-inch plastic penguin made of red, orange, green and clear beads. To make the item even more impressive, it is equipped with light bulbs that run through the frame and it wears a "Santa hat" made of lights. Stop there for a moment. As with my lighted tie, I have been unable to find a picture of this particular item. Note to anonymous law clerk who found me a representative tie: treat this as a challenge. Find me a picture, please.

Customs originally classified this item in Heading 3926 as an other article of plastic. The importer asked for reconsideration of that decision and asserted that it is properly classified as a festive article in heading 9505. As you probably know, the scope of heading 9505 has been the subject of a lot of litigation. This is primarily because goods classified in that heading are duty free and also because most things can be festive if seen in the right context. My kid's dirty soccer socks can be strung from the mantel to celebrate World Cup season.

In a tariff sense, festive articles includes items traditionally used at Christmas (e.g., artificial Christmas trees, nativity scenes, Christmas nutcrackers, and yule logs). More generally, the item must be closely associated with a festive occasion and must be used or displayed principally during that occasion. Seeing it on display at other times should be "aberrant."

"Other articles of plastic," on the other hand, is a basket provision. That means goods will not be classified in 3926 if they are specified or included elsewhere. So, if 9505 fits, 3926 fails.

So what about our penguin? Unlike a reindeer, there is no recognizable connection between a penguin and Christmas. But, in this case, the penguin has donned a "Santa hat." The hat is an article traditionally associated with Christmas and the festive Christmas season. So much so that CBP believes that the presence of the hat makes the display of this penguin aberrant outside of the Christmas season. This penguin is not a general decoration, it is a Christmas decoration. As such, it should be classified in 9505.10.25.

That's a win for the importer, and that is good enough for me.

I continue to believe that the test for festive articles related to Christmas, Easter, and other Christian holidays is too subjective. I have previously proposed a more scientific test. I still think it makes sense.

Also, this is a great opportunity for tariff engineering. I propose adding a Santa hat to basically anything that is dutiable. That doesn't seem like an artifice or disguise, does it?

Ruling of the Week 2015.11: German Pizza, Chicago Pride

This one is pretty straight forward. The only reason I am covering it is that the notion of importing completely prepared pizza from Germany is oddly funny to me. Kind of like getting tacos from Australia.

In N261593 (Mar. 11, 2015), U.S. Customs and Border Protection answered a ruling request from Freiberger U.S.A., Inc. asking for the tariff classification of a completely prepared and frozen pizza to be imported from Germany. Four varieties were involved including: flatbread with cream sauce and eleven-inch square.

The correct tariff classification is in Heading 1905 which is the heading for:

Bread, pastry, cakes, biscuits and other bakers' wares, whether or not containing cocoa; communion wafers, empty capsules of a kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products . . . .

I come from Chicago where we like our pizza thick, the way God intended it. Consequently, it makes sense to me that pizza would be treated as a bread product. Specifically, Customs classified the pizza in 1905.90.90. This is the "other, other" provision in the heading. The statistical suffix at 1905.90.9060 specifically calls out "Pizza and quiche" (not that the statistical suffix means much legally). The applicable rate of duty is 4.5%

From The Pizza Fan (thepizzafan.com)

This should not be (but probably is) true for the wood-fired, crispy-crust, hipster pizza you might find, say, in Brooklyn. It seems to me that would be, at best, a "crispbread" of 1905.10.0000. Just sayin', Brooklyn. I note there are no breakouts under crispbreads. I have, therefore, just legally proven that hipster pizza is, from a legal perspective, not pizza at all. You're welcome, Chicago.

Of course, the practical economic problem is that crispbreads are duty-free. We here in Chicago do not want Brooklyn to have an economic advantage in the imported pizza market. I think we need to petition the President (who is an adopted Chicagoan) to reduce the duty on imported pizza to Free to give Chicago parity with Brooklyn.

Here's another thing I am worried about: do they make a good pizza in Germany? Is this a product we really want in the U.S.? I realize that the tariff item covers more than just pizza. It also covers quiche, corn chips, and other savory snacks. But, for the entire category, Germany was the number seven source of these products. It fell just behind South Korea and just ahead of Israel, neither of which is a pizza dynamo. The number one source of pizza and similar products imported to the U.S. in 2014 was Mexico with the number two slot going to Canada. See, NAFTA works.

Italy, by the way, was number three.

Ladies and Gentlemen: Pitcairn Island Honey

Because I have some of the best and well-traveled readers (and their relatives) in the compliance business, I have received a picture of a Pitcairn Island country of origin label. An anonymous reader had this jar of honey in a cabinet.

So, compliance pros, what do you think of the marking? Does "Pitcairn Island, South Pacific Ocean" satisfy the U.S. Customs and Border Protection requirement for country of origin marking?

Let me know what you think in the comments.

Ruling of the Week 2015.8: Old Jersey and Pitcairn Island

For today's ROTW, I set out looking for a ruling dealing with some far off and preferably warm location. Turns out that, with the exception of coastwise transit issues, there are no Customs and Border Protection rulings involving Pitcairn Island or any of several Pacific Ocean microstates including Tuvalu, Niue, and Kiribati.

Pitcairn Island

What I did find is an interesting question about the country of origin marking for products of the Bailiwick of Jersey Island, Channel Islands. The ruling is HQ 561938 (Mar. 18, 2002). For those of you who may not know, Jersey is an island off the coast of Normandy, France. It is an independent international actor and not part of the U.K. although the U.K. is responsible for its defense and external relations. Also, the Queen is the Head of State in her capacity as "the Crown in Right of Jersey." It is, according to the U.S. Department of State, a "Crown Dependency" along with the Isle of Man and the Bailiwick of Guernsey.

So, what we know is that it is geographically and politically close to the U.K. It is politically distinct from the U.K.; but, it is not fully independent. That raises a question of how goods that originate in Jersey are to be marked when imported into the U.S.

Here, without additional comment, is the answer according to U.S. Customs and Border Protection:

For country of origin marking purposes, colonies, possessions, or protectorates outside the boundaries of the mother country are considered separate entities. Section 134.45(d), Customs Regulations (19 CFR 134.45(d)), states that the name of the colony, possession of protectorate shall usually be considered acceptable marking. However, when the name is not sufficiently well known to insure that the ultimate purchasers will be fully informed of the country of origin, or where the name appearing alone may cause confusion, deception, or mistake, clarifying words may be required. In such cases, the Commissioner of Customs shall specify the additional wording to be used in conjunction with the name of the colony, possession, or protectorate.

With regard to the Bailiwick of Jersey, Channel Islands, Customs has issued Treasury Decision (T.D.) 68-292(2), dated November 22, 1968, which states that, "[s]ince the States of Jersey, Channel Islands, attached to the Crown of England, are not a part of the United Kingdom or Great Britain, the marking "Made in Jersey, British Isles" constitutes acceptable country of origin marking." Similarly, T.D. 73-106, dated April 13, 1973, held that the marking, "Made in Guernsey, British Isles" was acceptable country of marking for goods produced on the island of Guernsey, Channel Islands. The phrases, "Manufactured in Jersey, British Isles," "Product of Jersey, British Isles," "Made in the British Isles" or "Made in the United Kingdom" would also be acceptable for purposes of 19 U.S.C. 1304.

I feel that the remaining descendants of the HMS Bounty should seek a CBP ruling on something, just for the heck of it. Apparently, they sell honey, soap, and honey soap. If you happen to see this, would represent you on a country of origin question just for the fun of it.

Next, on to Cueta and Mellila, little bits of Spain stuck in Morocco.

Ruling of the Week 2015.7: When is a Porsche More Than A Car?

I am late on this ruling of the week. I have been busy milking my Walking Dead posting, which got picked up by my friends at Law and the Multiverse. But, as far as I am concerned, I have another couple hours to go in this week. And, since most of you are probably busy watching the Academy Awards, I will sneak this post on to the site and give it a Hollywood connection.

This will be quick because there is not much law in this week's ruling. The ruling is NY N254307 (Jun 11, 2014). As you may know, rulings issued by the NY office of Customs and Border Protection often do not contain a lot of legal analysis. Given the short deadline and volume of requests, this makes sense.

My guess is that whoever wrote this particular ruling is a car buff. He or she certainly expended a lot of language to find that this particular 1969 Porsche 917K is classifiable not as a passenger car but as a collector's item. That was probably a good result for the importer, because the car was to be sold at auction and was expected to go for as much as $20 million.

Why? Well, a couple things. First, just look at it (although this is not the same one):





From Amanti delle Supercar

Next, the car in question was driven by Steve McQueen in the movie Le Mans.

From Cinemasterpieces

Third, and this is where I am out of my depth, the car belonged to Jo Siffert, who is apparently a legend in racing and in Porsche circles. If you read the ruling, you can easily feel the admiration the writer has for both the car and the driver. At least I think I can feel that.

For example, rather than just recount the facts in one of two sentences, CBP says:

To set the record straight, the 1969 Porsche, 917, chassis 917-024, had a long tail body, and was removed from its competition debut of May 11, 1969 in the 1000km Spa Francorchamps due to unstable vehicle conditions resulting from the vehicle’s long tail frame generating significant lift factors on straights using all of the road at speed. Records do indicate that racecar drivers Jo Siffert and Brain Redman managed to clock an unofficial lap time in the 917 Porsche, chassis 917-024, of 3:41.9 which would have beaten the pole of 3:42.5 set by the Lola, but they chose to use the Porsche 908LH long tail with which they won the race and set the fastest lap at 3:37.1. 

None of that is particularly relevant, nor is the detail of Siffert's career. But, it makes for good reading as these things go.

For our purposes, the important thing is Customs' conclusion that the rarity of the vehicle and its connections to Siffert and Hollywood  was sufficient reason to classify it in HTSUS item 9705.00.00 as a collector's piece. That made it duty free.


Ruling of the Week 2015.6 Human Remains and the Walking Dead

Note, this has been updated to add a little more context for those among you who are not trade compliance professionals.

Lately, I have been on a slow binge of watching the Walking Dead. Like most TV adaptations of graphic novels and comics, I am finding it very entertaining. I'm only in Season 3, so no one tell me . . . well, anything. As a result, I have been seeing a lot of images of corpses, both animate and inanimate. That reminded me that there is a specific provision in the Harmonized Tariff Schedule of the United States ("HTSUS") for the importation of corpses.

The HTSUS is the statute (19 USC 1202) by which imported products are assigned rates of duty. It also sets out certain other regulatory requirements and exceptions. General Note 3(e), HTSUS, exempts from customs duties "corpses, together with their coffins and accompanying flowers."

When goods arrive at a port in the U.S., they are usually subject to an "entry." That is the process of legally entering the goods into the commerce of the United States and reporting that fact to Customsd and Border Protection. The Customs Regulations provide that "all merchandise" is subject to entry unless exempted and lists HTSUS General Note 3(e) as an exemption. That seems confirm that corpses are not subject to entry requirements and not subject to duty. Or maybe not.

What if the "merchandise" to be imported is human heads, heads with necks, torsos, legs, arms, etc. taken from body donors. That is the question answered by Customs and Border Protection in its private letter ruling HQ H235506 (Jan.14, 2013). As customs rulings go, this is awesome. I don't know how I missed it when it was issued.

The ruling starts with the ancient legal principal that there can be no commercial property interest in a dead body. Among other sources, Customs cited Chief Justice of the King's Bench, Sir Edward Coke (1552-1634) for this legal proposition. At the same time, we all have a legal right to a decent burial, which puts a duty on survivors to properly care for the body of the decedent. For this, Customs cites a book I desperately want: The Law of Cadavers by Percival Jackson. All of which must be weighed against the right of the not-yet-dead to donate their body to science under the Uniform Anatomical Gift Act.

Getting to the substance of the issue, Customs looked at prior rulings in which it determined that cadavers imported for medical analysis are "corpses" for purposes of General Note 3(e). Customs has long had the practice of exempting corpses from duty and entry.

But this case involves parts of corpses. Counsel for the importers made the hand waving argument that it would be distasteful for CBP "to begin quibbling about the relative portions of human remains that are imported before qualifying for the GN 3(e)" exemption. Based solely on longstanding practice, a couple rulings, and "the weight of history," Customs agreed. Given that the body parts will eventually be given a decent burial, Customs saw no reason to interfere with the disposition of the "merchandise."

I have a couple questions. First, is there a flipside to the distasteful task of deciding how much of a body should be treated as a corpse? Counsel for the importer seemed to be wondering how much can be removed from the deceased and still have it remain a corpse for purposes of the customs laws. Apparently, the answer is that an entire body can be removed leaving the head legally a "corpse." What about a sample taken from a living human? This ruling says an arm or leg taken from a cadaver is a "corpse" and exempt from classification and entry. What about an arm or leg taken from a living person? Is that extremity now a corpse if imported into the United States. How would Customs know whether the "donor" was living or dead? Is the legal distinction administrable?

My second question has to do with the looming zombie apocalypse depicted in the Walking Dead TV series and presumably in the graphic novel. What if the unlucky victim of viral zombie reanimation happens to be visiting the Windsor Ballet at the time of his or her demise? When the undead start shuffling north toward the tunnel to Detroit, will there be a problem when it arrives at Customs? Is the walker a "corpse?" If so, it will not need to be entered as merchandise, and can continue walking.

If it is a person, it will need to clear immigration checks, which will be hard for the inarticulate shuffler lacking a passport. Customs might have to make accommodations under the Americans with Disabilities Act. Also, would the passport still be valid? It seem the correct "birthday" would now be the date of reanimation. I will leave that to the immigration lawyers.

Assuming the walker is no longer a person, Customs should treat it like an animal. If it is a dead but still walking animal, the best guidance ruling I can find (with minimal research) is HQ 975664, in which dead animals are treated as zoological specimens in HTSUS item 9705.00.00 (it's duty free!). In this case, the dead animal is walking itself across the border, which raises questions of whether the walker is the "owner, purchaser, or consignee" of the merchandise (which is the walker). Since we know there can be no property interest in a dead body (or living person), the walker would need to be his or her own consignee to have the legal right to make entry of himself or herself. If it is alive but non-human, I suggest an HTSUS classification of 0106.11.00 as live primates, which is also duty free.

Finally, there are, of course, issues of admissibility. As Customs pointed out in the ruling that sparked this post, the importation of corpses is subject to regulation by the Centers for Disease Control. Given the plot of The Walking Dead, it seems pretty certain that the CDC would have something to say about this.

If anyone from Customs and Border Protection knows what would happen if an unaccompanied non-human primate showed up at the border crossing, please drop a comment below.

Also, if any readers have rulings to nominate for Ruling of the Week treatment, please note them in a comment. I am particularly interested in bizarre products, crazy food items, and restricted merchandise. I am aware of the numerous NSFW rulings on personal massage devices, so no need to reference those. I try and keep this a family and office friendly site.

Ruling of the Week 215.4: CBP as Fashion Snob

Men's ties are an odd thing. They are completely useless in terms of functionality, unless the function is collection samples of soup and occasionally operating as a choking hazard. It is high time someone took ties to the proverbial next level. It appears that the fine folks at Seasons USA, Inc. have done just that. Apparently, they import a "novelty" tie that incorporates LEDs that light up in amusing patterns of joy.

Seasons requested a ruling on the classification of these ties.

According to the fashionistas at Customs and Border Protection, ties and bow ties conform to some preconceived notion of acceptable dress. To me, that is just a lack of imagination and fashion adventurism. Who says a light up tie is not acceptable wherever a tie might normally be worn? At a funeral or bar mitzvah, for example. Or a Cabinet Meeting? That's only true if you are not bold enough to do it.

But, Customs says a light up tie made of 100% polyester with an elastic band going around the wearer's neck is not a tie. Rather, it is classifiable in 6217.10.9530, Harmonized Tariff Schedule of the United States (HTSUS), which provides for "Other made up clothing accessories; parts of garments…Accessories: Other: Other: Of man-made fibers." The rate of duty will be 14.6 percent ad valorem. Actual polyester ties, by the way, are classified in 6215.20.0000 (24.8 cents/kg + 12.7%).

You can read this failure of creativity in NYRL N257651 (Oct. 20, 2014).

Note: In law school, the professor who taught me copyright law said any student who could find him the original Balinese dancer lamp that was at issue in the famous copyright case of Mazer v. Stein would get an automatic A. That was a joke, in case you are wondering. But, I have periodically looked for that lamp for Professor McGrath. Similarly, I have scoured the internet for a picture of this particular light up tie. It is Seasons Style Number AC 15-0065. Anyone who can find it will get my thanks and gratitude.

Infantino in a Flash

Infantino, LLC v. United States

Parents of a certain socio-economic status want to protect their small children from real and perceived dangers including the horrible wire and plastic seats on grocery store shopping carts. You have, no doubt, seen chubby baby legs kicking their way through the square wire openings while parents meet in the produce section to commiserate over the price of soccer cleats and debate which local orthodontist has the best espresso machine in the parents' lounge. Happily, there is a solution in the form of the Funny Farmer Shop & Play 2-in-1 play mat from Infantino.

This product is a play mat printed with a farm theme and having detachable toys. It also includes features that make it suitable for use in a shopping cart. Those features include a waist belt, leg flaps, pea pod shaped pillow bolster, and hook and loop closures to secure it to the otherwise offensive shopping cart seat. According to the related advertising, the Funny Farmer is perfect for "tummy time" and turns a shopping cart "into a clean, comfy activity center."

Infantino imported the Funny Farmer and classified it in 9404.90.20 as articles of bedding and similar furnishings. After importation, Infantino had a flash of insight and protested the liquidation. Infantino asserted that the correct classification is in 9503.00.00 as a toy. Customs and Border Protection denied the protest, which was consistent with an earlier ruling issued to Infantino. In the culmination of an elongated process, the Court of International Trade has now decided the classification.

Given that the Funny Farmer is a padded mat, the court had no difficulty finding that it is prima facie classifiable in Heading 9404. The question requiring more detective work was whether the product is also a toy.

A toy, for classification purposes, is something which is primarily designed and used for pleasurable diversion rather than a practical or utilitarian purpose. Apparently, the evidence showed that Infantino trademarked and tested the item as a toy. Infantino included the Funny Farmer in its "Toys and Activity Play" catalog and the description emphasized the accompanying "plush pals." Finally, the packaging acknowledges the use as a shopping cart cover but emphasizes the play aspects of the mat. There are obvious utilitarian features to the product including the leg holes and waste strap. Nevertheless, the court found it to also be designed for amusement. Accordingly, the court found the Funny Farmer to also be prima facie classifiable as a toy in Heading 9505.

The Court of International Trade found, however, that both headings each refer only to part of the materials in the product. Under General Rule of Interpretation 3(b), the good is to be classified as if it were the single material or component that gives the item its essential character. Essential character can be determined by examining the nature of the material including its bulk, weight, quantity and value as well as its role in the use of the good.

The Court noted that the detachable toys are, well, toys. The mat, were it not fitted to cover a shopping cart, would also be a toy. The packaging and pricing are also consistent with the item being a toy. Consequently, the Court held it to be classifiable in 9503.00.00.

A note on the links. When I saw the title of the case, my nerd heart skipped a beat. Carmine Infantino is a legend among comic artists who did great work at both DC and Marvel in the silver age of superhero comics. He is credited with reviving Flash, de-cluttering Batman (including the reviled Bat-Mite), creating the Barbara Gordon version of Batgirl and co-creating Detective Chimp and Elongated Man. I hoped this case would be similar to Toy Biz, which involved the classification of action figures from the Marvel universe. No such luck. Nevertheless, the links are a minor tribute to Mr. Infantino's work.

Available at Amazon.