Tag: Trade

U.S. Customs and Border Patrol Expands Reconciliation Opportunities

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In the May 13, 2013 Federal Register, United States Customs and Border Protection (CBP) announced the expansion of its Reconciliation Prototype program to include post-importation duty preference claims under the U.S.-Oman Free Trade Agreement, the U.S.-Peru Trade Promotion Agreement, the U.S.-Korea Free Trade Agreement, the U.S.-Colombia Trade Promotion Agreement, and the U.S.-Panama Trade Promotion Agreement.  CBP announced this expansion will take effect for post-importation duty preference claims filed on or after August 12, 2013.

The expansion will enable importers to file post-entry duty preference claims under the above-referenced free trade agreements (FTAs) where they are unable to confirm qualification at the time of entry.  Using the Reconciliation program, importers will electronically flag as-yet-unqualified imports at the time of entry.  Presuming the requisite supporting information becomes available within 12 months of the date of entry, importers can then file a Reconciliation entry to make their duty preference claim and receive corresponding duty refunds.  Importers who are not yet part of the Reconciliation program, but would like to take advantage of these expanded opportunities, must apply to participate by submitting the requisite application to CBP Headquarters.

CBP has been utilizing the Reconciliation Prototype program since 1998 as part of its National Customs Automation Program Reconciliation provides importers an automated mechanism to identify at the time of entry certain undeterminable information (that does not affect admissibility), and provide that information at a later date through an entry-by-entry or aggregate filing. Importers identify this provisional information by placing an electronic “flag” at the time the entry summary is filed.  Prior to expansion to allow for various post-entry FTA claims, importers could only flag information relating to: 1) value issues other than claims based on manufacturing defects; 2) classification issues, on a limited basis; 3) issues concerning value aspects of entries filed under heading 9802, Harmonized Tariff Schedule of the United States (HTSUS); and 4) issues concerning merchandise entered under the North American Free Trade Agreement (NAFTA).

The expansion of the Reconciliation program to these additional FTAs is consistent with the original opportunities to file post-entry NAFTA claims, as well as previous expansion of the Reconciliation program to include the U.S.-Chile Free Trade Agreement and the Dominican Republic-Central America-U.S. Free Trade Agreement. As importers have experienced with Reconciliation for NAFTA, allowing for post-importation duty claims under these new trade agreements allows for a streamlined mechanism for filing post-entry refund claims, and allows importers to file potentially thousands of post-entry claims under a single Reconciliation entry and receive a single duty refund check from CBP in response.

Importers may elect not to file their post-entry duty preference claims via the Reconciliation prototype, and expansion of the program does not prohibit importers from continuing to file post-entry claims using traditional processes in accordance with 19 U.S.C § 1520(d).However, once an importer flags an entry summary indicating that it may pursue post-importation duty preference claims via the Reconciliation process, the importer locks itself into the process and waives its rights to file a traditional paper filing pursuant to 19 U.S.C.§ 1520(d). If, after having flagged the entry, an importer fails to file a post-entry Reconciliation claim under one of the approved FTAs, the importer will not be assessed liquidated damages for a late file or no file Reconciliation (which can happen for post-entry valuation adjustments that are flagged but not reconciled). Rather, the flagged FTA entry will simply liquidate at the end of the 12-month period as entered, i.e., with the payment of duties and fees.

Reconciliation can be an effective trade compliance and risk management tool. Among other things, it allows importers to streamline multiple post-entry FTA claims, and can also serve as a compliance vehicle to flag undetermined or provisional values at the time of entry – providing an automated method to make entry corrections or adjustments once the relevant information has been finally determined. The extension of the Reconciliation Prototype to these additional FTAs provides importers with additional tools to manage their duty preference programs.

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Federal Trade Commission’s (FTC) New Chairwoman Ramirez Says Health Care Continues To Be Top Priority

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In remarks made this week at the International Competition Network annual conference, Federal Trade Commission (FTC) Chairwoman Edith Ramirez stated that health care will continue to be a top priority for the FTC.   Referring to health care and hospital mergers in particular, she said that the Commission will “guard[] against what we consider to be consolidation that may end up having adverse consequences for consumers.”  The Chairwoman’s comments indicate that the recent leadership change at the FTC from former Chairman Jon Leibowitz to Chairwoman Ramirez has not altered the Commission’s priorities.

Recent months have seen a flurry of FTC activity in the courts related to health care.  For example, two FTC cases came before the U.S. Supreme Court this term — the FTC’s challenge to Phoebe Putney’s acquisition of Palmyra Park Hospital in Georgia and the FTC’s challenge to “pay-for-delay” patent infringement litigation settlements between branded and generic pharmaceutical manufacturers.

In February, the Supreme Court ruled that the state action doctrine did not immunize Phoebe Putney’s hospital transaction from federal antitrust scrutiny, and the FTC has subsequently filed renewed motions in federal district court to stop further integration of the two hospitals even as it prepares for a full administrative hearing on the merits that will begin in August.

A decision on the “pay-for-delay” case is expected in June.  The Supreme Court’s ruling may have a large impact on further FTC efforts against what it perceives as anticompetitive efforts to delay generic drug entry.

Health care clients considering acquisitions are advised to consult antitrust counsel early in the transaction process.  Given the FTC and DOJ’s close scrutiny of health care transactions, early advocacy before the antitrust agencies is often critical to a deal closing on schedule.

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Office of Foreign Assets Control: Understanding the Federal Agency

Recently posted in the National Law Review an article by Simi Z. Botic and D. Michael Crites of Dinsmore & Shohl LLP regarding  the climate surrounding our nation’s safety has drastically changed since 9/11: 

Since September 11, 2001, the climate surrounding our nation’s safety has drastically changed. In an effort to promote United States foreign policy and national security goals, the Office of Foreign Assets Control (“OFAC”) has responded to the changing political environment. Although OFAC is not a recent development, the agency certainly operates with the present security sensitivities in mind.

OFAC operates within the U.S. Department of the Treasury, administering and enforcing economic and trade sanctions. Blocking necessary assets exemplifies one trade sanction often imposed by OFAC. In particular, sanctions are enforced against targeted foreign countries, terrorist regimes, drug traffickers, distributers of weapons of mass destruction, and other individuals, organizations, government entities, and companies that threaten the security or economy of the United States.

By enforcing the necessary economic and trade sanctions, OFAC restricts prohibited transactions. OFAC defines a prohibited transaction as a “trade or financial transaction and other dealing in which U.S. persons may not engage unless authorized by OFAC or expressly exempted by statute.” OFAC is largely responsible for investigating the “prohibited transactions” of individuals, organizations, and companies who operate in foreign nations. OFAC also has the ability to grant exemptions for prohibited transactions on a case-by-case basis.

Administrative subpoenas, vital OFAC investigation tools, allow OFAC to order individuals or entities to keep full and complete records regarding any transaction engaged in, and to furnish these records at any time requested. Both the Trading with the Enemy Act of 1917, 5 U.S.C. § 5, and the International Emergency Economic Powers Act, 50 U.S.C. § 1702(a)(2), grant OFAC the authority to issue administrative subpoenas.

Adam J. Szubin is the current director of OFAC. In his capacity as director, Mr. Szubin is authorized by 31 CFR § 501.602 to hold hearings, administer oaths, examine witnesses, take depositions, require testimony, and demand the production of any books, documents, or relevant papers relating to the matter of investigation. Once OFAC has issued an administrative subpoena, the addressee is required to respond in writing within thirty calendar days from the date of issuance. The response should be directed to the named Enforcement Investigations Officer, located at the U.S. Department of the Treasury, Office of Foreign Assets Control, Office of Enforcement, 1500 Pennsylvania Ave., N.W., Washington, D.C.

Should an addressee fail to respond to an administrative subpoena, civil penalties may be imposed. If information is falsified or withheld, the addressees could receive criminal fines and imprisonment. OFAC is authorized to penalize a party up to $50,000 for failure to maintain records. Therefore, should you find yourself the recipient of an OFAC administrative subpoena, it is imperative that you do not delay in responding. Typically, OFAC requests detailed information about payments or transactions, along with documentation to support such information. The subpoena response should be drafted by your attorney. The addressee of the letter should not have direct communication with OFAC. Counsel for the addressee should also follow up with the individual OFAC officer to make sure that all necessary paperwork was received.

Lastly, entities are encouraged to make voluntary disclosures when there has been an OFAC violation. Once a subpoena has been issued, disclosures are no longer considered voluntary. If information is turned over in response to an administrative subpoena, it may then be referred to other law enforcement agencies for possible criminal investigation and prosecution. Therefore, if there is a possible violation of OFAC, it is in your best interest to consult with counsel about the proper steps to take moving forward.

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