Bush Administration Sets Deadline for Finalizing Regulatory Actions
– by Sandler Travis & Rosenberg PA
The White House has set a Nov. 1 deadline for federal agencies to finalize pending
regulatory actions. This step could have the effect of delaying the implementation of
some trade-related regulations.
In what some observers said was a “highly unusual” memo issued May 9, White House
Chief of Staff Josh Bolten told the heads of executive departments and agencies that,
except in extraordinary circumstances, regulations to be finalized before the Bush
administration leaves office next Jan. 20 should be proposed no later than June 1 and
finalized no later than Nov. 1. Bolten said this timeframe is being imposed to prevent
“the historical tendency of administrations to increase regulatory activity in their final
months.” The memo did not define what might constitute “extraordinary
circumstances,” but it did say that the Office of Management and Budget will
coordinate an effort to complete administration priorities while providing for an
appropriately open and transparent process and controlling regulatory costs. The memo
also notes that the head of the OMB’s Office of Information and Regulatory Affairs
will report to Bolten on a regular basis regarding agency compliance. One former OMB
official was quoted in International Trade Daily as saying that this measure “gives a
presidential blessing to the whole process that agencies will be sure to notice.”
The deadlines imposed by the memo could affect a number of trade-related regulations.
For example, the following proposed rules (which were listed as forthcoming in the
most recent listing of federal regulatory agendas in the Federal Register; see the May 5
issue of WTI for more information) were apparently not issued by June 1, indicating
that further action could be delayed until next year.

• USDA – ensuring that cattle and captive bison infected with tuberculosis are not
imported into the U.S.

• USDA – tightening the TB testing requirements for steers and spayed heifers with more than three inches of horn growth that are entering the U.S. from Mexico

• USDA – establishing a new category of nursery stock whose importation is not authorized
pending risk assessment

• FDA – requiring imported food that is refused entry into the U.S. to be labeled “UNITED
STATES: REFUSED ENTRY” by its owners or consignees
The regulatory agendas also indicated that following interim, interim final or final rules are
expected to be issued before the Nov. 1 deadline; as a result, no delay in their
implementation is anticipated. In addition, these rules will likely take effect before the next
administration takes office, decreasing the chances that they could be overturned after that
time.

• USDA – mandatory country of origin labeling of beef, pork, lamb, fish, perishable
agricultural commodities and peanuts

• USDA – requiring phytosanitary certificates to accompany all non-commercial shipments
of fruits and vegetables imported by air passengers

• USDA – eliminating (a) the exemptions from inspection for imported fruits and
vegetables grown in Canada and (b) the exemptions from user fees for commercial vessels,
trucks, railroad cars and aircraft (and international air passengers) entering the U.S. from
Canada

• USDA – increasing the user fees charged for export certification of plants and plant
products

• USDA – prohibiting or restricting the importation of birds, poultry and bird and poultry
products from regions that have reported the presence in commercial birds or poultry of
highly pathogenic avian influenza other than subtype H5N1

• USDA – restricting the importation of live fish that are susceptible to viral hemorrhagic
septicemia

• CBP – final “10+2” rule requiring additional data elements from importers and ocean
carriers before oceanborne cargo is brought into the U.S.

• TSA – establishing the Certified Cargo Screening Program, which will certify shippers,
manufacturers and other entities to screen air cargo intended for transport on passenger
aircraft

• DOT – making intermodal equipment providers subject to the Federal Motor Carrier
Safety Regulations for the first time in order to ensure that intermodal container chassis and
trailers tendered to motor carriers by steamship lines, railroads, terminal operators, chassis
pools, etc., are safe and systematically maintained

Update on CBP's Draft Transaction Sets for the Proposed 10 + 2 Security Filing
– by Broker Power Inc.
U.S. Customs and Border Protection recently posted to its Web site draft transaction sets providing the
records and other information that will allow the Importer Security Filing (SF) data elements to be
transmitted to CBP.
COAC Had Asked for These Drafts - According to trade sources, the Departmental Advisory
Committee on Commercial Operations of U.S. Customs and Border Protection (COAC) had requested
these drafts, in order to allow the trade to prepare for the information technology (i.e., programming)
aspects of the Importer SF (ISF).
(In January 2008, CBP proposed requiring SF information from importers and additional information
from carriers (10+2) for vessel (maritime) cargo before it is brought into the U.S. For the ISF, 10 data
elements (ISF-10) are proposed for shipments other than those consisting entirely of FROB, IE or
T&E goods, and 5 data elements (ISF-5) are proposed for shipments consisting entirely of FROB, IE,
or T&E.1)
Draft ISF CATAIR and CAMIR Chapters - CBP has posted two draft chapters exclusively devoted
to the ISF-10 and ISF-5 transaction sets. One of these chapters is for the Customs and Trade
Automated Interface Requirements (CATAIR) and the other is for the Customs Automated Manifest
Interface Requirements - Intermodal (CAMIR - Intermodal). The information in both chapters appears
to be largely the same.
Drafts of Existing CATAIR and CAMIR Chapters, Appendices - Drafts of six existing CATAIR
and CAMIR chapters and appendices that have been amended for the ISF-10 and/or ISF-5 transaction
sets have also been posted.
Draft of Existing X12 Message Set - CBP has also posted a draft of an existing X12 message set
(309) which has been amended to include ISF-5 transaction set.
Drafts are Subject to Change Without Notice - CBP notes that the ISF technical requirements are in
draft form and are subject to change without notice.
Technical Comments May be Submitted on Drafts - CBP states that comments on these drafts, of a technical nature only, are being accepted at Security_Filing_Technical@cbp.dhs.gov. CBP further states that it reserves the right to provide answers to technical issues or questions at its discretion by way of a FAQ, through individual communications, or defer answering until publication
of the final rule.
1Foreign cargo remaining on board (FROB), immediate exportation (IE), and transportation and exportation (T&E). Note the ISF-5 data elements are not a subset of the ISF-10 data elements (but they have two data elements in common).
(See ITT's Online Archives or 06/02/08 news, (Ref: 008060205), for initial BP summary on the posting of these technical requirements.
See ITT's Online Archives or 01/17/08 news, (Ref: 08011710), for the final part of BP's summary of the 10+2 proposed rule, with links to previous parts.)
SF Draft Transaction Sets available at
http://www.cbp.gov/xp/cgov/trade/automated/automated_systems/sf_transaction_sets/.

Court Finds Importer Liable for Penalties for Not Exercising Reasonable Care
– by Sandler Travis & Rosenberg PA
In a June 9 decision, the Court of International Trade ruled that an importer of
certain liquid crystal display glass panels is liable for civil penalties under 19
USC 1592(c) because it did not exercise reasonable care with respect to their
classification. The company’s counsel had advised it to seek a binding
classification ruling from U.S. Customs and Border Protection in light of a
court decision classifying other types of LCD glass panels under HTSUS
9013.80.70. No such request was made, however, and the company continued
to classify its goods under HTSUS 8531, which carries a lower duty rate.
In determining whether reasonable care was exercised, the CIT said it was particularly influenced by
the company’s failure to act in accordance with the well-informed advice of its attorneys. The court
pointed out that the company’s counsel was its “only source of credible advice regarding the
classification of LCDs” because the company did not rely on its customs broker for classification
advice and apparently had no employees of its own who were sufficiently knowledgeable to determine
proper classification. “While the act of consulting with an attorney, in itself, does not establish
reasonable care under these circumstances,” the court said, “surely after receiving the formal advice of
its attorneys [the company] was under an obligation to actively pursue the issues raised, which it failed
to do.” According to the court, the continued misclassification that resulted constitutes negligence.
The court awarded CBP $913,572.79 in lost tariff revenue. The court also assessed a civil penalty of
about $1.4 million, which reflects aggravating factors such as the lack of a good faith effort to comply
and the economic benefit gained from the violation as well as a partial mitigation for the defendant’s
otherwise clean record.

CBP Posts May 2008 Statistics on Bond Rejections
– By Broker Power Inc.
U.S. Customs and Border Protection has posted an Excel spreadsheet listing the reject reasons for May
2008 for CBP Form 5106 Importer ID input records, CBP Form 301 Customs bonds, bond riders,
bond terminations, etc.
Top Five Rejection Reasons - The top five rejection reasons, along with the number of rejections, for
May 2008 were:
No. of Rejects Reject Reason
137 CBP Form 5106 Importer ID Input Record IR05 - Incorrect
127 CBP Form 301 Customs Bond B10 – Effective Date
68 CBP Form 5106 Importer ID Input Record IR02 – Missing CBP 5106
65 Bond Rider R04 - Incorrect
50 Bond Termination T14 – Bond Number
(Though the number of rejects for each reason was lower in May than in April, the top reasons for
rejects were mostly the same. See ITT’s Online Archives or 05/22/08 news, (Ref: 08052210), for BP
summary of April bond reject statistics.)
Reasons for Bond Rejections
The types of problems detailed in the document include (partial list):
•effective date •3 digit broker code
•title of signer •importer number(s)
•surety agent •bond amount
•point of contact information missing •execution date
(See ITT’s Online Archives or 05/22/08 news, (Ref: 08052205), for BP summary of the bond-related
issues discussed at the May 2008 COAC meeting, including CBP's development of a database of bond
errors.)
Rejects for the Month of May 2008 (posted 06/03/08) available at
http://www.cbp.gov/linkhandler/cgov/trade/priority_trade/revenue/bonds/pilot_program/bond_reject_
stats.ctt/bond_reject_stats.xls.

USTR Advisory Committee to Review Impact of C-TPAT on Small Businesses
– Terre Meth, Director of Sales - C-Air Brokers and Forwarders, Inc.
The Office of the U.S. Trade Representative’s Industry Trade
Advisory Committee on Small and Minority Business will hold
a partially open meeting June 9 in Orlando, Fla. The open
portion of this meeting will include discussion of the following.
• how the Customs-Trade Partnership Against Terrorism impacts small business
• Export opportunities in free trade agreement areas
• Asia-Pacific Economic Cooperation forum ministerial meeting on small and medium-sized
enterprises
• America’s Competitiveness Forum
• Patent reform legislation

CBP Revises ICP on Hats and Other Headgear
- Sandler Travis & Rosenberg PA
U.S. Customs and Border Protection has posted a June 2008 revised version of
its Informed Compliance Publication “Classification of Hats and Other Headgear
(under HTSUS Heading 6505)” as part of its series “What Every Member of the
Trade Community Should Know About.”
This publication was prepared by the National Commodity Specialist Division of Regulations and
Rulings in order to provide guidance to the trade community. It was first published in March 1999,
and was then revised in January 2004 and May 2005. It was reviewed with no changes in June 2006,
and has now been revised in June 2008.
ICP Revised for "Baseball-Style" Caps with Ornamental Braid
According to CBP sources, this ICP is different in only one respect from its prior (2006)
version. It has been revised to reflect CBP's 2005 final interpretive rule on man-made
fiber (MMF) baseball style caps with ornamental braid.
(Under the final interpretive rule, ornamental braid on a baseball-style cap, located
between peak and crown in a width of 1/8 of an inch or greater, will render the cap classifiable in the
HTS as “wholly or in part of braid.” Conversely, such braid in a width of less than 1/8 of an inch will
result in a cap being classifiable in the HTS as “not in part of braid.”)
Classification of Hats and Other Headgear under HTS 6505
HTS 6505 includes two six-digit HTS subheadings: hair-nets (HTS 6505.10) and other headgear (HTS
6505.90), the later of which is divided by component material and construction (knit , not knit, etc.)
into eight-digit subheadings:
•?of cotton, flax, or both (HTS 6505.90.15 through 6505.90.25)
•?of wool (HTS 6505.90.30 through 6505.90.40)
•?of MMF (HTS 6505.90.50 through 6505.90.80), and
•?of other (HTS 6505.90.90).
CBP notes that importers and brokers commonly enter HTS 6505 products under incorrect eight-digit
subheadings based on the wrong material or wrong construction.
CBP also notes, among other things, that:
•?Visors and other headgear which do not cover the crown of the head must be accurately
described as there are separate statistical breakouts for this type of merchandise.
•?Statistical breakouts for babies’ hats and headgear are provided and such items must be sized 0
to 24 months (toddler sizes do not fall under these numbers).
•?Woven cotton hats are often incorrectly classified under the HTS 6505.90.2590 provision for
woven flax headgear (cat 859). However, woven cotton hats are properly classified as other
cotton woven headgear under HTS 6505.90.2060 (cat 359) which pertains to both cotton
woven certified hand-loomed and folklore products and woven headgear of cotton (other than
for babies).
•?Many items have been determined to be hats and headgear of HTS 6505 rather than festive
articles of HTS 9505.
(See ITT’s Online Archives or 06/12/06 news, (Ref: 06061220), for BP summary of 2006 ICP. See
ITT’s Online Archives or 04/04/05 news, (Ref: 05040430), for BP summary of CBP’s final interpretive
rule on baseball-style caps with ornamental braids.)
CBP’s 2008 ICP available at
http://www.cbp.gov/linkhandler/cgov/trade/legal/informed_compliance_pubs/icp034.ctt/icp034.pdf.

CITA Makes DR-CAFTA Short Supply Determinations on Cotton Fabrics
– by Sandler Travis & Rosenberg PA
The Committee for the Implementation of Textile Agreements has determined under the DR-CAFTA
that certain cotton indigo-dyed fabrics are not available in commercial quantities in a timely manner in
the DR-CAFTA region. These 100 percent combed cotton fabrics are woven with a dobby attachment
and piece dyed with synthetic indigo and are classified under HTSUS 5208.39.6090 and
5208.39.8090. Effective June 11 these fabrics will be added to the short supply list in DR-CAFTA
Annex 3.25 in unrestricted quantities.

CBP in California Seized $4.8 Million Worth of Fake Items in May –
USCBP - (Monday, June 09, 2008) - http://www.cbp.gov/xp/cgov/newsroom/news_releases/06092008_4.xml
Los Angeles — U.S. Customs and Border Protection officers at Los Angeles and Long Beach seaports
seized over $4.8 million worth of counterfeit merchandise in the month of May. The items included
handbags, shoes, toys, DVD movies, sunglasses, wearing apparel and many other fake goods. Phony
athletic footwear was the number one item last month with an estimated domestic value of over $2.2
million.
CBP officers and import specialists are aggressively working together to intercept shipments
containing counterfeit and pirated items. "CBP is charged with enforcing trade laws and we continue
to devote substantial resources to target, intercept, detain, seize and forfeit shipments of goods that
violate these laws," said Kevin W. Weeks, CBP director of Field Operations, Los Angeles.
As CBP develops more innovative methods to identify high-risk shipments, the smugglers also
develop new schemes. Many of these shipments were shipped by unknown importers, manifested as
other products or hidden in between legitimate goods. "We will continue to develop new approaches
to combat intellectual property rights violators," added Weeks. Importation of counterfeit commodities
is illegal and importers may face civil penalties and criminal charges.
Once federal forfeiture procedures are completed, seized items are either donated to charity, with the
trademark owner’s approval, or destroyed. In the past, CBP has donated thousands of pairs of shoes
and clothing to charitable organizations or to relief efforts. Products that threaten the health and safety
of American consumers are destroyed.
U.S. Customs and Border Protection is the unified border agency within the Department of Homeland
Security charged with the management, control and protection of our nation's borders at and between
the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the
country while enforcing hundreds of U.S. laws.