Gonzalez Rolon Valdespino & Rodriguez, LLC, Attorneys

December 2006

International Trade Law Alert
Dallas • Houston • San Antonio • Mexico City • Sao Paulo, Brazil • Paris, France

International Trade Commission Discusses Tariff Changes

GRVR Attorneys offers free online interviews with important trade officials. We proudly announce that our latest interview is with Dave Beck the Acting Director of Tariff Affairs and Trade Agreements with the International Trade Commission. Director Beck is one of the officials that actually wrote the Harmonized Tariff Schedule. He discusses the upcoming changes to the Harmonized Tariff Schedule (see related article, below).

Our audio recordings are free and are available 24/7. You can download them to your iPod or other favorite mp3 player. Once subscribed (called an RSS feed), you will automatically get our podcasts. But you don’t need an iPod to listen to our program. You can also download and listen to them directly from your computer.

Previous interviews, also available on our website, include Joseph M. Rees, the Director for the Importer Self-Assessment (ISA) program, U.S. Customs and Border Protection. Director Rees explains the benefits and risks under the ISA Program, and Matthew S. Borman, Deputy Assistant Secretary of Commerce for Export Administration. Mr. Borman discusses the Bureau of Industry and Security's proposed "catch-all" rule for exports to China.

The 2007 Harmonized Tariff Schedule: Smooth Transition or Importer Nightmare?-

As 2006 winds down and importers stop to reminisce about their year, a dark cloud appears in the not too distant horizon. The 2007 Harmonized Tariff Schedule (HTS) is still not finalized and the official date for implementing the new HTS is still unknown. What is known, however, is that importers can help determine whether they will make a smooth transition into the latest edition of the HTS or whether the new HTS will lead to long sleepless nights.

The 2007 Harmonized Tariff Schedule will feature revisions to 83 of the 97 chapters, and 240 headings will need to be amended. Duty rates are not expected to be impacted, but special programs and trade agreements will be affected. Furthermore, the new HTS will have an especially significant impact on companies that regularly import high technology goods (e.g. computer parts and accessories, electronic equipment, and semiconductors). In order to prepare for the upcoming HTS changes it is recommended that all companies update their internal systems and alert any parties that rely on accurate classification information.

The last breaths of 2006 are fading away and you do not want to usher in a new year with fines and penalties for failing to apply the HTS changes in a timely fashion. Don’t wait, act now! If you have not started the process of implementing the 2007 HTS into your company policy, please do so immediately.

History Lesson:
Christmas Tree Ornaments - Classifying The Unclassifiable

As the other articles in this newsletter demonstrate, classifying your imported or exported goods can be dicey. Importers and exporters seldom agree with the federal government. It seems that this tension only increases during the holiday season, and especially when it comes to classifying Christmas tree ornaments.

But is the controvesy new?

Not according to a case from 1908 called Thanhauser v US. After reviewing even earlier cases, the Honorable Jasper Yeates Brinton (you won’t find a judge with a name like that nowadays) had to decide whether the imported goods were toys or christmas tree ornaments. The stakes were high. If toys, the duty rate would be 35%. If tree ornaments, the duty rate would be 60%.

Judge Brinton quickly noticed with palpable annoyance that Christmas tree ornament cases had a long history even in 1908. “As the briefs of the parties show distinctly, there has been more or less uncertainty for a good many years concerning the proper classification of articles that may be described in a general way as Christmas tree ornaments.”

Evidently the controversy had been raging for so long and vexed him to such a degree that he found it necessary to wrestle with the profound issue of what constitutes a Christmas tree ornament. With Solomonic certainty, he pronounced, “In my opinion, the evidence shows that the fragile, flimsy articles in question, mainly composed of tinsel in different shapes- stars and rings and nondescript devices - are not intended, and are not suitable to be played with.”

You know you're in trouble when the judge calls your goods "fragile and flimsy."

As for the argument that a child’s willingness to play with a thing rendered it a toy, Judge Brinton would have none of it. “They amuse or entertain because they are adapted to decorate, and no doubt they entertain children when they are hung on a Christmas tree; but on such an occasion they entertain adults also in the same way, although the entertainment differs in degree. Moreover, it clearly appears that the articles in question are often used by confectioners, stationers, and other merchants to make their wares or their shops more attractive, and this use has little reference to the amusement of children.”

And thus the courts have for well over one hundred years tried to figure out what makes a Christmas tree ornament, and there have been revealing milestones. For example, in Import & Export Service Co. v. U.S. Christmas, one court in 1942 was busy determining the proper customs duty of Christmas tree ornaments from Nazi Germany! The case raises a mountain of unanswered questions, including, why were the Nazis sending us Christmas tree ornaments? Why were we allowing it?

Fortunately, most of the cases have a far less sinister context, but they all seem to be trying to determine what may be undeterminable -- quantifying the ineffable qualities of Christmas cheer.
 

Do-Gooder Corner:
Alternative Gifts International

www.alternativegifts.org
Toll-free 800-842-2243

“Select an alternative gift from 34 life-sustaining, worldwide projects to honor family and friends”

Charles Dickens, through a Christmas Carol, emphasized the spirit of giving during Christmas and beyond. Charles M. Schultz drove the point home with the Charlie Brown Christmas.

This Christmas, you may wish to think about nontraditional Christmas gifts, gifts that undeniably help people help themselves.

There’s even a prominent tie-in to international trade.

Alternative Christmas gift fairs are all the rage. People love them because items are hand crafted, thus adding an aspect of the exotic and the personal to the presents you give.

Perhaps the leading voice for alternative Christmas gift fairs is Alternative Gifts International (AGI). From its website, “The global mission of AGI is to send authentic, life-giving gifts to a needy world - gifts that build a partnership with people in crisis and that protect and preserve the earth's endangered environment - to nourish and sustain a more equitable and peaceful global community.”

You want tangible benefits? AGI’s got them:

• For the price of an iPod, you can provide a fully equipped doctor's kit in North Korea with basic diagnostic tools to enable doctors to deliver better health care.    
• For the price of a video game, you can provide a wheelchair and give mobility, independence, dignity and hope to persons with disabilities in Cambodia.    
• For the cost of dinner and a movie, you can provide permanent, accessible clean water for village folk in the Andes.     
• For the cost of a necktie, you can provide a "Baby Bouncer" for one of the many infants living in orphanages in Russia and give them a chance to leave their cribs and have fun.

This year, start a new tradition, widen the circle of people benefiting from your gifts, and improve the world. Who could ask for more?

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IN THIS EDITION

New Podcast With The International Trade Commission

Changes to the Harmonized Tariff Classifiction Schedule

Classifying Christmas Tree Ornaments - History Lesson

Christmas Compliance Blues

Alternative Gifts International - Do-Gooder Corner

Contacting GRVR Attorneys

THE CHRISTMAS COMPLIANCE BLUES
or
CHANGED TO MY SUPPLY CHAIN

The holiday season is upon us once more
our compliance gaps are getting hard to ignore

Tariff classifications must be changed by Jan one
For us logistics grunts, the work is never done

China catchall export rule about to take affect
But no one in management seems to give a heck

Did someone upload our CTPAT profile?
We don’t meet the criteria by a New York mile.

Don’t tell me that sales shipped iPods to Iran
Who said our purchasing agent is a Mafia don?

No quick refund on our filed claimed drawback
Did anyone check if we can ship under OFAC?

We violated someone’s trademark and copyright?
I’m about to go screaming into the night.

What? Somebody put a denied party on our payroll?
We have whistleblowers and government moles!

The fines, penalties, and audits really do hurt
Why can’t we find that blasted NAFTA cert?

Will this compliance incompetence never end?
What you do mean you don’t know what’s an ECCN?

I don’t want to hear it! Take it back! Take it back!
We didn’t violate the Foreign Corrupt Practices Act!

Legal is forcing us to file a voluntary disclosure
It’s easy for them....I’m the one with the exposure!

But cargo has to be moved and shipments shipped
Someone has to do it, so why not bite my lip?

Hey, brokers, forwarders, and NVOCCs
Please oh please, listen to me

Too late for compliance, I do implore
The feds are knocking at our front door

Wake up President, Chairperson, and CFO
Time to call the lawyers as you try to lay low

The penalties are stiff and loyalty is rare
when the feds pounce and you're under their glare

I can’t skip town, what about my kids, my 401K?
My Tivo, my iPod, my Xbox, my Starbucks cafe?

So, I’ll stick around, although I may later resent
That as a compliance officer I'm faithful 100 percent

But why complain, why criticize, why mope?
Tis the season for love and unending hope

Next year, I trust we will improve and elevate
We will comply, check, train, and educate

And if not, well there’s always work by the hour
I’m leaving my application at the local Manpower.

Gonzalez Rolon Valdespino & Rodriguez, LLC Attorneys

Dallas • Houston • San Antonio • Mexico City • Sao Paulo, Brazil • Paris, France

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2911 Turtle Creek Blvd

Dallas, Texas  75219

Mailing Address:

P.O. Box 131587

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Phone: 972-747-5016
Email: info@exportimportlaw.com
Web: www.exportimportlaw.com

Copyright Notice

We wrote this and it belongs to us. We do not mind if you pass it along to others, as long as we get full credit and attribution. But, please, ask our permission first, and do not steal or mangle our words or ideas. ©GRVR Attorneys (2006).

Disclaimer

You will not find any legal advice anywhere in this newsletter, on our website, or in any course or public lesson we offer. You should not rely on this newsletter to decide on a legal course of action. If you would like legal advice, you need to ask your attorney. GRVR Attorneys provide legal advice only to existing clients in a confidential and private setting, not in public (i.e., not in a newsletter). Subscribing to our newsletter does not make you into one of our clients. If you are looking to hire an international trade attorney, we would love to hear from you. The GRVR Attorney responsible for the contents of this newsletter is Oscar Gonzalez. He can be reached at 972-747-5016 or info@exportimportlaw.com.