33
Chester/Associates, PLLC Trademark - Transactions - Trade Key Elements of International Trade Compliance Jim Chester Jim Chester JD, LL.M, CHB, CCS Chester/Associates, PLLC Dallas, Texas Presented by:

Keys To Trade Compliance

Embed Size (px)

DESCRIPTION

 

Citation preview

Page 1: Keys To Trade Compliance

Chester/Associates, PLLCTrademark - Transactions - Trade

Key Elements of InternationalTrade Compliance

Jim ChesterJim ChesterJD, LL.M, CHB, CCS

Chester/Associates, PLLCDallas, Texas

Presented by:

Page 2: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

2

InternationalBusiness

Transactions

What is International Trade Law?What is International Trade Law?

International CivilLitigation

Life Cycle of International TransactionsLife Cycle of International Transactions

Page 3: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

3

Every international shipment implicates at leastTWO legal regimes

I. Introduction

Page 4: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

4

I. Introduction

US Trade LawsWhen importing, exporting ordealing with foreign affiliates,numerous US trade regulationsmust be observed. - Certain goods have special

rules.

Page 5: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

5

II. Import Compliance

• Customs and Border Protection(CBP)– agency within Department of

Homeland Security– primary responsibility for policing

the U.S. border and enforcing U.S.import laws.

– CBP also enforces import-relatedrules for over 40 federal agencies.

Page 6: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

6

II. Import Compliance (Cont’d)

• Brief History of Customs– Pre-NAFTA– After NAFTA

• Reasonable Care• Audits

– Post 9-11• ISA/FA• C-TPAT

Page 7: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

7

II. Import Compliance (Cont’d)

• “Pillars of Importing”– Quantity– Classification– Value– Country of Origin

• Marking

Page 8: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

8

II. Import Compliance (Cont’d)• Import Penalties - Civil

– False Statement or Omission• Domestic value of imported goods

– Record Keeping• Up to $100,000 per transaction

– Marking• 10% of domestic value

• Other Customs Enforcementmeasures– Seizure & Forfeiture– Criminal – 5 yrs; $500,000– Additional scrutiny, exams & audits– Referral to other agencies for action

Page 9: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

9

II. Import Compliance (Cont’d)

• Common Importing Pitfalls– Over-reliance on 3rd Parties– Failure to supervise and control

vendors & agents– No (or inadequate) written ICP– Assists– Samples and other non-sales

transactions– Country of Origin marking

Page 10: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

10

• Imports and IP– Generally, IPR owners must self-police– U.S. Trade law provides protections for certain

IPR against infringing imports• Trademarks / Trade Names• Copyrights• Patent Surveys

II. Import Compliance (Cont’d)

Page 11: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

11

II. Import Compliance (Cont’d)

• IP Violations – 19 USC § 1526– No “culpability” required– Detention, seizure & forfeiture– Penalties up to US resale price of

goods

Page 12: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

12

II. Import Compliance (Cont’d)• $$$ Savings Programs

– Trade agreements (e.g., NAFTA, CAFTA-DR)– US Trade promotion programs (e.g., GSP)– Foreign-Trade Zones/Bonded Warehouses– Duty Drawback

Page 13: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

13

III. Export Compliance• The Bureau of Industry and Security (BIS) has primary

responsibility for enforcing export control laws– Export Administration Act (EAA)– Export Administration Regulations (EAR)

• Other agencies have export-specific regulations thatmust also be observed.– (e.g., Department of Defense Trade Controls (DDTC)

• Most export documents are delivered to CBP

Page 14: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

14

III. Export Compliance (Cont’d)• What is an Export?

– Physical shipment of EAR-subject goods,technology, or technical data outside US CustomsTerritory

– Downloads and emails of technology and technicaldata outside US

– “Sharing” technology with a foreign national, evenon US soil (“deemed” export)

Page 15: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

15

III. Export Compliance (Cont’d)

• 4 Key Questions for Exports– What is it?

• description & classification– Where is it going?

• country– Who will be receiving it?

• person/entity– How will it be used?

• dual use

Page 16: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

16

III. Export Compliance (Cont’d)• Pre-Shipment Checks and License Requirements

(i.e., “General Prohibitions”)1. Determine whether a license is required to

export the commodity.Step 1: Obtain Export Commodity Classification

Number (ECCN) for product on CommerceControl List (CCL),

Step 2: Compare to Country ChartStep 3: If license is required, see if exception

applies.Step 4: If license is required and no exception

applies, apply for license from BIS.

Page 17: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

17

III. Export Compliance (Cont’d)

2. Check the various “bad guy” lists1. Denied Parties List - BIS2. Specially Designations Nationals and

Narcotics Traffickers - OFAC3. Entity List - BIS4. Debarred Parties List – State5. Unverified List – BIS

See http://www.treas.gov/offices/enforcement/ofac/sdn

Page 18: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

18

III. Export Compliance (Cont’d)

3. Ensure export would not violate U.S. sanctions.– See current Office of Foreign Asset Controls (OFAC) Sanctions

(http://www.treas.gov/offices/enforcement/ofac/sanctions)

4. Don’t ignore “Red Flags”

Page 19: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

19

III. Export Compliance (Cont’d)

• Penalties for Export Violations– Up to $1 million– Up to 5 years in prison– Denial of export privileges

Page 20: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

20

III. Export Compliance (Cont’d)

• Common Exporting Pitfalls– Failure to check “bad guy” lists– Failure to secure IP abroad– Unlicensed exports– Deemed exports– Recordkeeping– Incorrect SEDs/documents

Page 21: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

21

IV. Other Trade Regulations

International Traffic in Arms Regulations (ITAR)Prohibits shipments of certain defense articles and

technology.Controls trade in “Munitions”

- Including “Mil Spec/Std.”Requirements

- Registration- Licenses- Recordkeeping

Page 22: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

22

IV. Other Trade Regulations

Common ITAR Pitfalls– No export/re-export license– Recordkeeping/Reporting– Shipments to affiliates– Dual use items– “Deemed” export

Page 23: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

23

IV. Other Trade Regulations

ITAR Penalties• Criminal & Civil:

– Up to $1 million per violation forcorporations

– Up to $1 million per violation and up to 10years in jail for individuals

• Other Enforcement Measures:– Seizure or forfeiture of goods– Debarment from licensing for as long as

three years– Potential debarment from Government

contracting for up to three years

Page 24: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

24

IV. Other Trade Regulations (Cont’d)1 Anti-Boycott Laws

Cannot support “illegal” boycotts.Prohibited conduct includes:– Agreements to do business with Israel or

blacklisted companies, or other personsbased on race, religion, sex, nationalorigin or nationality.

– Furnishing information about businessrelationships with these persons orentities.

– Failure to report requests for boycottinfo

Page 25: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

25

IV. Other Trade Regulations (Cont’d)2 Common Anti-Boycott Pitfalls

– Providing information unwittingly– Failure to report– Foreign agents/subsidiaries

Page 26: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

26

IV. Other Trade Regulations (Cont’d)3 Anti-Boycott Penalties

– Fines up to $50,000 or five times the valueof the exports involved, whichever is greater

– Imprisonment for up to 10 years.– Loss of foreign tax benefits/credits– Penalties under EAR

Page 27: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

27

V. Keys to Compliance

- Know & Follow the Rules- Implement & update

written complianceprogram

- Periodic compliancetraining

- “Hands on” managementof vendors, agents,brokers, forwarders, etc.

Page 28: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

28

V. Keys to Compliance

- Check your Work- Periodic compliance

reviews- Self-awareness cuts off

“contingent” liabilities- Prior Disclosures

reduce/eliminate potentialpenalties

Page 29: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

29

V. Keys to Compliance- Use Technology to Reduce Costs

- ABI - input data to Customsdirectly

- AES/SNAP – filed SEDs and applyfor export licenses online

- DPL software to check for “badguys”

- Integrate Customs entry number anddates into inventory/accountingsystems

- Scan entry documents for storageand easy retrieval

Page 30: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

30

V. Keys to Compliance

- Implement recordretention program

- Different periods requiredfor various records

- Once Requisite periodexpires, record becomesunnecessary “contingentliability”

Page 31: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

31

VI. Conclusion

- International trade involvesnumerous rules & agencies

- Must be aware of rules andensure compliance throughtraining and internal reviews

- Rules change frequently- Self-policing reduces

liabilities

Page 32: Keys To Trade Compliance

February 13, 2006

32

VI. Conclusion

Failure to be diligent with trade compliance =Lost opportunitiesSubstantial penaltiesInterruptions in global supply chain

Companies can budget and plan for compliance,but not for enforcement.

Socrates -“The unexamined life. . . .”

Page 33: Keys To Trade Compliance

March 28, 2008

Chester/Associates, PLLCTrademark - Transactions - Trade

33

Questions?Questions?Email [email protected]

Direct 214.800.2845

Toll Free 1.877.34.World

Chester/Associates, PLLC6060 NCX, Suite 560Dallas, Texas 75206

www.tradelawfirm.com