UPS Customs Brokerage Skates Free

In a brief 54 page opinion Judge Carmen doles out the what is hopefully the end of the on going saga which could be titled "UPS, Tricky Cathode Ray Classification and the Revenge of the Ten Factors."

For those who indulge in dry reading the novel chapters are as follows:
Chapter I  The Saga Begins: The Disputed Amount Will be a Mere Pittance.
Chapter II Plead to a Higher Power For Guidance on Hard Questions
Chapter III Hard Questions Are Best Left Unanswered
Chapter IV Cathode Ray Tubes Might be Everywhere: Let the Trial Begin.
Chapter V The Verdict is in Guilty: But the Hope Lives On.
Chapter VI The Tale of Ten Factors: Hard Questions Remain Unanswered.
Chapter VII The Fatal Gang of Ten Factors Let the Prisoner Go Free.

Will there be another Chapter? I certainly hope not.

I can't believe the end of this case. After Customs wins the ability to penalize a broker with a $75,000 fine, UPS appealed that decision, but also argued that that customs did not consider ALL of the ten factors listed in 19 CFR 111.1. when issuing the penalty.

Many, myself anyways, thought this would just then be sent back to the agency to reconsider all ten factors. (My blog from August 11th. Lawrence Friedman's Blog From August 13th.) Then after considering all ten factors it would go back to court with the same conclusion. So that finally the question of whether the maximum penalty issued to a broker can exceed $30,000.00 would be answered. I suppose we will never know that answer.

But now the Court concludes that if Customs failed to look at all ten factors at the time the penalty was issued then the penalty ab initio was faulty. The Court didn't say exactly that but the Court ruled the "failure was tantamount to a failure ... to meet its burden of proof." US CIT Slip-OP 10-11 at 53. This indicates that Customs must present at trial that it considered all ten factors before it can perfect a broker penalty.

UPS is off the penalty Scott free. My jaw dropped I was so stunned. I guess I need a life.

Why it took Judge Carmen 54 pages to come to the conclusion is another story. I suppose he likes to be thorough. 

Must congratulate the lawyers arguing for UPS. Picking up on the ten factors listed in 19 CFR 111.1 was a thorough job and a creative argument. Broker penalties will have to change. They are few and far between in the first place.

Will UPS try to claw back the penalties it already paid... Maybe the Saga is not over yet.

WTO Panel formed for challenging the emergency tire restrictions

Back on September 11th 2009 there was a well publicized presidential proclamation adding additional duties to tires imported from China. When China joined the WTO back int 1997 they made an "accession agreement" which allowed countries to add additional duties to safeguard industries in the occurrence of a market disruption due to steep rises in imports.

The duties were for a small market of tires. The duties are graduated from year to year the highest being the first year as follows:

1. 35% for the first year September 2009 to September 2010.
   
2. 30% for the second year September 2010 to September 2011.
3. 25% for the third year September 2011 to September 2012.
   
4. No additional duties after September of 2012.

Its a relatively small number of tires.  It somehow raise allot of anger with Chinese. They immediately challenges the duties with the WTO DSB (DS399). They claim:

1. The Chinese imports did not increase rapidly enough to warrant a market disruption.
2. The imports were not in suffciant quantities to damage U.S. industries.
3. The U.S. industries  are not materially injured
4. Even if they are injured the rates are excessive to remedy the problem
5. The measures are lasting too long to prevent what ever injury there might be.

The U.S. on the other hand says tire imports from China tripled in four years, the, production in the U.S. dropped 25%, and 14% of the workers in the industry has lost their job.  Seems like a pretty goods cause for a safeguard.

On September 26th China requested consultations, December 9th a panel, and today the panel was chosen.

Within another year they might have preliminary decision, which could be appealed, and maybe after three years we might actual a decision where they can retaliate. The decision will probably not be reached by the time the tariffs expire so this whole exercise seems moot to most observers.

This is probably the smallest but most publicized part of the trade war that is growing between China ind its trading partners.  The largest unreported part of the trade war is the explosion of antidumping and counervailing cases being filed in the U.S. and Europe. Another large isue coming to light is the allegations of Chinese government hacking into private companies and foreign government computers.

Could be difficult times for relations ahead.