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28 February 2020
The government has announced the first step in its plan to crack down on counterfeit goods online.
At the end of January 2020 the Trump administration announced a plan to crack down on the sale of contraband and counterfeit goods online. The plan will affect numerous parties in the supply chain – from importers and sellers to customs brokers, forwarders and e-commerce providers.
The administration took the first step to implement the plan on 31 January 2020, when it issued a new executive order allocating more federal resources to the inspection and oversight of imports that are at risk for counterfeits and other illicit goods. These include goods that are imported in a manner that evades duties, taxes and fees that should be collected by the government.
The executive order was issued one week after the US Department of Homeland Security (DHS) issued a plan setting out steps to combat counterfeit goods.
The executive order contains four mandates of note. First, it orders US Customs and Border Protection (CBP) to develop new criteria for obtaining importer of record numbers and new consequences for customs brokers that help importers to evade those criteria. Specifically, the order directs DHS to issue a notice of proposed rulemaking which:
Second, the executive order states that CBP must require customs brokers to report any attempts by importers that are ineligible to get an importer of record number "to re-establish business activity requiring an importer of record number through a different name or address associated with the debarred or suspended person". The executive order directs CBP to punish customs brokers that help ineligible importers by limiting their participation in trusted trader programmes or even revoking their broker licences.
Third, the executive order calls for CBP to develop new criteria to measure foreign postal service providers' efforts to cut down on counterfeit shipments. If those standards are not met, CBP may subject shipments from those postal authorities to more inspections or block them entirely.
Lastly, the executive order mandates the secretary of homeland security to submit a report that includes, among other things, an analysis of whether the fees collected by CBP are currently set at a sufficient level to reimburse the federal government's costs of processing, inspecting and collecting duties, taxes and fees for parcels.
The executive order is the first step in a broader DHS plan to enforce IP rights for e-commerce sales. Broadly speaking, the plan shifts the burden to monitor for counterfeit goods onto e-commerce platforms.
Under the plan, CBP will require formal entry for shipments deemed risky, notwithstanding that such shipments might otherwise qualify for duty-free or informal entry treatment under existing authorities. The plan states that CBP should also consider whether new regulations are needed to better define, and subsequently enforce, Section 321 eligibility requirements.
The plan includes immediate actions to be taken by DHS and recommendations for the government, such as:
In addition, the plan recommends the following best practices for e-commerce platforms and third-party marketplaces:
For further information on this topic please contact Teresa Polino or David Salkeld at Arent Fox LLP's Washington DC office by telephone (+1 202 857 6000) or email (firstname.lastname@example.org or email@example.com). Alternatively, contact Elyssa R (Emsellem) Kutner at Arent Fox LLP's New York office by telephone (+1 212 484 3990) or email (firstname.lastname@example.org). The Arent Fox LLP website can be accessed at www.arentfox.com.
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