Customs Overviews

By John Pellegrini, USFIA Customs Counsel, McGuireWoods LLP

In This Issue:

  • Classification Decisions
  • Turkmenistan WRO
  • Bond Limits
  • De Minimis
  • CPSC Developments


The following is a summary description of classification decisions recently made public by U.S. Customs & Border Protection (CBP).

In HQ H257531 (January 22, 2018), The Headquarters Office addressed the classification of a textile money belt. The ruling revokes a 1991 New York ruling, 868779 (November 25, 1991). That ruling found that a MMF/cotton money belt was classified as “flatgoods” in HTS subheading 4202.32.93 (17.6%). The Headquarters Office ruled that the money belt is properly a classified as “travel sports and similar bags” in HTS subheading 4202.92.31 (17.6%). The subheadings and duty rates are those currently in force.

In addition to the age of the revoked ruling, HQ H257531 is interesting in that it reminds us that, outside of the textile chapters, classification of a mixed fiber article is based upon an essential character analysis. While, as here, the analysis is cursory, it is useful to keep that distinction in mind. Almost invariably, the essential character will be imparted by the fiber that dominates by weight.

The scope of subheading 9801.00.20 was the subject of HQ H276403 (December 12, 2017). The subheading provides duty-free treatment for merchandise exported from the United States pursuant to a lease or similar use agreement after importation and payment of duty. The merchandise at issue consisted of apparel and accessories.

Here, the imported merchandise was shipped to Canada for warehousing until needed by customers in the United States. The ultimate issue was whether the goods were entrusted to the custody of a second party.

CBP reviewed the relationship between the importer and the party responsible for warehousing and concluded that, although they have that may have separate legal existence, for all intents and purposes, they were the same party. Given that conclusion, CBP held that subheading 9801.00.20 did not apply and denied duty-free treatment.

CBP has frequently expressed skepticism that related parties located north and south of the border can enter into transactions that are recognized for purposes of the customs laws.


As previously reported, CBP issued a withhold release order covering all Turkmenistan cotton and products produced in whole or in part with Turkmenistan cotton. The order is dated May18, 2018. The petition names two importers, Ikea (cotton bed linens) and Gamby Global, Inc. (fabric). It is not clear how far beyond the two named importers the detentions will extend.

To our knowledge, no shipments have been detained pursuant to the WRO and senior CBP officials have indicated that they do not expect a great deal of activity related to the WRO.


CBP has broad discretion in setting bond amounts. However, that discretion is not unlimited. This is illustrated by a recent decision of the Court of International Trade.

The decision was in response to an importer’s request for a permanent injunction commenced to contest the imposition of an enhanced single entry bond requirement equal to three times the total shipment value. This created a single entry bond requirement of $9 million as opposed to the previous continuous bond amount of $200,000. The imposition of the requirement would, as a practical matter, put the importer out of business. CBP took this action because the importer had entered merchandise that violated certain trademark rights. The violative merchandise represented less than one percent of the importer's merchandise.

CBP’s directive on determining bond amounts indicates that the bond's purpose is to protect the revenue and to ensure compliance. The directive goes on to indicate that it is not CBP’s intention to require a bond amount that unnecessarily puts an excessive burden on importers or places them in an impossible situation.

The court looked at CBP's directive and the fact that the problematic merchandise represented only a very small part of the importer’s merchandise and concluded that bond amount was excessive and imposed a permanent injunction, preventing CBP from imposing the single entry bond requirement.

CBP has also refused to release the importer’s entries without a 100 percent inspection. The court ordered CBP to use its best efforts to process all of the backlogged shipments and to release them in a timely manner.

Although this matter is not settled as there has not been a decision on the merits, the likelihood is that the parties will reach an accommodation.


During a National Association of Foreign Trade Zones conference held in May, a CBP official disclosed that the agency has ruled that distributors are not allowed to enter bulk goods into an FTZ, break them down into consumer shipments, and take advantage of the de minimis legislation. The ruling, which had not been made public as of 4:00 PM yesterday, was issued in response to an internal inquiry. We understand that the ruling does not address the retail sale prohibition but focuses on how goods are imported into the U.S.

There are efforts underway to amend the legislation to correct the failure to address the FTZ issues.

USFIA will circulate the ruling once it becomes public.


There were two recalls of textile or apparel items in May. The recalls involved: 1) a three-piece cardigan set in which the cardigan’s toggle button can detach, posing a choking hazard to young children; and, 2) women’s silk scarves that fail to meet federal flammability standards for clothing textiles, posing a risk of burn injuries to consumers.

The Customs Overview is a newsletter of Customs legal, administrative and other developments affecting importers of textiles and wearing apparel prepared as a service for United States Fashion Industry Association members and other interested parties. Matters reported on or summarized herein may not be construed as legal advice on specific situations.

By John Pellegrini, USFIA Customs Counsel, McGuireWoods LLP

In This Memo:

  • New Balance Caves
  • GSP Refund Process
  • Cell Phone Sports Armbands
  • CPSC Developments


New Balance has agreed to settle the California class action that challenged its “Made in USA” labels. The settlement covers footwear marketed as "Made in USA" that has a domestic value of 70 percent or greater, but less than 95 percent.

As part of the settlement, New Balance agrees to pay $750,000, to be distributed in $10 increments to consumers who purchased the mislabeled footwear. New Balance agrees that it will no longer use the “Made in USA” unless the shoe contains at least 95 percent domestic content. New Balance may continue to make qualified claims of domestic production as long as the 70 percent standard is mentioned explicitly in connection with the claim. The settlement agreement recites the following example: “New Balance ‘made’ is a premium collection that contains domestic value of 70% or greater”.

The settlement was filed April 23, 2018, and is subject to court approval.


U.S. Customs and Border Protection (CBP) began accepting claims for GSP duty-free treatment on eligible merchandise entered as of April 22, 2018. In addition, CBP indicates that it will automatically liquidate or reliquidate entries of GSP-eligible merchandise entered on or after January 1, 2018, through April 21, 2018. Automatic liquidation is limited to entries filed electronically through ABI and that claimed GSP treatment. 83 Federal Register 17561 (April 20, 2018).

Importers must file a specific request for a refund for GSP-eligible articles entered other than through ABI, or which were not the subject of a GSP claim at entry. The request must be filed with CBP by September 19, 2018.

Note that certain solar cells and panels from Philippines and certain solar cells, solar panels, washing machines, and washing machine parts from Thailand, although GSP eligible goods, are subject to Section 201 measures. Accordingly, these articles may not receive GSP duty preferences. CSMS #18-000307 (April 26, 2018).


An importer has challenged CBP's classification of sports armband cell phone holders as other travel bags, subheading 4202.99.90 (20%). The importer makes alternate classification claims. These include Chapter 95 as articles for general physical exercise, other, or under a classification for the materials (plastic, rubber or textile) that make up the armbands, presumably a question of essential character.

Members who import similar products may wish to consider filing protests to take advantage of a favorable decision. The case is Incase Design, Inc., Court No. 18-00090.


There was a single recall of a textile or apparel item in April. The recall covers decorative cushions that can catch fire if exposed to an ignition source, posing a fire hazard.

The Customs Overview is a newsletter of Customs legal, administrative and other developments affecting importers of textiles and wearing apparel prepared as a service for United States Fashion Industry Association members and other interested parties. Matters reported on or summarized herein may not be construed as legal advice on specific situations.

By John Pellegrini, USFIA Customs Counsel, McGuireWoods LLP

In This Issue:

  • Classification Decisions
  • CPSC Developments 


HQ H276403 (December 12, 2017) provides a quick reminder of certain North American Free Trade Agreement (NAFTA) certificate requirements.

The importer’s NAFTA claim was denied because the port held that the certificate was unacceptable for three reasons. First, the period covered by the certificate was not completed. Second, the certificate did not provide the part number of the covered merchandise. Third, the certificate was not dated.

Despite these deficiencies, the Headquarters Office ruled that the importer is allowed five days to present a signed certificate. The ruling holds that the UPS tracking number on the certificate satisfies the requirements relating to the time period and the identity of the merchandise. The Headquarters Office said the tracking number was sufficient to establish that the certificate covered a single entry and provided the identity of the merchandise. In addition, the tracking number enabled CBP to verify that the importer had the certificate in its possession at the time of entry, a failure that could not be overlooked.

This is another instance where the Headquarters Office applied common sense to issues of this nature in contrast to the sometimes mechanical approach of the field.


The following is a summary description of a recent classification decision.

HQ H263986 (December 27, 2017) appears in the February 22, 2018 Customs Bulletin. The ruling overrules NY N024929 (April 14, 2008) which classified textile surface handbags and tote bags imported with a textile coin purse, plastic spectacle case, and plastic identification card case as separate articles. The Headquarters Office concluded that the separate pieces constituted a set, in view of the fact that they serve the "singular purpose" of carrying various items. It is no surprise that CBP determined that the handbag and the tote were deemed to impart the essential character of the sets.

Accordingly, the handbag set falls in HTS subheading 4202.22.81 (17.6%) and the tote bag set in HTS subheading 4202.92.31 (17.6%). As separate articles, the coin purse was classified in HTS subheading 4202.32.95 (17.6%) and the other components in 4202.32.10 (12.1¢/kg+4.6%).


There were three recalls of apparel items in February. The recalls covered: 1) infant bodysuits - the snaps at the crotch can detach, posing a choking hazard to young children; 2). children’s rompers - snaps near the collar can detach, creating a choking hazard; and, 3) children's nightgowns – the garments fail to meet the flammability standards for children’s sleepwear, posing a risk of burn injuries to children.

The Customs Overview is a newsletter of Customs legal, administrative and other developments affecting importers of textiles and wearing apparel prepared as a service for United States Fashion Industry Association members and other interested parties. Matters reported on or summarized herein may not be construed as legal advice on specific situations.

By John Pellegrini, USFIA Customs Counsel, McGuireWoods LLP

In This Memo:

  • Collection Policy
  • False Origin Claims
  • Liquidation Notices
  • CPSC Developments


U.S. Customs & Border Protection (CBP) has modified its collection policies. CSMS #18 -000234 (March 20, 2018).

CBP will issue dunning letters 120 days after the bill if a protest has not been filed; it had previously been 61 days. The dunning letter will outline the consequences that could ensue when payment is not received or a protest not filed with 180 days. If a protest is filed, the bill will not be subject to set off by diverted refunds nor will the importer be subject to sanctions because of the bill.


There were two recent developments in this area.

The first is the settlement of the claim in California that a grocer falsely labeled olive oil as being Italian in origin. The settlement awards $1.3M to counsel and either $.50 in cash or $1.50 in vouchers to members of the class. The litigation, which was prosecuted in a California state court, alleged violations of the Tariff Act of 1930.

The fact that plaintiffs’ counsel earned over $1M creates an incentive to bring similar actions and could prove to be much more vexing than enforcement of origin marking rules by CBP.

The second development involves a claim by the Federal Trade Commission that a mattress manufacturer falsely labeled its products as “Assembled in the US.” 83 Federal Register 12192 (March 20, 2018). In fact, according to the FTC, the mattresses were imported in a finished condition. The FTC indicates that the mattress importer had entered into a settlement agreement. No details as to any fines were made public.


On March 5, 2018, CBP announced that it had uncovered an error in the creation of Liquidation Courtesy Notices. Some Notices were issued with errors and others were not issued. CBP issued corrected Notices the following week. That delivery covered all Notices for the weeks of the March 5 and the March 12. 

CBP also announced that as of February 24, 2018, the Notice delivery date is a Sunday, not a Friday.


There was a single recall of an apparel items in March. Star studded jeans, whose metal stars can detach, posing a laceration hazard, were recalled.

The Customs Overview is a newsletter of Customs legal, administrative and other developments affecting importers of textiles and wearing apparel prepared as a service for United States Fashion Industry Association members and other interested parties. Matters reported on or summarized herein may not be construed as legal advice on specific situations.

By John Pellegrini, USFIA Customs Counsel, McGuireWoods LLP

In This Issue:

  • “Jump” Teams
  • Preference Rulings
  • Devices – Border Searches
  • FTC Changes
  • CPSC Developments
  • Clarification 

“JUMP TEAMS” 2017.

Customs and Border Protection (CBP) has shared the results of the Fiscal 2017 Textile Production Verification Team visits with USFIA.

The teams visited approximately 145 factories in Honduras, Colombia, Guatemala, Madagascar, Mauritius, Korea, Peru, Lesotho, the Dominican Republic, and Morocco. None of the factories visited showed evidence of transshipment but 24 were categorized as high risk for transshipment.

The visit also looked at compliance with preference program requirements. Four factories were found to have violated CAFTA program requirements and one KORUS requirements. Thirteen of the 19 Moroccan factories visited were deemed to have violated Morocco FTA requirements. No factories were found to have violated AGOA requirements, but four were determined to have insufficient documentation to support AGOA claims. The same criticism (insufficient documentation) was lodged against 10 factories claiming CAFTA status, 15 claiming Peru TPA, four claiming Morocco PTA status and eight factories claiming CTPA status. All of the Korean factories were deemed to have adequate documentation.


In HQ H282674 (November 13, 2017), the Headquarters Office addressed a protest challenging the denial of duty-free treatment under the Oman agreement.

The importer entered the goods as originating goods under the terms of the agreement. However, a CBP review indicated that although they originated in Oman, the garments were made with foreign fabric and did not qualify as originating goods. Duty-free treatment was denied, and the importer filed a protest.

The basis of the protest was that the good qualified for the TPL. The TPL was open at the time of entry and never closed. The Headquarters Office approved the protest.

The Oman agreement has a 592(d) provision, meaning that a preference claim may not be raised for the first time in a protest. Here, the importer did claim the preference at entry. The fact that the protest asserted a different basis for preference eligibility, did not invalidate the protest.

The second ruling, HQ H263569 (October 12, 2017) modifies HQ H022665 (September 17, 2009). The earlier ruling involved a boy’s shirt packaged with a tie. The shirt was cut and sewn in El Salvador and was eligible for CAFTA. The tie was not eligible. The entire set was deemed ineligible for CAFTA. The tie was not made of regional or short supply fabric.

The 2017 ruling modifies the 2009 ruling in one important aspect. The basic CAFTA rule is that for purposes of the determining origin, the rule applicable to the good applies only to the component that determines the tariff classification of the good. Here the good is a set and it is the shirt that determines classification as it provides the essential character. Since the shirt qualified as an originating good, the fact that the tie was made with non-originating fabric did not affect CAFTA eligibility. However, the value of the non-originating tie exceeded the applicable the applicable de minimis limit, and for that reason the set was not entitled to duty-free treatment.


CBP released fiscal 2017 statistics relating to warrantless searches of electronic devices at the border. There was an almost 50 percent increase over 2016.

CBP also released a revised policy directive governing these searches. The revised policy clarifies the standard operating procedures for searching, reviewing, and retaining information found on electronic devices.

Key components of the new policy include:

  1. Border searches will be limited to information that is stored locally on the device. CBP officers must ensure the device is in “airplane mode” or a similar offline state to avoid accessing information that is stored remotely.
  1. CBP will not perform an advanced search unless there is reasonable suspicion of unlawful activity or for national security reasons. The revised directive distinguishes between “basic” and “advanced” searches. A basic search is a cursory search, which does not require any suspicion or cause. An advanced search is one in which an officer connects external equipment to an electronic device to review, copy, and/or analyze its contents. An advanced search requires reasonable suspicion of unlawful activity or a national security concern.
  1. CBP will must follow specific procedures when handling privileged or business-sensitive information. Where advised that the device contains protected information officer must: (a) seek clarification from the individual as to the specific information protected by either doctrine; and (b) contact the CBP Associate/Assistant Chief Counsel office to ensure the segregation of any privileged material to ensure appropriate handling. Relatedly, officers who encounter business-sensitive information are required to treat such information as confidential and protect it from unauthorized disclosure.
  1. CBP may ask travelers to unlock electronic devices and may request the individual’s assistance to access the device, i.e., ask them to unlock the device. If officers are unable to conduct their search due to a locked device, they are expressly permitted to detain the device (subject to time and supervisory approval limitations) to complete their inspection.
  1. CBP undertakes to safeguard data during storage and conveyance.

The revised policy demonstrates the difficulty CBP faces in balancing legitimate enforcement concerns with privacy rights.

Members should consider reviewing and, where necessary, updating procedures for handling sensitive business information when traveling internationally. These procedures should cover how travelling employees should respond to CBP requests related to business sensitive information. For example, do travelling employees have contact information for counsel?


The Federal Trade Commission (FTC) has made a minor change in the textile regulations. 83 Federal Register 3069 (January 23, 2018).

The change eliminates the requirement that traders who use a registered word trademarks as a house mark provide a copy of the USPTO registration to the FTC. The change is effective as of February 22, 2018.

The FTC decided against allowing the use of a word trademark as a means of in lieu of the trader’s name. The FTC determined that word trademarks are not as readily tied to a trader’s identity as a house mark. In order to use to register a house mark with the USPTO, a trader must indicate that it will use the house mark for a full line of products. In contrast, a trader may have multiple word trademarks.


There were no recalls of apparel items in January.


The piece describing the CIT’S decision on the classification of Santa Claus suits in the January overview contains a misleading statement.

It states that the decision has no effect on the classification of Christmas sweaters. While literally true, it implies that Christmas sweaters can be classified as “festive articles.” That is not the case. Note 1(w), Chapter 95 precludes ordinary apparel.

Thanks to Arthur Bodek of GDLSK LLP for pointing this out.

The Customs Overview is a newsletter of Customs legal, administrative and other developments affecting importers of textiles and wearing apparel prepared as a service for United States Fashion Industry Association members and other interested parties. Matters reported on or summarized herein may not be construed as legal advice on specific situations.