Tim Warren

Customs and Border Protection should provide more information through its automated commercial environment (ACE) system to importers about detention and seizures involving intellectual property rights, said the Commercial Customs Operations Advisory Committee IP Rights Working Group in draft recommendations released before COAC’s Wednesday meeting. The agency should improve intelligence sharing with industry on violations. The working group suggested CBP improve its e-recordation system to help keep track of trademarks and copyrights. Meanwhile, the next test of blockchain technology involving IPR is "anticipated to occur September," followed by an assessment, CBP said in an issue paper on emerging technologies.

The U.S. is outpacing other countries in the race toward 5G in "the allocation of spectrum" but is playing catch-up in other areas such as fiber deployment, said Commerce Department Deputy Chief of Staff Earl Comstock Wednesday. Comstock spoke on a panel on 5G and supply chains at the annual Bureau of Industry and Security conference (see 1907100013). The spectrum "is not perfect" and the administration is still working to "find the right spectrum in the right spaces," he said. "We have made available to our companies far more than any other country."

The advent of data privacy laws, such as Europe's general data protection regulation, creates a "potential tension" with trade sanctions compliance, said Ramsey Kazem of Spark Compliance Consulting Thursday at the American Association of Exporters and Importers Conference. GDPR and other laws in various stages of implementation in U.S. states "tend to be very protective and restrictive on how you use personal data," he said. This may "often conflict with sanction laws, which requires companies" to do "more with the personal data that they possess in terms of screening their third parties, screening their business partners, screening their customers," said Kazem. "So it's not difficult to see how the GDPR" and other data privacy restrictions "could conflict with, for example, U.S. sanctions laws." Further complicating the issue for companies is that "neither the U.S. nor the EU recognize the other's laws as a legitimate basis" for not complying, he said. Companies will need to examine the potential risks of such a conflict, Kazem said. "In some instances there may not be an easy answer and a company may be forced to choose between the lesser of two evils." As a result, data privacy considerations "must be at the table" while a company is developing a sanctions law compliance program, Kazem said.

Government agencies beyond Customs and Border Protection are starting to take a closer look at blockchain, said Vincent Annunziato, director of CBP’s Business Transformation and Innovation Division, in an interview. The Food and Drug Administration is “starting to move, especially, I think, because of the food safety” aspect, he said. The Health and Human Services Department “got an authority to operate” and have “a system that they’re standing up,” he said. The regulatory and legal aspects of CBP’s blockchain efforts will likely "ramp up" if the Commercial Customs Operations Advisory Committee recommends moving forward based on results of proof of concept testing (see 1903120038), said Annunziato. At that point, the Office of Regulations and Rulings (OR&R) would have to get involved by reviewing requirements that weren’t necessary during the test, which simulated the North American Free Trade Agreement and Central America Free Trade Agreement certificates of origin process, he said. OR&R will be more connected during the coming blockchain test involving intellectual property rights, Annunziato said. It will need to play an active part in the IPR piece because of its role in approving applicants that ask CBP for protection, he said. The specific application of blockchain to the NAFTA/CAFTA processes is less important to the test itself, he said. Activities such as sending documents, storing documents and re-keying information would no longer be necessary, he said.

Cable modems that include Chinese parts but are assembled in Mexico are subject to the third tranche of 10 percent Trade Act Section 301 tariffs on Chinese imports, said Customs and Border Protection in a Nov. 27 ruling. The ruling request was submitted by Barnes Richardson lawyer Lawrence Friedman on behalf of Zoom Telephonics. CBP's analysis was on two types of modems -- those that include Wi-Fi gateways and those that don’t. All the components involved are products of China and "bulk-packed board assemblies will be shipped in separate boxes from the remainder of the components including the case components, feet, screws, and labels," CBP said. The assembly work done in Mexico doesn't constitute a "substantial transformation" of the Chinese components, CBP said. The modems are classifiable under subheading 8517.62.0010 and therefore subject to the tariffs imposed Sept. 24, it said. The modems meet the North American Free Trade Agreement’s tariff shift requirement and are a product of Mexico for marking purposes, CBP said.

Scrutiny of social media platforms like Facebook should be seen as a cautionary model for the regulators watching the rapid growth of e-commerce, said Customs and Border Protection Commissioner Kevin McAleenan during a speech at the U.S. Chamber of Commerce Tuesday: "Recent developments in social media and the oversight of social media provide some context I think we should reflect on." For e-commerce, as with Facebook, "the relevant regulators have to be cognizant of the potential risks that such expansion brings," he said. As the e-commerce "business model has evolved, so have the potential threats," McAleenan said. "There are digital venues that enable the direct shipment of small packages to retailers and consumers eager to find that great deal who instead may receive counterfeit items." Growth in online commerce is overwhelming, the CBP chief said. The agency will need to make internal changes, he said. "CBP will use data analytics and an array of powerful resources at our National Targeting Center and forward deploy to our ports of entry." It will work with the Department of Homeland Security. CBP recently visited Amazon headquarters with customs officials from the U.K., Australia, Canada and New Zealand, he said. "It's a dialogue we need to continue, with eBay, with Alibaba, with major retailers." CBP's e-commerce strategy also includes opportunities for collaboration with other agencies, including state and local governments (see 1805070034).

Customs and Border Protection is considering offering trusted trader benefits to those in the e-commerce world, to improve compliance, said John Leonard, CBP executive director-trade policy and programs, on a panel last week at the National Customs Brokers & Forwarders Association of America annual conference. The hope is to "incentivize all these new actors in this space to improve the platforms and marketplaces, etc., to be more compliant," he said in Rancho Mirage, California. The agency will need to act quickly on an e-commerce policy "because it's already overtaking us," said Jim Swanson, association director-cargo and conveyance security and controls.

Comcast updates to its X1 system let its X1 set-top boxes fall outside the scope of an International Trade Commission limited exclusion order in November against the company (see 1711280017), Customs and Border Protection ruled March 5, recently released. Comcast has been litigating set-top patent issues with Rovi, now named TiVo, for years (see 1803150024). "Comcast has carried its burden of demonstrating that the changes made to the X1 system will prevent Comcast’s customers from using the modified X1 system, of which the STBs at issue are a component, in a manner which directly infringes," CBP ruled. The design changes, most of which are redacted in the ruling, removed some features that allowed users to remotely schedule TV program recordings. "In support of the efficacy of its redesign, Comcast produced customer complaints from its Internet forums, which Comcast assuaged by publicly explaining that the remote recording functionality had been removed," said CBP. Redesigned X1 boxes imported by Arris and Technicolor on behalf of Comcast are no longer prohibited from entry into the U.S. CBP wasn't persuaded by TiVo's claims the same infringing features remained despite Comcast's changes. Comcast thinks the ITC "reached the wrong decision in this case, and we removed the remote DVR scheduling feature at issue while we pursue an appeal," a spokeswoman said Wednesday. "The letter simply acknowledges the favorable ruling we received from Customs last month.” TiVo declined to comment.

Customs and Border Protection is seeking input through the Commercial Customs Operations Advisory Committee about what new statutes or regulations are needed to get CBP more authority over e-commerce issues, two COAC members told us. The request relates to recent testimony from Brenda Smith, executive assistant commissioner in the CBP Office of Trade, who was pressed by lawmakers to describe next steps for gaining such authority (see 1803070009). The agency didn't comment.

An iPhone case that includes a separate screen that shows information like photos, boarding passes and maps from the phone sent through a Bluetooth connection isn't classified based on the Bluetooth capability, Customs and Border Protection said in an Aug. 3 ruling that was recently released. CBP responded to an advice request from a customs broker for popSLATE Media, which makes the case. The company told CBP it believes the cases are best classified based on radio transceivers as the agency classified the Apple Watch and other "smartwatches" (see 1606280059). CBP disagreed, saying "the most prominent feature" is the image display screen. That classification has a 2.6 percent duty rate. We couldn't reach popSLATE Friday.