Surprise! Reestablishment of US Trade, Travel, and Diplomatic Ties with Cuba

Today President Obama announced a change in US policy intended to reopen diplomatic, economic, and cultural ties between the nations. The United States will establish an embassy in Havana, and issue licenses for travel to Cuba for persons in 12 very broad categories. This includes travel for purposes of professional meetings, business training, and/or to explore exporting to Cuba. The telecommunications industry in particular has been named an intended U.S. beneficiary.

In addition, licensed U.S. travelers to Cuba will be authorized to import $400 worth of goods from Cuba, of which no more than $100 can consist of tobacco products and alcohol combined. Cuban cigars and rum will be permitted.

The licensed travel categories are:

  1. Family visits
  2. Official business of the U.S. government, foreign governments, and certain intergovernmental organizations
  3. Journalistic activity
  4. Professional research and professional meetings
  5. Educational activities
  6. Religious activities
  7. Public performances, clinics, workshops, athletic and other competitions, and exhibitions
  8. Support for the Cuban people
  9. Humanitarian projects
  10. Activities of private foundations, research, or educational institutions
  11. Exportation, importation, or transmission of information or information materials
  12. Certain export transactions that may be considered for authorization under existing regulations and guidelines

Customs Seizure of Goods In-Transit – Part Two: Interpretation of Importation

In our previous blog (see below), we concluded that whether Customs has the authority to seize in-transit goods depends on the statutory interpretation of “import,” “importation” or “imported.”

First, let us look at precedents. Courts have consistently held that under the tariff law, importation means the bringing of goods within the jurisdictional limits of the United States with intent to unladeAm. Customs Brokerage Co., Inc. v. U. S., Cust. Ct. 245, 253-54 (Cust. Ct. 1974) (internal citations omitted). The Am. Customs Brokerage Co. Court cited Treasury Ruling T.D. 37376, reported in 33 T.D. 292. According to the Treasury Ruling, merchandise is not imported if it comes into the United States temporarily, but it will be treated as imported if it is brought into the United States permanently.  Whether the merchandise is brought into the United States permanently, is ultimately a question of intent. Such intention must be determined on the basis of circumstances.  Am. Customs Brokerage Co., Inc. Cust. Ct. at 254 (Cust. Ct. 1974). Accordingly, genuine in-transit goods that are transported under bond should not be considered as imported permanently into the United States.

Second, there is a longstanding principle of presumption against extraterritoriality unless Congress has affirmative intention, which is clearly “expressed to give a statute extraterritorial effect.” Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247, 255 (2010). The Supreme Court has ruled on the issue of “presumption against extraterritoriality” in the field of patent law. The Court has consistently refused to read the term “import” or “export” broadly which may afford protections to patent holders that should have been sought in other countries. See Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 531 (1972) (“Our patent system makes no claim to extraterritorial effect”; our legislation “do[es] not, and [was] not intended to, operate beyond the limits of the United States, and we correspondingly reject the claims of others to such control over our markets.”)(quoting Brown, 19 How. at 195, 15 L.Ed. 595)); Microsoft Corp. v. AT & T Corp., 550 U.S. 437, 454-55 (2007) (“The presumption that United States law governs domestically but does not rule the world applies with particular force in patent law. The traditional understanding that our patent law ‘operate[s] only domestically and do[es] not extend to foreign activities,’ is embedded in the Patent Act itself, which provides that a patent confers exclusive rights in an invention within the United States.”).

What about trademark law? If using the same reasoning, then the Lanham Act only provides exclusive right to use of trademark in commerce – U.S. Commerce, therefore, the presumption is that the Lanham Act does not have extraterritorial effect. See 15 U.S.C. § 1114. Unfortunately, the Supreme Court has not precisely ruled on this issue.

What about the Tariff Act? The Federal Circuit in TianRui Group Co. Ltd. v. International Trade Com’n, states that the presumption against extraterritoriality does not govern the International Trade Commission’s (ITC) investigation under 19 U.S.C 1337. TianRui Grp. Co. v. Int’l Trade Comm’n, 661 F.3d 1322 (Fed. Cir. 2011).  In that case the ITC found that TianRui, the Chinese company, misappropriated Amsted’s, an American company, trade secret in producing cast steel railway wheels. ITC issued a limited exclusion order, preventing the importation of certain TianRui products into the U.S. A split panel of the Court of Appeals for the Federal Circuit affirmed. The statute at issue was 19 U.S.C. 1337(a)(1)(A) which provides that it shall be unlawful to import articles into the United States or the sale of such articles by unfair methods of competition or unfair acts if the threat or effect of such importation or sale is to destroy or substantially injure an industry in the United States. The Chinese manufacturer’s argument was that the misconduct occurred overseas thus should not be considered by ITC in its investigation because Congress did not intend the statute to apply outside the territory of the United States. The Court held that the presumption against extraterritoriality does not govern this case for three reasons. First, Section 337 is expressly directed at unfair methods of competition and unfair acts “in the importation of articles” into the United States. As such, “this is surely not a statute in which Congress had only ‘domestic concerns in mind.’” Second, the Commission has not applied section 337 to sanction purely extraterritorial conduct; the foreign “unfair” activity at issue is relevant only to the extent that it results in the importation of goods into this country causing domestic injury. Third, the legislative history of section 337 supports the Commission’s interpretation of the statute as permitting the Commission to consider conduct that occurs abroad. In sum, what constitutes importation was not at issue in TianRui – the railway wheels were imported into the U.S. to compete with U.S. manufacturer’s products in the U.S. market. However, we can glean Congressional intent from the discussion of legislative history of Section 337 – Congress had “domestic concerns in mind.”

Interestingly, Section 337 of the Tariff Act also prevents the importation of counterfeit trademarked goods. See 19 USC 1337(a)(1)(C) (providing that it shall be unlawful to import into the United States, to sell for importation, or  to sell within the United States after importation of articles that infringe a valid and enforceable United States trademark). If the importation in 19 USC 1337(a)(1)(A) concerns importation that cause domestic injury, the importation in 19 USC 1337(a)(1)(C) must concern importation of counterfeit trademarked goods that have “domestic” effects. Therefore, it appears that transshipment of goods shall not be considered as an importation of goods because no harm is caused to U.S. trademark owners in the U.S. market.

Do the importation in 19 USC 1526(e) and the importation in 19 USC 1337(a) have the same meaning? We will explore this topic in a forthcoming blog post.


U.S. Changes in Iranian Sanctions Regime

As I’m sure many, if not all, of you are aware, the US with the EU and United Nations have recently undergone successful negotiations with Iran in order to reach “mutually-agreed long-term comprehensive solution that would ensure Iran’s nuclear programme will be exclusively peaceful.”   In the agreement that has been reached thus far with Iran, that country has agreed to:

a)  From the existing uranium enriched to 20%, retain half as working stock of 20% oxide for fabrication of fuel for the TRR and dilute the remaining 20% UF6 to no more than 5%,

b)  Agree to not enrich uranium over 5% for a period of 6 months, and

c)  Create no further locations for the enrichment of uranium, along with other measures.

In exchange, the US/E3/EU+3 agree to:

a)  Place a hold on any efforts to reduce Iran’s crude oil sales,

b)  Suspend US and EU sanctions on Iran’s petrochemical exports and on gold and precious metals, and

c)  Create no further sanctions for the next six months, while progress by Iran is monitored.

While further petroleum exports will not be stopped, no oilfield equipment may be exported to Iran, just as it is today.

There is a widely-held misconception that sanctions on goods being traded with Iran have been eliminated along with fines on those who choose to buy, sell, export, or transport goods to Iran.  It should be noted that most sanction reductions apply only to European citizens, and even they are few.

The US government has agreed to add no further sanctions during this 6 month period, but is not eliminating sanctions at this time (with the exception of certain humanitarian aid). When hearing about these agreements in the news, do not confuse the lowering of sanctions by the EU, which has no effect on US citizens.  As the White House stated in its fact sheet, “… relief is structured so that the overwhelming majority of the sanctions regime, including the key oil, banking and financial sanctions architecture, remains in place.”

For further information see:



Panama Canal Expansion: Impact on Southeastern Ports

We just wrote about the Panama Canal Expansion project (also called the Third Set of Locks Project) and its likely impact on Florida. The expansion, scheduled to be completed in April of 2015, will double the capacity of the Panama Canal by creating a new lane of traffic and allowing more and larger ships to transit. The expansion will create demand for ports to handle post-Panamax ships, which will be much larger in size. The U.S. ports of Baltimore, Norfolk, and Miami are now ready for these larger vessels, and other ports are undergoing renovations in order to accommodate these post-Panamax ships.

Southeastern ports are rushing to prepare for the completion of the Panama Canal Expansion Project. Southeastern ports along the Gulf of Mexico and Atlantic coast are competing for a part of the anticipated increase in volume. Many of these ports are not currently equipped to handle the higher container volumes and “post-Panamax” ships. They are all in the process of investing in expansion projects such as dredging access channels. and adding or updating container facilities in order to prepare for these new massive ships. These expansion projects are necessary as the Southeastern ports simply cannot afford to miss this opportunity allowing them to bring major business to their regions.

If Southeastern ports such as Charleston, Savannah, and even landlocked Atlanta are successful in updating their port facilities to accommodate the changes brought by the expansion, then these ports can expect a great increase in future business opportunities regarding importing and exporting goods at a higher volume.



Panama Canal Expansion: What Does it Mean for Florida?

             The Panama Canal Expansion project (also called the Third Set of Locks Project) is projected to be completed in April of 2015.  The project was announced with the purpose of increasing Panama’s ability to benefit from the growing traffic demand manifested in both the increased cargo volumes and the size of the vessels that will use this route.  This expansion will double the capacity of the Panama Canal by creating a new lane of traffic and allowing more and larger ships to transit. This project will improve on the current Panama Canal by building two new locks, one on each of the Atlantic and Pacific sides. It will excavate new channels to the new locks and widen existing channels and, this expansion project will raise Gatun Lake’s maximum operating level.

              The Canal Authority predicts that transit cargo volume will increase by an average of 3 percent a year, which will double 2005’s tonnage by 2025. The expansion will create demand for ports to handle post-Panamax ships, which will be much larger in size.  The U.S. ports of Baltimore, Norfolk, and Miami are now ready for these larger vessels, and other ports are undergoing renovations in order to accommodate these post-Panamax ships.

            In Florida, Governor Rick Scott has proclaimed that with the expansion of the Panama Canal, that he is confident the state can become the top export state in the nation. Mark Wilson, President and CEO of the Florida Chamber of Commerce stated that by taking advantage of this expansion, he expects to “double Florida-origin exports in the years to come, and to create more high-skill, high-wage manufacturing jobs.” The Panama Canal expansion has Florida’s logistics and distribution industry poised to grow further.  U.S. Trade Representative believes that this expansion can have “an explosive impact” on our ability to export from the U.S., and that Florida is going to be greatly benefited by these newfound abilities.

            The expansion of the Panama Canal will be a great advantage to importers and exporters in Florida. With the new features of the Panama Canal, and Miami being one of the few U.S. ports equipped to handle these “post-Panamax ” ships, Florida in the near term has a huge advantage over other U.S. states in their ability to handle larger volumes of cargo.


Families in the Philippines Need Your Help

On November 8, 2013 Super Typhoon Haiyan (locally known as “Yolanda”) made landfall in the Philippines. It is believed to be one of the most powerful and devastating storms ever recorded in the world. The aftermath of the storm is grim.  According to the United Nations Office for the Coordination of Humanitarian Affairs as of November 11, 2013 9.8 million people have been affected. 659,268 have been displaced. 394,494 people crammed into 1,316 evacuation centers. 10k+ feared dead.

Of the 9.8 million affected at least 2.5 million are in need of emergency food assistance. The World Food Programme is accepting donations. To donate please click ‘Donate Now’ below.

For other ways to help those affected by Haiyan please click here.