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This week the Consumer Product Safety Commission voted to approve a test program to assess the electronic filing of certificates of compliance at entry in coordination with U.S. Customs and Border Protection.  With the idea of better coordination among partner government agencies to facilitate electronic data collection and sharing of import data, the CPSC endorsed the test program to begin sometime after July, 2016 and run for approximately six months.

Currently Section 14(a) of the Consumer Product Safety Act, as amended by section 102(b) of the Consumer Product Safety Improvement Act of 2008 requires manufacturers (including importers) and private labelers of regulated consumer products manufactured outside of the U.S. to test and certify such products are compliant with all regulations prior to importation.  The CPSC also voted to extend the test program to certain products that do not currently require certificates, but are considered substantial product hazards.  The products added are hand-supported hair dryers, extension cords, and seasonal and decorative lighting products.

The test program will assess two options for the electronic filing of the certificates at entry.  An importer will have the option of either fling the data elements at time of entry or filing a reference to data stored in a registry maintained by CPSC.  Use of the Data Registry is voluntary. Once in effect, CPSC will have targeting and enforcement data available for validation, risk assessment and admissibility determinations at entry.  The goal is to review the data for earlier risk based admissibility decisions.

Notable and a change from the proposed rule on the test program is that the CPSC voted to require five data elements rather than the proposed ten.  Those data elements are the following:

  • Identification of the finished product
  • Each consumer product safety rule to which the finished product has been certified
  • Place where the finished product was manufactured including the name and address of the manufacturer
  • Parties on whose testing the certificate depends
  • A check box indicating that a required certificate currently exists for the finished product.

Should you have any questions, please do not hesitate to contact us.

The Attorney General of California has recently sent letters to more than 1,700 companies notifying them that the State is enforcing the California Transparency in Supply Chains Act, which became effective in 2012.  The Act requires large retailers and manufacturers doing business in California to disclose “conspicuously” on its websites “efforts to eradicate slavery and human trafficking from [their] direct supply chain for tangible goods offered for sale.”  The law applies to any company doing business in California, having annual worldwide gross receipts in excess of $100 million, and identifying itself as manufacturers or retailers on its California state tax returns.

Companies subject to the Act must post disclosures on its websites stating at a minimum that the company is:

  • Engaging in verification of product supply chains to evaluate and address risks of human trafficking and slavery and disclosing whether the verification is being done by a third party
  • Auditing suppliers to evaluate compliance with company standards for trafficking and slavery
  • Requiring direct suppliers to certify that materials used comply with trafficking and slavery laws
  • Maintaining internal accountability standards for suppliers failing to meet company trafficking and slavery standards
  • Providing company employees with training particularly to mitigate risks within product supply chains.

All companies to whom the Act applies, must post a disclosure – even if the disclosure states that the company has not taken any action with regard to the five areas above. In light of the recent letters by the California’s AG’s office, there could be civil actions brought for injunctive relief.

For more information, please contact:

David E. Fink
(310) 712-6170

Laura Siegel Rabinowitz
(212) 808-7706

In a recently released headquarters ruling, Customs and Border Protection (“CBP”) addressed the issue of the dutiability of payments for compliance testing.  The scenario is as follows:  The importer purchases merchandise from a foreign seller and imports them into the U.S.  The merchandise undergoes various product compliance tests outside of the U.S.  Sometimes the importer hires a third party tester directly and pays the tester directly and other times the seller hires the test vendors and either invoices the related fees to the importer or incorporates the costs into the imported merchandise.

Upon entry into the U.S. most merchandise is valued according to the transaction value of the goods which is the “price actually paid or payable for the merchandise…plus any assists.” (19 U.S.C. section 1401a(b)(1)(c))  The value includes total payment for the merchandise by the buyer to, or for the benefit of the seller.  CBP has already issued rulings holding that testing costs done by the seller are included in the dutiable value of the merchandise.  In this matter, CBP considered the question of third party testing costs.

CBP concluded that if the importer is paying a third party tester directly, then those payments are excluded from the transaction value of the goods.  In the instances where the importer relies on the seller to arrange the tests and pays the seller accordingly, the costs become part of the transaction value.  Therefore, it is important to keep in mind Customs valuation regulations when negotiating with manufacturers.

To read the full ruling, please click here.