New enforcement actions aimed at e-commerce are the focus of a recent executive order from President Trump, who said this sector “is being exploited by traffickers to introduce contraband into the United States, and by foreign exporters and United States importers to avoid applicable customs duties, taxes, and fees.”

The order raises a number of questions and concerns. It appears to be geared more toward the practice of non-resident importers acquiring importer of record numbers to ship goods to the U.S. and then disappearing to avoid duties, an increasing concern for U.S. Customs and Border Protection with the recent proliferation of Section 301, Section 232, and AD/CV duties, but it is written in such a way that it could be applied more broadly. It establishes tough penalties and appears to broaden the types of actions to which penalties could be applied, but some of those measures may not be allowable under current law. It is also unclear how CBP will interpret and implement the order in general.

For more information on this EO and its potential effects, please contact trade attorneys Paula Connelly at (781) 897-1771 or Lenny Feldman at (305) 894-1011..

IOR Numbers

The EO establishes a new policy under which any person who knowingly, or with gross negligence, imports (or facilitates imports of) merchandise in material violation of federal law should be referred to CBP for a determination of whether that person should be suspended or debarred (i.e., excluded from federal programs). The federal government will consider steps to ensure that persons who are thus suspended or debarred are excluded from participating in the importation of merchandise into the U.S.

In addition, the Department of Homeland Security is directed to promulgate regulations providing that any person suspended or debarred by CBP “for lack of present responsibility for reasons related to importation or trade” will not be able to obtain an IOR number for the duration of that suspension or debarment.

Express consignment operators, carriers, hub facilities, and licensed customs brokers will be required to notify CBP of any attempt “of which they know or have reason to believe” by a person thus deemed ineligible for an IOR number to re-establish business activity requiring an IOR number through a different name or address. CBP will consider measures to ensure that such entities cease to facilitate business activity that requires an IOR number by persons deemed ineligible for one, which may include limiting the entities’ participation in any CBP trusted trader programs, taking action regarding their operating privileges, or suspending or revoking a customs broker’s license.

CBP will report within 90 days on measures the federal government could take to prevent the importation through the international postal network of goods shipments known to have been facilitated by a person deemed ineligible for an IOR number under this EO.

International Mail

DHS will be required to formulate a compliance score for each international post (defined as a foreign public or private entity providing various types of postal services, including mailing and delivery services) that takes into account rates of trafficking of counterfeit goods, narcotics, and other contraband; the effectiveness of that post in reducing such trafficking; and other factors. Any international post that achieves less than a minimum score to be determined by DHS will be deemed noncompliant and subject to the following measures.

- for noncompliance for two or more quarters, DHS will prioritize targeted inspection of imports from that post

- for noncompliance for six or more consecutive quarters, CBP may require additional information for any shipment from that post and may take measures to prevent importations from that post when that information is not promptly provided

- for noncompliance for eight or more consecutive quarters, CBP will take measures to protect the U.S. from shipments from that post, which may include preventing the importation of shipments dispatched from that post

Enhanced Enforcement

The EO directs CBP to periodically publish information about seizures in the international mail and express consignment environments that involve intellectual property rights violations, illegal drugs and other contraband, incorrect country of origin, undervaluation, or other violations of law of particular concern.

The U.S. Attorney General is directed to give high priority to prosecuting offenses related to import violations described in this EO, including by increasing the number of Department of Justice officials who will enforce criminal or civil laws related to the importation of goods.

DHS is required to submit within 210 days a report analyzing whether fees collected by CBP are sufficient to reimburse the federal government’s costs associated with processing, inspecting, and collecting duties, taxes, and fees for parcels and, if not, recommending any necessary fee adjustments.

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