Big Changes Planned for CBP Enforcement of E-Commerce Imports to Fight Counterfeits
The Department of Homeland Security will take several new steps toward preventing the importation of counterfeit goods, executive branch officials said during a Jan.24 press conference to discuss a report on the subject. Peter Navarro, a close White House adviser on trade, said of the report: “What they produced is both historic and transcendent. The guts of this are the 10 sets of government actions that will be implemented immediately.” But, he said, 10 best practices for private industry -- which are voluntary -- are as important, if not more important. He said that currently, the burden is on the intellectual property rights holders to police the internet, and the government to catch counterfeits in shipments.
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“The flood of counterfeits coming, you cannot seize and inspect your way out of that problem,” he said. The report is a result of a memorandum from President Donald Trump issued last year that called for scrutiny of how counterfeit goods enter the country (see 1904030037).
Among other plans, “CBP will adjust its entry processes and requirements, as necessary, to ensure that all appropriate parties to import transactions are held responsible for exercising a duty of reasonable care,” the report said. The agency will also “treat domestic warehouses and fulfillment centers as the ultimate consignee for any good that has not been sold to a specific consumer at the time of its importation.” With this approach, the burden will shift to companies like Amazon, Alibaba, eBay and Walmart.com, Navarro said. “E-commerce platforms … are making too much money off this problem,” he said.
CBP will also require formal entry for shipments deemed risky, “notwithstanding that such shipments might otherwise qualify for duty-free or informal entry treatment,” it said. The agency will also work with the Justice Department to provide guidance on possible whistleblower claims involving e-commerce customs violations and will “enable the public to identify and bring such violations to the attention of the government,” it said. CBP should also consider whether new regulations are needed to “better define and subsequently enforce Section 321 eligibility requirements.”
The DHS also recommends that “the administration pursue a statutory change to explicitly permit the government to seek injunctive relief against third-party marketplaces and other intermediaries dealing in counterfeit merchandise,” it said. Until then, “DHS will provide information and support to registered brand owners looking to utilize statutory authorities to seek injunctive relief against persons dealing in counterfeit merchandise, whether through direct sales or facilitation of sales, following seizures of goods that are imported contrary to law.” The department also calls for a review of “the legal framework for allowing non-resident importers in the Section 321 de minimis low-value shipment environment.” CBP will also consider whether more fees are needed to fund the enforcement efforts.
Chad Wolf, acting secretary of Homeland Security, also said that international e-commerce platforms need to do more to protect intellectual property. “Up until this report private sector actions have not been sufficient,” he said, and said they need to aggressively self-police.
Wolf said that the government has statutory authority to levy civil fines. But Navarro added that “it’s important that Congress also steps up to the plate and makes it easier for parties to be held accountable.” Navarro said bonding requirements will make sure that offshore companies can be held accountable, and that changing who's going to be the ultimate consignee and importer of record will also help. “There’s real teeth and jaws in this,” he said.
Navarro said that while some aspects of the plan won't take effect for 180 days, the private sector can start moving toward best practices immediately, and some government initiatives will also start immediately. Mark Morgan, acting CBP commissioner, said it's not right to call this a report. “It's actually an action plan,” he said.
The U.S. Chamber of Commerce hailed the report. “We commend the Department of Homeland Security for prioritizing solutions to counterfeit and pirated goods, which threaten public safety, jobs, and economic growth. .... Specifically, the importation of unapproved medicines can have life-threatening consequences for patients and jeopardize the safety of the U.S. pharmaceutical supply chain.”