CBP Abandoning Standard of Reasonable Care in Customs Enforcement: Lawyers
NEWPORT, R.I. -- The Trump administration appears to be ditching the standard of reasonable care by importers in favor of strict compliance when enforcing customs violations, trade lawyer David Murphy said at the Coalition of New England Companies for Trade's (CONECT) Northeast Trade and Transportation Conference on Oct. 29.
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Murphy, a partner at Grunfeld Desiderio, said that based on the language of recent proclamations and executive orders, the Trump administration is moving "beyond reasonable care" and "in some situations, they have now stated strict liability" for importers.
Previously, importers have had to exercise reasonable care when making transactions and providing "complete information, doing due diligence" to make sure that information supplied to CBP was "sufficient and correct," Murphy said. The statute was vague, prompting trade lawyer Susan Ross, a partner at Mitchell Silberberg, to say that it can't be defined "because Customs hasn't really defined it."
Still, the standard allowed importers to operate with a presumption of innocence, a presumption the Trump administration wishes to move beyond as it prioritizes what Murphy called a "heavy emphasis on monetary penalties and enforcement."
Murphy said that it is an open question of whether the reasonable care standard will "continue to be recognized" by the Trump administration. He said that while "it's a little early to give you a definitive answer on that," language from the administration suggests it will not. The proclamation announcing copper tariffs (see 2507300053) said that importers may be subject to severe consequences for customs violations, in which he said the "idea of strict compliance is being introduced." He wondered "what happens to reasonable care" when "strict compliance is required? It would seem to be thrown out."
Murphy questioned the role of customs brokers in the enforcement paradigm shift, saying that CBP "would like the broker to work for Customs rather than being an agent for the employer." He said there have been changes in the regulations for brokers "that basically require the broker to turn in an importer if they're not following certain instructions," which he called "a little bit severe, but that's the way we're moving."
The idea that brokers are supposed to "ferret out fraud," is "antithetical" to the current relationship between importers and brokers, Murphy said, because they are "supposed to be working together" in a fiduciary relationship.
Ross said that CBP is often incorrectly issuing CF 28's and 29's as it tries to ramp up enforcement and, in some cases, "going right to letters of investigation," without giving the importer a chance to respond. This is significant, she said, because the importer's "right to fix the problem through a prior disclosure is cut off." She stressed that CBP is not making mistakes due to incompetence but because it is "very short of experienced people in higher positions, so be warned."
While noting that Murphy was "absolutely right" in saying the heightened enforcement environment is "all about revenue," Ross went one step further, saying, "it's all about stopping imports." She said she was not suggesting "that there's been any kind of memo issue that says, try to stop as much as you can, but it's very obvious that the CBP folks that are inspecting the goods, that are dealing with the paperwork are all being very strict."