Two Plea Guilty in Fake NAFTA Certificate of Origin Scheme

On December 16th ExportLawBlog reported that two men had pleaded guilty in the United States District Court Southern District of Texas of providing false NAFTA Certificates of Origin for textile products. Under the rules of NAFTA, goods originating in the U.S., Mexico, and Canada trade free of import duties among those three nations. Foreign fabric that is not the product of one of the three NAFTA partners does not qualify for NAFTA duty-free benefits.

In August 2008, a source of information informed Immigrations and Customs Enforcement (ICE) that Vahram Aynilian, President of N.Y. Aynilian & Co. located in New Jeresey was selling fraudulent North American Free Trade Agreement (NAFTA) Certificats of Origin documents. The fraudelent documents were used by Fred Lukach a freight forwarder in Loredo, Texas to claim that foreign textile shipments to Mexico were manufactured in the U.S.

From September 2008 through March 2009 undercover agents of U.S. Customs purchased from Mr. Aynilian multiple fake NAFTA Certificates of Origin at a rate of $1,000 per document. Investigations revealed that from 2005 to 2009 Aynilian had provided approximately 243 fake certificates for about $200,000. Aynilian and Lukach were each charged with multiple violations of 18 U.S.C. 554; each violation carries a maximum penalty of not more than ten years in prison and fine of not more than $250,000. Each man has entered a plea of guilty to one charge in return for which the United States will agree to drop the other charges and recommend substantially less than the maximum penalty. In addition Mr. Aynilian will forfeit his $200,000 in ill-gotten gains.

CPSC Extends the Stay of Enforcement on Testing and Certification Requirements for Many Children’s Products

WASHINGTON, D.C. - The U.S. Consumer Product Safety Commission (CPSC) voted unanimously (5-0) to extend a stay of enforcement on testing and certification of many regulated children’s products. While enforcement of specific CPSC testing requirements has been stayed, the products must still comply with all applicable rules and bans.

Time for a New Industrial Revolution

On December 20th, the Commonwealth of Massachusetts recognizes our textile heritage by honoring Samuel Slater (1768-1835).

“The governor shall annually issue a proclamation setting apart December twentieth as Samuel Slater Day, in recognition of the beginning of America’s Industrial Revolution along the banks of the Blackstone River where Samuel Slater established his first mill and later relocated and established the town of Webster, and in further recognition of the contribution of countless working men and women to America’s national greatness, and recommending that said day be observed in an appropriate manner by the people.”

—Massachusetts General Laws Chapter 6 Section 15PPP.

How we came to have a Massachusetts textile industry is a story worthy of spy-novel, for it was, literally, the result of industrial espionage. For a brief version of how the textile industry was established in America in 1790 I quote from the records of the 1925 Semi-Annual Meeting of The National Association of Cotton Manufacturers—

“[In England] Mr. Slater was apprenticed to Jeddidiah Strutt, who worked with Richard Arkwright. When young Slater came to this country, he did not bring any plans, any models, any patterns of any kind, on account of the prohibition of the exporting of cotton machinery by Parliament. He sought financial support, which he received from Moses Brown, who was in need of mechanical assistance...Brown took Slater out to Pawtucket and showed him some machinery which he had purchased somewhere. Slater immediately said the principle was wrong, discarded it, and then from his own mind started to manufacturer machinery on the Arkwright plan.”

There you have it. Prohibited by English law from bringing to American any drawings or notes on how to build a textile mill, Slater, observed closely how English machines were constructed and committed the plans to memory!

There is another story, one that is all too familiar—that is of the loss of jobs, not just in textiles, but all types of manufacturing jobs, in the U.S. Where are the manufacturing jobs that make possible the middle class that made America great? If a Samuel Slater showed up in America today with a terrific new technology that would put millions to work, would our elected officials embrace him? Or would they tax and regulate his innovations out of business?

Limitation of Duty-free Imports of Apparel Articles Assembled in Haiti under the HOPE Act

The Haitian Hemispheric Opportunity Through Partnership for Encouragement Act (HOPE) provides for duty-free treatment for certain apparel articles imported directly from Haiti. Section 213A (b)(1)(B) of HOPE outlines the requirements for certain apparel articles to qualify for duty-free treatment under a ``value-added'' program. In order to qualify for duty-free treatment, apparel articles must be wholly assembled, or knit-to-shape, in Haiti from any combination of fabrics, fabric components, components knit-to-shape, and yarns, as long as the sum of the cost or value of materials produced in Haiti or one or more countries, as described in HOPE, or any combination thereof, plus the direct costs of processing operations performed in Haiti or one or more countries, as described in HOPE, or any combination thereof, is not less than an applicable percentage of the declared customs value of such apparel articles. For the period December 20, 2009 through December 19, 2010, the applicable percentage is 55 percent.

For the one-year period beginning on December 20, 2009 and extending through December 19, 2010, the quantity of imports eligible for preferential treatment under the value-added program is 284,904,116 square meters equivalent. Apparel
articles entered in excess of these quantities will be subject to
otherwise applicable tariffs.

Stay on CPSIA Certificates Expected to be Terminated

Effective February 10, 2009, the Consumer Product Safety Commission (CPSC) stayed enforcement of certain provisions of the Consumer Product Safety Improvements Act of 2008 (CPSIA) which required testing and issuance of certificates of compliance by manufacturers and importers supplying products subject to any CPSC safety rule, standard, ban or Act enforced by the Agency.

The stay is expected to remain in effect until February 10, 2010 when the Commission will likely vote to terminate. When terminated, the testing and certification requirements will go into effect and will apply to "newly manufactured products subject to the Commission's rules, standards and bans." More information on the certificate is at: http://www.cpsc.gov/about/cpsia/faq/102faq.html#electronic.

For children's products, certificates must to be based on representative testing conducted by CPSC-recognized third party laboratories (See list at: http://www.cpsc.gov/cgi-bin/labapplist.aspx). Children's products are those intended primarily for children 12 years old and younger. General Conformity Certificates, however, do not need to be based on testing by third party labs approved by the Agency.

For the General Wearing Apparel Flammability Standard (16 CFR 1610), plain surface fabrics, regardless of fiber content, weighing more than 2.6 ounces/square yard are exempt from the testing requirement and also fabrics, both plain surface and raised surface, made wholly of acrylic, modacrylic, nylon, polyester, olefin or wool, or blends of these fibers are exempt from testing. Though these fabrics are exempt from testing, a Certificate of Compliance is still required.

The final rule on Certificates of Compliance was published in the Federal Register on November 18, 2008 and is available at: http://www.cpsc.gov/businfo/frnotices/fr09/certification.pdf.

CPSC Anounces Safety Recalls Affective Millions of Window Shades

On December 15, 2009, the U.S. Consumer Product Safety Commission announced several voluntary recalls affecting millions of Roman shades and other window shades.

U.S. Seeks Free Trade Agreement with Vietnam, Other Pacific Nations

The United States intends to enter into negotiations on a Trans-Pacific Partnership (TPP) trade agreement. USTR is seeking public comments on all elements of the agreement in order to develop U.S. negotiating positions. The initial TPP negotiating partners include Australia, Brunei Darussalam, Chile, New Zealand, Peru, Singapore and Vietnam. The U.S. objective is to expand on this initial group to include additional countries throughout the Asia-Pacific region. The U.S. already has trade agreements with Chile, Peru, and Singapore and it is unclear how they would be integrated into the TPP.