International Trade, Enforcement & Compliance Recent Developments Update (June 21, 2023)
Welcome to Foley’s International Trade, Enforcement & Compliance Recent Developments Update.
Recent developments include fair warning from the Department of Justice that national security concerns can invade even ordinary business activities, a reminder that the False Claims Act increasingly is being used as a weapon against companies that underpay Customs duties, and a multimillion-dollar message that federal judges find it kind of fishy to see price fixing between competitors.
National Security Risks
According to Principal Associate Deputy Attorney General Marshall Miller, the Department of Justice is finding that two-thirds of the DOJ’s major corporate criminal resolutions are now implicating U.S. national security. According to Mr. Miller, “[E]ven business operations and lines far removed from the defense sector — cigarettes, cement, information technology — can pose dire national security risks if the company is not highly sensitive to high-risk actors, high-risk areas, and high-risk internal activity,” including any operations in areas “controlled by autocracies.” Has your company conducted a global risk assessment in the last two years, to identify your highest-risk operations?
Customs False Claims Act Matter
In a recent settlement of a False Claims Act case, an importer agreed to pay $765,000 for failing to mark goods with the country of origin. Notably, the settlement was not premised on the underpayment of tariffs; instead, the underpaid duties were based on a 10-percent penalty that Customs is allowed to impose for failing to follow the Customs marking rules, thus demonstrating the incredible reach of FCA actions to hit Customs errors. Has your organization conducted a detailed review of its goods to ensure that it always knows the country of processing, that it is correctly applying the correct rules to determine this (substantial transformation versus tariff-shift for many free trade agreement countries), and that it is appropriately marking its goods in a way that will survive to the ultimate consumer?
Antitrust & Fair Competition Enforcement
A Florida federal judge has approved a $33 million price-fixing settlement involving indirect salmon purchasers and salmon-farming companies. Wood Mountain Fish LLC v. Mowi ASA (f/k/a Marine Harvest ASA) et al., case number 1:19-cv-22128, in the U.S. District Court for the Southern District of Florida. Does your organization have an up-to-date antitrust and fair competition policy, including guidelines for managing trade association activities?
Export Controls Enforcement
The Department of Commerce has implemented a dual-track system that fast-tracks the completion of voluntary self-disclosures for minor export violations while incentivizing the submission of “significant possible violations” of the Export Administration Regulations. According to the Department, if “a company . . . commits a violation of the EAR and makes a disclosure, they benefit greatly by getting a sharply reduced penalty — but if they make a deliberate decision not to disclose a significant possible violation, they risk a sharply increased one.” Does your organization maintain comprehensive export control compliance measures, including an export controls and economic sanctions policy; stop, hold, and release internal controls; and written export controls and screening protocols?