New Rules, New Headaches for Importers
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If you import goods into the United States, times are a bit tough right now. Consumer demand is falling, transportation prices are high, the weak dollar makes buying from overseas more expensive and the escalating financial crisis is affecting your ability to finance your transactions. Presidential and congressional candidates are raising a host of issues concerning sourcing abroad, and an electorate shocked by a struggling economy and a still-sizeable trade deficit is listening.
Could things get worse? They can and, in fact, they have. Two new laws affecting importing and exporting enacted this summer impose some of the most burdensome requirements American importers have faced in years. While the intent of these two measures is noble enough--improving protections against unsafe consumer goods and preventing the illegal logging that's devastating a number of developing countries--the way they're being implemented is changing the way importers structure their operations and deal with the federal government. And the first deadlines for complying with the new rules are approaching quickly.
Let's look at each of the new laws in turn. The Consumer Product Safety Improvement Act of 2008, Congress' response to the unprecedented outbreak of product recalls in 2007, was signed into law Aug. 14. This bill is the most comprehensive overhaul of U.S. consumer product safety laws in decades and includes more than 40 new regulatory requirements on companies that import goods to supply the U.S. market. These include stricter limits on lead and other hazardous substances in children's products, importer and manufacturer certification of third-party testing of children's products, and bans on imports and exports of nonconforming goods, as well as higher civil and criminal penalties for violations.
Potentially the most onerous new requirement, however, is also the one that takes effect the soonest. Beginning Nov. 12, importers and manufacturers of nearly any type of consumer product being imported for warehousing and/or consumption must certify that those goods conform to any applicable rules, bans, regulations or standards administered by the Consumer Product Safety Commission. This declaration must be based on a reasonable testing program and included in a certificate of conformity that accompanies the product during shipment and is subsequently furnished to each distributor or retailer of the product. If this requirement is not met, or if the certificate that is provided is false in any way, the shipment may be refused admission into the U.S. and destroyed.
The second new law covers a wide range of goods as well, and in fact many affected importers are only now beginning to realize it applies to them. The 2008 Farm Bill included a sweeping expansion of the scope of the Lacey Act--a century-old conservation law that restricts trade in certain plant and animal species--that is designed to aid efforts to prevent the illegal logging of endangered trees. In particular, this bill requires that importers of plants or plant products, including wood and wood products, must submit, upon entering those goods into the U.S., a declaration that includes the genus and species of the plant(s) used, the value and quantity of the shipment, and its country of origin. The Department of Agriculture recently announced plans to begin enforcing this requirement next spring.
Federal officials have emphasized that the scope of this requirement is broad and includes not only obvious goods such as plants, lumber, paper and paperboard, but also items such as furniture, tools, cookware, umbrellas, toys and sporting goods, musical instruments, textiles and apparel, and many more. There are no exceptions for products that contain only small amounts of plants or plant products. While the law does exclude some types of goods, the government is still working to define exactly what these will be.
While both the Lacey Act and the expanded laws protecting consumers have laudable intent, it's the details that plague importers unless Congress and the administration work out the limits of these broad new requirements. The good news is that they're trying to, but let's hope they make progress quickly.