The Fedtrade® Podcast recently interviewed Robert Leo, a customs and international trade attorney at Meeks, Sheppard, Leo & Pillsbury LLP, a specialized law firm representing clients on customs and related international trade issues. The firm represents clients before the principal international trade regulatory agencies, including U.S. Customs and Border Protection, the U.S. International Trade Commission, the U.S. Department of Commerce, the Office of the U.S. Trade Representative, the Bureau of Industry and Security, the Food and Drug Administration, the Federal Trade Commission and the Department of Agriculture. In addition, the firm handles litigation related to agency actions before the U.S. Court of International Trade, the U.S. Court of Appeals for the Federal Circuit, and various other federal district and appellate courts.

Learn more Meeks, Sheppard, Leo & Pillsbury LLP on their website. Connect with Robert on LinkedIn.

Key Takeaways:

  • In recent years, China and India have become the two major players for imports into the United States.
  • Companies must consider freedom to operate in the U.S. market.
  • Constantly changing and increasingly strict regulatory requirements greatly affect companies.
  • Knowing your supplier and product are key to to ensuring a successful entry into the U.S. market.

[a copy of the written transcript is here]:

Hello and welcome to the Fedtrade® podcast. I’m your host, James Hastings of Rothwell Figg. Joining us on today’s program is Robert Leo, a customs and international trade attorney with Meeks, Sheppard, Leo & Pillsbury of New York. Bob will be sharing his insight on how global companies can best position themselves to go to market in the United States. Bob, welcome to Fedtrade®.

Thank you, James. Very nice to be here.

Bob, I understand your focus is customs and international trade law. Can you briefly describe what those two subjects are?

Sure. Actually, customs is part of international trade. We started as a customs firm, primarily advising companies, entities, and persons on import regulations into the United States. And over the years, our clients kept asking us export questions. So we do export related questions as well, which involves physically exporting from the United States with the regulations there. Also now a lot of sanctions on other countries, on exports to other countries, whether licenses are required. So international trade covers all of that. It covers also dumping and countervailing duties, which would take us a couple of hours to explain so I won’t get into that. We do a little bit at the beginning of those, but we don’t practice that. And sometimes, if necessary, we go to court and litigate import cases – the U.S. Court of International Trade. It’s a federal district court. It’s interesting that the Court of International Trade doesn’t cover export cases. But we do that, only when necessary, because it’s really an administrative type of practice where you deal with the agencies involved and you can usually get a determination that’s good for the client or at least satisfies the client enough where you don’t have to litigate something.

What types of clients do you typically serve?

Usually it’s companies, corporations, LLCs, or partnerships that are in the business of importing or exporting. We have some Fortune 50 companies, we have Fortune 500 companies, we have small family-owned companies, mom and pop shops. We also advise, from time-to-time, individuals that are bringing, say they’re moving back to the United States and want to bring whatever they have overseas back in. Or if you get caught at one of the major airports with over $10,000 in your pocket when leaving the United States or coming in and you haven’t declared it to customs, we get a number of those where customs will take the money and then you have to file petitions to get it back. But primarily we advise businesses and we’re more of a business oriented law firm where we give an answer that is what the business needs to know as opposed to all the law behind it. Unless they want the law behind it and we can supply that as well.

That makes sense. Regarding your clientele who are seeking to go to market in the United States, do they come from a majority of certain countries or is it throughout the world?

Yeah, good question. It is throughout the world. Most of them, well, especially in the last four to eight years, it’s been U.S. companies that deal with companies in China, that either are related companies to them or make products for them in China and then ship it to the United States, bring it into the United States. And also companies in the United States that export to China or in a lot of cases export parts to China or have material sent to China to make a finished product. So the majority of our clients deal with China in some way. Even the multinational companies – we have non-U.S. companies in Europe, and they import into the United States, but they also either export to China or import their product that they design in Europe but have made in China or another country. India is becoming a large player now too for imports into the United States. So that’s the majority right now. And as people have read, China is high on the list of trade targets for the U.S., regardless of the administration.

With regard to importing into the United States, the great focus is on the import of products. What is not discussed as much is the import of services into the United States. Can you describe if you experienced those situations?

Yeah, good question because services are not regulated for import into the United States. So there are regulations of what a service can do in the United States, depending on what area they are in, what area the person or the company is in. But if it’s an accounting firm, for example, or another law firm, there’s no customs implications on that. It’s really on hard goods. And on the import side, we get a lot of questions on if you import something over the web, in other words, if you download something from, say, Europe, is that an import? And the answer is under U.S. Customs Law, that’s not an import that they tax, that they put a tariff on. And they don’t monitor that either. It’s a different question then on the export side where if you export software designs or export something via email, via download, upload, it is considered an export and then it might require a license depending on where you export.

Even with respect to apps that international companies make available to companies in the United States or customers in the United States, there are still intellectual property considerations involved.

Definitely. And U.S. Customs does not get involved with that other than you can record your copyright or trademark with U.S. Customs. And that offers some protection for U.S. copyright or trademark holders so that other people can’t import a product with a copyright or trademark that’s been recorded with customs. But the intellectual property itself is not something that U.S. Customs governs.

In your opinion, what is the importance of intellectual property protection for clients entering the U.S. marketplace?

It’s actually very important. We don’t advise on intellectual property, but we know that it’s just like doing customs compliance or export compliance where you really need to know what you’re importing, what duty you’re going to pay, what the regulations are. Are there any prohibitions on it, are there any problems with it that might stop your shipment from an import side? You need to know whether your intellectual property is protected if you’re going to sell to another country or if you’re importing something you’re having made in another country that it’s under your patent or your copyright or trademark. And you need to know how to protect that intellectual property in the United States and not only in the United States, because there are people in the United States that will try to knock off your product, but also on the import side too. We get a number of questions on that, where a U.S. company has found out that a competitor is selling their exact same product from the same factory and they have copyrighted or trademarked the packaging, or they have a patent on the product and the other company bringing this in is changing the packaging slightly, but it’s also getting the product from the same exact manufacturer. And the example I’m talking about was gloves during COVID, where the nitrile gloves were made in the same factory and they were put in the same type of packaging as our client’s. And they did the investigation. They had all the intellectual property on it and they asked us to help them stop the imports. So we put together a package that we could give to customs at the ports to say, “these are the imports and this is the company we believe is importing. We don’t have exact information as to where they are storing the product, but here’s our client’s copyright and trademark and packaging. And the other one is a knockoff and we think they’re infringing their patent as well.” And Customs took it from there.

Many international companies when seeking to go to market in the United States, rightfully seek trademark, copyright, or patent protection in their products. One of the areas that is somewhat overlooked is the right of that company to operate freely in the United States and not possibly infringe a third party. Have you seen that? And is that of equal importance to protecting your rights?

We haven’t seen that, but I believe it is of equal importance as any protection of your rights. It seems to me to be an open door. 

In other words, a freedom to operate opinion or a trademark clearance or some other types of search to see if they’re permitted to enter into the U.S. marketplace without a high risk of infringing an already existing party.

Right. And that would come from an intellectual property firm like yours. We could help to explain that to customs or to check with customs whether it’s a trademark already recorded with customs. If it hasn’t been, then it should be. Customs might detain it. They might see just by happenstance, see the product coming in and say, “wait a minute, we think there’s a recordation on this one. We’re going to stop it even though the company that does have freedom to operate has that authorization.” So it can work the other way as well.

In your experience, do you believe that regulatory requirements over the years have become more stringent since you first started the practice?

Yes. As it is with almost any industry or any practice, there are more and more regulations coming out all the time. Part of the issue is Congress passes laws but doesn’t give specifics a lot of times. So then it’s up to the agencies to interpret what Congress wanted to say, and they have to write regulations that way. But just even in the past eight years, we’ve seen more changes to import regulations, to export regulations, more restrictions coming out almost on a monthly basis, if not a weekly basis recently. And the custom side, on the import side, they’re pretty easy to understand if you’ve been in the business for a while, but they can affect a corporation tremendously who has relied on a previous interpretation of that regulation and has set up their business that way.  And the interesting thing to us as lawyers is that the regulation can be published as a notice of proposed rulemaking or proposed regulation. Everybody will comment on it, but it always hurts somebody and it’s meant to help the agency maybe, or it helped the domestic industry in a lot of cases. But what it does, it creates a lot of work for lawyers. Number one.

But number two, for business, it’s very hard to plan. I started out with the Association of Exporters and Importers. So I started with basically a lobbying organization on international trade. And I quickly understood that Congress, the representative senators and their staff in Washington, don’t have business experience and they don’t know really how a business works. And the problem with that is a business takes the long view. They set up their operations in a foreign country for making their product for a couple of years, at least. And they want to be secure in that. And then a regulation will come out that’ll either increase the cost or put extra duties on that product and they have to scramble. Or, all of a sudden they’ll find out that there’s now a forced labor issue out there and that a part of their product is made with forced labor and they didn’t even know because it’s not their part, they just bought it from an overseas manufacturer who’s not related to them. But it’s a small part of the finished product. And now it’s been subject to detention by U.S. Customs because Customs believes that that little part was made with forced labor and then the whole machine or the whole product is detained at the port.

Those are great examples.

Yeah. And the regulations keep coming out like that, where the regulations are tweaking one part of the process, but it really has a lot of ramifications down the line for the companies that have relied on the previous regulation.

If you could summarize for a potential client who’s seeking to go to market in the United States, some of the top legal customs and/or international trade issues that they should be looking out for to ensure a successful entry into the U.S. market, what would they be?

So the first thing is you need to know your product. You need to know where you’re sourcing from. You need to know what the classification is for duty purposes. You need to know all the requirements that U.S. Customs looks at when goods physically enter the country. Everything is electronic now. Customs is not looking at paper- they are looking at the electronic information entered so they know where your product is coming from, where it might be counterfeit, that type of thing. So know your product, know your supplier. In the U.S., it’s know your customer. In the import area, it’s know your supplier. Just going back to the tariffs for a second, in 2016, 2018, the tariffs on China, as everybody knows, were increased dramatically on certain products. That’s going to happen again. And you need to know what that’s going to be and whether you can pivot to another country in a short amount of time. So you really need to know what your classification is and your current duty rate. The second thing would be the supplier, which dovetails with the forced labor issue. In other words, is your supplier a reputable supplier? Are they buying their materials from a reputable supplier? Is there a counterfeit part made somewhere overseas that shows up in your product? But also with forced labor, is there some part of forced labor in your product? So you need to know your suppliers. Forced labor is being strictly enforced and enforcement has dramatically increased over the last three and a half years and keeps increasing. The staffing and resources that the government is putting on that has increased exponentially over three years and customs will detain your shipments without warning and then you have to prove them negative. So you really need to know your supplier and get that buttoned down from where something was grown all the way to showing up at your warehouse and including logistics, warehousing, financing, all of that has to be known as well. Those are the two main issues that are here and will be increasing.

Robert Leo, Customs and International Trade Attorney with Meeks, Sheppard, Leo, and Pillsbury. Thanks for joining the podcast.

Thank you, James, for having me and you’re welcome.

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