Ya Basta - Mexico Asks China To Work Together to Address Duty Evasion Schemes

Duty evasion has recently been the subject of Congressional hearings, reports, and pending legislation in the Senate and House in the United States of America.  Looks like the United States of Mexico is joining the fiesta.

According to a September 28, 2011 press release, Mexico's Secretary of Economy recently sent a letter to China's Ministry of Commerce (MOFCOM) raising concerns that Mexican industries are being harmed by pervasive transshipment, undervaluation, and misclassification. The letter apparently identifies companies that offer services to evade duties and "trick" customs authorities in several countries, including Mexico.  I haven't seen the letter, but I wonder if they are referring to the companies described in Part II of this report.

While efforts north of the Rio Grande have primarily focused on customs enforcement, Mexico is seeking a bilateral working group to enlist China's assistance in combating the problem.  This approach is inline with the Mexican saying, "mas vale un mal arreglo que un buen pleito" (it's better to have a bad deal than a good fight).

Show Me the Money - DOC Announces New Requirement For Cash Deposits of Provisional Measures

The US Department of Commerce (DOC) announced today a change in its regulations that will require importers to post cash deposits of estimated antidumping (AD) and countervailing (CVD) duties starting with the preliminary determination in original investigations.  This change applies to new investigations initiated as a result of petitions filed on or after November 2, 2011.  While DOC maintains discretion under the new regulations because it will "normally" require cash deposits, it recognizes that, going forward, it will be "rare and unusual circumstances" when it permits bonding.

Prior to this change, importers were allowed to post bonds in lieu of cash deposits for the so-called "provisional measures" DOC puts in place upon making an affirmative preliminary determination in an original investigation.  Under the US's retrospective system, the "provisional measures" are estimates of the importer's AD/CVD liability based on the dumping and/or subsidy margins calculated for the preliminary determination.  The final AD/CVD liability is determined later through annual administrative reviews.

DOC is making the change:

• "to strengthen the administration of the nation's AD and CVD laws by making importers directly responsible for the payment of AD and CVD duties";
• "to ensure that the U.S. Government collects the full amount of the duties owed"; and
• "reduce some of the burdens that U.S. Customs and Border Protection (CBP) faces when trying to collect AD and CVD duties."

The current shortfalls in collecting AD/CVD duties are well documented: see here, here, and here.  

Mystery Solved -- FDA/CBP Allows States To Import Drugs For Lethal Injections

The Arizona Republic is reporting that the FDA is exercising "enforcement discretion" to allow states to import drugs used in lethal injections even when produced in non-FDA approved facilities.  According to the article:

An FDA spokeswoman told The Arizona Republic last week that the agency would "continue to defer to law enforcement on all matters involving lethal injection," suggesting that the agency will allow states to continue to import the drug from abroad.

The article goes on to describe how Arizona imported the drug and counseled other states on how to go about doing so:

In late November, Britain imposed a ban on thiopental exports for use in capital punishment. In December, the Italian government passed a similar resolution.

Also in December, the California Department of Corrections and Rehabilitation was ordered by a judge to release details of its acquisition of thiopental after being sued by the American Civil Liberties Union. California disclosed its source: Arizona's Corrections Department. In late September, officials from California had driven to Arizona to obtain the drug.

Arizona corrections officials coached their California counterparts on a "bulletproof" means of obtaining the drug.

According to an e-mail from Corrections Deputy Director Charles Flanagan to California officials, Arizona used a local customs broker to obtain the drug from a British pharmaceutical-supply house. Then, Flanagan said, it was necessary for the shipment to go through customs in Phoenix, not in Memphis, Tenn., where the shipment would first arrive via Federal Express. That would give jurisdiction to local customs officials, not those in Memphis.

An FDA officer from Los Angeles signed off on the shipment, according to court documents. Whether the decisions to admit the shipment were made locally or higher up in Customs and the FDA is unclear. Neither agency has yet released that information.

Homeland Security Secretary Janet Napolitano, whose agency oversees U.S. Customs and Border Protection, told The Republic that the question did not go as high as her office.

In a series of e-mails to The Republic last week, FDA spokeswoman Shelly Burgess wrote: "Reviewing substances imported or used for the purpose of state-authorized lethal injection clearly falls outside of FDA's explicit public-health role. FDA does not verify the identity, potency, safety, or effectiveness of substances imported for this purpose. FDA exercises similar enforcement discretion when these drugs are manufactured and purchased within the United States."

I've previously blogged about the prohibitions against importation of drugs manufactured in non-FDA approved facilities located outside the United States ("Buying Medicine From Outside the U.S. Is Risky Business" Especially For Death Row Inmates) and raised questions about how Arizona obtained the sodium thiopental:

what I really want to know is how was the thiopental sodium imported into the United States.  Perscription drugs (and controlled substances) such as sodium thiopental  can only be imported into the United States if they are produced at FDA-approved facilities.  There are no foreign FDA-approved facilities for sodium thiopental.  Therefore, it's unclear how someone could have formally declared the drugs and imported them into the United States.  Did someone "informally" import the sodium thiopental  in their carry-on luggage and make it available for sale to states?  I sure hope not.

Well, now we know.  The FDA has decided to create a de facto "lethal injection" exception to the statutory prohibition against importation of drugs produced in non-FDA facilities.  In effect, what the FDA is saying is that it won't prohibit the importation of these drugs by states that intend to use them in lethal injections because these are "off label" uses and so the FDA has no interest in ensuring that the drugs are safe and effective.  I suspect the recipients of the drugs feel differently.