China-US Trade Alert: Electronic Goods Being Seized by US Customs

1. China-US Trade Alert: Electronic Goods Being Seized by US Customs As we all know, China and US are major trade partners, and there is a large amount of related financing that follows this path of trade. Just last month, US Trade deficit showed a 7% increase in imported goods. Much of these goods are financed by US or Chinese banks or commercial lenders. Many trade finance and factoring companies in the US also provide financing around these services. Based on several current factoring companies’ reports, it appears that Customs Border Patrol (CBP) is detaining and seizing a much higher percentage of the electronics trade because they have decided to raise their internal requirements for documentation. For example, US Customs requires for tablet computers with Google software to be authorized by Google which makes sense for use of their logos, etc. However, having Google’s approval for use of logos is no longer sufficient documentation for U.S. Customs. They must have a Letter from Google authorizing them to be able to “import” their goods. This appears to be over reaching because if Google gave the approval and certification to the tablet or electronic makers to use their name and logos, then it should be assumed they have the right to import and to sell the same product. Why else would an electronics company seek these approvals and Google’s approval, if it were not for the reason to import and sell these same electronic products. Invoice factoring and Trade Finance companies financing electronic goods coming out of China, especially with IP on the box or even embedded in the tablet or other electronic devices need to be on high alert to review their respective client(s)’ documentation to make sure that there are no issues upon importation. If your collateral is detained or seized by US Customs, then what? Where does one appeal a U.S. Customs decision or go to expedite the correction of an error? The answer, is that one must appeal through the U.S. Customs…there should be an outside judicial remedy to check this government agency, but there is not and most decisions on seized goods take more than 12 months to respond with a decision on an IPR issue. Collateral lenders providing trade finance need to be on alert that U.S. Customs has changed their requirements and more importantly, free reign to make unilateral decisions and change guide lines as described above. Stephen Perl, CEO 1st PMF Bancorp – invoice factoring worldwide