Section 337 Bond During Presidential Review Period
/'sɛkʃən θriː θriː 'sɛvən bɑnd 'dʊrɪŋ prɛzɪ'dɛnʃəl rɪ'vjuː 'pɪriəd/
When the U.S. International Trade Commission (ITC) issues an exclusion order or cease and desist order under Section 337, it enters a 60-day Presidential review period during which the order can be disapproved for policy reasons. To allow for continued importation while protecting domestic industries, imported articles subject to the order are permitted to enter the U.S. under a customs bond.
In Detail
Following an affirmative finding of a Section 337 violation, the ITC issues a remedial order, typically an exclusion order or cease and desist order. This order then undergoes a 60-day review by the President of the United States. During this review period, the ITC's order is in effect unless the President formally disapproves it. To prevent immediate disruption of trade while allowing for potential future remedies, U.S. Customs and Border Protection (CBP) permits the entry of articles subject to the order, but only under the condition that an appropriate customs bond is posted.
The purpose of the Section 337 bond is to ensure that if the President does not disapprove the ITC's order, an effective remedy remains available against articles imported during the review period. If the order is upheld, CBP can then demand the redelivery of the bonded merchandise for exclusion or destruction, or, alternatively, declare the bond forfeited. The bond amount is typically set by the ITC at 100% of the merchandise's entered value, serving as a deterrent against continued infringement and compensating for the injury incurred by the domestic industry during this interim.
A common point of confusion arises when importers fail to accurately calculate the potential bond liability or misunderstand the implications of a bond forfeiture. If the President allows the ITC order to stand, the importer becomes liable for the full bond amount for all articles entered under bond. This financial obligation can be substantial, often exceeding the profit margins on the goods, and underscores the critical need for robust legal and trade compliance strategies when dealing with products potentially infringing intellectual property rights.
Classification Significance
Mismanagement of Section 337 bond requirements exposes importers to significant financial risk and supply chain disruptions. Failure to post the correct bond or correctly identify merchandise subject to an ITC order can lead to substantial bond forfeitures, costly redelivery demands, and potential future import restrictions. This not only impacts an importer's profitability but can also damage their reputation and lead to increased scrutiny from CBP, highlighting the need for precise identification and compliance regarding goods under trade action.
How Kanon Handles This
While Kanon does not calculate bond amounts, it provides the deterministic HTSUS classification critical for accurately identifying whether a product falls within the scope of an existing or pending Section 337 exclusion order. By providing legally sound classification support, Kanon helps importers and brokers understand if their goods are subject to these stringent import conditions, allowing them to proactively manage bond requirements and mitigate enforcement risks.
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cease-and-desist-order-itc
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ad-valorem-duty
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19 U.S.C. § 1337(j) - Exclusion of articles from entry; entry under bond
19 CFR Part 210, Subpart I - Enforcement Procedures and Ancillary Activities
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Navigate Complex Trade Actions with Confidence
Kanon empowers importers to proactively identify and mitigate risks associated with trade actions like Section 337, ensuring compliant and efficient supply chains.
Frequently Asked Questions
What happens if the President disapproves the ITC's exclusion order?
If the President disapproves the ITC's order, the order becomes null and void, and any bonds posted for merchandise entered during the review period are canceled and released, with no forfeiture required.
Who determines the specific bond amount for goods entered during the Presidential review period?
The International Trade Commission (ITC) determines the appropriate bond amount, which is typically 100% of the *ad valorem* entered value of the articles, but can be adjusted based on the specific circumstances of the case.