Thanks to Barnes, Richardson for this article. A well-meaning packer earning close to minimum wage abroad is bracing your merchandise in a shipping container with wood that he is cutting to length. A marked piece of wood is cut, and the leftover bit without marking fits just right, securing your merchandise in the container. Customs sees this unmarked piece of wood on importation. Now you face a penalty of three times the domestic value of the merchandise in the container and must bear the costs of returning the whole shipment to its country of origin.
Solid wood packaging materials (WPM) have become the target of increased concern and scrutiny over the past year. Importers face potential liquidated damages, penalties, denial of a shipment’s entry, and the costs associated with returning the shipment back to its country of origin. WPM are pieces of wood used to support, brace, protect, or carry cargo including but not limited to crates, pallets, packing blocks, boxes, drums, cases, and skids. There are significant pest risks associated with WPM that threaten the U.S.’s agriculture and natural biomes. Pests, such as the Asian Longhorn Beetle, Pine Shoot Beetle, and Emerald Ash Borer, have entered the U.S. through shipping and caused billions of dollars in damages to the agricultural and lumber industries on top of the billions of dollars spent by Federal and local governments to control the pests’ spread. This is all before one considers the effect on America’s ecosystems and biodiversity, which have been found to heavily outweigh any financial hardship of the importer.
WPM are regulated by United States Department of Agriculture, Animal and Plant Health Inspection Service (APHIS). There are two treatment options: heat treatment or fumigation. For heat treatment, WPM must be heated to a minimum wood core temperature of 56°C for a minimum of 30 minutes. For fumigation, the WPM must be fumigated with methyl bromide in an enclosed area for at least 16 hours at the regulated dosage. The marking indicating WPM has been properly treated must be permanent and legible. Unmarked, inappropriately marked, and infested WPM does not comply.
When non-compliant WPM is discovered, Customs will issue an Emergency Action Notification (“EAN”), usually demanding the immediate re-exportation of the entire shipment containing the non-compliant WPM and assessing a penalty of 3 times the domestic value of all the associated merchandise. In addition to this substantial penalty the importer is responsible for ALL expenses related to the movement, inspection, separation, safeguarding, storage, and ultimate disposition of the non-compliant WPM and its associated merchandise and, Customs may issue liquidated damages if an importer fails to comply with an EAN.
Mitigating and aggravating factors can greatly influence the penalty owed. The list of mitigating and aggravating factors is non-exhaustive. However, two mirroring factors are notable: 1) exceptional cooperation with CBP and APHIS and 2) clear documentary evidence of immediate remedial action taken to prevent further WPM violations are mitigating factors; while 1) lack of Cooperation with CBP or APHIS and 2) failure to take immediate remedial action to prevent further WPM violations are aggravating factors. Thus, it is very important to act quickly and in the appropriate manner when an EAN is received. What can importers do to reduce their risk?
Prospective steps:
- Ask your supplier or WPM packer if WPM is ISPM 15 compliant and accredited;
- Provide your supplier or WPM packer information on the ISPM 15 standard;
- Require supplier or WPM packer employees undergo WPM training periodically;
- Discuss and develop compliance procedures with suppliers or WPM packers;
- Put WPM compliance mechanisms into the contract with suppliers;
- Create a rating/penalty system for suppliers and inspect imports for WPM compliance on importation; and
