Part 25

For years, examinations of wool were conducted on the piers by taking samples from the ends of the highly compressed bales, which were covered with burlap and bound by steel bands. The examiner had no way of knowing--except to have a bale of fleece opened--whether or not the outer fleece concealed a higher grade of wool in the center of the bale. In some isolated cases, examiners found that a coarse grade of carpet wool concealed extremely high-grade wool. Contraband such as narcotics also was found hidden inside suspect bales.

Perhaps of even greater importance, the examiner had no reliable method of determining the amount of dirt, vegetable fiber, grease and other foreign matter contained throughout the bale--and the duties were supposed to be assessed only on the “clean content” of the wool.

This haphazard method of examination drew the fire of Congress in 1930. To correct the situation, the Customs Bureau established the post of Wool Administrator in New York City. It was his job to coordinate the examinations throughout the country and to establish more uniform practices. Daniel J. Kelly was named Administrator, with three assistants--Morris Shuster in Philadelphia, Al Kelleher in Boston and John Walker in New York.

The Bureau assigned to Chief Chemist Louis Tanner of the Boston laboratory the job of finding a method to determine the “clean content” of wool shipments. He developed a special boring tool which enabled examiners to take samples, or cores, of wool from inside the bales, and to judge the uniformity of the fiber in an entire bale without disturbing the bindings. This method proved so simple and effective that it has been adopted by the commercial trade and by government agencies in other countries throughout the world.

Imports of all kinds and types reach the Appraiser’s Stores in this manner: When merchandise is ready for export from a foreign country to the United States, the exporter prepares a special customs invoice describing the merchandise and giving its value. This invoice is sent to the American importer. When the importer is notified that the merchandise has arrived at a port of entry, he turns over the invoice to his customs broker. The broker calculates the estimated rate of duty, then proceeds to the Customs House. There he makes what is called a formal entry of the merchandise, filing the information he has received from the exporter and paying the duty.

In the Collector’s office at the Customs House, the broker’s estimates of value and duty are reviewed for any errors. Then the invoice is transmitted to the appraiser’s office, where it is assigned to the expert who will examine this particular merchandise.

The Collector notifies the Customs inspector at the pier that he is to send a 10 per cent sampling of the imported merchandise to the Appraiser’s Stores to be physically examined by the specialist in that field. The specialist examines the samples of merchandise to see that they are correctly identified by the importer. Then he determines whether the broker’s estimates of value and duty are correct.

If the broker entered the merchandise at $100 a unit and the examiner believes that the appraised value should be $125 a unit, then the examiner makes the change. His report is then forwarded to the office of the Collector for final action, and normally the Collector accepts the examiner’s judgment.

The Collector then notifies the broker or the importer of the action that has been taken. The importer and broker may accept the ruling or they may take issue. If they disagree, they may appeal to the United States Customs Court. If either the importer or the government is dissatisfied with the lower court’s decision, an appeal may be taken to the U.S. Court of Customs and Patent Appeals. Usually the decision of the Appeals Court is accepted as being final, but either of the parties may carry the appeal further, to the Supreme Court.

* * * * *

It seems odd that piracy should be a concern of Customs in the 1960s, as it was in the days of Jean and Pierre Laffite. But piracy still exists in modern dress and is a troublesome problem. The only practical difference between the modern pirates and the cutlass-carrying freebooters of the past is that the pirates’ methods have changed.

There was the case that might be called “The Pirates of Taiwan”--a case which created an incident of international embarrassment between the governments of the United States and Formosa (Taiwan) and a potential threat to the U.S. book publishing industry.

The “pirates” of Taiwan were the owners of small printing shops who engaged in the business of publishing--without the consent of the authors or the original publishers--almost every book of any merit printed in the English language.

With fantastically cheap labor, cheap paper, and a photo-offset printing process, the publishers in Taiwan reproduced such extensive works as the _Encyclopaedia Britannica_, dictionaries, sets of medical and scientific works, volumes of the classics, standard reference books, best-selling novels and popular non-fiction. The books were carbon copies of the originals, even to the U.S. copyright numbers and the phrase “Manufactured in the United States.” Nothing was changed in the pirating process, not even the typographical errors. From a casual examination, there was nothing to indicate that the books had not been published in Philadelphia, Boston, or New York.

The pirating problem became acute in 1959 when the Chinese publishers arranged contacts with sales agents in the United States, men and women usually located on or near a campus of a university or college. These agents solicited orders primarily from professors and teachers, librarians, researchers, and students. A standard set of the _Encyclopaedia Britannica_--normally costing about $400--was offered for less than $50. The $35 _Columbia Encyclopedia_ was listed at $7.13. _Gray’s Anatomy_, a standard work for all medical students and normally costing $17.50, could be purchased for $2.50. Allen Drury’s best-selling novel of political life in Washington, _Advise and Consent_, cost $5.75 in American bookstores--but was advertised by the Chinese publishers at $1.25.

In some instances, the Chinese publishers obtained lists of likely customers and solicited them by mail. The prospects usually were men, women and organizations with modest incomes who were forced to operate on a very limited budget. And here they were being offered the opportunity to obtain expensive volumes of literary works--which they had long dreamed of owning--for only a fraction of the price being charged throughout the United States.

The books were shipped from Taiwan in individual packages. Even when the packages were opened for inspection by a Customs examiner, there was nothing to arouse suspicion of any irregularity. The first hint which Customs had of fraud was when a complaint was lodged in 1959 by the American Book Publishers Council and the American Textbook Publishers Institute.

The book publishers appealed for help to the State Department, the Customs Bureau, Congress and even to the White House. The sales of pirated books in the United States had become a multi-million-dollar business which threatened to destroy the American book market.

In theory, at least, the publishers could have protected themselves from the sales of pirated books in the United States by registering each title with the Customs Bureau and paying a fee of $75. The registration would have banned any import of a similar title without the publisher’s consent.

Such a procedure would have been prohibitive in its cost because each title produced is regarded by law as a different product. A single publisher might well have had to register as many as 2,000 titles annually to obtain total protection--at a cost of more than $150,000 in fees and incidental expenses. This cost would have been in addition to the $300,000 paid to copyright the works, at $150 per title.

When Customs agents opened an investigation they discovered that in the first half of February, 1960, sales of pirated books at Iowa State University alone totalled more than $1,200. It was obvious that American publishers and authors were literally being robbed of millions of dollars. Not only were the books being mailed to the United States in large quantities, but a great many sales were being made on Formosa to military personnel, to students, and to tourists who could not pass up such a bargain in literature.

Action was taken by Customs to halt the importation of the books through seizure at the ports of entry. Then the U.S. Ambassador to Nationalist China, Everett F. Drumright, took up the problem with Foreign Minister S. K. Huang in Taipei, seeking a ban on the export of the books.

The problem was not one presenting an easy solution because the laws of Taiwan technically tolerated such piracy. Many members of Chiang Kai-shek’s government were not entirely sympathetic to shutting off this lucrative trade which brought dollars into the treasury. There was the fact, too, that lack of any copyright agreement gave Chinese students access to cheap editions of technical books and famous works of literature.

However, an arrangement was worked out on the diplomatic level for a ban on the wholesale export of pirated books from Taiwan. The American publishers agreed to make available certain of their works to Chinese students. This agreement brought a halt to much of the illicit traffic, but the problem of pirated books continues to be troublesome.

Competition for world trade has also brought some sharp practices in which foreign manufacturers copy American-made automobile parts, tools, and other merchandise and then ship them into the United States. The articles are identical in appearance to the American-made product down to such small details as the American manufacturer’s registered trademark. But the price--and quality--are far below the American level.

The piracy in the field of trademarks is a continuing problem for Customs. There are approximately 5,000 trademarks registered with the Customs Bureau, including those registered by foreign firms. And each manufacturer guards his trademark jealously.

Many foreign trademark owners, for the protection of their representatives in this country, will not permit more than one of their trademarked articles to be imported into the United States by a tourist. Many tourists will go abroad and purchase an unusual bargain in a camera, perfume or some other item. They are dismayed when they return to this country to find that Customs will not permit them to keep more than one of the articles.

In these cases, Customs is following the letter of the law in preventing more than one article from being imported bearing the restricted trademark. It is only the trademark which Customs is interested in protecting. If the importer of the articles should obliterate or remove the trademark from the items he is carrying, Customs inspectors would have no objections to allowing them into the country.

The trademark prohibitions sometimes create unique problems. One of these developed when a Mexican cattle raiser shipped a herd of cattle to the Mexican border and was preparing to bring them into the United States at Nogales, Arizona. Before the cattle could cross the border an American cattle raiser rushed to Nogales and demanded that Customs halt the importation of the Mexican cattle. He argued that he was the owner of the cattle brand seared into the hides of the Mexican cattle and that any importation bearing this brand would be a violation of the trademark laws.

An investigation by Customs officers revealed that the American cattle owner was entirely correct. By chance, the Mexican cattle raiser had the same cattle brand as the American rancher. The American’s cattle brand was registered with the Customs Bureau, and his cattle brand was entitled to the same protection given to the trademarks of manufacturers. Eventually, the protesting American and the baffled Mexican got together and the American gave his consent for the importation of the cattle.

One section of the trademark law prohibits the importation of any articles which are marked in a manner to indicate a false country of origin. It also bans imports which are marked with false descriptions. To enforce this section of the law, Customs officers must police millions of imports to weed out the products of foreign manufacturers who engage in some shady and sharp practices.

In recent months there arrived from Japan a large shipment of boys’ baseball bats which were boldly marked with large letters burned into the wood, “American Model.” At the end of the bat in extremely small letters was stamped the word “Japan.” The Customs Service felt that the purchaser of these bats could only assume, by looking at them and seeing “American Model” in large letters, that they had been made in the United States. It ruled that before the bats could be entered, the word “Japan” would have to be stamped onto the bats in close proximity to the words “American Model,” to remove the taint of deception.

Another manufacturer shipped into the country flatware made of iron with a chrome plating. It was marked with the word “stainless,” implying that it was stainless steel. The courts and the Federal Trade Commission have held that the world “stainless,” when used in describing manufactured articles, has a very specific meaning: that the product has a great deal of resistance to normal corrosive elements and to wear and tear that other metals normally do not have. And to describe an article as stainless steel, it must be an alloy of steel mixed with chromium in approved percentages.

To protect the manufacturers of stainless steel products in this country, the Customs Bureau instituted a campaign to halt such sharp practices and to educate foreign manufacturers to the fact that they cannot mark products with the word “stainless” unless they meet the very severe test required for the use of this word. The shipment of cast-iron flatware was refused entry, and inspectors were alerted to guard against any such shenanigans in the future.

21

THE MIDDLE MEN

Mr. and Mrs. John Smith of Lima, Ohio, were strolling through the streets in Florence, Italy, enjoying their first European vacation, when Mrs. Smith noticed a beautiful, hand-blown glass bowl in the window of a small shop.

“John!” she exclaimed. “There is the bowl I’ve been looking for. It would be perfect for our Christmas eggnog parties. Let’s go in and price it.”

They stepped inside the shop and a clerk brought the bowl from the window to a table where Mr. and Mrs. Smith could examine it more closely. It was a lovely piece of glass and obviously the work of a fine Venetian craftsmen. After admiring the delicate etchings on the glass, Mrs. Smith asked, “How much is it?”

The clerk said the bowl was one of the best pieces in the house and that it was priced at $75.

“My goodness,” Mrs. Smith exclaimed. “That bowl would cost double the price at home. It’s a good buy.”

Mr. Smith said, “But how will we ever get it home? We can’t lug it all over Europe with us. We would be certain to break it.”

The clerk interrupted, saying, “Pardon me. You don’t have to worry about getting the bowl to your home. We will take care of everything for you--the packing and the shipping. And we will insure it against breakage. We ship hundreds of purchases every year for American visitors.”

Mr. Smith asked, “How much do you charge for that service?”

The clerk shrugged. “There is no charge for our service, sir,” he said. “There will be a small shipping charge which you can pay on receipt of the package, but as for the trouble of packaging and handling the shipment from here, that is merely a part of the service we give our customers.”

“We won’t be back home for another three weeks,” Mrs. Smith said. “What will happen if the bowl arrives before we reach home?”

“You need not worry about that,” the clerk said. “I’ll hold the bowl for several days and then ship it so that it will not arrive until after you have reached home.”

“Well, that seems simple enough,” Mr. Smith said. “As long as you can handle this for us, then we’ll buy it.” He pulled out his wallet and paid for the bowl. Then he carefully wrote out his home address in Lima, Ohio.

“Don’t worry about a thing,” the clerk said, smiling. “The bowl will arrive soon after you get home.”

As the Smiths left the shop, Mrs. Smith said to her husband, “Well, the Italians certainly do make it easy for the Americans to buy something and send it home. I had no idea there would be so little red tape to sending a purchase home.”

A month later Mrs. Smith was at home when the telephone rang. It was a long-distance call from New York. A strange man--someone she had never heard of--asked if she had ordered a glass bowl from a shop in Florence, Italy. He explained that he was a Customs broker, the bowl had been consigned to him, and he was prepared to clear the package and forward the shipment if she authorized him to do so. He explained there would be a nominal fee for his services in getting the package released from Customs and forwarded to the Smiths in Lima.

Mrs. Smith was so flustered she told the caller she would have her husband get in touch with him. What was this strange man doing with her bowl? The clerk in Florence had said he would take care of everything, and now this broker was saying something about having legal title to the shipment and that she would have to pay a fee to get her bowl shipped to her. He had explained that she could come to New York and arrange personally for the Customs clearance if she wished to do so.

Mrs. Smith telephoned her husband at his office and told him about the call from the broker in New York. She gave her husband the man’s name and his telephone number in New York.

And then Mr. Smith exploded with anger. “It’s a gyp deal of some sort,” he said. “I am going to call the nearest Customs office and see what this is all about. We didn’t tell that clerk to send the package to anyone in New York. I don’t know how he got into this picture. There’s something funny going on and I’m going to find what it’s all about.”

Within a short time, Mr. Smith learned--by checking with a Customs officer--that he was not being gypped. The broker in New York was a legitimate broker, licensed by the Federal government to act as a clearing agent for merchandise arriving in the port of New York. The call that had been made to Mrs. Smith was a routine call, because the package containing the bowl had been consigned to the broker in routine fashion either by the shipper in Florence or by the carrier which brought the package into the port of New York.

Mr. Smith asked why it was that Customs in New York could not forward the bowl directly to him without going through a broker. That seemed the easy way to handle the shipment without all this red tape and the payment of a fee to some stranger whose name he had never heard before this day. Mr. Smith declared heatedly that he didn’t have time to go running off to New York for a $75 glass bowl. As a matter of fact the bowl wasn’t worth all that trouble and expense. He and his wife wanted the bowl and they wanted it as quickly as possible.

The Customs officer explained that unless Mr. Smith or his wife went to the port of entry to clear the shipment with Customs--or unless they authorized the broker to act as their agent--the bowl would be held by Customs for five days. Then if it were not claimed, it would be sent to a warehouse. It would remain in the warehouse for one year, and if it had not been claimed within that period, then it would be sold at auction along with other unclaimed packages. The officer explained further that Customs was not authorized by law to act as the forwarding agent for anyone--except in cases where a shipment valued at less than $250 was received by mail from an overseas point.

“Now, if you had shipped the bowl by mail,” the Customs officer said, “it would have been delivered to your post office and you could have obtained its release with no difficulty at all.”

Smith retorted, “This is a fine time to tell me I should have shipped by mail. All I can say is it’s a hell of a way to run a railroad.” He slammed down the phone, cursing Customs and all of the government’s red tape. Then, reluctantly and angrily, he called the strange broker in New York and authorized him to clear the glass bowl. Thus the day was ruined for Mr. and Mrs. John Smith of Lima, Ohio.

The story of Mr. and Mrs. Smith is not unusual. Similar cases occur daily throughout the United States as returning travellers discover that they could have saved themselves worry, time, and money by familiarizing themselves with the Customs procedures governing the importation of foreign purchases into the United States. Had Mr. and Mrs. Smith taken the time to read a few relatively simple instructions--available to travellers in pamphlet form--they would not have gotten into the difficulty they did.

In the first place, they would not have accepted the glib assurance of the Florence clerk that he would take care of everything. Instead, they would have instructed the clerk to mail the glass bowl by parcel post, marked as a “tourist purchase.” When the package arrived in New York, the post office would have turned it over to Customs in routine fashion for examination. An examiner would have verified the contents and its value and then returned the package to the post office to be forwarded directly to the Smiths in their home town. If any duty were due, it could have been paid to the postmaster after filling out a simple entry form. No broker. No delay. No red tape.

But this is what happened to the Smith’s glass bowl after it was purchased in Florence: the clerk turned the package over to a forwarding agent with no special instructions. The agent routinely consigned the shipment to a broker in New York with whom he had been doing business for years. The bill of lading was made out to the New York broker, which meant that when the package arrived in New York, the broker had legal title to the glass bowl because it was consigned to him.

What few travellers realize is that there is no automatic movement of merchandise arriving by ship from overseas. Someone has to be on hand to clear each shipment with Customs and pay any duties that might be due. Someone must see to it that the merchandise is moved from the piers to its destination. And this is usually the job of the broker, a point which many people do not understand and which causes considerable difficulty.

The broker is the expediter of the multi-billion-dollar flow of merchandise through the ports of entry in the United States. He is the legal representative of his client in dealing with Customs problems.

The Customs Service is not interested in merchandise until it arrives within the limits of a port of entry to be unloaded. At this point the merchandise legally becomes an import. And the merchandise passes through Customs under two types of general entries. One is called the “consumption entry” and the other is known as a “warehouse entry.”

Most imports arrive and are passed through Customs under the consumption entry, which permits the importer to pay the duties, obtain a release, and get immediate possession of all of his merchandise.