SEKO wins conditional reinstatements from US customs agency

By Thomson Reuters Jun 4, 2024 | 7:29 PM

By Lisa Baertlein

LOS ANGELES (Reuters) – Privately held SEKO Logistics said U.S. Customs and Border Protection (CBP) has conditionally reinstated its participation in two vital international trade programs, but still has not identified the violations that led to the suspensions.

The Illinois-based customs broker, which is seeking unconditional reinstatements, said on Tuesday that CBP has yet to provide any evidence or examples of compliance issues to justify its actions.

“The agency’s lack of a direct response in this matter has led to a clear and present danger to SEKO’s business, its reputation and its clients,” SEKO said in a statement.

CBP could not be immediately reached for comment.

The industry is monitoring the dispute since it is unusual for customs brokers to be targeted in CBP crackdowns.

On Friday, the CBP announced that it had suspended multiple customs brokers from its “Entry Type 86” expedited customs clearance program to prevent abuse of the tariff exemption for direct-to-consumer imports valued at under $800 per day.

Chinese-founded Shein, PDD Group’s Temu and ByteDance’s TikTok Shop use the tariff exemption when they ship products directly from factories in China to U.S. shoppers in individually addressed packages.

“We are incredibly disappointed by, and strongly disagree with, the original decision by CBP,” said SEKO CEO James Gagne, who added that the company maintained a “99.999+%” compliance rate in the expedited clearance program.

CBP on Friday said the suspended brokers’ entries “posed unacceptable compliance risk” and that “bad actors” were exploiting the tariff exemption to send contraband, including materials used to make synthetic drugs like fentanyl, into the United States. The agency did not say whether shippers were undervaluing or misclassifying shipments.

SEKO has also said that CBP suspended it from the agency’s Customs Trade Partnership Against Terrorism (CTPAT) security program that many large shipping customers rely on.

SEKO on Saturday filed a lawsuit in the U.S. Court of International Trade, seeking to stop the suspensions and win full reinstatements.

SEKO also alleged that CBP failed to give the company adequate notice of the suspensions or an opportunity to address any unverified deficiencies identified the agency.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Himani Sarkar)