US Customs Rules Tuna 'Transit Washing' Does Not Constitute Substantial Transformation, Expects $8.9 Million in Penalties

US Customs and Border Protection (CBP) expects to collect $8.9 million (about EUR 7.9 million) in penalties from a group of tuna importers accused of using a technical loophole to circumvent country-of-origin labeling (COOL) regulations.

CBP reported that its investigation into imported tuna found that some importers failed to declare the country of the foreign-flagged vessel that caught the tuna as the country of origin, instead declaring the country where the tuna briefly came ashore for simple cleaning and packaging as the country of origin. "Importers used this stopover to claim the fish came from that country, thereby avoiding the applicable duties and taxes," CBP said in a statement.

CBP's Agriculture and Prepared Products Center of Excellence and Expertise (APP) in Miami, Florida, determined that basic cleaning and packaging does not constitute a substantial transformation of tuna products, and that the country of origin should match the flag state of the vessel that caught the fish. CBP noted that although importers challenged the government's determination, CBP headquarters upheld the APP's interpretation of the law.

"Our APP center is committed to following the facts and ensuring that US trade law is correctly applied," said Daniel Alonso, director of field operations for CBP's Miami and Tampa field offices. "This enforcement action demonstrates our commitment to protecting US revenue and fostering a level playing field for law-abiding businesses."

Since the government made the determination, importers have begun correcting their declarations, generating about $1.3 million (about EUR 1.2 million) in trade remediation across 780 entry summaries. CBP is currently processing 5 prior disclosures and 10 penalties, and the investigation is expected to result in $8.9 million in penalties.