S. cannot legally abide -- this would result in the U.S. signature being ultra vires (beyond the powers of authority) (Reid v. Covert)
Thus, United States Coast Guard had no authority to board a private vessel that was not in its territorial jurisdiction. Substance laws, in this case, pixie dust, is not illegal in Neverland, and the flagless vessel carrying Tinkerbell and the dust was not damaging or at fault in any way towards the United States. Under U.S. law, "customs waters" means that if a foreign vessel that is subject to a previous treaty with the U.S. is in U.S. customs waters, then by agreement, it can be boarded, examined, and contents searched and seized per U.S. law (U.S. Code 1709 - Definitions). However, since the President signed an executive agreement effectively cancelling the U.S./Neverland Treaty issue of customs waters, the vessel, its passengers, and its cargo were not in U.S. jurisdiction.
The accounts of the United States, in this case, under international legal principles, were illegal. Even under strict U.S. law, the Coast Guard had no authority in this case. Tinkerbell, the vessel, and its cargo, should thus be returned to Neverland as quickly as possible, with possible reparations due depending upon circumstances. Immediately, the Coast Guard should apologize to the International Community, otherwise U.S. relations regarding upholding of treaties will be in jeopardy.
Part 2 -- Analysis of U.S. domestic law and this situation - Based on the timeline of the situation, U.S. Domestic law actually plays no part in the legality of the scenario. Since the President signed an order declaring that the customs waters of the United States would no longer extend to the territorial waters of Neverland, then the U.S. Coast Guard, as noted above, had absolutely no right to seize, inspect, or even board the vessel, let alone confiscate its cargo and passengers. The only possible contention is that the vessel was not flying a flag, and therefore, depending on the actions and policies, might be considered a pirate vessel if in international waters. This is problematical, though, because according to the information given, the ship was not in international waters, but in Neverland waters. Generally speaking, in international law, the laws of the country from which the vessel is registered are the ruling precedents. This also depends on the treaties that, in this case, Neverland might have with other countries. Since Neverland has a specific agreement with the United States, however, and the U.S. must abide by that rule (the President's signature), the Coast Guard cannot contest the validity of the order, and thus was operating incorrectly. Essentially, it does not matter whether pixie dust is illegal in the United States, what is germane to the issue is that the vessel was not in U.S. waters, nor was it even conceivably part of the responsibility of the Coast Guard.
Further, without some specific provisions as to the legality of transport, use, and dissemination of Pixie Dust, the U.S. law may be problematical in International Legal terms. If a product deemed illegal in the United States is shipped from another country to the U.S., then it may be seized once in U.S. waters. If it is produced and/or distributed within the United States, then it falls under U.S. Law. However, if it is produced in another country in which it is illegal, and is not in U.S. waters, then the simple transport, even if there is evidence of intent to distribute, cannot be considered illegal under the Vienna Convention. Mitigating circumstances might include other countries or regions outlawing the substance, at which time there might be a more concerted International effort to control the substance and its proliferation.
Reid v. Covert. No. 354 U.S. 1. U.S. Supreme Court. 10 June 1957. Print.
"U.S. Code 1709 - Definitions." 2010. Cornell University Legal Information. Web. December 2011. .
"Vienna Convention on the Law of Treaties 1969." 23 May 1969. UNtreaty.un.org. Web. December 2011. .