Print PDF

February 1 2012 news

Wednesday, February 01, 2012
Sandler, Travis & Rosenberg Trade Report

White House Pushes for Legislative Fix to CV Duty Decision as Court Extends Appeal Deadline

Two Obama administration officials recently asked key lawmakers to move quickly on legislation that would explicitly allow the federal government to impose countervailing duties on goods imported from non-market economy countries like China. Such a bill would effectively reverse a recent court ruling against that practice and allow the U.S. to continue the 24 CV duty orders it has in place against Chinese goods. The administration also recently received a 30-day extension of the deadline for appealing the court ruling.

In December 2011 the Court of Appeals for the Federal Circuit ruled in GPX International Tire Corporation v. United States that the Department of Commerce can no longer apply CV duties against imports from NME countries. The Court of International Trade had previously ruled that CV duties cannot be imposed on NME goods at the same time as antidumping duties, but the CAFC said CV duties cannot be imposed on NME exports at all because Congress formally adopted that position and DOC does not have the discretion to say otherwise. If it ultimately stands, this ruling could result in substantial refunds of CV duties imposed on goods from NME countries, although because it is not yet final importers of such goods must continue to deposit CV duties for the time being.

The CAFC decision is opposed by the administration, which is working to determine how best to overturn it. In a recent letter to Senate Finance Committee Chairman Max Baucus, Commerce Secretary John Bryson and U.S. Trade Representative Ron Kirk said the decision “would have substantial adverse economic implications for our country” because it would require the DOC to revoke 24 existing CV duty orders and terminate five pending investigations and two recently filed petitions. The letter said these proceedings cover a wide range of products in which U.S. manufacturing is most competitive, including steel, aluminum, paper, chemicals, tires and other products, and that the annual value of imports of subject goods is $4.7 billion. The two officials therefore pledged to work with Congress to promptly enact legislation “clarifying that the CVD law can be applied to subsidized goods from non-market economies, that CVD proceedings Commerce has already initiated on products from non-market economies are to continue, and that CVD determinations Commerce has made with respect to such products are to remain in effect.”

The administration’s position is backed by at least one key congressional leader. House Ways and Means Committee Chairman Dave Camp said recently that “we must do everything we can to ensure that the Department of Commerce can continue to fight subsidies granted by countries like China that unfairly injure our industries, cost U.S. jobs, and distort the market.” He called the CAFC ruling “wrongly decided” and expressed his willingness to consider legislation “that ensures our countervailing duty laws can be used to protect U.S. employers and workers from unfairly subsidized imports from countries like China.” However, he added that “any such legislation would have to be narrowly targeted, ensure that U.S. application of its countervailing duty laws complies with its WTO obligations, and will pass the House and Senate without complications.”

The administration is also considering whether to appeal the CAFC ruling, which could take the form of a request for a panel of CAFC judges to rehear the case or a petition for review by the Supreme Court. However, neither option is seen as likely to result in a reversal of the CAFC decision, observers say. The court recently extended from Feb. 2 to March 5 the deadline for the administration to make its decision, which could give Congress time to pass the legislation urged by Bryson and Kirk. One potential complication is that such a bill could provide an opportunity for lawmakers to advance more controversial trade provisions, such as punitive measures against what are seen as predatory trade practices by China.

Effort to Revise Corruption Law Could Move Forward in 2012

Increasing corporate and individual penalties and a growing number of unfavorable court rulings could lend momentum to efforts to revise the Foreign Corrupt Practices Act in 2012. Several lawmakers have expressed interest in legislative action and private sector groups on both sides of the issue are making their cases.

In October 2010 the U.S. Chamber of Commerce issued a white paper calling for changes to the FCPA. Recent years have seen a “boom in FCPA enforcement,” the Chamber noted, in part because there has been minimal judicial oversight, leaving the Department of Justice and the Securities and Exchange Commission free to be “increasingly aggressive in their reading of the law.” The costs to businesses have been high, the white paper states, citing a 1999 report by the Congressional Research Service that the FCPA’s anti-bribery provisions result in up to $1 billion annually in lost U.S. export trade. The Chamber added that the current enforcement environment appears likely to continue for various reasons: current incentives ensure that judicial oversight will continue to be limited, both DOJ and the SEC are continuing to devote significant new resources to FCPA enforcement, the 2010 Dodd-Frank Act contains a bounty provision that seems likely to produce heightened whistleblower activity, and U.S. authorities may feel a need to keep pace with a bribery law the United Kingdom implemented in July 2011 that is seen as more far-reaching than the FCPA in several respects.

In response, the Chamber proposed five reforms to the FCPA: adding a compliance defense, limiting a company’s liability for the prior actions of a company it has acquired, adding a “willfulness” requirement for corporate criminal liability, limiting a company’s liability for acts of a subsidiary, and defining a “foreign official” under the FCPA.

Calls for reform have become louder since the Chamber issued its white paper, not only because penalties have continued to mount and more companies and individuals have been affected, but because courts have begun ruling against the government in its FCPA prosecutions. In November 2011 the first-ever criminal conviction of a corporation for FCPA violations was overturned
due to prosecutorial misconduct. Other high-profile FCPA cases have seen judges dismiss complaints and declare mistrials and juries return not guilty verdicts because federal officials were unable to prove illegal activity. These cases have highlighted the confusion arising from a number of FCPA provisions and the resultant interest among some in clarifying those provisions through legislative amendments. DOJ officials have also said they plan to address the problem by issuing guidelines on the department’s interpretation of the law.

However, there are others concerned that any reform of the FCPA could end up watering it down. In a Jan. 12 letter sent to all members of Congress, nearly three dozen civil society organizations said that the FCPA “promotes economic growth by ensuring a fair and competitive business environment” and that it is “critical to U.S. businesses operating in the global business environment that corporate liability under the FCPA remains a credible threat.” They expressed concern that any amendments to more narrowly define key terms of the FCPA would “constrain the ability of the Department of Justice and the Securities and Exchange Commission to effectively enforce the FCPA, limit the potential liability of companies violating the FCPA to a greater degree than is already provided under the maximum sentencing provisions of the Act, and thereby significantly undermine the statute as a tool to curb corruption.” The groups opined that the forthcoming DOJ guidance “may produce many of the outcomes that the proposed amendments to the FCPA seek to achieve, without risking the erosion of this important statute.”

Labor Dept. to Review Alleged Violations in Mexico

The Department of Labor’s Office of Trade and Labor Affairs has accepted for a review a submission from a Mexican union alleging that the government of Mexico has failed to fulfill certain obligations under the North American Agreement on Labor Cooperation. The alleged violations relate to the issuance of an October 2009 presidential decree dissolving the state-owned electrical power company and terminating the employment of over 44,000 workers. The submission argues that the Mexican government’s subsequent actions or lack thereof denied these workers their rights under Mexican law related to freedom of association, the right to organize, the right to bargain collectively and the prevention of occupational injuries and illnesses. The OTLA will now gather information on these allegations and issue a report within 180 days on whether the Mexican government’s actions were consistent with its obligations under the NAALC.

WCO Committee to Discuss Royalties, Related Party Transactions, Other Issues

The World Customs Organization’s Technical Committee on Customs Valuation will hold its 34th session April 16-20. The draft agenda for this meeting includes the following issues.

- technical assistance/capacity building activities undertaken by the WCO Secretariat and member countries
- progress report on members’ application of the WTO Valuation Agreement
- draft advisory opinion submitted by Brazil on royalties and license fees
- related party transactions under the Agreement on Transfer Pricing
- valuation of industrial waste
- interpretation of “condition of sale”
- treatment of bonus payments

CPSC to Hold Symposium on Phthalates Screening and Testing Methods

The Consumer Product Safety Commission will hold a symposium on phthalates screening and testing methods March 1 in Rockville, Md. Individuals interested in serving on panels or presenting information at the symposium should register by Feb. 9; all other individuals who wish to attend should register by Feb. 24. Comments must be received by Feb. 27.

Section 108 of the Consumer Product Safety Improvement Act of 2008 permanently prohibits the sale of any children’s toy or child care article containing more than 0.1% of each of three specified phthalates: di-(2-ethylhexyl) phthalate (DEHP), dibutyl phthalate (DBP) and benzyl butyl phthalate (BBP). Section 108 also prohibits on an interim basis the sale of any children’s toy that can be placed in a child’s mouth or child care article containing more than 0.1% of each of three additional phthalates: diisononyl phthalate (DINP), diisodecyl phthalate (DIDP) and di-n-octyl phthalate (DNOP).

Under the Consumer Product Safety Act, before a children’s product that is subject to a children’s product safety rule is imported for consumption or warehousing or distributed in commerce, the manufacturer or private labeler must submit sufficient samples of the product, or samples that are identical in all material respects to the product, to an accredited third-party conformity assessment body to be tested for compliance. Based on such testing, the manufacturer or private labeler must issue a certificate that certifies that the product complied with the applicable safety rule.

The CPSC states that the CPSIA’s phthalate restrictions, coupled with the testing and certification requirements in the CPSA, have created certain challenges for manufacturers, retailers and third-party conformity assessment bodies. The goal of the symposium is therefore to review available and emerging technologies for detecting phthalates and to stimulate discussion of technological needs to improve testing methods. The following topics will be covered: (1) methods for increased quality control, from the manufacturing process to testing a final product; (2) available chemical analysis instrumentation and techniques, including infrared spectroscopy, thermal desorption, direct analysis real time mass spectrometry, and gas chromatography/mass spectrometry; (3) the advantages and limitations of available technology; and (4) emerging organic chemical detection and quantification technologies.

CBP Revokes, Modifies Classification Rulings on Salad Spinners, Plastic Bottles, Tree Supports

In the Jan. 25, 2012, Customs Bulletin and Decisions, CBP revoked or modified the following classification rulings, effective March 26.

Product: Salad spinners.
Action: Revocation of NY N047346 and NY N061380.
New ruling: HQ H121095.
New classification: HTSUS 8421.19.00, other centrifuges, including centrifugal dryers (1.3% duty).
Explanation: The salad spinners use centrifugal force to whisk water away from salad greens, and heading 8421 includes centrifuges that remove the moisture from wet substances. The heading text does not limit the heading to industrial items. While the Explanatory Note states that “great speed” is required, there is no indication that such speed could not be obtained manually.

Product: Plastic sports beverage bottles.
Action: Modification of HQ 952264 and revocation of NY D82348 and NY F80484.
New ruling: HQ H100800, HQ H100801 and HQ H100804.
New classification: HTSUS 3924.10.40, plastic tableware and kitchenware (3.4% duty).
Explanation: The common characteristic or unifying purpose of the exemplars of heading 3924 is to store or contain food and beverages, and many of the exemplars of tableware classifiable under HTSUS 3924.10 are items from which the consumer can directly consumer beverages or food. “Tableware” does not refer solely to items used in the home.

Product: EZ Tree Bar, used to hold trees in place while they grow.
Action: Modification of NY N132377.
New ruling: HQ H188375.
New determination: Item is not eligible for entry under HTSUS 9817.00.50, which provides for duty-free entry of machinery, equipment and implements to be used for agricultural or horticultural purposes. U.S. Note 2(ij) in HTSUS Chapter 98 Subchapter XVII states that HTSUS 9817.00.50 does not apply to articles classified in Chapter 73, with certain exceptions. The item at issue is classifiable under HTSUS 7326.00.50, which is not among the subheadings excepted.

President Nominates New CPSC Commissioner, Trade Advisory Committee Member

President Obama announced recently his intention to nominate the following individuals to the positions indicated.

• Marietta S. Robinson has been nominated as a commissioner at the Consumer Product Safety Commission. According to a White House press release, Robinson has practiced as a trial attorney for 33 years, handling a wide variety of complex litigation for both plaintiffs and defendants. In 2011 she served as independent legal counsel to the chair of the United Nations Peacebuilding Commission in Liberia. Earlier in her career she served for eight years as a federally-appointed trustee of the Dalkon Shield Trust, which disbursed over $2.4 billion to more than 300,000 claimants in over 120 countries. Ms. Robinson is a fellow of the International Society of Barristers, serving as its first female president from 2010 to 2011 and a fellow in the American Bar Foundation and the Michigan Bar. In 2000 she was a candidate for the Michigan Supreme Court and in 2009 she was an appointed a member of the Judicial Advisory Committee for the Eastern District of Michigan. She also served as a member of the Michigan State Bar Representative Assembly.

• Robert J. Stevens, chairman and chief executive officer of Lockheed Martin Corporation, has been nominated as a member of the Advisory Committee for Trade Policy and Negotiations. Mr. Stevens serves on the international advisory boards of the Atlantic Council, the British-American Business Council and the Aerospace Industries Association’s Board of Governors. He is also a member of the Council on Foreign Relations and a director of the Congressional Medal of Honor Foundation. Mr. Stevens is a recipient of the Marine Corps Heritage Foundation’s inaugural LeJeune Recognition for Exemplary Leadership and the National Defense Industrial Association’s James Forrestal Industry Leadership Award.

AD/CV Notices: Solar Panels, Initiation of Reviews, Honey, Brass, Pipe, Polyester

Preliminary Critical Circumstances Determination on Chinese Solar Panels. In its countervailing duty investigation of crystalline silicon photovoltaic cells from China, the International Trade Administration has preliminarily determined that critical circumstances exist. Specifically, the ITA has concluded that importers, exporters or producers knew one month in advance that petitions were likely to be filed in this case and that there have been massive imports of solar cells over a relatively short period of time.

As a result, if the ITA makes an affirmative preliminary determination that subsidies have been provided to the respondent companies at above de minimis rates, it will instruct U.S. Customs and Border Protection to require importers to post a cash deposit or bond for all entries of subject merchandise that are entered or withdrawn from warehouse for consumption on or after the date that is 90 days prior to the date that determination is published in the Federal Register.

In related news, the ITA has again postponed its preliminary CV duty determination in this proceeding, from Feb. 13 to March 2.

Initiation of Administrative Reviews. The International Trade Administration has initiated administrative reviews of the following antidumping and countervailing duty orders for the period Dec. 1, 2010, through Nov. 1, 2011. The ITA intends to issue the final results of these reviews no later than Dec. 31, 2012.

- honey from Argentina (AD/CV) and China (AD)
- hot-rolled carbon steel flat products from India (AD)
- welded large diameter line pipe from Japan (AD)
- cased pencils from China (AD)
- hand trucks and parts thereof from China (AD)

The ITA has also received requests to revoke in part the AD duty orders on cased pencils from China and honey from Argentina.

Initiation of New Shipper Review of Honey from Argentina. The International Trade Administration has initiated a new shipper review of the antidumping duty order on honey from Argentina for the period Dec. 1, 2010, through Nov. 30, 2011. This review will determine whether the subject company is eligible for a separate AD duty rate.

Final Results of Sunset Review of Brass Sheet and Strip from Germany. In its sunset review of the antidumping duty order on brass sheet and strip from Germany, the International Trade Administration has determined that revocation of this order would likely lead to continuation or recurrence of dumping at margins ranging from 3.81% to 7.30%. If the International Trade Commission’s sunset review determination is also affirmative, this order will be continued for an additional five years; otherwise, it will be revoked.

Admin Review of Pipe from Turkey Extended. The International Trade Administration has extended from Jan. 31 to May 30 the time limit for the preliminary results of the administrative review of the antidumping duty order on light-walled rectangular pipe and tube from Turkey for the period May 1, 2010, through April 30, 2011. The ITA states that it needs more time to evaluate complicated issues involving the respondent’s sales terms, use of multiple currencies in both markets, duty drawback claims and certain movement expenses.

Admin Review of Polyester Fiber from Taiwan Extended. The International Trade Administration has extended from Jan. 31 to April 25 the time limit for the preliminary results of its administrative review of the antidumping duty order on polyester staple fiber from Taiwan for the period May 1, 2010, through April 30, 2011. The ITA states that more time is needed to analyze responses and obtain further information on the respondent’s reported quarterly cost of production.

FTZ Temporary Manufacturing Authority Sought at Drug Facilities in Nebraska

The Foreign-Trade Zones Board has received an application from Lincoln Foreign-Trade Zone Inc., grantee of FTZ 59, requesting temporary/interim manufacturing authority at two Novartis Consumer Health Inc. facilities in Lincoln, Neb. Under T/IM procedures, Novartis has requested authority to produce over-the-counter pharmaceutical products such as analgesics, cough/cold medicine, antihistamines/decongestants and penicillin-based antibiotics.

FTZ procedures could exempt Novartis from customs duty payments on the foreign components used in export production, and the company anticipates that some 5-10% of the plant’s shipments will be exported. On its domestic sales, Novartis would be able to choose the duty rates that apply to the OTC pharmaceutical products (zero) for foreign inputs. Novartis would also be exempt from duty payments on foreign materials that become scrap or waste during the production process.

Comments on this application are due no later than March 1.

Revised Test Procedures for Lamps

The Department of Energy’s Office of Energy Efficiency and Renewable Energy has issued a final rule revising the test procedures for general service fluorescent lamps and general service incandescent lamps established under the Energy Policy and Conservation Act. These amendments (1) update test procedures by incorporating certain lighting industry standards by reference in order to adopt current best practices and technological developments and (2) establish a new test procedure for determining GSIL rated lifetime, consistent with the minimum rated lifetime requirements in set forth in EPCA. DOE states that these test procedures also provide the protocols upon which the Federal Trade Commission bases its Energy Guide label for these products.

This rule will be effective as of Feb. 27. The changes incorporated in this rule will be mandatory for product testing starting approximately July 27.

Ocean Transportation Intermediary License Applicants

The Federal Maritime Commission has provided notice that the following applicants have filed applications for licenses as non-vessel-operating common carrier and/or ocean freight forwarder ocean transportation intermediaries. Persons knowing of any reason why any of these applicants should not receive a license are requested to contact the FMC.

• Advance Container Line LLC, New York, N.Y.
• Airport Clearance Service Inc. d/b/a ACS Lines, Rochelle Park, N.J.
• Alpha Florida Trade LLC, Doral, Fla.
• C.Hartwig Gdynia d/b/a C. Hartwig Transport, Gdynia, Poland
• Centro Marine Freight Forward LLC, Los Angeles, Calif.
• Cheryl G. Wilson d/b/a JC Logistics, Des Moines, Wash.
• CR & J Logistics Inc. d/b/a Brightwater Shipping Services, Lake Worth, Fla.
• Eagle Trans Shipping & Logistics LLC, Hoboken, N.J.
• Easyway International LLC, Wilmington, Del.
• Eurotrans Systems Inc., New York, N.Y.
• Guaranteed International Freight and Trade Inc., Brooklyn, N.Y.
• H.A.B. International Inc., Miami, Fla.
• HNM Enterprises LLC d/b/a HNM Global Logistics, Orlando, Fla.
• Joseph P. Solomon d/b/a Equitorial Import-Export, Shoreline, Wash.
• Kamino International Transport Inc. d/b/a Kamino Ocean Line, Valley Stream, N.Y.
• Kog Transport Inc., New York, N.Y.
• Omega Cargo Inc., Medley, Fla.
• Seagull Maritime Agencies Private Limited, New Delhi, India
• Sky Link NY Inc., Jamaica, N.Y.
• Sunshine Express Line Inc., Miami, Fla.
• Super Trading LLC d/b/a Harry Shipping, Minneapolis, Minn.
• Swift Customs House Brokers LLC d/b/a Swift Worldwide Logistics LLC, Miami, Fla.
• Unique Logistics International (NYC) LLC, Jamaica, N.Y.
• Vip Cargo Services Limited Liability Company, North Plainfield, N.J.
• Vision Shipping Inc., Alexandria, Va.

Amended Maritime Agreement Filed

The Federal Maritime Commission has issued notice that the following amended agreement has been filed. Interested parties may submit comments by Feb. 6.

• CMA CGM/Maersk Line Space Charter, Sailing and Cooperative Working Agreement Western Mediterranean-U.S. East Coast – The amendment revises the agreement scope to include U.S. Gulf ports.

USDA Information Collections on Export Certification, Mexican Pork, Tomatoes

The Department of Agriculture’s Animal and Plant Health Inspection Service is accepting comments on the following information collections.

• Phytosanitary Export Certification – APHIS provides export certification services to assure other countries that the plants and plant products they are receiving from the United States are free of plant pests specified by the receiving country. APHIS utilizes several forms to collect information used to locate shipments, guide inspection and issue a certificate to meet the requirements of the importing country (comments due by Feb. 22).

• Poultry and Pork Products from Mexico Transiting the United States – APHIS collects information to ensure that fresh pork and pork products, as well as poultry carcasses, parts and products, transiting the United States from Mexico pose a negligible risk of introducing classical swine fever and exotic Newcastle disease. APHIS also collects the name and address of the exporter, the origin and destination points of the commodities, how much and what type of commodity will be transiting, the intended port of entry, the date of transportation, the method and route of shipment, and other information that will enable it to determine whether any disease introduction risk is associated with the transit and, if so, what risk mitigation measures will be necessary to minimize that risk (comments due by Feb. 22).

• Importation of Tomatoes From Certain Central American Countries – Pink or red tomatoes from Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama are subject to certain conditions before entering the United States to prevent the introduction of plant pests. The regulations require information collection activities including phytosanitary certificates with an additional declaration statement, production site and packinghouse inspection records, monitoring and auditing of the trapping program, trapping records, and labeling of boxes (comments due by March 26).

To get news like this in your inbox daily, subscribe to the Sandler, Travis & Rosenberg Trade Report.

Customs & International Headlines