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Supply chain security hearing, bonded warehouse manual, etc.

Friday, February 10, 2012
Sandler, Travis & Rosenberg Trade Report

Supply Chain Security Efforts Reviewed During House Hearing

The House Homeland Security Subcommittee on Border and Maritime Security held a hearing Feb. 7 on supply chain security. The primary witnesses at the hearing were David Heyman, assistant secretary of homeland security for policy, Kevin McAleenan, acting assistant commissioner of U.S. Customs and Border Protection for field operations, and Rear Admiral Paul Zukunft, assistant commandant of the Coast Guard for marine safety, security and stewardship, who issued a joint statement ( concerning the department’s work in this area. The subcommittee also received a report on this issue ( from the Government Accountability Office.

Supply Chain Security Strategy. Recognizing the various types of threats to global supply chains, the statement says, “governments and businesses around the world have an interest in transforming the old model of efficiency and adopting a new model based also on ensuring the integrity and reliability of the system,” or in other words, moving “from a model principally focused on ‘just-in-time’ to one also predicated on ‘just-in-case.’” This is the basis of the new National Strategy for Global Supply Chain Security (, which “is about a layered, risk-based and balanced approach in which necessary security measures and resiliency planning are integrated into supply chains” in order to both protect supply chains and maximize the flow of legitimate commerce. The officials indicated that this strategy will serve as the foundation for DHS supply chain security efforts in the future. The department is now in the process of reaching out to foreign and domestic stakeholders to solicit their views on how best to implement it.

Ongoing Efforts. In the meantime, the officials said, DHS is pursuing seven supply chain security objectives with partners around the world: identifying and responding to evolving threats and risks, expanding advance information requirements across all modes, streamlining trusted trader programs, stemming the flow of illicit shipments of dangerous materials, securing and facilitating air cargo and global mail, building a resilient system, and exploring and deploying new technologies. The department’s work in these areas has had a number of outcomes, including the following.

- The World Customs Organization has developed a Risk Management Compendium, enabling customs administrations to operate under common terminology and criteria to target both high- and low-risk cargo.

- The International Civil Aviation Organization is finalizing its Risk Context Statement, which will create a common risk definition for aviation security, and will present it to the Aviation Security Panel of Experts in March.

- The ICAO established a transshipment sub-working group to address air cargo that is
transshipped through world airports.

- The International Maritime Organization has completed a user’s guide for International Ship and Port Facility Security (ISPS) Code implementation.

- The WCO has revised its advance data guidelines, modeled after DHS’s Importer Security Filing (10+2) rule, and is working on refining air cargo advance data guidelines in coordination with the Air Cargo Advance Screening pilots currently being conducted by DHS.

- DHS is working with the ICAO and the WCO toward creating common global standards for trusted trader programs.

- The U.S. Immigration and Customs Enforcement project Global Shield has transitioned into the WCO Program Global Shield, under which nearly 90 countries are sharing information to ensure that chemicals entering their countries are being used in safe and legal ways. As of December 2011, Program Global Shield had accounted for seizures of chemical precursors totaling over 45 metric tons.

- The International Atomic Energy Agency, in collaboration with the Domestic Nuclear Detection Office, is developing technical standards for detection devices and recommendations on addressing nuclear and other radioactive materials out of regulatory control.

- Through its International Port Security Program, which assesses the effectiveness of foreign ports’ compliance with the ISPS Code, the Coast Guard has assessed 900 ports and facilities in more than 150 countries, including 211 facilities in 76 countries in 2011.

Risk-Based Evaluation Seen as Key. The officials emphasized that by utilizing risk-based strategies and applying a multilayered approach CBP can focus time and resources on the small percentage of goods that are high-risk or about which it knows the least, which in turn allows the agency to expedite trade that is low-risk or about which it already knows a great deal. This approach involves obtaining information about cargo and those involved in moving it early in the process, using advanced targeting techniques to assess risk and build a knowledge base about the people and companies involved in the supply chain, fostering partnerships with the private sector and collaborating with other federal agencies and departments and foreign governments, expanding enforcement efforts to points earlier in the supply chain, and maintaining robust inspection regimes (e.g., non-intrusive inspection equipment and radiation detection technologies) at U.S. ports of entry. “This approach improves supply chain integrity, promotes economic viability and increases resilience in the event of a disruption to the global supply chain,” the officials said.

CSI. The statement also provided an update on the Container Security Initiative, under which CBP stations multidisciplinary teams of officers overseas to work with their host country counterparts to identify and examine U.S.-bound containers that are determined to pose a high risk for terrorist activity. CSI is currently operational in 58 foreign seaports covering more than 80% of the maritime containerized cargo shipped to the U.S., and in fiscal year 2011 CBP officers stationed at CSI ports reviewed over 9.5 million bills of lading and conducted 45,500 exams.

However, the officials noted, CBP is exploring opportunities to utilize emerging technology in some CSI locations, which will allow the program to become more efficient and less costly. In January 2009 CBP began to reduce the number of targeting personnel stationed overseas and to shift more of that work to the National Targeting Center-Cargo. Going forward, CSI will become a hybrid of different operational protocols designed around the uniqueness of each foreign port. The officials emphasized that CSI will remain operational in all 58 locations in FY 2012 with sufficient personnel in country to conduct examinations of high-risk shipments and maintain relationships with their host country counterparts.

100% Scanning. A requirement to achieve 100% scanning of inbound maritime cargo containers by July 2012 was established in the 9/11 Commission Act of 2007, but DHS officials have consistently said it would be virtually impossible to comply with and urged a more risk-based approach instead. Officials have also said they plan to grant a blanket two-year extension of this requirement to all foreign ports. The GAO states that DHS must notify Congress of any such extensions by May 2, and according to press reports that has not yet happened.

The Secure Freight Initiative comprised six pilot programs designed to test the feasibility of 100% scanning. According to the joint statement, all SFI operations except one in Pakistan have ended after illustrating “a number of serious challenges,” including diplomatic challenges, trade community opposition, the need for port reconfiguration, the potential for reciprocal requirements on the U.S., and the lack of available technology to efficiently scan transshipped cargo. “It is also important to keep in mind,” the officials said, “that approximately 80% of the cargo shipped to the United States is sent from only 58 of more than 700 ports,” meaning that “installing equipment and placing personnel at all of these ports – regardless of volume – would strain government resources without a guarantee of results.”

The GAO noted that CBP has still not followed up on a previous recommendation to conduct an analysis as to whether 100% scanning is feasible and, if so, the best way to achieve it. No such analysis appears to be forthcoming, the report stated, and CBP has not provided any details about any alternatives it might be considering. In addition, the Supply Chain Security Strategy makes no mention of the 100% screening mandate and instead asserts that the government will focus on “those enhancements that result in the most significant improvement or reduction in risk.”

CBP Issues Updated Bonded Warehouse Manual

For the first time in over 20 years U.S. Customs and Border Protection has updated its “Bonded Warehouse Manual.” CBP states that this manual serves as a comprehensive guide to understanding bonded warehouse operations and is intended for use by CBP officers, bonded warehouse proprietors, importers and other parties in the import-export community. It brings together many different references, including laws and regulations (which are paraphrased for the sake of simplicity), other agency issuances and rulings. The majority of the manual deals with bonded warehouse operations and procedures, but information on centralized examination stations and container freight stations is also included.

Suggested additions, deletions or corrections to this manual should be sent to CBP at 1300 Pennsylvania Avenue, N.W., Washington, D.C. 20229, Attn: Cargo Security and Controls, Office of Field Operations.

Click here for Bonded Warehouse Manual

New Legislation on Exports, Insular Possessions, Fruit Juices

H.R. 3976 – to provide exporting assistance to small business concerns (introduced Feb. 8 by Rep. Velazquez, referred to House committees on Ways and Means, Small Business, Financial Services and Foreign Affairs

H.R. 3979 – to amend the Harmonized Tariff Schedule of the United States to extend to 2025 the production certificate program that allows refunds of duties on certain articles produced in U.S. insular possessions (introduced Feb. 8 by Rep. Christensen, referred to House Committee on Ways and Means)

H.R. 3984 – to limit the quantity of arsenic and lead in beverages containing fruit juice pursuant to tolerances under section 406 of the Federal Food, Drug and Cosmetic Act (introduced Feb. 8 by Rep. Pallone, referred to House Committee on Energy and Commerce)

Supply Chain Competitiveness Committee Expands Search for Members

The Department of Commerce has expanded its search for members for its new Advisory Committee on Supply Chain Competitiveness to include representatives of public or semipublic organizations or entities. Representatives of ports are particularly encouraged to apply. Applications are due no later than Feb. 24.

The purpose of this committee is to advise DOC on the necessary elements of a comprehensive, holistic national freight infrastructure and a national freight policy designed to support U.S. export growth and competitiveness, foster national economic competitiveness and improve U.S. supply chain competitiveness in the domestic and global economy. The department wants the committee’s members to represent a balanced and broad range of interests, including supply chain firms or their associations (including shippers and all modes of freight transportation (trucking, rail, maritime and air)), ports, stakeholders, community organizations and others directly affected by the supply chain as well as experts from academia. Each member must be a U.S. citizen, not a federally-registered lobbyist and not registered as a foreign agent under the Foreign Agents Registration Act.

Click here for DOC notice

Safety Standard Proposed for Infant Swings

The Consumer Product Safety Commission is proposing a safety standard for infant swings in response to a mandate under the Consumer Product Safety Improvement Act of 2008 for it to issue such standards for durable infant or toddler products. According to the CPSC, the proposed standard is based on the voluntary standard developed by ASTM International, ASTM F 2088-11b, “Standard Consumer Safety Specification for Infant Swings,” but includes two new requirements, two major modifications and several testing clarifications. Comments on this proposal are due no later than April 25.

Once there is a safety standard in effect, it will be unlawful for anyone to manufacture, distribute or import an infant swing into the U.S. that is not in conformity with that standard. The CPSC intends for the proposed standard to become effective six months after a final rule is published in the Federal Register, but comments on how long it will take infant swing manufacturers to come into compliance are being accepted.

Click here for CPSC proposed rule

AD/CV Notices: Pasta, Uranium

Agency: ITA.
Commodity: Pasta.
Country: Italy.
Nature of Notice: Final results of administrative review of CV duty order for the period Jan. 1 through Dec. 31, 2009.
Details: Net subsidy rates range from zero to 5.11% and will be used to determine AD duties assessed on entries made during the period of review and cash deposit rates for entries on and after Feb. 10.

Agency: ITA.
Commodity: Low enriched uranium.
Country: France.
Nature of Notice: Preliminary results of changed circumstances review of CV duty order.
Details: It is appropriate to issue a one-time amendment to the scope of the order to extend by 18 months the deadline for the reexportation of one entry of LEU.

Agency: ITC.
Commodity: Uranium.
Country: Russia.
Nature of Notice: Feb. 14 open meeting for vote in sunset review of AD duty order.

U.S.-India CEO Forum Members Sought

The Department of Commerce is seeking applications for appointment or reappointment as representatives to the U.S. Section of the Private Sector Committee of the U.S.-India CEO Forum. This panel of 10-12 individuals represents the views and interests of the private sector business community in the U.S. and provides recommendations that reflect private sector views, needs and concerns about the creation of an environment in which they can partner, thrive and enhance commercial ties to expand bilateral trade and economic links.

Each candidate must be the chief executive officer or president (or have a comparable level of responsibility) of a U.S.-owned or controlled company that is incorporated in and has its main headquarters located in the United States and is currently doing business in both India and the U.S. Each candidate also must be a U.S. citizen or otherwise legally authorized to work in the U.S. and be able to travel to India and locations in the U.S. to attend official forum and section meetings. Candidates may not be a registered foreign agent under the Foreign Agents Registration Act of 1938. The DOC will evaluate applications based on the following criteria.

- a demonstrated commitment by the individual's company to the Indian market, either through exports or investment

- a demonstrated strong interest in India and its economic development

- the ability to offer a broad perspective and business experience to the discussions

- the ability to address cross-cutting issues that affect the entire business community

- the ability to initiate and be responsible for activities in which the forum will be active

- prior work by the applicant on the U.S. Section

Click here for DOC notice

Amended Energy Conservation Standards Proposed for Distribution Transformers

The Department of Energy is proposing to amend the energy conservation standards for distribution transformers. If adopted, these standards would apply to all covered distribution transformers manufactured in or imported into the U.S. on or after Jan. 1, 2016.

DOE has tentatively concluded that the proposed standards represent the maximum improvement in energy efficiency that is technologically feasible and economically justified and would result in the significant conservation of energy. DOE further notes that equipment achieving the proposed standard levels is already commercially available for at least some, if not most, covered equipment classes.

DOE will hold a public meeting on this proposal, which will also be broadcast as a webinar, on Feb. 23 in Washington, D.C. In addition, comments, information and data concerning this rule will be accepted through April 10.

Click here for DOE proposed rule

Pomegranates from India Now Allowed Into Continental U.S.

Effective Feb. 10, the Department of Agriculture’s Animal and Plant Health Inspection Service has authorized the importation into the continental United States of fresh pomegranate fruit from India. APHIS believes that the application of the following phytosanitary measures will be sufficient to mitigate the risks of introducing or disseminating plant pests or noxious weeds via such imports.

- the fruit may be imported in commercial consignments only

- the fruit must be irradiated in accordance with 7 CFR part 305 with a minimum absorbed dose of 400 Gy

- if the irradiation treatment is applied outside the U.S., each consignment must be jointly inspected by APHIS and the national plant protection organization of India and accompanied by a phytosanitary certificate attesting that the fruit received the required irradiation treatment and was inspected and found free of the mite Tenuipalpus granati, the false spider mite Tenuipalpus punicae and the bacterium Xanthomonas axonopodis pv. punicae

- if irradiation is applied upon arrival in the U.S., each consignment must be inspected by the NPPO of India prior to departure and accompanied by a phytosanitary certificate with an additional declaration that the fruit was inspected and found free of the pests listed above

- the fruit is subject to inspection upon arrival at the U.S. port of entry

Click here for USDA notice

USDA to Hold March 28 Meeting Ahead of Session of Codex General Principles Committee

The Department of Agriculture’s Food Safety and Inspection Service will hold a public meeting March 28 in Washington, D.C., to provide information and receive public comments on agenda items and draft U.S. positions that will be discussed at the 27th session of the Codex Committee on General Principles, which will be held in Paris April 2-6. The following items on the agenda for the 27th session will be discussed during the public meeting.

- mechanism for examining economic impact statements
- review of the risk analysis policies of Codex committees
- definition of “hazard”
- development of joint Codex-World Organization for Animal Health (OIE) standards

Click here for USDA notice

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