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Feb 23 2012 issue

Thursday, February 23, 2012
Sandler, Travis & Rosenberg Trade Report

U.S.-Korea FTA to Take Effect March 15

The Office of the U.S. Trade Representative has announced that the U.S.-Korea Free Trade Agreement will take effect March 15. The two sides have exchanged diplomatic notes confirming that they have each completed their applicable legal requirements and procedures for the agreement’s entry into force.

A USTR press release states that as of March 15 almost 80% of U.S. exports of industrial products to Korea will become duty-free, including aerospace equipment, agricultural equipment, auto parts, building products, chemicals, consumer goods, electrical equipment, environmental goods, all footwear and travel goods, paper products, scientific equipment, and shipping and transportation equipment. Also on that date almost two-thirds of U.S. exports of agricultural products to Korea will become duty-free, including wheat, corn, soybeans for crushing, whey for feed use, hides and skins, cotton, cherries, pistachios, almonds, orange juice, grape juice and wine. In addition, the KORUS agreement includes a number of significant commitments related to non-tariff measures that will come into force March 15, including obligations related to motor vehicle safety and environmental standards, enhanced regulatory transparency, standard-setting, technology neutrality, customs administration, and strengthened protections for intellectual property rights.

Key Republican leaders welcomed the news and expressed hope that the FTAs with Colombia and Panama will enter into force soon as well. U.S. officials have been discussing implementation with their counterparts in those countries, but there has been little public news about the progress of those talks. Some have called for the Colombia FTA to be postponed due to ongoing anti-labor violence, but Senate Finance Committee Ranking Member Orrin Hatch urged the Obama administration not to “delay the implementation of the Panama or Colombia trade pacts because of issues that have nothing to do with the agreements themselves.”

House Ways and Means Trade Subcommittee Chairman Kevin Brady said the administration should build on the momentum associated with these FTAs to “promptly” complete negotiations on the Trans-Pacific Partnership agreement and “work with Congress on a forward thinking, aggressive trade agenda for the future.” To best move those efforts forward, Hatch added, the president should also seek a renewed congressional grant of trade promotion authority, which allows the executive branch to negotiate and move trade agreements through Congress in an expedited manner.

Ex-Im Bank Launches New Programs to Increase Exports

The Export-Import Bank has launched three initiatives to further increase U.S. exports. A press release from the White House notes that U.S. exports are up nearly 34% since 2009 and that the Bank has been an important contributor, with total export financing hitting a record for the third straight year in fiscal year 2011 at $32 billion.

The first initiative is a new product entitled Global Credit Express, which will help small business exporters obtain a revolving line of credit of up to $500,000 for six to twelve months. During the program’s pilot phase an initial $100 million in financing will be made available through a select number of lenders nationwide. Following the pilot, the Bank will evaluate the results of this program and determine whether to increase the available amount. An agency press release notes that the GCE product is specially designed to finance the business of exporting rather than specific export transactions.

Second, President Obama has announced that the Ex-Im Bank will be able to provide U.S. firms competing for domestic or third-country sales with matching financing support to counter foreign non-competitive official financing that fails to observe international disciplines.

Finally, the Bank reported that The Boeing Company will become the third participant in the Supply Chain Finance Guarantee program. This program provides competitively priced working capital financing to suppliers of goods or services to U.S. exporters. Through this partnership Boeing’s small business suppliers will be able to access over $700 million in short-term credit this year.

China to Increase Market Access for U.S. Movies

China has agreed to increase market access for U.S. movies in response to a World Trade Organization ruling (wti/wti.asp?pub=0&story=33567&date=&company=) against Chinese restrictions on the importation and distribution of copyright-intensive products such as films, DVDs, music, books and journals. According to information from the White House and press reports, the agreement allows the U.S. to export 14 additional 3D, IMAX and similar enhanced format movies to China in addition to the current quota of 20 traditional format films, and those additional movies can be exported in traditional format as well. The agreement also increases from 13.5% to 25% the compensation level for U.S. films distributed by Chinese state-owned enterprises.

The Independent Film and Television Alliance praised the agreement and provided additional details. “China has agreed that licensing arrangements should be negotiated on commercial terms comparable with other markets proportional in size,” such as France and Germany, an IFTA press release said. “Additionally, the pact encompasses key provisions that are considered standard practice elsewhere, including audit rights, approval of sub-licenses, consultation on marketing campaigns and the ability to designate a choice of law when disputes arise. … China has also agreed to affirm that no law or regulations can prevent other Chinese enterprises from actively engaging in the distribution of imported films. In fact, the Chinese government will now promote the entrance of other distributors into the marketplace.”

The White House notes that this agreement will be reviewed after five years to ensure it is working as envisioned.

$1.25 Million Penalty, Prison Term, Corporate Probation for Exports to Iran

According to the Department of Justice, a New York resident and his company have been sentenced for exporting computer-related equipment to Iran through the United Arab Emirates without a license or authorization from the Treasury Department’s Office of Foreign Assets Control. The man was sentenced to 18 months in prison, his company was sentenced to 24 months corporate probation and both were sentenced to forfeiture in the amount of $1.25 million. In addition, the export privileges for both will be denied for ten years, although this penalty will be suspended provided that neither one commits any export violations.

President Nominates Two for Export Council

President Obama has announced his intent to nominate the following two individuals as members of the President’s Export Council.

Dr. Gary W. Loveman is currently president, chief executive officer and chairman of the board of directors of Caesars Entertainment Corp. He is also on the board of directors of Coach Inc., FedEx Corp. and the American Gaming Association, for which he served as chairman from 2007 to 2009. Dr. Loveman sits on the board of trustees at Children’s Hospital and on the visiting committee of the Department of Economics at M.I.T. Earlier in his career he served as an associate professor at the Harvard University Graduate School of Business Administration and as a research assistant at the Federal Reserve Bank of Boston.

Denise Morrison is president and CEO of Campbell Soup Company and has previously served in that company as president of global sales, executive vice president, chief operating officer, and president of North America soup, sauces and beverages. She has previously held general management, marketing and sales roles at Kraft, Nabisco, Nestle, Pepsi and Procter & Gamble. Ms. Morrison serves on the board of the Grocery Manufacturers Association and chairs its Health & Wellness Committee, is a founding member of the Healthy Weight Commitment Foundation and is on the board of the Consumer Goods Forum.

Russia to Join OECD Anti-Bribery Convention on April 17

Russia will become the 39th party to the Organization for Economic Cooperation and Development’s Anti-Bribery Convention effective April 17, 60 days after depositing its instrument of accession. This agreement, which entered into force in 1999, outlaws the bribery of foreign public officials in international business transactions.

An OECD press release states that once its accession to the agreement is official Russia will undergo systematic reviews of its implementation of its anti-bribery laws, starting with a first examination in 2012. This will be one of 22 reviews the OECD will hold on a wide range of policy areas to assess Russia’s ability to meet OECD standards and eventually become a full member of the organization.

AD/CV Notices: Drill Pipe, Salmon, Silicon Metal, Pipe Fittings

Agency: ITA.
Commodity: Drill pipe.
Country: China.
Nature of Notice: Termination of anti-circumvention inquiry of AD and CV duty orders due to withdrawal of the request by the petitioners.

Agency: ITC.
Commodity: Fresh and chilled Atlantic salmon.
Country: Norway.
Nature of Notice: Sunset review determination that revocation of AD and CV duty orders would not be likely to lead to continuation or recurrence of material injury to an industry in the U.S. within a reasonably foreseeable time.
Details: In light of this determination, these orders will shortly be revoked.

Agency: ITC.
Commodity: Silicon metal.
Country: China.
Nature of Notice: Scheduling of expedited sunset review of AD duty order.
Details: This review will result in either the revocation or continuation of this order.

Agency: ITC.
Commodity: Stainless steel butt-weld pipe fittings.
Country: Italy, Malaysia and the Philippines.
Nature of Notice: Scheduling of expedited sunset reviews of AD duty orders.
Details: These reviews will result in either the revocation or continuation of these orders.

New IPR Infringement Petition on Consumer Electronics

The International Trade Commission received Feb. 17 a petition requesting that it institute a Section 337 investigation regarding certain consumer electronics, including mobile phones and tablets. The proposed respondents are located in Taiwan, Korea, Canada and the U.S.

Section 337 investigations primarily involve claims regarding intellectual property rights violations by imported goods, including the infringement of patents, trademarks and copyrights. Other forms of unfair competition involving imported products, such as misappropriation of trade secrets or trade dress and false advertising, may also be asserted. The primary remedy available in Section 337 investigations is an exclusion order that directs U.S. Customs and Border Protection to stop infringing imports from entering the U.S. In addition, the ITC may issue cease and desist orders against named importers and other persons engaged in unfair acts that violate Section 337, including selling infringing imported articles out of U.S. inventory.

Foreign Regulatory Changes That Could Affect Exports

According to the National Institute of Standards and Technology, the World Trade Organization has been notified of regulatory changes that may affect exports of specific products to the following countries. More details, including regulatory texts, can be accessed here ( For information on how these restrictions may affect your business, contact ST&R.

- Albania: draft decision on approval of list of substances and chemical preparations whose usage is limited or prohibited (comments due by April 16)

- Canada: new radio standards specifications effective Jan. 28

- Colombia: technical regulation on liquid petroleum gas cylinder depots, outlets and points of sale (effective Nov. 19, 2011)

- Ecuador: revised draft technical regulation on pacifiers for babies and young children (comments due by May 2)

- Honduras: technical regulations establishing labeling requirements for pre-packaged distilled and fermented alcoholic beverages for human consumption (comments due by April 7)

- Honduras: technical regulation establishing registration requirements for microbiological pesticides for agricultural use (comments due by April 7)

- Hong Kong: voluntary energy efficiency labeling scheme for induction cookers (comments due by April 16)

- Indonesia: national standard on azo dye and formaldehyde levels in fabric for clothes for babies and children (comments due by April 13)

- Japan: additional standard for fuel for gasoline-powered motor vehicles (comments due by Feb. 29)

- South Africa: proposed new compulsory specification for pressurized paraffin-fueled appliances (comments due by April 9)

- Taiwan: revised standard for child restraint systems for vehicles (comments due by April 14)

- Taiwan: vehicle safety testing directions (comments due by April 10)

USDA Improves Phytosanitary Certificate System for Agricultural Exporters

The Department of Agriculture’s Animal and Plant Health Inspection Service has made several improvements to its Phytosanitary Certificate and Issuance Tracking system. PCIT was created in 2005 to automate the issuance of phytosanitary certificates for agricultural commodities exported to foreign countries. In fiscal year 2011, APHIS and state and county governments issued more than 530,000 export certificates for individuals and businesses through the PCIT system.

APHIS states that in the coming months PCIT will begin automatically transferring phytosanitary certificates to foreign countries receiving U.S. exports, reducing previous delays associated with paperwork verification. In addition, APHIS is expanding the availability of user-printed phytosanitary certificates, eliminating the need for users to pay for shipped documents.

CBP Reviewing Screening Requirements for Carriers, Declaration of Repairs

U.S. Customs and Border Protection is soliciting comments on the proposed extension without change of the following information collections.

- Screening Requirements for Carriers: Section 273(e) of the Immigration and Nationality Act authorizes the Department of Homeland Security to establish procedures that carriers must undertake for the proper screening of their alien passengers prior to embarkation at the port from which they are to depart for the United States in order to become eligible for an automatic reduction, refund or waiver of a fine imposed under section 273(a)(1). To be eligible, the carrier must provide evidence to CBP that it screened all passengers on the conveyance in accordance with the procedures listed in 8 CFR 273.3. Some examples of such evidence include a description of the carrier's document screening training program, the number of employees trained, information regarding the date and number of improperly documented aliens intercepted by the carrier at the port(s) of embarkation, and any other evidence to demonstrate the carrier's efforts to properly screen passengers destined for the United States. (comments due by March 26; click here for CBP notice)

- Declaration of Persons Who Performed Repairs or Alterations: Articles entered under HTSUS subheadings 9802.00.40 and 9802.00.50 are articles that were in the U.S. and were exported temporarily for repairs. Upon their return, duty is only assessed on the value of the repairs performed abroad and not on the full value of the article. This declaration is used to determine the value of the repairs and includes information such as a description of the article and the repairs, the value of the article and the repairs, and a declaration by the owner, importer, consignee or agent having knowledge of the pertinent facts. (comments due by April 23; click here for CBP notice)

Alcohol and Tobacco Tax and Trade Bureau Reviewing Information Collections

The Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau is accepting comments through April 23 on the proposed extension of the following information collections.

- Labeling and Advertising Requirements under the Federal Alcohol Administration Act: Bottlers and importers of alcohol beverages must adhere to numerous performance standards for statements made on labels and in advertisements of alcohol beverages. These performance standards include minimum mandatory labeling and advertising statements.

- Beer for Exportation: Un-tax-paid beer may be removed from a brewery for exportation without payment of the excise tax normally due on removal. In order to ensure that exportation took place as claimed and that un-tax-paid beer does not reach the domestic market, TTB requires certification on form TTB F 5130.12.

- Bond for Drawback under 26 USC 5131: Businesses that use tax-paid alcohol to manufacture non-beverage products may file a claim for drawback (refund or remittance). Claims may be filed monthly or quarterly. Monthly claimants must file a bond on form TTB F 5154.3 to protect the government’s interest.

Click here for TTB notice

New and Amended Maritime Agreements Filed

The Federal Maritime Commission has issued notice that the following new or amended agreements have been filed. Interested parties may submit comments by March 5.

- The Credit Agreement: The amendment deletes Crowley Latin American Services LLC and a King Ocean entity as a party to the agreement.

- MSC/Zim South America East Coast Vessel Sharing Agreement: The agreement would authorize MSC and Zim to share vessels in the trade between the U.S. Gulf Coast and ports in the Dominican Republic, Jamaica, Brazil and Panama. It would also authorize MSC to charter space to Zim in the trade between the U.S. East Coast and ports in the Bahamas, the Dominican Republic, Brazil, Argentina and Uruguay.

- Slot Purchase Agreement Between UASC and YMUK: The agreement authorizes UASC to sell and Yang Ming to purchase slots in the trade between countries in the Mediterranean Sea and the Atlantic Coast of the United States and Canada.

- Fourth Amendment to Lease and Operating Agreement between PRPA and Dependable Distribution Services Inc. for Pier 84 South: The amendment extends the lease through April 30, 2018, provides for the level of base rent during the new period, replaces the dockage fee provision and establishes the prevailing wage on the facility.

- Marine Terminal Lease and Operating Agreement Between Broward County and Mediterranean Shipping Company S.A.: The amendment revises language in the agreement regarding the calculation of rates for containers and minimum guarantee payments.

- Marine Terminal Lease and Operating Agreement Between Broward County and King Ocean Services Limited (Cayman Islands) Incorporated: The agreement provides for the lease and operation of terminal facilities at Port Everglades in Broward County, Fla.

Click here for FMC notice

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