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March 5 2012 issues

Monday, March 05, 2012
Sandler, Travis & Rosenberg Trade Report

President’s 2012 Trade Policy Agenda Focuses on Increasing Employment

The Obama administration delivered to Congress March 1 its 2012 Trade Policy Agenda and 2011 Annual Report, which “offers a survey of how the [Obama] administration will continue to support American jobs through exports and two-way trade, through enforcement of U.S. rights in a strong, rules-based trading system, and through bolstered international trade relationships.” A press release from the Office of the U.S. Trade Representative states that key goals for 2012 include entry into force and implementation of free trade agreements with Korea, Colombia and Panama; concluding negotiations on the Trans-Pacific Partnership agreement; enhanced trade enforcement efforts to investigate unfair trading practices and hold trading partners accountable for their commitments to comply with World Trade Organization obligations; extending permanent normal trade relations to Russia; and continued U.S. leadership at the WTO and other forums toward greater international trade liberalization.

National Export Initiative. As it did in 2011, the administration plans to advance the National Export Initiative goal of doubling U.S. exports by the end of 2014 by continuing to implement the 70 trade promotion and trade policy recommendations of the Export Promotion Cabinet, which last year delivered to Congress a comprehensive interagency National Export Strategy. Later this year the administration will report on the full array of NEI implementation activities, including metrics to measure ongoing progress.

FTAs. Following the recent enactment of legislation to implement FTAs with Korea, Colombia and Panama, the administration will work to “secure swift entry into force” of these agreements and is moving with “a strong sense of urgency” to ensure that the provisions specified in the FTAs and related measures are met.

TPP/TPA. In 2012 the U.S. wants to conclude TPP negotiations, which currently include Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam, and decide on whether to allow Canada, Japan and Mexico to participate. As the administration works with Congress on these topics it will “explore issues regarding additional trade promotion authority necessary to approve the TPP and future agreements.”

Russia. With Russia having concluded its negotiations on joining the WTO and expected to formally accede later this year, the administration will work with Congress to secure legislation ending application of the Jackson-Vanik Amendment and authorizing the president to extend permanent normal trade relations status to Russia as soon as possible. This step “is essential to ensure that American firms and American exporters enjoy the same job-supporting benefits of Russia’s membership in the WTO rules-based system as our international competitors.”

World Trade Organization. This section of the report makes hardly any mention of the long-running Doha Round negotiations and instead focuses on “the effective functioning of the WTO.” The U.S. has acknowledged that the Doha Round “is at an impasse” and will therefore “exercise its leadership in turning the page toward fresh, credible approaches to market-opening trade negotiations in the WTO.” Specifically, the administration will focus on “measures that present significant opportunities for U.S. producers and consumers and strengthen the WTO’s credibility as a negotiating organization.” While the U.S. remains “open to pursuing elements of the Doha Round where there are reasonable prospects for producing such results … we believe it is essential also to foster dialogue on forging productive paths in other aspects of the WTO’s mandate.” As part of that effort the U.S. will continue to “focus on the responsibilities of emerging economies to make contributions commensurate with their advancing roles in global trade.”

The U.S. also plans to “vigorously support and revitalize the valuable, day-to-day work carried out by the WTO’s committees, working groups and dispute settlement mechanism.” The U.S. believes WTO committees “can play a vital role in exploring emerging challenges surrounding issues such as regional trade agreements, export restrictions, food security, and governmental involvement in commercial activities.”

Services. The administration plans to intensify efforts to liberalize trade in services in 2012 through regional initiatives such as the TPP, bilateral engagement with major markets like the European Union, China, India and Brazil, and exploring plurilateral options with more progressive WTO members. The administration will also continue its efforts to address new trade issues arising as a result of technological advances, such as restrictions to data flows and other requirements that limit the access of U.S. service suppliers to key global markets.

Investment. The administration pledged to produce an updated model bilateral investment treaty, a commitment it also made in 2011. The report notes that this step will enable the U.S. to re-engage in BIT negotiations with partners such as China, India and Mauritius and to consider additional BIT negotiations with other potential partners, such as Russia and the East African Community.

GSP. Following the reauthorization of the Generalized System of Preferences through July 31, 2013, the administration will work closely with Congress to consider the future of GSP and other trade preference programs. The report suggests, however, that any GSP reforms that “take into account the growing competitiveness of many emerging market GSP beneficiaries” are not likely to be made this year.

Bilateral/Regional Initiatives. “To build better markets for U.S. exports and extend the job-supporting benefits of trade more broadly,” the U.S. will work with individual trade partners in 2012 as follows.

Europe – In 2011 the U.S. and the EU established a High-Level Working Group on Jobs and Growth that will consider all options, including new trade agreements, to reduce, eliminate or prevent conventional and non-tariff barriers to trade. The report states that this effort will also include enhanced cooperation for the development of rules and principles on global issues of common concern and for the achievement of shared economic goals relating to third countries.

China – The report reiterates the goal of ensuring that China “engages in fair play on trade and that U.S. exporters have a fair shot to compete in China.” To this end the U.S. will maintain efforts to resolve well-known concerns in areas such as discriminatory industrial policies, investment, government procurement, market access barriers, intellectual property rights protection, technology transfer, and regulatory transparency.

Middle East/North Africa – Under the trade and investment partnership initiative the U.S. announced last year (wti/wti.asp?pub=0&story=38076&date=&company=), the U.S. will focus on securing and implementing near-term measures, in part by building on existing agreements. These efforts “can open the door for those countries that adopt high standards of reform and trade liberalization to construct a regional trade arrangement.” Plans include developing a bilateral action plan with Egypt and reinvigorating the trade and investment framework agreement with Tunisia.

Sub-Saharan Africa – The administration appears to be ready to pursue a wider range of regional economic integration measures this year, including aiding efforts to achieve a free trade area covering three existing regional economic communities. The U.S. will also work to negotiate a regional investment treaty with the five-member East African Community as part of a new U.S.-EAC trade and investment initiative, which “could possibly provide building blocks for a more comprehensive U.S.-EAC trade agreement or bilateral investment agreement in the future, and may serve as a model for U.S. engagement with other African regional economic communities.”

The administration will also work with Congress on enacting legislation extending the third-country fabric provision of the African Growth and Opportunity Act through 2015 and “defining and achieving a seamless renewal of AGOA beyond 2015.” Other initiatives will include expanding duty-free, quota-free treatment for imports of upland cotton grown in least-developed countries, extending the West Africa Cotton Improvement Program (which currently covers Benin, Burkina Faso, Chad and Mali), and fully deploying the African Trade and Competitiveness Enhancement Initiative.

Americas – With Canada, the U.S. will ensure full implementation of commitments under the border and regulatory action plans concluded in 2011. With Mexico, the emphasis will be avoiding regulatory barriers to U.S. exports and North American competitiveness. The U.S. will also work with these two countries on strengthening IPR protection and enforcement, including by modernizing outdated laws and regulations.

In Central America, the administration will work with Congress to secure implementing legislation for a February 2011 agreement on technical corrections to the DR-CAFTA textile and apparel rules of origin and will also seek to complete negotiations on a revised TIFA with the Caribbean Community.

Asia – The U.S. will work on a number of issues with its Asia-Pacific Economic Cooperation forum partners, including improving the regulatory environment in the region for U.S. exporters, streamlining import procedures for energy-efficient test vehicles, facilitating trade in remanufactured goods by ensuring that they are treated “like new” at the border, combating illegal logging and associated trade, collaborating on food safety, and implementing a commitment to establish commercially useful de minimis values that will exempt low-value shipments from duties or taxes. The U.S. also hopes to advance initiatives with the Association of Southeast Asian Nations related to digital connectivity, health care services, agribusiness and consumer products.

India – The administration will seek to “advance action on key trade and investment items that will yield improved market access in the near term” and launch an “outreach program to select Indian states in recognition of their importance in setting trade and investment policy in India.”

Innovation. The U.S. will work with others toward launching negotiations on expanding the product scope of the WTO Information Technology Agreement, producing a list of environmental goods on which APEC members will reduce tariffs to 5% or less by 2015, and ensuring high standards for intellectual property protection in the TPP.

Trade Enforcement. Trade enforcement efforts in 2012 will focus on standing up the new Interagency Trade Enforcement Center, which the president formally established in late February. The U.S. will also continue to prosecute WTO cases involving China, the EU and the Philippines.

Click here for USTR report
http://www.ustr.gov/sites/default/files/FULL%20REPORT%20-%20PRINTED%20VERSION.pdf

House Ways and Means Committee Holds Hearing on President Obama’s Trade Policy

[Editor’s note: The following article originally appeared in the March 1, 2012, issue of the Advisor, a weekly publication of ST&R’s STR-TAP service for the textile and apparel industry. Click here for more information http://strtap.strtrade.com.]

On February 29, the House Ways and Means Committee held a hearing on President Obama’s trade policy agenda with U.S. Trade Representative (USTR) Ron Kirk testifying. The exhaustive three-and- a-half-hour long hearing focused on the implementation of the recently passed free trade agreements, progress on the ongoing Trans-Pacific Partnership (TPP) talks, recent efforts to bolster trade enforcement and other upcoming initiatives.

Chairman Dave Camp (R-MI), who led the hearing, started the proceedings by stressing the importance of continuing the hard-won momentum in the trade arena. He noted that the TPP will allow U.S. goods to more easily reach key Asian markets and boost U.S. jobs in the process. In addition, Camp welcomed the interest expressed by Japan, Canada and Mexico in joining the TPP talks. On the issue of Russia’s accession to the World Trade Organization (WTO), Chairman Camp acknowledged that providing permanent normal trade relations (PNTR) status to Russia is important for U.S. businesses. The recurring issue of access to the Chinese market was a major theme, and Rep. Camp took the opportunity to announce legislation that would allow the Department of Commerce (DOC) to continue to apply countervailing (CV) duties on imports from non-market economies.

Stepping back from specific policies, Chairman Camp framed the discussion by acknowledging that the Doha Round is now dormant and the U.S. needs to take initiative and continue the process of trade liberalization. He also hoped that the Obama administration would share his view that trade promotion authority is essential to accomplish any trade agreement. Ranking Democrat Sander Levin (MI) added to the chorus, stating that Democrats have been actively working to create trade policy that is responsive to the changing dynamics of global trade policy.

In line with his focus on labor and environmental provisions in trade agreements, Rep. Levin praised the development and passage of the bipartisan May 10, 2007 agreement. In the same vein, he stressed the attention Ways and Means has been paying to Colombia to ensure application of the Labor Action Plan. Both Camp and Levin recognized the effort by the Obama administration to step up trade enforcement through the creation of the Interagency Trade Enforcement Center (ITEC).

USTR Kirk, in his remarks, applauded the template of bipartisan support for trade shown by the passage of the FTAs with Colombia, Panama and South Korea. He reported on four key areas of progress and engagement: implementation of existing FTAs, TPP negotiations, trade enforcement, and Russia’s accession to the WTO. Ambassador Kirk highlighted the work the USTR is doing to ensure implementation is on track for both Colombia and Panama, and reminded the audience that the U.S.-Korea FTA will enter into force on March 15. On the TPP front, Kirk said that he hopes to reach an agreement by the end of this year and vowed to work closely with Ways and Means as new countries express interest in joining the talks.

Ambassador Kirk also stressed that trade enforcement is a priority of the administration and highlighted the establishment of ITEC as evidence of a renewed commitment. Further, Kirk said that the administration will seek PNTR status for Russia and termination of its Jackson-Vanik status. In terms of broader opportunities and as part of the next steps to bolster trade liberalization, USTR Kirk pointed to engagements with the European Union to further cement the Trans-Atlantic partnership and mentioned the continuing search for “fresh and credible opportunities” at the WTO.

New issues raised by members during the question-and-answer session focused mainly on constituent-specific concerns. Rep. Johnson (R-TX) brought up the topic of the president’s corporate tax reform effort and its effect on companies. Rep. Neal (D-MA) specifically asked for an update on a possible U.S.-EU FTA. Ambassador Kirk noted the creation of a high-level working group as well as five meetings that have been held between EU and U.S. officials. In response to questions about e-commerce provisions, Kirk directed members to the e-commerce chapter under negotiation in the TPP.

Focusing specifically on the historically high tariffs on footwear, Rep. Schock (R-IL) asked why these were still in place despite the lack of a domestic industry. USTR Kirk cited a U.S. company that still produces shoes in the Northeast as well as the need to maintain a balance between benefits to consumers and U.S. jobs. Rep. Gerlach (R-PA) brought up an issue a company in his district was facing with the way the yarn-forward rule is being administered under the DR-CAFTA. Gerlach said he would follow up with a formal letter to the USTR.

The majority of the Ways and Means Committee members focused on the issue of access to the Chinese market, protection of intellectual property rights (IPR), e-commerce regulation and the status of the TPP talks, as well as other ongoing negotiations.

(The Senate Finance Committee will hold its own hearing on the president’s 2012 trade policy agenda on March 7.)

Of Note: Aircraft Subsidies, India-Pakistan Trade, FCPA Setbacks, Brazil Trade Financing

U.S. Sees WTO Rulings As Basis To Address Future Disputes
http://www.aviationweek.com/aw/generic/story_generic.jsp?channel=businessweekly&id=news/bav/2012/02/27/05.xml&headline=U.S.+Eyes+WTO+Case+Against+Canada+And+Bombardier

India Embraces Pakistan Trade Plan as Rivals Boost Economy Ties
http://www.bloomberg.com/news/2012-03-01/india-embraces-pakistan-trade-plan-as-rivals-boost-economy-ties.html

U.S. Prosecutor Says Tough Tactics to Remain in Bribery Fight
http://www.reuters.com/article/2012/03/02/usa-bribery-idUSL2E8E1GYU20120302

Brazil Extends Tax on Foreign Loans in Latest Bid to Stem Currency Gains
http://www.bloomberg.com/news/2011-04-06/real-weakens-most-in-three-weeks-as-brazil-readies-more-currency-measures.html

Dates and Deadlines in the Week Ahead

Following are highlights of regulatory effective dates and deadlines and federal agency meetings coming up in the next week

March 6 - meeting of Bureau of Industry and Security’s Regulations and Procedures Technical Advisory Committee
http://strtradenews.com/rv/ff0002dfe2d852ee9e5384aa5748ae32dcb009d8/p=4005811

March 6 - ST&R webinar on transporting lithium batteries by air
http://www.strtrade.com/Seminars/seminar_desc.aspx?id=1808

March 9 - comments on Department of Labor lists of goods possibly made with forced/child labor
http://strtradenews.com/rv/ff0002dfe2d852ee9e5384aa5748ae32dcb009d8/p=7403039

March 9 - applications to participate in healthcare technology policy and trade mission to Mexico City May 13-16, 2012
> Full Article

AD/CV Notices: Shrimp, Pipe, Steel Products, Bearings

Agency: ITA.
Commodity: Frozen warmwater shrimp.
Country: Thailand.
Nature of Notice: Preliminary results of administrative review of AD duty order for the period Feb. 1, 2010, through Jan. 31, 2011.
Details: Dumping margins range from 0.97% to 1.98%. ITA also preliminarily determined that nine companies had no reviewable transactions during the period of review.
Link: http://www.ofr.gov/OFRUpload/OFRData/2012-05263_PI.pdf

Agency: ITA.
Commodity: Large diameter carbon and alloy seamless standard, line and pressure pipe (over 4.5”).
Country: Japan.
Nature of Notice: Preliminary results of administrative review of AD duty order for the period June 1, 2010, through May 31, 2011.
Details: ITA preliminarily found that none of the four reviewed companies had shipments of subject merchandise to the U.S. during the period of review.
Link: http://www.ofr.gov/OFRUpload/OFRData/2012-05261_PI.pdf

Agency: ITA.
Commodity: Corrosion-resistant carbon steel flat products.
Country: Korea.
Nature of Notice: Final results of administrative review of CV duty order for the period Jan. 1 through Dec. 31, 2009.
Details: Reviewed company received a de minimis net subsidy. As a result, no CV duties will be assessed on entries of subject merchandise from this company during the period of review, and no CV duty cash deposits will be collected for entries on or after March 5.
Link: http://www.ofr.gov/OFRUpload/OFRData/2012-05188_PI.pdf

Agency: ITA.
Commodity: Tapered roller bearings and parts thereof, finished or unfinished.
Country: China.
Nature of Notice: Extension from March 1 to June 29 of time limit for preliminary results of administrative review of AD duty order.
Link: http://www.ofr.gov/OFRUpload/OFRData/2012-05257_PI.pdf

Foreign Regulatory Changes Could Affect Exports of Foods, Chemicals, Pipes, Wood, Radio Equipment, Motorcycle Helmets

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 (https://tsapps.nist.gov/notifyus/data/request/new_notifications.cfm). For information on how these restrictions may affect your business, contact ST&R.

Australia – national test procedures for determining the weight of frozen fish (comments due by April 28)

Brazil – amended mandatory technical requirements for identity standards and quality requirements for rice

European Union – amended regulations on Registration, Evaluation, Authorization and Restriction of Chemicals

Hungary – draft decree specifying scope of products and technologies that may be distributed on condition of having a fire protection conformity certificate (comments due by May 15)

Israel – amended mandatory standards on concrete cylindrical pipes, plywood and wood chipboards (comments due by April 28)

Japan – draft ordinance on technical standards conformity certification for radio equipment used in close proximity to the human body (comments due by April 30)

Korea – amended regulations on environment-friendly agricultural products and organic materials (comments due by April 29)

Singapore – amended regulations on edible fats and oils (comments due by April 29)

Uganda – draft standard prescribing requirements for materials, design and make of national flags (comments due by April 29)

Uganda – draft standard specifying requirements for motorcycle helmets (comments due by April 29)

New IPR Infringement Petitions on Dental Appliances, Stainless Steel Sinks

The International Trade Commission received March 1 separate petitions requesting that it institute Section 337 investigations regarding the following products.

- incremental dental positioning adjustment appliances (respondents located in Pakistan and the U.S.)

- digital models, digital data, and treatment plans for use in making incremental dental positioning adjustment appliances (respondents located in Pakistan and the U.S.)

- stainless steel sinks (respondent located in China)

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.

FTC Proposes Amendments to Appliance Labeling Rule

The Federal Trade Commission is seeking public comment no later than May 16 on proposed changes to the Appliance Labeling Rule. This rule provides for the EnergyGuide labels that tell consumers the product's estimated annual operating cost and energy consumption rating as well as a range for comparing the highest and lowest energy consumption for all similar models. Appliances that have EnergyGuide labels include televisions, clothes washers, dishwashers, refrigerators, freezers, water heaters, room air conditioners, central air conditioners, furnaces, boilers, heat pumps and pool heaters.

The FTC is requesting input on the benefits and costs of the rule as well as several proposed changes, including whether the Commission should (a) eliminate duplicative reporting requirements for manufacturers, (b) require a uniform method for attaching labels to appliances, (c) place EnergyGuide labels on room air conditioner packages instead of the products, (d)
improve Web site disclosures and (e) revise ceiling fan labels.

Click here for FTC press release
http://www.ftc.gov/opa/2012/02/appliancelabel.shtm

USDA Leading Trade Mission to China This Month

The Department of Agriculture announced March 1 that it will lead an agricultural trade mission to China at the end of March. China became the largest market for U.S. agricultural goods in 2011, purchasing $20 billion in U.S. agricultural exports, and USDA is planning to take on this mission more than 40 U.S. agribusinesses seeking to either enter or expand their presence in China.

A USDA press release notes that in February the U.S. and China signed a plan of strategic cooperation that will guide their agricultural relationship for the next five years. This plan focuses on agricultural science, trade and education, and it looks to deepen cooperation through technical exchanges and strengthen coordination in key priority areas, including food security and emerging technologies.

Advisory Committee for FTA Labor Provisions to Meet March 23

The National Advisory Committee for Labor Provisions of U.S. Free Trade Agreements will hold an open meeting March 23 in Washington, D.C. At this meeting the committee will discuss the implementation of FTA labor provisions, technical assistance efforts in FTA countries, and a subcommittee report regarding the North American Agreement on Labor Cooperation.

Click here for DOL notice
http://www.ofr.gov/OFRUpload/OFRData/2012-05198_PI.pdf

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