March 9 2012 issue
Senate Finance Hearing Sees Clashes on Trade Policy
The Senate Finance Committee’s March 7 hearing on President Obama’s 2012 trade agenda was a bit more contentious than a House Ways and Means hearing on the same topic a week earlier. Ranking Member Orrin Hatch was sharply critical of the president’s actions on trade to date as well as some of his priorities for this year, perhaps signaling a more difficult path to progress on those issues.
Baucus and U.S. Trade Representative Ron Kirk praised the Obama administration for moving a number of trade liberalization initiatives forward in 2011, but Hatch did not share their view. Baucus and Kirk cited as major achievements the enactment of legislation implementing free trade agreements with Korea, Colombia and Panama, the renewal of the Trade Adjustment Assistance program, and the reauthorization of the Generalized System of Preferences and the Andean Trade Preferences Act. Hatch, however, pointed out that “President Bush’s vision of an aggressive market-opening U.S. trade policy … made all three agreements possible” and criticized Obama for a years-long delay in sending the FTAs to Congress. He accused Obama of being “satisfied with just nibbling at the edges of a comprehensive and coherent trade agenda” instead of exhibiting the “commitment and leadership” necessary to “address the opportunities and challenges the world presents now.”
Baucus and Kirk said policymakers should build on the momentum generated in 2011 by pursuing three major goals in 2012, the first of which is approving permanent normal trade relations status for Russia by repealing the Jackson-Vanik Amendment. Kirk said PNTR for Russia “would “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” and “provide the United States with more enforcement tools to secure enhanced market access for both U.S. goods and services and a level playing field for U.S. exporters and service providers in Russia.” Baucus asserted that PNTR “would double U.S. exports to Russia in five years.” He acknowledged that Russia has “a troubled democracy and human rights record” but said the activists he met with during a recent trip to Russia all support PNTR because it “weakens the ability of the hardliners in Russia to rally anti-American forces.” Hatch, on the other hand, argued that approving PNTR would ignore “Russia’s rampant corruption, theft of U.S. intellectual property, poor human rights record, and adversarial foreign policies for a market that amounts to .05 percent of U.S. exports.” He added that “we hear a lot of rhetoric about how the President will only pursue trade policies consistent with his values, especially when it comes to the labor policies of our democratically elected friends in Latin America,” but that “somehow those values vanish in the context of trade with Russia, a corrupt and autocratic regime.”
The second objective identified by Baucus and Kirk for 2012 is concluding the Trans-Pacific Partnership negotiations, which currently involve nine countries and could be expanded in the coming months. The latest round of talks is being held this week in Australia, but some observers believe that not enough progress has been made to allow a final deal to be reached by the end of the year. Canada, Mexico and Japan are all hoping to join the TPP, and both Baucus and Kirk stressed that to do so they must be willing to accept the high standards of the agreement and address specific areas of concern. Baucus also expressed hope that Korea, Colombia and Panama will be added to the list of potential participants.
Related to the TPP negotiations is the possible renewal of trade promotion authority, which allows the president to negotiate trade agreements that Congress can then approve or reject but not amend. TPA expired in 2004 and many believe it must be restored for the U.S. to successfully conclude the TPP negotiations as well as any other agreements that might be pursued in the future. Kirk said that the Obama administration will explore these issues “as we move toward negotiating outcomes and new partners” with respect to the TPP process, but Hatch rebuked that approach as essentially an abuse of authority. “TPA is not something the President asks for after an agreement is negotiated,” he said. “TPA establishes the foundation upon which trade agreement negotiations and meaningful consultation takes place.” Without TPA “the President has no authority or guidance from Congress upon which to negotiate,” he added, asserting that “Federal Register notices and staff-level meetings are not a substitute.” Unless the administration engages with Congress on TPA soon, Hatch warned, the TPP could “fail under the weight of empty rhetoric without action.”
The third key issue for this year is addressing trade-related challenges with respect to China. Baucus praised the recent establishment of the Interagency Trade Enforcement Center as “an important step in the right direction.” Kirk claimed that the ITEC will “significantly enhance the administration’s capabilities to prioritize and aggressively challenge unfair trade practices around the world, including those in China,” and called on lawmakers to provide sufficient funding. ITEC will be led by a USTR official, and Baucus asserted that “no agency is better positioned” to dismantle foreign trade barriers than USTR. Hatch, however, downplayed the new office as illustrative of the administration’s “lack of substance and vision” on trade policy. The ITEC “appears to do nothing more than detail personnel from one agency to another while replicating the core statutory mission of the Office of the U.S. Trade Representative,” Hatch said. “At the same time the President seeks to end USTR’s special role in trade policy through a trade-agency reorganization, ending 50 years of achievement by a talented, nimble, and effective agency.”
Report Outlines Costs, Savings Associated with C-TPAT
U.S. Customs and Border Protection posted to its Web site recently its “2011 C-TPAT Costs & Savings Survey.” CBP concludes from the review that C-TPAT “has become a vital part of supply chain security in the post-9/11 world” and that the program membership “continues to be a critical source of feedback and recommendations for improvement.”
CBP states that the “overarching theme” of this survey is that “the value of C-TPAT membership cannot be measured adequately in terms of dollars and cents.” On the one hand, there are indeed implementation costs and maintenance costs, which are offset by savings in only a minority of cases. In addition, a “non-ignorable minority of respondents” said they have not seen the expected improvements in processes that impact their profitability, such as faster border crossings, front-of-the-line programs and less-frequent inspections. At the same time, CBP said, “it is clear that C-TPAT members take pride in their membership, see it as an industry best practice and value it for reasons that go beyond a purely monetary frame of reference.” These reasons include a best-practice approach to security issues that creates a business culture of more secure operations for all and constant improvements in security, the assurance that shipments will move predictably, reduced exposure to legal or financial risk, and the indirect benefits of efficiency and safety resulting from security activities that reveal equipment or personnel issues that do not directly impact security.
Other information revealed through this survey includes the following.
- Small numbers of importers and carriers reported their estimates of the costs of border delays in four different modes of transport. The median costs were $200 for land delays, $500 for air delays, $1,000 for rail delays and $1,500 for sea delays.
- CBP asked what percentage of contracts for supply chain relationships these days require bidders to be C-TPAT certified. Eight percent of respondents said all of them while 9% said none. About 40% of respondents put the figure between 1% and 45% and about 30% said it was between 50% and 99%.
- For the 75% of respondents who reported a dollar value for implementation costs related to C-TPAT membership, those costs ranged from $280 to $4 million, with a median of $17,370. For the 62% who reported a dollar value for maintenance costs, those costs ranged from $45 to $815,000, with a median of $9,000.
- For the 26% of respondents who reported a number of person-hours for time savings related to C-TPAT membership, those savings ranged from 25 to 48,000 person-hours annually with a median of 373. For the 24% who reported a dollar value for cost savings, those savings ranged from $50 to $52 million, with a median of $5,350.
- Asked to summarize the financial costs and savings related to C-TPAT membership as net positive, neutral or net negative, respondents fell about equally into each category.
Click here for CBP report
House Committee Approves Bill to Improve Export Promotion Efforts
The House Foreign Affairs Committee unanimously approved March 7 the Export Promotion Reform Act (H.R. 4041), which is designed to increase exports of U.S.-made goods and services by improving the functioning of U.S. export promotion programs. Based on recommendations in a Government Accountability Office report that found U.S. export promotion programs to be less effective than those in other countries, H.R. 4041 includes the following provisions.
DOC. The Department of Commerce would be required to assess global markets to identify opportunities for increased U.S. exports, re-deploy U.S. Commercial Service personnel and budgets to carry out the market assessment, and seek the recommendations of U.S. exporters, particularly small and medium-sized firms and representatives of U.S. workers.
TPCC. The Trade Promotion Coordinating Council would be required to assess current export promotion programs and direct improvements, review and approve annual export promotion budget submissions, and direct the implementation of export promotion activities by other agencies.
State. The State Department would be required to direct ambassadors to develop country-by-country commercial diplomacy plans aimed at increasing U.S. exports, draft those plans in consultation with the U.S. Commercial Service and through the TPCC with the heads of other agencies with export promotion programs, require annual performance assessments of the actions by the ambassador and deputy chief of mission to carry out the commercial diplomacy plans, and include an assessment of commercial diplomacy effectiveness in the inspector general’s period audits of U.S. missions.
A similar bill (S. 2171) was introduced in the Senate March 7 and referred to the Committee on Banking, Housing and Urban Affairs.
AD/CV Notices: Hot-Rolled Steel Products, Polyvinyl Alcohol, Wind Towers
Commodity: Hot-rolled carbon steel flat products.
Nature of Notice: Rescission of administrative review of AD duty order for the period Nov. 1, 2010, through Oct. 31, 2011, based on the withdrawal of the requests for review.
Details: AD duties on entries of subject merchandise during the period of review will be assessed at rates equal to the cash deposits required at the time of entry or withdrawal from warehouse for consumption.
Commodity: Polyvinyl alcohol.
Nature of Notice: Corrected notice of opportunity to request administrative review.
Details: Period of review is Sept. 13, 2010 (not 2011) through Feb. 29, 2012.
Commodity: Utility scale wind towers.
Nature of Notice: Postponement until May 29 of preliminary CV duty determination.
Foreign Regulatory Changes Could Affect Exports of Gas Containers, Cosmetics, Tractors, Appliances, Slings, Medical Equipment, Building Materials
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.
Brazil – amended conformity assessment procedures for transportable containers for liquefied petroleum gas
China – test method for chemical raw materials used in cosmetics (comments due by May 10)
European Union – directives on tractors placed on the market under the flexibility scheme, emission stages for narrow-track tractors, electric and electronic equipment containing cadmium, and short-range devices
Israel – amended mandatory standards on domestic electrical appliances, oriented strand boards, dry process fiberboards, textile slings and medical electrical equipment (comments due by May 2)
Peru – amended regulations on (1) registration, control and sanitary surveillance of pharmaceutical products, medical devices and sanitary products and (2) pharmaceutical establishments
Uganda – draft standards on expanded metal sheets or plates for general use, building products made from expanded metal, and seamless plastic pipes of circular cross-section (comments due by May 2)
IPR Enforcement Actions on Consumer Electronics, Kitchenware, Semiconductor Chips
Potential IPR Probes of Consumer Electronics, Kitchenware Evaluated for Public Interest Issues. The International Trade Commission is requesting comments no later than March 19 on any public interest issues raised by separate Section 337 intellectual property rights infringement complaints against (1) certain consumer electronics and display devices and products containing same and (2) certain food containers, cups, plates, cutlery and related items and packaging thereof. Comments should address whether the issuance of exclusion orders and/or cease and desist orders pursuant to these complaints would affect the public health and welfare in the U.S., competitive conditions in the U.S. economy, the production of like or directly competitive articles in the U.S., or U.S. consumers. In particular, the ITC is interested in comments that:
- explain how the articles potentially subject to the orders are used in the U.S.;
- identify any public health, safety or welfare concerns in the U.S. relating to the potential orders;
- identify like or directly competitive articles that the complainants, their licensees or third parties make in the U.S. that could replace the subject articles if they were to be excluded;
- indicate whether the complainants, the complainants’ licensees and/or third-party suppliers have the capacity to replace the volume of articles potentially subject to the requested orders within a commercially reasonable time; and
- explain how the requested orders would impact U.S. consumers.
Click here for consumer electronics notice
Click here for kitchenware notice
Further Input Sought in Semiconductor Chip Investigation. In patent infringement investigation 337-TA-753 of certain semiconductor chips and products containing same, the presiding administrative law judge has recommended that if the ITC finds a violation of Section 337 it should issue a limited exclusion order against respondents’ infringing products (including respondents’ own infringing downstream products) that contain the supplier respondents’ accused semiconductor chips as well as cease and desist orders against five respondents. The ITC is soliciting comments through March 26 on whether such relief would affect the public health and welfare in the U.S., competitive conditions in the U.S. economy, the production of like or directly competitive articles in the U.S. or U.S. consumers. In particular, the ITC is interested in comments that:
- explain how the articles potentially subject to the recommended orders are used in the U.S.;
- identify any public health, safety or welfare concerns in the U.S. relating to the recommended orders
- identify like or directly competitive articles that complainant, its licensees or third parties make in the U.S. that could replace the subject articles if they were to be excluded;
- indicate whether complainant, complainant's licensees and/or third party suppliers have the capacity to replace the volume of articles potentially subject to the recommended orders within a commercially reasonable time; and
- explain how the recommended orders would impact consumers in the U.S.
Click here for semiconductor notice
Industry Trade Advisory Committee on Small and Minority Business to Meet April 4
The Office of the U.S. Trade Representative’s Industry Trade Advisory Committee on Small and Minority Business (ITAC-11) will hold a partially open meeting April 4 in Washington, D.C. The sole agenda item for this meeting is the Small Business Administration’s State Trade and Export Promotion grants process.
Click here for USTR notice
Commercial Labs and Gaugers Approved
U.S. Customs and Border Protection has announced that the following companies have been accredited as commercial laboratories and/or approved as commercial gaugers.
- effective Aug. 17, 2011, Intertek USA Inc. of Gretna, La., has been approved to gauge and accredited to test petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes
- effective Sept. 7, 2011, Intertek USA Inc. of Yorktown, Va., has been approved to gauge and accredited to test petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes
- effective Sept. 22, 2011, Intertek USA Inc. of Jacksonville, Fla., has been approved to gauge and accredited to test petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes
- effective July 8, 2011, Intertek USA Inc. of Houston, Texas, has been accredited to test petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes
- effective July 26, 2011, Intertek USA Inc. of Holland, Ohio, has been approved to gauge petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes
- effective July 8, 2011, Intertek USA Inc. of Pasadena, Texas, has been approved to gauge petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes