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March 14 2012 issue

Wednesday, March 14, 2012
Sandler, Travis & Rosenberg Trade Report

U.S. Files WTO Case against China’s Export Restrictions on Rare Earths; U.S. and EU Both Claim Victory on Boeing Case

The Office of the U.S. Trade Representative announced March 12 that the United States, the European Union and Japan have filed a World Trade Organization dispute settlement case against China’s export restraints on rare earths, tungsten and molybdenum. These materials are key inputs in a range of products made in the United States, including hybrid car batteries, wind turbines, energy-efficient lighting, steel, advanced electronics, automobiles, petroleum and chemicals.

A USTR press release alleges that China imposes several different types of unfair export restraints on rare earths, tungsten and molybdenum, including export duties, export quotas, export pricing requirements, and related export procedures and requirements. The USTR claims that these restrictions artificially increase prices for the inputs outside of China while lowering prices in China, creating significant advantages for Chinese producers when competing against their U.S. counterparts both in the Chinese market and elsewhere. The USTR further argues that these restraints contribute to creating substantial pressure on U.S. and other non-Chinese downstream producers to move their operations, jobs and technologies to China.

The two sides have 60 days to reach a mutually-acceptable solution through bilateral consultations. If an agreement is not reached, the U.S. may formally request the establishment of a dispute settlement panel to examine the case. The USTR indicates that this case is part of a series of enforcement actions designed to hold China accountable under its WTO commitments. The U.S. won a similar case last year involving China’s export restraints on nine other industrial raw materials (i.e., various forms of bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorous and zinc) and is currently challenging several other Chinese practices at the WTO.

Separately, the U.S. and the EU both claimed victory in a long-drawn-out WTO dispute related to subsidies allegedly provided by U.S. authorities to The Boeing Company, which is related to an earlier dispute on the EU’s alleged subsidization of Airbus. According to a USTR press release, the WTO Appellate Body rejected claims that the U.S. has provided massive trade-distorting subsidies to Boeing and affirmed a dispute settlement panel’s March 2011 finding that most of the programs challenged by the EU were not subsidies. In addition, the Appellate Body ruled that the value of WTO-inconsistent subsidies was far beyond what the EU had alleged. By contrast, EU Trade Commissioner Karel De Gucht said that the ruling “vindicates the EU’s long-held claims that Boeing has received massive US government hand-outs in the past and continues to do so today.” According to the European Commission, the Appellate Body found that U.S. federal and state governments granted some $5-6 billion in WTO-incompatible subsidies to Boeing during 1989-2006.

CBP Issues U.S.-Korea FTA Implementation Instructions

U.S. Customs and Border Protection has issued a memorandum with instructions to implement the provisions of the U.S.-Korea Free Trade Agreement, which is scheduled to enter into force March 15. The memo provides guidance to the ports, the trade community and other interested parties on a range of issues, including origination; rules of origin; transit and transshipment; regional value content calculation methods; textiles and apparel; de minimis provisions for non-textile products; quotas on certain agricultural products; treatment of sets; eligible articles and immediate and staged reductions; merchandise processing fee exemption; correction of a false/unsupported claim; certification and other information requirements; originating analysis and certification when no tariff change rule exists; CBP verification; issuing a determination; impact of a negative determination on a blanket certification; repeated false or unsupported claims (pattern of conduct); protest rights; entry into force; making a preference claim; and post-importation claims.

A copy of the memo is available here

New Deadline for Comments on Proposed Revisions to Wildlife Trade Regulations

As previously reported, the Fish and Wildlife Service is proposing to revise the regulations that implement the Convention on International Trade in Endangered Species of Wild Fauna and Flora by incorporating certain provisions adopted at the June 2007 and March 2010 conferences of CITES parties. FWS erroneously indicated in a March 8 notice that interested parties had until May 7 to submit comments on this proposed rule. However, the actual deadline is April 9, or about a month earlier than previously indicated.

Highlights of the proposed changes are set forth below.

- clarification that the allowed use of a specimen after import into the U.S. is determined by the current status of the specimen under CITES and the Endangered Species Act, except for a specimen of an Appendix I species or an Appendix II species annotated for noncommercial purposes that was imported before such listing (thus avoiding the retroactive application of import/export restrictions to goods legally imported prior to the imposition of those restrictions)

- amended definition of “bred for noncommercial purposes” that removes the requirement that trade be conducted between facilities involved in a cooperative conservation program

- revised definitions of coral due to problems encountered in the implementation of the requirements for trade in stony corals

- clarification that violation of any of the provisions of 50 CFR part 23, including use of CITES specimens imported into the U.S. contrary to what is allowed under section 23.55, is unlawful

- elimination of requirement that commercial operations breeding Appendix I species be registered with the CITES secretariat to export specimens under any circumstances

- allowing CITES documents to be issued electronically (although the U.S. cannot currently issue or accept electronic permits)

- addition of three circumstances in which FWS may request verification of a CITES document: (1) the document is issued for a species with an annotated quota that raises concerns about the validity of the shipment, (2) a shipment of captive-bred Appendix I wildlife specimens did not originate from a registered breeding operation and FWS has reason to believe the import is for commercial purposes, and (3) the actual quantity exported has not been validated or certified at the time of export

- clarification that authorized inspecting officials for imports into the U.S. of CITES-listed plants are responsible for the cancellation and collection of original documents for submission to the U.S. management authority

- incorporation of a definition of “ranched specimen” that will cover many of the specimens FWS previously considered “wild”

- clarification that an individual unable to clearly demonstrate that a wildlife specimen meets the criteria for an exempt hybrid must obtain a CITES document

- replacement of the annual reporting requirement for registered commercial breeding operations with a process for registration renewal

- clarification of procedures and amended criteria for issuance and acceptance of replacement CITES documents, including requirements that specimens are presented to the appropriate official at the time of import

- clarification that FWS may issue or accept a retrospective document in circumstances where a technical error was made by the issuing management authority at the time the original document was issued

AD Notices: Frozen Fish Fillets, Graphite Electrodes, Foundry Coke

Agency: ITA.
Commodity: Certain frozen fish fillets.
Country: Vietnam.
Nature of Notice: Final results and partial rescission of administrative review of AD duty order for the period Aug. 1, 2009, through July 31, 2010.
Details: Dumping margins range from 0.00% to 2.11%. AD duties based on these margins will be assessed on entries of subject merchandise made during the period of review, and AD duty cash deposits at these rates will be required for shipments of subject merchandise entered or withdrawn from warehouse on or after March 14. No AD duties or cash deposit requirements will be imposed on entries subject to a zero or a de minimis rate.

Agency: ITA.
Commodity: Small diameter graphite electrodes
Country: China.
Nature of Notice: Amended final results of administrative review of AD duty order for the period Aug. 21, 2008, through Jan. 31, 2010.
Details: Amended dumping margins range from 1.10% to 39.83%. AD duties based on these amended margins will be assessed on entries of subject merchandise made during the period of review, and AD duty cash deposits at these rates will be required for shipments of subject merchandise entered or withdrawn from warehouse on or after March 14.

Agency: ITC.
Commodity: Foundry coke.
Country: China.
Nature of Notice: Scheduling of expedited sunset review of AD duty order.

New DEA Registration and Reregistration Fees Announced

The Drug Enforcement Administration has issued a final rule that adjusts effective from April 16 the fee schedule for DEA registration and reregistration fees necessary to recover the costs of the diversion control program relating to the registration and control of the manufacture, distribution, dispending, importation and exportation of controlled substances and List I chemicals, as mandated by the Controlled Substances Act. The CSA requires the DEA to register persons and entities who manufacture, distribute, import or export controlled substances or List I chemicals, as well as persons and entities who dispense or conduct research or chemical analysis with controlled substances. The DEA is authorized to charge reasonable fees in connection with its registration and control activities but the agency has not changed the current fees for more than five years. The new fees vary depending on the business activity: for example, the one-year registration fee for importing has been set at $1,523 while the one-year registration fee for exporting has been set at that same amount.

Click here for final rule

New Maritime Agreement Filed

The Federal Maritime Commission has issued notice that the following new or amended agreement has been filed. Interested parties may submit comments by March 26.

- Central America Discussion Agreement: The amendment reflects a change in the name of Great White Flee.

Click here for the FMC notice

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