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March 19 2012 issue

Tuesday, March 13, 2012
Sandler, Travis & Rosenberg Trade Report

USTR Starts Process for Redesignation and Removal of Certain Products under GSP

[Editor’s note: The following article included in the March 16 issue of the ST&R Trade Report has been updated and corrected regarding the list of products that have applied for waiver consideration.]

U.S. importers, trade associations and foreign governments have until 5:00 p.m. on April 6 to submit comments to the Office of the U.S. Trade Representative concerning the eligibility of certain goods for duty-free treatment under the Generalized System of Preferences. These comments may seek to preserve, reinstate or revoke this treatment.

The U.S. GSP program includes provisions, known as competitive need limitations, that trigger the removal of duty-free treatment if imports of a covered product from a beneficiary developing country exceed certain limits. For calendar year 2011, these limits are (a) 50% of the value of total U.S. imports of the product from all countries or (b) $150 million. Once the president determines that a CNL has been exceeded, GSP duty-free treatment for the subject article must be terminated no later than July 1 of the next calendar year.

However, CNL waivers are permitted for products that are imported in de minimis quantities as well as products that apply for waiver consideration based on the president’s authority to grant such waivers. The list of products that have applied for waiver consideration during the 2011 Annual Review, as well as new products that may be added to the GSP can be found here.

Once a waiver is received, this remains in effect until the president determines that it is no longer warranted due to changed circumstances. Waivers that have been in effect for more than five years may also be revoked if U.S. imports of the article exceed (a) $225 million (1.5 times the applicable CNL value limit) or (b) 75% of the value of total U.S. imports of that article.

In addition to waiver considerations, the USTR is requesting comments on products eligible for redesignation that were once eligible for GSP but ceased to receive duty-free treatment due to exceeding a CNL in a prior year.

A list of products that may qualify for one of these actions can be found on the USTR website. The USTR notice on GSP CNLs is available here.

In a separate action, the USTR has postponed from March 20 to March 29 the date for the 2011 annual GSP product review hearing. The deadline for submitting post-hearing briefs has been extended from April 10 to April 16. The hearing will cover only the petitions for new products and CNL waivers that have been previously submitted and accepted for review in the 2011 GSP annual review.

ST&R has extensive experience helping companies navigate all aspects of the GSP program, including the issues outlined above. For more information, including on how ST&R can assist you in the preparation and submission of comments to USTR, please contact David Olave.

CITA Issues Interim Procedures for Considering Short Supply Requests, Filing Textile and Apparel Safeguard Actions under U.S.-Korea FTA

The Committee for the Implementation of Textile Agreements has issued interim procedures for considering (1) requests under the commercial availability (short supply) provision of the U.S.-Korea Free Trade Agreement, and (2) requests for textile and apparel safeguard actions on imports from Korea. Comments on these procedures may be submitted by April 18.

Interim Short Supply Procedures. The U.S.-Korea FTA provides for a list in Appendix 4-B-1 for fibers, yarns and fabrics that the United States has determined are not available in commercial quantities in a timely manner from suppliers in the United States. A textile or apparel good imported into the United States containing fibers, yarns or fabrics that are included on this will be treated as if it is an originating good for purposes of the specific rules of origin in Annex 4-A of the FTA, regardless of the actual origin of those inputs. CITA has the authority to establish procedures that govern the submission of a short supply request and provide the opportunity for interested entities to submit comments and supporting evidence in any such determination.

CITA states that the interim procedures are intended to facilitate the transmission, on a timely basis, of requests for commercial availability determinations and offers to supply the products that are the subject of the requests; have the market indicate the availability of the supply of the subject products; make available promptly to interested entities and parties information received regarding the requests for products and offers to supply; ensure wide participation by interested entities and parties; provide careful scrutiny of information provided to substantiate order requests and responses of offers to supply; and provide timely public dissemination of information used by CITA in making commercial availability determinations.

Preferential duty treatment under the U.S.-Korea FTA short supply mechanism is limited in each of the first five years in which the FTA is in force to (i) 100 million square meter equivalents for goods of HS Chapters 51, 52, 54, 55, 58 and 60; and (ii) 100 million SME for goods of HS Chapters 61 and 62.

A copy of the interim procedures is available here.

Interim Safeguard Procedures for Textiles and Apparel. The safeguard mechanism under the U.S.-Korea FTA applies when, as a as a result of the reduction or elimination of a customs duty under the agreement, a Korean textile or apparel article is being imported into the United States in such increased quantities, in absolute terms or relative to the domestic market for that article, and under such conditions as to cause serious damage or actual threat thereof to a U.S. industry producing a like or directly competitive article. In these circumstances, Article 4.1.1(b) permits the U.S. to (i) suspend any further reduction in the rate of duty provided for under Annex 2-B of the agreement in the duty imposed on the article; or (ii) increase duties on the imported article from Korea to a level that does not exceed the lesser of the prevailing U.S. normal trade relations
/most-favored-nation duty rate for the article or the U.S. NTR/MFN duty rate in effect on the day before the agreement enters into force.

A copy of the interim procedures is available here.

CPSC Unveils Draft Rules on Accreditation of Third Party Testing Labs for Children’s Products, Audit Requirements for Third Party Labs

Consumer Product Safety Commission staff has unveiled a draft proposed rule that would establish the requirements pertaining to the third party conformity assessment laboratories that are authorized to test children’s products in support of the certification required by section 14(a)(2) of the Consumer Product Safety Act, as amended by section 102(a) of the Consumer Product Safety Improvement Act of 2008. The proposed rule would establish the general requirements concerning third party labs, such as the requirements and procedures for CPSC acceptance of lab accreditations, and it would address adverse actions against CPSC-accepted third party labs. The proposed rule would also amend the audit requirements for third party labs as well as the CPSC’s regulation on inspections at 16 CFR 1118.2(a).

The CPSC is expected to vote on this draft proposed rule April 4. If the rule is green-lighted, it will be published in the Federal Register and interested parties will have 75 days from the date of publication to submit comments. A copy of the draft proposed rule is available here.

Separately, CPSC staff has unveiled a draft final rule establishing requirements for the periodic audit of third party labs as a condition of their continuing accreditation. The rule would implement section 14(i)(1) of the CPSA, as amended by section 102(b) of the CPSIA. The CPSC is also scheduled to vote on this draft final rule April 4. If it is approved, it would enter into force 60 days after its date of publication in the Federal Register. A copy of the draft final rule is available here.

CBP Issues Guidance on Reimbursement Certificates, Provides Details on 2012 West Coast Trade Symposium, Revokes Various Tariff Classification Rulings

Guidance on Reimbursement Certificates. U.S. Customs and Border Protection has posted to its website a guidance document on reimbursement certificates. The current Department of Commerce regulations require that, prior to liquidation and the assessment of antidumping duties, the importer file a certificate advising whether it has entered into an agreement or otherwise has received reimbursement of AD duties. If an importer fails to provide a statement of reimbursement prior to liquidation, CBP should presume reimbursement and double the duties. CBP notes that importers may also make non-reimbursement statements through ACE.

The guidance document discusses several issues related to these certificates, including deadlines for filing certificates, notification of certificate of reimbursement requirement, language to be included in certificates, blanket certificates of reimbursement, signature on the certificate, ACE non-reimbursement statements, instances where the exporter is the importer of record, acknowledgment of the reimbursement by the importer, failure to submit a certificate of reimbursement, importers no longer in business, deemed liquidated entries, countervailing cases, and protests involving reimbursement certificates. A copy of the guidance is available here.

2012 West Coast Trade Symposium. CBP has announced that it will convene the 2012 West Coast Trade Symposium May 10 at the Long Beach Convention and Entertainment Center to discuss issues relating to the agency’s role in international trade initiatives and programs. CBP indicates that the format of this year’s symposium will be held in a general session themed “Harmonizing Trade for a Stronger Economy,” and there will be no breakout sessions. Companies are requested to limit their registrations to no more than three participants in order to afford equal representation from all members of the international trade community.

A copy of the CBP notice announcing the symposium is available here.

CBP Rulings on Coffee Cups, Hulled Pumpkin Seeds, Semi-Precious Stones. In the March 14 Customs Bulletin and Decisions, CBP revoked classification rulings on the following products, effective May 14.

Product: Raw, shelled (hulled) pumpkin seed kernels that are not roasted, prepared or preserved.
Action: Revocation of HQ 954648, NY 885798, NY C81606, NY C80043, NY 856226, HQ 958495, HQ 955091 and HQ 954317.
New ruling: HQ108019.
New classification: HTSUS 1212.99.91 (duty-free).
Explanation: In these rulings, the subject pumpkin seeds were classified as seeds of a kind used for sowing under HTSUS 1209.91.80 (duty of US$0.015 per kilogram), but CBP now believes that these seeds are primarily used for human consumption and should therefore be classified under HTSUS 1212.99.91 (duty-free). Among other things, CBP notes that the subject seeds are not only incapable of germination but also unsuitable for sowing because they have been modified from their natural form to remove the hull so as to become edible. Once a seed has been hulled, it is fit only to be eaten and would not be planted with the expectation of growing a crop.

Product: Porcelain travel coffee cups.
Action: Revocation of NY N078995 and NY N087912.
New ruling: HQ108019.
New classification: HTSUS 6911.10.41 (6.3 percent duty).
Explanation: In these rulings, CBP classified certain porcelain travel coffee cups designed to resemble a traditional paper coffee cup as tableware and kitchenware of porcelain or china under HTSUS 6911.80.10 (20.8 percent duty). However, CBP now believes that these cups should be classified as tumblers because they have a tapering cylindrical shape.

Also in the March 14 Customs Bulletin and Decisions, CBP withdrew the proposed revocation of a classification ruling on the following product.

Product: Tumbled semi-precious gemstones.
Action: Withdrawal of proposed revocation of ruling letter.
Classification: HTSUS 7103.99.10 (duty-free).
Explanation: CBP has withdrawn its proposed revocation of HQ 951866 because it has since determined that the subject merchandise is covered by the terms of HTSUS 7103.99.10 and should remain classified there.

FTZB Considers Reorganization of Tennessee Foreign-Trade Zone

The Foreign-Trade Zones Board is seeking input by May 18 (rebuttal comments are due by June 4) on an application by the Industrial Development Board of Blount County and the Cities of Alcoa and Maryville, Tennessee, grantee of FTZ 148, requesting authority to reorganize the zone under the alternative site framework. The ASF is an option for grantees for the establishment or reorganization of general-purpose zones and can permit significantly greater flexibility in the designation of new usage-driven FTZ sites for operators/users located within a grantee’s service area in the context of the FTZB’s standard 2,000-acre activation limit for a general-purpose zone project.

The grantee’s proposed service area under the ASF would include all of Anderson, Blount, Campbell, Claiborne, Cocke, Cumberland, Grainger, Jefferson, Knox, Loudon, Monroe, Morgan, Roane, Scott, Sevier and Union Counties in Tennessee. If approved, the grantee would be able to serve sites throughout the service area based on companies’ needs for FTZ designation. The proposed service area is within and adjacent to the Knoxville U.S. Customs and Border Protection port of entry.

A copy of the FTZB notice is available here.

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