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March 21 2012 issue

Wednesday, March 21, 2012
Sandler, Travis & Rosenberg Trade Report

Pending Change Could Significantly Increase Penalties for Late Damages Mitigation Requests

U.S. Customs and Border Protection is expected to publish in the near future amended guidelines on the late filing of petitions for mitigation of liquidated damages. CBP officials are continuing to discuss the changes with affected industry groups and no final draft has reportedly yet been approved. If the revised guidelines are approved as currently envisioned, however, there could be a significant increase in penalties for late petitions.

Under CBP’s regulations in 19 CFR Part 172, when there is a failure to meet the conditions of any bond posted with CBP or when a violation occurs that results in the assessment of a penalty secured by a customs bond, the principal (as well as the bond surety) is notified of any liability for liquidated damages or penalty incurred and a demand for payment is made. Affected parties can petition for remission or mitigation of a fine or penalty within 60 days from the date the claim was mailed. If a petition is filed after that time CBP may still mitigate the fine or penalty but not as much.

According to an informal document made available to industry groups by CBP, the current mitigation guidelines have not served to deter or reduce the number of late filed petitions. CBP is therefore planning to amend the guidelines to provide some limitations on the discretion of Fines, Penalties and Forfeitures officers to accept late petitions. Specifically, late petitions would not be accepted more than 180 days after one of the following dates.

- the date of mailing of the notice of claim to the bond principal or, in the case of a surety, the date of mailing of the first demand on the surety

- the date the petitioner previously submitted a petition and/or was offered mitigation in the same case and such mitigation amount was not paid within the prescribed period

- the date the claim was referred to the Office of Chief Counsel for collection action

- the date a sanctioning action against the principal was commenced

- the date of issuance of a notice to show cause against a surety

CBP states that it is also planning to change the calculation of the late petition mitigation amount added to the normal mitigation that would be offered. CBP would first determine the mitigated fine or penalty amount as though the petition had been timely filed (i.e., the base amount), as it does currently. CBP would then determine the additional mitigation amount by multiplying the full assessed amount of the claim (rather than the mitigated amount, as is currently the case) by 0.1% by the number of days the petition is late. This additional amount would be added to the base amount to reach the final mitigated fine or penalty amount to be offered. In no case would the additional amount be less than $400.

In the longer term, CBP intends to increase the mitigated amounts in the published liquidated damages guidelines, many of which have not changed in 30 years, to at least take inflation into account. For example, the mitigated amount of $100 for a late filed entry summary will rise. CBP says it will provide further information on this project as it progresses.

Electronic Submission of Export Ocean Manifest to be Pilot Tested Starting This Month

U.S. Customs and Border Protection plans to begin March 26 a pilot test for filing export ocean manifests (CBP Form 1302A) electronically in the Document Image System. The pilot will be located in the Atlanta field office and consist of the ports of Norfolk (1401), Wilmington (1501), Beaufort (1511), Georgetown (1602), Charleston (1601), Savannah (1703) and Brunswick (1701). CBP notes that this is a voluntary program offered as a means to help reduce trade costs associated with the filing of paper export manifests.

According to CBP, participants will not be required to present a paper copy of their CBP Form 1302A and/or their paper bills of lading to the ports listed above during the pilot. Instead, participants will submit via an email to CBP a readable PDF copy of the paper export manifest as presented currently. The email will include the following data elements to be used by the system to store, search and process the documents.

Data Elements in the Email Subject Line

- vessel IMO number
- vessel departure date
- U.S. port of departure
- action code (new, add, update, delete)

Data Elements in the Body of the Email

- vessel name
- voyage number
- vessel standard carrier alpha code (SCAC)
- submitting SCAC
- first foreign port of unlading
- point of contact information (optional)
- comment field (optional)

All other forms still required by CBP must continue to be submitted in paper format. In addition, the current filing timeline for submission of the export manifest applies to DIS transmission of documents as well.

The CBP notice (which can be accessed here - includes information on registering to participate in the pilot as well as technical instructions for submitting export ocean manifests in DIS.

West Coast Trade Symposium Slated for May 10

U.S. Customs and Border Protection will hold its 2012 West Coast Trade Symposium May 10 in Long Beach, Calif. The theme for the symposium, which will also be available via a live webcast, is “Transforming Trade for a Stronger Economy.” Registration to attend or participate is now open, but each company is requested to limit their in-person registrations to three participants to afford equal representation from all members of the international trade community. Click here for more information or to register

Final Affirmative AD/CV Duty Determinations on Steel Wheels, Bottom-Mount Fridges

The International Trade Administration announced March 19 that it has made final affirmative dumping and subsidization determinations on imports of steel wheels from China and bottom-mount combination refrigerator-freezers from Korea and a final affirmative dumping determination on bottom-mount combination refrigerator-freezers from Korea.

Steel Wheels. The ITA will instruct U.S. Customs and Border Protection to collect cash deposits or bonds equal to the weighted-average dumping margins, which range from 44.96% to 193.54%, adjusted for export subsidies found in the final CV duty determination. The ITA will also issue a CV duty order, reinstate the suspension of liquidation and require cash deposits equal to the net subsidy rates, which range from 25.66% to 38.32%, if the International Trade Commission issues a final affirmative injury determination. The ITC’s determinations are due on or before April 30.

In its AD investigation, the ITA made an affirmative critical circumstances with regard to one individual respondent as well as the China-wide entity. The ITA will therefore instruct CBP to suspend liquidation of entries of subject merchandise exported by the identified respondent or the China-wide entity effective 90 days prior to the publication of the preliminary determination. Suspension of liquidation for all other entries will be effective as of the date of publication of the preliminary determination.

The ITA has also found critical circumstances in its CV duty investigation with regard to all other Chinese producers/exporters but not for any of the mandatory respondents. Accordingly, the ITA will direct CBP to continue to suspend liquidation of subject merchandise entered by all other Chinese producers/exporters beginning June 8, 2011.

Refrigerator-Freezers. The ITA will instruct CBP to continue to collect cash deposits or bonds equal to the weighted-average dumping margins, which range from zero to 15.41% for Korea and 6% to 30.34% for Mexico. In the case of Korea, cash deposit or bond amounts will be adjusted for export subsidies found in the final CV duty determination. As a result of its final affirmative CV duty determination, which follows a negative preliminary determination, the ITA will instruct CBP to collect cash deposits or bonds on subject merchandise based on the countervailable subsidy rates, which range from 0.30% to 12.90%, except for shipments from LG Korea, which received de minimis subsidies.

In the AD duty investigations, the ITA determined that critical circumstances (a) do not exist for imports from Korea and (b) do not exist for imports from Mexico except with respect to one respondent.

The ITC is currently scheduled to issue its final AD and CV injury determinations on or before April 30. If the ITC’s determinations are affirmative, the ITA will issue AD and CV duty orders. If a CV duty order is issued, LG Electronics Inc. will be excluded based on its de minimis countervailable subsidy rate. Similarly, if an AD duty order is issued, Daewoo Electronics Corporation will be excluded based on its dumping margin of zero. If the ITC makes negative injury determinations, these investigations will be terminated and no AD or CV duties will be assessed.

Of Note: Trade Liberalization, Int’l Chamber Appointment, Trade Statistics

Business, trade experts work to break deadlock in global trade talks

Anthony Barone appointed Chair of ICC Customs and Trade Regulations Committee

WTO and OECD to develop statistics on trade in value added

AD Notices: Large Power Transformers, Ball Bearings

Agency: ITC.
Commodity: Large power transformers.
Country: Korea.
Nature of Notice: Scheduling of final phase of AD injury investigation.
Details: Staff report placed on the non-public record June 20, hearing scheduled for July 10, requests to appear at hearing due July 3, prehearing briefs due by June 27, post-hearing briefs due by July 17, final comments due by Aug. 1.

Agency: ITA.
Commodity: Ball bearings and parts thereof.
Country: France, Germany and Italy.
Nature of Notice: Extension from March 31 to May 30 of time limit for preliminary results of administrative reviews for the period May 1, 2010, through April 30, 2011.

FTZ Board Approves New Activity in Two States, Receives Reorganization Request

The Foreign-Trade Zones Board has recently announced the following actions.

- received an application from the Triangle J Council of Governments, grantee of FTZ 93, requesting authority to reorganize this zone under the alternative site framework with a proposed service area of Chatham, Durham, Franklin, Granville, Harnett, Johnston, Lee, Moore, Orange, Person, Vance, Wake and Warren counties in North Carolina, within and adjacent to the Raleigh-Durham U.S. Customs and Border Protection port of entry (comments due by May 21; click here for notice

- approved an application from Nissan North America Inc., operator of subzone 78A at the NNA manufacturing facilities in Smyrna and Decherd, Tenn., to expand the scope of manufacturing authority to include new finished products (click here for notice

- granted authority to establish subzone 272 B for activity related to the manufacturing and distribution of inhalation anesthetics at the Piramal Critical Care Inc. facilities in Bethlehem, Pa. (click here for notice

IPR Enforcement Actions on A/V Components, Navigation Products

Potential IPR Probe of A/V Components Evaluated for Public Interest Issues. The International Trade Commission is requesting comments no later than March 29 on any public interest issues raised by a Section 337 intellectual property rights infringement complaint against certain audiovisual components and products containing the same. Comments should address whether the issuance of exclusion orders and/or cease and desist orders pursuant to this complaint 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 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 the complainant, the complainant’s 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 A/V notice

Investigation of Navigation Products Terminated. The ITC has terminated patent infringement investigation 337-TA-810 of certain navigation products, components thereof and related software on the basis of a settlement agreement among all parties.

(click here for navigation products notice

Arms Export Regulations Amended to Implement Defense Trade Treaty with U.K.

The State Department has issued a final rule amending the International Traffic in Arms Regulations to implement the Defense Trade Cooperation Treaty between the United States and the United Kingdom. This rule also (a) identifies in a new supplement the defense articles and defense services that may not be exported pursuant to this treaty, (b) amends the section pertaining to the Canadian exemption to reference the new supplement, and (c) with regard to congressional certification, adds Israel to the list of countries and entities that have a shorter certification time period and a higher dollar value reporting threshold.

This final rule will be effective upon the entry into force of the treaty, and State will publish a notice in the Federal Register announcing that date. A final rule implementing the Defense Trade Cooperation Treaty with Australia will be published later this year once that treaty enters into force.

Click here for State Dept. final rule

CBP Reviewing Burmese Gemstone Information Collections

U.S. Customs and Border Protection has extended through April 20 the deadline for comments on the proposed extension without change of information collections associated with the Tom Lantos Block Burmese JADE Act of 2008. This law prohibits the importation of “Burmese covered articles” (jadeite, rubies, and articles of jewelry containing jadeite or rubies mined or extracted from Burma) and sets forth conditions for the importation of “non-Burmese covered articles” (jadeite, rubies, and articles of jewelry containing jadeite or rubies mined or extracted from a country other than Burma). To implement these restrictions, CBP requires that the importer enter the specific HTSUS subheading for jadeite, rubies or articles containing jadeite or rubies on the entry summary (form 7501), which serves as the importer's certification. In addition, the importer must have in its possession at the time of entry a certification from the exporter certifying that the conditions of the JADE Act have been met. Importers must keep this certification in their records and make it available to CBP upon request.

Click here for CBP notice

DOT Lists Applications for Special Permit Modifications

The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration has published a list of applications for modifications of special permits for exceptions from the Hazardous Materials Regulations. Such requests may seek to provide for additional hazardous materials, packaging design changes, additional modes of transportation, etc. Each entry on this list indicates the applicant, the regulations affected and the nature of the special permit. Comments on these applications are due no later than April 5.

Click here for PHMSA notice

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