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March 27 2012 issue

Tuesday, March 27, 2012
Sandler, Travis & Rosenberg Trade Report

U.S. Suspends Argentina from GSP, Adds South Sudan

U.S. Trade Representative Ron Kirk announced March 26 that President Obama has issued a proclamation suspending Argentina’s eligibility for preferential tariff treatment under the Generalized System of Preferences and adding the new country of South Sudan as a GSP beneficiary.

Argentina. Kirk said the suspension of Argentina, which will become effective 60 days after the proclamation is published in the Federal Register, follows its failure to pay two longstanding arbitral awards in favor of U.S. companies totaling about $300 million plus interest. Once these awards are paid, Kirk said, the U.S. would be able to consider reinstating Argentina’s GSP eligibility. A USTR press release notes that in 2011 U.S. imports from Argentina benefiting from GSP totaled $477 million, which accounted for roughly 11% of total imports from Argentina and made Argentina the ninth-largest source of imports under GSP.

South Sudan. The president designated South Sudan as a beneficiary developing country under GSP but also as a least-developed BDC. As a result, Kirk said, “once the presidential action takes full effect, nearly 4,900 products from South Sudan will be eligible for duty-free treatment upon entry into the United States.” This designation also means that GSP eligibility is a prerequisite for consideration of South Sudan’s eligibility for trade benefits under the African Growth and Opportunity Act.

Kirk also pledged to work with Congress on near-term passage of legislation extending AGOA’s third-country fabric provision. This provision, which allows most sub-Saharan African AGOA beneficiaries to use fabric from any source in the production of qualifying apparel subject to duty-free treatment when imported into the U.S., is currently scheduled to expire Sept. 30.

WTO Ruling on U.S. Origin Labeling Rules for Agricultural Products Appealed

The U.S. has appealed a World Trade Organization dispute settlement panel ruling that the U.S. mandatory country of origin labeling requirements for various agricultural products are inconsistent with U.S. multilateral obligations. A decision by the WTO Appellate Body could come as soon as late June.

The 2008 Farm Bill revised previous mandatory COOL requirements to provide that for a commodity to be labeled as a product of the U.S. all production activities associated with the commodity have to occur on U.S. soil or in U.S. waters. For products produced in the integrated North American marketplace, the label must indicate every country in which a stage of production has taken place. The 2008 Farm Bill also imposed mandatory COOL requirements for muscle cuts and ground beef, pork, lamb, goat, and chicken, wild and farm-raised fish and shellfish, fresh and frozen fruits and vegetables, peanuts, pecans, macadamia nuts and ginseng.

The WTO panel found that the COOL requirements violate WTO rules because they afford imported livestock treatment less favorable than that accorded to like domestic livestock and they do not fulfill the objective of providing consumer information on origin with respect to meat products. The Office of the U.S. Trade Representative maintains that the ruling affirmed the U.S. right to require country of origin labeling for meat products, and a USTR representative said last week’s appeal challenges the panel’s ruling against “the way that the United States designed its COOL requirements with regard to beef and pork.”

A Reuters article notes that while consumer and farm groups support the COOL requirement because it allows consumers to distinguish between U.S. and foreign products, “big meat processors” say it unnecessarily increases costs and jeopardizes trade.

SEC Asked to Share Bribery Penalties with Foreign Governments

The Socio-Economic Rights and Accountability Project sent a letter to the Securities and Exchange Commission March 15 urging it to “establish an efficient case-by-case process for the payment of some or all of US Foreign Corrupt Practices Act (FCPA) civil penalty and disgorgement proceeds to or for the benefit of the victimized foreign government agency or the citizens of the affected foreign country.” The letter recommended that civil society or U.S. nonprofit groups in such countries also be allowed to apply for a share of the proceeds. “Procurement and investment agreements corrupted by foreign bribery invariably lead to increased costs,” the letter explained, but “victimized governmental agencies are typically without a practical remedy” for recovering those costs. In addition, sharing penalty proceeds could foster improved public opinion of the U.S. in affected countries.

According to the letter, SERAP is proposing that after the publication of an FCPA settlement agreement the victim foreign government entity would have 60 days to file a request that the SEC’s Enforcement Division pay some or all of the agreed payment proceeds to or for the benefit of the victim government entity or to a U.S.-based non-governmental organization that would present a proposal to spend the proceeds for public purposes (e.g., on public health programs) in the country of the victim entity. The Enforcement Division would then have 60 days to act on the request and would be encouraged to provide a brief statement of the reasons for whatever decision it makes. SERAP notes that under this proposal it would be “incumbent upon an entity seeking such proceeds to demonstrate that it has adequate anti-corruption safeguards in place, including the sort of rigorous anti-bribery compliance programs that the Enforcement Division expects companies subject to its jurisdiction to maintain.”

SERAP suggested that the SEC issue a notice seeking public comments on this proposal, but according to press sources the SEC has so far said only that it will review the letter.

China Imposes AD Duties on Photographic Paper, Launches Probe of Resorcinol

Press sources report that as of March 23 China’s Ministry of Commerce has imposed antidumping duties of 16.2% to 28.8% on imports of photographic paper and paperboard from the U.S., the European Union and Japan. The duties respond to what the MOC said was “substantial harm” to its domestic industry by imports from these three trading partners, which account for about 75% of the Chinese market for these goods. Some observers say the move is also meant to send a warning to China’s trading partners about their increasing trade remedy actions against imports of Chinese goods.

Also on March 23 China announced a new AD duty investigation of resorcinol from the U.S. and Japan. Resorcinol is also known as M-dihydroxybenzene and is used to make tires and other fiber-reinforced rubber goods.

Of Note: Trade Negotiations, Egypt to Expand QIZs

South Korea, Turkey agree on free trade deal

New Zealand to negotiate South Korean free trade deal

Egypt to Expand Qualified Industrial Zones, Trade Minister Says

Canada Eliminates Individual Permit Requirement for Steel Products

The Canada Border Services Agency has issued a notice concerning the April 1 implementation of a new import permit system for steel and steel products. Under this new system, CBSA states, importers of steel and steel products will no longer be required to obtain individual permits but will instead be provided by Foreign Affairs and International Trade Canada with general import permits for all steel covered by the Import Control List of the Export and Import Permits Act. The new system will thus eliminate the need for importers provide CBSA with the individual permit information (electronic transaction record or paper copy of the transaction record) with the release request. However, CBSA notes that General Import Permit No. 80 – Carbon Steel (GIP 80) and General Import Permit No. 81 – Specialty Steel Products (GIP 81) must be quoted on the release documentation (e.g., description of goods field on the invoice) or in the description free text field when release requests are transmitted using electronic data interchange.

WTO Dispute on India’s Agricultural Import Restrictions Subject of USTR Comment Request

The Office of the U.S. Trade Representative is soliciting public comments through April 19 on issues raised in a recent U.S. complaint ( at the World Trade Organization against prohibitions India imposes on various agricultural products from the U.S., including poultry meat and chicken eggs, purportedly because of concerns related to avian influenza. The U.S. alleges that these measures appear to be inconsistent with numerous provisions of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures.

Click here for USTR notice

AD Notices: PET Film, Bedroom Furniture, Pipe Fittings

Agency: ITA.
Commodity: Polyethylene terephthalate film, sheet and strip.
Country: Taiwan.
Nature of Notice: Extension from April 1 to July 30 of time limit for preliminary results of administrative review of AD duty order for the period July 1, 2010, through June 30, 2011.

Agency: ITA.
Commodity: Wooden bedroom furniture.
Country: China.
Nature of Notice: Extension from March 22 to Aug. 20 of time limit for final results of administrative review of AD duty order for the period Jan. 1 through Dec. 31, 2010.

Agency: ITC.
Commodity: Stainless steel butt-weld pipe fittings.
Country: Italy, Malaysia and the Philippines.
Nature of Notice: Revised schedule for sunset reviews of AD duty orders.
Details: Staff report placed in nonpublic record May 25, comments due no later than May 30.

Security and Safety Upgrades at Port of Casablanca to be Subject of USTDA-Funded Study

The U.S. Trade and Development Agency is funding a feasibility study that will develop recommendations for safety- and security-related upgrades to the port of Casablanca, the largest port in Morocco, the USTDA announced March 23. According to an agency press release, this study will provide recommendations to ensure that the port of Casablanca is compliant with the security measures of the International Ship and Port Facility Security Code and will also recommend operational strategies to improve the safety of the work environment, including safety and security training modules and a revised standard operation procedures manual.

USTDA notes that shipping volume through Casablanca has been growing for decades and that this port currently handles 32% of all national port traffic. The Moroccan government is planning to invest $360 million to modernize the port infrastructure by 2015, and an additional government investment of $76.5 million is anticipated to improve the port's connectivity to inland transportation sources.

Foreign Regulatory Changes Could Affect Exports of Blood, Plastic Bags

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 ( For information on how these restrictions may affect your business, contact ST&R.

Canada – proposed regulations on human blood and components intended for transfusion or further manufacturing into human drugs (comments due by May 24)

Togo – procedures for managing production, importation, distribution, marketing, use, collection and recycling of plastic bags and packaging

New IPR Infringement Petition on Integrated Circuit Devices

The International Trade Commission received March 23 a petition requesting that it institute a Section 337 investigation regarding certain semiconductor integrated circuit devices and products containing same. The proposed respondents are located in the U.S.

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.

Quarterly IRS Interest Rates Relating to Customs Duties

U.S. Customs and Border Protection has updated its list of the quarterly Internal Revenue Service interest rates used to calculate interest on overdue accounts (underpayments) and refunds (overpayments) of customs duties. For the quarter beginning April 1, 2012, the interest rates for overpayments will be 2% for corporations and 3% for non-corporations, and the interest rate for underpayments will be 3%. These rates are unchanged from the previous quarter.

Click here for CBP notice

Energy Conservation Standards for Battery Chargers, External Power Supplies

The Department of Energy is proposing amended energy conservation standards for Class A external power supplies and new energy conservation standards for non-Class A EPSs and battery chargers. If adopted, these standards would apply to all subject products manufactured in or imported into the U.S. on or after July 1, 2013.

Comments, data and information on this proposal are due no later than May 29. In addition, DOE will hold a public meeting on this issue May 2 in Washington, D.C.

Click here for proposed rule

Export Assistance Programs Information Collections Under Review

The Department of Agriculture’s Foreign Agricultural Service is inviting comments through April 26 on information collections associated with its export assistance programs. These programs (U.S. Suppliers List, Buyer Alert, Trade Shows, Foreign Buyers List, Export Directory of U.S. Food Distribution Companies, and the Madigan Award ) are designed to promote exports of food, forestry and fishery products by helping exporters make contact with export agents, trading companies, importers and foreign buyers. As part of these programs FAS collects information on contact names, mailing addresses, telephones, fax, email and Web sites.

Click here for USDA notice

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