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April 2 2012 issue

Monday, April 02, 2012
Sandler, Travis & Rosenberg Trade Report

Legislative Update: Port Security Bill Advances, IPR Legislation Under Review

Congress continues to make slow but steady progress on a number of trade-related issues. Following the approval of legislation implementing three free trade agreements and allowing the imposition of countervailing duties on products imported from non-market economy countries, lawmakers have advanced legislation to bolster port security and promote exports and are actively considering a bill aimed at strengthening enforcement of intellectual property rights. Measures on trade relations with Russia and the reorganization of federal trade agencies are also in the mix.

Port Security. The House Homeland Security Subcommittee on Border and Maritime Security approved by voice vote March 27 an amended version of H.R. 4251, the Securing Maritime Activities through Risk-based Targeting for (SMART) Port Security Act. The bill, which leaves intact the requirement for 100% scanning of inbound cargo containers, could be taken up by the full Homeland Security Committee in April. According to Subcommittee Chair Candice Miller, R-Mich., H.R. 4251 seeks to improve and update U.S. laws governing port security by enhancing security measures overseas, foster a collaborative environment between U.S. Customs and Border Protection and the U.S. Coast Guard in sharing port security duties, and leverage the maritime security work of trusted allies.
IPR Enforcement. The House Judiciary Subcommittee on Crime, Terrorism and Homeland Security held a hearing March 26 on H.R. 4216, the Foreign Counterfeit Prevention Act, which would clarify that it is not a violation of the Trade Secrets Act for CBP officers to provide information and samples, including bar codes and identifying marks, to intellectual property rights holders. The U.S. Chamber of Commerce has come out in support of the bill but others say it goes too far. “There’s nothing wrong with giving information to people to determine if goods are counterfeit,” CQ Today quoted ST&R’s Lee Sandler, general counsel for the American Free Trade Association, as saying. “But a lot of that information is not necessary to determine if it’s counterfeit.”
In the meantime, legislation that would give the International Trade Commission a direct role in combating online IPR infringement (H.R. 3782, the Online Protection and Enforcement of Digital Trade (OPEN) Act), appears to have stalled. The OPEN Act (wti/wti.asp?pub=0&story=39051&date=&company=) had been billed as a more moderate alternative to two similar measures that were the subject of widespread protests, and an article in The Hill reports that with those bills having been shelved there is no longer a pressing interest in advancing H.R. 3782.

Russia. The U.S. must grant permanent normal trade relations status to Russia to allow U.S. companies to fully take advantage of the trade liberalization measures Russia will implement as part of its accession to the World Trade Organization, which is expected to become official this summer. PNTR will also guarantee Russian products the same duty rates when imported into the U.S. as those from most every other country without the annual congressional review currently required. Some lawmakers see this change as a loss of leverage to press Moscow on human rights and other issues and are therefore pushing to couple PNTR with explicit measures on those issues. Others, however, point out that Congress approves NTR for Russia every year with virtually no debate, giving Russian goods full access to the U.S. market that would not change even if PNTR is not granted. Instead, the primary beneficiary of PNTR will be U.S. businesses, which will have expanded access to the Russian market and the added certainty that comes with Russia’s membership in a global rules-based organization. The Senate Finance Committee held a hearing on the matter March 15, but Chairman Max Baucus, D-Mont., indicated that the committee will probably not act on PNTR legislation until closer to the time Russia formally joins the WTO.

Export Promotion. 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. Click here for more information.

Trade Agency Reorganization. President Obama sent to Congress Feb. 16 the Consolidating and Reforming Government Act, which would permit the creation, abolition, consolidation, transfer or renaming of an executive agency or department if doing so reduced the overall number of agencies or achieved cost savings. The president has said he would first use this authority to consolidate six federal trade agencies and some other related programs into one department whose function would be to promote competitiveness, exports and U.S. business. Prospects are uncertain due to opposition among some lawmakers, although the bill got a boost recently when Sen. Tom Coburn became the first Republican to express support for it.

Other. Following is a list of additional trade-related legislation that has been introduced recently. The texts of these bills are or will shortly be available on the Library of Congress Web site (

H.R. 4262 – to improve the safety of cosmetics
H.R. 4268 – to abolish the Export-Import Bank of the U.S.
H.R. 4272 – to make capital grants for certain freight rail economic development projects

EU Levies $225 Million in Fines for Price Fixing in Freight Forwarding Industry

The European Commission announced March 28 that it has fined 14 international companies a total of $225 million (€169 million) for a five-year scheme involving four distinct cartels aimed at fixing prices and other trading conditions for international air freight forwarding services in breach of EU antitrust rules. One forwarder received full immunity from fines because it was the first to reveal the existence of the cartels to the Commission. Others received fine reductions of 5-50% in light of the timing of their cooperation and the extent to which the evidence they provided helped the Commission prove the respective cartels. Some of the forwarders said they are considering appealing their fines.

According to the Commission, the forwarders involved colluded on surcharges and charging mechanisms concerning the Europe-U.S. and the China/Hong Kong-Europe trade lanes. These included a surcharge related to the United Kingdom’s electronic declaration for exports, a surcharge for processing the electronic transmission of advance cargo information to the United States’ Automated Manifest System, and a surcharge for shipments during peak shipping season (generally September to December). The companies also agreed on a shift of contracts from dollars to the Chinese yuan to avoid losses following the appreciation of the yuan against the dollar in 2005.

WTO Food Safety Committee Hears Concerns on Indonesian Port Closure, New Virus in EU

The World Trade Organization’s Sanitary and Phytosanitary Measures Committee held a meeting March 27-28 that featured discussion of the topics listed below. The SPS Committee’s main task is to monitor how countries are implementing food safety and animal and plant health measures under the WTO Agreement and to discuss related issues, including the work of recognized international standards-setting bodies.

International Standards. Twelve countries registered a complaint about “the increase in the number of SPS measures that are not based on international standards, guidelines and recommendations or that have inadequate scientific justification.” These measures “often unduly restrict trade and appear to be associated with objectives that are not deemed as legitimate under international trade rules,” the complaint said. WTO members were urged to confirm the need for science-based international guidelines, standards and recommendations and the need for a scientific justification for any SPS measures that are not based thereon.

Schmallenberg Virus. The European Union reported on a newly discovered virus affecting cattle, sheep and goats (the Schmallenberg virus) that has been detected throughout Europe since November 2011. This virus is similar to one found in Asia, Africa and Australia and is not considered a danger to humans. The EU said it has not taken any trade measures against the virus and urged other countries not to do so either, but Brazil has notified emergency measures on imports of genetic materials from affected animals and other countries are reported to have taken similar action without notifying the WTO.

Indonesia Port Closures. Seven WTO members expressed concern about Indonesia’s plan to close four ports for imports of fruit and vegetables, including the Port of Jakarta. They said 90% of horticultural imports enter through Jakarta and that the use of alternative ports will add several days of transportation, increasing costs and affecting the shelf life of perishable produce. Indonesia responded that the ports to be closed do not have enough laboratory and quarantine facilities to deal with threats found in imported products and that four seaports and one airport will stay open for these imports. The effective date of the change has been postponed to June 19 to give trade partners enough time to set up new infrastructure such as warehouses.

China’s Food Additive Tests. India asked China questions about its proposed testing methods to identify physical and chemical contents of substances in food additives, stating that they do not conform to any international standards and asking about the scientific basis for the regulations.

EU Controls for Aluminum in Noodles. China complained about the EU’s restrictions on imports of noodles and other flour products containing aluminum, arguing that the threshold level is too strict and the number of inspections is too high. The EU replied that up to 10mg/kg is allowed given that aluminum can occur naturally but that levels of 50mg/kg were found in Chinese noodles, triggering an increased control frequency of 10%,. If those levels fall, the EU said, controls will be less frequent.

Other Issues. Other issues the SPS Committee is continuing to discuss include Taiwan’s ban on meat fed with ractopamine, the treatment of indigenous and traditional products as “new” in the EU, China’s proposed limit on methanol alcohol in distilled spirits not made from grain, and U.S. residue levels for the pesticide tricyclazole in Basmati rice and EU levels for a number of pesticides.

Dates and Deadlines in the Week Ahead

Following are highlights of regulatory effective dates and deadlines and federal agency meetings coming up in the next week.

April 3 – deadline for comments on proposed rule to establish a new test procedure for television sets

April 3 – ST&R webinar: The Basics of Letters of Credit for Importers and Exporters
International Payment – The Basics of Letters of Credit for Importers and Exporters

April 4 – meeting of USTR Industry Trade Advisory Committee on Small and Minority Business

April 6 – deadline for comments on eligibility of certain goods for GSP duty-free treatment

April 5 – ST&R webinar: Update on Implementation of Food Safety Modernization Act
FDA’s Implementation of FSMA: The 2012 Update

Advance Notice for Imports of Seven Chemicals Proposed by EPA

The Environmental Protection Agency has issued a proposed rule that would impose new import restrictions on seven polybrominated diphenylethers (PBDEs), chemicals often used in the manufacture of textiles, furniture, electronics, plastics and other products. EPA states that there is growing evidence that people and the environment are exposed to PBDEs contained in articles and that those PBDEs may have adverse effects on human health and the environment. Comments on this proposal are due no later than June 1.

The proposed rule would amend the existing significant new use rule for certain PBDEs by (a) designating the processing of six PBDEs (tetraBDE, pentaBDE, hexaBDE, heptaBDE, octaBDE or nonaBDE), or any combination thereof resulting from a chemical reaction, after Dec. 31, 2013, for any use that is not ongoing as a significant new use; (b) designating the importing, manufacturing and processing of a seventh PBDE, decaBDE, for any use that is not ongoing after Dec. 31, 2013, as a significant new use; and (c) making inapplicable the article exemption for SNURs for this action. As a result, no person would be able to begin importing, manufacturing or processing any of these chemical substances, including as contained in an article, for a significant new use without first notifying EPA at least 90 days in advance. No such notification would be necessary for ongoing uses of these substances.

EPA is also proposing a test rule under the Toxic Substances Control Act that would require any person who imports, manufactures or processes commercial pentaBDE, octaBDE or decaBDE, including in articles, for any use after Dec. 31, 2013, to conduct testing of these mixtures to obtain data on health effects, environmental effects and chemical fate. The test rule would be promulgated if EPA finds that import, manufacture or processing of c-pentaBDE, c-octaBDE or c-decaBDE, for any purpose, including as contained in an article other than as an impurity, will occur after Dec. 31, 2013.

Click here for EPA proposed rule

AD Notices: New Admin Reviews, Garment Hangers, Shrimp, Nails

Agency: ITA.
Nature of Notice: Initiation of administrative reviews of AD duty orders for the period Feb. 1, 2011, through Jan. 31, 2012.
Details: Orders to be reviewed are as follows.
- frozen warmwater shrimp from Brazil, China, India, Thailand and Vietnam
- stainless steel bar from Brazil, India and Japan
- preserved mushrooms from China and India
- cut-to-length carbon quality steel plate from Korea
- small diameter graphite electrodes from China
- uncovered innerspring units from China

Agency: ITA.
Commodity: Steel wire garment hangers.
Country: China.
Nature of Notice: Amended final results of administrative review of AD duty order.
Details: Revised weighted average dumping margins range from 0.81% to 187.25%. These rates will be used to determine AD duties assessed on entries of subject merchandise during the period of review, and AD cash deposits at these rates will be required for entries of subject merchandise entered or withdrawn from warehouse for consumption on or after March 30.

Agency: ITA.
Commodity: Frozen warmwater shrimp.
Country: China.
Nature of Notice: Request to revoke AD duty order for one exporter.

Agency: ITA.
Commodity: Steel nails.
Country: China.
Nature of Notice: Extension from May 2 to Aug. 30 of time limit for preliminary results of administrative review of AD duty order for the period Aug. 1, 2010, through July 31, 2011.

Zeroing Dispute Involving Shrimp from Vietnam Subject of USTR Comment Request

The Office of the U.S. Trade Representative is soliciting public comments through April 13 on the issues raised in a World Trade Organization initiated by Vietnam dispute concerning the use of zeroing in administrative reviews and a sunset review of the U.S. antidumping duty order on frozen warmwater shrimp. Vietnam is also challenging various U.S. laws, regulations, administrative procedures, practices and methodologies affecting the duties imposed under this order, including:

- the practice of requiring submission of a separate rate application or certification to qualify for the all others rate;

- the practice of limiting the number of respondents selected for individual examination to only a small fraction of the total number of companies seeking individual review and the accompanying failure to provide alternative methods for non-investigated respondents to demonstrate that they are no longer dumping;

- the application of a so-called Vietnam-wide entity rate based on adverse facts available to respondents not individually investigated who fail to provide a separate rate application or certification to demonstrate the absence of government control; and

- the practice of denying individually examined and non-individually examined respondents the opportunity to demonstrate the absence of dumping, which would allow for the order to be revoked as to individual respondents that cease dumping behavior.

Click here for USTR notice

Foreign Regulatory Changes Could Affect Exports of Insect Repellent, Baby Carriages, Cosmetics, Animal Feed, Beverages, Electronics, Wood Products

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.

Brazil – new Aug. 1 date for entry into force of instructions for filling out registration form for labels of imported products of animal origin

Brazil – draft technical regulation establishing requirements for registration of cosmetic insect repellents (comments due by May 15)

Brazil – conformity assessment requirements for baby carriages (comments due by May 28)

China – cosmetics (comments due by May 28)

El Salvador – technical regulation on manufacturing and hygiene practices for products used in animal feed (comments due by April 13)

Japan – proposed revisions to labeling standard for liquors made from organic agricultural products (comments due by May 28)

Korea – proposed amendment of enforcement rule of Electrical Appliances Safety Control Act concerning broadcasting and communications equipment (comments due by May 15)

Lithuania – draft amended order on use and marketing of natural mineral waters and spring waters (comments due by May 27)

Nicaragua – technical regulation on manufacturing and hygiene practices for products used in animal feed (comments due by April 13)

Uganda – final draft standards on solid poles, wood-protecting compounds, and coffee and coffee substitutes (comments due by May 28)

DOC Launches Biennial Process that Could Lead to Fish Import Bans, Denial of Port Privileges

The Department of Commerce’s National Oceanic and Atmospheric Administration is seeking by April 30 information regarding nations whose vessels are engaged in illegal, unregulated or unreported fishing, bycatch of protected living marine resources and/or fishing activities in waters beyond any national jurisdiction that target or incidentally catch sharks. This information will be reviewed in preparing NOAA’s third biennial report identifying nations pursuant to the High Seas Driftnet Fishing Moratorium Protection Act. NOAA’s second such report, which identified six nations, is available here

Identified nations that are not certified by NOAA as taking the necessary actions to address IUU fishing, bycatch of PLMRs and/or shark catch would be subject to trade restrictive measures, including denial of entry of their fishing vessels into U.S. ports and prohibitions on the importation of certain fisheries products.

Click here for NOAA notice

Export Committee on Emerging Technology to Meet April 16

The Bureau of Industry and Security’s Emerging Technology and Research Advisory Committee will hold a partially open meeting April 16 in Washington, D.C. This committee advises BIS on emerging technology and research activities, including those related to deemed exports.

The open session of the upcoming meeting will include discussion of nanocoated materials and science and engineering indicators. This session will be accessible via teleconference to 40 participants on a first come, first served basis, and requests to participate in this manner are due no later than April 9. In addition, a limited number of seats will be available at the public session, but reservations are not accepted.

Click here for BIS notice

Expanded Manufacturing Approved for Farm Equipment in North Dakota FTZ

The Foreign-Trade Zones Board has approved an application from the Fargo Municipal Airport Authority, grantee of FTZ 267, requesting to expand manufacturing under temporary/interim manufacturing authority to include subassemblies and parts of tractors, combines and wheel loaders on behalf of CNH America LLC within site 2 in Fargo, N.D.

Click here for FTZB notice

CBP Reviewing Information Collection on Merchandise Subject to Actual Use Provisions

U.S. Customs and Border Protection is requesting comments no later than May 2 on the proposed extension without change of an information collection associated with imports of merchandise subject to actual use provisions. Under 19 CFR 10.137 importers of such goods are required to maintain detailed records to establish that the goods were actually used as contemplated by the law and to support claims for free or reduced rate of duty. The records of use or disposition must be retained for three years from the date of liquidation of the entry and must be available at all times for examination by CBP.

Comments concerning this information collection should address one of the following points.

- whether it is necessary for the proper performance of CBP’s functions

- how to enhance the quality, utility and clarity of the information collected

- the accuracy of the estimate of the burden on respondents, including the validity of the methodology and assumptions used

- how to minimize the burden, including the use of appropriate automated, electronic, mechanical or other technological techniques or other forms of information

Click here for CBP notice

Export Privileges Suspended for Attempted Export to Iran

The Bureau of Industry and Security has suspended for ten years, through Sept. 13, 2021, export privileges for a man convicted of knowingly and willfully attempting to export a fighter jet and other defense articles to Iran. The BIS order prohibits the man from directly or indirectly participating in any way in any transaction involving any commodity, software or technology exported or to be exported from the U.S. that is subject to the Export Administration Regulations. In addition, no person may export or reexport any such item on this man’s behalf. The order does not prohibit any export, reexport or other transaction subject to the EAR where the only items involved that are subject to the EAR are the foreign-produced direct product of U.S.-origin technology.

Click here for BIS notice

USDA Asked to Increase Tariff-Rate Quota for Imported Sugar

In a March 28 letter, the Sweetener Users Association asked the Department of Agriculture to increase the tariff-rate quota for imported sugar as of April 1 and to work with the Office of the U.S. Trade Representative to reallocate known shortfalls under the current quota. “The U.S. market needs substantial additional supplies of sugar” due to “disappointing Mexican production and exports” and “continued strong U.S. domestic demand,” the SUA asserted, “and a TRQ increase is the only way to provide adequate supplies at reasonable prices.” The organization said that a reallocation of the existing TRQ by itself “would be totally insufficient to provide confidence of adequate supplies” and that USDA “should not ‘lowball’ its TRQ increase but attempt to announce a quantity that will fulfill market needs during the balance of this fiscal year.”

OFAC Designates Two Front Companies as Affiliated with Iran’s National Shipping Line

The Treasury Department’s Office of Foreign Assets Control has published the names of two front companies based in Malta and two individuals that have been determined to be affiliated with Iran’s national shipping line (Islamic Republic of Iran Shipping Lines). OFAC has designated these affiliated entities pursuant to Executive Order 13382, which is aimed at prohibiting transactions with and freezing the assets of proliferators of weapons of mass destruction and their supporters in order to isolate them from the U.S. financial and commercial systems.

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