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April 6 2012 issue

Friday, April 06, 2012
Sandler, Travis & Rosenberg Trade Report

CBP to Begin Allowing Electronic Submission of Certain Forms

U.S. Customs and Border Protection has announced its plan to begin soon a test of the Document Image System, which will allow participating importers and brokers to electronically submit certain forms required by CBP and other government agencies. This test will commence no earlier than April 6 and will continue until further notice. The CBP notice linked below describes eligibility criteria, procedural and documentation requirements, and test development and evaluation methods.

The first phase of this test will enable participating importers and brokers to transmit images of the following CBP and participating government agency forms with supporting information via electronic data interchange in an XML format in lieu of conventional paper methods.

- TSCA Import Certification Form
- EPA Form 3520-21 Importation of Motor Vehicles and Engines (off road)
- EPA Form 3520-1 Importation of Motor Vehicles and Engines (on road)
- EPA Form 3540-1 Notice of Arrival of Pesticides and Devices
- EPA Pre-approved Vehicle/Engine Exemption Letter
- EPA Pesticide Label
- APHIS Ingredients List
- APHIS Phytosanitary Certificate
- APHIS Import Permit
- APHIS Transit Permit
- APHIS Notice of Arrival
- APHIS Pre-Clearance 203
- NOAA Form 370 Fisheries Certificate of Origin
- NOAA Toothfish Pre-Approval

DIS will provide for the storage of all submitted documents in a secure centralized location for the maintenance of associations with ACE entry summary transactions. Authorized CBP and PGA users will be able to select specific documents for review, change the status of documents and add comments based on the current state of their review. They will also be able to download or print the document image if necessary.

CBP notes that for the purposes of this test phase, APHIS, EPA and NOAA forms can be submitted only with ACE entry summaries that are certified for release.

Subsequent phases will incorporate additional forms and provide new interfaces for the integration of DIS with other systems in CBP and other government agencies. The exact dates and content of subsequent phases have not yet been determined but will be announced in the Federal Register when set.

Click here for CBP notice

Strengthen Imported Food Safety by Improving Foreign Regulatory Systems, Report Says

A new report from the Institutes of Medicine concludes that the Food and Drug Administration should work to strengthen regulatory regimes abroad as part of its effort to improve the safety of imported foods, drugs and medical devices. While the FDA has developed into “one of the world’s top-notch regulatory agencies,” the report states, it needs help from its foreign regulatory peers to ensure the safety of the rapidly expanding number of imported goods. The report enumerates 13 steps that the FDA and others can take over the next three to five years and states that “in time [these steps] would do much to improve product safety in the United States as well as improve public health around the world.”

The report asserts that the developing countries that produce a growing share of U.S. imports are unlikely to have robust regulatory systems due to infrastructure and resource limitations. These include unreliable transportation and communication systems and inadequate access to clean water, electricity and broadband Internet. Regulatory agencies often have few staff positions, difficulty hiring and retaining qualified workers, outdated equipment, and skeletal surveillance systems to track and monitor products. Some of the poorest countries have no laws on product safety at all, while others have only a weak legal foundation for regulation. Finally, product safety is not a high priority in countries with overwhelmed health systems, poor sanitation and high mortality rates.

The report therefore recommends that low- and middle-income countries work with the FDA and other U.S. government agencies toward achieving core regulatory capabilities, including the following minimum components.

- a rulemaking process that enables all stakeholders to comment on proposed regulations

- a protocol for different regulatory agencies to share information and oversight along the supply chain

- a method to identify when regulatory actions, such as an order to stop production due to unsanitary conditions, are necessary

The report also calls on the FDA to expand education and training about regulatory science and policy in countries that are high-volume exporters of high-risk goods to the U.S. market and to work with domestic and international partners to strengthen surveillance systems and improve supply chain management in developing countries. The report highlights the FDA Secure Supply Chain pilot program, which rewards drug firms that thoroughly trace their products with expedited entry. This pilot is due to end in 2014, and the report states that if FDA determines that it has been successful it should be expanded to food companies as well as a greater number of medical companies.

EU Soliciting Input on Modernization of Trade Defense Instruments

The European Commission’s Directorate-General for Trade has launched an initiative to consider ways it might modernize the European Union’s trade defense instruments (antidumping and countervailing duties, safeguards, etc.). While trade defense instruments are often the only means companies have to address unfair international trading practices, the Commission states, the application of these measures can have an impact on users and consumers as well. Taking into account the difficult economic environment that companies are currently faced with, “the time is right to take stock of the strong and weak points of the current TDI rules as part of a discussion on whether and, if so, how to adapt and improve them in a balanced way for the benefit of all stakeholders concerned.”

The Commission is seeking input from importers, producers, and other companies large and small on ways to maintain and even improve the EU’s trade defense instruments. Specific topics of interest include the following.

- improving transparency and predictability
- addressing the threat of retaliation by trading partners
- strengthening investigation practices and rules to improve the effectiveness of trade defense instruments
- facilitating the cooperation of interested parties without compromising on the overall duration and quality of investigations
- fine-tuning certain aspects of the review practice to better meet the objectives and purpose of reviews
- making technical changes to bring EU legislation in line with current practice and/or make necessary amendments following WTO jurisprudence

WTO Upholds Ruling Against U.S. Ban on Imported Clove Cigarettes

The World Trade Organization’s Appellate Body has upheld a dispute settlement panel ruling against a U.S. ban on flavored cigarettes. Indonesia brought this case against a 2009 U.S. law that prohibits the production or sale in the U.S. of cigarettes containing certain additives (including candy and fruit flavors), alleging that the law discriminates against the clove cigarettes of which Indonesia is a major exporter while continuing to permit the production and sale of cigarettes with menthol that are primarily produced in the U.S.

According to a WTO summary of key findings, the lower panel had found this ban to be inconsistent with the national treatment obligation of Article 2.1 of the WTO Agreement on Technical Barriers to Trade because it prohibits imported clove cigarettes from Indonesia but does not prohibit “like” domestic menthol cigarettes. The Appellate Body ultimately upheld this finding but said that the determination of whether products are “like” should be based not on the regulatory purpose of the technical regulation at issue but on the competitive relationship between the products, based on an analysis of the traditional “likeness” criteria of physical characteristics, end-uses, consumer tastes and habits, and tariff classification. The Appellate Body added that the regulatory concerns underlying a measure, such as the health risks associated with a product, may be relevant to the determination of “likeness” to the extent that they have an impact on the competitive relationship between the products.

The Appellate Body noted that the obligation to accord imports “treatment no less favorable” than that given to domestic products does not prohibit a detrimental impact on imports that stems exclusively from a legitimate regulatory distinction. Panels must therefore carefully scrutinize the particular circumstances of such cases, including the design, architecture, revealing structure, operation and application of the technical regulation at issue and, in particular, whether it is even handed. Using this test, the Appellate Body determined that the U.S. ban discriminates against clove cigarettes from Indonesia.

Finally, the Appellate Body upheld the panel’s finding that by allowing only three months between the publication and the entry into force of its ban the U.S. acted inconsistently with Article 2.12 of the TBT Agreement, which requires a minimum of six months between the publication and the entry into force of a technical regulation.

The ruling met with immediate disapproval in the U.S. Obama administration officials said they were “very disappointed” and Rep. Henry Waxman, D-Calif., called the decision “wrong on the merits and wrong in its interference with our efforts to protect the American public from tobacco’s devastating effects.” Lori Wallach, director of Public Citizen’s Global Trade Watch, added that “this case underscores why countries must insist that WTO rules be altered and that no new agreements [including the Trans-Pacific Partnership agreement currently under negotiation] use the same corporate backdoor deregulation model.”

Of Note: U.S. Considers Easing Burma Sanctions, CBP to Stay at New York Facility, Product Safety Inspections Up

Sec. Clinton on Recognizing and Supporting Burma's Democratic Reforms

CBP and Port Authority Reach Agreement to Maintain Security and Continue Trade Operations at Red Hook Container Terminal

CPSC Investigators Find, Stop Nearly 650,000 Unsafe Products at the Start of Fiscal Year 2012

Annual Report on Trade Barriers to Telecom Services and Equipment

The Office of the U.S. Trade Representative released April 4 its annual review of the operation and effectiveness of telecommunications trade agreements. USTR states that this year’s Section 1377 report addresses several general themes: cross-border data flows and Internet-enabled trade in services, including voice over Internet protocol; issues concerning independent and effective regulators; limits on foreign investment; access to major supplier networks; increases in fixed and mobile call termination rates; issues concerning satellites and submarine cable systems; and issues affecting the telecom equipment trade.

USTR Ron Kirk said the 2011 report highlights progress on key issues in Mexico and Canada. In Mexico, providers have resolved several disputes with a U.S.-affiliated competitor and agreed to work on long-term solutions to pricing and access. The U.S. also concluded a mutual recognition agreement with Mexico that will permit recognized U.S. laboratories to test telecom products for conformity with Mexican technical requirements and vice versa. In Canada, the government has recently proposed lifting investment limits on companies comprising less than 10% of the market. Kirk said USTR is also monitoring potentially positive action in India, where the regulator is reviewing rules governing access to submarine cable landing stations, and in Germany, where the regulator has proposed new rules to ensure fair access to next generation (e.g., Internet protocol-based) networks.

A USTR press release adds that the report also covers the following concerns.

- U.S. equipment manufacturers may be disadvantaged by the growing use of local content requirements in countries such as Brazil, India and Indonesia.

- Equipment standards and conformity assessment procedures (including testing requirements) may act as barriers to entry for U.S. telecom equipment in certain countries, including a multi-level protection scheme in China, India’s restrictions on the use of strong encryption and onerous security requirements for the importation of telecom network equipment, and mandatory certification requirements and requirements for local testing in Brazil, China, Costa Rica and India.

- Restrictions on data access and transfers, particularly in China and Vietnam, and issues with voice over Internet protocol services generally are a concern.

- Foreign investment limits, typically in the form of limits on the percentage of equity a foreign firm can control, were widely cited by commenters as a trade-distortive barrier. This year’s report focuses on Thailand, Canada and Mexico.

- Telecom carriers have encountered problems trying to access incumbent operators’ networks in Germany and Mexico.

- U.S. trading partners appear to be seeking ways to increase the rates U.S. telecom operators must pay to deliver long-distance calls into the foreign operators’ countries, resulting in higher costs for U.S. carriers and higher prices for U.S. consumers. This year’s report focuses on problems in El Salvador, Ghana and Jamaica.

- U.S. operators have experienced difficulty in offering satellite capacity to customers in China and India and in obtaining competitive access in a timely fashion to cable landing stations in India.

Click here for USTR report

AD/CV Notices: Pipes, Foundry Coke Products, Sinks, Garlic, Sawblades

Agency: ITA.
Commodity: Circular welded carbon steel pipes and tubes.
Country: Thailand.
Nature of Notice: Preliminary results of administrative review of AD duty order for the period March 1, 2010, through Feb. 28, 2011.
Details: Preliminary weighted-average dumping margins range from 1.23% to 5.81%.

Agency: ITA.
Commodity: Foundry coke products.
Country: China.
Nature of Notice: Final results of expedited sunset review of AD duty order.
Details: Revocation of this order would be likely to lead to continuation or recurrence of dumping at levels ranging from 48.55% to 214.89%.

Agency: ITC.
Commodity: Drawn stainless steel sinks.
Country: China.
Nature of Notice: April 13 open meeting for vote on preliminary AD/CV injury determinations.

Agency: ITC.
Commodity: Fresh garlic.
Country: China.
Nature of Notice: April 12 open meeting for vote in sunset review of AD duty order.

Agency: ITA.
Commodity: Diamond sawblades.
Country: Korea and China.
Nature of Notice: Extension from April 4 and May 14, respectively, to June 4 of time limit for final results of administrative reviews of AD duty orders.

FTZ Board Schedules More Training Sessions, Receives Temporary Manufacturing Request

The Foreign-Trade Zones Board is planning a series of free training/outreach events this spring on the new FTZ Board regulations. Events have been scheduled for Atlanta on May 8 and Houston on May 17 and a similar event is planned for San Diego on Sept. 13. Additional sessions could take place later this year in Washington, D.C., the Northeast and the Midwest. There is no charge for any of these events but RSVPs are necessary. Click here for more information (

Separately, the FTZ Board is accepting comments through May 7 on an application from the Board of County Commissioners of Sedgwick County, grantee of FTZ 161, requesting temporary/interim manufacturing authority within FTZ 161 at the Siemens Energy Inc. facilities in Hutchinson, Kan. Under T/IM procedures, Siemens has requested authority to produce wind turbine nacelles and hubs. FTZ procedures could exempt Siemens from customs duty payments on the foreign components used in export production, and on its domestic sales the company would be able to choose the duty rates that apply to wind turbine nacelles and hubs (0-2.5%) for foreign inputs. (click here for FTZ Board notice

IPR Enforcement Actions on Consumer Electronics, Cigarette Papers

New IPR Infringement Investigation of Consumer Electronics. The International Trade Commission has instituted investigation 337-TA-836 to determine whether imports of certain consumer electronics and display devices and products containing same are violating Section 337 of the 1930 Tariff Act by reason of patent infringement. The products at issue include cellular telephones, personal computers, home theater audio and video components, televisions and gaming and media devices.

The complainant, Graphics Properties Holdings Inc., requests that after this investigation the ITC issue an exclusion order, which would direct U.S. Customs and Border Protection to prohibit the entry of the infringing products into the U.S., and cease and desist orders, which would require the named respondents to cease actions that violate Section 337, including selling infringing imported articles out of U.S. inventory. The respondents in this investigation are located in Canada, Taiwan, Korea, Japan, Sweden and the U.S.

ITC Reviewing No Violation Finding on Cigarette Papers. In patent infringement investigation 337-TA-756 of certain reduced ignition proclivity cigarette paper wrappers and products containing same, the International Trade Commission is partially reviewing the presiding administrative law judge’s determination that the importation, sale for importation and sale within the U.S. after importation of these items does not violate the specified patents. The ITC is also inviting comments no later than April 16 on whether it should issue an exclusion order and/or cease and desist order in this investigation, the effects of any such remedy on the public interest, and the amount of the bond under which these items could enter the U.S. during the 60-day period the president has to review any ITC remedy order.

Click here for ITC notice

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