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April 13 2012 issue

Friday, April 13, 2012
Sandler, Travis & Rosenberg Trade Report

Global Trade Growth to Slow in 2012, Could be Sluggish for Years

The World Trade Organization is projecting that world trade will expand 3.7% in 2012, down from a 5% gain in 2011 and a 13.8% jump in 2010 that marked the beginning of a recovery from the global economic downturn. A WTO press release said the further deceleration is attributable to a number of shocks to the global economy, including the European sovereign debt crisis. WTO Director General Pascal Lamy said “the sluggish pace of recovery raises concerns that a steady trickle of restrictive trade measures could gradually undermine the benefits of trade openness.”

The WTO warns that “the world may have to resign itself to a long period of slower-than-average growth in international trade.” The projected 3.7% growth rate for 2012 is below the long-term average of 6.0% for 1990–2008 and would therefore not bring the volume of world trade any closer to its pre-crisis trend. Eliminating this divergence would require faster than average growth at some point in the future, and while “this could happen after governments, businesses and households in developed countries reduce their debt burdens to more manageable levels … this process of deleveraging (reducing reliance on debt) and fiscal consolidation (reducing budget deficits) is likely to take years.” The WTO believes the most likely near-term outcome is “a mild recession in Europe, slower growth in developing countries and moderate recoveries in the United States and Japan” and as a result is estimating global trade growth of 5.6% in 2013.

The WTO notes that in 2011 the dollar value of world merchandise trade increased 19% to $18.2 trillion, surpassing the previous peak of $16.1 trillion from 2008. However, much of this growth was due to higher commodity prices, and monthly trade flows were mostly flat or declining in many major traders over the course of the year. The value of world commercial services exports increased by 11% to $4.2 trillion, but there was a sharp slowdown in the fourth quarter coinciding with the heightened level of financial market turmoil surrounding the euro debt crisis.

Click here for WTO report

BIS Creates New Classification Number Series for Temporary Export Controls

The Bureau of Industry and Security has issued a final rule that, effective April 13, amends the Export Administration Regulations by establishing a new Export Control Classification Number series, 0Y521, that will be used for items that warrant control on the Commerce Control List but are not yet identified in an existing ECCN, such as emerging technologies. BIS states that this new series is intended to provide it with the authority to quickly impose a license requirement on otherwise uncontrolled items in a transparent way for a limited period. This change was part of a July 2011 proposed rule encompassing a broader effort to establish a new regulatory construct for the transfer of items from the U.S. Munitions List to the CCL (wti/wti.asp?pub=0&story=37511&date=&company=), but the other parts of that rule remain under review.

Adding Items to New ECCNs. BIS states that ECCN 0Y521 is equivalent to U.S. Munitions List category XXI (miscellaneous articles). Items will be added to the 0Y521 ECCNs by the Department of Commerce, with the concurrence of the departments of Defense and State, when it identifies an item that should be controlled because it provides a significant military or intelligence advantage to the U.S. or because foreign policy reasons justify such control. A decision to include an item in ECCN 0Y521 is not a classification of the item’s technical characteristics, and BIS does not anticipate that a large number of now EAR99 items will be listed on the CCL under ECCN 0Y521. In addition, items falling under the ECCN 0Y521 series will not be defense articles being moved from the USML to the CCL, and this new series is not part of the proposed 600 series that is informally known as the Commerce Munitions List.

License Requirements. ECCN 0Y521 items will be subject to a nearly worldwide license requirement (i.e., for every country except Canada) through regional stability (RS Column 1) controls. The U.S. government will evaluate on a case-by-case basis whether the export or reexport of such an item could contribute directly or indirectly to any country’s military capabilities in a manner that would destabilize a region’s military balance contrary to the foreign
policy interests of the United States.

No license exceptions will be available for any item classified under the 0Y521 ECCN series other than license exception GOV if the item is for official use by U.S. government personnel and agencies. BIS will have the authority to apply additional license exceptions on an item-specific basis at any time if the departments of Defense and State concur.

Temporary Classification Pending Additional Action. Items classified under ECCN 0Y521 will stay so classified for one year from the date the associated final rule is published in the Federal Register, unless the item is re-classified under a different ECCN or the 0Y521 classification is extended. During this one-year period the U.S. government will determine whether it is appropriate to submit a proposed control to the applicable export control regime for potential multilateral control, with the understanding that multilateral controls are preferable when practical. An item’s ECCN 0Y521 classification may be extended for two one-year periods to provide time for the U.S. and multilateral regime(s) to reach agreement on controls for the item, and for further extension beyond three years is allowed if BIS determines that it is in the national security or foreign policy interests of the United States.

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 16 - meeting of Bureau of Industry and Security’s Emerging Technology and Research Advisory Committee

April 16 – comments on FDA information collection on importer, manufacturer, user facility and distributor reporting of medical device events

April 16 – effective date of revocation or modification of classification rulings on ball set, frozen dessert, toy money

April 16 – comments on remedy, the public interest and bonding in patent infringement probe of cigarette papers

April 17 – ST&R webinar on use of foreign-trade zones for textiles, apparel and footwear distribution

April 17 – petitions requesting changes to non-textile/apparel rules of origin under DR-CAFTA

April 18 – claims for retroactive GSP benefits on non-ABI entries or entries filed without the SPI “A”
> Full Article

April 18 – comments on procedures for short supply requests and textile and apparel safeguard requests under Korea FTA

April 18 – STTAS webinar on preparing for a CBP focused assessment
Preparing for a CBP Focused Assessment

April 19 – comments on WTO complaint on India’s prohibitions on agricultural imports from U.S.

April 20 – comments on proposed modification of admissibility ruling on jewelry sets with tumbled diamonds from Zambia

Monthly Trade Deficit Drops on Decline in Imports

Trade statistics released April 12 by the Department of Commerce show that the monthly U.S. trade deficit in goods and services reversed a recent trend in February and dropped $6.5 billion (12.4%) to $46.0 billion. Exports saw a small increase, up $0.2 billion to $181.2 billion, but imports fell $6.3 billion to $227.2 billion. Compared to a year earlier, the February trade deficit saw a $0.6 billion gain (compared to $5.0 billion in January) as exports climbed $15.4 billion (9.3%) and imports rose $16.1 billion (7.6%).

According to DOC, the goods trade deficit fell $6.0 billion in February to $61.4 billion while the services surplus edged up $0.5 billion to $15.4 billion. Exports of goods lost $0.6 billion to $128 billion while imports declined $6.5 billion to $189.4 billion. Services exports were up $0.8 billion to $53.2 billion and imports moved ahead $0.2 billion to $37.8 billion.

The politically sensitive bilateral trade deficit with China plummeted 25.4% to $19.4 billion and the deficit with Korea fell 71.4% to $0.4 billion in the month before the U.S. free trade agreement with that country took effect. Deficits also declined with the European Union (30.6% to $5.9 billion), Germany (12.2% to $3.6 billion), Ireland (4.3% to $2.2 billion) and Taiwan (38.5% to $0.8 billion) as well as major oil suppliers Canada (42.9% to $2.8 billion), Venezuela (5% to $1.9 billion) and Nigeria (30.8% to $0.9 billion). Deficits increased with Japan (12.9% to $7.0 billion) and Mexico (38.1% to $5.2 billion). The U.S. ran trade surpluses with Hong Kong (up 47.6% to $3.1 billion), Australia (up 6.3% to $1.7 billion), Singapore (down 12.5% to $0.7 billion) and Egypt (unchanged at $0.2 billion).

Click here for Census report on trade deficit

AD/CV Notices: Orange Juice, Nails, Brightening Agents, Refrigerator-Freezers, Steel Wheels, Silicomanganese

Agency: ITC.
Commodity: Orange juice.
Country: Brazil.
Nature of Notice: Sunset review determination that revocation of AD duty order would not be likely to lead to continuation or recurrence of material injury to an industry in the U.S. within a reasonably foreseeable time. As a result, this order will be revoked shortly.

Agency: ITC.
Commodity: Steel nails.
Country: United Arab Emirates.
Nature of Notice: April 19 open meeting for vote on final AD injury determination.

Agency: ITC.
Commodity: Stilbenic optical brightening agents.
Country: China and Taiwan.
Nature of Notice: April 19 open meeting for briefing and vote on final AD injury determinations.

Agency: ITC.
Commodity: Bottom mount combination refrigerator-freezers.
Country: Korea and Mexico.
Nature of Notice: April 17 open meeting for briefing and vote on final AD and CV injury determinations.

Agency: ITC.
Commodity: Steel wheels.
Country: China.
Nature of Notice: April 17 open meeting for briefing and vote on final AD and CV injury determinations.

Agency: ITC.
Commodity: Silicomanganese.
Country: Brazil, China and Ukraine.
Nature of Notice: Scheduling of full sunset review of AD duty orders.

Foreign Regulatory Changes Could Affect Exports of Beverages, Protective Gear, Bicycles, Gas Storage Systems, Solar Collectors

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

Argentina – draft resolution on regulation of non-alcoholic beverages with caffeine and taurine (comments due by May 17)

Brazil – draft ministerial act on conformity assessment procedures for personal protective equipment (comments due by May 19)

Brazil – conformity assessment procedures for components for adult bicycle usage (comments due by April 15)

Mexico – emergency official standard on design, construction, safety, operation and maintenance of liquefied petroleum gas storage systems

Trinidad and Tobago – standard on durability, reliability and safety for liquid heating solar collectors (comments due by May 23)

Import Restrictions Sought in IPR Infringement Probe of Audiovisual Components

The International Trade Commission has instituted investigation 337-TA-837 to determine whether imports of certain audiovisual components and products containing the same are violating Section 337 of the 1930 Tariff Act by reason of patent infringement. The products at issue in this investigation are Wi-Fi components, multimedia processing components, digital televisions, Blu-ray players, DVD players/recorders, DTV/DVD combinations, DTV/Blu-ray combinations, multimedia streaming players, home theater systems, etc.

The complainants, LSI Corporation and Agere Systems Inc., request 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 Japan, Taiwan and the U.S.

FMC to Discuss Tariff Publication Exemption, Reporting Requirements, Trade Conditions

The Federal Maritime Commission will hold a partially open meeting April 18 in Washington, D.C. The open session of this meeting will include a staff briefing on economic and trade conditions and a briefing and discussion on the tariff filing exemption for non-vessel-operating common carriers. The FMC is currently considering ways to make this exemption more useful, including its possible extension to non-licensed foreign-based NVOCCs (wti/wti.asp?pub=0&story=38886&date=&company=). During the closed session of the meeting the FMC will discuss a September 2011 order amending the special reporting requirements for the Transpacific Stabilization Agreement and the Westbound Transpacific Stabilization Agreement.

USDA Information Collections on Imported Goods Under Review

The Department of Agriculture’s Animal and Plant Health Inspection Service is requesting comments no later than May 14 on the following information collections. Comments should address whether the collection is necessary for the proper performance of APHIS’ functions, ways to enhance the quality, utility and clarity of the information, the accuracy of APHIS’ estimate of the burden associated with these collections and ways to minimize that burden.

Requirements for Request to Amend Import Regulations – APHIS’ regulations governing the submission of requests for changes in the regulations that restrict the importation of plants, plant parts and products require the collection of information about the requestor, information about the commodity to be imported, shipping information, a description of pests and diseases associated with the commodity, risk mitigation or management strategies, and additional information APHIS determines to be necessary to complete a pest risk analysis in accordance with international standards.

Importation of Christmas Cactus and Easter Cactus in Growing Media from the Netherlands and Denmark – Imports of such items require a phytosanitary certificate and a declaration stating that the plants were grown in accordance with specific conditions, an agreemnt between APHIS and the plant protection service of the country where the plants are grown, and an agreement between the foreign plant protection service and the grower. This information is used as a guide to the intensity of the inspection that APHIS must conduct when the shipment arrives.

Importation of Peppers from the Republic of Korea – As a condition of entry, such peppers must be grown in approved insect-proof, pest-free greenhouses and packed in pest-exclusionary packinghouses. Each shipment must be accompanied by a phytosanitary certificate of inspection with a declaration issued by the National Plant Quarantine Service of Korea officials stating that the peppers were grown in greenhouses in accordance with the regulations in 7 CFR 319-56-42 and found free of certain plant pests.

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