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April 17 2012 issue

Tuesday, April 17, 2012
Sandler, Travis & Rosenberg Trade Report

U.S.-Colombia FTA to Take Effect May 15; Obama Pledges New Help for Small Exporters

President Obama announced during the Summit of the Americas meeting April 13-15 in Colombia that the U.S.-Colombia free trade agreement will enter into force May 15. The president also unveiled an initiative to help more U.S. small businesses get involved in trade within the region.

Free Trade Agreement. The FTA announcement followed the exchange of letters confirming that the two sides have completed the necessary legal requirements and procedures. Among other things, U.S. Trade Representative Ron Kirk said, Colombia “has successfully implemented the key elements” of the Action Plan Related to Labor Rights, which the Obama administration negotiated in an effort to gain further domestic political support for the FTA, “and met all of the Action Plan’s milestones to date.” The USW, the AFL-CIO and other labor groups decried this determination and urged the White House to withhold FTA implementation “until the rates of anti-union violence and impunity are dramatically reduced.” Administration officials responded by acknowledging that more work needs to be done and stating that the U.S. will continue to work with Colombia to help it “meet its long-term commitments to improve its labor practices and deter violence against labor leaders.”

A USTR fact sheet states that as of May 15 over 80% of U.S. exports of consumer and industrial products to Colombia will become duty-free, including agricultural and construction equipment, building products, aircraft and parts, fertilizers, information technology equipment, medical scientific equipment and wood, with the remaining tariffs phased out over ten years. More than half of U.S. exports of agricultural commodities to Colombia will become duty-free on that date as well, including wheat, barley, soybeans, high-quality beef, bacon, and almost all fruit and vegetable products, and virtually all remaining tariffs will be eliminated within 15 years. According to USTR, the International Trade Commission has estimated that the tariff reductions alone will expand exports of U.S. goods by more than $1.1 billion and help increase U.S. gross domestic product by $2.5 billion. The FTA will also provide significant new access to Colombia’s $180 billion services market, such as by eliminating measures that prevent firms from hiring U.S. professionals and phasing out market restrictions in cable television.

Small Business Network of the Americas. The SBNA aims to promote and support job creation in small and medium-sized enterprises and encourage greater trade among these businesses throughout the Western Hemisphere. Specific initiatives will include the following.

- expanding the Small Business Development Center model, which provides individualized, long-term business counseling, group training and market research services, to other countries in the hemisphere

- connecting the more than 2,000 SBDCs and similar SME support centers throughout the hemisphere

- providing matchmaking services and export counseling through U.S. Export Assistance Centers and other platforms to SBDC clients seeking business partners in other countries

- enhancing the use and availability of virtual trade platforms like

Of Note: CBP Meets with Trade Community, FTAs Under Negotiation, Air Cargo Security Recognition Sought

CBP Commissioner Looks to Trade Groups to Build Partnerships

Kosovo to sign free trade agreement with Turkey

Nepal garment manufacturers seek free trade pact with US

Dhaka, Ankara agree on FTA

Airlines call for U.S. recognition of EU air cargo security

Textile and Apparel Imports Continue Downward Trend in February

The Department of Commerce’s Office of Textiles and Apparel reported April 12 that monthly U.S. textile and apparel imports were down 6.5% in February compared to a year earlier. Imports of cotton, wool, manmade fiber, silk blends and non-cotton vegetable fiber textile and apparel products totaled 3.87 billion square meter equivalents. Textile imports dropped 5.9% from a year before to 2.11 billion SME while apparel imports fell 7.1% to 1.77 billion SME.

For the year to date as of February 2012, compared to the same period in 2011, imports of textiles and apparel were down 3.2% to 8.32 million SME. Textile imports were down 2.9% to 4.57 million SME while apparel imports saw a 3.5% drop to 3.75 million SME. For the 12-month period ending in February total imports fell 4.8% to 53.4 billion SME as textile imports slid 4.1% to 29.7 billion SME and apparel imports declined 5.7% to 23.7 billion SME.

With respect to specific sources, imports of textile and apparel products (except cotton and silk blend textiles) saw a year-on-year increase in February from Taiwan (3.4% to 61.8 million SME), Korea (11.7% to 105.4 million SME), South Asia (4.8% to 637.4 million SME) and Turkey (38.8% to 45.5 million SME) but declined from China (12.8% to 1.63 billion SME), Vietnam (11.4% to 227 million SME), Hong Kong (24.1% to 4.6 million SME), Canada (2% to 102 million SME), Mexico (1.9% to 196.6 million SME), the DR-CAFTA region (3.5% to 245.6 million SME), the Caribbean Basin (5.2% to 265.4 million SME), the ASEAN region (6.1% to 564.9 million SME), the EU-15 (9.3% to 98 million SME) and Israel (16.4% to 28.1 million SME).

EPA Proposes to Expand Electronic Reporting for Chemical Information

The Environmental Protection Agency is seeking comments by June 18 on a proposed rule intended to streamline the process of reporting certain chemical information and reduce associated administrative costs. EPA states that electronic reporting will increase the speed with which it can make information publicly available, improve accuracy and provide the public with quicker and easier access to chemical information.

The proposed rule would require electronic reporting for information that must be submitted under Toxic Substances Control Act section 4 (pursuant to test rules and enforceable consent agreements), the TSCA section 8(a) preliminary assessment information rule and TSCA section 8(d) health and safety data reporting rules. EPA is also proposing amendments to certain TSCA section 5 reporting regulations that would extend electronic reporting requirements to notices of commencement of manufacture or import and support documents (e.g., correspondence, amendment and test data) relating to TSCA section 5 notices submitted before April 6, 2010. This proposed rule would require the use of EPA’s Central Data Exchange and the Chemical Information Submission System Web-based reporting tool for the submission of forms, reports and other documents except for TSCA section 5 submissions, which would use existing e-PMN software.

EPA notes that over the coming months it will offer a number of opportunities for potential users to become familiar with the new requirements, including an initial webinar to introduce the electronic reporting tool, follow-up webinars and testing of specific applications, and opportunities for submitters and others to provide feedback on their experiences using the tool before its release.

Two Proposed Changes to Expedited Dual-Use Exports to Validated End Users

The Bureau of Industry and Security is proposing two changes to its regulations concerning license authorization VEU (validated end user). Comments on this proposed rule are due no later than June 18.

Authorization VEU is a mechanism to facilitate increased high-technology exports to companies in China and India that have a verifiable record of civilian end-uses for such items. End-users qualified as VEUs are eligible to receive a wide range of specified items on the Commerce Control List under this authorization instead of under individual transaction-specific export licenses. Authorization VEU may also be used by foreign reexporters and by persons transferring in-country. Eligible items may include commodities, software and technology, except those controlled for missile technology or crime control reasons.

This proposed rule would add a requirement for persons exporting, reexporting or transferring (in-country) under authorization VEU to send written notification to the recipient VEU with details about their shipment within seven days of the shipment. Required details include a list of the contents of the shipment and the quantity of such items that have been or will be shipped to the respective VEUs under authorization VEU as well as a list of the applicable export control classification numbers for items included in the shipment under authorization VEU. BIS notes that this proposed change is not the result of noncompliance by existing VEUs but instead was requested by VEUs to improve their ability to determine which authorization their suppliers utilized and thus which set of conditions applies to the items received in each shipment.

BIS is also proposing to clarify that VEUs who are subject to item-specific conditions and have received items subject to such conditions under authorization VEU would no longer be bound by the conditions associated with the items if the items no longer require a license for export or reexport to China or India or become eligible for shipment under a license exception to the destination. However, this rule would also add a new paragraph to remind exporters that records requirements for shipments that were made under authorization VEU prior to the removal of a license requirement or the availability of a license exception remain subject to the review requirements of paragraph (f)(2) of section 748.15 on and after the date that the license requirement was removed or the license exception became applicable.

State Dept. Ends Acceptance of International Import Certificate for Temporary Defense Imports

Effective May 17, the State Department is amending the International Traffic in Arms Regulations by removing reference to form DSP-53, the International Import Certificate. State notes that it receives a few hundred DSP-53 submissions a year and that typically they are submitted by persons who are claiming a temporary import licensing exemption but need documentation of U.S. government approval of the temporary import. As of May 17, importers in this situation will instead be required to obtain a form DSP-61 (application/license for temporary import of unclassified defense articles), which is the primary means by which State controls the temporary import of defense articles. State notes that the Bureau of Industry and Security and the Bureau of Alcohol, Tobacco, Firearms and Explosives will continue to adjudicate DSP-53 submissions for items under their jurisdiction.

Import Restrictions Likely After Patent Infringement Finding on Handbags and Luggage

The International Trade Commission has granted the motion of complainant Louis Vuitton for summary determination that the importation, sale for importation and sale within the U.S. after importation of certain handbags, luggage, accessories and packaging thereof is infringing specified patents. Louis Vuitton has also requested the issuance of a general exclusion order, which the presiding administrative law judge recommends. The ITC is therefore requesting no later than April 26 comments on:

- the form of remedy, if any, that should be ordered (i.e., an order excluding the subject articles from entry into the United States and/or orders requiring the respondents to cease and desist from engaging in unfair acts in the importation and sale of covered articles);

- the effect of any such remedy on the public health and welfare, competitive conditions in the U.S. economy, U.S. production of articles that are like or directly competitive with those that are subject to investigation, and U.S. consumers; and

- the amount of the bond under which the subject articles could enter the U.S. during the 60-day period the president has to review any remedy ordered by the ITC.

FMC Moves to Revoke OTI License for Failure to Replace Qualifying Individual

The Federal Maritime Commission has ordered an Indiana company to show cause by May 11 why its ocean transportation intermediary license should not be revoked. The FMC states that the person based on whose qualifications this license was granted is no longer employed with the company, which neither notified the FMC of that situation nor has requested approval of a replacement qualifying individual. FMC regulations require such notifications and requests within 30 days. The company has also failed to respond to numerous communications from the FMC as part of an OTI compliance audit. A final decision in this proceeding is anticipated by Aug. 9.

Click here for FMC notice

Defense Trade Treaty with U.K. Effective as of April 13

The State Department has announced the April 13 exchange of diplomatic notes bringing the Defense Trade Cooperation Treaty between the United States and the United Kingdom into force as of that date. As a result, the State Department final rule ( amending the International Traffic in Arms Regulations to implement this treaty will be effective as of April 13. 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.

Pomegranates from Chile May be Imported Into U.S. as of May 17

The Department of Agriculture’s Animal and Plant Health Inspection Service has issued a final rule that, effective May 17, will allow the importation into the continental United States of pomegranates from Chile subject to a systems approach with the following provisions.

- the fruit is grown in a place of production that is registered with the national plant protection organization of Chile and certified as having a low prevalence of Brevipalpus chilensis

- the fruit undergoes pre-harvest sampling at the registered production site

- following post-harvest processing, the fruit is inspected in Chile at an approved inspection site

- each consignment of fruit is accompanied by a phytosanitary certificate with an additional declaration stating that the fruit has been found free of Brevipalpus chilensis based on field and packinghouse inspections

APHIS notes that relatively small quantities of pomegranates are expected to be imported from Chile because of this rule, equivalent to less than 4% of the estimated U.S. production consumed domestically in recent years.

Information Collections on IPR Recordation and Enforcement, Explosives Imports Under Review

U.S. Customs and Border Protection is extending through May 17 the period for public comment on the proposed extension of information collections associated with the regulations relating to the recordation and enforcement of trademarks and copyrights. Trademark and trade name owners and those claiming copyright protection may submit information to enable CBP officers to identify violating articles at the border. Parties seeking to have merchandise excluded from entry must provide proof to CBP of the validity of the rights they seek to protect. The information collected is used to identify infringing goods at the border and determine if they infringe on intellectual property rights for which federal law provides import protection.

Separately, the Department of Justice’s Bureau of Alcohol, Tobacco, Firearms and Explosives is extending through May 17 the period for public comments on the proposed extension of an information collection concerning the identification of imported explosives materials. All licensed importers are required to identify by marking all explosive materials they import for sale or distribution. This information is necessary to ensure that explosive materials can be effectively traced as part of explosion and bombing investigations.

In each case comments should evaluate whether the information collection is necessary for the proper performance of the functions of the agency, describe how to enhance the quality, utility and clarity of the collection, evaluate the agency’s estimate of the burden of the collection and/or provide information on minimizing that burden.

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