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May 1 2012 issue

Tuesday, May 01, 2012
Sandler, Travis & Rosenberg Trade Report

U.S. Wants to Expand Work with Southeast Asia as Part of Broader Trade Liberalization Effort

In an April 26 speech in Singapore, U.S. Trade Representative Ron Kirk said the United States is ready to begin discussions on further liberalizing trade with the ten-member Association of Southeast Asian Nations. Kirk said recent political and economic developments in the region are opening up new opportunities beyond those already in progress, such as the Trans-Pacific Partnership agreement negotiations and the ongoing work of the Asia-Pacific Economic Cooperation forum, and that acting on these opportunities could help further the cause of trade liberalization on a broader scale.

Kirk said the ultimate goal of the TPP is to build a Free Trade Area of the Asia-Pacific, a “vibrant, seamless regional economy” that the U.S. believes can help “form the foundation for a stronger global trading system.” However, recognizing that TPP alone will not be sufficient to achieve that goal, the U.S. is also looking to expand its engagement with ASEAN. Kirk noted that a bilateral trade and investment framework agreement signed in 2006 has “served to deepen our relations” and support ASEAN’s goal of becoming a single economic community by 2015. Now, he added, with “encouraging progress toward democratic transformation in Burma” (see related article this issue) and “Laos nearly ready to accede to the World Trade Organization … we see the potential to engage with the ASEAN countries on new far-reaching trade initiatives that will help businesses and workers in ASEAN and the United States enhance their competiveness and promote faster economic growth and higher living standards.”

Specifically, Kirk said, “the United States is eager to begin discussions of possible agreements we can pursue in areas of mutual interest.” These talks should focus on “concrete outcomes that will enhance efficiency, encourage innovation and promote increased trade and development,” which could include the issues of trade facilitation, the digital economy and agribusiness in which ASEAN itself has already been working. Kirk said that agreements in these or other areas “could potentially serve as building blocks for broader trade initiatives.”

What form could such broader initiatives take? While some will advocate for bilateral or regional free trade agreements, Kirk focused on extending the “policy principles and liberalization efforts” between the U.S. and ASEAN worldwide. He explained that the U.S. remains “firmly committed to the precept that trade liberalization at the multilateral level holds the highest potential for securing wide-ranging market-opening outcomes while at the same time advancing trade as an economic engine for global development.” However, because the Doha Round is “at an impasse,” the U.S. is seeking to work with “like-minded countries” to “focus on new pathways for more productive, trade liberalizing work within the WTO.” These include expanding the coverage of the Information Technology Agreement and negotiating a new plurilateral agreement to open up trade in services.

U.S. Considers Easing Burma Sanctions as Others Lift Theirs

The Obama administration is beginning to consider easing longstanding economic and trade sanctions against Burma in light of ongoing political reforms in that country. There is pressure from the business community to accelerate these steps so that the U.S does not fall behind competitors in Europe and Asia, but others warn that moving too quickly could jeopardize the progress made to date.

In an April 20 letter more than a dozen large trade organizations urged President Obama to “open the door to further involvement of the U.S. business community” as part of the process of “encouraging Burma’s engagement with the global economy.” They noted that U.S. companies can “create the jobs and economic base needed for Burma to jumpstart its economy,” lend needed support for the rule of law, intellectual property rights and high labor standards, and provide capacity building and training. To achieve those goals, they indicated, the U.S. should lay out “a plan that eases restrictions on private investment across all sectors and includes the same rules for all businesses.” In addition, lifting the financial services facilitation and transactions sanctions “is an essential step in enabling any U.S. business to work in Burma.”

The letter noted that U.S. companies are already at a disadvantage as “numerous entities from Europe and elsewhere in Asia have substantially stepped up their engagement [with Burma] in recent months.” For example, the European Union confirmed April 23 that it is suspending most of its sanctions against Burma for one year, and on April 24 Canada removed its requirement for a permit for exports of uncontrolled goods and technology to Burma. In addition, the United Kingdom said it will lift its policy of discouraging trade with Burma.

Administration officials indicated last week that they intend to move forward cautiously. Kurt Campbell, assistant secretary of state for East Asian and Pacific affairs, told the House Foreign Affairs Subcommittee April 25 that the progress made so far in Burma is “real and significant” but is also “fragile and reversible” and that as a result “we need to carefully calibrate our approach to encourage continued progress.” In particular, with respect to easing the bans on the export of U.S. financial services and new investment for commercial activities, “we plan to proceed in a careful manner” and “easing sanctions will remain a step-by-step process.” He also acknowledged the positive role that U.S. companies may be able to play in “contributing to justice, development and reform in Burma” once investment restrictions are relaxed.

Aung Din, executive director of the U.S. campaign for Burma, testified at the same hearing that easing the bans on investment and financial services is “too much and too fast.” Din said his contacts within Burma “do not think this is the time to ease these important sanctions” and fear that doing so will lead Congress to also remove the U.S. ban on imports from Burma. Thomas Andrews, president and CEO of United to End Genocide, explained that such measures “will have minimal, if any, positive impacts on the people of Burma while advantaging those that have perpetrated or supported crimes against civilians.” Din called on the administration to take a number of other measures instead, including updating the Specially Designated Nationals list maintained by the Office of Foreign Assets Control (which the State Department’s Campbell indicated is in the works) and developing “binding requirements or a compulsory framework for responsible business conduct” on any U.S. business that will invest in Burma. In general, he said, the U.S. should wait and further evaluate ongoing reform efforts before making any decision to ease sanctions, including the import ban.

May 11 Deadline for Advising DOT on Harmonizing Hazmat Regs with International Standards on Lithium Battery Transport

The Pipeline and Hazardous Materials Safety Administration is inviting public comments through May 11 on changes to international standards for the transportation of lithium cells and batteries that are slated to take effect Jan. 1, 2013. Since January 2010 PHMSA has been considering a proposed rule that would harmonize the Hazardous Materials Regulations with provisions in the International Civil Aviation Organization’s Technical Instructions on the Transport of Dangerous Goods by Air concerning the air transport of lithium cells and batteries. Given that those provisions have undergone many changes since the issuance of the proposed rule, PHMSA is now seeking input on the effect of these revisions should they be adopted into the HMR.

PHMSA explains that under the changes to the Technical Instructions packages containing more than eight lithium cells or two lithium batteries, which were previously excepted from most of the packaging, marking, labeling and other requirements, would be subject to additional requirements, including package weight limits (10 kg for lithium ion cells and batteries and 2.5 kg for lithium metal cells and batteries) and a requirement to display a Class 9 label and the lithium battery handling label. In addition, the shipper would have to provide the carrier with the name and address of the shipper and consignee, the appropriate proper shipping name and UN number, and the number of packages and the gross mass of each. The air carrier, in turn, would have to provide the information on this document to the pilot, retain this information for at least three months, and inspect each package for compliance with the Technical Instructions.

Sandler, Travis & Rosenberg recently conducted a webinar reviewing current and proposed requirements for the air transportation of lithium cells and batteries, including the changes to the Technical Instructions. For more information on these requirements, or for assistance in preparing comments to PHMSA, please contact Mark Ludwikowski or Melissa Paul.

CBP Specifies Requirements for Filing Claims Once Colombia FTA Takes Effect

U.S. Customs and Border Protection issued April 30 an administrative message outlining the following requirements for filing claims for duty-free treatment under the U.S.-Colombia free trade agreement. However, CBP emphasizes that the Colombia FTA does not take effect until May 15 and that no claims under this FTA should be filed until CBP issues an additional message indicating that it has made the system changes necessary to handle such claims.

- country of origin must be “CO”
- country of export must be “CO”
- tariff number associated with the FTA claim must contain the special program indicator “CO”
- HTSUS numbers 9822.08.01 through 9822.08.35 and 9918.02.01 through 9918.24.20 are subject to quota
- to claim an exemption from the merchandise processing fee for a good that qualifies as originating under the Colombia FTA and is classified in a tariff line that is already duty-free, the country code SPI CO should be transmitted

CBP adds that as of May 15 Colombia will no longer be eligible for duty-free treatment under the Generalized System of Preferences (SPI A) or the Andean Trade Preference Act (SPI J and J+).

Click here for CBP notice

Of Note: Chile Proposes Dropping All Import Duties, Two Countries Joining WTO

Chile Tax Bill To Eliminate Import Duties In 2015

Montenegro and Samoa strengthen the WTO

$125,000 Fines for Carbon Fiber Exports to China

The Bureau of Industry and Security announced April 26 that a New York company and individual will each pay a $125,000 fine to settle allegations that they attempted to export carbon fiber controlled for nuclear nonproliferation and national security reasons to China without the required U.S. government authorizations. BIS alleged that these two entities conspired with others to export two types of carbon fiber to the China Academy of Space Technology via Hong Kong and Singapore in knowing violation of the Export Administration Regulations.

A related two-year denial of export privileges, as well as $75,000 of the fines, for each entity will be suspended so long as neither commits additional export control violations during that time. Also during that period the company will retain an item classification sheet for every item exported or to be exported from the U.S. that is subject to the EAR and is the subject of a transaction in which the company has an interest. In addition, the man and the company’s export compliance officers and employees, including the president, will attend export control compliance training.

Customs Broker Licenses Reinstated After Erroneous Revocation

U.S. Customs and Border Protection has issued a notice stating that the following customs broker licenses were inadvertently revoked in November 2011 and are currently active.

- license #17367: Aldo Neyra, Jr., Los Angeles
- license #17389: Samantha Woo, New York
- license #04973: Gloria S. Oh, New York
- license #13049: Kenneth Carlstedt, New York
- license #04793: Michael Bonvissuto, New York
- license #05829: John G. Duffield, New York
- license #22702: Michael Russell, New York
- license #24103: Anthony J. Raffin, Detroit
- license #23068: Jeramy Caudill, St. Louis
- license #10847: Susan K. Richards, Philadelphia
- license #12339: Catherine Finn, New Orleans

Click here for CBP notice

AD/CV Notices: New Admin Reviews, Steel, Honey, Plastic Bags, Coke, Carbon, Polyester Fiber

Agency: ITA.
Nature of Notice: Opportunity to request administrative reviews of the following AD and/or CV duty orders. AD reviews cover the period May 1, 2011, through April 30, 2012 and CV reviews cover the period Jan. 1 through Dec. 31, 2011, unless otherwise noted. Requests for review are due no later than May 31.
- stainless steel plate in coils from Belgium (AD), Korea (AD), South Africa (AD/CV) and Taiwan (AD)
- iron construction castings from Brazil (AD/CV) and China (AD)
- citric acid and citrate salt from Canada (AD) and China (AD/CV)
- antifriction ball bearings from France, Germany and Italy (AD; May 1 through Sept. 14, 2011)
- silicomanganese from India, Kazakhstan and Venezuela (AD)
- welded carbon steel pipes and tubes from India (AD)
- polyethylene retail carrier bags from Indonesia (AD), Taiwan (AD) and Vietnam (AD/CV)
- gray portland cement and cement clinker from Japan (AD)
- polyester staple fiber from Korea and Taiwan (AD)
- circular welded carbon steel pipes and tubes from China, Taiwan and Turkey (AD)
- aluminum extrusions from China (AD (Nov. 12, 2010 through April 30, 2012) and CV (Sept. 7, 2010, through Dec. 31, 2011))
- oil country tubular goods from China (AD)
- pure magnesium from China (AD)
- light-walled rectangular pipe and tube from Turkey (AD)

Agency: ITA.
Nature of Notice: Initiation of administrative reviews of AD/CV duty orders on the following products for the period March 1, 2011, through Feb. 29, 2012 (unless otherwise noted). Final results of these reviews are anticipated by March 30, 2013.
- orange juice from Brazil (AD; March 1-8, 2011)
- brass sheet and strip from France, Germany, Italy (AD)
- cut-to-length carbon-quality steel plate from Korea (AD; Feb. 1, 2011, through Jan. 31, 2012)
- polyvinyl alcohol from Taiwan (AD)
- welded carbon steel pipe and tubes from Thailand (AD)
- frozen warmwater shrimp from China and Vietnam (AD; Feb. 1, 2011, through Jan. 31, 2012)
- glycine from China (AD)
- sodium hexametaphosphate from China (AD)
- drill pipe from China (CV; March 3, 2011 through Dec. 31, 2011)
- welded carbon steel pipe and tube from Turkey (CV; Jan. 1 through Dec. 31, 2011)

Agency: ITA.
Commodity: Hot-rolled carbon steel flat products.
Country: India.
Nature of Notice: Rescission of administrative review of AD duty order for the period Dec. 1, 2010, through Nov. 30, 2011, based on the withdrawal of the request for review. AD duties on entries of subject merchandise during this period will be assessed at rates equal to the cash deposits required at time of entry or withdrawal from warehouse for consumption.

Agency: ITA.
Commodity: Honey.
Country: China.
Nature of Notice: Rescission of administrative review of AD duty order for the period Dec. 1, 2010, through Nov. 30, 2011, with respect to Anhui Honghui Foodstuff (Group) Co. Ltd., Shanghai Bloom International Trading Co. Ltd., Shanghai Taiside Trading Co. Ltd., Tianjin Eulia Honey Co. Ltd. and Wuhan Bee Healthy Co. Ltd. due to the petitioners’ withdrawal of their requests for review.
Details: All five companies have separate rates from a prior segment of this proceeding, so AD duties on entries of subject merchandise from these companies during the period of review will be assessed at rates equal to the cash deposits required at the time of entry or withdrawal from warehouse for consumption.

Agency: ITA.
Commodity: Polyethylene retail carrier bags.
Country: Thailand.
Nature of Notice: Rescission of administrative review of AD duty order for the period Aug. 1, 2010.

Agency: ITC.
Commodity: Tin and chromium coated steel sheet.
Country: Japan.
Nature of Notice: May15 open meeting for vote in sunset review of AD duty order.

Agency: ITC.
Commodity: Foundry coke.
Country: China.
Nature of Notice: May 15 open meeting for vote in sunset review of AD duty order.

Agency: ITA/ITC.
Commodity: Activated carbon.
Country: China.
Nature of Notice: Initiation of sunset review of AD duty order.

Agency: ITC.
Commodity: Polyester staple fiber.
Country: China.
Nature of Notice: Initiation of sunset review of AD duty order.

Agency: ITA.
Commodity: Crystalline silicon photovoltaic cells, whether or not assembled into modules.
Country: China.
Nature of Notice: Alignment of final AD and CV duty determinations, which are due on July 30.

Agency: ITA.
Commodity: Corrosion-resistant carbon steel flat products.
Country: Korea.
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.

DOC to Move More Information on AD/CV Actions to Web Site

The Department of Commerce’s Import Administration has announced plans to reduce the amount of information concerning antidumping and countervailing duty proceedings that it publishes in the Federal Register. Specifically, IA will stop publishing in the Federal Register notices of extensions of time limits for preliminary and final results of reviews, lists of pending scope decisions in its quarterly scope ruling publication, and advance notifications of sunset reviews when no such review is scheduled for initiation the following month. Deadline extension information will instead be accessible to parties on IA ACCESS ( once it becomes available and will also be reflected in a calendar published on IA’s Web site.

All other AD/CV duty notices will continue to be published in the Federal Register in a modified and condensed format. Such notices will continue to include fundamental case information (e.g., segment of proceeding, abbreviated scope description, period of review, summary of findings, summary of methodology, names of exporters/producers subject to the proceeding, margins calculated, notification of disclosure and public comment, notifications of assessment and cash deposit instructions, and reminder of any deadlines associated with the notice’s publication). For preliminary and final determinations and notices of AD and CV duty orders, the entire scope will be published. All other information (e.g., discussions of margin calculation methodologies in notices of preliminary results of administrative reviews) will be transferred to separate memoranda published on IA’s Web site.

These modifications will be implemented incrementally, beginning May 15 with the cessation of Federal Register notices on deadline extensions and advance notices of sunset reviews when none are scheduled. In addition, the next quarterly scope decision will not contain a list of pending scope decisions. Beginning Sept. 1 abbreviated notices for all preliminary determinations and preliminary results of review will be published in the Federal Register while the memorandum accompanying each notice that includes the background, methodology and additional content will be adopted through the notice’s publication and posted on the IA Web site ( ITA anticipates that other notices will be published in abbreviated format in the near future following the implementation of the above.

Assembly and Programming Results in Substantial Transformation of Oscilloscopes, CBP Says

U.S. Customs and Border Protection has issued a final determination concerning the country of origin of certain oscilloscopes that may be offered to the U.S. government under an undesignated government procurement contract. CBP issues country of origin advisory rulings and final determinations as to whether an article is or would be a product of a designated country or instrumentality for the purposes of granting waivers of certain “Buy American” restrictions in U.S. law or practice for products offered for sale to the U.S. government.

The oscilloscopes at issue consist of components that are manufactured in various countries, including China, Malaysia and Taiwan, and incorporate software and firmware developed in the U.S. CBP has concluded that in each of the five scenarios presented the assembly and programming operations performed in Singapore substantially transform the components. As a result, the country of origin for purposes of U.S. government procurement is Singapore.

CBP’s final determination was issued April 23. Any party-at-interest may seek judicial review of this determination by May 31.

Click here for CBP notice

Foreign Regulatory Changes Could Affect Exports of Food, Lamps, Apparel, Bags, Shoes, Plants, Extension Cords, Etc.

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.

Bahrain – draft technical regulation on general requirements for athletic food (comments due by June 24)

Chile – draft protocol establishing energy efficiency labeling certification procedure for electromagnetic and electronic ballasts for fluorescent lamps

Egypt – ministerial decrees requiring inspection and review certificate for certain apparel, ready-made garments, home textiles, and natural or artificial leather bags and shoes (comments due by June 23)

Japan – revised standards on pressure resistance and backflow prevention of water service connection facilities (comments due by June 23)

Kuwait – draft technical regulation on labeling for herbal plants for human consumption (comments due by June 24)

Mozambique – regulation on metrological control of pre-packaged products (comments due by June 18)

Oman – regulation on registering national, regional and international quality marks found in all food and non-food products (comments due by June 23)

Paraguay – draft technical regulation on establishing identity of potatoes (comments due by June 20)

South Africa – publication of technical regulations on apricots, cord sets and cord extension sets, fat spreads with less than 50% milk fat, and continuous totalizing automatic weighing instruments

Uganda – draft standards specifying requirements, methods of sampling and testing for refined white sugar and plantation or mill white sugar intended for industrial use or human consumption (comments due by June 24)

Supply Chain Security, Harmonized Security Regulations to be Discussed at May 15-16 Meeting

The National Maritime Security Advisory Committee will hold a partially open meeting May 15-16 in Arlington, Va. The open session will include discussion of the following items.

- Global Supply Chain Security Initiative

- efforts to harmonize security regulations across the U.S.-Canada border

- Coast Guard and U.S. Customs and Border Protection field guidance pertaining to requirements for vessels to post or contract for guards while in U.S. ports

- efforts to accommodate Transportation Worker Identification Credential readers into the Port Grant Program as a result of the completion of the TWIC reader pilot

- maritime domain awareness and information sharing

Seating at the public session is very limited and members of the public wishing to attend should register no later than May 9. Additionally, the open session will be broadcast via a Web-enabled interactive online format and teleconference.

Click here for meeting notice

Dental Appliances, Integrated Circuit Devices, Drill Bits Subject of IPR Enforcement Actions

ITC Investigating Alleged Violation of Consent Order in IPR Probe of Dental Appliances. The International Trade Commission has instituted a formal enforcement proceeding relating to the Nov. 13, 2006, consent order issued in investigation 337-TA-562 of certain incremental dental positioning adjustment appliances and methods of producing same. That order prohibits the importing, offering for sale and selling for importation in the U.S. incremental dental positioning adjustment appliances and any other articles that infringe the asserted patents or that contain or use the asserted trade secrets. Complainant Align Technology Inc. now alleges that the successors and bound officers of the original respondents have violated this order by continuing to engage in these prohibited activities.

New Patent Investigation of Semiconductor Integrated Circuit Devices. The ITC has instituted investigation 337-TA-840 to determine whether imports of certain semiconductor integrated circuit devices and products containing same are violating Section 337 of the 1930 Tariff Act by reason of patent infringement. The items at issue are used in many consumer and industrial products, such as servers and storage equipment, telecom and datacom equipment, power supply modules, personal computers, televisions, industrial systems, medical equipment, automotive applications, portable systems, digital video recorders, printers, battery packs, digital cameras, amplifiers, receivers, modems and routers.

The complainant, Microchip Technology Incorporated, 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 the U.S.

Potential IPR Probe of Drill Bits Evaluated for Public Interest Issues. The ITC is requesting comments no later than May 8 on any public interest issues raised by a Section 337 intellectual property rights infringement complaint against certain drill bits and products containing the same. Comments should address whether the issuance of exclusion orders and/or cease and desist orders pursuant to this complaint would affect the public health and welfare in the U.S., competitive conditions in the U.S. economy, the production of like or directly competitive articles in the U.S., or U.S. consumers. In particular, the ITC is interested in comments that:

- explain how the articles potentially subject to the orders are used in the U.S.;

- identify any public health, safety or welfare concerns in the U.S. relating to the potential orders;

- identify like or directly competitive articles that the complainant, its licensees or third parties make in the U.S. that could replace the subject articles if they were to be excluded;

- indicate whether the complainant, the complainant’s licensees and/or third-party suppliers have the capacity to replace the volume of articles potentially subject to the requested orders within a commercially reasonable time; and

- explain how the requested orders would impact U.S. consumers.

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