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May 9 2012 issue

Wednesday, May 09, 2012
Sandler, Travis & Rosenberg Trade Report

U.S., EU to Begin Mutual Recognition of Supply Chain Security Programs July 1

The U.S. and the European Union signed May 4 an agreement on mutual recognition of each other’s supply chain security programs. As of July 1, U.S. customs authorities will treat the approximately 5,000 members of the EU’s Authorized Economic Operator program the same way they treat participants in the 10,000-plus member Customs-Trade Partnership Against Terrorism, and vice versa. An EU press release states that as a result of this agreement “certified trusted traders will enjoy lower costs, simplified procedures and greater predictability in their transatlantic activities.” Readers should note, however, that U.S. Customs and Border Protection will need to be able to identify certified AEO participants in a C-TPAT member’s supply chain to grant any reciprocal benefits.

The U.S. also has mutual recognition arrangements for C-TPAT in place with Canada, New Zealand, Japan, Korea and Jordan and is negotiating an MRA with Singapore. The EU’s AEO program is accorded mutual recognition by Switzerland, Norway and Japan, with a similar deal under consideration with China.

Algirdas Šemeta, EU Commissioner for Taxation and Customs Union, Audit and Anti-Fraud, said he will meet with Homeland Security Secretary Janet Napolitano this week to discuss additional ways the two trading partners can cooperate on global supply chain security issues. For example, Šemeta was quoted as saying in The Hill, “we’re working now in the area of maritime transport, in air cargo security and several other areas where I think that if we agree to mutually recognize our systems, that will significantly facilitate our trade and will lead to growth in jobs, which we badly need.”

A May 7 article in the online daily publication Europolitics notes that the MRA was signed just after the Department of Homeland Security notified Congress May 2 that it intends to extend by two years the deadline for complying with a 2007 law requiring 100% scanning of inbound maritime cargo containers, which had been slated to take effect this July. DHS officials have said for years that it would be virtually impossible to comply with this requirement and instead have urged a more risk-based methodology, and as the article points out the MRA is consistent with that approach.

House Bill Lays Out Trade Agency Priorities for FY 2013; White House Threatens Veto

The White House issued a statement of administration policy May 7 threatening a veto of the fiscal year 2013 appropriations bill for the Commerce Department and other agencies that is currently advancing in the House of Representatives. The House bill includes relatively small increases to the budgets of several trade agencies, reflecting the emphasis of the Republicans who control the House on keeping a tight rein on government spending. The Commerce funding bill in the Senate, which is controlled by Democrats, would give more money to those agencies in the name of intensifying efforts to promote competitiveness, exports and jobs.

Debate Over Spending Levels. The House bill (H.R. 5326) would fund the International Trade Administration at $467.7 million, up just $3 million from the amount the agency received for FY 2012. This amount includes $277.8 million for trade promotion and the U.S and Foreign Commercial Service (up $8.02 million from FY 2012), $6.125 million for SelectUSA (up $3.425 million) and $15.075 million for the Interagency Trade Enforcement Center. The bill also provides $101 million for the Bureau of Industry and Security (unchanged from FY 2012), $83 million for the International Trade Commission (up $3 million) and $51.3 million for the Office of the U.S. Trade Representative (unchanged).

The White House SAA requests $517 million for the ITA and warns that without such an increase the ITA “would have to dramatically scale back its export promotion and counseling efforts, both domestically and overseas.” The SAA also “strongly encourages” Congress to approve the administration’s funding requests for the ITEC and SelectUSA initiatives, “which will help protect against unfair trade practices and promote investment and jobs.” The statement opposes the House bill’s lower funding level for USTR ($1.8 million under the administration’s request), which it says would have a negative impact on the activities of the new ITEC.

Directives to Trade Agencies. The House Appropriations Committee report on the Commerce funding bill provides some additional information on the activities and priorities lawmakers have in mind for U.S. trade agencies in FY 2013, including the following.

Interagency Trade Enforcement Center. The committee “believes the ITEC proposal was poorly developed and justified, especially given USTR's existing mandate to coordinate trade efforts--including trade enforcement--across the government.” The report therefore (a) directs the ITA and USTR to each report within 180 days of enactment on their performance goals with respect to the ITEC, timeframes for achieving these goals and how they intend to support the ITEC in the future, (b) directs USTR to continue to submit detailed budget information on a monthly basis detailing the execution of ITEC funding, and (c) directs USTR to include in its quarterly staffing reports details of projected and actual ITEC staffing, including details on USTR and ITA assignees as well as detailees from other agencies.

China-specific Activities. The report directs the ITA to spend no less than $11.4 million for enforcement and compliance activities concerning antidumping and countervailing duties on imports from China. Any proposed ITA reorganization would have to include information on how the ITEC will enhance the ITA’s capability with respect to pursuing additional cases against China.

The ITA would also have to report within 120 days of the bill’s enactment on the extent to which existing laws provide remedies against anticompetitive actions of Chinese state-owned or state-invested enterprises operating in the U.S. market as well as recommendations for any additional legal remedies that may be necessary.

USTR, meanwhile, is directed to coordinate and implement a comprehensive and robust strategy to address the trade imbalance with China. Among other things, the bill would (a) require USTR to provide quarterly reports that include an assessment of current staffing in China with respect to enforcement needs and (b) encourage USTR to hire sufficient staff who can translate trade documents received from China “given the challenges associated with enforcing existing U.S. trade laws with China.”

Export Control Reform. The committee directs the BIS to begin providing quarterly updates on ongoing export control reforms and process improvements that the agency will incorporate to ensure that it can conduct due diligence before an export license is granted and adequately conduct post-sale verification.

ITA Reorganization. The report encourages the ITA to examine its organizational structure and redirect resources to key export promotion programs, target emerging markets, expand market access and more aggressively enforce trade agreements. Any reorganization should include a description of the ITA’s participation in the ITEC and how the ITA’s proposed organizational structure will enable it to most effectively utilize its resources to expand U.S. business export opportunities and enforce trade agreements.

Foreign Direct Investment. The ITA redirected $2.7 million in FY 2012 base resources to provide assistance to states through a new interagency investment facilitation task force, engage in advocacy and outreach to promote the U.S. as the best market for business operations, and consolidate all information on federal programs and services available to companies that operate in the U.S. The committee directs the ITA to provide by Nov. 30, 2013, a report on the location and type of assistance provided, the state to which firms sought to relocate and why, and the number of foreign firms that actually decided to locate in the U.S. as a result of the SelectUSA process.

The ITA would also have to submit annual reports on Chinese investment in the U.S., including data on investments by Chinese state-owned enterprises and other state-affiliated entities.

ITC Improvements. The committee is “pleased with ITC’s progress in addressing internal control issues” but that agency “must continue to take aggressive action to address its remaining shortcomings” and would have to submit a status report on these efforts within 120 days. The report directs the ITC to spend $200,000 on efforts to improve its “cybersecurity posture” given that the agency “handles sensitive and proprietary data and therefore is a potential target for cyber attacks.”

Of Note: Mexican Apparel Exports, India Waits on Visa Complaint, Possible WTO Case on Rum Subsidies

Mexico clawing back role as key US clothing supplier

Visa issues with US not taken to WTO

Spirited fight over rum - Subsidies pit CARICOM against US and Diageo

AD/CV Notices: Nails, Brightening Agents, Threaded Rod, Kitchen Shelving

Agency: ITC.
Commodity: Steel nails.
Country: United Arab Emirates.
Nature of Notice: Final affirmative AD injury determination.
Details: An AD duty order will be issued shortly, with duty rates ranging from 4.55% to 184.41%. Subject merchandise is provided for under HTSUS 7317.00.55, 7317.00.65 and 7317.00.75.

Agency: ITC.
Commodity: Stilbenic optical brightening agents.
Country: China and Taiwan.
Nature of Notice: Final affirmative AD injury determinations.
Details: AD duty orders will be issued shortly, with duty rates of 6.20% for Taiwan and 63.98-109.95% for China. Subject merchandise is provided for in HTSUS 3204.20.80 and 2921.59.40 and may have been imported under HTSUS 2921.59.8090 and 2933.69.6050.

Agency: ITA.
Commodity: Steel threaded rod.
Country: China.
Nature of Notice: Preliminary results of administrative review of AD duty order for the period April 1, 2010, through March 31, 2011.
Details: Weighted average dumping margins of 56.07% for one exporter and 206% for the China-wide entity. Review has been rescinded for six companies based on withdrawal of petitioner’s request for review. ITA intends to rescind review for two additional companies that had no shipments of subject merchandise during the period of review.

Agency: ITA.
Commodity: Kitchen shelving and racks.
Country: China.
Nature of Notice: Extension from June 1 to Oct. 1 of time limit for preliminary results of administrative review of CV duty order for the period Jan. 1 through Dec. 31, 2010.

Foreign Regulatory Changes Could Affect Exports of Agricultural Inputs, Metal Scrap, Animal Feed

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.

Colombia – draft resolution on agricultural inputs (comments due by July 18)

Macedonia – order prohibiting internal trade, purchase and export of refuse and remains of products made of iron, steel, aluminum, copper, lead zinc, tine, bronze and brass (comments due by May 14)

Guatemala – technical regulation on manufacturing and hygiene practices for products used in animal feed (comments due by July 1)

Three Foreign-Trade Zones in Washington State Proposed for Merger

The Foreign-Trade Zones Board has received an application from the Port of Bellingham, grantee of FTZ 129, requesting authority to reorganize this zone under the alternative site framework. The proposed service area of this zone would be Whatcom County, Wash., within and adjacent to the Blaine U.S. Customs and Border Protection port of entry. The FTZ Board notes that the Port of Bellingham is also the grantee of FTZ 130 and FTZ 131, both of which are also located within Whatcom County, and is requesting authority to merge these two zones into FTZ 129. Comments on this application are due no later than July 9.

IPR Enforcement Actions on Electronic Devices, Semiconductor Chips

Potential IPR Probe of Electronic Devices Evaluated for Public Interest Issues. The International Trade Commission is requesting comments no later than May 16 on any public interest issues raised by a Section 337 intellectual property rights infringement complaint against certain electronic devices, including mobile phones and tablet computers, and components thereof. 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.

Initial Recommendation Against Import Restrictions on Semiconductor Chips. The International Trade Commission has determined to review in its entirety the final initial determination of the presiding administrative law judge finding that the importation, sale for importation, and sale within the U.S. after importation of certain semiconductor chips and products containing same are not violating the patents identified by complainant Rambus Inc. As part of this process the ITC is requesting written comments by May 18 on the form of remedy, if any, that should be ordered (i.e., an exclusion order and/or cease and desist order); 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 subject articles could enter the U.S. during the 60-day period the president has review any remedy ordered by the ITC.

The ITC is also terminating this investigation as to three respondents based on a settlement agreement, leaving only two manufacturer respondents remaining along with six of their customers.

Import Assessments on Raspberries to be Required as of Sept. 5

The Department of Agriculture’s Agricultural Marketing Service has issued a final rule establishing the Processed Raspberry Promotion, Research and Information Order. Under this order, beginning Sept. 5 importers of processed raspberries and U.S. producers of raspberries for processing will pay an assessment of one cent per pound. Importers and producers of less than 20,000 pounds annually will be exempt from this assessment, as will 100% organic importers and producers. The assessment rate may be increased or decreased no more than once annually but may not exceed one cent per pound.

CBP General Declaration for Aircraft Under Review

U.S. Customs and Border Protection is extending through June 8 the period for public comment on the proposed extension without change of CBP Form 7507, General Declaration (Outward/Inward), which must be filed for all aircraft entering under the provisions of 19 CFR 122.41. This form is used to document clearance by the arriving aircraft at the required inspectional facilities and inspections by appropriate regulatory agency staffs. CBP Form 7507 collects information about the flight routing, the numbers of passengers embarking and disembarking, a declaration of health for the persons on board, details about disinfecting and sanitizing treatments during the flight, and a declaration attesting to the accuracy and completeness and truthfulness of all other documents that make up the manifest.

New and Amended Maritime Agreements Filed

The Federal Maritime Commission has issued notice that the following new or amended agreements have been filed. Interested parties may submit comments by May 21.

United States/Australasia Discussion Agreement – The amendment would add Mediterranean Shipping Company S.A. as a party.

Australia and New Zealand-United States Discussion Agreement – The amendment would add Mediterranean Shipping Company S.A. as a party.

EUKOR Car Carriers, Inc. /FOML Space Charter – The amendment revises the geographic scope of the agreement to include ports on the U.S. West Coast and ports in the Russian Far East.

COSCON/PIL Space Charter and Sailing Agreement – The amendment extends the term of the agreement through January 2013.

CSCL/UASC Vessel Sharing Agreement – Asia and U.S. East Coast Service – The agreement authorizes China Shipping and UASC to share space on vessels in the trade between the U.S. East Coast and China.

Crowley/ELJSA Space Charter Agreement – The agreement authorizes Crowley to charter space to Evergreen in the trade between the U.S. East Coast and Panama and Costa Rica.

Marine Terminal Services Agreement between Port of Houston Authority and Cosco Container Lines Americas Inc. – The agreement sets forth certain discounted rates and charges applicable to Bayport Container Lines Americas Inc.’s container vessels calling at PHA’s Barbours Cut and Bayport Container Terminals in the Port of Houston.

Marine Terminal Services Agreement between Port of Houston Authority and Hanjin Shipping Company Ltd. – The agreement sets forth certain discounted rates and charges applicable to Bayport Container Lines Americas Inc.’s container vessels calling at PHA’s Barbours Cut and Bayport Container Terminals in the Port of Houston.

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