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May 11 2012 issue

Friday, May 11, 2012
Sandler, Travis & Rosenberg Trade Report

Legislative Update: MTB, Trade Agency Funding Advance as Lawmakers Mull Reforms to Lacey Act

Legislative initiatives affecting international trade are picking up a bit of steam, and with nearly three months before Congress takes its annual month-long summer recess a number of them could see further progress. The process of assembling a miscellaneous trade bill will continue to move quietly forward, and in the meantime debate over fiscal year 2013 funding for federal trade agencies is heating up. Lawmakers have also recently held hearings on possible reforms concerning imported wood and wood products.

Miscellaneous Trade Bill. The last of the hundreds of individual bills seeking to remove or reduce import duties on specific products will be introduced this week, at which point they will undergo a vetting process by the International Trade Commission to make sure they are eligible to include in the MTB. Existing duty breaks are scheduled to expire Dec. 31, and sources speculate that Congress will take up and approve the MTB after this November’s elections.

The vast majority of the bills introduced to date apply to chemicals, but other affected goods include the following.

- numerous textile products, including fibers, yarns, fabrics, sleeping bag shells and carry cases, rooftop cargo bags, sanitary towels, tampons, diapers, diaper liners, insulated food or beverage bags, floor coverings and mats, and rolling travel bags with removable backpack or daypack

- apparel products such as leather belts, sports bras and knit tops with textile or polymer-based electrodes knit into or attached to the fabric, mechanics’ work gloves, girls’ shorts, trousers and breeches, boys’ shirts, and many types of footwear

- sports equipment such as ski boots, ski poles, cross country ski footwear and snowboard boots, basketballs, volleyballs, baby or child carriers designed for use on bicycles, bicycle speedometers, brakes and wheel rims, and golf club heads and golf bags

- auto parts, including direct injection fuel injectors, hybrid electric vehicle inverters, stator/rotor parts, motor generator units, lithium ion electrical storage batteries, high-pressure fuel pumps, lubricating or cooling medium pumps, compression-ignition internal combustion piston engines, gear boxes, cast stainless steel single-piece exhaust gas manifolds, used camshafts and crankshafts for diesel engines, axles, programmable controllers and drive axles designed for use in agricultural and off-road construction vehicles, and truck cabs

- consumer products such as digital camera lenses, ice shavers, metal lighting fixtures, plastic nightlights, headphones and earphones, self-contained microphones, high-performance loudspeakers, shopping bags, instant print film for analog photography, inkjet printing ink, infants’ products, eyeglass frames, color video monitors with flat panel screens, portable personal area mosquito repellents, imitation jewelry earrings, necklaces and bracelets, textile and plastic bags, cases and containers for toys, educational toys and plastic stylus pens used with such toys, covers and stands for electronic devices, electric pencil sharpeners, snow globes, plastic children’s wallets, coupon holders, and inflatable swimming pools

- housewares such as ceiling fans, drinking glasses, electric wine bottle openers, and bamboo kitchen devices and baskets

- electrical equipment such as occupancy sensors, electrical connectors, time switches, surge protectors, and ground fault circuit interrupters

- electronic equipment, including wide-range high sensitivity zoom security cameras and metal halide lamps for use in video projectors

- food items such as chocolate crumb, artichokes, oysters, capers and pepperoncini

- industrial goods such as sector molds and tooling, helical springs and vibration dampeners, check valves, stop valves, hand-operated globe-type valves, steel screws, bolts, nuts, washers and similar articles, machines for punching, centrifugal blowers and fans, parts and accessories of oscilloscopes, spectrum analyzers, and optical instruments and apparatuses, axial fans, and microscopes

Trade Agency Funding. The House approved May 10 a fiscal year 2013 appropriations bill for various trade agencies ( that the Obama administration has threatened to veto because its funding levels are too low. A companion Senate bill more in line with the White House’s budget request was approved by the Senate Appropriations Committee in April.

On May 9 the House Appropriations Committee began considering an FY 2013 funding bill for the Department of Homeland Security. Materials made available by the committee indicate that this bill includes the following provisions.

- $10.2 billion for U.S. Customs and Border Protection, $77 million above President Obama’s request and $9.4 million above FY 2012, including $700.2 million for automated systems (including $138.8 million for development of the Automated Commercial Environment)

- $5.5 billion for U.S. Immigration and Customs Enforcement, $141.6 million above the president’s request and $76.8 million below FY 2012

- $5.1 billion for the Transportation Security Administration, $146.5 million below the president’s request and $422 million below FY 2012, which includes funding for security enforcement, cargo inspections and intelligence functions, a $15 million increase for privatized screening operations and support for TSA’s shift to more risk-based screening

- TSA must either certify that the requirement for screening 100% of air cargo on passenger aircraft has been met or submit a plan to meet that requirement, particularly with respect to such aircraft arriving in the U.S. from foreign locations

Ex-Im Bank Reauthorization. A politically divisive battle over the Export-Import Bank, which finances exports of U.S.-made goods, came to a close May 9 when the House of Representatives voted 330-93 to approve a bill (H.R. 2072) that reauthorizes this agency through Sept. 30, 2014, and raises its lending limit from $100 billion to $120 billion for fiscal year 2012, with additional increases possible to $130 million for FY 2013 and $140 billion in FY 2014. The Bank’s authority is currently scheduled to expire May 31, but the bill is expected to clear the Senate and be signed by the president before that date.

A legislative analysis from Bloomberg Government states that this bill includes provisions that “would direct the bank to review its current requirement that export projects include at least 85 percent U.S. content for recipients to obtain maximum Ex-Im support” and “require companies to certify that they hadn’t engaged in activity barred by a U.S. sanctions law on Iran in order to receive Ex-Im financing.” The bill would also “require the bank to undertake a study of textile financing” in response to charges by the U.S. textile industry that “outdated policies prevent Ex-Im from financing textile exports.”

Lacey Act. On May 8 the House Natural Resources Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs held a hearing on two bills that seek to ameliorate some of the “unintended consequences” of the Lacey Act amendments of 2008. The Freedom from Over-Criminalization and Unjust Seizures (FOCUS) Act of 2012 (H.R. 4171 and S. 2062) would remove liability for violations of foreign laws pertaining to wildlife, fish and plants. It would also remove a provision allowing a federal prison sentence of up to five years and reduce the maximum fine from $500,000 to $200,000. The Retailers and Entertainers Lacey Implementation and Enforcement Fairness (RELIEF) Act (H.R. 3210) would exempt any plant product imported or manufactured before May 22, 2008, from the requirements of the Lacey Act amendments and limit the import declaration requirement to solid wood and items imported only for commerce. In addition, the penalty for violating the Lacey Act the first time, as it pertains to plants, would be limited to a $250 fine for all violations in a single offense as long as it was not knowingly committed.

Subcommittee Chairman John Fleming indicated that he is interested in moving a Lacey Act reform bill forward, a position supported by several witnesses. Sen. Rand Paul asserted that the current law is unconstitutional, among other things because it holds U.S. citizens accountable for violating foreign laws, and stands as “a frightening example of [the] trend of overcriminalization.” Several industry representatives said enforcement agencies have turned the Lacey Act into a “strict liability” law and that amendments are needed so that unintentional violations are not unduly penalized and business owners can seek the return of seized goods after showing they were acquired through the exercise of due care. Others testified of the difficulty of providing the information required on the import declaration.

On the other hand, some witnesses expressed opposition to what they see as an effort to water down the 2008 amendments. Rep. Earl Blumenauer pointed out that over the last four years “illegal logging has been reduced by as much as 25 percent worldwide, and 50-70 percent in some key countries,” and noted that the U.S. example has prompted the enactment of similar protections in Japan, New Zealand, Australia and the European Union. He argued that the RELIEF Act would reduce the effectiveness of the 2008 amendments by lowering financial penalties, altering forfeiture requirements and exempting non-solid wood products, “by far the largest segment of imports covered.”

FCPA Reform. A House subcommittee held a hearing last June (wti/wti.asp?pub=0&story=37307&date=&company=) on possible changes to the Foreign Corrupt Practices Act in light of increasing prosecutions and civil penalties, and several lawmakers said they intended to introduce FCPA reform legislation. The case for reform appeared to strengthen somewhat in the following months after several Department of Justice prosecutions of key FCPA cases were rejected by federal courts. Even so, there was little apparent movement toward introducing an FCPA reform bill, and some observers say any chance such a bill might have had have been all but wiped out by allegations that a major retailer committed numerous violations and then covered them up. In the meantime, businesses are looking to forthcoming guidance from the DOJ to provide clarity on how key FCPA provisions are interpreted and enforced.

Textiles. The Office of the U.S. Trade Representative issued May 9 a fact sheet calling for “urgent” textile and apparel-related changes to the African Growth and Opportunity Act and DR-CAFTA. With respect to AGOA, USTR said Congress needs to extend the third-country fabric provision, which is currently scheduled to expire at the end of 2012. This provision “is critical to the continued survival of Africa’s textile and apparel industry,” USTR said, and letting it expire would “significantly weaken the prospects for the development of a viable and more vertically integrated African cotton-to-apparel value chain.” Other benefits include lowering costs for U.S. retailers and providing them with “an incentive to diversify their supply chains away from other sources.” On DR-CAFTA, the fact sheet states that legislation is needed to provide certainty of duty-free treatment for women’s and girls’ woven pajama bottoms and clarity as to how certain items will be treated on the short supply list. USTR states that these changes “will promote U.S. exports to the region and help support jobs and production in America.”

Port Security. The House Homeland Security Committee approved May 9 the Gauging American Port Security Act (H.R. 4005), which directs the Department of Homeland Security to submit to Congress a report that identifies remaining gaps in port security in the U.S., prioritizes those gaps and creates a plan to address them.

Other. Following is a list of additional trade-related legislation that has been introduced recently. The texts of these bills are or will shortly be available on the Library of Congress Web site (

H.R. 5143 – to prohibit the U.S. from making payments to the Brazilian Cotton Institute (click here wti/wti.asp?pub=0&story=37293&date=&company= for more information on this issue)

H.R. 5157 – to suspend Vietnam’s eligibility under the Generalized System of Preferences absent progress on curbing human rights abuses

H.R. 5393 – to make improvements to the trade promotion policies and programs of the U.S. government

H.R. 5513 – to require the collection of up-to-date information on tariff and non-tariff laws, regulations and practices of foreign countries affecting exports of U.S. goods and services

S. 2884 – to provide an incentive for businesses to bring jobs back to the U.S.

H.R. 5542 – to amend the Internal Revenue Code of 1986 to encourage domestic insourcing and discourage foreign outsourcing

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.

May 14 – comments on EPA proposal to revise certain export provisions of cathode ray tube regulations

May 14 – meeting of Labor Advisory Committee on Trade Negotiations and Trade Policy

May 15 – ST&R webinar on commodity jurisdiction and export classification

May 16 – comments on proposed changes to Appliance Labeling Rule

May 17 – ST&R webinar on eligibility and documentation requirements for claims under U.S.-Colombia FTA

May 17 – effective date of final rule eliminating use of International Import Certificate

May 17 – comments on CBP information collection on recordation and enforcement of trademarks and copyrights

May 18 – comments on CBP interim rule implementing Korea FTA

$450,000 Penalty for Illegal Sales of Foreign Products to U.S. Federal Agencies

The Department of Justice reports that a Columbus, Ohio, firm has agreed to pay $450,000 to resolve allegations that it falsely claimed payment in violation of the Trade Agreements Act, which prohibits the sale of products to federal agencies from countries that do not have a reciprocal trade agreement with the United States. A DOJ press release states that while the company’s contracts to sell office supplies and other products to the U.S. government require that all such products be manufactured in one of a list of designated countries deemed to trade fairly with the U.S., the company was charged with knowingly selling products from China, which is not on that list. The DOJ notes that the allegations arose from a lawsuit filed by a whistleblower under the False Claims Act, who will receive $67,500 of the total recovery as a statutory award.

FTZ Board Schedules More Outreach Sessions, Receives South Dakota Application

The Foreign-Trade Zones Board has scheduled two additional training and outreach sessions on its new regulations ( These sessions will be held the week of July 16 in Chicago and on July 24 in New York. The FTZ Board is also hoping to hold a session in Washington, D.C., later this year. Sessions previously announced will be held in Houston May 17 and San Diego Sept. 13. There is no charge to attend these sessions but RSVPs are necessary. Click here for more information (

Separately, the FTZ Board has received from the Sioux Falls Development Foundation, grantee of FTZ 220, a notification of proposed production activity at the Rosenbauer America LLC/Rosenbauer South Dakota LLC facility in Lyons, S.D. This facility is used for the production of emergency vehicles and firefighting equipment (pumps, tankers, rescue, aerials and specialty emergency vehicles). Production under FTZ procedures could exempt Rosenbauer from customs duty payments on the foreign status components used in export production, and customs duties also could possibly be deferred or reduced on foreign status production equipment. Comments on this notification are due no later than June 21.

AD/CV Notices: Nails, Brightening Agents, Pipe, Ironing Tables, Tissue Paper, Fish, Steel, Carbon Bricks, Sinks

Agency: ITA.
Commodity: Steel nails.
Country: United Arab Emirates.
Nature of Notice: Amended final affirmative AD duty determination and issuance of AD duty order.
Details: Weighted average dumping margins range from 2.51% to 184.41%. AD duties based on these rates will be assessed on entries of subject merchandise entered or withdrawn from warehouse on or after Nov. 3, 2011, and AD cash deposits at these rates are now required.

Agency: ITA.
Commodity: Stilbenic optical brightening agents.
Country: China and Taiwan.
Nature of Notice: Amended final affirmative AD duty determinations and issuance of AD duty orders.
Details: Weighted average dumping margins of 6.19% for Taiwan and 61.04% to 106.17% for China. AD duties based on these rates will be assessed on entries of subject merchandise entered or withdrawn from warehouse for consumption on or after Nov. 3, 2011, and AD cash deposits at these rates are now required.

Agency: ITA.
Commodity: Large diameter carbon and alloy seamless standard, line and pressure pipe.
Country: Japan.
Nature of Notice: Final results of administrative review of AD duty order for the period June 1, 2010, through May 31, 2011.
Details: No sales of subject merchandise to the U.S. were made by the respondents during the period of review. Any such shipments discovered will be subject to AD duty assessments at the all others rate of 68.88%.

Agency: ITA.
Commodity: Floor-standing, metal-top ironing tables and certain parts thereof.
Country: China.
Nature of Notice: Preliminary results of administrative review of AD duty order for the period Aug. 1, 2010, through July 31, 2011.
Details: Weighted average dumping margin of 157.68% for the China-wide entity. AD duties based on this rate will be assessed on entries of subject merchandise made during the period of review, and AD cash deposits at this rate will be required for subject merchandise entered or withdrawn from warehouse on or after May 10.

Agency: ITA.
Commodity: Tissue paper products.
Country: China.
Nature of Notice: Initiation of inquiry to determine if imports of tissue paper products from India are circumventing this AD duty order.

Agency: ITA.
Commodity: Frozen fish fillets.
Country: Vietnam.
Nature of Notice: Final results of new shipper review of AD duty order for the period Aug. 1, 2010, through Jan. 31, 2011.
Details: No dumping found for manufacturer/exporter reviewed, and no AD cash deposits will be required for entries of subject merchandise from this company that are entered or withdrawn from warehouse on or after May 10.

Agency: ITA.
Commodity: Corrosion-resistant carbon steel flat products.
Country: Korea.
Nature of Notice: Sunset review determination that revocation of CV duty order is likely to lead to continuation or recurrence of countervailable subsidies at rates ranging from 0.57% to 1.26%.
Details: If the ITC also makes an affirmative sunset review determination, this order will be continued for another five years; otherwise, it will be revoked.

Agency: ITA.
Commodity: Magnesia carbon bricks.
Country: China.
Nature of Notice: Extension from June 1 to Oct. 1 of time limit for preliminary results of administrative review of AD duty order for the period March 12, 2010, through Aug. 31, 2011.

Agency: ITA.
Commodity: Light-walled rectangular pipe and tube.
Country: Mexico.
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.

Agency: ITA.
Commodity: Drawn stainless steel sinks.
Country: China.
Nature of Notice: Postponement of preliminary CV duty determination from May 25 to July 30.

Small Business Export Expansion Effort Extended to DHL

The International Trade Administration announced May 9 that it has expanded its New Market Exporter Initiative to DHL Express to “help small and mid-size businesses harness new international sales opportunities in the global marketplace.” The ITA notes that only a small percentage of U.S. companies export and that of those that do 58% sell to only one international market. Through this and similar partnerships the ITA is working to educate U.S. exporters, particularly small and mid-sized companies, about the benefits of expanding their exports to additional markets and to provide the public and private sector resources to assist them.

An agency press release states that through this partnership the ITA will provide a wide range of business resources to DHL’s U.S. exporting customers, including industry-specific consulting, marketing research available only to ITA registrants, lead generation of overseas contacts, and information on industry trade shows targeting potential buyers and distributors. ITA’s network of trade professionals, located in more than 70 countries and 100 cities across the U.S., will also help to connect these companies with international buyers. The ITA has previously entered into NMEI agreements with FedEx, UPS, the U.S. Postal Service and the National Association of Manufacturers.

FMC to Discuss Service Contracts, Agricultural Exports, NVOCC Rate Arrangements

The Federal Maritime Commission will hold an open meeting May 16 in Washington, D.C., to discuss the following matters.

- service contracts that reference freight indices (as allowed in a recent final rule

- potential notice of inquiry on container freight indices for U.S. agricultural export commodities

- draft direct final rule on revisions on regulations on non-vessel-operating common carrier negotiated rate arrangements (click here for more information wti/wti.asp?pub=0&story=38886&date=&company=)

- Marine Transportation System

- XXI Latin American Congress of Ports

Foreign Regulatory Changes Could Affect Exports of Appliances, Detergents, Food Products, Drugs, Auto Parts, Medical Equipment

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.

Brazil – exemption of compressors used in refrigeration equipment from conformity assessment procedure for household and similar electrical appliances

Brazil – compulsory third-party certification concerning conformity assessment procedure for instantaneous/storage gas water heaters

Brazil – new law establishing minimum technical requirements for energy efficiency and safety of household microwave ovens

Brazil – draft technical regulation establishing prioritization of technical analysis of petitions within the General Drugs Registration Office (comments due by May 20)

Canada – proposed amendments to Food and Drugs Act concerning establishing the prescription status of a drug (comments due by July 2)

European Union – adoption of amended regulation on use of phosphates and other phosphorus compounds in consumer laundry detergents and consumer automatic dishwasher detergents

European Union – adoption of amended regulation on protected designations of origin and geographical indications, traditional terms, labeling and presentation of certain wine sector products

European Union – adoption of regulation on common airspace usage requirements and operating procedures for airborne collision avoidance

European Union – adoption of amended regulation on fertilizers

Israel – amended mandatory standards on steering ball joint assemblies and power cables (comments due by June 8)

Korea – revised enforcement regulation on installation and operation of special medical equipment (comments due by July 8)

Uganda – final draft standards on dry whole grains, fresh sweet cassava and dried cassava chips (comments due by July 8)

Ten-Year Suspension of Export Privileges for Shipments to Iran

The Bureau of Industry and Security has issued an order suspending until Aug. 12, 2021, the export privileges of a California man convicted of violating U.S. export control laws by knowingly and willfully attempting to export connector adapters designated on the U.S. Munitions List to Iran without the required license or other approval. BIS is also revoking all export licenses in which the man had an interest at the time of his conviction.

This order prohibits this individual and any of his representatives from directly or indirectly participating in any way in any transaction involving any commodity, software or technology exported or to be exported from the U.S. that is subject to the Export Administration Regulations. These restrictions may be extended to any other person, firm, corporation or business organization related to this man by affiliation, ownership, control or position of responsibility in the conduct of trade or related services. This order does not, however, prohibit any export, reexport or other transaction subject to the EAR where the only items involved that are subject to the EAR are the foreign-produced direct product of U.S.-origin technology.

Ocean Transportation Intermediary License Revocations, Applicants

OTI Licenses Revoked. The Federal Maritime Commission has given notice that the following ocean transportation intermediary licenses have been revoked. A revocation may occur after a license is surrendered voluntarily by the OTI or for failure to maintain a valid bond.

- license #2802F: Charles Dorsch Ship’s Agent Inc., San Diego, Calif.
- license #4217F: Reliable Van & Storage Co. Inc., Elizabeth, N.J
- license #004422NF: C & C Group Inc., Miami, Fla.
- license #004471F: B.R.A.L. Miami Inc., Miami, Fla.
- license #6098N: Sunshine Express Line Inc., Miami, Fla.
- license #15369N: Caribbean Ocean Corporation, Miami, Fla.
- license #16397N: Kesco Shipping Inc., City of Industry, Calif.
- license #017511N: Royal Cargo Line Inc., Miami, Fla.
- license #017524N: Natco International Transports USA LLC, Miami, Fla.
- license #017692NF: American Links Logistics International Inc., San Bruno, Calif.
- license #018184N: JP Express Shipping Corp., Bronx, N.Y.
- license #018196N: PMJ International Inc., North Plainfield, N.J.
- license #018250F: Consolidation Shipping & Logistic (USA) Inc., Lyndhurst, N.J.
- license #018269N: Zaklee International Corporation, Folcroft, Pa.
- license #019311N: Turkish Express Line Inc., Edgewater, N.J.
- license #019398NF: Copacabana Enterprises Group Inc. Miami, Fla.
- license #019704NF: All Services & Merchandise Corp. d/b/a Asam d/b/a Cargo Mundo, Miami, Fla.
- license #019808N: Centro America Envios Inc., Miami, Fla.
- license #020381F: Active Link Logistics LLC, West Des Moines, Iowa
- license #020784NF: Matson Global Distribution Services Inc., Oakland, Calif.
- license #021459N: Pax Global Cargo U.S.A. LLC, Torrance, Calif.
- license #021957N: Foothills Logistics Inc., Greer, S.C.
- license #022397NF: Meridian Logistics LLC, Fort Wayne, Ind.
- license #022845NF: Arlette P. Porras d/b/a RA International, Placentia, Calif.
- license #023220NF: Asencomex LLC, Miami, Fla.

OTI License Applicants. The Federal Maritime Commission has provided notice that the following applicants have filed applications for licenses as non-vessel-operating common carrier and/or ocean freight forwarder ocean transportation intermediaries. Persons knowing of any reason why any of these applicants should not receive a license are requested to contact the FMC.

- DTS World Cargo Services Inc. d/b/a DTS World Cargo, Houston, Texas
- Expedited American Cargo Corp., Miami, Fla.
- Four Points Ocean Inc., Woodbridge, N.J.
- Global Shipping Ministries Inc., Deltona, Fla.
- NW Forwarding LLC, Des Moines, Wash.
- Piscon Guardian Overseas Inc., Atlanta, Ga.
- Senderex Cargo Inc., Los Angeles, Calif.
- Transcar De Oriente USA LLC, Miami, Fla.
- ULG Logistics Inc., Seaford, N.Y.
- Warehouse Division of World Terminal and Distributing Corporation d/b/a WTDC, Miami, Fla.
- Worldwide Cargo Services Inc., Lawrence, N.Y.

BIS Reviewing Statement by Ultimate Consignee and Purchaser

The Bureau of Industry and Security is requesting comments no later than June 11 on form BIS-711, Statement by Ultimate Consignee and Purchaser. This form puts the importer on notice of the special nature of the goods proposed for export and conveys a commitment against illegal disposition. In order to effectively control the export of U.S.-origin commodities, BIS states that it must have sufficient information regarding the end-use and end-user of those goods. The information will assist the licensing officer in making the proper decision on whether to approve or reject the application for the export license.

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