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May 17 2012 issue

Thursday, May 17, 2012
Sandler, Travis & Rosenberg Trade Report

Colombia FTA Claims Now Allowed; Proclamation Makes Additional Changes to HTSUS

U.S. Customs and Border Protection announced May 16 that the Automated Commercial System and the Automated Commercial Environment are now ready to accept claims for preferential tariff treatment under the U.S.-Colombia Trade Promotion Agreement. CBP has set forth the following requirements for filing such claims.

- country of origin must be “CO”

- country of export must be “CO”

- tariff number associated with the 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 (except HTSUS 9822.08.25, 9822.08.35, 9918.24.15 and 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

Also on May 16 CBP issued an information bulletin to importers, brokers and others specifying instructions for implementing the Colombia FTA. This bulletin addresses issues such as rules of origin, transit and transshipment, regional value content calculation, de minimis provisions, textiles and apparel, correction of false or unsupported claims, certification and other information requirements, verification of claims, protest rights and post-importation claims.

Proclamation Includes Non-Colombia Changes. President Obama issued May 14 a proclamation (click here for full text to implement the U.S-Colombia FTA. Effective May 15, this proclamation:

- amends the Harmonized Tariff Schedule of the U.S. to provide for the preferential tariff treatment under this FTA and set forth the applicable rules of origin;

- formally removes Colombia from eligibility under the Generalized System of Preferences, the Andean Trade Preferences Act and the Andean Trade Promotion and Drug Eradication Act;

- implements tariff-rate quotas on certain sugar, beef, dairy, ice cream and tobacco products; and

- designates the Committee for the Implementation of Textile Agreements to handle issues concerning short supply of fabrics, yarns or fibers and the enforcement of trade with Colombia in textile and apparel goods.

Separate from the U.S.-Colombia FTA, this proclamation amends the HTSUS to reflect (a) the extension of the ATPA through July 31, 2013, (b) the removal of Peru as a beneficiary country under the ATPA and ATPDEA as of Jan. 1, 2011, (c) a 1996 law prohibiting the president from designating as GSP-eligible textile and apparel articles that were not GSP-eligible on Jan. 1, 1994, (d) the correction of errors in the quantities specified under certain tariff-rate quotas and references to relevant tariff lines pursuant to the U.S.-Oman FTA, effective Jan. 1, 2009, (e) the restoration of certain incorrectly deleted NAFTA rules of origin, effective Feb. 3, 2007, (f) the correct rate of duty for certain articles for the years 2016 through 2018, and (g) the correction of an error in the staged duty applied to two tariff subheadings pursuant to the U.S.-Korea FTA.

Proposed and Final Revocation and Modification of Numerous CBP Rulings

In the May 16, 2012, Customs Bulletin and Decisions, U.S. Customs and Border Protection proposed to revoke classification rulings on the following products. Comments are due by June 15.

Product: Perforating gun assemblies, which are used in connection with onshore oil well drilling and oil production.
Proposed action: Revocation of NY N012463, NY C83105 and NY C82398.
Current classification: HTSUS 9303.90.8000, other firearms and similar devices.
Proposed classification: HTSUS 7326.90.85, other articles of iron or steel (2.9% duty).
Explanation: The subject merchandise is a hollow tube-like container that relies on a detonator and other articles to function and has no independent or individual functions or capabilities.

Product: SCT’s Livewire flash device, a handheld device designed to program the powertrain control module of a Ford automobile.
Proposed action: Revocation of HQ H097095.
Current classification: HTSUS 9031.80.80, other measuring or checking instruments, appliances and machines (1.7% duty).
Proposed classification: HTSUS 8517.62.00, machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus (duty-free).

Also in the May 16, 2012, Customs Bulletin and Decisions, CBP revoked or modified rulings on the following, effective July 16.

Product: Gas generators designed for industrial use.
Action: Modification of HQ 967102 and revocation of NHQ 087981.
New ruling: HQ W968276 and H108255.
Determination: Classification as other gas turbines under HTSUS 8411.82.8000 (2.5% duty) upheld. Analysis in HQ 967102 modified.

Product: Air fresheners.
Action: Revocation of NY K89535 and modification of NY J88743, NY L82296, NY L83477 and NY L85641.
New ruling: HQ H045873, HQ H045874, HQ H108678, HQ H108681 and HQ H108682.
New classification: HTSUS 3307.49.0000, other preparations for perfuming or deodorizing rooms (6% duty).
Explanation: The essential character of the air fresheners, which are in the form of animals, dolls or cartoon characters, is imparted by the scented card.

Product: Jingle bell wreaths and hanging decorations.
Action: Revocation of NY J85472 and NY L85378.
New ruling: HQ H118439.
New classification: HTSUS 8306.10.00, bells, gongs and the like (5.8% duty).
Explanation: The bells are the whole merchandise and the fact that they may be hung on a Christmas tree does not change their character.

Product: Trunk/cab organizers.
Action: Revocation of NY K84392 and NY J86790.
New ruling: HQ H092277.
New classification: HTSUS 4202.92.90, other containers with outer surface of sheeting of plastic or textile materials (17.6% duty).

Product: Lighting fixtures designed for use in commercial greenhouses.
Action: Modification of NY N032539.
New ruling: HQ H089796.
New classification: HTSUS 9405.10.6020, other lighting fittings of base metal (7.6% duty).

Product: “CoCo Peat,” which is composed of used coconut shell coir pith.
Action: Modification of NY N054636.
New ruling: HQ H061739.
New determination: Product is a NAFTA originating good, qualifies to be marked as a product of Canada under the NAFTA marking rules and is eligible for the special “CA” duty rate.
Explanation: The original purpose of the coir pith when imported from Sri Lanka to Canada is for growing hydroponic vegetables. Over the course of one growing season the pith deteriorates to the point that poor performance would be expected if it were used again. The used pith is collected from growers in Canada, cleaned and filtered, then further broken down into finer sized granules that are used as an ingredient in potting soil. The used coir pith thus constitutes used goods collected within the territory of a NAFTA party.

Product: “Trendy Tee” craft kit used to decorate T-shirts.
Action: Revocation of NY K87306.
New ruling: HQ W968017.
New classification: HTSUS 8479.89.98, other machines and mechanical appliances (2.5% duty).
Explanation: Kit is properly classified as a set and its essential character is provided by the stud tool, which is utilitarian rather than amusing.

Product: Homeopathic remedies.
Action: Revocation of HQ H086082.
New ruling: HQ H145541.
New classification: HTSUS 3004.90.91, other medicaments put up in measured doses or in forms or packings for retail sale (duty-free).

Product: Thermal oxidizers used chiefly for burning waste gases and hydrocarbon fumes.
Action: Revocation of NY K88616 and modification of NY J84466.
New ruling: HQ H118895.
New classification: HTSUS 8421.39.80, other filtering or purifying machinery and apparatus for gases (duty-free).
Explanation: The oxidizers have two functions that are “so tightly linked” CBP cannot identify one principal function and therefore is classifying them under the heading occurring last in numerical order among those that equally merit consideration.

Product: Men’s sleeveless vest composed of three layers of bonded fabric.
Action: Revocation of NY N084077.
New ruling: HQ H136897.
New classification: HTSUS 6211.33.0054, other men’s or boys’ manmade fiber vests (16% duty, visa category 659).
Explanation: Classification is based on the outer layer of fabric because there are no other parts or accessories that materially contribute to the vests’ character or usefulness to an extent to impart the essential character.

Issue: Analysis of manufacture in CBP bonded warehouses.
Action: Modification of HQ 228508 and HQ H046995.
New ruling: HQ H140895 and HQ H141855.
New determination: Use of “substantial transformation” analysis to determine whether an action would constitute manufacture for purposes of 19 USC 1562, the provision on permissible manipulation in CBP bonded warehouses, is incorrect. However, this modification does not change the holding of the two rulings that the actions at issue are considered to be a manufacture.

Finally, CBP has withdrawn proposals to (a) modify NY E82956 relating to the inclusion of acetyl l-carnitine hydrochloride in the Pharmaceutical Appendix of the HTSUS, noting that the classification of l-carnitine compounds is the subject of litigation currently before the Court of International Trade, and (b) revoke NY N012485 concerning the classification of plastic recorder musical instruments, noting that the original classification of such items as toys under HTSUS 9503.00.00 is correct.

Click here to view the May 16 Customs Bulletin

Of Note: AD Duties on China Getting Harder? O’Hare to Add Cargo Facility

Shift by U.S. Muddles Solar Imports Case

Chicago mayor announces $200m cargo initiative at O’Hare

Freight Forwarder Gets Prison Time for Conspiracy to Facilitate Export of Goods to Iran

The Bureau of Industry and Security reports that a former manager of a Netherlands-based freight-forwarding company has been sentenced to six months in prison for conspiring to facilitate the illegal export of goods to Iran. The man pleaded guilty to violating a BIS temporary denial order prohibiting any person from directly or indirectly exporting or reexporting to or on behalf of the company for which the man’s co-conspirator worked. This charge carries a maximum penalty of five years in prison and a $250,000 fine.

AD Notices: Thermal Paper, Wind Towers, Sodium Hexametaphosphate

Agency: ITA.
Commodity: Lightweight thermal paper.
Country: Germany.
Nature of Notice: Amended final results of administrative review of AD duty order for the period Nov. 1, 2009, through Oct. 31, 2010.
Details: Weighted average dumping margin for one company adjusted from 3.99% to 4.33%. This rate will be used to determine AD duties assessed on entries of subject merchandise during the period of review, and AD cash deposits at this rate will be required for entries of subject merchandise entered or withdrawn from warehouse for consumption on or after May 16.

Agency: ITA.
Commodity: Utility scale wind towers.
Country: China and Vietnam.
Nature of Notice: Postponement of preliminary AD duty determinations from June 6 to July 26.

Agency: ITA.
Commodity: Sodium hexametaphosphate.
Country: China.
Nature of Notice: Extension from July 21 to Sept. 19 of time limit for final results of administrative review of AD duty order for the period March 1, 2010, through Feb. 28, 2011.

President’s Export Council to Meet June 6

The President's Export Council will hold a meeting via live webcast ( June 6 to discuss topics and provide recommendations related to the National Export Initiative and export promotion. Written statements on these issues may be submitted online ( or via mail no later than May 25. Copies of the minutes of this meeting will be available within 90 days.

DOT Notes Hazmat Special Permit Applications, Decisions, Delays

The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration has issued the following concerning exceptions from the Hazardous Materials Regulations.

- a list of applications for special permits ( for exceptions from the HMR, including for motor vehicles, rail freight, cargo vessels, cargo aircraft and passenger-carrying aircraft (comments due no later than June 18)

- a list of applications to modify ( previously issued special permits; e.g., to provide for additional hazardous materials, packaging design changes, additional mode of transportation, etc. (comments due no later than June 1)

- a list of actions taken on special permit applications (, including modified, new and emergency permits granted or withdrawn and permits denied

- a list of special permit applications that have been in process for 180 days or more (, including the reason(s) for delay and the expected completion date

USDA Overhauls Market Access Program for Agricultural Commodity Exports

The Department of Agriculture has issued a final rule revising and amending the regulations used to administer the Market Access Program, which is designed to create, expand and maintain foreign markets for U.S. agricultural commodities and products through assistance in sharing the costs of certain overseas marketing and promotion activities. Specifically, this rule:

- updates and merges the application requirements and the activity plan requirements to reflect the Unified Export Strategy system currently in place;

- clarifies the eligibility of activities designed to address international market access issues;

- modifies the list of eligible and ineligible contributions;

- revises provisions regarding evaluations, contracting procedures and the compliance review and appeals process;

- eliminates the Export Incentive Program/Market Access Program as a separate subcomponent; and

- makes other administrative changes for clarity and program integrity.

USDA states that this rule is effective as of May 17 and will become applicable for MAP participants at the beginning of their 2013 program year (i.e., Jan. 1 or July 1, 2013).

Ex-Im Bank Considers Financing Exports to Build New Petrochemical Facility in Saudi Arabia

The Export-Import Bank of the United States has received an application for a $4.3 billion direct loan to support the export of approximately $3.3 billion in U.S. equipment and services to establish a new petrochemical facility in Saudi Arabia. The U.S. exports will enable the facility to produce approximately 750,000 metric tons of linear low density polyethylene, 350,000 metric tons of linear density polyethylene, 250,000 metric tons of elastomers, 200,000 metric tons of glycol ethers, 70,000 metric tons of propylene glycol, 208,000 metric tons of ethanolamines and ethyleneamines, 400,000 metric tons of polyether polyols, 200,000 metric tons of toluene diisocyanate, and 400,000 metric tons of polymeric methyl diphenyl diisocyanate. Available information indicates the majority of LDPE, LLDPE and glycol ethers will be sold primarily in the Asia-Pacific market and that the balance will be sold in Europe, the Middle East and Africa; that the majority of elastomers, TDI, PMDI and polyether polyols will be sold primarily in the Asia- Pacific, Europe, Middle East and Africa markets, with the rest sold in North and Latin America; that approximately equal volumes of MPG will be sold primarily in the Asia- Pacific region, Europe, the Middle East and Africa; and that approximately equal volumes of ethanolamines and ethyleneamines will be sold globally. Initial production at this facility is expected to be phased in from 2016 to 2018.

Interested parties may submit comments on this transaction by e-mail to or by mail no later than May 31.

EPA Issues 2012 Critical Use Exemptions for Methyl Bromide Uses, Seeks Applications for 2015

The Environmental Protection Agency has issued a final rule, effective May 17, that authorizes uses of methyl bromide that qualify for the 2012 critical use exemption and specifies the amount of methyl bromide that may be produced, imported or supplied from existing pre-phaseout inventory for those uses in 2012. The critical use exemption permits the production and import of methyl bromide for uses that do not have technically and economically feasible alternatives. The critical uses for 2012 (which are the same as those approved in previous years) include selected pre-plant uses involving cucurbits, eggplant, forest nursery seedlings, nursery stock, orchard replants, ornamentals, peppers, strawberry fruit, strawberry nurseries, sweet potato slips and tomatoes, as well as selected post-harvest uses in food processing, commodities and dry cured pork products.

Separately, the EPA is soliciting applications for the critical use exemption for 2015, which must be postmarked on or before Aug. 15. All entities interested in obtaining such an exemption must provide EPA with technical and economic information to support their claim and must do so by the deadline even if they have applied for an exemption in previous years. EPA is also inviting interested parties to provide new data on the technical and economic feasibility of methyl bromide alternatives.

Information Collections on Imported Peppers, Exported Pesticides Under Review

Peppers from Central America. The Department of Agriculture’s Animal and Plant Health Inspection Service is requesting comments no later than June 18 on information collection activities concerning the importation of peppers from Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. These activities include inspections by national plant protection organization officials, fruit fly trapping, monitoring, recordkeeping, box labeling and phytosanitary certificates.

Exports of Unregistered Pesticides. The Environmental Protection Agency is inviting comments through June 18 on an information collection entitled “Foreign Purchaser Acknowledgement Statement of Unregistered Pesticides,” which enables EPA to provide notice to foreign purchasers of unregistered pesticides exported from the United States that the pesticide product cannot be sold in the United States. The information is submitted in the form of annual or per-shipment statements to EPA, which maintains original records and transmits copies, along with an explanatory letter, to appropriate government officials of the countries importing the pesticide.

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