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May 21 2012 issue

Monday, May 21, 2012
Sandler, Travis & Rosenberg Trade Report

100% Screening of Inbound Air Cargo to be Required as of Dec. 3

The Transportation Security Administration has announced that beginning Dec. 3, 2012, all air cargo shipments bound for the United States from foreign locations must undergo screening for explosives. The practical effect of this change is to require 100% screening for cargo on international passenger air carrier flights bound for the U.S. TSA notes that additional risk-based, intelligence-driven procedures are being built into the pre-screening process to determine screening protocols on a per-shipment basis; i.e., enhanced screening will be required for shipments designated as higher risk while lower risk shipments will undergo other physical screening protocols.

TSA had sought to implement the 100% screening requirement for cargo on inbound passenger air carriers as of Dec. 31, 2011, two years ahead of the deadline established by Congress, but ultimately decided against it due to certain operational and policy challenges. (wti/wti.asp?pub=0&story=38159&date=&company=) In the meantime TSA sought to move toward 100% screening by partnering with U.S. Customs and Border Protection to develop the Air Cargo Advance Screening program, which uses advance shipment data to assess risk on air cargo transported into the U.S. from foreign locations, identify cargo requiring enhanced pre-departure physical screening protocols, and prevent the loading of high-risk cargo before it departs from an overseas airport. An ACAS pilot program was rolled out to passenger air carriers in September 2011, and a strategic plan issued in April said the “trusted shipper” concept embedded in ACAS is an essential element in enabling passenger carriers to attain 100% screening of inbound cargo without disruption to the global air cargo supply chain (click here for more information on ACAS

TSA’s announcement of the Dec. 3 deadline does not indicate how the “operational and policy challenges” previously identified have been or will be resolved, nor does it detail the role ACAS may play in implementing 100% screening.

TSA notes that all cargo on passenger aircraft departing U.S. airports, both domestic and international, currently undergoes screening. Domestically, cargo screening is conducted by air carriers or those voluntarily participating in the Certified Cargo Screening Program. TSA has more than 500 inspectors throughout the U.S. to ensure compliance with air cargo security regulations as well as more than 100 internationally-focused inspectors who assess and document security measures at applicable foreign airports.

Additional Details on Mexico-China Agreement on Footwear Trade

[Editor’s note: This article originally appeared in the May 17, 2012, issue of the Advisor, a weekly publication from the ST&R’s STR-TAP service for the textile and apparel industry. Click here for more information]

Mexico’s Ministry of Economy (ME) announced March 28 that Mexico and China had agreed to establish a set of conditions to manage imports of Chinese footwear into Mexico. In exchange, the Mexican footwear sector committed not to file a safeguard action against Chinese footwear. The agreement entered into force on May 1 but has not been published in Mexico’s official journal because it is a private deal between the ME and the China Chamber of Commerce for Import and Export of Light Industrial Products and Arts-Crafts (CCCLA), which is the organization responsible for certifying exports of Chinese footwear to Mexico. Nonetheless, the American Apparel and Footwear Association has obtained and shared an English copy of a bulletin on the agreement issued by CCCLA.

Highlights of the agreement are as follows.

- The agreement covers footwear classified under HTSMX 6401.10.01 ($13.00), 6401.92.01 ($4.12), 6402.19.01 ($12.00), 6402.19.02 ($11.00), 6402.19.03 ($7.00), 6402.20.01 ($2.33), 6402.91.01 ($12.50), 6402.99.01 ($3.00), 6402.99.02 ($11.00), 6402.99.03 ($12.00), 6402.99.04 ($11.00), 6402.99.05 ($7.00), 6402.99.99 ($10.00), 6403.19.02 ($25.69), 6403.40.01 ($32.00), 6403.91.01 ($31.00), 6403.91.02 ($16.00), 6403.91.03 ($17.84), 6403.91.99 ($28.00), 6403.99.02 ($14.00), 6403.99.03 ($28.00), 6403.99.04 ($21.00), 6403.99.05 ($15.00), 6404.11.01 ($12.35), 6404.11.02 ($10.31), 6404.11.99 ($7.42), 6404.19.01 ($8.50), 6404.19.02 ($7.85), 6404.19.03 ($5.50), 6404.19.99 ($7.00) and 6405.20.99 ($1.68). The agreed minimum export (FOB) price for each item is shown in parentheses in US$ per pair.

- Exporters in China must complete an application form with the name of the merchandise, HS code, specification, quantity and unit price. Documents that must be submitted to CCCLA include the application form, export contract and proforma invoice or commercial invoice.

- CCCLA will examine and certify the export contract and the proforma or commercial invoice. CCCLA will examine the unit prices and relevant clauses in the export contract and certify only the prices that are higher than the reference prices listed above.

- CCCLA will send the certified export contract and proforma or commercial invoice by mail to the exporter in three working days. CCCLA will also inform in two working days all exporters whose documents it has decided not to certify.

- Exporters need to reapply for certification if the export contract, proforma invoice or commercial invoice are changed before the actual exportation takes place.

Company-Specific Revocation of AD/CV Duty Orders No Longer Allowed

The International Trade Administration has issued a final rule eliminating the regulatory provision allowing antidumping and countervailing duty orders to be revoked with respect to individual exporters or producers based on their having received AD duty rates of zero for three consecutive years or CV duty rates of zero for five consecutive years. This final rule will apply to all reviews of AD or CV duty orders that are initiated on or after June 20, meaning that parties who have requested revocation in ongoing reviews will have the opportunity to obtain it if they meet the applicable requirements under the previous regulations.

The ITA has explained that company-specific revocations are not required by law and present a number of problems. For example, the ITA is required to expend additional resources, including additional mandatory verifications, in conducting administrative reviews where a request for company-specific revocation is being considered. While the ITA annually conducts administrative reviews of hundreds of foreign companies subject to AD or CV duty orders, only a small fraction of these are ultimately found to be eligible for a company-specific revocation. Another consideration is that because the ITA frequently limits the number of companies examined in any given review, individual companies may not have the opportunity to amass the required number of years of zero AD or CV duty rates necessary to qualify for a company-specific revocation.

The ITA notes that for eligible companies that maintain AD or CV duty rates of zero percent, this rule will not change the amount of duties applied to entries subject to AD or CV duty orders. The rule also does not alter the ITA’s ability to revoke an AD or CV duty order with respect to a certain type of merchandise in the absence of interest by substantially all of the domestic industry.

Click here for final rule

U.S. Lifts More Sanctions on Burma but Import Ban Remains in Place

President Obama announced May 17 that the U.S. will lift its bans on the exportation of financial services to, and new investment in, Burma. The president said this step reflects the “positive developments” in that country over the past year and that “opening up greater economic engagement between our two countries is critical to supporting reformers in government and civil society, facilitating broad-based economic development, and bringing Burma out of isolation and into the international community.” However, the U.S. will maintain the statutory authorities on which its economic sanctions are based “to help ensure further reform and to retain the ability to reinstate selected sanctions if there is backsliding.”

The president added that the U.S. “will work to establish a framework for responsible investment … that encourages transparency and oversight and helps ensure that those who abuse human rights, engage in corruption, interfere with the peace process, or obstruct the reform process do not benefit from increased engagement with the United States.” While this framework will not be legally binding, Secretary of State Hillary Clinton noted that the administration will “expect U.S. firms to conduct due diligence to avoid any problems … to create a grievance process that will be accessible to local communities, to demonstrate appropriate treatment of employees [and] respect for the environment, to be a good corporate citizen, and to promote equitable, sustainable development that will benefit the people.”

The U.S. continues to maintain other economic sanctions against Burma, including a ban on all products of Burma that are imported directly or indirectly into the U.S. This prohibition applies to merchandise intended for commercial and personal use, including gifts or informational materials; merchandise landed, but not entered for consumption, in the U.S. (e.g., goods placed in a foreign-trade zone or bonded warehouse); and imports for transshipment or in-transit movements of products of Burma intended or destined for a third country. The ban does not apply to merchandise for which the Office of Foreign Assets Control has issued an import license, which may be entered for consumption or in-transit movement through the U.S., or importations for U.S. or foreign diplomatic and consular officials.

U.S. business interests have been pressing the Obama administration to move more quickly to lift these sanctions, noting that competitors in Europe and Asia are already doing so. However, human rights advocates have cautioned against doing “too much and too fast” and administration officials have said the easing of existing restrictions will be “a step-by-step process.”

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 21 – comments on country of origin marking requirements for containers and holders

May 22 – ST&R webinar on First Sale customs valuation

May 22 – meeting of the Advisory Committee on Commercial Operations of U.S. Customs and Border Protection

May 22 – comments on Ecuador’s eligibility for benefits under ATPA/ATPDEA

May 23 – ST&R webinar on the Customs-Trade Partnership Against Terrorism

May 25 – comments on CBP proposal to refuse admission to imported goods noncompliant with energy conservation or labeling standards

Chile Drawback Claims Must be Filed Separately, CBP Says

U.S. Customs and Border Protection has announced that as of May 15 all drawback claims involving goods exported to Chile must be submitted separately from all other types of drawback claims and the paper submission should be marked “Chile FTA” in conspicuous letters at the top of the first page. CBP explains that as a result of the U.S.–Chile Free Trade Agreement drawback claims made on goods exported to Chile after Jan. 1, 2012, are subject to special treatment as described in 19 USC 1313(j)(4)(B) and 1313(n), which includes a possible reduction in drawback refunds for certain claims. CBP will issue additional detailed instructions for filing Chile FTA drawback claims in a subsequent notice.

Food Safety Capacity Building in Foreign Countries to be Subject of June 19 FDA Meeting

The Food and Drug Administration will hold a public meeting June 19 in Washington, D.C., to aid in its development of a plan to expand the technical, scientific and regulatory capacity of foreign governments and their respective food industries in countries that export foods to the United States. As required by the Food Safety Modernization Act, this plan must include (1) recommendations for bilateral and multilateral arrangements and agreements, including providing for responsibilities of exporting countries to ensure food safety, (2) provisions for secure electronic data sharing, (3) provisions for mutual recognition of inspection reports, (4) training of foreign governments and food producers on U.S. requirements for safe food, (5) recommendations on whether and how to harmonize requirements under the Codex Alimentarius, and (6) provisions for multilateral acceptance of laboratory methods and testing and detection techniques. FDA is accepting input on whether it should consider additional issues as well.

The June 19 meeting is an opportunity for FDA to share its current thinking on the capacity-building plan and for interested persons to provide feedback. FDA is also establishing a docket to obtain comments, data and evidence that will inform its development of the plan; such input is requested no later than July 20.

Illegal Exports to Iran Yield Penalties, Export Privilege Suspension

The Bureau of Industry and Security announced May 16 that two U.S. citizens and their California company have been sentenced in connection with a scheme to illegally export computer-related goods to Iran through the United Arab Emirates. The scheme was discovered when the manufacturer of the goods began receiving service calls from individuals in Iran concerning units sold to the California company.

One man was given 13 months in prison for conspiracy to violate the International Emergency Economic Powers Act and defraud the U.S. while the other received three years supervised release for obstruction of justice. The first man and his company agreed to forfeiture of $1.9 million seized from the company’s bank accounts during the course of the investigation and a ten-year denial of export privileges (which will be suspended provided that neither commits any export violations during that time and both comply with the terms of the criminal plea agreements and sentences). The second man agreed to a $50,000 monetary penalty to settle a civil charge that he solicited a false statement to federal law enforcement agents.

FDA Moves to Halt Imports of Molluscan Shellfish from Korea

As of May 1 the Food and Drug Administration removed all Korean certified shippers of molluscan shellfish (oysters, clams, mussels and scallops) from the Interstate Certified Shellfish Shippers List. This step is intended to stop the import of molluscan shellfish harvested from polluted waters. In addition, the FDA recommends that food distributors, retailers and food service operators remove from sale or service all fresh, frozen and processed Korean molluscan shellfish and any product subsequently made with them. The FDA adds that Korean molluscan shellfish that entered the U.S. prior to May 1 and any product made with Korean molluscan shellfish are considered adulterated under the Federal Food, Drug and Cosmetic Act.

According to an agency press release, a comprehensive FDA evaluation determined that the Korean Shellfish Sanitation Program no longer meets the sanitation controls spelled out under the National Shellfish Sanitation Program. This evaluation found significant shellfish growing area deficiencies, including (a) ineffective management of land-based pollution sources that can impact shellfish growing areas, (b) inadequate sanitary controls to prevent the discharge of human fecal waste from fish farms and commercial fishing and aquaculture vessels operating in and adjacent to shellfish growing areas, and (c) the detection of norovirus.

Foreign Regulatory Changes Could Affect Exports of Appliances, Water Meters, Adaptors, Medical Devices, Foods

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.

Botswana – standards on electrical appliances for use with aquariums and garden ponds, air cleaning appliances, electric fence energizers, and meters for cold potable water and hot water (comments due by July 14)

Chile – certification procedure for adaptors (comments due by June 27)

Chile – certification procedure and safety requirements for household washing machines and washing machines with an incorporated tumble dryer (comments due by June 25)

European Union – publication of regulation on electronic instructions for use of medical devices

Saudi Arabia – draft technical regulations on adaptive cruise control systems, heavy duty diesel engine vehicles,
(comments due by July 15)

South Africa – proposed regulations on jam, jelly and marmalade (comments due by July 15)

United Arab Emirates – draft technical regulation on low starch macaroni (comments due by July 15)

United Arab Emirates – draft technical regulations on athlete foods intended to be used for producing energy, sugar-free chocolate, low caloric value jam and bran bread (comments due by July 16)

Potential IPR Probe of Integrated Circuits Evaluated for Public Interest Issues

The International Trade Commission is requesting comments no later than May 28 on any public interest issues raised by a Section 337 intellectual property rights infringement complaint filed on behalf of Peregrine Semiconductor Corporation against certain radio frequency integrated circuits and devices containing 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.

Fresh Celery, Arugula and Spinach from Colombia Now Allowed Into Continental U.S.

Beginning May 18 the Department of Agriculture’s Animal and Plant Health Inspection Service will issue permits for the importation into the continental United States of fresh celery, arugula and spinach from Colombia, subject to the following conditions.

- imported as commercial shipments only

- each consignment must be accompanied by a phytosanitary certificate issued by the national plant protection organization of Colombia that includes additional declarations stating that the shipment has been inspected and found free of specified pests

- each shipment is subject to inspection upon arrival at the port of entry into the continental U.S.

More Time to Comment on Proposed Amendment of BSE-Related Import Conditions

The Department of Agriculture’s Animal and Plant Health Inspection Service has reopened through June 14 the period for public comment on a proposal ( that would revise the conditions for the importation of live bovines and products derived from bovines with regard to bovine spongiform encephalopathy. APHIS is proposing to base importation conditions on the inherent risk of BSE infectivity in specified commodities as well as on the BSE risk status of the region from which the commodities originate. APHIS is also proposing to classify certain specified countries as to BSE risk and remove BSE restrictions on the importation of cervids and camelids and products derived from such animals.

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