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May 30 2012 issue

Wednesday, May 30, 2012
Sandler, Travis & Rosenberg Trade Report

Tariff Suspension Bills Now Open for Public Comment

The House Ways and Means and Senate Finance committees are accepting public comments through June 22 on the approximately 1,300 individual bills that have been submitted as part of the Miscellaneous Trade Bill process. Each bill under consideration, along with other related information, is listed here for Ways and Means (http://waysandmeans.house.gov/mtb/mtbbills.htm) and here for Senate Finance (http://www.finance.senate.gov/legislation/details/?id=beca4d9e-5056-a032-5262-f8409b84f63a). The committees both noted that a key objective of MTBs is to boost the competitiveness of U.S. manufacturers by lowering the cost of imported inputs that are not produced in the U.S.

Exchange Rate Policy Report Again Excludes China from Manipulator Designation

In its semiannual report on foreign exchange rate policies released May 25, the Treasury Department again declined to name China or any other major trading partner as a currency manipulator.

Treasury’s report reviews the exchange rate policies of nine economies accounting for 70% of U.S. foreign trade. The report states that all of the major advanced economies have fully flexible exchange rates and that Japan has not intervened since its unilateral operations last fall. Among major emerging market economies, a select few, notably in East Asia, have more tightly managed exchange rates, with varying degrees of management. The report emphasizes the need for greater exchange rate flexibility in these economies and particularly in China.

Nevertheless, the report lays out several factors that weigh against naming China a currency manipulator. One is that the yuan has appreciated 40% bilaterally against the dollar (adjusting for inflation) since July 2005 and 12.5% since China moved off its peg against the dollar in June 2010. The 40% figure is significant because those who have argued that China manipulates the value of its currency to gain a trade advantage and pushed for some sort of punitive response have frequently asserted that the yuan is undervalued by as much as 40%. The report also praises China’s recent decision to widen the daily trading band for the yuan, which it says is “a move that has the potential to increase exchange rate flexibility and adjustment if it is implemented in a way that allows the value of the exchange rate to better reflect market forces.”

Another factor is that China's current account surplus has fallen markedly over the past four years, from 9.1% of GDP in 2008 to 2.8% in 2011. While some of this reduction reflects weaker demand growth in China's major trading partners, the large impact of rising commodity prices on China's trade surplus, and unsustainably high rates of domestic investment in China, the report states, some of it reflects structural adjustments in the Chinese economy, continued wage increases in the manufacturing sector and the effects of currency appreciation. This indicates that “China is gradually allowing necessary external adjustments to take place,” something the U.S. has consistently pressured Beijing on for a number of years.

Despite these findings, the report concludes, available evidence suggests that the yuan remains significantly undervalued and that further appreciation against the dollar and other major currencies is warranted. Treasury plans to continue to press for policy changes that yield greater exchange rate flexibility, level the playing field, and support a pronounced and sustained shift to domestic-demand led growth.

Of Note: Brazil Approves Tariff Increase; China Protesting U.S. CV Duties; EU Companies Could Withdraw from China

Brazil to raise tariffs on 100 non-Mercosur products
http://www.businesslive.co.za/world/2012/05/29/brazil-to-raise-tariffs-on-100-non-mercosur-products

Chinese WTO suit hits back at U.S. duties
http://www.reuters.com/article/2012/05/25/us-china-usa-trade-idUSBRE84O0VB20120525

Group says European companies might shift investment away from China due to market barriers
http://www.startribune.com/business/155242205.html

Unauthorized Uses of Exported Defense Articles Increased in FY 2011, Report Says

The State Department’s Directorate of Defense Trade Controls has posted to its Web site a report outlining the fiscal year 2011 performance of its “Blue Lantern” end-use monitoring program for defense exports. The report reveals that in FY 2011 about 27% of all Blue Lantern end-use checks were unfavorable (compared to 21% in FY 2010 and 15% in FY 2009), indicating that the exported items are being used for unauthorized purposes.

The Blue Lantern program monitors the end-use of commercially exported defense articles, defense services and brokering activities subject to licensing or other authorizations under section 38 of the Arms Export Control Act and the International Traffic in Arms Regulations. Blue Lantern end-use monitoring entails pre-license, post-license or post-shipment checks undertaken to verify the bona fides of proposed foreign consignees and end-users to confirm the legitimacy of proposed transactions and to provide reasonable assurance that (a) the recipient is complying with U.S. government requirements with respect to use, transfers and security of defense articles and defense services and (b) such articles and services are being used for the purposes for which they are provided.

According to the report, in FY 2011 the Blue Lantern program initiated 783 checks in 88 countries. State explains that it has adopted a new accounting method resulting in a lower total number of initiations, but even using this method the report reveals that the number of new inquiries initiated has increased every year since FY 2008 and saw a 46.1% jump in FY 2011 alone.

Of the 592 cases closed in FY 2011, 161 (27%) were determined to be unfavorable. Unfavorable Blue Lantern cases may result in the rejection, denial or revocation of a license application, removal of a party, update of the DDTC Watch List, or referral to the Enforcement Division for appropriate action. In FY 2011, unfavorable Blue Lanterns referred to END resulted in 19 directed disclosure cases involving potential civil violations of the ITAR and six referrals to federal law enforcement resulted in the opening of a criminal investigation. The report also lists the reasons for unfavorable checks, with the most frequent being “derogatory information/foreign party deemed unreliable recipient” (76), “unable to confirm order or receipt of goods by end-user” (43), “indications of diversion or unauthorized retransfer or reexport” (34) and “foreign party involved in transaction but not listed on license/application” (30).

Click here for full report
http://www.pmddtc.state.gov/reports/documents/End_Use_FY2011.pdf

ITC Issues Redacted Report on Economic Effects of Possible Additions to GSP Coverage

The International Trade Commission has made available a public, redacted version of its report to the Office of the U.S. Trade Representative on the potential economic effects of the following changes to the list of goods eligible for duty-free treatment under the Generalized System of Preferences. Any modifications that result from this review are expected to be announced on or before June 30 and to become effective on or before July 1.

Plastic bags – extending GSP eligibility to certain plastic bags classified under HTSUS 3923.21.00 from all beneficiary countries (such eligibility would be granted to HTSUS 3923.21.0030, which would need to become a new subheading)

Cotton – extending GSP eligibility to the following cotton products when imported from least-developed beneficiary developing countries

HTSUS 5201.00.18 - cotton, not carded or combed, having a staple length under 28.575 mm (1-1/8 inches), n/harsh or rough, nesoi

HTSUS 5201.00.22 - cotton, not carded or combed, staple length of 28.575 mm or more but under 34.925 mm, described in general note 15

HTSUS 5201.00.24 - cotton, not carded or combed, harsh or rough, staple length 29.36875 mm or more but n/o 34.925 mm, white in color, quota described in Chapter 52 Additional U.S. Note 6

HTSUS 5201.00.28 - cotton, not carded or combed, harsh or rough, staple length of 29.36875 mm or more but under 34.925 mm and white in color, nesoi

HTSUS 5201.00.34 - cotton, not carded or combed, staple length of 28.575 mm or more but under 34.925 mm, other, quota described in Chapter 52 Additional U.S. Note 7

HTSUS 5201.00.38 - cotton, not carded or combed, staple length of 28.575 mm or more but under 34.925 mm, nesoi

HTSUS 5202.91.00 - cotton garnetted stock

HTSUS 5202.99.30 - cotton card strips made from cotton waste having staple length under 30.1625 mm & lap, sliver & roving waste, nesoi

HTSUS 5203.00.05 - cotton fibers, carded or combed, of cotton fiber processed but not spun, described in General Note 15

HTSUS 5203.00.10 - cotton fibers, carded or combed, of cotton fiber processed but not spun, quota described in Chapter 52 Additional U.S. Note 10

HTSUS 5203.00.30 - cotton fibers, carded or combed, of cotton fiber processed, but not spun, nesoi

HTSUS 5203.00.50 - cotton carded or combed, excluding fibers of cotton processed but not spun

Competitive Need Limitations – waiving the competitive need limitations (and thereby maintaining GSP eligibility) for the following products from the countries indicated

HTSUS 1602.50.20 - prepared or preserved beef in airtight containers, other than corned beef, not containing cereals or vegetables (Argentina)

HTSUS 2840.19.00 - disodium tetraborate (refined borax), except anhydrous (Turkey)

HTSUS 292l.l9.60 - other acyclic monoamines and their derivatives (the Philippines)

HTSUS 2922.41.00 - lysine and its esters and salts thereof (Brazil)

HTSUS 3307.41.00 - "agarbatti" and other odoriferous preparations that operate by burning to perfume or deodorize rooms or used during religious rites (India)

HTSUS 4015.19.10 - seamless gloves of vulcanized rubber other than hard rubber, other than surgical or medical gloves (Thailand)

HTSUS 7606.12.30 – aluminum alloy, plates/sheets/strip, w/thick. 0/0.2mm, rectangular (including square), not clad (Indonesia)

HTSUS 8415.90.80 – parts for air conditioning machines, nesoi (Thailand)

HTSUS 8708.30.50 – parts and accessories of motor vehicles of heading 8701, nesoi, and 8702-8705, brakes and servo-brakes and parts thereof (India)

Click here for ITC report
http://www.usitc.gov/publications/332/pub4327.pdf

$1.75 Million Penalty for Unlicensed Exports to Cuba

The Bureau of Industry and Security announced May 25 that a Panama company has agreed to pay a civil penalty of $1.753 million to settle 262 violations of the Export Administration Regulations. BIS alleged that the company knowingly implemented a scheme to route items from Cuba through Panama, repackage the items to conceal their Cuban markings, forward the items to the U.S. for repair and replacement, and then return the items to Cuba. The items at issue were controlled for national security, antiterrorism, encryption and sanctions reasons.

The settlement also requires a company-wide export audit conducted by an independent third party of all transactions connected with the company’s Cuba customers. BIS officials stated that while the conduct in this case was egregious the company avoided possible criminal prosecution and heavier fines by voluntarily disclosing the violations and cooperating with the BIS investigation.

Steel Pipe from Four Countries to be Subject to New AD Duties

The International Trade Administration announced May 24 that it has made preliminary affirmative dumping determinations on circular welded carbon-quality steel pipe from India, Vietnam, Oman and the United Arab Emirates. The preliminary dumping margins are 48.43%, zero to 27.96%, 5.59% and 3.29% to 11.71%, respectively. The ITA will now instruct U.S. Customs and Border Protection to require cash deposits or bonds based on these preliminary rates, except for pipe produced and exported by SeAH Steel VINA Corporation and Vietnam Haiphong Hongyuan Machinery Manufactory Co. Ltd. since their rate is zero.

The merchandise covered by these investigations is welded carbon-quality steel pipes and tube, of circular cross-section, with an outside diameter not more than 16 inches, regardless of wall thickness or surface finish or industry specification. This pipe is generally known as standard pipe, fence pipe and tube, sprinkler pipe, and structural pipe, although it may also be referred to as mechanical tubing if it is made to standard sizes for subject standard pipe. The scope of these investigations does not include boiler tubing, finished electrical conduit, finished scaffolding tube and pipe hollows for redrawing, oil country tubular goods produced to API specifications, line pipe produced to only API specifications and certain mechanical tubing. The pipe subject to these investigations is currently classifiable in HTSUS 7306.19.1010, 7306.19.1050, 7306.19.5110, 7306.19.5150, 7306.30.1000, 7306.30.5025, 7306.30.5032, 7306.30.5040, 7306.30.5055, 7306.30.5085, 7306.30.5090, 7306.50.1000, 7306.50.5050 and 7306.50.5070.

The ITA is currently scheduled to make its final AD duty determination for India in early August and its final determinations for Oman, UAE and Vietnam in early October. If these determinations and the International Trade Commission’s final AD injury determinations are affirmative, the ITA will issue AD duty orders.

AD Notices: New Admin Reviews, Pipe Fittings, Steel Products, PET Film, High-Pressure Cylinders

Agency: ITA.
Nature of Notice: Initiation of administrative reviews of AD duty orders on the following products, effective May 29. The period of review is April 1, 2011, through March 31, 2012, unless otherwise noted. Final results of these reviews are anticipated by April 30, 2013.
- HEDP from India
- ammonium nitrate from Russia (May 2, 2011, through March 31, 2012)
- polyvinyl alcohol from Taiwan (Sept. 13, 2010, through Feb. 29, 2012)
- activated carbon from China
- steel threaded rod from China
- frontseating service valves from China
- magnesium metal from China

Agency: ITA.
Commodity: Non-malleable cast iron pipe fittings.
Country: China.
Nature of Notice: Final results of changed circumstances review and revocation of AD duty order with respect to a particular brake fluid tube connector, retroactive to April 1, 2011.

Agency: ITA.
Commodity: Clad steel plate.
Country: Japan.
Nature of Notice: Final sunset review determination that revocation of this AD duty order would be likely to lead to the continuation or recurrence of dumping at the rate of 118.53%.

Agency: ITA.
Commodity: Stainless steel bar.
Country: Japan.
Nature of Notice: Initiation and preliminary results of changed circumstances review and intent to revoke AD duty order with respect to certain types of steel bar.

Agency: ITA.
Commodity: Polyethylene terephthalate film, sheet and strip.
Country: Brazil.
Nature of Notice: Rescission of administrative review of AD duty order for the period Nov. 1, 2010, through Oct. 31, 2011, based on the petitioner’s withdrawal of its request for review. AD duties on entries of subject merchandise during this period will be assessed at rates equal to the cash deposit required at the time of entry or withdrawal from warehouse for consumption.

Agency: ITC.
Commodity: High-pressure steel cylinders.
Country: China.
Nature of Notice: May 30 open meeting for vote on final AD injury determination.

Agency: ITC.
Commodity: Corrosion-resistant carbon steel flat products.
Country: Germany and Korea.
Nature of Notice: Scheduling of full sunset reviews of AD and CV duty orders.
Details: Hearing will be held Nov. 1; requests to appear at hearing due by Oct. 25; pre-hearing briefs due by Oct. 23; post-hearing briefs due by Nov. 13; final comments due by Dec. 21.

Export Regulations and Procedures Committee to Meet June 12

The Bureau of Industry and Security’s Regulations and Procedures Technical Advisory Committee will hold a partially open meeting June 12 in Washington, D.C. This committee advises BIS on implementation of the Export Administration Regulations and provides for continuing review to update the EAR as needed.

The public session of the June 12 meeting will include updates on export enforcement, regulations and the Automated Export System as well as reports from the committee’s working groups. The open session will be accessible via teleconference to 25 participants on a first come, first served basis, and requests to participate in this manner are due no later than June 5. In addition, a limited number of seats will be available at the public session, but reservations are not accepted.

Foreign Regulatory Changes Could Affect Exports of Appliances, Industrial Products, 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.

Korea – proposed amendment of criteria for non-conforming features in electrical appliances (comments due by July 6)

Korea – proposed amendment to assign product verification numbers for industrial products (comments due by July 23)

Switzerland – draft revision of Federal Act on Railway Noise Abatement (comments due by Aug. 31)

Turkey – draft regulation on transportable pressure equipment

United Arab Emirates – draft technical regulation on general requirements for pre-packaged foods for special dietary use (comments due by July 23)

DOE Revises Energy Standards for Dishwashers, Test Procedures for Bathroom Equipment

Amended Energy Conservation Standards for Residential Dishwashers. The Department of Energy has issued a direct final rule adopting amended energy conservation standards for residential dishwashers. DOE has determined that these amended standards would result in significant conservation of energy (approximately 15%, along with more than 20% less water) and are technologically feasible and economically justified.

This rule will be effective as of Sept. 27 unless adverse comment is received by Sept. 17. In that case, the direct final rule will be withdrawn and DOE will proceed with a separate proposed rule making the same changes. Comments on that proposal are also due no later than Sept. 17.

Proposed Update to Test Procedures on Bathroom Equipment. The DOE is proposing to update its test procedures for showerheads, faucets, water closets and urinals. The DOE expects that this action will bring its testing requirements more closely in line with current industry practices, reduce the burden associated with testing and reporting test results for these products, and improve the accuracy of test results. Comments on this proposal are due no later than Aug. 14. The department will hold a public meeting concerning this proposal (which will also be broadcast as a webinar) July 24 in Washington, D.C.

USDA Seeks Input on Environmental Impact of Allowing Banana Imports from the Philippines

The Department of Agriculture’s Animal and Plant Health Inspection Service is accepting through June 29 comments on an environmental assessment concerning the importation of fresh bananas from the Philippines into the continental United States. APHIS issued in April a proposed rule that would allow such imports (http://strtradenews.com/rv/ff0004b4e2dbd750cf1774105646b96a4dd98312/p=3117511) under certain conditions.

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