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May 31 2012 issue

Thursday, May 31, 2012
Sandler, Travis & Rosenberg Trade Report

EU Files WTO Dispute Against Argentina’s Import Restrictions

The European Union has filed a World Trade Organization dispute settlement case against import restrictions imposed by Argentina. According to an EU press release, the measures at issue include the following.

- Since February Argentina has subjected the importation of all goods to a pre-registration and pre-approval regime called the “Declaración Jurada Anticipada de Importación.”

- Hundreds of goods need an import license, but Argentina appears to issue these non-automatic licenses in a discretionary way with burdensome procedures and delays of up to six months and under unacceptable and non-transparent conditions. Non-automatic import licenses are not compatible with WTO rules unless they are justified by certain exceptions that can be granted for security reasons, under safeguard rules, or for balance of payment reasons and development, but the EU alleges that Argentina’s licenses are not covered by any such exception.

- Argentina requires importers to balance imports with exports, to increase the local content of the products they manufacture in Argentina, or to not transfer revenues abroad. This appears to be a systematic, unwritten practice and is often used as a pre-condition for the release of imported goods at the border.

The EU states that while these measures potentially affect all of its exports to Argentina, which amounted to €8.3 billion in 2011 and were led by automobiles, auto parts and chemicals, “the long-term impact of a negative trade and investment climate is significantly higher.” For example, a separate fact sheet adds, “if more WTO members adopted these kind of discriminatory measures, the damage to world trade and growth would be devastating.” In that vein, more than a dozen WTO members registered complaints ( about the above measures at a March 30 meeting of the organization’s Goods Council.

The fact sheet notes that the recent expropriation of Spanish oil company Repsol by the Argentinean government is not covered by the new WTO case but is “an expression of the same worrying policy pursued by Argentina.” Spain has responded to the seizure by banning imports of biodiesel from Argentina, which totaled about $1 billion in 2011. In addition, the EU is considering suspending preferential treatment for some imports from Argentina (a step the U.S. recently took as the result of a separate dispute) as well as talks on a free trade agreement with the Mercosur trade bloc, of which Argentina is one of four members.

In a related move likely to also be panned by the EU and other trading partners, Argentina approved May 28 stricter controls on imports of equipment and supplies by mining companies. According to a Reuters article, those companies “will have to get prior approval for overseas purchases and submit import plans 120 days in advance” and will also “have to consider swapping imports for locally produced goods.”

Agricultural Export Competition Between U.S. and Brazil is Limited, ITC Finds

The International Trade Commission has released a report finding that direct competition between the U.S. and Brazil for sales of soybeans, grains and meats to third-country markets has been limited. This report provides an overview of Brazil’s agricultural imports, exports, consumption and production during 2006–11; an overview of Brazilian government programs and regulations relating to agricultural production and exports; an analysis of the growth of Brazilian agribusiness firms and their impact on global supply chains; a description of competitive factors affecting Brazil’s agricultural sector; and special focus chapters surveying the soybean, grains, poultry, beef and pork sectors, with an emphasis on important third-country markets where U.S. and Brazilian exports directly compete. The study also uses economic modeling to analyze the effects of the removal of tariff preferences within the Mercosur customs union on U.S. agricultural exports as well as the effects of certain non-tariff measures in third-country markets on both Brazilian and U.S. exports.

An ITC press release highlights the following findings from the report.

High-Yield Production has Helped Boost Exports. Brazil's agricultural sector has rapidly increased domestic production through land expansion and higher yields, and over the past 20 years Brazil has emerged as a leading global exporter of soybeans, soybean meal and oil, corn, beef, poultry, pork, cotton and orange juice. The country’s low-cost resource base, including ample land and water resources and weather patterns conducive to intensive land use, enables high-yield crop production across a wide range of agricultural products. Government-funded agricultural research has developed crop varieties that flourish in Brazil's previously untapped Center-West region, and low on-farm production costs have helped to make Brazil a competitive exporter.

Future Production Faces Challenges. Several factors may serve to slow Brazil's expansion of agricultural production. Much of the available farmland is in areas that lack easy access to transportation infrastructure, and increasing demands for transportation, storage, and port infrastructure and capacity will likely outpace supply for quite some time. Relatively high-cost commercial credit could have the effect of discouraging investment, and Brazil's labor laws and tax structures reportedly increase costs. In addition, some livestock disease issues remain unresolved.

Competition Between U.S. and Brazil. Although Brazil and the United States are both global exporters of grains and oilseeds, direct competition between the two is currently somewhat limited due to the substantial increase in global consumption. For example, both countries supply China with soybeans and soybean products, but given the rapid growth in Chinese soybean demand increases in U.S. and Brazilian production have been readily consumed and global prices remain strong.

Limited competition also exists in the meat sectors. Brazilian poultry exports are primarily produced and packaged for customers with exacting specifications, while U.S. poultry exports tend to be undifferentiated broiler cuts such as leg quarters. In the beef sector, U.S. competition with Brazil is limited because each country serves a different market segment. The U.S. supplies grain-fed beef destined for Canada, Mexico, Japan and Korea while Brazil supplies grass-fed beef used in processed products to other markets such as Russia. Because of import bans related to foot-and-mouth disease, market access for Brazilian beef and pork is restricted in many of the largest U.S. export markets.

CBP Sets Forth Requirements for Canceling Higher Bonds for Shrimp Imports

U.S. Customs and Border Protection has issued a general notice announcing that it will cancel a continuous bond where the liability amount was calculated pursuant to enhanced bonding requirements upon its acceptance of a qualified superseding bond application. These bonds applied specifically to imports of shrimp from India and Thailand that were subject to antidumping duty orders. This enhanced bonding requirement was imposed in 2004 in response to problems CBP was experiencing with collecting AD duties but was withdrawn in 2009 following an adverse World Trade Organization decision and subsequently overturned by the Court of International Trade (wti/wti.asp?pub=0&story=31825&date=&company=).

CBP states that it will accept a qualified superseding bond application pursuant to this notice only if posted by an importer who (a) was not a litigant in any of the National Fisheries Institute Inc. v. U.S. court cases (which have already had their bonds canceled pursuant to a CIT ruling) and (b) establishes to CBP’s satisfaction that no contingent liability remains secured by the predecessor EBR bond and that the EBR bond does not cover entries that are subject to a pending protest. The superseding bond must also feature a limit of liability that is calculated using CBP’s current bond formula and must be for the same time period covered by the EBR bond.

Superseding bond applications, including supporting documentation, must be received by CBP within 90 calendar days from the date the related preceding EBR bond no longer secures any remaining sum certain or contingent debt, including unliquidated entries and matters subject to 19 USC 1592 involving actual or potential loss of revenue.

Click here for CBP notice

Australia FTA Rule of Origin for Certain Yarns Modified as of June 1

The Office of the U.S. Trade Representative has announced that a modification to the rules of origin under the U.S.-Australia Free Trade Agreement for certain viscose rayon staple fiber blended yarns classified under HTSUS 5510.90 will be effective as of June 1. This change will allow yarns from Australia classified under HTSUS 5510.90.20, 5510.90.40 or 5510.90.60 to be made from non-originating viscose rayon staple fiber and still qualify for trade preferences under the FTA. This modification was agreed in 2008, but Australia did not complete its applicable domestic procedures to give effect to that agreement until earlier this year.

IPR Enforcement Actions on Drill Bits, Imaging Devices, Rubber Resins

New Patent Infringement Investigation of Drill Bits. The International Trade Commission has instituted investigation 337-TA-844 to determine whether imports of certain drill bits for mineral mining and products containing same are violating Section 337 of the 1930 Tariff Act by reason of patent infringement. The complainants, Boart Longyear Company and Longyear TM Inc., request that after this investigation the ITC issue an exclusion order, which would direct U.S. Customs and Border Protection to prohibit the entry of the infringing products into the U.S., and cease and desist orders, which would require the named respondents to cease actions that violate Section 337, including selling infringing imported articles out of U.S. inventory. The respondents in this investigation are located in Peru, Chile, Panama and the U.S.

Potential IPR Probes of Electronic Imaging Devices, Rubber Resins Evaluated for Public Interest Issues. The International Trade Commission is requesting comments no later than June 7 on any public interest issues raised by separate Section 337 intellectual property rights infringement complaints filed on behalf of (a) FlashPoint Technology Inc. against certain electronic imaging devices and (b) SI Group Inc. against certain rubber resins and processes for manufacturing same. Comments should address whether the issuance of exclusion orders and/or cease and desist orders pursuant to these complaints 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 complainants, their licensees or third parties make in the U.S. that could replace the subject articles if they were to be excluded;

- indicate whether the complainants, the complainants’ 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.

Foreign Regulatory Changes Could Affect Exports of Hoses, Plastic Goods, Pipes, Measuring Equipment, 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.

Saudi Arabia – draft technical regulations on textile-reinforced plastic hoses and hose assemblies, rigid cellular plastic thermal insulation products, PTFE semi-finished products, plastic piping systems for hot and cold water, ball valves of thermoplastic materials, visual disappearing filament pyrometers, taximeters, tungsten ribbon lamps for the calibration of radiation thermometers, and moisture meters for cereal grains and oilseeds (comments due by July 24)

Uganda – final draft standards on cassava flour, cassava-wheat composite flour and food-grade cassava starch (comments due by July 25)

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 #004661N: Jacob Fleishman Transportation Inc., Miami, Fla.
- license #020163N: Global Services of Nevada Inc., Henderson, Nev.
- license #021803NF: Skyline Customs Services 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.

- Agunsa Logistics & Distribution (Los Angeles) Inc., Rancho Dominguez, Calif.
- American Global Logistics LLC d/b/a AGL, Atlanta, Ga.
- Ark Shipping Line Limited Liability Company, Middlesex, N.J.
- Asencoex LLC, Miami, Fla.
- Blue Axis Shipping & Freight Inc., Allen, Texas
- Blue Global Line Inc. d/b/a CFS Logistics, Schaumburg, Ill.
- BM Forwarding Inc., Pomona, Calif.
- Brilliant Group Logistics Corp., Valley Stream, N.Y.
- Concord Atlantic Inc. d/b/a Concord Atlantic Shipping, Laurel, Md.
- CTL Lax Inc., Cypress, Calif.
- Eagle Van Lines Inc., Temple Hills, Md.
- EZ Forwarding LLC, Hollywood, Fla.
- Fast Global Logistics LLC, Miami, Fla.
- ISS Marine Services Inc. d/b/a Inchcape Shipping, Mobile, Ala.
- Jo-Sak Shipping USA Inc., Boulder, Colo.
- Quasar Logistics Inc., Hollis, N.Y.
- Shipping Logistics LLC, Houston, Texas
- Tradelanes Inc., Mobile, Ala.
- US Pacific Transportation Group Inc., Pomona, Calif.
- W8 Shipping LLC, Savannah, Ga.
- Waterline International Logistics Inc., Mission Viejo, Calif.

Increasing Aviation Product Exports is Goal of New Ex-Im Bank Policy

The Export-Import Bank of the United States has announced that in an effort to increase U.S. aviation industry exports it will now finance transactions of U.S.-produced goods and services for aftermarket (post-manufacturing) use on foreign-manufactured aircraft. The Bank states that this new policy will expand its financing to benefit suppliers of many different products and services, including escape slides, flight simulators, entertainment systems and maintenance services. The Ex-Im Bank may also now consider support for exports by a U.S. small business to a foreign aircraft manufacturer. The financing of non-small-business sales of capital goods, services and major component sales to large foreign aircraft manufacturers will continue to be prohibited.

Advance Notice Required for Imports of Elemental Mercury for Certain Uses

The Environmental Protection Agency has issued a final rule that, effective June 25, will impose new import restrictions on elemental mercury for use in barometers, manometers, hygrometers and psychrometers. Under this rule, persons who intend to import, manufacture or process elemental mercury for an activity that is designated as a significant new use by this rule must notify EPA at least 90 days before commencing that activity. This notification will provide EPA with the opportunity to evaluate the intended use and, if necessary, to prohibit or limit that activity before it occurs.

DOE May Allow More Products to Qualify for Compliance Testing Alternatives

The Department of Energy is accepting comments through July 2 on a proposed rule that would revise and expand its regulations governing the use of particular methods as alternatives to testing for the purposes of certifying compliance with energy conservation standards and the reporting of related ratings for certain consumer products and commercial and industrial equipment covered by energy conservation standards.

For certain consumer products and commercial equipment, DOE’s testing regulations allow the use of an alternative efficiency determination method or an alternative rating method in lieu of actual testing to simulate the energy consumption or efficiency of certain basic models of covered products. DOE has authorized the use of AEDMs or ARMs for certain products that are difficult or expensive to test, including commercial heating, ventilation and air-conditioning (HVAC) equipment, commercial water heating equipment, distribution transformers, electric motors, residential central air conditioners and central heat pumps.

DOE now believes other similar products, such as commercial refrigeration equipment, automatic commercial ice makers, beverage vending machines, walk-in cooler and freezer refrigeration systems, and small electric motors, could also be rated and certified through AEDMs or ARMs. The department states that its goal is to establish a uniform, systematic and fair approach to the use of these types of modeling techniques that will enable it to ensure that products in the marketplace are correctly rated, irrespective of whether they are subject to actual physical testing or are rated using modeling, without unnecessarily burdening regulated entities.

Revised Energy Conservation Standards for Residential Clothes Washers

The Department of Energy has issued a direct final rule adopting amended energy conservation standards for residential clothes washers. DOE has determined that these amended standards would result in significant conservation of energy and are technologically feasible and economically justified.

This rule will be effective as of Sept. 28 unless adverse comment providing a reasonable basis for withdrawal of the rule is received by Sept. 18. 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. 18.

If no such adverse comments are received, compliance with the initial energy and water conservation standards will be required as of March 7, 2015, for top-loading and front-loading washers. Compliance with additional standards for top-loading washers would then be required as of Jan. 1, 2018.

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 June 11.

Voluntary Intermodal Sealift Discussion Agreement – The amendment deletes Maersk Line Limited and Maersk Line Inc. as parties to the agreement.

CMA CGM/Maersk Line Space Charter, Sailing and Cooperative Working Agreement Western Mediterranean-U.S. East Coast – The amendment would add Morocco to the geographic scope of the agreement.

CMA CGM/SSL Puerto Rico-Leeward Islands Space Charter Agreement – The agreement authorizes CMA to charter space to Sea Star in the trade between Puerto Rico and the U.S. Virgin Islands and Saint Maarten.

Maersk Line/MSC Caribbean Space Charter Agreement – The agreement would authorize Maersk Line to charter space to MSC in the trade between ports in Puerto Rico and ports in the Dominican Republic and Panama.

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