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June 8 2012 issue

Friday, June 08, 2012
Sandler, Travis & Rosenberg Trade Report

Legislative Update: Drug Safety Bill Moving Quickly, Lacey Act Reforms On Tap

In recent weeks Congress has advanced a number of measures that could have significant effects on the trade community. A bill overhauling imported drug safety rules could make it to the White House later this summer, and the House of Representatives is moving legislation that would ease some of the requirements for imports of wood products. Lawmakers are also focused on legislation aimed at further facilitating U.S. exports and improving the security of U.S. seaports.

Drug Safety. The Senate approved May 25 the Food and Drug Administration Safety and Innovation Act (S. 3187), a wide-ranging bill that includes provisions aimed at improving the safety of imported drugs. The House of Representatives passed similar legislation (the FDA Reform Act, H.R. 5651) May 30. House Majority Whip Eric Cantor, R-Va., recently expressed hope that a conference to resolve differences in the two measures can be concluded by July 4, and the White House has signaled that President Obama will sign the final bill.

Lacey Act. Cantor also indicated that the House Natural Resources Committee is working to advance the Retailers and Entertainers Lacey Implementation and Enforcement Fairness (RELIEF) Act (H.R. 3210) so it can be considered on the House floor in July. This bill would exempt any plant product imported or manufactured before May 22, 2008, from the requirements of the Lacey Act amendments, limit the import declaration requirement to solid wood and items imported only for commerce, and limit the penalty for violating the Lacey Act the first time as it pertains to plants. Cantor made no mention of advancing the Freedom from Over-Criminalization and Unjust Seizures (FOCUS) Act of 2012 (H.R. 4171 and S. 2062), which would remove liability for violations of foreign laws pertaining to wildlife, fish and plants, remove a provision allowing a federal prison sentence of up to five years and reduce the maximum fine from $500,000 to $200,000.

Port Security. The House Homeland Security Committee approved by voice vote June 6 H.R. 4251, the Securing Maritime Activities through Risk-based Targeting for (SMART) Port Security Act. This bill leaves intact the requirement for 100% scanning of inbound cargo containers but seeks to improve and update U.S. laws governing port security by enhancing security measures overseas, foster a collaborative environment between U.S. Customs and Border Protection and the U.S. Coast Guard in sharing port security duties, and leverage the maritime security work of trusted allies. Click here for more details on the provisions of this bill
http://strtradenews.com/rv/ff00046b150c3bc5e4c522886b42ab023608f7be/p=1482809

PNTR for Russia. Congress has until 30 days after Russia officially approves its World Trade Organization entry (expected sometime this summer) to pass legislation that repeals the Jackson-Vanik Amendment and establishes permanent normal trade relations for products of Russia. If this does not happen, the lower tariffs and other increased market access measures Russia will implement upon its WTO accession will not apply to U.S. businesses, putting them at a disadvantage to foreign competitors.

PNTR for Russia is one of the top trade priorities of the Obama administration this year but the price for securing its approval will apparently be legislation addressing human rights violations in Russia and other countries. The House Foreign Affairs Committee was expected to approve its version (H.R. 4405) on June 7 despite opposition from business groups and the Senate Foreign Relations Committee is planning to consider a companion measure (S. 1039) later this month. The bill has been criticized by Russian President Vladimir Putin, who has warned of retaliatory measures if it is approved.

In related news, an Inside US Trade article reports that the 11 Republican members of the Senate Finance Committee have requested that the committee hold a hearing with Obama administration officials on the implications of PNTR for Russia. The article adds that House Ways and Means Committee Chairman Dave Camp, R-Mich., is hoping to hold his own hearing on this issue by the end of June.

Export Promotion. The House approved May 30 the Export Promotion Reform Act (H.R. 4041), (http://strtradenews.com/rv/ff00036db81b5d8418adee384d4a8c5b55b0c942/p=3741603) which is designed to increase exports of U.S.-made goods and services by improving the functioning of U.S. export promotion programs. A similar bill was referred to the Senate Banking, Housing and Urban Affairs Committee March 7 but no further action has been taken.

Ex-Im Bank Reauthorization. On May 30 President Obama signed into law H.R. 2072, which reauthorizes the Export-Import Bank of the U.S. 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. Among other things, this law will require the Bank to review its 85% U.S. content requirement for maximum financing, require companies applying for financing to certify that they have not violated U.S. sanctions on Iran, and conduct a study on textile financing.

Invasive Species. Rep. Louise Slaughter, D-N.Y., introduced May 30 the Invasive Fish and Wildlife Prevention Act of 2012 (H.R.5864), which she said “would significantly strengthen the ability of federal regulators to make rapid, science-based decisions on whether non-native fish or wildlife species pose a risk to ecosystems within the United States and cause economic damage or threaten public health.” Specifically, this bill would strengthen the U.S. Fish and Wildlife Service's ability to designate animals as “injurious,” thus prohibiting them from being imported or shipped between states without a permit. It would also empower the FWS, which Slaughter said takes an average of four years to officially list a species as injurious and take appropriate actions, to become proactive rather than reactive in its listing and restriction process.

CBP Eases Requirements for Location and Method of Broker Recordkeeping

U.S. Customs and Border Protection has issued a final rule that, effective July 11, will ease the customs broker recordkeeping requirements as they pertain to the location and method of record retention. CBP states that these changes are intended to reflect modern business practices whereby documents are often generated, stored and transmitted in an electronic format.

This rule permits licensed customs brokers to store records relating to their customs transactions at any location within the customs territory of the U.S. so long as their designated recordkeeping contact (identified in their permit application) makes all records available to CBP within 30 calendar days (or such longer time as CBP may specify) at the broker district that covers the CBP port to which the records relate. The rule also removes the requirement for customs brokers who are not serving as the importer of record and who maintain separate electronic records to retain entry records in their original format for 120 calendar days after the release or conditional release of imported merchandise (except for documents required by law to be maintained as a paper record).

Click here for CBP rule
http://www.ofr.gov/OFRUpload/OFRData/2012-13907_PI.pdf

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.

June 11 – comments on possible amendments to CITES appendices on wildlife trade
http://strtradenews.com/rv/ff0004a291573ae6060d44f5ab41adf3706f38c2/p=6210502

June 11 – comments on FDA information collection concerning administrative detention and banned medical devices
http://strtradenews.com/rv/ff00049a95f0f7dd856cdd51c14eb099d31e9ac5/p=7789115

June 11 – comments on form BIS-711, Statement by Ultimate Consignee and Purchaser
http://strtradenews.com/rv/ff0005bf7cbc08c19130d148db48be31a929aa82/p=4256044

June 12 – ST&R webinar on certification under TSA cargo screening program
http://www.strtrade.com/Seminars/seminar_desc.aspx?id=1823

June 12 – meeting of BIS Regulations and Procedures Technical Advisory Committee
http://strtradenews.com/rv/ff0006832b81ae8ce7ca1772df4b820ae57076d7/p=8391564

June 12 – effective date of new ASTM F963-11 standard on toy safety
http://strtradenews.com/rv/ff000324b9bee77560a7fadaca4c94d746e2777b/p=2269077

June 13 – ST&R webinar on importing into the U.S.
http://www.strtrade.com/Seminars/seminar_desc.aspx?id=1478

June 13 – comments on Customs Mod Act recordkeeping requirements, motor carrier identification forms, export health certificates
http://strtradenews.com/rv/ff0005c5e29fda92609da6c0704fb44de57f9424/p=3800895

June 13 – ST&R webinar on due diligence and global import and export compliance
http://www.strtrade.com/Seminars/seminar_desc.aspx?id=1824

June 14 – STTAS seminar on NAFTA qualification, compliance and recordkeeping
http://www.strtrade.com/Seminars/seminar_desc.aspx?id=21

June 15 – comments on proposed modification or revocation of classification rulings
http://strtradenews.com/rv/ff0006250b84edc762eca853d04bbccc053ccd7d/p=6210502

Of Note: More Argentine Import Restrictions, New Latin America Bloc, Trade Linked to Endangered Species, WTO Accessions

Argentine president slaps tariffs on capital goods
http://www.reuters.com/article/2012/06/06/argentina-trade-idUSL1E8H694X20120606

Chile, Peru, Colombia and Mexico form 'Pacific Alliance'
http://www.google.com/hostednews/afp/article/ALeqM5gyaJKJqxdOdjCdzjzkcH3eOIWCgg?docId=CNG.1b3a198fac6c581c48e42da92f8b0395.981

Global trade plays key role in species threats
http://www.reuters.com/article/2012/06/06/us-biodiversity-trade-idUSBRE8550ZY20120606

Laos clears WTO entry hurdle, Yemen still trying
http://www.reuters.com/article/2012/06/07/wto-laos-yemen-idUSL5E8H74E320120607

$14.5 Million Criminal Fine in Auto Parts Price Fixing Probe

The Department of Justice announced June 6 that a Swedish company has agreed to pay a $14.5 million criminal fine for its role in two conspiracies to fix the prices of seatbelts, airbags and steering wheels installed in U.S. cars. DOJ states that this is the first case filed relating to occupant safety systems as part of its ongoing antitrust investigation into the auto parts industry. Separately, an executive of a Japanese company will pay a $20,000 criminal fine and serve 14 months in a U.S. prison for participating in a conspiracy to fix the prices of automotive wire harnesses and related products installed in U.S. cars.

A DOJ press release notes that six companies and ten individuals have now been charged in its auto parts price fixing and bid rigging investigation, with a total of more than $750 million in criminal fines assessed and individual prison terms of up to two years.

Personal Protective Equipment Proposed for Transfer to Commerce Control List

As part of President Obama’s Export Control Reform Initiative the Bureau of Industry and Security has issued a proposed rule describing how personal protective equipment, shelters and related items that the president determines no longer warrant control under the U.S. Munitions List would be controlled under the Commerce Control List in new export control classification numbers 1A613, 1B613, 1D613 and 1E613. Concurrently, the State Department’s Directorate of Defense Trade Controls has issued a proposed rule that would revise USML category X to describe more precisely those types of such articles that warrant continuing control on the USML. Comments on these proposed rules are due no later than July 23.

BIS states that the coverage of the new ECCNs would be as follows.

1A613 – armored and protective equipment, constructions and components

1B613 – test, inspection and production equipment and related commodities specially designed for the development or production of commodities controlled by ECCN 1A613 or USML Category X and not identified in USML Category X

1D613 – software for the development, production, operation, installation, maintenance, repair, overhaul or refurbishing of items controlled by ECCNs 1A613 or 1B613

1E613 – technology for the development, production, operation, installation, maintenance, repair, overhaul or refurbishing of items controlled by ECCNs 1A613, 1B613, or 1D613

This rule would also control military helmets (currently controlled under ECCNs 0A018 and 0A988) under new ECCN 1A613, amend ECCN 1A005 for body armor, remove machetes from ECCN 0A988, and revise license exceptions BAG (baggage) and TMP (temporary imports, exports and reexports) to authorize exports of certain body armor classified under new ECCN 1A613.

Click here for BIS rule
http://www.ofr.gov/OFRUpload/OFRData/2012-13745_PI.pdf
Click here for State Dept. rule
http://www.ofr.gov/OFRUpload/OFRData/2012-13744_PI.pdf

AD Notices: Xanthan Gum, Oil Country Tubular Goods, Foundry Coke Products

Agency: ITA/ITC.
Commodity: Xanthan gum.
Country: China and Austria.
Nature of Notice: New AD petitions filed June 5.

Agency: ITA.
Commodity: Oil country tubular goods.
Country: China.
Nature of Notice: Preliminary results of administrative review of AD duty order for the period May 19, 2010, through April 30, 2011.
Details: Weighted average dumping margin of 185.84% for reviewed exporter. Review rescinded for 18 respondents with existing separate rate status for which the request for review was timely withdrawn. Intent to rescind review for 33 additional respondents without separate rate status due to timely withdrawal of request for review.
Link: http://www.ofr.gov/OFRUpload/OFRData/2012-13972_PI.pdf

Agency: ITA.
Commodity: Foundry coke products.
Country: China.
Nature of Notice: Continuation of AD duty order.
Details: The product covered by this order is coke larger than 100 mm (4 inches) in maximum diameter and at least 50 percent of which is retained on a 100–mm (4 inch) sieve, of a kind used in foundries. The subject product is classifiable under HTSUS 2704.00.0011.

FMC Eases Recordkeeping Requirements for Tariff Publication Exemption for NVOCCs

The Federal Maritime Commission has issued a direct final rule revising its regulations on negotiated rate arrangements to ease some of the related recordkeeping requirements. This rule will become effective Sept. 10 unless significant adverse comment is received by Aug. 10, in which case the rule will be withdrawn.

In April 2011 the FMC removed from its regulations the requirement that licensed non-vessel-operating common carriers publish in tariffs the rates they charge for cargo shipments. Under this rule licensed NVOCCs who enter into negotiated rate arrangements with their customers are exempt from the tariff rate publication requirement if they meet certain conditions. These include continuing to publish rules tariffs containing contractual terms and conditions governing shipments and providing those rules to the public free of charge, ensuring that the rates they charge are agreed to and memorialized in writing by the date cargo is received for shipment, and retaining documentation confirming the agreed rate and terms for five years and making that documentation available promptly to the FMC upon request. Such NVOCCs are also exempt from regulatory requirements regarding time volume rates, 30 days’ notice of tariff rate increases, carrier refunds due to a tariff error and adherence to published tariff rates. In December 2011 the FMC solicited input on ways to make this tariff filing exemption more useful.

The FMC is now making certain changes to the April 2011 rule as a result of the 23 sets of comments it received in response to its inquiry. Specifically, the FMC is eliminating the requirement to include the shipper’s title and address in its written assent to rates, the requirement that the bill of lading include a notice that a shipment is moving pursuant to an NRA, and the requirement that an NVOCC retain all associated records and written communications pertaining to an NRA.

The FMC notes that it will continue to consider other suggestions made by commenters and may further modify its regulations at a future date. That could include extending the tariff publication exemption to non-licensed foreign-based NVOCCs, an option the FMC raised in its December 2011 inquiry.

IPR Enforcement Actions on Mobile Communications Devices, Polyimide Films

New IPR Infringement Petition on Mobile Communications Devices. The International Trade Commission has received a petition filed on behalf of Apple Inc. requesting that it institute a Section 337 investigation regarding certain personal data and mobile communications devices and related software. The proposed respondents are located in Taiwan and the U.S.

Section 337 investigations primarily involve claims regarding intellectual property rights violations by imported goods, including the infringement of patents, trademarks and copyrights. Other forms of unfair competition involving imported products, such as misappropriation of trade secrets or trade dress and false advertising, may also be asserted. The primary remedy available in Section 337 investigations is an exclusion order that directs U.S. Customs and Border Protection to stop infringing imports from entering the U.S. In addition, the ITC may issue cease and desist orders against named importers and other persons engaged in unfair acts that violate Section 337, including selling infringing imported articles out of U.S. inventory.

Potential Exclusion Order on Polyimide Films Evaluated for Public Interest Issues. The International Trade Commission is requesting comments no later than June 15 on any public interest issues raised by a recommendation by the presiding administrative law judge to issue a limited exclusion order against certain infringing polyimide films, products containing same and related methods. Comments should address whether this remedy 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.

Foreign Regulatory Changes Could Affect Exports of Cookware, Appliances, Food Packaging, Tobacco Products, Medical Devices

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 – draft resolutions on grain moisture meters (comments due by June 26) and steel cookware (comments due by July 22)

Brazil – draft technical regulations on conformity assessment for vacuum cleaners, mixers, hair dryers, and live animals and genetic material (comments due by Aug. 1)

Colombia – Dec. 31, 2012, effective date of technical regulations on requirements for materials, objects, packaging and equipment that come into contact with food and alcoholic beverages for human consumption

Czech Republic – draft amended regulation on requirements for tobacco products (comments due by July 30)

Korea – performance and safety requirements for orthodontic brackets, casting investments and refractory die materials, and polymer-based restorative materials; heater systems; radiation shield partitions; blood glucose monitoring systems; ear thermometers; inhalers; infant heaters; and other medical devices (comments due by Aug. 5)

U.S.-China Trade and Investment Relationship to be Subject of June 14 Hearing

The U.S.-China Economic and Security Review Commission will hold an open hearing June 14 in Washington, D.C., to discuss the evolving U.S.-China trade and investment relationship. The Commission states that this hearing is aimed at “sharpening our understanding of contemporary Chinese trade and investment challenges” and will include testimony on the implications of employing value-added measurements of trade, the bilateral investment treaty and the U.S. investment regime as well as case stories of U.S. companies’ China trade challenges.

Expansion of FTZ Subzone at Detroit Refinery Sought

The Foreign-Trade Zones Board has received an application to expand subzone 70T, which encompasses a refinery complex and three related sites and connecting pipelines in the Detroit, Mich., area. The request seeks to expand site 1 by 22.2 acres to include an adjacent parcel and remove site 3. The approved scope of authority for the subzone would remain unchanged. Comments on this application are due no later than Aug. 6.

FDA Reviewing Information Collections on Medical Device Reporting

The Food and Drug Administration is requesting comments no later than July 9 on the proposed extension of information collections concerning medical device reporting by importers, manufacturers, user facilities and distributors.

Manufacturers of medical devices are required to report to the FDA when they become aware of information indicating that one of their devices may have caused or contributed to death or serious injury or has malfunctioned in such a way that should the malfunction recur it would be likely to cause or contribute to a death or serious injury. Device importers report deaths and serious injuries to manufacturers and the FDA. Importers report malfunctions only to the manufacturers unless they are unknown, in which case the reports are sent to the FDA.

Medical device user facilities that receive or otherwise become aware of information that reasonably suggests that a device has or may have caused or contributed to the death or serious illness of a patient of the facility must report that information to the FDA within 10 working days after becoming aware of it, along with the identity of the device manufacturer if known. User facilities are also required to annually submit the number and summary of adverse events reported during the calendar year using form FDA 3419.

CPSC Testing and Recordkeeping Requirements for Carpets and Rugs Under Review

The Consumer Product Safety Commission is accepting comments through Aug. 10 on the proposed extension of testing and recordkeeping requirements for manufacturers and importers who furnish guaranties or certificates for products subject to the carpet flammability standards. These items must meet the requirements of the applicable flammability standards prior to distribution in commerce and firms must issue a General Certification of Conformity or Children’s Product Certificate certifying that the products meet all applicable product safety regulations. In addition, under the Consumer Product Safety Improvement Act there is a third-party testing requirement for all consumer products, including carpets and rugs, subject to a consumer product safety rule or similar rule, ban, standard or regulation under any other act enforced by the Commission that are primarily intended for children 12 years of age or younger. Every manufacturer (including an importer) or private labeler of a children’s carpet or rug must have its product tested for compliance to parts 1630 and 1631 and other applicable product safety rules by an accredited, CPSC-accepted third-party laboratory. Finally, there are enforcement regulations that specify the frequency of testing necessary to support the issuance of a guaranty of compliance under the Flammable Fabrics Act and the types of records that must be maintained to document this activity. Beginning in 2013, firms must also employ reasonable and representative testing programs in accordance with the CPSIA.

CBP Extends Import Restrictions on Materials from Peru

U.S. Customs and Border Protection is extending through June 9, 2017, import restrictions first imposed in 1997 on certain archaeological and ethnological material from Peru. These restrictions are being extended pursuant to the State Department’s determination that the cultural heritage of Peru continues to be in jeopardy from the pillage of the subject materials, which are listed in T.D. 97-50 and are also available here (http://exchanges.state.gov/heritage/culprop/pefact.html) under “III. Categories of Objects Subject to Import Restriction” by clicking on “Designated List” and then “Peru section of the Image Database”.

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