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June 15 2012 issue

Friday, June 15, 2012
Sandler, Travis & Rosenberg Trade Report

Brazil Readies for Possible Sanctions Against U.S. in Cotton Dispute

Press reports state that on June 11 Brazil’s Foreign Trade Board (CAMEX) approved the reinstatement of an interagency group that will update a list of possible trade sanctions against the United States in retaliation for Washington’s failure to comply with a World Trade Organization ruling against its cotton subsidies. Whether or not Brazil goes ahead with those measures will depend on the how the 2012 Farm Bill currently being debated in Congress addresses the cotton subsidy issue.

In a case brought by Brazil a number of years ago, the WTO ruled against the U.S. cotton subsidy program and later found that the U.S. had failed to comply with that ruling. As a result, the WTO authorized Brazil to impose retaliatory sanctions in the form of both higher tariffs on goods imported from the U.S. and the suspension of U.S. intellectual property rights. The annual amount of countermeasures authorized has two parts, a fixed amount of $147.3 million for cotton payments and an amount for the GSM-102 export assistance program that varies based on program usage (currently more than $800 million).

In 2010 Brazil took steps to impose these sanctions, including more than $560 million in higher tariffs against 102 specific U.S. products. Shortly before the tariffs were to have taken effect, however, the two sides reached an agreement under which Brazil postponed retaliation in return for various U.S. measures, including establishing an annual fund of $147.3 million to aid Brazilian cotton producers and reforming the GSM-102 program. This agreement acknowledged that the more substantial reforms to U.S. cotton subsidies that Brazil wants were to be taken up in the next Farm Bill, which Congress is expected to pass this year. However, CAMEX warned at the time that Brazil would continue to pursue full compliance with the WTO rulings and that any partial compliance would only be accepted on a temporary basis.

Press sources now report that with no clear path toward subsidy reform evident in the ongoing deliberations on the 2012 Farm Bill CAMEX is moving to update its retaliation plans. Specifically, CAMEX will review the list of U.S. goods that could be hit with higher tariffs, the total amount of U.S. exports to be penalized, and whether the duty increases and measures against IPR should be imposed concurrently or sequentially. Any decision to actually impose these sanctions, however, will await a further determination as to whether the new Farm Bill adequately addresses Brazil’s concerns.

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 18 – comments on proposed rules moving certain explosive materials from USML to CCL

June 18 – comments on improving FMC regulations exempting NVOCC service arrangements from tariff filing requirements

June 18 – comments on EPA proposal to streamline process of reporting certain chemical information

June 18 – comments on two changes to regulations on license authorization VEU

June 19 – FDA meeting on food safety capacity building in foreign countries

June 20 – ST&R webinar on mastering the Export Administration Regulations

June 21 – ST&R webinar on export laws and regulations for textile, apparel and footwear companies

June 22 – comments on bills for inclusion in Miscellaneous Trade Bill

$855,000 Penalty Against UAE Bank for Sudan Sanctions Violations

The Treasury Department’s Office of Foreign Assets Control announced June 14 that a United Arab Emirates bank will pay $855,000 to settle potential civil liability for 45 transactions that appear to have violated the Sudanese Sanctions Regulations. According to OFAC, the bank provided information revealing that certain of its clerical staff removed or omitted Sudan-related references in payment instructions processed on behalf of its Sudan branch for payments routed through financial institutions located in the U.S. in apparent violation of the prohibition against the “exportation or re-exportation, directly or indirectly, to Sudan… of services from the United States.”

The base penalty amount for the apparent violations was $4,276,000. OFAC notes that while the bank did not voluntarily self-disclose the apparent violations they constitute a non-egregious case and the bank extended substantial cooperation throughout OFAC’s review. The settlement amount also reflects OFAC’s consideration of the following general factors under its Economic Sanctions Enforcement Guidelines: the bank took prompt and appropriate remedial action and has not received a penalty notice or finding of violation in the five years preceding the transactions at issue.

Of Note: China Tariff Cuts, More Protection in Brazil, China-Taiwan Customs Cooperation

China to cut tariffs on 700 imported goods

Brazil protects its ... wines?

Taiwan, China close to signing customs cooperation pact

AD Notice: Hand Trucks from China

Agency: ITA.
Commodity: Hand trucks.
Country: China.
Nature of Notice: Amended final results of administrative review of AD duty order for the period Dec. 1, 2005, through Nov. 30, 2006.
Details: Revised weighted average dumping margin of 145.90% for Qingdao Taifa Group Co. Ltd. AD duties on entries of subject merchandise during the period of review will likely be assessed at this rate, and because this company has not participated in any administrative reviews since this one its AD cash deposit rate will be 145.90% as of June 14.

CBP Reviewing Information Collections on Cargo Containers, User Fees

U.S. Customs and Border Protection is inviting comments on the proposed extension of the following information collections. Comments should address whether these collections are necessary for the proper performance of CBP’s functions, ways to enhance the quality, utility and clarity of the collections, the accuracy of the estimated burden of the collections and ways to minimize that burden.

Cargo Container and Road Vehicle for Transport under Customs Seal – CBP has the responsibility of collecting information for the purpose of certifying containers and vehicles for international transport under customs seal. A certification of compliance facilitates the movement of containers and road vehicles across international territories. The procedures for obtaining a certification of a container or vehicle are set forth in 19 CFR 115. Comments are due no later than July 16.

User Fees – The collection of these fees requires the submission of information from the party remitting them, which is submitted on CBP Form 339A for aircraft, CBP Form 339C for commercial vehicles and CBP Form 339V for vessels. The information on these forms may be filed electronically. In addition, CBP requires express consignment courier facilities to file lists of couriers using the facility as well as quarterly reports.

Foreign Regulatory Changes Could Affect Exports of Heaters, Toys, Electronics, Milk, Drugs

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.

Chile – certification procedure for kerosene-fired heaters (comments due by July 15)

France – amended order on installations for the dry cleaning and treatment of textiles or clothing and their operators (comments due by July 1)

Mexico – May 15 publication of official standard on heavy metals in toys and school items (effective 90 days after publication)

Mexico – draft official standard on software and electronic systems that control the operation of systems for measuring and dispensing gasoline and other liquid fuels (comments due by July 12)

Mexico – draft official standard on milk with vegetable fat (comments due by July 30)

Paraguay – regulations on renewal of sanitary registration of pharmaceutical preparations

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