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June 20 2012 issue

Wednesday, June 20, 2012
Sandler, Travis & Rosenberg Trade Report

Mexico, Canada Invited to Participate in Trans-Pacific Trade Talks

The nine countries currently negotiating the Trans-Pacific Partnership agreement announced at a G-20 meeting in Mexico this week that they are formally inviting Mexico and Canada to join the talks. The two countries had both expressed their interest in the TPP in November 2011 but a decision on whether to accept them had been delayed due to concerns that they might not be willing to put sensitive issues on the table. However, press reports indicate that both have provided assurances that they are prepared to conclude a high-standard agreement that encompasses more issues and deeper commitments than free trade agreements typically do.

The addition of Canada and Mexico appears to lower the chances that participants will reach their goal of concluding a TPP agreement by the end of 2012. Twelve rounds of negotiation have already been held, with the next one slated for July 2-10 in San Diego, Calif., but few of the politically sensitive issues that will have to be dealt with to secure the kind of “21st century” agreement the TPP countries say they want have yet been taken up. Bringing two new countries into the mix will only complicate matters further and thus renders the current timeline increasingly improbable.

Faster Entry of Drugs and Drug Ingredients Envisioned Under FDA Pilot Program

The Food and Drug Administration is still working to launch a pilot program that could offer expedited entry for certain imported drugs and drug ingredients. Foreign manufacturers of finished drug products and active pharmaceutical ingredients intended for human use that are imported by a secure supply chain will be able to apply to participate in this voluntary Secure Supply Chain pilot program. The goal of the pilot is to allow the FDA to determine the practicality of developing a full-fledged secure supply chain program, which it believes would assist in its efforts to prevent the importation of adulterated, misbranded and unapproved drugs.

The FDA first announced this pilot program in January 2009 but FDA sources stated this week that it still has not gotten underway. As part of its current effort to move the pilot forward the agency is requesting comments no later than July 20 on its request for Office of Management and Budget approval of associated information collections. Sources said the pilot will not begin until OMB approval is secured, which is not expected for at least several more months.

According to sources and this week’s request for comments, following is the most up-to-date information concerning the operation of the pilot program.

Participation. Applicants will have to meet numerous criteria to be selected to participate, including the following.

- the importation of the finished drug product or API must (a) be from the foreign manufacturer identified in the application, (b) arrive through the identified port of entry and port of arrival, (c) use the identified broker/customs broker/filer, and (d) be intended for the identified ultimate consignee

- the supply chain of which the applicant is a part must have been validated as C-TPAT Tier II (i.e., U.S. Customs and Border Protection has visited a site in the firm’s supply chain and validated its security procedures as meeting C-TPAT requirements) or Tier III (i.e., a firm has exceeded the C-TPAT security criteria and implemented its own best practices)

- the applicant must have a plan in place for promptly correcting any concerns the FDA identifies regarding its secure supply chain or specific importations

- regardless of whether it is required by law, for each shipment of a finished drug product or API applicants must maintain records that document the product’s movement through the secure supply chain from the point of manufacture to the point of receipt by the ultimate consignee

- the broker/customs broker/filer identified in the application must be qualified for paperless entry filing to the FDA’s Operational and Administrative System for Import Support

However, applications to participate in the pilot program will not be accepted until OMB approval is secured. The FDA will announce in the Federal Register when that happens, the date that applications may be submitted and application submission procedures. The agency plans to select no more than 100 participants and no more than five drug products per applicant.

Examinations. The FDA anticipates substantially increasing the rate at which entries of the finished drug products and APIs selected for the SSC pilot are allowed entry without human review or examination. As with all entries, however, the FDA will perform full electronic entry review of products included in the pilot, and some will receive further FDA review or examination. The FDA does not intend to issue a “May Proceed” notice after electronic entry review if it has information that a problem may exist with the product.

The FDA will regularly examine records and review whether pilot participants are continuing to meet the specified criteria. The FDA may withdraw its selection of an application if the applicant, foreign manufacturer or ultimate consignee receives a warning letter citing violations of the Federal Food, Drug and Cosmetic Act relating to drug products or has been otherwise deemed by the FDA to have committed such violations. Termination of participation in the pilot will result in a return to the general rate at which entries of finished drug products and APIs are allowed entry without human review or examination.

Evaluation. The FDA’s evaluation of the pilot program will be based on several factors, including time frames for the passage of goods through the entry process, the level of participants’ adherence to program criteria and the impact of the program. Following this evaluation the FDA may establish a full-fledged SSC program or extend and perhaps modify the pilot.

Clarifications. In response to comments received on its January 2009 notice, the FDA has provided the following clarifications.

- The FDA will assign a unique identifier to each selected pilot program application and that identifier will be transmitted when entry is filed for the product. Otherwise, the FDA data requirements to submit a drug import entry will not change.

- There will be one affirmation of compliance code for products subject to the pilot program, which will be required at the time of entry and will identify the drug product as being part of the program.

- Each individual dosage form will require a separate application, and one API used in multiple drug products’ new drug applications would require the submission of one application.

- The pilot program will be limited to the one port of entry and one port of arrival (if different) listed on the applications. Any deviations from the applicant’s SSC distribution practices, as identified in the application, would cause that individual shipment to be screened under general import processing procedures.

- An API source is required to be disclosed in the applications of companies importing finished dosage form drug products.

U.S. Advances Efforts to Expand Trade with Africa

The Obama administration has recently taken a number of steps to further expand trade between the United States and Africa. These include formulating a new strategy toward sub-Saharan Africa, broadening an economic partnership with the East African Community, updating a trade deal with South Africa and cooperating with Mauritius on trade in information technology services.

SSA Strategy. The president said the new strategy “solidifies and advances” many of the Africa-related initiatives his administration has launched since 2009 and pledges to “elevate our focus on and dedicate greater effort to” two efforts: strengthening democratic institutions and increasing broad-based economic growth, including through trade and investment. Based on the belief that “Africa can be the world’s next major economic success story,” the U.S. will work with African countries to “remove constraints to trade and investment,” to “expand opportunities for African countries to effectively access each other’s markets and global markets” and to “diversify their economies beyond a narrow reliance on natural resources.” Specific steps will include the following.

- encourage legal, regulatory and institutional reforms that con¬tribute to an environment that enables greater trade and investment in sub-Saharan Africa and encourage the SSA private sector to engage governments to undertake these reforms

- help build the public sector’s capacity to provide services and improve protections against illicit financial activity

- work with regional economic communities and national governments to reduce the barriers to trade and investment flows across the continent, specifically by promoting trade facilitation, customs modernization and standards harmonization; supporting regulatory coherence and transparency; improving infrastructure that strengthens regional trade and access to global markets; and exploring ways to remove impediments to the efficient operation of supply chains in the region

- work with Congress to extend the African Growth and Opportunity Act beyond 2015 and extend the Generalized System of Preferences beyond 2013 while also exploring ways to update these programs and enhance African capacity to fully utilize and benefit from them

- increase coopera¬tion and technical assistance on a range of issues, including building Africa’s capacity to meet product standards, food safety and sanitary and phytosanitary requirements, product testing, and certification requirements

- take steps to increase productive capacity and improve the competitiveness of African exports, including by helping to address a range of supply side constraints that raise costs and reduce the efficiency of exports

- develop a “Doing Business in Africa” campaign to help U.S. businesses identify and take advantage of opportunities in sub-Saharan Africa

Expanded Partnership with East African Community. Representatives of the United States and the EAC announced June 14 their intent to “pursue a new trade and investment partnership” that will build on AGOA and the U.S.-EAC Trade and Investment Framework Agreement. The initial items that will be explored under this new “umbrella partnership” include a regional investment treaty, a trade facilitation agreement, continued trade capacity building assistance and a commercial dialogue. According to a joint statement, these steps “could also serve as building blocks toward a more comprehensive trade agreement over the long term.” The EAC includes Burundi, Kenya, Rwanda, Tanzania and Uganda.

Updated TIFA with South Africa. On June 18 the U.S. and South Africa updated the TIFA they first signed in 1999. A press release from the Office of the U.S. Trade Representative suggests that the revised agreement is intended to more effectively address bilateral trade irritants, stating that it will “provide a forum to better exchange views on improving the trade and investment climate and promoting new U.S. investment that is critical to South Africa’s economic development.” The first TIFA Council meeting under the new agreement was held the same day and examined issues such as tariffs, the business and regulatory environment, implementation of AGOA, export diversification, energy, trade facilitation, and enhancing the participation of small and medium-sized enterprises in trade and investment.

Agreement with Mauritius on Information Technology Trade Principles. Also on June 18 the U.S. reached an agreement with Mauritius on a set of non-binding trade-related principles for information and communication technology services. These principles address transparency in legislation and regulation, open access to networks and applications, the free flow of information across borders, foreign investment in ICT sectors, facilitating the cross-border supply of services, the efficiency of spectrum allocation, the independence of regulatory authorities, the granting of operating licenses, interconnection between suppliers of basic public telecommunication services, and international cooperation. USTR states that this is the first agreement of its kind that the U.S. has negotiated with an African country and that it includes a commitment to jointly promote the adoption of these principles by others.

Import Restrictions Unlikely on Monitors, TVs, Etc. Subject to IPR Probe

The International Trade Commission has determined that the importation, sale for importation and sale within the U.S. after importation of certain liquid crystal display devices, including monitors, televisions, modules and components thereof, are not violating four patents owned by complainants Thomson Licensing SAS of France and Thomson Licensing LLC of New Jersey. The ITC has therefore terminated its Section 337 of such products with respect to those patents without the imposition of any related import restrictions. The ITC is continuing this investigation with respect to one other patent, which expires Aug. 26.

Puerto Rico Drug Facilities Propose to Expand FTZ Operations

The Foreign-Trade Zones Board is accepting comments through July 30 on the following notifications of expanded FTZ activity in Puerto Rico.

- The Puerto Rico Industrial Development Company, grantee of FTZ 7, has submitted a notification of proposed production activity at the Baxter Healthcare of Puerto Rico facilities within FTZ 7 in Aibonito and Jayuya, P.R., which are used for the manufacture of pharmaceutical and nutritional intravenous bags, IV administration sets and their components.

- The Puerto Rico Trade and Export Company, grantee of FTZ 61, has submitted a notification of proposed production activity at the Pfizer Pharmaceuticals LLC manufacturing facility in Guayama, P.R., where it wants to produce ibuprofen pharmaceutical products in bulk mixture or dosage form.

In both cases production under FTZ procedures could exempt the companies from customs duty payments on the foreign status components used in export production. On their domestic sales the companies would be able to choose for foreign-status inputs the duty rates that apply to the finished products (zero). Customs duties also could possibly be deferred or reduced on foreign status production equipment.

Ocean Transportation Intermediary License Revocations, Reissuances, 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 #2958F: Elite International Transportation Inc., Houston, Texas
- license #004670F: The Pelixan Group Inc., Miami Springs, Fla.
- license #11057NF: EMO Trans Texas Inc.
- license # 016633F: Uniship Inc., Long Beach, Calif.
- license #020397N: F.I.D. International Inc., Sunrise, Fla.
- license #021899NF: Trans World Logistics Corporation, Plainfield, Ind.
- license #022238F: Grimes Supply Chain Services Inc., Jacksonville, Fla.

OTI Licenses Reissued. The Federal Maritime Commission has given notice that the following ocean transportation intermediary licenses have been reissued.

- license #004661F: Jacob Fleishman Transportation Inc., Miami, Fla.
- license #016671F: Lee Ann Tyus d/b/a Lee Ann Tyus Maritime Services, Cornelius, N.C.
- license #020376NF: Unity Container Line Inc., Miami, Fla.
- license #022844F: World Freight Solutions Inc., Mobile, Ala.

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.

- ACM Enterprises Group Inc., Carson, Calif.
- Amerifreight (N.A.) Inc. d/b/a Freight Team, Walnut, Calif.
- Aqua Gulf Transport Inc., Deerfield Beach, Fla.
- Bayanihan Cargo International Inc., South San Francisco, Calif.
- COM TEC LLC, Woodland, Calif.
- Daudry Business Group, Miami, Fla.
- DTS Advance LLC d/b/a Triple Eagle Logistic Canada, North Ridgeville, Ohio
- Express Line International Corp., South San Francisco, Calif.
- FSG Logistics (USA) Inc. d/b/a FSG Logistics Inc., Des Moines, Wash.
- Global Synergy Logistics Inc., Roslyn Heights, N.Y.
- Hyundai Logistics (USA) Inc. , La Mirada, Calif.
- Jenny Freight Forwarding LLC, Phoenix, Ariz.
- Ocean Trade Lines Inc., Ft. Lauderdale, Fla.
- PLS Air & Shipping Inc., Rancho Palos Verdes, Calif.
- Prime Van Lines Inc., Paterson, N.J.
- Spectrum Trucking Co. Inc. d/b/a Spectrum Logistics, Jacksonville, Fla.
- Solivan Racing Logistics Inc., Carolina, P.R.
- Sun US Transport Corp., Los Angeles, Calif.
- Taiwan Express (USA) Inc., Inglewood, Calif.
- Trinity Logistics USA Inc., Valley Stream, N.Y.
- Triple “B” Forwarders Inc.. Carson, Calif.
- United Cargo Services Inc., Ashburn, Va.

CPSC Reviewing Recordkeeping Requirements on Baby Bouncers and Walker-Jumpers

The Consumer Product Safety Commission is inviting comments through Aug. 20 on the proposed three-year extension of information collection requirements for manufacturers and importers of children’s articles known as baby bouncers and walker-jumpers. Such manufacturers and importers must make, keep and maintain records of inspections, testing, sales and distributions consistent with the provisions of the Federal Hazardous Substances Act (15 USC 1261 and 1262) and 16 CFR part 1500. The regulation does not specify a particular form or format for the records, and manufacturers and importers may rely on records kept in the ordinary course of business to satisfy the recordkeeping requirements if those records contain the required information.

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 July 2.

WHS/PIL Space Charter Agreement – The agreement authorizes Wan Hai to charter slots to PIL in the trade from California to China.

Gulf Seaports Marine Terminal Conference – The amendment reflects the Port of Corpus Christi’s termination of membership from the agreement.

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