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July 16 2012 Issue

Monday, July 16, 2012
Sandler, Travis & Rosenberg Trade Report

CBP Moving Forward on Rail/Sea E-Manifest, Cargo Release, Export Initiatives

U.S. Customs and Border Protection has posted to its Web site an update on the functionality already implemented in the Automated Commercial Environment as well as near-term priorities for other ACE deliverables, including e-manifest for rail and sea, cargo release and export processing. ACE is currently in an operations and maintenance phase and CBP is using carry-over dollars for development work on these initiatives. 

E-Manifest: Rail and Sea (M1). M1 provides a consolidated view of rail and sea shipment manifest and entry data at the bill of lading or container level to facilitate the identification of shipments that may pose a risk and will expedite the pre-arrival processing of legitimate cargo. New capabilities include enabling CBP to place and remove holds at the conveyance, container and master bill level, informing carriers which participating government agency has held their merchandise, allowing carriers to create through the ACE Portal a list of trade partners authorized to use their in-bond authorization, providing 12 new reports for rail and sea carriers along with seven new reports for brokers and two for importers, and allowing filers to create and maintain rail line release entry banks through the ACE Portal.

M1 has now been deployed to all CBP ports of entry and 91% of the carrier community impacted by M1 has sent rail and sea manifests to ACE, has completed testing or is in the process of testing. As of Sept. 29 the Automated Manifest System for rail and sea will be decommissioned. E-manifest for trucks was deployed in February 2007 and e-manifest for air and integration of the multimodal manifest is anticipated at some point in the future. 

In May the Coast Guard became the first PGA to navigate M1 in production during a series of operational trials piloted in Charleston, S.C. These trials will result in better targeting capability of high-risk cargo, improved communication to the trade community and greater border security. 

Cargo Release. ACE Cargo Release will provide the trade community with a more automated and modern process that streamlines data requirements, removes paper and provides for expedited import decisions by federal agencies. The following components are in progress, and CBP is evaluating requirements and developing an analysis of alternatives to determine possible development options for the ultimate full delivery of Cargo Release. 

Simplified entry is the first phase of Cargo Release and CBP successfully completed a pilot test of simplified entry capabilities at the ports of Indianapolis, Chicago and Atlanta in June. Under this pilot the current CBP Form 3461 used to make entry was eliminated and replaced with a streamlined set of data – 12 required and three optional data elements – submitted earlier in the process. CBP is now examining the results of the pilot, implementing software fixes and adjustments identified during the pilot, and working with the participants to establish the plan for the next rollout of simplified entry capabilities. 

PGA Interoperability introduces a comprehensive set of technical services that enables CBP to share trade data, documents and events of interest in an automated manner with PGAs in an effort to significantly enhance the interagency collaboration required during the cargo importation, review and release process. The Food Safety and Inspection Service has joined the Consumer Product Safety Commission in receiving automated production entry and entry summary data directly from CBP. Several more PGAs are in the process of being brought into the interoperability environment, including the Animal and Plant Health Inspection Service, the Department of Transportation, the Environmental Protection Agency, the National Marine Fisheries Service and the Coast Guard. 

Exports. CBP is planning to establish ACE as the single processing platform for all export manifest and commodity transactions, and current plans call for the development of an automated export manifest system for all modes. CBP appears to have dropped plans to establish an interface between the Automated Export System and the ACE platform to allow CBP and PGA access to export control and licensing information required for processing and releasing export shipments, which was to have had an initial focus on the primary export control and licensing agencies. The automated export processing system will also focus on developing a standard data set document for export transactions, developing the capability to accept document images to support manifest, commodity or licensed export filings, and developing functionality for an interoperable Web-based system among CBP and PGAs. 

An automated export manifest pilot test using the document imaging system capability began in late March at the ports of Norfolk, Newport News, Wilmington, Beaufort-Morehead City, Georgetown, Charleston, Savannah and Brunswick with 18 carriers representing 56% of the total containerized U.S. export volume. CBP is in the process of expanding this pilot to additional participants and ports.

Global Outsourcing to be Subject of September FDA Conference

The Food and Drug Administration is co-sponsoring a public conference on global outsourcing Sept. 24-26 at Xavier University in Cincinnati, Ohio. This public conference for the pharmaceutical industry will include presentations from key FDA officials, global regulators and industry experts on improving the quality of outsourced products. Specific topics to be addressed include the following. 

- FDA international initiatives 
- European Union regulator perspective 
- FDA new inspectional approach and trends 
- supplier selection and due diligence 
- operating in different regions of the world 
- establishing a meaningful supplier qualification program 
- supply chain development 
- finished product distribution channel 
- self-inspections and corporate audits 
- quality agreements 
- business process management 

Those interested in attending may register here

Trade Fair in Seattle July 19 to Focus on Commerce with Canada

U.S. Customs and Border Protection will host a trade fair July 19 in Seattle, Wash. This event will provide importers, exporters and others the opportunity to speak one-on-one with representatives of U.S. and Canadian agencies involved with imports and exports, including the Alcohol and Tobacco Tax and Trade Bureau, CBP (entry and import specialists, client representatives, and officials from the Office of International Trade), the Consumer Product Safety Commission, the Department of Commerce, the Environmental Protection Agency, the Food and Drug Administration, Health Canada, the National Oceanic and Atmospheric Administration, the U.S. Fish and Wildlife Service, and the Department of Agriculture’s Animal and Plant Health Inspection Service, Food Safety and Inspection Service and Veterinary Regulatory Support. 

Attendees will also have the opportunity to attend presentations on the following topics. 

- introduction to exporting and available resources 
- Food Safety Modernization Act 
- National Defense Authorization Act of 2012 
- import and export of plants and plant products 
- wood packaging material 
- electronic manifest and simplified entry initiatives 
- how to become a customs broker and broker responsibilities 

U.S. Continues to Lead the World in Imports and Exports of Services, ITC Finds

The International Trade Commission’s annual report on trends in U.S. services trade finds that in 2010 the U.S. remained the world's largest services market and leading exporter and importer of services. This year's report, which covers cross-border trade in services through 2010 and affiliate sales through 2009, focuses on infrastructure services such as banking and telecommunications. It also includes separate chapters on the banking, insurance, logistics, retail, securities and telecom industries that analyze global competitive conditions in each industry, examine recent trade performance, discuss non-tariff measures that affect trade and summarize the industry's outlook. 

Among the report’s findings are the following. 

- From 2009 to 2010 U.S. cross-border services exports increased by 9% percent (to $518 billion) while services imports grew by 6% (to $358 billion). Infrastructure services accounted for 25% of the total for exports and 37% for imports in 2010. 

- Services supplied abroad by foreign affiliates of U.S. firms continued to exceed services purchased from U.S. affiliates of foreign firms, reaching $1.1 trillion and $669 billion, respectively, in 2009. Infrastructure services accounted for 60% of both sales and purchases of services through affiliates. 

- Regulation is a recurring theme among infrastructure services industries covered in this year's report. For example, financial reforms enacted in 2010 affected the banking, insurance and securities services industries. Such regulations aim to address the potential negative effects of providing services and to meet economic and social objectives, but they can also represent non-tariff measures that impede the ability of providers to enter and operate in markets. 

- The outlook for growth in each infrastructure service industry is, for the most part, dependent on the overall level of economic growth, although factors such as regulatory reform, technological innovation and market access will also have a major impact. Joint ventures and mergers and acquisitions are likely to increase as a way for firms to reduce costs and enter foreign markets. Market access will be increasingly important to the banking, logistics and retail industries, which anticipate faster demand growth in developing countries than in developed countries. 

Washington Company Pays $1.3 Million for Cuba Sanctions Violations

The Treasury Department’s Office of Foreign Assets Control reports that a Washington state company has agreed to pay $1.3 million to settle apparent violations of the Cuban Assets Control Regulations in connection with its performance of various back-office functions for sales by a foreign affiliate of non-U.S. origin barley malt to Cuba. The base penalty amount was $5.99 million and the final settlement amount reflects the following facts and circumstances. 

Aggravating – there was no voluntary disclosure to OFAC, the company is a large and sophisticated entity and had no adequate OFAC compliance program in place at the time of the violations, a number of the violations involved transactions with specially designated nationals in Cuba, and some of the violations involved transactions in which an SDN vessel was involved 

Mitigating – the apparent violations constitute a non-egregious case, the company has no history of prior OFAC violations and substantially cooperated with OFAC, including entering into a statute of limitations tolling agreement, and if the subject goods had been shipped from the U.S. they would have been eligible for an OFAC license 

$465,000 Penalty, Suspension of Export Privileges for Illegal Exports of Restraining Devices

The Bureau of Industry and Security has issued an order imposing a $465,000 penalty on a Wisconsin company to settle charges that it committed 27 violations of the Export Administration Regulations in connection with the export of various restraint devices, including strait jackets, bed restraints, and wrist and ankle restraints. These items, which are classified under Export Control Classification Number 0A982 and controlled for crime control reasons, were shipped to Germany, Greece, Hungary, Ireland, New Zealand, South Korea, Taiwan and the United Kingdom without the required BIS licenses. Under this order $415,000 of the penalty will be suspended for two years and then waived provided that the company commits no further export violations during that time. 

The BIS is also suspending the company’s export privileges for two years. However, this action does not prohibit the company from exporting items from the U.S. under a previously approved BIS export license that is valid as of July 9. In addition, freight forwarders, carriers, consignees or end users may still participate in export transactions authorized by a previously approved BIS export license issued to the company that is valid as of July 9. 

Increased U.S. Sanctions on Iran Target Shipping Networks, Among Others

The Treasury Department announced July 12 that the U.S. is imposing additional sanctions on Iran’s nuclear and ballistic missile proliferation networks and is also taking additional steps to prevent the evasion of sanctions by publicly identifying a group of Iranian front companies and banks. 

One set of actions designates entities and individuals that are part of the international procurement and nuclear proliferation operations of Iran’s Ministry of Defense for Armed Forces Logistics and its subsidiary, Aerospace Industries Organization; Iran’s national maritime carrier, Islamic Republic of Iran Shipping Lines; and Iran’s Islamic Revolutionary Guard Corps. Treasury is also updating the identifying information for 57 vessels affiliated with IRISL that had been renamed or reflagged since they were originally designated and identifying seven vessels affiliated with IRISL that have not been identified previously. U.S. persons are generally prohibited from engaging in any transactions with designated individuals or entities and any assets the designees may have under U.S. jurisdiction are blocked. 

Treasury is also acting to prevent the circumvention of international sanctions on Iran, including on oil trade with Iran, by publicly exposing numerous Iranian front companies, ships and banks that are part of the government of Iran. These identifications highlight Iran’s attempts to evade sanctions through the use of front companies as well as its attempts to conceal its tanker fleet by repainting, reflagging or disabling GPS devices. Treasury is identifying these entities pursuant to Executive Order 13599, which blocks all property and interests in property within U.S. jurisdiction of the government of Iran and all Iranian financial institutions and also prohibits U.S. persons or those within U.S. jurisdiction from having dealings with them. 
Click here for more details

AD Notices: Isocyanurates, Hand Trucks, Steel Sinks

Agency: International Trade Administration. 
Commodity: Chlorinated isocyanurates. 
Country: China. 
Nature of Notice: Preliminary results of administrative review of antidumping duty order for the period June 1, 2010, through May 31, 2011. 
Details: Weighted average dumping margins from zero to 82.29%. 

Agency: International Trade Administration. 
Commodity: Hand trucks and certain parts thereof. 
Country: China. 
Nature of Notice: Final results of administrative review of antidumping duty order for the period Dec. 1, 2009, through Nov. 30, 2010. 
Details: Weighted average dumping margin of 41.49% for sole reviewed exporter. This rate will be used to determine AD duties assessed on entries of subject merchandise made during the period of review, and AD cash deposits at this rate will be required for subject merchandise entered or withdrawn from warehouse on or after July 16. 

Agency: International Trade Administration. 
Commodity: Drawn stainless steel sinks. 
Country: China. 
Nature of Notice: Postponement of preliminary AD duty determination from Aug. 8 to Sept. 27.

Textile and Apparel Imports Slip in May

The Department of Commerce’s Office of Textiles and Apparel reported July 11 that monthly U.S. textile and apparel imports sank 0.7% in May compared to a year earlier after a 2.9% gain in April. Imports of cotton, wool, manmade fiber, silk blends and non-cotton vegetable fiber textile and apparel products totaled 4.65 billion square meter equivalents. Textile imports climbed 3.9% from a year before to 2.83 billion SME while apparel imports fell 7.2% to 1.82 billion SME. 

For the year to date as of May 2012, compared to the same period in 2011, imports of textiles and apparel were down 0.5% to 21.33 billion SME. Textile imports saw a 2.3% gain to 12.31 billion SME while apparel imports dropped 3.3% to 7.20 billion SME. For the 12-month period ending in May total imports were down 4.6% to 53.58 billion SME as textile imports slid 2.6% to 30.10 billion SME and apparel imports slumped 7.2% to 23.48 billion SME. 

With respect to specific sources, imports of textile and apparel products (except cotton and silk blend textiles) saw a year-on-year increase in May from China (up 1% to 2.19 billion SME), Hong Kong (90.9% to 7.1 million SME), South Korea (12.7% to 127.5 million SME), Canada (2.3% to 109.5 million SME), the EU15 (11.5% to 117.6 million SME), Turkey (11.9% to 56.0 million SME) and Israel (55.8% to 41.7 million SME). On the other hand, imports declined from Vietnam (8.7% to 255.9 million SME), Taiwan (4.2% to 65.2 million SME), Mexico (2.5% to 221.4 million SME), the DR-CAFTA region (4.1% to 269.5 million SME), the Caribbean Basin Initiative region (3.5% to 294.2 million SME), the Association of Southeast Asian Nations (11.1% to 552.9 million SME) and South Asia (4.1% to 707.7 million SME). 

FDA Outlines Plans to Provide Earlier Feedback on Medical Device Product Submissions

The Food and Drug Administration is inviting public comments through Oct. 11 on a draft guidance that outlines recommendations and procedures for medical device manufacturers and researchers who want early feedback and advice before submitting a product- or research-specific application. This guidance is intended to help medical device developers identify regulatory requirements early in the process by describing when developers might benefit from early FDA feedback, describing pre-submissions package content necessary for optimal FDA feedback, and explaining how to best engage the FDA in informal meetings to discuss the most efficient path with a new technology or planned regulatory submission. 

The draft guidance expands on the FDA’s existing pre-Investigational Device Exemption (pre-IDE) program, which allows companies to obtain feedback on a product during the investigational stage and prior to the formal application process. The new program will be referred to as the Pre-Submission or “Pre-Sub” program and will operate within the FDA’s existing medical device premarket regulatory pathways: IDE, Premarket Approval (PMA), Humanitarian Device Exemption (HDE), Premarket Notification (510(k)), and de novo. 

2The FDA emphasizes that this guidance is not yet final nor is it in effect at this time. Click here for a copy of the FDA draft guidance. 

Court of International Trade Justice Nominated

The White House announced July 12 that President Obama has nominated Mark A. Barnett to serve on the U.S. Court of International Trade. Barnett has been deputy chief counsel in the Office of Chief Counsel for Import Administration at the Commerce Department since 2005 and has worked as an attorney in the same office since 1995. From 2008 to 2009 he was detailed to the House Ways and Means Committee, where he served as trade counsel for the Subcommittee on Trade.  

Foreign Regulatory Changes Could Affect Exports of Brakes, Plastics, Sunbeds, Chemicals

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. 

Colombia – June 8 entry into force of technical regulations on motor vehicle brake systems 

Dominican Republic – requirements to be met by electricity metering equipment (comments due by Aug. 20) 

France – amended order on the use of processing aids in the manufacture of certain foods and beverages 

Saudi Arabia – draft technical regulations on plastic sheets, plastic molding and extrusion materials, textile-reinforced plastic hoses and hose assemblies for hydraulic applications, and plastic piping systems for non-pressure underground drainage and sewerage (comments due by Sept. 10)

Sweden – updated regulations on sunbeds and solariums (comments due by Sept. 14) 

Switzerland – revised ordinance on risk assessment for chemical substances, preparations and products (comments due by Aug. 31) 

U.S., Mexico to Cooperate on Safety of Molluscan Shellfish Exports

The Food and Drug Administration recently signed a statement of cooperation with Mexico’s Secretariat of Health on ensuring the safety and sanitary quality of fresh and frozen molluscan shellfish harvested from aquacultured and wild populations that are now or may be exported from Mexico to the U.S. This arrangement took effect June 28 and will remain in force for five years. Click here to see the text of the statement, which details the responsibilities of both sides. 

Technical Corrections to Export Regulations

The Bureau of Industry and Security has issued separate notices making technical corrections to its regulations concerning the Commerce Control List and the definitions of terms. Click here and here for full details. 

Advance Notice Proposed for Imports of Chemical Substance

The Environmental Protection Agency is proposing to impose new import restrictions on a chemical substance identified as phenol, 2,4-dimethyl-6-(1-methylpentadecyl)-. Under this rule, persons who intend to import, manufacture or process this substance 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. Comments on this proposal are due no later than Aug. 15. 

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