Print PDF

July 18 2012 issue

Wednesday, July 18, 2012
Sandler, Travis & Rosenberg Trade Report

WTO Announces Split Decision in U.S. Case Against Chinese Electronic Payment Services

A World Trade Organization dispute settlement panel issued July 16 a mixed decision in a case brought by the U.S. against China’s policies on electronic payment services. U.S. Trade Representative Ron Kirk said the ruling represents a victory over what he called China’s “pervasive discrimination against U.S. suppliers of electronic payment services” and that the U.S. stands to gain 6,000 jobs if China complies. Beijing, however, pointed out that the ruling rejected several U.S. arguments. 

According to a USTR press release, EPS are what make possible payments using credit, debit, prepaid and other payment cards by enabling, facilitating and managing the flow of information and the transfer of funds from cardholders’ banks to merchants’ banks. Each year well over one $1 trillion worth of electronic payment card transactions are processed in China, but the U.S. alleged that the People’s Bank of China has issued a series of measures dating back to 2001 that discriminate against foreign suppliers of EPS at every stage of a payment card transaction. Among other things, the U.S. claimed, these measures establish China UnionPay as the sole supplier of EPS for all domestic renminbi payment card transactions and prohibit the use of non-CUP cards for inter-bank and cross-region payment card transactions. The U.S. argued that China assumed market access and national treatment commitments under the General Agreement on Trade in Services to permit the supply of EPS both on a cross-border basis (under mode 1) and through commercial presence (under mode 3) and that the requirements at issue are inconsistent with those obligations. 

According to the WTO, the panel found that China’s GATS commitments do not include allowing the cross-border supply of EPS into China by foreign EPS suppliers but do include allowing foreign EPS suppliers to supply their services through commercial presence in China so long as they meet certain qualification requirements related to local currency business. The panel also concluded that China made a full national treatment commitment for the cross-border supply of EPS as well as a national treatment commitment under mode 3 that is also subject to certain qualification requirements related to local currency business. 

In addition, the WTO states, the panel found insufficient evidence that China maintains CUP as an across-the-board monopoly supplier for the processing of all domestic RMB payment card transactions, thus rejecting in their entirety the United States’ market access and national treatment claims in respect of this alleged requirement. However, the panel did conclude that China maintains CUP as a monopoly supplier for the clearing of certain types of RMB-denominated payment card transactions and thus acted inconsistently with its mode 3 market access commitment under Article XVI:2(a) of the GATS. 

The panel also ruled that China fails to provide national treatment to foreign EPS suppliers by modifying the conditions of competition in favor of CUP through a number of other measures, including requirements that all payment cards issued in China bear the “Yin Lian”/“UnionPay” logo and be interoperable with that network, that all terminal equipment in China be capable of accepting such cards, and that acquiring institutions post the “Yin Lian”/“UnionPay” logo and be capable of accepting all payment cards bearing that logo. 

A Reuters article quoted USTR General Counsel Tim Reif as saying that while the U.S. lost on some points of the dispute “it has absolutely no impact on the finding that every single aspect of China’s discriminatory regime has been found inconsistent with WTO rules and China is going to have to fix that.” 

Of Note: Updated Informed Compliance Publications, EU-Japan FTA

Revised informed compliance publication on distinguishing bolts from screws  
Revised informed compliance publication on hand tool sets  
EU opens door to Japan trade talks, new era of deals

$400,000 Penalty for Failure to Report Product Hazard

The Consumer Product Safety Commission reports that a New York company has agreed to pay a civil penalty of $400,000 to resolve allegations that it knowingly failed to immediately report the defect and hazard associated with certain magnetic building sets. These sets were labeled for ages three and up, but small magnets inside the building pieces can fall out and if found by young children can be swallowed or aspirated. If more than one magnet is swallowed, the magnets can attract each other, connect and cause intestinal perforations or blockages, which can be fatal.

CPSC staff alleged that the company received its first report of magnets coming loose from these sets in October 2005 but did not report to the CPSC until two years later, by which time it had received 16 reports of magnets coming out of the sets and two reports of children ingesting non-magnetized steel balls. The commission further alleges that the company was aware of the dangers posed by the ingestion of magnets by this time in light of several recalls of similar toys and the CPSC’s issuance of an alert warning parents of the risk of serious injury and death to children from magnet ingestion. 

Federal law requires manufacturers, distributors and retailers to report to the CPSC within 24 hours after obtaining information reasonably supporting the conclusion that a product contains a defect that could create a substantial product hazard, creates an unreasonable risk of serious injury or death, or fails to comply with any consumer product safety rule or any other rule, regulation, standard or ban enforced by the CPSC.

AD Notices: Urea, Pencils, Power Transformers

Agency: International Trade Administration. 
Commodity: Solid urea. 
Country: Russia. 
Nature of Notice: Preliminary results of administrative review of antidumping duty order for the period July 1, 2010, through June 30, 2011. 
Details: Zero dumping margin for sole reviewed exporter. 

Agency: International Trade Administration. 
Commodity: Cased pencils. 
Country: China. 
Nature of Notice: Initiation and preliminary results of changed circumstances review of antidumping duty order. 
Details: Intent to revoke order with respect to certain novelty drumstick pencils, retroactive to June 1, 2011. 

Agency: International Trade Commission. 
Commodity: Large power transformers. 
Country: Korea. 
Nature of Notice: Revised schedule for antidumping injury investigation. 
Details: Final release of information on Aug. 3 and final party comments due Aug. 7. 

Canada Launches AD/CV Probe of Chinese Unitized Wall Modules

The Canada Border Services Agency initiated July 16 antidumping and countervailing duty investigations of certain unitized wall modules originating in or exported from China. The Canadian International Trade Tribunal will now begin a preliminary inquiry to determine whether these imports are harming Canadian producers and will issue a decision by Sept. 14. The CBSA’s preliminary determinations are due by Oct. 15. If they are affirmative, the CBSA’s final determinations would be due within another 90 days; otherwise, the investigations will be terminated. 

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 #347F: T.A. Provence and Company Incorporated, Mobile, Ala. 
- license #011056NF: EMO-Trans Georgia Inc., Atlanta, Ga. 
- license #13488N: FCL/LCL International Inc., Jamaica, N.Y. 
- license #15187N: Gage Shipping Lines Ltd., Baltimore, Md. 
- license #015941F: Cargo Plus Inc., Pennsauken, N.J. 
- license #017267N: Just In Time Services Inc., Doral, Fla. 
- license #017754N: Adcom Express Inc. d/b/a Adcom Worldwide, Edina, Minn. 
- license #019288N: Kairos Logistics LLC, Cerritos, Calif. 
- license #020717NF: SS-World Enterprise Inc. d/b/a Smooth Shipping, Grand Prairie, Texas 
- license #022228N: Mota Import Export LLC d/b/a MTI Mota Import Cargo Express, Perth Amboy, N.J. 
- license #022597N: Sky Express World Courier Inc., Los Angeles, Calif. 
- license #023327N: G & F West Indies Shipping Inc., Boston, Mass. 

OTI License Reissued. The Federal Maritime Commission has given notice that the following ocean transportation intermediary license has been reissued. 

- license #003918F: Benison International Transportation Inc., Santa Fe Springs, Calif. 

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. 

- AG Technical Group LLC, Dallas, Texas 
- Central Ohio Logistics Center LLC, Jeffersonville, Ohio 
- DEC Global Logistics Inc., Houston, Texas 
- Roosevelt Elias d/b/a E Global Shipping Line, Montgomery, Texas 
- Garces & Garces Cargo Service Inc., Miami, Fla. 
- Innocent Peter Ajaroh d/b/a Innglo Global, Richmond, Texas 
- Mega Shipping Inc., El Monte, Calif. 
- Meiko America Inc., Torrance, Calif. 
- Nidsan Shipping Inc., New York, N.Y. 
- Norman G. Jensen Inc. d/b/a Jensen Marine Services, Minneapolis, Minn.
- Novomarine Container Line LLC, Orlando, Fla. 
- PNG Worldwide LLC, Lititz, Pa. 
- Seaway Export LLC, Savannah, Ga. 
- Sermar Enterprises Inc., Miami, Fla. 

DOT Notes Hazmat Special Permit Applications, Decisions, Delays in Processing

The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration has issued the following concerning exceptions from the Hazardous Materials Regulations. 

- a list of applications for special permits for exceptions from the HMR, including for motor vehicles, rail freight, cargo vessels, cargo aircraft and passenger-carrying aircraft (comments due no later than Aug. 17) 

- a list of applications to modify previously issued special permits; e.g., to provide for additional hazardous materials, packaging design changes, additional mode of transportation, etc. (comments due no later than Aug. 2)

- a list of actions taken on special permit applications, including modified, new and emergency permits granted or withdrawn and permits denied 

- a list of special permit applications that have been in process for 180 days or more, including the reason(s) for delay and the expected completion date 

Foreign Regulatory Changes Could Affect Exports of Fuel, Fruits, Plastics, 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. 

Canada – June 20 entry into force of amended regulations on sulfur in diesel fuel 

Colombia – extension to Oct. 1 of comment period on draft technical regulation on sanitary requirements for fruits that are processed, packaged, transported, imported and marketed in the national territory 

Dominican Republic – standards on plastics, concrete, concrete cylinders and laundry soap (comments due by Aug. 20) 

India – amended regulation on control of importation of pharmaceutical products 

Import Limits for Three List I Chemicals to be Modified for 2012

The Justice Department’s Drug Enforcement Administration has issued a notice proposing to increase the limits on the quantity of ephedrine and phenylpropanolamine (both for sale) and pseudoephedrine that can be imported into or produced in the U.S. in 2012. These limits would be increased from 4,000 kg to 4,300 kg for ephedrine, 5,200 kg to 5,800 kg for phenylpropanolamine, and 258,000 kg to 278,000 kg for pseudoephedrine. There would be no change to the current limits on phenylpropanolamine (26,200 kg) or ephedrine (12,000 kg) for conversion. Comments on this proposal are due no later than Aug. 17. 

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 30. 

Maersk Line/CMA CGM TP5 Space Charter Agreement – The amendment would add China to the geographic scope, add language reflecting the fact that Maersk’s TP5 service will be operated in cooperation with another carrier, and delete obsolete language. 

Siem Car Carrier Pacific AS/Hyundai Glovis Co., Ltd. Space Charter Agreement – The amendment revises the geographic scope of the agreement to include Asia (including Korea, Japan, the Philippines, Singapore and China) and authorizes the mutual chartering of space between the parties. 

Maersk/MSC Vessel Sharing Agreement – The agreement authorizes the parties to share vessels in the trades between China, Korea and Japan and ports in California and Alaska. 

Port of Oakland Truck Tracking Program – The agreement would provide for delivery of data to the Port of Oakland by the participating marine terminal operators and various arrangements associated with that data delivery. 

Port of Long Beach Data Services Agreement – The agreement would provide for delivery of data to the Port of Long Beach by the participating marine terminal operators and PierPass Inc. and various arrangements associated with that data delivery. 

To get news like this in your inbox daily, subscribe to the Sandler, Travis & Rosenberg Trade Report.

Customs & International Headlines