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July 20 2012 Issue

Friday, July 20, 2012
Sandler, Travis & Rosenberg Trade Report

Senate Finance Committee Approves Bills on Russia PNTR, Trade Enforcement, Etc.

The Senate Finance Committee approved July 18 legislation extending permanent normal trade relations to Russia and Moldova as well as bills to tighten enforcement of trade remedies, create or renew federal trust funds for wool, cotton and citrus, renew sanctions on Burma, and amend trade programs benefiting Africa and Central America. (click here for more details on these bills

Russia PNTR. This bill would revoke the Jackson-Vanik Amendment and grant PNTR to Russia, ensuring that Russian goods are subject to the same tariffs upon importation into the U.S. as those from virtually every other country. The committee added to this bill a measure allowing the U.S. to impose certain restrictions on individuals determined to have participated in human rights abuses. These sanctions are targeted at Russian officials involved in the death of an activist in police custody but are broadly applicable to anyone who meets the specified criteria. Finally, this bill grants PNTR with Moldova. 

An Inside US Trade article notes that the vote in favor of Russia PNTR was unanimous, which Committee Chairman Max Baucus said “gives us a lot of momentum” and will hopefully allow the full Senate to “pass this bill sometime before the election” in November. However, the article adds, Senate Majority Leader Harry Reid is not expected to schedule a vote on this bill until the House acts because as a revenue measure it needs to originate in that chamber. House Ways and Means Committee Chairman Dave Camp said that he prefers to pass a “clean” version of Russia PNTR (i.e., without the human rights provisions) and that he hopes to schedule a markup of such a bill soon once he finds a Democrat willing to co-sponsor it. It is therefore uncertain whether the U.S. will grant PNTR before Russia officially joins the World Trade Organization next month; if not, U.S. companies will not immediately be able to take advantage of many of the concessions Moscow made as part of its WTO accession bid. 

AGOA/DR-CAFTA/Burma. This bill extends through September 2015 the third-country fabric provision under the African Growth and Opportunity Act, adds the Republic of South Sudan to the list of countries eligible for AGOA benefits, makes technical corrections and modifications to the DR-CAFTA rules of origin for certain textile and apparel products, and reauthorizes import sanctions against Burma for three years. 

Trade Remedy Enforcement. The committee approved a modified version of the Enforcing Orders and Reducing Customs Evasion (ENFORCE) Act (S. 1133), which would create a set of procedures for U.S. Customs and Border Protection to investigate allegations of evasion of antidumping and countervailing duty orders. 

Press reports indicate that this bill passed after Sen. Debbie Stabenow withdrew an effort to add the Protect American Innovation Act, which is aimed at further tightening the enforcement of intellectual property rights with respect to imported goods. Baucus reportedly said Senate Finance will take up Stabenow’s measure as part of a customs reauthorization bill that will be considered this fall. Also withdrawn was an effort by Sen. Orrin Hatch to get U.S. Customs and Border Protection to launch a user fee reimbursement pilot program at up to three airports, three seaports and three land ports. 

On the other hand, International Trade Daily reports, the committee did approve an amendment that would require the Office of the U.S. Trade Representative to pursue the elimination of market-distorting subsidies and practices in the Canadian lumber market as part of the Trans-Pacific Partnership agreement negotiations. 

Trust Funds. This bill creates a federal trust fund to support research on diseases affecting the citrus industry; reauthorizes through 2015 the Cotton Trust Fund, which temporarily suspended duties on certain cotton shirting fabrics; and fully restores wool trust fund payment levels in calendar years 2010 through 2012 and ensures that the Wool Trust Fund is fully funded through 2014. 

According to Inside US Trade, committee members rejected an effort to add to this bill a provision reinstating trade promotion authority for any trade agreement signed in 2013, which was largely aimed at allowing expedited congressional consideration of the Trans-Pacific Partnership agreement. Also denied were efforts to add provisions to reform the miscellaneous trade bill process and eliminate import duties on certain footwear and recreational outerwear. 

Textile and Apparel Enforcement Actions Somewhat Slower Through First Half of FY 2012

U.S. Customs and Border Protection has posted to its Web site the following statistics on its textile and apparel enforcement efforts in the first half of fiscal year 2012. The statistics show an increase in commercial fraud penalties and liquidated damages claims but a slowdown in most other categories. 

- no quota seizures (there were none in FY 2011 either) 

- 3,654 intellectual property seizures valued at $5.21 million (roughly on pace to match FY 2011) 

- 10 commercial fraud penalties totaling $27.76 million (more than in all of FY 2011) 

- 531 liquidated damages claims associated with textiles (compared to 746 total for FY 2011), the vast majority of which were related to entry 

- 57 factories in three countries have been visited to investigate concerns about illegal transshipment and trade preference claims (less than half the FY 2011 total), with the percentage of discrepant factories at 19% for the former and 32% for the latter 

- 3,668 examinations conducted (well under the pace of FY 2011) with an average 12% discrepant rate 

- no audits initiated or completed and no recommended recoveries (compared to 36, 40 and $6.5 million for FY 2011) 

- 543 samples tested in CBP labs (less than half the FY 2011 total) and 295 found to be discrepant 

- no special enforcement operations initiated or completed (versus eight and seven in FY 2011) 

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. 

July 23 – comments on issues raised in China’s WTO complaint on U.S. CV duty orders  

July 23 – comments on defense export brokering information collections  

July 23 – effective date of final rule establishing requirements for periodic audit of third-party conformity assessment bodies under Consumer Product Safety Improvement Act of 2008  

July 24 – ST&R webinar on International Traffic in Arms Regulations  

July 25 – input for second Joint Strategic Plan on Intellectual Property Enforcement 

July 26 – ST&R webinar on antiboycott issues  

July 26 – Defense Trade Advisory Group meeting  

July 27 – deadline for preliminary AD duty determination on large residential washers from Korea and Mexico  

July 27 – deadline for applications for appointment to CBP Commercial Operations Advisory Committee 

Tribunal Says Low-Priced Canadian Timber Not in Violation of Softwood Lumber Agreement

A tribunal of the London Court of International Arbitration ruled July 18 that a timber-pricing system in the Canadian province of British Columbia does not violate the Softwood Lumber Agreement between Canada and the U.S. The SLA is designed to constrain softwood lumber exports from Canada to the U.S. when demand in the U.S. is low and to allow unrestricted trade in favorable market conditions. The U.S. has previously won two other SLA-related disputes, which required Canada to impose additional export duties totaling nearly C$130 million. The two sides recently extended the SLA until October 2015, but at least one U.S. lumber group said that this week’s decision could affect its evaluation of whether to support the agreement in the future. 

The U.S. argued that by selling timber harvested from public lands in the interior region of British Columbia for prices below those provided for under the timber pricing system permitted under the SLA, the Canadian government provided a benefit to domestic softwood lumber producers in circumvention of the export measures provided for in the SLA. Canada claimed that the increased proportion of low-value logs in the province’s timber harvest was caused by “the devastating impacts of the mountain pine beetle infestation,” which “killed millions of hectares of timber in British Columbia and reduced the value and grade of the logs.” However, the U.S. said the volume of lumber classified as “salvage” and assigned a lower price had increased far more than is justified when known factors affecting timber quality, including damage from the mountain pine beetle, are taken into account. 

A press release from the Canadian trade ministry states that the tribunal rendered a decision favorable to Ottawa , but the Office of the U.S. Trade Representative asserted that “the tribunal did not sanction the pricing practices in British Columbia.” A USTR press release states that while the tribunal acknowledged the “dramatic increase” in the amount of timber priced as salvage it “was unable to find a conclusive link between the increase and action by British Columbia.” The U.S. Lumber Coalition explains that because there were multiple actions by the British Columbia government that had the effect of mis-grading timber, together with the legitimate damage caused by the mountain pine beetle, the tribunal found that the specific effect of any one action on the grading of logs that no longer exist could not be determined. In the meantime, USTR added, British Columbia has modified its timber pricing system and the U.S. will be monitoring the resulting pricing closely. 

AD Notices: Pipe Fittings, Pipe, Folding Gift Boxes

Agency: International Trade Administration. 
Commodity: Stainless steel butt-weld pipe fittings. 
Country: Italy, Malaysia and the Philippines. 
Nature of Notice: Continuation of antidumping duty orders for five years, effective July 20. 
Details: Butt-weld pipe fittings are under 14 inches in outside diameter (based on nominal pipe size), whether finished or unfinished. The product encompasses all grades of stainless steel and commodity and specialty fittings. The fittings subject to the orders are currently classifiable under HTSUS 7307.23.0000. Specifically excluded are threaded, grooved and bolted fittings and fittings made from any material other than stainless steel. The orders also do not apply to cast fittings. 

Agency: International Trade Commission. 
Commodity: Seamless carbon and alloy steel, standard, line and pressure pipe. 
Country: Germany. 
Nature of Notice: Scheduling of expedited sunset review of antidumping duty order. 

Agency: International Trade Commission. 
Commodity: Folding gift boxes. 
Country: China. 
Nature of Notice: Scheduling of expedited sunset review of antidumping duty order. 

Import Restrictions Proposed for Integrated Circuits and Products Containing Them

An International Trade Commission administrative law judge has issued a final initial determination that the importation, sale for importation and sale within the U.S. after importation of certain integrated circuits, chipsets and products containing same, including televisions, are violating certain patents. The ALJ has therefore proposed to issue a limited exclusion order against such goods imported by two respondents. 

The ITC is now inviting comments through Aug. 13 on the effect of the recommended relief on the public health and welfare, competitive conditions in the U.S. economy, the production of like or directly competitive articles in the U.S., and U.S. consumers. In particular, the ITC is interested in comments that: 

- explain how the articles potentially subject to the recommended orders are used in the U.S.; 

- identify any public health, safety or welfare concerns in the U.S. relating to the recommended 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 recommended exclusion order and/or a cease and desist order within a commercially reasonable time; and 

- explain how the limited exclusion order would impact consumers in the U.S. 

Ex-Im Bank Approves $57.3 Million in Financing for Renewable Energy Exports to India

The Export-Import Bank of the United States announced July 18 that it has authorized a pair of loans totaling $57.3 million to finance the export of U.S. solar panels and ancillary services to India, where they will be used in the construction of solar photovoltaic plants. An agency press release notes that India is one of Ex-Im Bank’s nine key markets and accounted for approximately $7 billion of the Bank’s worldwide credit exposure as of the end of fiscal year 2011. In addition, so far in FY 2012 the Bank has authorized approximately $380 million for renewable energy exports of all types worldwide.  

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