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August 3 2012 Issue

Friday, August 03, 2012
Sandler, Travis & Rosenberg Trade Report

House, Senate Pass Bills on Trade with Latin America, Africa, Burma 

The House and Senate passed Aug. 2 legislation to renew trade sanctions on Burma, extend trade preferences for sub-Saharan Africa and amend a free trade agreement with Central America. The approval followed the lifting of two holds in the Senate, one that was resolved by voting on an amendment that would have revised how the bill is paid for (which failed) and the other that was removed after Senate leaders gave assurances that the renewal of the cotton and wool trust funds will be addressed this year. 

AGOA. This bill will extend through September 2015 the third-country fabric provision under the African Growth and Opportunity Act, which provides duty-free treatment to apparel produced in AGOA beneficiary countries from fabric produced anywhere in the world and had been slated to expire this fall. In addition, the Republic of South Sudan will be added to the list of countries eligible for AGOA benefits, including for apparel, textiles and footwear. 

DR-CAFTA. The bill will make technical corrections and modifications to the DR-CAFTA rules of origin for certain textile and apparel products. These corrections include a change clarifying that certain monofilament sewing thread is required to be produced in the U.S. or the DR-CAFTA region in order for goods to qualify for preferential tariff treatment. The other modifications clarify or correct the language used in the text of the agreement and relate to the treatment of certain nightwear as well as several products under the short supply list, including elastomeric yarns, knit waistbands and knit-to-shape components. 

Burma. This bill reauthorizes import sanctions against Burma for three years and provides that these sanctions will remain in place until at least July 2013. 

It appears likely that Congress will wait until it returns from its summer recess in September to vote on legislation to extend permanent normal trade relations status to Russia and Moldova, which has passed both the House Ways and Means Committee and the Senate Finance Committee. Prospects remain unclear for other bills recently approved by Senate Finance that would tighten enforcement of trade remedy laws and create or reauthorize federal trust funds for citrus, cotton shirting fabrics and wool. 

FDA Sets FY 2013 Fees for Facility and Importer Reinspections 

The Food and Drug Administration has announced its fiscal year 2013 fee rates for certain domestic and foreign facility reinspections, failures to comply with a recall order, and importer reinspections. Fees for these services will be assessed at the rate of $221 per hour if domestic travel is required and $289 per hour if foreign travel is required. However, the FDA indicates that these fees will not be assessed until certain additional steps are completed. Comments on the fees are being accepted through Oct. 31.

Under the FDA Food Safety Modernization Act the FDA may assess a fee for a reinspection that is (a) conducted to determine whether corrective actions have been implemented and are effective and compliance has been achieved to FDA’s satisfaction at a facility that manufactures, processes, packs or holds food for consumption and (b) necessitated as a result of a previous inspection of the facility that had a final classification of Official Action Indicated when the FDA determined that the non-compliance was materially related to food safety requirements of the Federal Food, Drug and Cosmetic Act. This fee may be collected from the responsible party for each domestic facility and the U.S. agent for each foreign facility subject to a reinspection. 

The FDA is also authorized to assess fees for not complying with a recall order; e.g., not initiating a recall as ordered by the FDA, not conducting a recall in the manner specified by the FDA in a recall order, or not providing the FDA with requested information regarding an FDA-ordered recall. Such fees are to be paid by the responsible party for a domestic facility and an importer who does not comply with a recall order. 

The fee for import reinspection will generally be assessed in the following situations: (1) reconditioning of imported food to bring it into compliance, (2) importer request for admission of an article that has been detained , (3) request for removal from an import alert for detention without physical examination, and (4) destruction of food that has been refused admission. 

Fees Delayed Pending Resolution of Outstanding Issues. In recognition of the fact that these fees could present a hardship for small businesses, the FDA is developing a guidance document to outline the process through which firms may request a reduction of fees. The FDA states that it does not intend to issue invoices for reinspection or recall order fees until this guidance document has been published. 

The FDA is also in the process of considering various issues associated with the assessment and collection of importer reinspection fees. Recognizing the particular complexities involved in these issues, the FDA states that it is not in a position to assess importer reinspection fees until it has resolved these issues and will not assess such fees until it notifies the public. However, the fee rates set forth above will be used to determine any importer reinspection fees that may be assessed in FY 2013. 

For more information on this issue or any FDA matters, please contact: 

Edgar J. Asebey-Birkholm, Esq. 
Chair, FDA Practice Group 
(305) 894-1012 

Ann Marie Gaitan 
Senior Associate 
(305) 894-1008 

U.S.-Ukraine Trade Talks Focus on IPR and Taxation 

In a statement issued following a July 31 meeting of the U.S.-Ukraine Trade and Investment Council in Washington, D.C., the Office of the U.S. Trade Representative noted progress on the following issues. 

Intellectual Property Rights. Ukraine committed to redouble its efforts, especially those identified in the 2010 IPR Action Plan, to implement protections that benefit both Ukrainian and U.S. inventors and creators. Ukraine also plans to increase the number of intellectual property inspectors and to adopt a new Customs Code intended to improve customs valuation procedures. 

Taxation. Ukraine has increased payments of value-added tax arrears to U.S. companies since 2011 and has committed to pay outstanding and future VAT refunds in a more timely and easier manner. Officials also discussed Ukraine’s new automatic VAT refund system, which Ukraine has pledged to make more transparent and applicable to more companies. 

Civil Aviation. Ukraine has ratified the Cape Town Convention, which will increase its ability to finance the purchase of aircraft and related equipment. Officials discussed the Federal Aviation Administration’s Technical Review, which will help in determining Ukraine's progress in making the necessary technical changes to achieve compliance with international standards and is another step toward Ukraine’s goal of having its airlines operate flights more frequently to the U.S. and enter into code sharing arrangements with U.S. air carriers. Once all necessary actions have been completed, additional discussions will occur regarding any future assessment under the International Aviation Safety Assessment program. 

Trade Experts Group. A Trade Experts Group was established with the goal of making it easier to achieve more rapid resolution of trade, investment and commercial issues. 

Agriculture. The two sides reviewed regulatory, scientific and technical cooperation in agriculture and ways to promote the expansion of bilateral trade relations in agriculture and the food industry. 

Space. Officials emphasized the prospects for bilateral cooperation in research and implementation of commercial projects in space. 

Investment. Recognizing the government of Ukraine’s desire to encourage foreign investment and its efforts to improve its standing in the World Bank’s Ease of Doing Business Index, the two sides examined some of the systemic issues that have affected the business climate in Ukraine. 

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. 

Aug. 6 – comments on proposed modification of ruling on use of transaction value for calculating regional value content under NAFTA  

Aug. 6 – comments on proposed revocation or modification of classification rulings  

Aug. 6 – comments on extension of import declaration for certain plants and plant products  

Aug. 7 – comments on proposed requirements for CPSC acceptance of accreditation of third-party conformity assessment body for testing children’s products 

Aug. 7 – ST&R webinar on compliance with EAR deemed export rule and ITAR technical data transfer requirements  

Aug. 8 – comments on possible development of container freight indices for U.S. agricultural exports  

Aug. 8 – STTAS seminar in Detroit on classification of automotive products  

Aug. 9 – comments on application for presidential permit for new cross-border bridge in Detroit  

Aug. 9 – applications for inclusion on list of persons available to serve on FTA dispute settlement panels 

Aug. 9 – ST&R webinar on C-TPAT risk assessment, internal audit and annual review  

Aug. 9 – STTAS seminar in Detroit on light-duty vehicles under NAFTA  

Aug. 10 – meeting of USTR committee on small and minority business  

Aug. 10 – comments on proposed rule to strengthen accountability of representatives in AD/CV duty cases

$17 Million Penalty for Price Fixing in Coastal Freight Industry 

The Department of Justice reports that a Florida-based ocean freight carrier has been sentenced to pay a $17 million criminal fine after pleading guilty to participating in a conspiracy to fix prices in the coastal water freight transportation industry. This carrier transports a variety of cargo shipments, such as heavy equipment, cargo that would not fit into containers, used cars and liquids capable of being transported only in tanker containers, on scheduled ocean voyages between the U.S. and Puerto Rico. The DOJ notes that as a result of its ongoing antitrust investigation into this industry three freight companies have been sentenced to pay criminal fines totaling more than $45 million and five executives have been sentenced to serve prison time totaling more than 11 years.

USDA Highlights Work to Remove Trade Barriers, Expand Market Access  

The Department of Agriculture’s Animal and Plant Health Inspection Service issued Aug. 1 a press release highlighting the work it has done so far in fiscal year 2012 to remove foreign trade barriers and expand foreign market access for U.S. agricultural products. The press release notes that these efforts have helped push agricultural exports to record levels since 2009 and are supporting President Obama’s goal of doubling U.S. exports by the end of 2014. 

APHIS states that since Sept. 1 it has worked with federal, international and industry partners to arrange for the release of 209 shipments of U.S. products valued at more than $39 million that were detained at foreign ports of entry pending resolution of various animal and plant health questions. For example, APHIS arranged for the release of six shipments of cherries and $1.5 million of cotton held at Chinese ports. 

In addition, APHIS has helped to open or maintain more than $51 million in overseas markets for U.S. agricultural products. This includes negotiating to reopen the Chinese market for U.S. log exports in a six-month pilot program, facilitating the first export of 1,400 cattle to Angola, and helping California producers ship stonefruit to Mexico. 

APHIS notes that it has launched a new Web site that will help exporters find information on its services, including trade information and regulations. This Web site also serves as the news hub for APHIS trade updates, with links to trade-related feeds from the APHIS newsroom, Twitter and the USDA blog. 

AD/CV Notices: Pasta, Small Diameter Pipe  

Agency: International Trade Administration. 
Commodity: Pasta. 
Country: Italy. 
Nature of Notice: Preliminary results of administrative review of antidumping duty order for the period July 1, 2010, through June 30, 2011. 
Details: Weighted average dumping margins of zero or 6.97% for reviewed manufacturers/exporters. Intent to revoke AD duty order with respect to one company after three years of no dumping. 

Agency: International Trade Administration. 
Commodity: Pasta. 
Country: Turkey. 
Nature of Notice: Preliminary results of administrative review of countervailing duty order for the period Jan. 1 through Dec. 31, 2010. 
Details: Net subsidy rates of 0.15% and 0.28% for reviewed exporter/manufacturers, both of which are de minimis. 

Agency: International Trade Administration. 
Commodity: Small diameter seamless carbon and alloy standard, line and pressure pipe. 
Country: Germany. 
Nature of Notice: Sunset review determination that revocation of this antidumping duty order would likely lead to the continuation or recurrence of dumping at the rate of 57.72%. 

FTZ Board Asked to Reorganize Michigan Zone, Approve Activity at Fragrance Facility  

Reorganization of Michigan Zone. The Foreign-Trade Zones Board is accepting comments through Oct. 2 on an application from the City of Battle Creek, Mich., grantee of FTZ 43, for authority to reorganize this zone under the alternative site framework. The proposed service area would be Allegan, Barry, Berrien, Branch, Calhoun, Cass, Clinton, Eaton, Ingham, Ionia, Jackson, Kalamazoo, St. Joseph and Van Buren counties, within and adjacent to the Battle Creek U.S. Customs and Border Protection port of entry. This application would have no impact on FTZ 43’s previously authorized subzones. 

Production Activity in New York. The FTZ Board has received from Takasago International Corporation a notification of proposed production activity for its fragrance compound manufacturing facility in Harriman, N.Y. Production under FTZ procedures could exempt Takasago from customs duty payments on the foreign status components used in export production. On its domestic sales, Takasago would be able to choose the duty rates that apply to fragrances (zero) for foreign status inputs. Customs duties also could possibly be deferred or reduced on foreign status production equipment. Comments on this proposal are due no later than Sept. 12. 

Monthly Surface Trade with Canada and Mexico Up 5% in April  

U.S. monthly surface transportation trade in goods with NAFTA partners Canada and Mexico rose 5.0% in May, according to statistics released July 31 by the Department of Transportation. The May total of $83.8 billion was also up 8.3% from a year before. Over the last ten years total surface transportation trade with Canada and Mexico has risen 72.6%, including an 85.9% gain for exports and a 62.5% increase for imports. 

Surface transportation includes freight movements by truck, rail, pipeline, mail, foreign-trade zones and other modes and in May accounted for 86.5% of U.S. trade by value with Canada and Mexico. Surface trade between the U.S. and Canada totaled $48.1 billion, up 2.1% from April and 4.0% from the year before. Exports climbed 3.9% for the month and 5.1% from the previous May, while imports saw a 0.4% monthly rise and a 3.0% gain year-on-year. U.S.-Mexico surface transportation trade totaled $35.6 billion, up 9.2% from April and 14.9% from the previous year. Exports rose 8.1% and imports jumped 10.2% for the month, and both categories saw increases from May 2011 as well (15.5% and 14.4%, respectively). 

Import Restrictions on Plants Hosting Chrysanthemum White Rust Under Review  

The Department of Agriculture’s Animal and Plant Health Inspection Service is soliciting comments through Oct. 2 on whether and how it should amend its process for responding to the importation of plant material that is a host of chrysanthemum white rust. 

Current Requirements. The importation of CWR host plants for planting from a number of countries and localities is currently prohibited to prevent the introduction of CWR into the U.S. I CWR host plants for planting imported from all other countries must be accompanied by a phytosanitary certificate with an additional declaration stating that the plants and place of production have been inspected and found free of the causal agent of CWR. Imported host material must be grown under the conditions of a post-entry quarantine growing agreement at an approved location for six months and be inspected prior to being released from quarantine. 

The importation of cut flowers of CWR host plants from countries where CWR is known to occur is restricted as well. Consignments of such flowers must be accompanied by a phytosanitary certificate with an additional declaration stating that the place of production and the consignment have been inspected and found free of the causal agent of CWR. 

Changes Under Consideration. Despite these restrictions, APHIS states, detections of CWR within the U.S. continue to occur, leading to costly eradication measures. In addition, many stakeholders no longer consider the causal agent of CWR to be a pest of quarantine significance due to its limited host range, its frequent detection within the U.S. and the availability of treatment/control measures within countries where it is present. APHIS is therefore considering, and is now requesting comments on, the following four options. 

- continuing to manage CWR as a quarantine pest with the objective of continuing to eradicate new infestations 

- designating CWR as a regulated non-quarantine pest, which would allow for the creation of a certification program for propagators in foreign countries who want to export cuttings of CWR hosts to the U.S. 

- no longer managing CWR as a quarantine pest whose presence requires an eradication-oriented response but maintaining port of entry restrictions for chrysanthemums destined to those states where CWR is not present and that have established an official control program 

- completely removing CWR as a quarantine pest whose presence requires an eradication-oriented response, thus allowing propagators and growers to manage CWR as a quality pest without federal restrictions 

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