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August 8 2012 Issue

Wednesday, August 08, 2012
Sandler, Travis & Rosenberg Trade Report

CBP Reminds Trade Community of Sept. 29 Transition of Rail and Sea Manifests to ACE  

U.S. Customs and Border Protection is reminding the trade community that there are fewer than 60 days left until all rail and sea cargo information and ABI in-bond transactions must be submitted through the Automated Commercial Environment. As of Sept. 29 the rail and sea manifest capabilities of the Automated Commercial System will be decommissioned and ACE will be the only CBP-approved electronic data interchange through which such manifests may be transmitted. 

CBP is therefore warning those who submit sea or rail cargo information, file ABI in-bond transactions or receive broker download information via ABI that their transactions will fail once this transition occurs unless they or their software providers transition to ACE. To ensure that this does not happen, the following steps must be completed by Sept. 29: the required programming changes must be completed, certification testing must be completed in coordination with the client representative, and the switch to production for ACE e-Manifest: Rail and Sea (also known as M1) must made. CBP notes that as of July 31, 96% of ocean carriers and 83% of ABI software developers affected by the change to M1 had completed or were in the process of onboarding and all rail carriers were in production or testing. 

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. 

E-manifest for trucks was deployed in February 2007 and is used to process an average of 190,000 trucks nationally per week. E-manifest for air and integration of the multimodal manifest is anticipated at some point in the future but has not yet been planned. 

BIS Official Details Export Enforcement Performance, Priorities  

David Mills, assistant Commerce secretary for export enforcement, gave attendees at the Bureau of Industry and Security’s Update Conference in Washington, D.C., an overview of the bureau’s recent export enforcement performance and an outline of its planned enforcement efforts as items are transferred from the U.S. Munitions List to the Commerce Control List. 

Enforcement Performance in 2011. Office of Export Enforcement investigations resulted in the conviction of 29 individuals who received prison sentences totaling 572 months. There also were criminal convictions of 10 companies. “With individuals being convicted three times as often as companies,” Mills said, “you are seeing our emphasis on individual responsibility.” Together these cases resulted in the imposition of $20.2 million in criminal fines and $2.1 million in forfeitures, and OEE is on track to meet or exceed those numbers in 2012. 

OEE and the BIS Office of Chief Counsel resolved 39 administrative enforcement cases, which imposed a total of $8.5 million in fines and 26 export denial orders. So far in 2012 OEE has resolved 24 administrative cases with $6.4 million in fines and 24 export denial orders. But not all investigations end with the imposition of penalties, as OEE issued 227 warning letters in 2011 and has issued 181 so far in 2012. Mills noted that criminal and administrative sanctions, including fines, denial orders and placement on the Entity List, can be pursued independently or in conjunction with each other depending on the circumstances of a particular case. 

There were 213 voluntary self-disclosure investigations opened nationwide, 60% of which have already been closed. In 2012 there have been 68 VSD investigations opened to date and approximately 30% have been closed. BIS will continue its efforts to speed up the resolution of VSD cases. 

BIS completed 891 end-use verifications, up 25% from the previous year. End-use check visits were conducted in 60 countries and over 18% of those visits were rated unfavorable; i.e., BIS detected a violation or a compliance issue or identified unreliable recipients of U.S. items and technology. 

The Office of Antiboycott Compliance settled eight cases totaling $129,300 in administrative penalties and issued two warning letters. In 2012 to date the OAC has settled seven cases totaling $100,600 in penalties and issued three warning letters. 

Enhanced Enforcement of Transferred Items. Mills highlighted several “significant cases” that he said “illustrate three characteristics about our organization that will tell you something about how we will enforce controls on items being transferred from the USML to the CCL.” Specifically, BIS will continue to (a) place a high priority on identifying and disrupting illicit global procurement networks for parts and components that are being used to make improvised explosive devices, (b) pursue investigative leads systematically and thoroughly, which “can and often does result in one case leading to another case, and to still another case,” and (3) strongly encourage exporters to submit voluntary self-disclosures, which result in nothing more than a warning letter “in the great majority of cases” and can “substantially” reduce any penalty that may be assessed. 

Mills also outlined the following plan for enhanced enforcement of items transferred from the USML to the CCL. 

- conduct targeted outreach to affected companies and reach out to counterparts in U.S. Customs and Border Protection to ensure that the transition phase does not inhibit legitimate transfers of 600 series items 

- work with the Census Bureau to establish new electronic validations in the Automated Export System, including linking the use of license exception STA to a valid State or Commerce license number to ensure 600 series items are not inadvertently shipped to foreign consignees that have not been previously vetted by the government 

- through the use of intelligence information via the Information Triage Unit, provide reliable and objective data to facilitate licensing officers’ reviews of the bona fides of foreign parties to license applications 

- systematically review transactions of license exception STA to verify that the end-users are eligible and compliant 

- work with the State Department to coordinate end-use checks at foreign firms receiving 600 series parts and components for incorporation into ITAR-controlled end-items 

- focus on illicit procurement networks seeking not only weapons of mass destruction and IEDs but also 600 series items and information suppression technology 

ITC to Study Economic Effect of Adding Canada and Mexico to Trans-Pacific Trade Pact  

The U.S. International Trade Commission has launched an investigation into the probable economic effect of adding Canada and Mexico to the Trans-Pacific Partnership Agreement currently under negotiation. In a report to be submitted to the Office of the U.S. Trade Representative no later than Nov. 19, the ITC will update its previous advice on the TPP (which remains confidential) to cover the effect of duty-free treatment for imports of products of all ten current TPP partners on U.S. consumers as well as industries in the U.S. producing like or directly competitive articles. 

The ITC states that in preparing its advice it will consider each article in chapters 1 through 97 of the Harmonized Tariff Schedule of the United States for which tariffs will remain, taking into account the implementation of U.S. commitments in the World Trade Organization and under free trade agreements the U.S. has with TPP countries. The advice will be based on the 2011 HTS nomenclature and trade data for 2011. It will assume that any known U.S. non-tariff barrier will not be applicable to such imports, and the ITC will note in its report any instance in which the continued application of a U.S. non-tariff barrier would result in different advice with respect to the effect of the removal of the duty. The ITC will also prepare an assessment of the probable economic effect of eliminating tariffs on imports of certain agricultural products on U.S. industries producing those products and the economy as a whole. 

The ITC is seeking input for this investigation from all interested parties and requests that such information focus on the issues for which the Commission has been requested to provide information and advice. A public hearing will be held Sept. 12 and written submissions for the record are due no later than 5:15 p.m. on Sept. 19. 

Drug Maker Penalized $60 Million for FCPA Violations  

The Securities and Exchange Commission announced Aug. 7 that a U.S. pharmaceutical company and a similar firm it acquired in 2009 will pay more than $45 million to the SEC to settle charges that they violated the Foreign Corrupt Practices Act. The parent company will also pay a $15 million penalty as part of a deferred prosecution agreement with the Department of Justice concerning related charges. 

According to an SEC press release, employees and agents of the company’s subsidiaries in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia and Serbia made improper payments to foreign officials to obtain regulatory and formulary approvals, sales, and increased prescriptions for the company’s pharmaceutical products. They also tried to conceal the bribery by improperly recording the transactions in accounting records as legitimate expenses for promotional activities, marketing, training, travel and entertainment, clinical trials, freight, conferences and advertising. 

The SEC notes that the company made an initial voluntary disclosure of misconduct by its subsidiaries in October 2004 and fully cooperated with SEC investigators. It also “took such extensive remedial actions as undertaking a comprehensive worldwide review of its compliance program.” Following its acquisition of the other drug manufacturer involved, the company undertook a risk-based FCPA due diligence review of the other’s global operations, voluntarily reported the findings to SEC staff, and “diligently and promptly” integrated the legacy operations into its own compliance program. 

Of Note: U.S. v. China at WTO, Air Cargo Price Fixing, Pakistan-Mercosur Talks  

At WTO, a growing U.S. record of wins against China, but a less than certain benefit 
More Air Cargo Carriers Fined for Price Fixing 

Pakistan, Mercosur may hold talks on trade pact

AD/CV Notices: Woven Ribbons, Diamond Sawblades, Citric Acid  

Agency: International Trade Administration. 
Commodity: Narrow woven ribbons with woven selvedge. 
Country: China. 
Nature of Notice: Preliminary results of administrative review of antidumping duty order for the period Sept. 1, 2010, through Aug. 31, 2011. 
Details: Weighted average dumping margins ranging from 123.83% to 247.65%. Rescission of review with respect to Yangzhou Bestpak Gifts & Crafts Co. Ltd. and Precious Planet Ribbons & Bows Co. Ltd., which timely withdrew their requests for review. 

Agency: International Trade Administration. 
Commodity: Diamond sawblades and parts thereof. 
Country: China. 
Nature of Notice: Rescission of administrative review of antidumping duty order for the period Jan. 23, 2009, through Oct. 31, 2010, with respect to subject merchandise exported by Hebei Jikai Industrial Group Co. Ltd. or Jiangyin Likn Industry Co. Ltd. 

Agency: International Trade Administration. 
Commodity: Citric acid and certain citrate salts. 
Country: China. 
Nature of Notice: Intent to rescind administrative review of countervailing duty order for the period Jan. 1 through Dec. 31, 2011, with respect to Yixing-Union Biochemical Co. Ltd. based on preliminary determination that this company had no entries of subject merchandise into the U.S. during the period of review. 

CBP Reviewing Information Collections on Protests, Petroleum Refineries  

U.S. Customs and Border Protection is inviting public comments through Oct. 9 on the proposed extension without change of the following information collections. 

CBP Form 19, Protest – This form is used by an importer, filer or any party at interest to petition CBP or protest any action or charge made by the port director with respect to imported merchandise. 

Petroleum Refineries in Foreign Trade Subzones – Refiners and CBP may assess the relative value of multiple products at the end of the manufacturing period during which these products were produced when the actual quantities of these products resulting from the refining process can be measured with certainty. Also, products refined in a subzone during a manufacturing period may be attributed to a given crude introduced into production during the period to the extent that such products were producible or could have been produced the from quantities removed from the subzone if Industry Standards of Potential Production on a Practical Operating Basis (known as producibility) is utilized. The operator of the refinery subzone is required to retain all records relating to the above activities for five years after the merchandise is removed from the subzone. Further, the records must be readily available for CBP review at the subzone. 

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 #002391F: Silva, Leonel d/b/a Best Forwarders, Inglewood, Calif. 
- license #003180NF: Seajet Express Inc. d/b/a Seajet Express Container Line Ltd. d/b/a Gateway Container Line, Chelsea, Mass. 
- license #004638F: Fits Limited Liability Company, Kingwood, Texas 
- license #009709N: Zonn Agency, Los Altos, Calif. 
- license #12454N: Federation Exports-Imports Inc., Inglewood, Calif. 
- license #014040N: Gulf South Forest Products Inc., Fort Lauderdale, Fla. 
- license #014807N: Ape Freight International Inc., Jamaica, N.Y. 
- license #015255F: Triways Shipping Lines Inc., Hawthorne, Calif. 
- license #017524F: Natco International Transports USA LLC, Miami, Fla. 
- license #017994NF: Standard Overseas Inc., Los Angeles, Calif. 
- license #018629NF: Zust Bachmeier International Inc. d/b/a Z Lines, Humble, Texas 
- license #019986N: Evox Logistics Inc., South Pasadena, Calif. 
- license #021706N: Unity Vanlines Inc., Carlstadt, N.J. 
- license #022748NF: Transglad Inc., Brooklyn, N.Y. 
- license #022773F: WLI (USA) Inc., Jamaica, N.Y. 
- license #022992N: Westwind Shipping and Logistics Inc., New York, N.Y.

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

- license #000347F: T. A. Provence and Company Incorporated, Mobile, Ala. 
- license #016914F: Air Sea Cargo Network Inc., Oakland, Calif. 

In addition, the FMC has rescinded its order revoking license #015187N issued to Gage Shipping Lines Ltd. of Baltimore, Md. 

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. 

- A & E Logistics Inc., Chicago, Ill. 
- American International Shipping, Anaheim, Calif. 
- Baggio USA Inc., Miami, Fla. 
- Bonaberi Shipping & Moving Inc., Hyattsville, Md. 
- C & C Group Inc., Doral, Fla. 
- Carex Shipping LLC, Santa Fe, N.M. 
- Hyun Dae Trucking Co. Inc., Los Angeles, Calif. 
- RDD Freight International (Atlanta) Inc., Norcross, Ga. 
- Translogistic USA Service Inc., Miami, Fla. 

Cargo Shipping Topics to be Discussed at Sept. 5 State Dept. Meeting  

The State Department’s Shipping Coordinating Committee will hold an open meeting Sept. 5 in Washington, D.C., to prepare for the 17th session of the International Maritime Organization's Sub-Committee on Dangerous Goods, Solid Cargoes and Containers, which will be held in the United Kingdom Sept. 17-21. Agenda items to be considered include the following. 

- amendment 37-14 to the International Maritime Dangerous Goods Code and supplements, including harmonization with the United Nations recommendations on the transport of dangerous goods 

- revision of the guidelines for packing of cargo transport units 

- development of measures to prevent loss of containers 

- development of guidance for approved continuous examination programs 

- development of criteria for the evaluation of environmentally hazardous solid bulk cargoes in relation to the revised MARPOL Annex V 

- stowage of water-reactive materials

Ex-Im Bank Asked to Finance Exports of Nuclear Reactor Components to UAE  

The Export-Import Bank is accepting through Sept. 4 comments on an application for final commitment for a long-term loan or financial guarantee in excess of $100 million. The transaction at issue would support the export of U.S.-manufactured nuclear reactor components and U.S.-supplied engineering services to the United Arab Emirates to generate electrical power for the national grid. To the extent that the Ex-Im Bank is reasonably aware, the items being exported are not expected to produce exports or provide services in competition with the exportation of goods or provision of services by a U.S. industry.

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 Aug. 20. 

International Council of Containership Operators – The amendment deletes Regional Container Lines Public Company Limited from the agreement. 

Ocean Carrier Equipment Management Association Agreement – The amendment deletes Crowley Maritime Corporation, Crowley Latin America Services LLC and Crowley Caribbean Services LLC as parties to the agreement.

Commercial Labs and Gaugers Approved  

U.S. Customs and Border Protection has announced that the following companies have been accredited as commercial laboratories and/or approved as commercial gaugers. 

- effective Oct. 19, 2011, Chem Gas International LLC of Dickinson, Texas, has been approved to gauge and accredited to test petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes 

- effective April 3, 2012, Saybolt LP of Texas City, Texas, has been approved to gauge and accredited to test petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes 

- effective April 25, 2012, Saybolt LP of Deer Park, Texas, has been approved to gauge and accredited to test petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes 

- effective May 9, 2012, SGS North America Inc. of Bridgeport, N.J., has been approved to gauge and accredited to test petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes 

- effective June 2, 2012, Saybolt LP of Sulfur, La., has been approved to gauge petroleum, petroleum products, organic chemicals and vegetable oils for customs purposes 

- effective April 3, 2012, SGS North America Inc. of Texas City, Texas, has been approved to gauge petroleum, petroleum products, organic chemicals and vegetable oils for customs purposes

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