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August 10 2012 Issue

Friday, August 10, 2012
Sandler, Travis & Rosenberg Trade Report

ITC Launches Investigation of Proposed Information Technology Agreement Expansion

The U.S. International Trade Commission has launched an investigation into the proposed expansion of the Information Technology Agreement, a plurilateral agreement that liberalized trade in computers, semiconductors, telecommunications, software and other electronics products. The ITA currently includes 74 participants representing 97 percent of trade in products covered by the agreement.

The ITC investigation will cover a list of products compiled by the Office of the U.S. Trade Representative and included HS Chapters 32, 37, 39, 48, 49, 69, 70, 74, 84, 85, 88, 90, 94, 95 and 96 that could be considered for duty-free treatment under the ITA. The ITC expects to deliver an initial report to the USTR by Oct. 24 with information on both information and communications technology and non-ICT uses of these products. The report will also identify products that U.S. industry and other interested parties view as import sensitive. The ITC will accept comments in connection with this report by Sept. 6.

A second report, which the ITC hopes to deliver to the USTR by Feb. 15, 2013, will identify for each product the major producing countries, leading U.S. export markets, leading sources of U.S. imports, and tariffs applied to these products in major markets. The report will also include an overview of key subsectors and, to the extent practicable, examine the benefits to U.S. industry of ITA expansion. The ITC will hold a hearing in connection with the second report on Nov. 8 and accept input from interested parties by Nov. 20. 

USTR Begins Annual ATPA Review

The USTR has initiated its 2012 annual review of the Andean Trade Preference Act (ATPA). Under this process, petitions may be filed no later than Sept. 17 calling for the limitation, withdrawal or suspension of ATPA or ATPDEA benefits by presenting evidence that the eligibility criteria of the program are not being met. Ecuador is currently the only beneficiary of the program. Bolivia’s benefits were suspended several years ago based on that country’s failure to meet certain counternarcotics cooperation criteria. Colombia and Peru are no longer included in ATPA/ATPDEA because they receive preferential duty treatment under separate bilateral free trade agreements with the U.S.

The criteria that must be considered include the criteria for eligibility under the original ATPA as well as the criteria added by the ATPDEA. ATPA criteria include, among other things, whether a country has: (i) seized ownership or control of property owned by a U.S. citizen or company by expropriation, violation of intellectual property rights, enforcement of restrictive operational conditions, etc.; (ii) failed to enforce arbitral awards in favor of U.S. citizens or companies; (iii) given preferential treatment to the products of another developed country that has a significant adverse effect on U.S. commerce; or (iv) taken steps to afford internationally recognized workers’ rights to its workers.

Other factors that must be taken into account include: the economic conditions in that country; the degree to which it follows the accepted rules of international trade; its use of export subsidies, export performance requirements, or local content requirements; its IPR protection laws and practices; its cooperation with U.S. counternarcotics efforts; etc.

Under the ATPDEA, the criteria include: (i) whether the country has committed to undertake its WTO obligations and participate in negotiations toward the FTAA or another FTA; (ii) the extent to which it provides IPR protection equal to or greater than the protection afforded under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs); (iii) the extent to which it provides internationally recognized worker rights; (iv) whether it has implemented its commitments to eliminate the worst forms of child labor; (v) the extent to which it has met U.S. counternarcotics certification criteria; (vi) the extent to which it has taken steps to become a party to and implement the Inter-American Convention Against Corruption; (vii) the extent to which it applies transparent, non-discriminatory, and competitive procedures in government procurement equal to those contained in the WTO Agreement on Government Procurement, and the extent to which it contributes to efforts in international fora to develop and implement rules on transparency in government procurement; and (viii) the extent to which it has supported U.S. efforts to combat terrorism.

CPSC Continues Efforts to Address Safety Hazards Posed by Magnetic Toys

The Consumer Product Safety Commission has stepped up efforts to address the serious safety issues posed to children by certain magnetic toys. Most recently, the CPSC sued a Colorado company alleging that its powerful rare earth magnets contain a defect in the design, packaging, warnings and instructions that poses a substantial risk of injury to the public. CPSC staff alleges in the complaint that the warning and labeling included with that product are defective because they do not effectively communicate the hazard associated with ingestion of the product. The complaint further alleges that the product’s design and packaging are also defective because they fail to prevent children from gaining access to the product, and do not allow parents or caregivers to know readily if a magnet is missing and is potentially within the reach of a young child. Moreover, the complaint alleges that once separated from the packaging the individual magnets themselves display no warning against ingestion or aspiration, and the small size of the individual magnets precludes the addition of such a warning.

The CPSC notes that it decided to file an administrative complaint against this company after discussions with the company failed to result in a voluntary recall plan that CPSC staff considered to be adequate. This is only the third administrative complaint filed by the CPSC in the past 11 years, which showcases the seriousness of this hazard in the eyes of the Commission. In fact, the CPSC was scheduled to hold a meeting on Aug. 9 to consider a proposed rule on hazardous magnet sets.

Schedule of ITC Economic Impact Assessment of Adding Canada and Mexico to TPP

As previously reported, the ITC has launched an investigation into the probable economic effect of adding Canada and Mexico to the Trans-Pacific Partnership Agreement currently under negotiation. 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 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 recently issued a complete schedule for this investigation, as follows: parties have until Aug. 30 to file requests to appear at the public hearing; the deadline for filing pre-hearing briefs and statements is Aug. 31; the public hearing will be held on Sept. 12; parties wishing to file post-hearing briefs and statements must do so by Sept. 17; and the deadline for filing all other written submissions is Sept. 19. The ITC is expected to submit its report to the USTR no later than Nov. 19.

AD Notices: Certain Pasta, Ferrovanadium/Nitrided Vanadium

Agency: ITA.
Commodity: Certain pasta.
Country: Italy.
Nature of Notice: Initiation of AD changed circumstances review.
Details: The ITA has initiated a changed circumstances review to determine whether Delverde Industrie Alimentari S.p.A. is the successor-in-interest to Del Verde S.p.A. In changed circumstances reviews involving a successor-in-interest determination the ITA typically examines several factors including management, production facilities, supplier relationships and customer base.

Agency: ITC.
Commodity: Ferrovanadium and nitrided vanadium.
Country: Russia.
Nature of Notice: Final negative injury determination in AD sunset review.
Details: The ITC has determined that revoking the existing AD duty order on subject merchandise would not be likely to lead to the continuation or recurrence of material injury within a reasonably foreseeable time. As a result, this order will be terminated.

FTZB Approves New Miami Foreign-Trade Zone, Considers Reorganization and Subzone Status Applications by New York and Texas FTZs

The Foreign-Trade Zones Board has approved an application by the Miami-Dade County to establish a general-purpose foreign-trade zone (FTZ 281) under the alternative site framework at sites in Miami, Florida, within the Miami Customs and Border Protection port of entry. The ASF is an option for grantees for the establishment or reorganization of general-purpose zones and can permit significantly greater flexibility in the designation of new subzones or “usage-driven” FTZ sites for operators/users located within a grantee’s service area in the context of the FTZB’s standard 2,000-acre activation limit for zone.

The service area under the ASF is the northern half of Miami-Dade County, delineated by SW 8th Street (SR-90/US 41) as the southern boundary. The zone will be able to serve sites throughout the service area based on companies’ needs for FTZ designation. FTZ 281 is the fourth general-purpose zone for the Miami CBP port of entry. The other zones are FTZ 32, Miami (Greater Miami Foreign Trade Zone Inc. as grantee), FTZ 166, Homestead (Vision Foreign Trade Zone Inc. as grantee) and FTZ 180, Miami/Wynwood (Wynwood Community Economic Development Corporation as grantee).

Separately, the FTZB is seeking input by Oct. 9 (rebuttal comments are due by Oct. 24) on an application by the County of Onondaga, grantee of FTZ 90, requesting authority to reorganize the zone under the ASF. The grantee’s proposed service area would be Onondaga, Cayuga, Oswego and Madison Counties in New York. If approved, the grantee would be able to serve sites throughout the service area based on companies’ needs for FTZ designation. The proposed service area is within and adjacent to the Syracuse Customs and Border Protection port of entry.

Parties may also submit input by Sept. 19 (rebuttal comments are due by Oct. 4) on an application by the McAllen Foreign Trade Zone Inc., grantee of FTZ 12, requesting special-purpose subzone status for the facility of TST NA TRIM, LLC, located in Hidalgo, Texas. The proposed subzone would be subject to the existing activation limit of FTZ 12.

Labor Dept. Announces Competitive Solicitation for Cooperative Agreements to Combat Child Labor in Cambodia

The Department of Labor’s International Labor Affairs has announced a $10 million competitive solicitation for cooperative agreements to combat child labor in Cambodia’s agriculture, fishing, fisheries/aquaculture and domestic service sectors. Projects funded under the solicitation will focus on reducing social exclusion and promoting economic opportunities for Cambodian households with children who are vulnerable to child labor. Eligible applicants should address ways to combat child labor by increasing children’s access to quality education and vocational/skills training; promoting sustainable livelihoods for affected households; increasing beneficiaries' access to national social protection programs that help households overcome dependence on child labor to meet basic needs; and increasing access to decent jobs for young people of legal working age. The deadline to submit applications is Oct. 2.

OFAC Publishes General Licenses Related to Burma Sanctions Program

The Department of the Treasury’s Office of Foreign Assets Control has published General License No. 16 and General License No. 17 issued under the Burma sanctions program. General License No. 16 authorizes the exportation or re-exportation of financial services to Burma, directly or indirectly, from the United States or by a U.S. person wherever located, subject to certain limitations. General License No. 17 authorizes new investment in Burma by U.S. persons, subject to certain limitations and requirements.

OFAC notes that the transactions authorized by General License No. 16 include the activities formerly authorized by General License No. 14-C, dated April 17, 2012, authorizing certain financial transactions in support of humanitarian, religious and other not-for-profit activities in Burma, and General License No. 15, dated May 9, 2008, authorizing noncommercial, personal remittances to Burma. Accordingly, General License No. 14-C and General License No. 15 have been replaced and superseded in their entirety by General License No. 16.

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