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August 13 2012 Issue

Monday, August 13, 2012
Sandler, Travis & Rosenberg Trade Report

Trade Deficit Falls for Third Straight Month in June

Trade statistics released Aug. 9 by the Department of Commerce show that the monthly U.S. trade deficit in goods and services fell for the third straight month in June, down by 10.7% to $42.9 billion following drops of 5.0% in May and 3.8% in April. Exports increased 0.9% or $1.7 billion to a record $185.0 billion while imports fell 1.5% or $3.5 billion to a four-month low of $227.9 billion. Compared to a year earlier, the June trade deficit was down 14.7% or $7.4 billion as exports climbed $12.3 billion (7.1%) and imports rose $4.9 billion (2.2%). 

According to DOC, the goods trade deficit fell 8.6% or $5.4 billion in June to $57.5 billion after a 3.4% or $2.2 billion drop in May. The services surplus experienced a 1.9% or $0.3 billion decline to $14.6 billion in June. Exports of goods rose 1.4% from the previous month and 9.1% from a year ago to $132.8 billion in June, while imports declined 1.8% from a month ago but were 1.6% higher than a year ago at $190.3 billion. Services exports inched down 0.3% from May but were still 2.3% higher than in June 2011 at $52.2 billion, while imports grew 0.3% from a month ago and 5.1% from a year ago to $37.6 billion. 

The bilateral trade deficit with China increased for the fourth month in a row, up 5.2% to $27.4 billion. Deficits also increased with Russia (18.0% to $2.1 billion), Thailand (9.7% to $1.4 billion), Nigeria (1.0% to $1.4 billion), France (130.3% to $0.8 billion) and Indonesia (15.5% to $0.7 billion). Deficits fell with the European Union (20.1% to $8.4 billion), Japan (7.2% to $6.0 billion), Mexico (6.5% to $5.9 billion), Germany (16.6% to $4.1 billion), Saudi Arabia (33.2% to $3.0 billion), Ireland (6.0% to $2.6 billion), India (4.7% to $1.7 billion), Canada (25.9% to $1.5 billion), Taiwan (12.6% to $1.2 billion) and South Korea (43.5% to $1.1 billion). 

The U.S. ran surpluses with several trade partners in June, including Hong Kong (down 7.6% to $2.6 billion), Australia (up 11.7% to $1.9 billion), the Netherlands (down 7.6% to $1.6 billion), Belgium (up 51.4% to $1.2 billion) and Singapore (up 21.0% to $1.2 billion). .

Ex-Im Bank Approves $2 Billion in Financing for Renewable Energy Exports to South Africa

The Export-Import Bank of the United States and the Industrial Development Corp. of South Africa Ltd. on Aug. 7 signed a declaration of intent to help advance the South African government’s Integrated Resource Plan and the South African Renewable Initiative. Under the agreement the Ex-Im Bank will assist in financing up to $2 billion worth of U.S. technologies, products and services exports to South Africa’s energy sector, with an emphasis on clean energy development. An agency press release notes that South Africa is the largest U.S. export market in sub-Saharan Africa with $7.3 billion in total exports last year. South Africa has been chosen as one of nine key markets that offer great potential for U.S. exports due to the size of its economy and close trading and investment linkages to the U.S. The Ex-Im Bank indicates that it authorized more than $930 million in financing to support U.S. exports to South Africa in fiscal year 2011.

In the first three quarters of FY 2012 the Ex-Im Bank has approved a record $1.5 billion in financing to support U.S. exports to sub-Saharan Africa, up from the previous record of $1.4 billion in FY 2011. Notably, last year the Ex-Im Bank financed 6.7% of U.S. exports to the region.

AD Notices: Large Power Transformers, Folding Gift Boxes

Agency: ITC.
Commodity: Large power transformers.
Country: Korea. 
Nature of Notice: Final affirmative injury determination in AD investigation. 
Details: The ITC has determined that a U.S. industry is materially injured by reason of imports of large power transformers from Korea that DOC has determined are sold in the United States at less than fair value. As a result, DOC will issue an AD duty order on subject merchandise.

Agency: ITC.
Commodity: Folding gift boxes.
Country: China. 
Nature of Notice: Postponement of release of staff report and date for final comments in AD sunset review. 
Details: The ITC is postponing the release of its staff report and final comment date until after the DOC’s preliminary determination scheduled for Oct. 19. At that time, the ITC will establish revised dates for the release of the report and the submission of final comments.

FTZB Approves New Foreign-Trade Zone in Oregon, Seeks Comments on Proposed Production Activity at Virginia FTZ

The Foreign-Trade Zones Board has approved a request for subzone status from the Port of Portland, grantee of FTZ 45, along with a notification of production activity at the Shimadzu USA Manufacturing Inc. facility in Canby, Ore. This facility is used for the production of chromatographs, mass spectrometers and related equipment such as liquid chromatograph pumps, fraction collectors, auto samplers, lab instruments, controllers and column ovens. Production under FTZ procedures could exempt Shimadzu from customs duty payments on the foreign status components used in export production and customs duties also could possibly be deferred or reduced on foreign status production equipment. The original application indicated that certain of the bearings that would be used are subject to an antidumping/countervailing duty order. 

Separately, the FTZB is seeking comments by Sept. 24 on a notification of proposed production activity filed by the Virginia Port Authority, grantee of FTZ 20, on behalf of Usui International Corporation. Located in Chesapeake (Virginia) within site 9 of FTZ 20, the Usui facility is used for the production of diesel engine fuel lines. Production under FTZ procedures could exempt Usui from customs duty payments on foreign status components used in export production. On its domestic sales, Usui would be able to choose the duty rate during customs entry procedures that applies to diesel engine fuel lines (2.5%) for the foreign status inputs noted below. Customs duties also could possibly be deferred or reduced on foreign status production equipment. The application indicates that components and materials sourced from abroad include plastic caps and clips, rubber orings, paper labels, adhesive tape, tubes/pipes/profiles, fasteners, springs, tags, brackets, engine parts, plates, fixtures, alarm tanks, and caps (duty rate ranges from free to 8.5%).

EPA Extends Deadline to Submit Applications for 2015 Critical Use Exemptions for Methyl Bromide Uses

The Environmental Protection Agency has extended from Aug. 15 to Aug. 29 the deadline to submit applications for the critical use exemption from the phaseout of methyl bromide for 2015. Methyl bromide stakeholders indicated that they required additional time to complete their applications because recent industry involvement with associated international meetings impeded their ability to devote adequate time to the application process. All entities interested in obtaining an exemption must provide EPA with technical and economic information to support their claim and must do so by the deadline even if they have applied for an exemption in previous years.

USDA Seeks Comments on Information Collections Involving Imports of Swine/Swine Products and Pork-Filled Pasta

The Department of Agriculture is seeking comments by Sept. 12 on the following existing information collections. 

Importation of Pork-Filled Pasta. A certificate must be completed and signed by the issuing official and contains such information as the origin of the meat used in the product, the name and location of the facility that processed the product, and the product’s intended destination. The USDA contends that the lack of that information would significantly cripple the ability of the Animal and Plant Health Inspection Service to ensure that pork-filled pasta from certain regions pose a minimal risk of introducing swine vesicular disease into the United States. 

Importation of Swine and Swine Products from the European Union. To help APHIS ensure that classical swine fever is not introduced into the United States, the regulations allow, under specified conditions, the importation of pork, pork products and swine from the APHIS-defined European Union CSF region. These requirements necessitate the use of several information collection activities, including certification statements from the importation of pork, pork products and swine. The USDA notes that failing to collect this information would increase the chances of CSF being introduced into the United States.

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