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August 16 2012 Issue

Thursday, August 16, 2012
Sandler, Travis & Rosenberg Trade Report

Iranian Sanctions Bill Holds U.S. Parent Companies Liable for Actions by their Foreign Subsidiaries

As reported last week in the ST&R Trade Report, Congress passed the “Iran Threat Reduction and Syrian Human Rights Act” (H.R.1905) which will become effective Oct. 9. A lot media attention has focused on the passage of this bill as the upcoming presidential election nears. However, the bill primarily amends current U.S. sanctions on Iran, such as the Iran Sanctions Act, the Comprehensive Iran Sanctions, Divestment and Accountability Act (“CISADA”), and the Iran Transactions Regulations. The most significant provision of the bill would levy sanctions on U.S. parent companies of foreign subsidiaries and affiliates that engage in transactions involving Iran. Maximum civil penalties that can be assessed for violations of the legislation would be twice the value of the underlying transaction unless the U.S. parent divests itself of the foreign entity within 180 days after the bill has been enacted (i.e., by Feb. 6, 2013). 

In addition, by Feb. 6, 2013 all companies covered by Section 13 of the Securities and Exchange Act of 1934 will be required to disclose in their quarterly and annual reports whether they or their foreign entities have: 

(A) knowingly engaged in an activity or a transaction prohibited by the Iran Sanctions Act or CISADA; 

(B) knowingly engaged in any human rights abuses committed against the Iranian people as identified under section 105A(b)(2); or, 

(C) knowingly conducted any transactions or dealings with Specially Designated Nationals who are involved in terrorist activities, weapons of mass destruction, or the Government of Iran. 

U.S. parent companies will also be required to submit a detailed description of each such activity (i.e., the nature and extent of the activity, gross revenues and net profits earned from the activity, and whether the U.S. parent or foreign entity intends to continue the activity). This information will also be required to be the subject of a separate filing with the SEC, which will in turn report the information to the president and Congress.                                                

Other provisions in the bill amending existing law and regulations are intended to strengthen the current sanctions imposed on the Iranian energy sector; the transportation of oil from Iran (including shipping company evasions); the development of weapons of mass destruction in Iran; the provision of vessels and/or shipping services to transport certain goods related to terrorism or nuclear proliferation activities; underwriting, insuring or reinsuring the National Iranian Oil Company or the National Iranian Tanker Company; purchasing, subscribing to or facilitating Iranian sovereign debt; or dealings with certain Specially Designated Nationals.                                                
For more information about this legislation or current U.S. restrictions on Iran, please contact Melissa Miller Proctor atmproctor@strtrade.com, Donna L. Bade at dbade@strtrade.com, or Anu Gavini at agavini@strtrade.com.

USTR Reschedules Hearing to Examine GSP Country Practice Petitions

As previously reported, the Office of the U.S. Trade Representative announced July 12 that the hearing for the country practice petitions accepted as part of the 2011 annual Generalized System of Preferences review, which concern practices of Fiji, Indonesia, Iraq and Ukraine, was scheduled for Sept. 27. Pre-hearing briefs and requests to appear at the hearing were originally due by Sept. 13 while post-hearing comments were due by Oct. 18. However, the USTR has decided to reschedule the hearing and associated deadlines as follows: pre-hearing briefs and requests to appear at the hearing are now due by Sept. 18; the hearing will be held on Oct. 2; and pos-hearing briefs must be filed by Oct. 23.

Comments Sought on India’s WTO Case against U.S. CV Measures on Steel Products

The USTR is seeking comments by Sept. 28 on the issues raised by India in a World Trade Organization dispute settlement case concerning the U.S. countervailing measures on certain hot-rolled carbon steel flat products. The USTR indicates that India’s challenge addresses sections 771(7)(G) and 776(b) of the Tariff Act of 1930 as well as sections 351.308 and 351.511(a)(2)(i)-(iv) of Title 19 of the U.S. Code of Federal Regulations. In addition, India is challenging certain U.S. actions with respect to the CV duty determinations and the CV duty order on subject merchandise from India. India alleges inconsistencies with Articles I and IV of the General Agreement on Tariffs and Trade 1994 and Articles 1, 2, 10, 11, 12, 13, 14, 15, 19, 21, 22 and 32 of the WTO Agreement on Subsidies and Countervailing Measures.

CBP to Modify Eligibility for Duty-Free Treatment under HTSUS 9801.0025, Classification of Saddle Blankets, Work Footwear, Hose Assemblies

In the Aug. 15, 2012, Customs Bulletin and Decisions, U.S. Customs and Border Protection revoked classification rulings on the following products, effective Oct. 15, 2012. 

Product: Saddle blankets. 
Action: Revocation of HQ 082167. 
New ruling: HQ H161715. 
New classification: HTSUS 4201.00.60, other saddlery and harnesses for any animal (2.8% duty). 
Explanation: The subject blankets are marketed and sold as saddle blankets and the manufacturer is a saddle blanket manufacturer with over 60 years in the business of hand-weaving saddle blankets exclusively for the equine industry. Accordingly, CBP has determined that the blankets in question are principally used as saddle blankets and should be classified as such. 

Product: Rubber and plastic hose assemblies for vacuum cleaners. Action:Revocation of HQ 735542 and modification of NY K85099. New rulings: HQ H024323 and HQ H024320. 
New classifications: HTSUS 4009.12.00, tubes, pipes and hoses of vulcanized rubber other than hard rubber, not reinforced or otherwise combined with other materials, with fittings (duty-free). HTSUS 3917.33.00, other plastic tubes, pipes and hoses, not reinforced or otherwise combined with other materials, with fittings (3.1% duty). 

CBP is also proposing to revoke classification rulings on the following products. Comments are due by Sept. 14. 

Product: Certain products re-imported for repair, upgrade or exchange. 
Proposed action: Revocation of NY N163660 and N069900. 
Current duty treatment: Eligible for duty-free treatment under HTSUS 9801.0025. 
Proposed duty treatment: Not eligible for duty-free treatment under HTSUS 9801.0025. 
Explanation: CBP held in these rulings that certain products re-imported for repair, upgrade or exchange were eligible for duty-free treatment under HTSUS 9801.00.25. It is now CBP’s position that tires re-imported for upgrade would not be eligible for duty-free treatment, and tires, cameras and camera accessories re-imported for repair or exchange would only be eligible if there are delivered not conforming to sample or specifications. 

Product: Work footwear. 
Proposed action: Revocation of NY N039199 and modification of NY N039198. 
Current classification: HTSUS 6403.99.6075, other men’s footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather (8.5% duty); and HTSUS 6403.99.9065, other women’s footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather, valued over $2.50/pair (10% duty). 
Proposed classification: HTSUS 6403.99.6025, men’s, youth’s and boys’ work footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather (8.5% duty). HTSUS 6403.99.9015, women’s work footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather, valued over $2.50/pair (10% duty). 
Explanation: CBP states that this footwear meets the requirements enumerated in Statistical Note 1(a) of HTSUS Chapter 64 to be considered work footwear. The footwear has outer soles of rubber or plastics, marketing and sales materials substantiate that the footwear was designed for use by food service industry employees, and the footwear has special oil and slip resistance features to protect against slippage and other hazards. In addition, the footwear styles do not have any of the features listed in Statistical Note 1(a) that work footwear does not have.

FTC Extends Deadline to Submit Input on Jewelry Guides

The Federal Trade Commission has extended from Aug. 27 to Sept. 28 the deadline for interested parties to submit comments on the costs, benefits, necessity for, and regulatory and economic impact of its “Guides for the Jewelry, Precious Metals, and Pewter Industries.” The Jewelry Guides explain to businesses how to avoid making deceptive claims about precious metal, pewter, diamond, gemstone and pearl products and when they should make disclosures to avoid unfair or deceptive trade practices. 

The FTC has received inquiries in recent years that suggest that technological developments and related changes in industry standards and practice may affect certain provisions of the Jewelry Guides. Some inquiries also indicate that modifying the FTC’s consumer and business education materials could improve industry and consumer understanding of the Jewelry Guides. Accordingly, the FTC is seeking comments on several specific issues (e.g., the advertising of stones comprising a mixture of ruby/corundum and lead-glass, the use of the term “cultured” to describe industry products created in a laboratory or factory, issues related to freshwater pearls, and the non-deceptive description of alloys and alloy products) as well as input regarding any other issues or concerns relating to the Jewelry Guides.

Section 337 Investigation of Certain Mobile Devices Amended

On April 6, the U.S. International Trade Commission instituted a Section 337 investigation of certain mobile electronic devices incorporating haptics from Taiwan by reason of infringement of six patent claims. On May 21, the complainant requested that the administrative law judge amend the investigation to assert certain patent claims based upon a recent certificate of correction issued by the U.S. Patent and Trademark Office for that patent. In addition, the complainant sought to add an additional claim that it alleged had been omitted from the notice of the investigation because of a typographical error. The ALJ subsequently granted the complainant’s motion and the ITC has decided not to review this decision.

FMC: OTI License Applications/ Reissuances/ Revocations

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. 


OTI Licenses Reissued, Revoked. The FMC has given notice that it has reissued an ocean transportation intermediary license for G & F West Indies Shipping Inc., Boston, Mass. (license #023327N). In addition, the FMC has revoked the licenses listed below. A revocation may occur after a license is surrendered voluntarily by the OTI or for failure to maintain a valid bond. 

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