Print PDF

September 4 2012 Issue

Tuesday, September 04, 2012
Sandler, Travis & Rosenberg Trade Report

Brazilian Textile and Clothing Association Files Safeguard Action against Imported Apparel  

[Editor’s note: The following article originally appeared in the Aug. 30, 2012, issue of the Advisor, a weekly publication of our STR-TAP service (, and is reprinted here with permission.] 

The Brazilian Textile and Apparel Industry Association (ABIT) reported on Aug. 24 that it has filed a safeguard petition covering 60 clothing products that account for 82 percent of Brazil’s total apparel imports. The petition covers apparel imports from all suppliers and regions and not just those originating in China, although it appears that Chinese apparel is the main target of this action. The filing apparently includes over 2,000 pages of information and was submitted on August 23 to Brazil’s Ministry of Development, Industry and Commerce (MDIC). ABIT favors the establishment of quotas on apparel imports although it would also accept the imposition of 
additional tariffs. 

The petition is confidential but according to ABIT it focuses on the 240 percent increase in apparel imports from 2007 to 2011 and a significant decrease in domestic production. Most of this import growth came from Asia and particularly China. Representatives from ABIT were quoted as saying that they are against predatory imports from Asian countries and currency fluctuations that have resulted in a strong real and an undervalued yuan. ABIT also claims that the economic downturn has led to sluggish apparel sales to the United States and the EU, generating excess production that Asian countries are exporting to other markets like Brazil. 

The Brazilian Association of Textile Retailers has expressed opposition to this process. It claims that the Brazilian industry has not kept up with innovation and cost reductions promoted by the global textile industry. They have also mentioned that only 35 companies have presented data to the MDIC in a universe of 30,000 producers in Brazil. 

There is no exact timeline as to when the Brazilian authorities will decide whether to reject the petition or accept it and initiate an official investigation.

Decision on Japan’s TPP Participation Could Have Significant Impact, Report Says  

The Congressional Research Service has issued a report examining the possibility of Japan joining the Trans-Pacific Partnership agreement negotiations. The TPP talks currently include nine countries – Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the U.S. and Vietnam – with Canada and Mexico to be added by the end of the year. The report states that the decision on whether or not Japan will also participate in the TPP could have a significant effect on the perception of that agreement as well as relations between Tokyo and Washington. 

In late 2011 the Japanese government decided to explore the possibility of joining the TPP, which is envisioned as “a comprehensive, next-generation regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21st century challenges.” The report notes that although Japanese leaders have not yet made a final decision, they have been engaging in discussions with each of the nine current TPP partners separate from the main negotiations. As of August 2012 Japan had completed discussions with six, all of which support Japan’s participation and have been or are in the process of negotiating bilateral free trade agreements with Japan, while talks with the U.S., Australia and New Zealand were ongoing. In the meantime domestic opposition has been particularly strong among vested interest groups, such as the agricultural community, and has divided both Japan’s ruling party and its largest opposition party. Even if Japan were to succeed in joining the negotiations, the report states, “it is not clear if any government in Tokyo will be strong enough to overcome this opposition when it comes time to approving a final agreement.” 

The report concludes that TPP presents both risks and opportunities for the U.S. and Japan. On the one hand, if it is successful the TPP could “reinvigorate an economic relationship that has remained steady but stagnant by forcing the two countries to address long-standing, difficult issues,” such as restrictions on imports of U.S. beef, market access for U.S. automobiles, and preferential treatment for insurance and express delivery subsidiaries of state-owned Japan Post. Expanding the TPP to include Japan – the second largest economy in Asia, the third largest economy in the world and a key link in global supply and production chains – would also “be pivotal to enhancing the credibility and viability of the TPP as a regional free trade arrangement.” On the other hand, a decision by Tokyo or Washington to exclude Japan from the TPP “could indicate that the underlying problems are too fundamental to overcome” and “signify the failure of the United States and/or Japan to deal with domestic opposition to a more open trade relationship.” 

WTO Case on Argentinian Import Restrictions is Subject of USTR Comment Request  

The Office of the U.S. Trade Representative is accepting comments through Sept. 28 on the issues raised in a complaint the U.S. filed at the World Trade Organization against the following import restrictions imposed by Argentina. 

- Argentina subjects the importation of all goods to approval of a non-automatic import license through the Declaración Jurada Anticipada de Importación (DJAI) system. 

- Argentina subjects the importation of certain goods to other product-specific non-automatic import licenses, or Licencias No Automáticas de Importación, in the form of Certificados de Importación (CIs). 

- The issuance of CIs and approval of DJAIs are systematically delayed or denied by Argentine authorities on non-transparent grounds. 

- Argentina often requires importers to undertake commitments to limit imports, to balance imports with exports, to make or increase investments in production facilities in Argentina, to increase the local content of products manufactured in Argentina (and thereby discriminate against imported products), to refrain from transferring revenue or other funds abroad and/or to control the price of imported goods. 

- Argentine authorities often make the issuance of CIs and the approval of DJAIs conditional upon importers undertaking to comply with the above trade-restrictive commitments. 

Court Denies CBP Effort to Impose Civil Penalty for False Origin Declaration  

The Court of International Trade has denied an effort by U.S. Customs and Border Protection to obtain a default judgment in a case seeking a civil penalty against a New York apparel importer. CBP alleges that certain wearing apparel was manufactured in China but that the importer submitted entry documentation showing Indonesia, South Korea or the Philippines as the country of origin as well as manufacturer identification codes indicating that the goods were manufactured in countries other than China. However, CBP also acknowledges that these alleged violations did not affect the assessment of duties. The importer has thus far failed to plead or otherwise defend itself and the court has entered its default. 

CBP is now seeking a civil penalty of $80,596.40, which is 20% of the aggregate dutiable value of the merchandise at issue. However, the CIT states that CBP has not alleged facts from which it can conclude that the alleged false statements of origin were “material” within the meaning of 19 USC 1592. While the complaint asserts that these statements were “materially false” because they influenced CBP’s determinations as to the admissibility of the goods at issue, the court states that there are no actual facts alleged that would support such a conclusion. Further, the court rejects CBP’s reliance on the definition of a material statement in its “Guidelines for the Imposition and Mitigation of Penalties for Violations of 19 USC 1592,” which the court says “would subject an importer to penalty liability of up to 20% of the dutiable value of the merchandise for any negligently-made origin statement, even one that has no potential to affect a determination made under any law pertaining to the imported merchandise.” The court also states that “finding materiality to exist merely because a misstatement or material omission affected the accuracy of CBP record-keeping or of import statistics would impose serious penalty liability for any of a great number of common and inconsequential errors appearing in entry documentation.” 

The CIT has given CBP 30 days to seek leave to amend its complaint, and if that deadline is not met the court will dismiss the case.

Proposed Safety Standard on High-Powered Magnet Sets Open for Comments Through Nov. 19  

The Consumer Product Safety Commission has published in the Federal Register a proposed mandatory federal safety standard for small, high-powered magnet sets. Under this proposed rule, if such a set contains a magnet that fits within the CPSC’s small parts cylinder, magnets from that set would be required to have a flux index of 50 or less or they would be prohibited. 

The magnet sets at issue are aggregations of separable, permanent, magnetic objects intended or marketed primarily as a manipulative or construction desk toy for general entertainment such as puzzle working, sculpture building, mental stimulation or stress relief. However, when children ingest two or more of these magnets the magnetic forces pull the magnets together and they pinch or trap the intestinal walls or other digestive tissue between them, resulting in acute and long-term health consequences. 

The CPSC is accepting through Nov. 19 written comments concerning the risks of injury associated with these magnet sets, possible ways to address those risks, the regulatory alternatives discussed in this proposed rule (i.e., voluntary recalls, a voluntary safety standard, warnings, packaging restrictions, sales restrictions) and the economic impacts of those alternatives.

AD/CV Notices: Request Reviews, Shrimp, Nails, Bearings, Pasta  

Agency: International Trade Administration. 
Nature of Notice: Opportunity to request administrative reviews of AD and CV duty orders and suspension agreements on the following products for the periods Sept. 1, 2011, through Aug. 31, 2012 (AD) and Jan. 1 through Dec. 31, 2011 (CV). Requests are due by Sept. 30. 
- steel concrete reinforcing bars from Belarus, China, Indonesia, Latvia, Moldova, Poland and Ukraine (AD) 
- lined paper products from China (AD) and India and Indonesia (AD/CV) 
- stainless steel wire rod from Italy, Japan, Korea, Spain and Taiwan (AD) 
- magnesia carbon bricks from China (AD/CV) and Mexico (AD) 
- narrow woven ribbons with woven selvedge from China (AD/CV) and Taiwan (AD) 
- raw flexible magnets from China (AD/CV) and Taiwan (AD) 
- foundry coke from China (AD) 
- freshwater crawfish tail meat from China (AD) 
- kitchen appliance shelving and racks from China (AD/CV) 
- new pneumatic off-the-road tires from China (AD/CV) 
- silicomanganese from Ukraine (AD) 
- solid agricultural grade ammonium nitrate from Ukraine (AD) 
- lemon juice from Argentina and Mexico (AD suspension agreement) 

Agency: International Trade Administration. 
Commodity: Frozen warmwater shrimp. 
Country: China. 
Nature of Notice: Final results of administrative review of antidumping duty order for the period Feb. 1, 2010, through Jan. 31, 2011. 
Details: Weighted average dumping margin of 112.81% for the China-wide entity. AD duties based on this rate will be assessed on shipments of subject merchandise during the period of review, and AD cash deposits at this rate will be required for subject merchandise entered or withdrawn from warehouse for consumption on or after Sept. 4. Review rescinded for Shantou Yuexing Enterprise Company, which had no shipments of subject merchandise to the U.S. during the period of review. 

Agency: International Trade Administration. 
Commodity: Steel nails. 
Country: China. 
Nature of Notice: Preliminary results of administrative review of antidumping duty order for the period Aug. 1, 2010, through July 31, 2011, with rates ranging from zero to 118.04%. 
Details: Review rescinded with respect to 316 of 383 companies due to withdrawal of requests for review. 

Agency: International Trade Administration. 
Commodity: Ball bearings and parts thereof. 
Country: France and Germany. 
Nature of Notice: Rescission of administrative review of antidumping duty orders for the period May 1 through Sept. 14, 2011, due to withdrawal of requests for review. 

Agency: International Trade Administration and International Trade Commission. 
Commodity: Pasta. 
Country: Italy and Turkey. 
Nature of Notice: Initiation of sunset reviews of antidumping and countervailing duty orders.

New Conditions of Entry for Vessels Visiting Ports in Yemen  

Effective Sept. 18, the Coast Guard will impose certain conditions of entry on vessels that visited ports in Yemen, with the exception of vessels arriving from the Ash Shihr Terminal, the Balhalf LNG Terminal or the port of Hodeidah, during their last five port calls. Any vessel that does not meet these conditions may be denied entry into the U.S. The Coast Guard is imposing these conditions because it has determined that these ports are not maintaining effective anti-terrorism measures. Inclusive to this determination are assessments that (a) Yemen presents significant risk of introducing instruments of terror into international maritime commerce and (b) there are significant deficiencies in Yemen’s legal regime, designated authority oversight, access control and cargo control. 

Under the conditions of entry, affected vessels must: 

- implement measures per the ship’s security plan equivalent to security level 2 while in port in Yemen; 

- ensure that each access point to the ship is guarded and that the guards have total visibility of the exterior (both landside and waterside) of the vessel while it is in port in Yemen; 

- attempt to execute a declaration of security while in port in Yemen; 

- log all security actions in the ship’s log; and 

- report actions taken to the cognizant Coast Guard captain of the port prior to arrival into U.S. waters. 

In addition, based on the findings of the Coast Guard boarding or examination, vessels may be required to ensure that each access point to the ship is guarded by armed private security guards who have total visibility of the exterior (both landside and waterside) of the vessel while in U.S. ports. 

The current list of countries not maintaining effective anti-terrorism measures and therefore subject to conditions of entry is as follows: Cambodia, Cameroon, Comoros, Cote d’Ivoire, Cuba, Equatorial Guinea, Guinea-Bissau, Indonesia, Iran, Liberia, Madagascar, Sao Tome and Principe, Syria, Timor-Leste, Venezuela and Yemen. 

Foreign Regulatory Changes Could Affect Exports of Appliances, Detergent, Pots, Drugs  

According to the National Institute of Standards and Technology, the World Trade Organization has been notified of regulatory changes that may affect exports of specific products to the following countries. For information on how these restrictions may affect your business, contact ST&R. 

Brazil – revised conformity assessment procedures on sound power in domestic electrical appliances (vacuum cleaners, mixers and hair dryers) 

Jamaica – revised standard specification for synthetic laundry detergent powder (comments due by Oct. 29) 

Korea – proposed amendments to mandatory safety certification standard on blades of portable mowing machines, domestic pressure pans and pressure pots (comments due by Oct. 29) 

Korea – labeling requirements for quasi-drugs (comments due by Sept. 18) 

Turkey – draft technical regulation on eco-design requirements for air conditioners and ventilators (comments due by Oct. 29)

To get news like this in your inbox daily, subscribe to the Sandler, Travis & Rosenberg Trade Report.

Customs & International Headlines