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September 7 2012 Issue

Friday, September 07, 2012
Sandler, Travis & Rosenberg Trade Report

Brazil Raises Tariffs on 100 Products, Plans Similar Hike for 100 More  

Brazil’s Foreign Trade Chamber (CAMEX) announced Sept. 4 a list of 100 goods in the steel, petrochemical, chemical, pharmaceutical and capital goods industries on which import tariffs will be raised to as much as 25%. A similar increase is planned for an additional 100 products that will be identified in October. 

The tariff hikes must now be approved by the other members of the Mercosur trade bloc and could take effect in late September. They will remain in place for a year but can be extended for additional 12 month periods through Dec. 31, 2014, when the Mercosur policy allowing such higher duties will expire. 

Trade Minister Fernando Pimentel said the move is designed to aid struggling domestic manufacturers and is in keeping with World Trade Organization rules. Finance Minister Guido Mantega added that his ministry will monitor the prices of the subject goods and will act quickly to lower tariffs on any for which prices increase. 

The full list of goods subject to the higher tariff rates can be found here.

Lawsuit Seeks to Force FDA Issuance of Food Safety Regulations  

A lawsuit filed recently in federal court is seeking to force the Food and Drug Administration to issue regulations implementing various provisions of the FDA Food Safety Modernization Act, which was signed into law in January 2011. The Center for Food Safety and the Center for Environmental Health argue that the FDA has not complied with “hundreds” of deadlines for completing certain tasks, including the release of rules concerning FSMA provisions on the following issues. 

- requiring each importer to perform risk-based foreign supplier verification activities for the purpose of verifying that the food imported by the importer or its agent is in compliance with provisions on hazard analysis and risk-based preventive controls and standards for produce safety and is not adulterated or misbranded (final rule due by Jan. 4, 2012) 

- requiring (a) that third-party audits be performed unannounced, (b) a structure to decrease the potential for conflicts of interest, including timing and public disclosure, for fees paid by eligible entities to accredited third-party auditors, and (c) appropriate limits on financial affiliations between an accredited third-party auditor or audit agents of such auditor and any person that owns or operates an eligible entity to be certified by such auditor (final rules due by July 4, 2012) 

- requiring shippers, carriers by motor vehicle or rail vehicle, receivers, and other persons engaged in the transportation of food to use sanitary transportation practices to ensure that food is not transported under conditions that may render it adulterated (due by July 4, 2012) 

- protecting against the intentional adulteration of food subject to FSMA by (a) specifying how a person shall assess whether the person is required to implement mitigation strategies or measures intended to protect against the intentional adulteration of food and (b) specifying appropriate science-based mitigation strategies or measures to prepare and protect the food supply chain at specific vulnerable points (final rule due by July 4, 2012) 

- establishing science-based minimum standards for conducting hazard analysis, documenting hazards, implementing preventive controls and documenting such implementation (final rule due by July 4, 2012) 

- clarifying activities that constitute on-farm packing, holding, manufacturing or processing of food that is not grown, raised or consumed on such farm or another farm under the same ownership (proposed rule due by Oct. 4, 2011) 

- establishing science-based minimum standards for the safe production and harvesting of certain types of fruits and vegetables, including specific mixes or categories of fruits and vegetables that are raw agricultural commodities for which the FDA has determined that such standards minimize the risk of serious adverse health consequences or death (proposed rule due by Jan. 4, 2012) 

The plaintiffs state that several of these rules (including those concerning the foreign supplier verification program and protection against intentional adulteration) have been submitted to the Office of Management and Budget for approval but have been delayed there far past the normal review time. The plaintiffs are therefore seeking a court order that requires the FDA to issue these regulations as soon as reasonably practicable, according to a court-imposed deadline, and prevents OMB from delaying the FDA’s compliance with that deadline. 

The suit also faults the FDA for failing to complete industry guidance documents and reports, implement enhanced food product tracking mechanisms, and create a consumer Web site for recall information and foodborne illness outbreaks.

A Little Ray of Sunshine Before the Storm?  

[Editor’s note: The following was originally posted Sept. 5 on ST&R’s Trade and Politics Blog, which you can follow here.] 

Labor issues continue to be at the forefront of all things U.S. trade policy-related. The U.S. Department of Labor released today a report reviewing allegations made against the government of Peru under the U.S.-Peru Free Trade Agreement. Oddly, the allegation were not backed by the AFL-CIO but instead came solely from one public sector union in Peru, the Peruvian National Union of Tax Administration Workers (SINAUT). SINAUT alleged that Peru’s National Superintendent of Tax Administration (SUNAT) was failing to effectively recognize the union’s right to collective bargaining. The DOL found that the Peruvian government “has made significant progress in addressing underlying issues in the submission” and said it will not recommend formal consultations with the Peruvian government under the FTA, thus officially ending the investigation. 

The SINAUT case was very narrow, complex and potentially outside of the scope of the FTA legal requirements so it should not be a surprise that the U.S. decided not to pursue it further. But this decision should not be interpreted to mean that the U.S. government is backing off its pressure on FTA partners on labor issues. The U.S. and Guatemala are working to iron out differences on labor issues within the DR-CAFTA agreement while the Dominican Republic, Jordan, Bahrain and Honduras are undergoing investigations by the DOL within the scope of their respective FTAs. These investigations may result in official requests by the U.S. government to its FTA partners for further consultations and enforcement actions. At the same time, following a report issued by the AFL-CIO in late July, it is safe to assume that this organization is preparing a similar petition for investigation against the Colombian government for alleged labor violations in that country since the implementation of its FTA with the U.S. 

The pending cases are likely to see some action in the following months. It is possible that many will result in official consultations or even arbitration. Governments and the trade community should treat these issues seriously as they may have a negative impact on bilateral trade relationships with the U.S. We will keep you informed of new developments. 

Dates and Deadlines: IPR Investigations, TPP Additions, Export Compliance, CBP Fines  

Following are highlights of regulatory effective dates and deadlines and federal agency meetings coming up in the next week. 

Sept. 10 – comments on proposed amendment to ITC rules on conduct of IPR infringement investigations 

Sept. 10 – effective date of FMC rule easing recordkeeping requirements for negotiated rate arrangements 

Sept. 11 – meeting of BIS Regulations and Procedures Technical Advisory Committee 

Sept. 12 – ITC hearing on adding Canada and Mexico to Trans-Pacific Partnership 

Sept. 12 – STTAS seminar on export compliance and classification 

Sept. 13 – ST&R webinar on the CBP fines, penalties and forfeitures enforcement process 

Sept. 13 – STTAS seminar on NAFTA qualification, compliance and recordkeeping 

Sept. 14 – comments on including other food categories as mandatory fields in FDA food facility registrations 

Sept. 14 – input for USTR’s 2012 Notorious Market List 

Sept. 14 – comments on remedy, the public interest and bonding in IPR infringement case on protective cases for handheld electronics 

Of Note: “Foreign Official” Under FCPA, Meat Origin Labeling Rules, Japanese Beef Restrictions, Chinese Solar Panels  

SEC Resource Extraction Rules Include Provision on Definition of Foreign Official Under FCPA 
Made in the USA Foundation, Ranchers-Cattlemen Action Legal Fund and Mile High Organics Sue WTO to Keep Country of Origin Labeling Act in Force 
Japan's restrictions on U.S. beef may be relaxed 
EU initiates anti-dumping investigation on solar panel imports from China

Annual Review of Foreign Policy-Based Export Controls  

The Bureau of Industry and Security is seeking comments by Oct. 9 for its annual review of whether the foreign policy-based export controls in the Export Administration Regulations should be modified, rescinded or extended for another year. 

Criteria for Determining Whether to Continue Controls. Among the criteria considered in determining whether to extend U.S. foreign policy-based export controls are the following. 

- the likelihood that such controls will achieve the intended foreign policy purpose in light of other factors, including the availability from other countries of the goods, software or technology proposed for such controls 

- whether the foreign policy objective of such controls can be achieved through negotiations or other alternative means 

- the compatibility of the controls with the foreign policy objectives of the U.S. as well as overall U.S. policy toward the country subject to the controls 

- whether the reaction of other countries to the extension of such controls is likely to render the controls ineffective in achieving the intended foreign policy objective or counterproductive to U.S. foreign policy interests 

- the comparative benefits to U.S. foreign policy objectives versus the effect of the controls on the export performance of the U.S., the competitive position of the U.S. in the international economy and the international reputation of the U.S. as a supplier of goods and technology 

- the ability of the U.S. to enforce the controls effectively 

Industry Information Sought. BIS is interested in industry information relating to the following. 

- the effect of foreign policy-based export controls on sales of U.S. products to third countries (i.e., those not targeted by sanctions), including the views of foreign purchasers or prospective customers regarding these controls 

- controls maintained by U.S. trade partners (e.g., they extent to which they have similar controls on goods and technology on a worldwide basis or to specific destinations) 

- licensing policies or practices by U.S. foreign trade partners that are similar to U.S. foreign policy-based export controls, including license review criteria, use of conditions and requirements for pre- and post-shipment verifications (preferably supported by examples of approvals, denials and foreign regulations) 

- revisions to foreign policy-based export controls that would bring them more into line with multilateral practice 

- actions that would make multilateral controls more effective 

- the effect of foreign policy-based export controls on trade or acquisitions by the intended targets of the controls 

- the effect of foreign policy-based export controls on overall trade at the level of individual industrial sectors 

- how to measure the effect of foreign policy-based export controls on trade

- the use of foreign policy-based export controls on targeted countries, entities or individuals

AD Notice: Light-Walled Pipe and Tube from Mexico  

Agency: International Trade Administration. 
Commodity: Light-walled rectangular pipe and tube. 
Country: Mexico. 
Nature of Notice: Preliminary results of administrative review of antidumping duty order for the period Aug. 1, 2010, through July 31, 2011. 
Details: Weighted average dumping margin of zero for two reviewed manufacturer/exporters.

FTZ Board Reorganizes Ohio Zone, Approves Instrument Production in Oregon  

The Foreign-Trade Zones Board has recently announced the following actions. 

- approval of the production of chromatographs, mass spectrometers and related equipment, such as liquid chromatograph pumps, fraction collectors, auto samplers, lab instruments, controllers and column ovens, under FTZ procedures at the Shimadzu USA Manufacturing Inc. facility in Canby, Ore., which was recently designated as subzone 45G 

- approval of the reorganization under the alternative site framework of FTZ 151, which will have a service area of Hardin, Putnam, Seneca, Allen and Hancock counties in Ohio, adjacent to the Toledo U.S. Customs and Border Protection port of entry

Foreign Regulatory Changes Could Affect Exports of Foods, Drugs, Light Bulbs  

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. 

Bahrain – draft technical regulations on packed mash garlic, croissants, bottled natural mineral water, evaporated milk, and pre-packaged foods for special dietary use (comments due by Oct. 31) 

China – administrative measures on manufacturing site inspection of overseas pharmaceutical companies (comments due by Nov. 4) 

Colombia – technical regulations on vegetables and vegetable and animal oils and fats to take effect Feb. 8, 2013 

Japan – ban on manufacture, import and sale of designated pharmaceutical substances except for “proper uses” (comments due by Oct. 10) 

Mexico – Aug. 10 publication of official standard on tolerances and verification methods for net content of pre-packaged products 

Mexico – draft official standard on energy efficiency of and user safety requirements for self-ballasted compact fluorescent lamps (comments due by Oct. 15) 

Sweden – regulations on machinery installations, electrical installations and periodically unattended machinery spaces on passenger ships (comments due by Oct. 31)

Input Sought on Licensing of Agricultural Shipments to Cuba  

The Bureau of Industry and Security is requesting public comments by Oct. 9 on the effectiveness of its licensing procedures for exports of agricultural commodities to Cuba. BIS will include a description of these comments in the biennial report it is required to submit to Congress under the Trade Sanctions Reform and Export Enhancement Act of 2000. This report must also include the number and types of licenses applied for and approved, the average amount of time elapsed from the date of filing of a license application until the date of its approval, and the extent to which the licensing procedures were effectively implemented.

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