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September 13 2012 Issue

Thursday, September 13, 2012
Sandler, Travis & Rosenberg Trade Report

CBP Continuing to Gather Information Ahead of Broker Regulations Rewrite    

At a recent meeting the Advisory Committee on Commercial Operations of U.S. Customs and Border Protection (COAC) provided an update on the status of CBP’s Role of the Broker initiative. As part of this effort CBP is planning to rewrite the customs broker regulations in 19 CFR Part 111 to (a) clarify brokers’ responsibilities related to importer validation and provide greater visibility of importers, (b) align with current electronic capabilities and business practices, (c) reinforce the broker’s responsibility to exercise due diligence in conducting business and (d) “professionalize” the customs broker by introducing a continuing education requirement. 

CBP is currently conducting roundtables with local broker associations to discuss this issue, with 10 completed so far and another 18 slated through the end of September. During these roundtables CBP is asking questions covering three primary areas of interest. 

Continuing education – Should licensed customs brokers have a continuing education requirement to ensure they are current on the latest customs issues, regulations and technology changes? What types of courses would provide brokers the best value and greatest professional enhancement? Other than traditional coursework, what other types of activities would be considered educational? How would small brokerages or importers with a sole broker on staff be affected by a continuing education requirement? 

Bona fides – How can customs brokers enhance their relationships with their importers, particularly those who represent the greatest compliance risk (e.g., one-time importers and unknown importers)? How do brokers establish bona fides with their customers to ensure secure and compliant importations? How can CBP help brokers with the establishment of bona fides for their clients? 

Broker permit pilot – CBP is exploring ways to better align the broker regulations with modern business practices. Among other things CBP would like to consider restructuring local permitting requirements to allow brokers to not have to host a local permit qualifier in every port in which they operate. Brokers who chose to take advantage of these more lenient requirements would have to demonstrate to CBP that they have a strong corporate plan to exercise responsible supervision and control over their customs business conducted in ports without a permit qualifier. If CBP were to pilot test a program that would change local permitting requirements, would brokers support this concept? How would small brokerages or importers with a sole broker on staff be affected? 

CBP states that the feedback received on these issues will be summarized and presented during an Oct. 4 webinar. A proposed rule could then be drafted this fall or winter and published by late spring 2013.

FTC Proposes Changes to Care Labeling Rule for Clothing    

The Federal Trade Commission is accepting through Nov. 16 comments on a proposed rule that would amend the Rule on Care Labeling of Textile Wearing Apparel and Certain Piece Goods. The Care Labeling Rule requires manufacturers and importers to attach labels with care instructions for garments and certain piece goods so consumers have reliable instructions for drycleaning or washing, bleaching, drying and ironing their clothing. 

After a review of comments on this rule the FTC has determined that there is wide support for it from all affected major industries as well as consumers. The FTC has therefore determined to retain the rule but is proposing the following changes. 

- add a definition for “wetclean” and allow (but not require) manufacturers and importers to provide a care instruction for professional wetcleaning on labels if the garment can be professionally wetcleaned 

- require manufacturers and importers currently labeling items with a “dryclean only” instruction to either substantiate that wetcleaning is an inappropriate method of care or revise their labels 

- permit manufacturers to use the symbol system set forth in either ASTM Standard D5489-07, “Standard Guide for Care Symbols for Care Instructions on Textile Products,” or ISO 3758:2005(E), “Textiles — Care labeling code using symbols” in lieu of written terms providing care instructions (manufacturers or importers using the ISO symbols would have disclose that they are doing so) 

- clarify what constitutes a reasonable basis for the care instructions that manufacturers and importers provide by giving examples of situations where testing an entire garment may be needed to determine care instructions as well as examples where such testing is not needed 

- update and expand the definition of “dryclean” to reflect current practices and account for the advent of new solvents

Safeguard Duties on Chinese Tires to Expire Sept. 26    

The increased tariffs the U.S. imposed on imports of passenger vehicle and light truck tires from China in 2009 under the so-called Section 421 safeguard are expected to expire Sept. 26. After that date the U.S. should remove the additional 25% duty currently assessed on imports from China of new pneumatic tires, of rubber, of a kind used on motor cars (except racing cars) and on-the-highway light trucks, vans and sport utility vehicles, provided for in HTSUS 4011.10.10, 4011.10.50, 4011.20.10 and 4011.20.50. The higher duties were initially set at 30%, dropped to 30% a year later and were lowered to 25% in 2011. 

It is unlikely that the U.S. will levy any similar safeguard duties against imports from China before its authority to do so expires Dec. 31, 2013. The tire tariffs represent the only time the U.S. actually used the China-specific safeguard allowed under that country’s protocol of accession to the World Trade Organization despite several attempts by private-sector interests and in contrast to the frequent utilization of other measures to address trade irritants with Beijing. Both Republican and Democratic presidents appear to have taken the position that using this tool would not be worth the risk of souring relations with China and jeopardizing bilateral cooperation on larger economic and national security issues. That message seems to have been accepted by those who have filed most of the Section 421 petitions in the past given that no new such petitions have been filed in several years. 

Interim Procedures for Considering Short Supply Requests Under Colombia FTA    

The Committee for the Implementation of Textile Agreements has issued interim procedures for considering requests under the commercial availability (short supply) provision of the U.S.-Colombia Free Trade Agreement. Comments on these procedures may be submitted through Oct. 15. 

The Colombia FTA provides in Annex 3-B a specific list of fibers, yarns and fabrics determined to not be available in commercial quantities in a timely manner from suppliers in Colombia or the U.S. A textile or apparel good imported into the U.S. containing fibers, yarns or fabrics that are included on this list will be treated as if it is an originating good for purposes of the specific rules of origin in Annex 4.1 of the FTA, regardless of the actual origin of those inputs. 

CITA has now issued interim procedures that govern the submission of requests that a specific fabric, yarn or fiber be added to or removed from this list and provide the opportunity for interested entities to submit comments and supporting evidence. These procedures are intended to facilitate the transmission of requests, allow the market to indicate the availability of the products that are the subject of requests, make available promptly information regarding the requests for products and offers received for those products, ensure wide participation by interested entities and parties, allow for careful review and consideration of information provided to substantiate requests and responses, and provide timely public dissemination of information used in making commercial availability determinations. 

CPSC to Meet Sept. 19 on Lowering Third-Party Testing Costs, Proposed Rule on Bassinets    

The Consumer Product Safety Commission will hold an open meeting Sept. 19 in Bethesda, Md., to discuss the following issues. Interested parties can attend the meeting in person or view it via live webcast

proposed rule that would amend the new mandatory play yard standard to address the hazards associated with the use of bassinet accessories that can be assembled with missing key structural elements (comments on this proposal are due no later than Nov. 13) 

- ways to reduce the costs of third-party testing of the compliance of children’s products with applicable safety rules

ITC Considers Possible Import Restrictions on LEDs     

The International Trade Commission has determined to review in part a final initial determination of the presiding administrative law judge that the importation, sale for importation and sale within the U.S. after importation of certain light-emitting diodes and products containing the same are violating patents owned by OSRAM GmbH of Germany. The ALJ has already recommended the issuance of a limited exclusion order against infringing LEDs manufactured or imported by the respondents, but the ITC is inviting comments no later than Sept. 21 on the following issues. 

- whether it should issue an order excluding the subject articles from entry into the U.S. and/or one or more orders that respondents cease and desist from engaging in unfair acts in the importation and sale of such articles 

- the effects that an exclusion order and/or cease and desist orders would have on the public health and welfare, competitive conditions in the U.S. economy, U.S. production of articles that are like or directly competitive with those that are subject to investigation, and U.S. consumers 

- the amount of the bond under which infringing articles could enter the U.S. during the 60-day period the president has to review any ITC-ordered remedy

Ocean Transportation Intermediary License Revocations, Applicant     

OTI Licenses Revoked. The Federal Maritime Commission has given notice that the following ocean transportation intermediary licenses have been revoked. A revocation may occur after a license is surrendered voluntarily by the OTI or for failure to maintain a valid bond. 

- license #010860N: Seair Export Import Services Inc., Plantation, Fla. 
- license #021171N: Pacific Groupage Services Inc., Keller, Texas 
- license #021444N: J & V International Shipping Corp., Arcadia, Calif. 
- license #023100N: Archers Cargo Express Inc., Syosset, N.Y. 

OTI License Applicant. The Federal Maritime Commission has provided notice that the following applicant has filed an application for a license as a non-vessel-operating common carrier and ocean freight forwarder ocean transportation intermediary. Persons knowing of any reason why this applicant should not receive a license are requested to contact the FMC. 

- NTL Naigai Trans Line (USA) Inc., Torrance, Calif.

FTZ Procedures Authorized for Production of Mint Products at Washington Facility     

The Foreign-Trade Zones Board has authorized the production and distribution of mint products, primarily for the food, confectionary, pharmaceutical and fragrance industries, under FTZ procedures at the Callisons Inc. facility within site 3 and site 15 of FTZ 216 in Chehalis and Lacey, Wash.

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