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September 14 2012 Issue

Friday, September 14, 2012
Sandler, Travis & Rosenberg Trade Report

CBP to Conduct Assessment Before Further Action on Entry of Containers with Cargo Residue    

U.S. Customs and Border Protection is planning to move forward in the near future on a proposed requirement for containers with any amount of cargo residue to be manifested and entered. 

In July 2009 CBP proposed to modify all contrary rulings to provide that re-imported instruments of international trade (containers) made of any material that have residues of any type of cargo may not be entered or manifested as empty and that the cargo residue contained, regardless of the amount, must be classified, entered and manifested. CBP explained that this policy change was designed to address risks to national security and the health and safety of CBP officers and to facilitate the agency’s revenue collection function. CBP rejected trade community complaints about the effect of this change, including the expense of compliance, increased border congestion and challenges in providing accurate information, but nevertheless subsequently delayed enforcement indefinitely. 

CBP is now planning to conduct an assessment to help gauge the amount of residual cargo currently not being reported by rail and truck carriers along the northern and southern borders. The results of these controlled examinations, which will use large scale non-intrusive inspection equipment, will be compared against the manifests submitted by carriers and then shared with the trade community to help clarify CBP standards on properly reporting and entering IIT with residue. 

CBP then intends to publish in the coming months a Federal Registernotice concerning a pilot test that will provide new procedures and guidance on how to manifest IIT that may or may not contain residual cargo and provide entry procedures as necessary. The pilot test will introduce the following new manifesting categories. 

IIT Empty/Clean – signifies that the IIT has been cleaned and would be allowed to enter under current processes for empty IIT 

IIT Empty/Residue – No Commercial Value – signifies that the residue contained inside the IIT will either be cleaned with the residue destroyed or refilled without cleaning for export (CBP would accept the carrier as the importer of record, which would allow for a release under 19 USC 1321 informal entry) 

IIT Empty/Residue – Commercial Value – signifies that the residue contained inside the IIT has value and an informal (including a Section 321 informal entry) or formal entry, based on the value, would be required (here also CBP would accept the carrier as the IOR, who will serve as the default importer for the entry unless another owner can be identified)

Imports Support U.S. Jobs Too, According to Think Tank    

The Heritage Foundation issued Sept. 11 a paper that seeks to debunk the conventional wisdom that exports are beneficial and imports are harmful. Political leaders of all stripes have held this belief up as a fundamental truth and used it to craft economic growth and development policies, particularly in times such as the present when the domestic economy is struggling and the unemployment rate is high. However, the paper asserts that this approach is “wrong” and that understanding the positive role of imports “is critical to adopting the correct trade policy and thus to bolstering the economy.” 

The paper focuses on arguments that the United States’ large volume of imports from China, and its resultant ballooning trade deficit with that country, are causing the loss of millions of U.S. jobs. These arguments are “fatally flawed” for several reasons, the paper states. First, they rely on trade data that give full credit to the country that sends the final shipment and “ignores the fact that many imports into the U.S. start their lives as American intellectual property or components of goods, which are then modified or assembled overseas.” Second, they reflect a lack of understanding that “the availability of more choices, usually at a lower price, in the form of imports allows American consumption to be higher than it otherwise would be.” Third, they rely on “a completely fictional view of the world” in which the impacts of a decades-long process of globalization and continuous productivity improvement are instead attributed to trade with a single country. 

Some claim that the only impact of imports is to displace U.S. production, but in fact imports “are a signal of prosperity and plentiful jobs.” Over the past 30 years, the paper points out, the U.S. unemployment rate has actually decreased when imports have increased. This is because the increased economic activity associated with every stage of the import process helps support “a lot” of domestic jobs. For example, in 2010 imports of clothing and toys from China alone supported nearly 600,000 jobs in fields such as transportation, wholesale, retail, construction, finance, and other activities. 

“Because exports and imports both support jobs,” the paper concludes, “it follows that the best measurement of how trade affects employment is the amount of combined trade flowing in and out of the country.” The paper therefore calls on policymakers to (1) resist legislation and regulations that restrict imports and adopt policies that encourage liberalization of trade in both directions, (2) stop using the trade deficit to show the effect of trade on employment, and (3) improve trade data at a technical level (e.g., measuring components used in production rather than just the final product).

Trade Costs Will Rise Without More Investment in Infrastructure, Group Says    

The American Society of Civil Engineers released Sept. 13 a report concluding that without more investment in domestic infrastructure for marine ports, inland waterways and airports “transporting goods will become costlier, prices will rise, and the United States will become less competitive in the global market.” 

The report states that U.S. airports and water ports are the primary means for competitively supplying most imported goods to consumers and businesses as well as meeting the requirements for a technologically advanced service economy and are thus vital to the nation’s economic well-being and standard of living. Investments in inland waterways and marine port systems are also vital to the ability to compete effectively in global markets as the demand for U.S.-produced goods, commodities and services grows. 

However, the report finds, the infrastructure situation in these areas is deteriorating. Air-side congestion is worsening and improvements associated with the Next Generation Air Transportation System have been delayed. Inland waterways have suffered from chronic underfunding, which affects the ability to export key commodities like grains, energy and specialized manufactured goods and provides competing countries with an opening to capture market share. The marine port system is in danger of being non-competitive at several key ports in the Southeast and Gulf port ranges due to the slow and complex process of project delivery for critical dredging projects, especially those that will allow key ports to participate in offering services that depend on serving the larger bulk and container vessels that will call on U.S. ports once the expanded Panama Canal opens in 2015. In addition, moving goods to and from inland markets and airports continues to pose a significant challenge in some of the more congested metropolitan regions, typically those where the largest airports and marine ports are located. 

The report asserts that investment needs in these areas between now and 2020 total $144 billion but that planned expenditures only come to $109 billion. “If we don’t close the investment gaps, everyone is going to feel the negative impacts,” said ASCE President Andrew Herrmann, “because we are on course to lose more than one million jobs and more than $1 trillion in personal income by 2020.” On the other hand, the report states, an additional investment of $15.8 billion in ports and waterways could protect $270 billion in exports, $697 billion in gross domestic product and 738,000 jobs annually. In addition, $2.1 billion more per year invested in air transportation infrastructure could protect $54 billion in exports, $313 billion in GDP and 350,000 jobs.

CITA Still Awaiting Approval for Colombia FTA Short Supply Procedures    

Commerce Department officials have clarified that the Committee for the Implementation of Textile Agreements has drafted and submitted for Office of Management and Budget review, but has not yet issued, interim procedures for considering requests under the commercial availability (short supply) provision of the U.S.-Colombia Free Trade Agreement. Comments on the estimated burden of these procedures may be submitted through Oct. 15. CITA intends to publish the procedures once OMB has approved them, but an exact date remains undetermined. Click here for more information.

FTZ Authority Sought for Cosmetic and Personal Hygiene Set Production    

The Foreign-Trade Zones Board has received from the Piedmont Triad Partnership, grantee of FTZ 230, a notification of proposed production activity at the Sonoco Corrflex facilities in Rural Hall and Winston-Salem, N.C. These facilities are used for the kitting of cosmetic and personal hygiene gift sets. Production under FTZ procedures could exempt Sonoco Corrflex from customs duty payments on the foreign status components used in export production, and on its domestic sales the company would be able to choose the duty rates that apply to cosmetic and personal hygiene gift sets (zero to 6.5%) for foreign status inputs. Customs duties also could possibly be deferred or reduced on foreign status production equipment. Comments on this proposal are due no later than Oct. 24.

AD Duty Order on Small Diameter Pipe from Germany Continued    

The International Trade Administration has continued for another five years, effective Sept. 14, the antidumping duty order on certain small diameter seamless carbon and alloy steel standard, line and pressure pipe from Germany. 

For purposes of the order, seamless pipes are seamless carbon and alloy (other than stainless) steel pipes, of circular cross-section, not more than 114.3 mm (4.5 inches) in outside diameter, regardless of wall thickness, manufacturing process (hot-finished or cold-drawn), end finish (plain end, beveled end, upset end, threaded, or threaded and coupled), or surface finish. Seamless pressure pipes are intended for the conveyance of water, steam, petrochemicals, chemicals, oil products, natural gas and other liquids and gasses in industrial piping systems. Seamless standard pipes are intended for the low temperature and pressure conveyance of water, steam, natural gas, air and other liquids and gasses in plumbing and heating systems, air conditioning units, automatic sprinkler systems and other related uses. Seamless line pipes are intended for the conveyance of oil and natural gas or other fluids in pipe lines. 

The pipes subject to this order are currently classifiable under HTSUS 7304.19.1020, 7304.19.5020, 7304.31.6050, 7304.39.0016, 7304.39.0020, 7304.39.0024, 7304.39.0028, 7304.39.0032, 7304.51.5005, 7304.51.5060, 7304.59.6000, 7304.59.8010, 7304.59.8015, 7304.59.8020 and 7304.59.8025. 

Specifically excluded from the order are boiler tubing and mechanical tubing not produced to A-335, A-106, A-53 or API 5L specifications and not used in standard, line or pressure applications. In addition, finished and unfinished oil country tubular goods are excluded if covered by the scope of another AD duty order from the same country; otherwise, finished and unfinished OCTG are included in the scope when used in standard, line or pressure applications. Finally, also excluded from the order are redraw hollows for cold-drawing when used in the production of cold-drawn pipe or tube.

FY 2013 Sugar TRQ Allocations Announced    

The Office of the U.S. Trade Representative has issued notice of the country-specific in-quota allocations under the fiscal year 2013 tariff-rate quotas for imported raw cane sugar, refined sugar, specialty sugar and sugar-containing products. 

Raw Cane Sugar. The in-quota quantity of the TRQ for raw cane sugar will be 1,117,195 metric tons raw value, the minimum amount to which the U.S. is committed under the World Trade Organization Uruguay Round agreements and the same as in FY 2012, which is being allocated as follows. 

Argentina – 46,154 
Australia – 89,087 
Barbados - 7,513 
Belize - 11,807 
Bolivia - 8,587 
Brazil – 155,634 
Colombia - 25,760 
Congo - 7,258 
Costa Rica - 16,100 
Cote d’Ivoire - 7,258 
Dominican Republic - 188,908 
Ecuador - 11,807 
El Salvador - 27,907 
Fiji - 9,660 
Gabon - 7,258 
Guatemala - 51,520 
Guyana - 12,880 
Haiti - 7,258 
Honduras - 10,733 
India - 8,587 
Jamaica - 11,807 
Madagascar - 7,258 
Malawi - 10,733 
Mauritius - 12,880 
Mozambique - 13,953 
Nicaragua - 22,540 
Panama – 31,127 
Papua New Guinea - 7,258 
Paraguay - 7,258 
Peru - 44,007 
Philippines - 144,901 
South Africa - 24,687 
St. Kitts & Nevis - 7,258 
Swaziland - 17,174 
Thailand - 15,027 
Trinidad & Tobago - 7,513 
Uruguay - 7,258 
Zimbabwe - 12,880 

These allocations, which are also the same as those set in FY 2012, are based on the countries’ historical shipments to the U.S. Allocations to countries that are net importers of sugar are conditioned on receipt of the appropriate verifications of origin. Certificates of quota eligibility must accompany imports from any country to which an allocation is provided. 

Refined Sugar. The FY 2013 refined sugar TRQ is 117,254 MTRV. USTR is allocating a total of 12,050 MTRV to Canada, with 8,294 MTRV to be administered on a first-come, first-served basis. 

Specialty Sugar. Imports of all specialty sugar will be administered on a first come, first served basis in five tranches. The total in-quota quantity of specialty sugar will be the 1,656 MTRV included in the WTO minimum plus an additional 95,254 MTRV. The first tranche of 1,656 MTRV will open Oct. 12, and all types of specialty sugars will be eligible for entry under this tranche. The second tranche of 35,245 MTRV will open Oct. 26. The third, fourth and fifth tranches of 20,003 MTRV each will open Jan. 11, April 11 and July 11, 2013, respectively, and will be reserved for organic sugar and other specialty sugars not currently produced commercially in the U.S. or reasonably available from domestic sources. 

Sugar-Containing Products. With respect to the 64,709 metric ton TRQ for certain sugar-containing products, USTR is allocating 59,250 metric tons to Canada and the remainder is available for other countries on a first come, first served basis.

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