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September 18 2012 Issue

Tuesday, September 18, 2012
Sandler, Travis & Rosenberg Trade Report

Trans-Pacific Partnership Talks See Progress, Will Expand with December Round    

The 14th round of talks on the Trans-Pacific Partnership agreement concluded in Virginia last week with negotiators reporting “progress” but no major breakthroughs. Press accounts indicate that more than two years into the negotiations participants are only now beginning to discuss some of the more sensitive issues, leading to speculation that the unofficial goal of wrapping up an agreement by the end of 2013 could be difficult to achieve. The next round of talks, which will be the first to include Mexico and Canada as active participants, is slated to be held Dec. 3-12 in New Zealand. 

A press release from the Office of the U.S. Trade Representative states that following the latest round negotiators claimed progress on chapters involving market access, customs, rules of origin, technical barriers to trade, sanitary and phytosanitary standards, cross-border services, telecommunications, government procurement and other issues. Delegations also “continued to move forward in constructing the tariff and other specific market-opening commitments that each country is making on industrial goods, agriculture, textiles, services and investment, and government procurement.” Issues where agreement has been harder to come by but that remain “a continued focus” include intellectual property rights, labor and environment, sugar, state-owned enterprises, and “other topics that address core issues faced by manufacturers, service providers, farmers, ranchers, and workers in the 21st century.” 

U.S. Files WTO Case on Chinese Export Subsidies for Automobiles and Auto Parts    

The Office of the U.S. Trade Representative announced Sept. 17 the filing of a dispute settlement case at the World Trade Organization concerning Chinese export subsidies on automobiles and auto parts. A USTR press release asserts that from 2009 through 2011 China provided at least $1 billion in subsidies to auto and auto parts producers located in designated regions, known as export bases, that meet export performance requirements. USTR alleges that this program appears to provide export subsidies that are prohibited under WTO rules because they “severely distort trade.” 

Also on Sept. 17 the U.S. requested that the WTO establish a dispute settlement panel to address China’s imposition of antidumping and countervailing duties on more than $3 billion in exports of U.S.-made automobiles. Beijing followed by filing a WTO case of its own against U.S. AD and CV duty orders on various Chinese goods, including kitchen appliances, paper, steel, tires, magnets, wood flooring and wind towers. 

Amid charges from Republican presidential candidate Mitt Romney that the Obama administration has not been tough enough with China on trade, USTR Ron Kirk said this week’s actions, announced by President Obama during a campaign stop in Ohio, show just the opposite. Kirk stated that the administration “is committed to protecting the rights of nearly 800,000 American workers in our $350 billion auto and auto parts manufacturing sector” and is insisting that China “live up to its international obligations,” including a commitment as part of its WTO accession to eliminate all export subsidies. Kirk also pointed out that the Interagency Trade Enforcement Center created earlier this year “provided crucial investigative and analytical resources to this effort,” an example of how ITEC “is expanding and accelerating the United States’ trade-enforcement capabilities and activities.” The USTR press release adds that the auto parts case “is the latest in a series of enforcement actions” the Obama administration has taken against China at the WTO, most of which the U.S. has won.

Industry Recommendations on Locations of Additional CBP Centers of Excellence and Expertise    

The Advisory Committee on Commercial Operations of U.S. Customs and Border Protection (COAC) recently made several recommendations on the locations of the additional Centers of Excellence and Expertise that CBP plans to open by the end of fiscal year 2013. CBP already has CEEs operating in Detroit (automotive and aerospace), New York (pharmaceuticals, health and chemicals) and Los Angeles (electronics) and expects to launch one in Houston (petroleum, natural gas and minerals) by the end of September. Other planned CEEs will handle agriculture and prepared products, base metals and machinery, consumer products and mass merchandising, industrial and manufacturing materials, and textiles, wearing apparel and footwear. Click here for more information on CEEs. 

At its August meeting COAC recommended that the textile, apparel and footwear CEE be located in San Francisco or Seattle. COAC’s Trade Facilitation Subcommittee had also recommended Laredo for the base metals and machinery CEE, Chicago for the consumer products CEE, and Buffalo for the industrial and manufacturing materials CEE. The subcommittee noted that the location of the agriculture CEE “presents challenges given the product diversity and lack of regional concentration of the importing community” and suggested consideration of Miami and Tucson. 

The subcommittee said that when evaluating the location of CEEs the following criteria should be considered: locations that permit routine communications and meetings with a large sector of the importing industry, CBP ports that process a large percentage of the entries that will be governed by the CEE, recommendations of the industry working groups, and political sensitivities. Based on these criteria the COAC recommended that CBP evaluate after implementation the appropriateness of the location selections or whether additional CEEs should be created within the same broad industry group. 

Industry working groups were established by CBP in collaboration with the American Association of Exporters and Importers to plan and prepare for future CEEs. Each group is co-chaired by a representative from the trade community and a CBP manager. The goals of each IWG are to create an overview of the industry, identify areas of risk within the industry, identify opportunities for facilitation, develop industry-based metrics for the CEE and provide a recommendation for the CEE’s location. CBP states that it will determine the final locations of the CEEs and the timeframe for their implementation based on the recommendations of the IWGs and the COAC.

EU Moves to Reinstate Trade Preferences for Burma    

The European Commission adopted Sept. 17 a proposal to reinstate Burma’s eligibility for the European Union’s “Everything But Arms” trade preference program, part of its Generalized System of Preferences. If the proposal is approved by the European Council and the European Parliament, Burmese goods will once again receive duty-free, quota-free treatment when imported into any of the 27 EU member states. Brussels suspended Burma from GSP in 1997 due to “serious and systematic violations” of international conventions on forced labor, but in light of Burma’s recent efforts to improve its political, social and labor environments Trade Commissioner Karel de Gucht said “the time is right” to reverse that decision. At the same time, de Gucht added, the EU will continue to engage with Burma to “encourage continued progress on all fronts.” 

Burma is not currently eligible for benefits under the United States’ GSP program and there have been no reports of a possible change to that policy. However, the U.S. has been moving to relax other economic sanctions against Burma for the same reasons as the EU and other countries. In August the Treasury Department issued general licenses eliminating restrictions on new investment in, and the exportation of financial services to, Burma. According to an article in The Financial Times, the Obama administration is also apparently considering lifting the U.S. ban on most imports from Burma, which the president recently reauthorized but can waive under certain conditions. The article notes that such a move could mean a resumption of Burmese shipments to the U.S. of apparel, footwear, seafood and other food products. 

Of Note: Trade Facilitation, China-Japan Dispute    

Trade facilitation matters! 
China-Japan Dispute Over Islands Risks $340 Billion Trade

IPR Enforcement Actions on Integrated Circuits, Secure Communication Devices    

No Import Restrictions in IPR Probe of Integrated Circuits. The International Trade Commission has determined that the importation, sale for importation and sale within the U.S. after importation of certain integrated circuits, chipsets and products containing same, including televisions, are not violating specified patents owned by Freescale Semiconductor Inc. As a result, the ITC has terminated this investigation without the imposition of any import restrictions on this merchandise. 

New IPR Infringement Petition on Devices with Secure Communication Capabilities. The International Trade Commission received Sept. 14 on behalf of VirnetX Inc. and Science Applications International Corporation a petition requesting that it institute a Section 337 investigation regarding certain devices with secure communication capabilities and components thereof. The proposed respondent is located in the U.S. 

Section 337 investigations primarily involve claims regarding intellectual property rights violations by imported goods, including the infringement of patents, trademarks and copyrights. Other forms of unfair competition involving imported products, such as misappropriation of trade secrets or trade dress and false advertising, may also be asserted. The primary remedy available in Section 337 investigations is an exclusion order that directs U.S. Customs and Border Protection to stop infringing imports from entering the U.S. In addition, the ITC may issue cease and desist orders against named importers and other persons engaged in unfair acts that violate Section 337, including selling infringing imported articles out of U.S. inventory.

Application for Permanent Exportation of Firearms Under Review    

The Department of Justice’s Bureau of Alcohol, Tobacco, Firearms and Explosives is accepting comments through Nov. 19 on the proposed extension of form ATF F 9 (5320.9), Application and Permit for Permanent Exportation of Firearms. This form is used to obtain permission to export firearms and serves as a vehicle to allow either the removal of the firearm from registration in the National Firearms Registration and Transfer Record or collection of an excise tax. Comments should address one or more of the following points: whether the collection is necessary for the proper performance of the ATF’s functions, including whether the information has practical utility; the quality, utility and clarity of the information collected; the accuracy of the ATF’s estimate of the burden of the collection; and ways to minimize that burden, including through the use of appropriate automated, electronic, mechanical or other technological collection techniques or other forms of information technology.


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