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September 19 2012 Issue

Wednesday, September 19, 2012
Sandler, Travis & Rosenberg Trade Report

An October Surprise?    

[Editor’s note: This article originally appeared as a Sept. 17 post on ST&R’s Trade and Politics Blog, which you can follow here.] 

We are keeping our fingers crossed that the United States-Panama Free Trade Agreement will be implemented on Oct. 1. Both countries have been aiming at this date for several months, but as it draws nearer there appear to be some possible hiccups in Panama. 

Before the FTA can take effect, Panama’s National Assembly must approve four bills that were recently introduced. The bills contain certain additional provisions that are required to implement the FTA as well as provisions to strengthen intellectual property rights protections. Similar to Colombia, Panama must ratify several international treaties relating to intellectual property rights. Panama also needs to pass trade capacity-building initiatives needed in areas such as the administration of tariff-rate quotas. 

According to Panama’s Minister of Trade and Industry Ricardo Quijano, Panama gave the U.S. the necessary documentation in May. Panama appears eager to speed up the process. As Quijano stated, Panama sent the documentation in English to avoid delays from translation. 

While it is nice that the minister is hopeful, unfortunately, as in the United States, Panama’s legislature has to act on the bills before any action can be taken. We can only hope that in Panama the National Assembly is taking up essential legislation in a much more timely fashion than the U.S. Congress!

$850,000 Penalty for Failure to Timely Report Defective Consumer Appliances    

The Consumer Product Safety Commission has provisionally accepted an agreement under which a New York company has agreed to pay an $850,000 civil penalty to settle charges that it knowingly failed to timely report defects in electric blenders it imported and sold to retailers. Any interested person may ask the CPSC not to accept this agreement or otherwise comment on its contents by filing a written request no later than Oct. 4. 

The blenders at issue were defective because the nut holding the blade assembly could dislodge during use, allowing the blade assembly pieces to break apart and/or crack the glass jar. The company received approximately 56 incident reports regarding the blenders from January 2007 through September 2009 but did not file a full report with the CPSC until October 2009.

Annual Review of Eligibility of Sub-Saharan African Countries for AGOA Duty Preferences    

The Office of the U.S. Trade Representative is conducting its annual review of the eligibility of sub-Saharan African countries to receive benefits under the African Growth and Opportunity Act. Public comments, which are due no later than Oct. 12, will be considered in developing recommendations on AGOA country eligibility for the president. In addition, comments related to the AGOA child labor criteria may be considered by the Department of Labor as it prepares its required report on that issue. 

For 2012 the following have been designated as beneficiary SSA countries: Angola, Benin, Botswana, Burkina Faso, Burundi, Cape Verde, Cameroon, Chad, Comoros, Congo, Cote d’Ivoire, Djibouti, Ethiopia, Gabon, The Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome & Principe, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, Tanzania, Togo, Uganda and Zambia. 

In addition, the following have not been designated as beneficiary SSA countries in 2012 and are up for review: Central African Republic, Democratic Republic of Congo, Equatorial Guinea, Eritrea, Madagascar, Somalia, South Sudan, Sudan and Zimbabwe. 

The president may designate a country as eligible for AGOA’s additional Generalized System of Preferences benefits, as well as the textile and apparel benefits if certain statutory requirements intended to prevent unlawful transshipment are met, if that country meets the eligibility criteria set forth in section 104 of the AGOA and section 502 of the 1974 Trade Act. These requirements include that the country has established or is making substantial progress toward establishing, among other things, a market-based economy, the rule of law, political pluralism, the right to due process, the elimination of barriers to U.S. trade and investment, economic policies to reduce poverty, a system to combat corruption and bribery, and the protection of internationally recognized worker rights. In addition, the country may not engage in activities that undermine U.S. national security or foreign policy interests or engage in gross violations of internationally recognized human rights. If the president determines that a beneficiary is not making continual progress in meeting the eligibility requirements, the designation of that country as a beneficiary must be terminated.

List of Entities Restricted from Receiving Exports of Dual-Use Goods Amended    

The Bureau of Industry and Security has issued a final rule that, effective Sept. 19, adds six persons under eight entries to the Entity List. This rule also removes one entity in Pakistan and makes various changes based on the annual review of the Entity List. 

For entities on the Entity List there is an export license requirement for all items subject to the Export Administration Regulations and a license application review policy of a presumption of denial. The license requirement applies to any transaction in which items are to be exported, reexported or transferred (in-country) to such persons or in which such persons act as purchaser, intermediate consignee, ultimate consignee or end-user. In addition, no license exceptions are available for exports, reexports or transfers (in-country) to persons on the Entity List. 

Additions. Of the eight entries being added, two are in Iran and six are in the United Arab Emirates. BIS states that all are being added for their roles in the actual or potential transshipment of U.S.-origin equipment to Iran in violation of the U.S. economic embargo against that country. 

Removal. BIS is removing one entity in Pakistan as a result of that entity’s request to be removed. This decision took into account the entity’s cooperation with the U.S. government as well as its assurances of future compliance with the EAR. 

Annual Review. Finally, this rule amends the Entity List to reflect the results of the annual review. First, BIS is removing one person in China, three persons in Egypt, eight persons in Hong Kong and two persons in Kuwait. This action eliminates the existing license requirements in Supplement No. 4 to part 744 for exports, reexports and transfers (in-country) to these 15 entities but does not relieve persons of their obligation to apply for export, reexport or in-country transfer licenses required by other provisions of the EAR. 

Second, BIS is amending three entries under Belarus, 12 entries under China, three entries under Malaysia, 12 entries under Pakistan, one entry under Singapore and five entries under South Africa to clarify the relationship between listed persons and/or provide alternate addresses, alternate spellings and acronyms and/or aliases for the names of the listed persons. 

Third, BIS is adding (a) two separate entries under China for two entities formerly listed under China as aliases of the Chinese Academy of Engineering Physics and (b) one entry under Uganda as an alternate address for an entity listed under Pakistan, thereby creating a new country listing. The licensing requirements and licensing review policies for all three of these entries will mirror those in the entries in which they were previously located. 

Savings Clause. Shipments of items removed from eligibility for a license exception or export or reexport without a license (NLR) as a result of this rule that were en route aboard a carrier to a port of export or reexport on Sept. 19 pursuant to actual orders for export or reexport to a foreign destination may proceed to that destination under the previous eligibility for a license exception or NLR.

ITC Preparing Annual Report on Trends in U.S. Services Trade    

The International Trade Commission has set an Oct. 25 deadline for interested members of the public to furnish information in connection with its 2013 report on trends in U.S. services trade. This report, which the ITC plans to publish in July 2013, will provide aggregate data on cross-border trade in services and more specific data and information on cross-border trade in professional services (education, health and legal services) for the period ending in 2011 as well as transactions by affiliates based outside the country of their parent firm for the period ending in 2010.

IPR Enforcement Actions on Fireplaces, Magnets, Satellite Devices, Electronic Devices    

ITC Considers Remedies in Fireplace Investigation. The International Trade Commission has determined that the importation, sale for importation and sale within the U.S. after importation of certain electronic fireplaces, components thereof, manuals for same, certain processes for manufacturing or relating to same, and certain products containing same are violating Section 337 of the 1930 Tariff Act by reason of (a) infringement of copyrights owned by Twin-Star International Inc. and TS Investment Holding Corp., both of Florida, and (b) misappropriation of trade secrets, breach of contract and tortious inference with contract, the threat or effect of which is to destroy or substantially injure an industry in the U.S. 

The ITC is inviting public comments no later than Oct. 12 on the following issues. 

- what support exists for the notion that unfair acts or unfair methods of competition under 19 USC 1337(a)(1)(A) are limited to “public wrongs” as opposed to “private wrongs” 

- whether a breach of contract claim can give rise to a violation of 19 USC 1337(a)(1)(A) 

- whether exclusion orders (including the limited exclusion order recommended by the presiding administrative law judge) and/or cease and desist orders should be imposed in this case 

- the effects of any such remedy 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 in which the president has to review any ITC-ordered remedy 

New Patent Infringement Investigations of Magnets, Satellite Devices, Electronics. The International Trade Commission has instituted separate investigations to determine whether imports of the following products are violating Section 337 of the 1930 Tariff Act by reason of patent infringement. 

- rare earth magnets and products incorporating rare earth magnets, such as motors, audio speakers, headphones, cordless tools, computer hard drives and golf ball markers (investigation 337-TA-855 based on complaint filed by Hitachi Metals Ltd. and Hitachi Metals North Carolina Ltd.; respondents located in China, Hong Kong, Austria, Germany and the U.S.)

- two-way satellite devices and systems that may be used to provide routine communications, tracking, emergency and alerting functions for individuals anywhere in the world (investigation 337-TA-854 based on complaint filed by BriarTek IP Inc.; respondents located in the United Kingdom and the U.S.) 

- certain Apple iPhones, iPods, iPads and personal computers (investigation 337-TA-856 based on complaint filed by Motorola Mobility LLC, Motorola Mobility Ireland and Motorola Mobility International Limited) 

In each case the complainant is requesting that after the investigation the ITC issue an exclusion order, which would direct U.S. Customs and Border Protection to prohibit the entry of the infringing products into the U.S., and cease and desist orders, which would require the named respondents to cease actions that violate Section 337, including selling infringing imported articles out of U.S. inventory.

DOT Lists Hazmat Special Permit Applications, Decisions, Delays in Processing    

The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration has issued the following concerning exceptions from the Hazardous Materials Regulations. 

- a list of applications for special permits for exceptions from the HMR, including for motor vehicles, rail freight, cargo vessels, cargo aircraft and passenger-carrying aircraft (comments due no later than Oct. 19) 

- a list of applications to modify previously issued special permits; e.g., to provide for additional hazardous materials, packaging design changes, additional mode of transportation, etc. (comments due no later than Oct. 4)

- a list of actions taken on special permit applications, including modified, new and emergency permits granted or withdrawn and permits denied 

- a list of special permit applications that have been in process for 180 days or more, including the reasons for delay and the expected completion date

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