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September 28 2012 Issue

Friday, September 28, 2012
Sandler, Travis & Rosenberg Trade Report

U.S. to Lift Ban on Imports from Burma      

Secretary of State Hillary Rodham Clinton announced Sept. 26 that the U.S. “will begin the process of easing restrictions on imports of Burmese goods into the United States.” Clinton said this move recognizes “the continued progress toward reform” in Burma and is a “response to requests from both the government and the opposition.” 

The U.S. currently maintains a ban on all products of Burma that are imported directly or indirectly into the U.S. This prohibition applies to merchandise intended for commercial and personal use, including gifts or informational materials; merchandise landed, but not entered for consumption, in the U.S. (e.g., goods placed in a foreign-trade zone or bonded warehouse); and imports for transshipment or in-transit movements of products of Burma intended or destined for a third country. The ban does not apply to merchandise for which the Office of Foreign Assets Control has issued an import license, which may be entered for consumption or in-transit movement through the U.S., or importations for U.S. or foreign diplomatic and consular officials. 

Clinton said that as the Obama administration moves to lift this import ban it will consult with Congress and other relevant stakeholders. Press reports indicate that to remove the ban the president will have to waive a sanctions law renewed by Congress last month and OFAC will have to issue a general license allowing imports, although specific companies or sectors could remain restricted. Sources note that the U.S. primarily imported hardwood, gems and apparel from Burma before the ban was imposed in 2003 and that the apparel industry could benefit the soonest from the relaxed policy. 

Court Dismisses Case Challenging Ban on Lobbyists from Advisory Committees      

The U.S. District Court for the District of Columbia dismissed Sept. 26 a lawsuit challenging an Obama administration policy barring federally registered lobbyists from serving on Industry Trade Advisory Committees. This ban was imposed in 2009 to, as one administration official put it, reduce the influence of lobbyists out of a belief that they “have too often in the past achieved disproportionate impact on government decision makers at the expense of broader voices from the public at large.” However, with ITACs advising federal agencies on a wide range of trade-related issues, there was concern among the trade community that by removing registered lobbyists these panels would lose an enormous amount of subject matter expertise, which could hinder the development of workable policy tools that balance the interests of the federal government and the private sector. 

In the case at issue the court rejected arguments that the registered lobbyist ban violates the Constitution by imposing a burden on the right to petition the government for a redress of grievances and employing a classification that penalizes those who invoke that right. The court notes that the plaintiffs were not denied the ability to serve on an ITAC because of anything they expressed, who they lobbied for or any particular position they advanced on behalf of their clients. In addition, the ban does not retaliate against or penalize the plaintiffs for the exercise of their right to petition the government, nor does it condition the ability to serve on an ITAC on relinquishing that right. Among other things, the court notes that while ITAC service confers perquisites that could make the plaintiffs’ lobbying more effective and lucrative, such as “special access to government decision-makers and a chance to get the first peek at new policy initiatives,” these are not considered a “valuable government benefit” the receipt of which would be protected from unconstitutional requirements.

The court also finds that the government’s policy is rationally related to the legitimate purpose of seeking to reduce the influence of special interests in government. The government reasonably could have believed federally registered lobbyists on ITACs would meet and form relationships with government policymakers, the court said, which they could then exploit to gain special influence for their clients. It was also reasonable for the government to single out federally registered lobbyists as particularly captured by special interests because those individuals engage in a substantial amount of lobbying for at least one client and are paid for their services. While the policy does not exclude all individuals who engage in lobbying the government on behalf of special interests because the lobbying activities of some individuals will not trigger the registration requirement, those that the policy does exclude are all engaged in lobbying on behalf of special interests. The court concludes that the government could therefore reasonably believe that barring at least those individuals from serving on ITACs would reduce the influence of individuals who engage in a substantial amount of paid lobbying for clients, which in turn would reduce the influence of special interests in government by some margin. 

EU Wants Authority to Hit U.S. with $12 Billion in Sanctions for Aircraft Subsidies      

The European Union submitted to the World Trade Organization Sept. 27 a request for authorization to impose up to $12 billion in sanctions against the U.S. for its alleged failure to comply with a WTO ruling against subsidies provided to Boeing related to the production of large civil aircraft. The EU said these measures could come in the form of higher tariffs on goods imported from the U.S. or the suspension of commitments concerning countervailing duties or services. In a companion case against EU subsidies to Airbus the U.S. has already sought permission to levy up to $10 billion in retaliatory sanctions against the EU. 

The WTO is already considering U.S. claims that the EU has not complied with a dispute settlement panel decision against it, and this week the EU asked for a similar review of the U.S. Should the WTO find noncompliance in either case it would then take up the matter of the extent of the countermeasures that could be imposed in response. However, many observers believe the two sides will ultimately work out a new agreement on government aid for large civil aircraft manufacturers instead of imposing trade sanctions. 

U.S. Signs Agreement to Boost Trade Cooperation with Persian Gulf Countries      

The U.S. and the Gulf Cooperation Council signed this week a Framework Agreement for Trade, Economic, Investment and Technical Cooperation. According to a press release from the Office of the U.S. Trade Representative, this agreement will establish a joint committee in which the two sides will discuss areas of mutual interest, including opportunities for enhancing economic, commercial, investment and technical cooperation, fostering economic relations and increasing the volume of trade and investment. 

The GCC comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The U.S. has bilateral free trade agreements in place with Bahrain and Oman as well as trade and investment framework agreements with the other four. USTR said the new pact “will supplement and build upon – not replace” Washington’s engagement with GCC members under those agreements. 

USTR notes that two-way trade totaled almost $100 billion in 2011, when the GCC countries collectively ranked as the United States’ tenth-largest export market. U.S. goods exports to the region approached $38 billion, led by vehicles, machinery, aircraft, electrical machinery, and optical and medical instruments. The GCC was also the sixth-largest supplier of U.S. imports at $62 billion, which encompassed primarily oil but also aluminum, fertilizers and organic chemicals. 

Dates and Deadlines in the Week Ahead      

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

Sept. 28 – deadline for requests for administrative reviews of AD/CV duty orders 

Sept. 29 – effective date for submitting ocean and rail cargo manifests through ACE 

Oct. 1 – effective date of revocation of classification ruling on terracotta grills  

Oct. 1 – comments on proposal for new FTZ in Chenango County, N.Y. 

Oct. 1 – comments on proposed guidance on inaccessible component parts in children’s toys or child care articles 

Oct. 2 – USTR hearing on GSP country practice petitions 

Oct. 3 – CPSC vote on reducing third-party testing costs for children’s products  

Oct. 3 – annual hearing on China’s compliance with WTO commitments 

Oct. 3 – comments on reducing regulatory burden for shipping consumer products containing hazardous materials in the reverse logistics supply chain 

Oct. 3 – customs broker license exam 

Oct. 5 – deadline for petitions to modify list of products eligible for GSP or modify GSP status of beneficiary developing countries 

AD/CV Actions: Plywood, Solar Cells, Tomatoes      

New AD/CV Petition on Plywood. The International Trade Administration and International Trade Commission received Sept. 27 petitions requesting the initiation of new antidumping and countervailing investigations of hardwood plywood from China. 

Letter Seeks Broader Coverage of Solar Cell Investigation. Eight members of Congress wrote to Acting Commerce Secretary Rebecca Blank Sept. 27 raising concerns about the scope of the International Trade Administration’s ongoing antidumping and countervailing duty investigations of solar cells from China. However, the letter did not explicitly call for any particular action in response to these concerns. 

The lawmakers pointed out that the ITA’s preliminary determinations would exclude from the scope of these investigations Chinese solar panels that are produced from non-Chinese crystalline silicon photovoltaic cells, notwithstanding that China is alleged to subsidize the manufacture of such panels and that Chinese producers are alleged to be selling them below cost. Such an exclusion would “lead to absurd results,” the letter asserted; e.g., excluding from AD or CV duties solar panels made in China from PV cells made in a third country from wafers produced in China from crystals that are also manufactured in China, a scenario in which 80% of the value of the final product is added in China. This would invite circumvention of the anticipated AD and CV duty orders, and the legislators asserted that “the record in this investigation indicates that Chinese manufacturers are already developing such circumvention plans.” 

Suspended AD Investigation of Mexican Tomatoes to be Terminated. International Trade Administration staff forwarded to senior officials Sept. 27 a memorandum recommending that the ITA terminate its suspended antidumping duty investigation of tomatoes from Mexico. A notice of intent to do so is expected to appear shortly in the Federal Register, and interested parties will have 30 days thereafter to comment. 

Since 1996 the ITA has held in suspension an AD duty investigation of all fresh and chilled tomatoes from Mexico except tomatoes for processing. Under this agreement, which was last renewed in January 2008, Mexican tomato producers and exporters have agreed to prevent the suppression or undercutting of prices of domestic fresh tomatoes by selling their tomatoes at or above reference prices calculated by the ITA. 

However, the U.S. tomato industry recently requested authorization to withdraw its original AD duty petition and terminate the suspension agreement. Should the ITA finalize its preliminary determination and grant this request, the domestic industry is expected to file a new case that could result in AD duties against imports of Mexican tomatoes. 

New IPR Infringement Petition on Cases for Portable Electronic Devices      

The International Trade Commission received Sept. 26 a petition requesting that it institute a Section 337 investigation regarding certain cases for portable electronic devices. The petition was filed on behalf of Speculative Product Design and the proposed respondents are located in China, Hong Kong and 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. 

Monthly Surface Trade with Canada and Mexico Falls 8.4% in July       

U.S. monthly surface transportation trade in goods with NAFTA partners Canada and Mexico dropped 8.4% in July following a 1.4% decline in June, according to statistics released Sept. 27 by the Department of Transportation. However, the July total of $75.7 billion was up 4.6% from a year before. Over the last ten years total surface transportation trade with Canada and Mexico has risen 82.8%, including a 105.1% gain for exports and a 66.7% increase for imports. 

Surface transportation includes freight movements by truck, rail, pipeline, mail, foreign-trade zones and other modes and in July accounted for 86.3% of U.S. trade by value with Canada and Mexico. Surface trade between the U.S. and Canada totaled $42.9 billion, down 11.3% from June but up 1.0% from the year before. Exports sank 12.0% for the month but gained 3.2% from the previous July, while imports saw a 10.5% monthly drop and a 1.0% decline year-on-year. U.S.-Mexico surface transportation trade totaled $32.7 billion, down 4.3% from June but up 9.7% from the previous year. Exports fell 0.8% and imports dropped 7.0% for the month, but both categories saw increases from July 2011 (10.0% and 9.5%, respectively). 

Import Restrictions on Guatemalan Archaeological Material Extended       

U.S. Customs and Border Protection has issued a final rule extending through Sept. 29, 2017, the import restrictions on certain archaeological materials from Guatemala. This rule also adds new restrictions on the importation of certain ethnological materials from Guatemala. The State Department has concluded that the cultural heritage of Guatemala continues to be in jeopardy from the pillage of these materials. A list of all materials now subject to the import restrictions can be found here.

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