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October 1 2012 Issue

Monday, October 01, 2012
Sandler, Travis & Rosenberg Trade Report

Update on ACE Initiatives on Cargo Release, Exports       

U.S. Customs and Border Protection has posted to its Web site an updateon the functionality already implemented in the Automated Commercial Environment as well as near-term priorities for other ACE deliverables, including e-manifest for rail and sea, cargo release and export processing. ACE is currently in an operations and maintenance phase and CBP is using carry-over dollars for development work on these initiatives. However, CBP recognizes that additional functionality is necessary to achieve broad participation and is therefore committed to working with ACE stakeholders to develop business cases for remaining functionality in order to secure the additional funding needed to implement it. 

E-Manifest: Rail and Sea (M1). M1 provides a consolidated view of rail and sea shipment manifest and entry data at the bill of lading or container level to facilitate the identification of shipments that may pose a risk and will expedite the pre-arrival processing of legitimate cargo. As of September M1 had been deployed to all CBP ports of entry and 100% of the affected carrier community had sent rail and sea manifests to ACE, completed testing or was in the process of testing. CBP is on track to decommission the Automated Manifest System for rail and sea by the end of 2012. Click here for more information. 

Cargo Release. ACE Cargo Release will provide the trade community with a more automated and modern process that streamlines data requirements, removes paper and provides for expedited import decisions by federal agencies. 

Simplified entry is the first phase of Cargo Release. CBP is currently conducting a pilot test of simplified entry that will eliminate the current CBP Form 3461 used to make entry and replace it with a streamlined set of data – 12 required and three optional data elements – submitted earlier in the process. Participants will also be able to update entry information for the first time, allowing them to provide the best available information at the time of filing and update it as needed all the way up to the arrival of the conveyance. 

The pilot was launched in May at the ports of Indianapolis, Chicago and Atlanta and since then has been expanded to airports in Seattle, San Francisco, Oakland, Los Angeles, Dallas/Ft. Worth, Houston, Miami, Newark, New York/JFK and Boston. As of Sept. 9 there had been approximately 15,000 simplified entries successfully filed for nearly 450 importers at these ports. CBP opened the pilot to additional participants in August and is currently reviewing 13 applications. CBP is also working to add new functionality to the pilot including incorporation of the PGA message set, the simplified entry transaction set, single transaction bonds, automated cancellations and deletions, the Document Image System, and remote location filing. 

PGA Interoperability. This initiative introduces a comprehensive set of technical services that enables CBP to share trade data, documents and events of interest in an automated manner with participating government agencies in an effort to significantly enhance the interagency collaboration required during the cargo importation, review and release process. The Consumer Product Safety Commission, the Food Safety and Inspection Service and the Coast Guard are already participating, and other agencies in the process of being brought into the interoperability environment include the Agricultural Marketing Service, the Animal and Plant Health Inspection Service, the Army Corps of Engineers, the Department of Transportation, the Environmental Protection Agency, the Alcohol and Tobacco Tax and Trade Bureau, the Census Bureau, the Internal Revenue Service and the National Marine Fisheries Service. 

Exports. CBP is planning to establish ACE as the single processing platform for all export manifest, commodity, licensing and export control transactions. Current plans call for the development of an automated export manifest system for all modes, which will involve coordination with the Census Bureau and other PGAs involved in export licensing and commodity transactions. 

CBP has completed the concept of operations and operational requirements document, which detail both the enhanced electronic commodity processing and the pre-departure electronic export manifest processing for all modes of transport and are in the final stages of executive review. An pilot test using the DIS capability, which allows for an emailed submission and automated processing of export manifests in the ocean mode of transportation, was launched in March and has now been expanded to all seaports and ocean carriers. CBP states that it is receiving a near 100% success rate for the export manifests submitted as part of this pilot. 

New Limits on Duty/Quota-Free Apparel from Ecuador, Africa       

Ecuador. The Committee for the Implementation of Textile Agreements has issued a notice extending through July 31, 2013, the period of the quantitative limitation on imports of qualifying apparel articles eligible for duty- and quota-free treatment under the regional fabric provision of the Andean Trade Promotion and Drug Eradication Act. For the period Oct. 1, 2012, through July 31, 2013, this limit will be set at 1,341,030,128 square meters equivalent, and apparel articles entered in excess of this quantity will be subject to otherwise applicable tariffs. However, this limit applies only to imports from Ecuador, which is the only remaining ATPDEA beneficiary. 

The regional fabric provision applies to apparel articles sewn or otherwise assembled in one or more ATPDEA beneficiary countries from fabrics or fabric components formed, or from components knit-to-shape, in one or more ATPDEA beneficiary countries from yarns wholly formed in the U.S. or one or more ATPDEA beneficiary countries (including fabrics not formed from yarns, if such fabrics are classifiable under HTSUS 5602 and 5603 and are formed in one or more ATPDEA beneficiary countries). Such apparel articles may also contain certain other eligible fabrics, fabric components or components knit-to-shape. 

Africa. CITA has also announced the fiscal year 2013 (Oct. 1, 2012, through Sept. 30, 2013) limits on duty- and quota-free imports of apparel articles assembled from regional and third-country fabric under the African Growth and Opportunity Act. For apparel articles wholly assembled in one or more beneficiary sub-Saharan African countries from fabric wholly formed in one or more beneficiary countries from yarn originating in the U.S. or one or more beneficiary countries, the FY 2013 limit is 1,735,859,926 SME (down from 1,877,430,342 SME in FY 2012). Of this amount, 867,929,963 SME (down from 938,715,171 SME) is available for apparel articles imported under the AGOA third-country fabric provision, which provides preferential treatment for apparel articles assembled in one or more lesser-developed beneficiary countries regardless of the country of origin of the fabric used. Apparel articles entered in excess of these quantities will be subject to otherwise applicable tariffs. 

Impact of Andean Trade Preferences Continues to Diminish, ITC Says       

In an annual report released Sept. 27, the International Trade Commission found that the Andean Trade Preference Act continues to have a negligible overall effect on the U.S. economy as well as a small but indirect effect on reducing illicit coca cultivation and promoting crop substitution efforts in the Andean countries. These effects are continuing to diminish because Ecuador is now the only remaining ATPA beneficiary. In addition, the report notes, imports under the ATPA were significantly lower in 2011 because the program lapsed for a substantial part of the year. 

Highlights of the report include the following. 

- Total imports from ATPA countries represented 1.5% of the total value of U.S. merchandise imports in 2011. ATPA-exclusive imports accounted for 0.19% of the total. 

- Of the products imported into the U.S. under the ATPA, U.S. consumers benefited the most from imports of fresh cut roses and chrysanthemums through lower prices as a result of duty-free treatment. U.S. producers of fresh cut roses were the most negatively impacted as lower priced imports led to a small reduction in domestic production. 

- ATPA preferences expired Feb. 12, 2011, but were retroactively renewed Oct. 21, 2011. In addition, Peru lost its ATPA beneficiary status at the end of 2010. As a result of these two factors, imports entered under ATPA fell 70% and ATPA-exclusive imports fell 68% in 2011. 

- Of the $4.4 billion in U.S. imports that were entered under ATPA in 2011, imports valued at $4.2 billion could not have received tariff preferences under any other program. These ATPA-exclusive imports accounted for 13.1% of the value of total U.S. imports from ATPA countries. 

- Petroleum and petroleum products now dominate the list of leading imports that benefit exclusively from the ATPA. The five leading items benefiting exclusively from the ATPA in 2011 were heavy crude oil, light crude oil, heavy fuel oil, fresh cut roses and light oil mixtures. 

- Future effects of the ATPA on the overall U.S. economy and most economic sectors are expected to be minimal because U.S. imports from Ecuador represent such a small portion of total U.S. imports (0.43% percent in 2011). Uncertainty over the future of ATPA trade preferences in 2011 discouraged investment in some sectors. Nevertheless, some investments could generate future exports to the United States under the ATPA, including frozen broccoli and cauliflower, pouched tuna and plywood. 

- Sustained aerial and manual eradication operations in Colombia reduced coca cultivation nearly 15% in 2010, while Ecuador remained essentially free of drug-crop cultivation despite being a major transit country for drug trafficking. 

Three Foreign-Trade Zones Reorganized, Zone Procedures OKed at Ship Facility       

The Foreign-Trade Zones Board has recently approved the following. 

- the construction and repair of oceangoing vessels under zone procedures at the Gulf Ship LLC facility within site 3 of FTZ 92 in Gulfport, Miss. 

- the reorganization and expansion under the alternative site framework of FTZ 220, which will have a service area of Bon Homme, Brookings, Clay, Davison, Duel, Hamlin, Hanson, Hutchinson, Kingsbury, Lake, Lincoln, McCook, Miner, Minnehaha, Moody, Sanborn, Turner, Union and Yankton counties in South Dakota 

- the reorganization under the ASF of FTZ 107, which will have a service area of Adair, Adams, Audubon, Boone, Calhoun, Carroll, Cass, Clarke, Dallas, Decatur, Greene, Guthrie, Hamilton, Hardin, Jasper, Lucas, Madison, Mahaska, Marion, Marshall, Monroe, Polk, Poweshiek, Ringgold, Story, Union, Warren, Wayne and Webster countries in Iowa 

- the reorganization under the ASF of FTZ 131, which will have a service area of Whatcom County, Wash., within and adjacent to the Blaine, Wash., U.S. Customs and Border Protection port of entry, and the merger of FTZ 130 and FTZ 131 under FTZ 129 

Potential IPR Probe of Optoelectronic Devices Evaluated for Public Interest Issues      

The International Trade Commission is requesting comments no later than Oct. 9 on any public interest issues raised by a Section 337 intellectual property rights infringement complaint filed on behalf of Avago Technologies Fiber IP (Singapore) Pte. Ltd., Avago Technologies General IP (Singapore) Pte. Ltd. and Avago Technologies U.S. Inc. against certain optoelectronic devices for fiber optic communications, components thereof, and products containing the same. Comments should address whether the issuance of exclusion orders and/or cease and desist orders pursuant to this complaint would affect the public health and welfare in the U.S., competitive conditions in the U.S. economy, the production of like or directly competitive articles in the U.S., or U.S. consumers. In particular, the ITC is interested in comments that: 

- explain how the articles potentially subject to the orders are used in the U.S.; 

- identify any public health, safety or welfare concerns in the U.S. relating to the potential orders; 

- identify like or directly competitive articles that the complainant, its licensees or third parties make in the U.S. that could replace the subject articles if they were to be excluded; 

- indicate whether the complainant, the complainant’s licensees and/or third-party suppliers have the capacity to replace the volume of articles potentially subject to the requested orders within a commercially reasonable time; and 

- explain how the requested orders would impact U.S. consumers. 

New Energy Conservation Standards for Dishwashers, Clothes Washers      

The Department of Energy has confirmed the adoption of amended energy conservation standards for residential dishwashers and residential clothes washers established in separate May 2012 direct final rules. Compliance with the new standards will be required for (a) all covered dishwashers manufactured in or imported into the U.S. on or after May 30, 2013, (b) all covered top-loading clothes washers manufactured in or imported into the U.S. on or after March 7, 2015 and (c) all covered top-loading and front-loading clothes washers manufactured in or imported into the U.S. on or after Jan. 1, 2018.  

DEA Establishes 2013 Import Limits for Three List I Chemicals      

The Justice Department’s Drug Enforcement Administration has issued a notice setting the initial specific limits on the quantity of ephedrine, pseudoephedrine and phenylpropanolamine that can be imported into or produced in the U.S. in 2013. Pursuant to the Combat Methamphetamine Epidemic Act of 2005, this notice sets forth the DEA’s initial assessment of the quantities of these three List I chemicals that are needed for medical, scientific, research and industrial needs; for lawful export requirements; and for the establishment and maintenance of reserve stocks.

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