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October 12 2012 Issue

Friday, October 12, 2012
Sandler, Travis & Rosenberg Trade Report

Annual Survey Finds Growth in China Tempered by Costs, IPR Enforcement, Competition      

The U.S.-China Business Council released this week the results of itsannual survey on the business environment in China. The survey finds that while China continues to deliver sales growth and profitability for U.S. companies, rising costs, increasing competition and persistent market access and regulatory barriers are tempering the optimism of U.S. companies doing business there. Highlights of the report’s findings include the following. 

- 94% of companies say they are doing business in China primarily to access that country’s market, not to develop an export platform, and 66% plan to increase investment in China in the next 12 months 

- 89% of respondents said their China operations are profitable, two-thirds said revenue from those operations grew 10% or more in the past year, and 75% said profit margins from those operations were the same as or better than their global margins 

- 90% of respondents said they are optimistic or somewhat optimistic about business prospects in China over the next five years but 45% said they are less optimistic than three years ago 

- competition from domestic competitors was cited as the primary restraint on increased profitability in China by 27% of respondents, followed by rising costs (20%), government policy and regulation (17%), competition from international competitors (15%), insufficient personnel to support growth (7%) and insufficient capacity to meet demand (6%) 

- 17% of respondents said they reduced or stopped planned investment in China in the past year, and 50% of those cited market access restrictions as the reason 

- the top 10 challenges identified concerning doing business in China were talent recruitment and retention, administrative licensing, competition with Chinese enterprises, cost increases, intellectual property rights enforcement, uneven local enforcement and implementation of laws and policies, investment restrictions, competition with foreign companies in China, competition with foreign or Chinese companies not subject to the Foreign Corrupt Practices Act, and standards and conformity assessment 

- China’s exchange rate was not among the top 25 concerns listed by U.S. companies doing business in China, and forced transfer of technology ranked 16th 

- although local and central governments have issued notices ending “indigenous innovation” preferences in government procurement policies, 85% of respondents said they have yet to see any impact from this change

CBP Reviews Import Trade Trends for First Half of FY 2012      

U.S. Customs and Border Protection has issued a report on import trade trends for the first half of fiscal year 2012. Among other things the report includes the following statistics on import value, revenue, source countries, entry summaries, consignees, compliance rates and trade partnership programs for the period Oct. 1, 2011, through March 31, 2012. 

- total import value was $1.18 trillion, on pace to exceed the $2.27 trillion total for FY 2011 

- the percentages of imports that were of dutiable value (31%), conditionally free value (21%) and duty-free value (48%) were unchanged from FY 2011 and have varied only slightly over the past five years 

- total revenue collected was $19.1 billion and total duty collections were $15.3 billion, both on pace to exceed the FY 2011 totals 

- estimated undercollections totaled $149 million, compared with $342 million for all of FY 2011 

- antidumping duty deposits ($193 million) and countervailing duty deposits ($15 million) are both on pace to exceed FY 2011 totals ($329 million and $27 million, respectively) 

- a total of 14.8 million entry summaries were filed (on pace to exceed the 29.5 million for FY 2011), the paperless entry summary rate edged up to 92.3%, and the paperless cargo rate fell slightly to 57.4% 

- over 500,000 entry summaries were filed in the Automated Commercial Environment, far exceeding the total for all of FY 2011, and one of every 15 entry summaries is now filed in ACE 

- the total number of consignees was 513,144, compared to 728,651 for FY 2011 

- the major transactional discrepancy trade compliance measurement rate was 97.7%, up from 96.7% 

- Importer Self-Assessment program: 1.6 million ISA entry summaries (11% of the total) covering $285 billion in import value (24% of the total), both on pace to exceed FY 2011 totals 

- Customs-Trade Partnership Against Terrorism: 3.5 million entry summaries filed (24% of the total) covering $361 billion in import value (31% of the total) 

- $624 billion in import value was from the top five source countries, on pace to hit the highest annual total in five years 

- $9 billion in duties were paid on imports from the top five duty-paying source countries (China, Japan, Germany, Vietnam and Indonesia) 

Dates and Deadlines: Trade Barriers, Export Laws, NAFTA, Supply Chains      

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

Oct. 15 – deadline for input for USTR annual foreign trade barrier report 

Oct. 16 – ST&R webinar on export laws and regulations for textile, apparel and footwear companies 

Oct. 17 – comments on public interest issues in patent infringement investigation of certain LED photographic lighting devices and components thereof 

Oct. 17 – ST&R webinar on Export Control Reform Initiative 

Oct. 17-18 – STTAS seminar on NAFTA for auto products 

Oct. 18 – ITC conference on AD/CV petitions on hardwood plywood from China 

Oct. 19 – meeting of Advisory Committee on Supply Chain Effectiveness

Of Note: Trade Policy, EU-U.S. FTA      

For U.S. Voters, Trade is a Tough Sell 
EU, US companies push for ‘realistic’ transatlantic trade deal

AD Notices: Solar Cells, Hangers, Grain-Oriented Electrical Steel, Polyester Staple Fiber      

Solar Cells from China. The International Trade Administration announced Oct. 10 its final affirmative antidumping and countervailing duty determinations on crystalline silicon photovoltaic cells, whether or not assembled into modules, from China. 

In the AD duty investigation, dumping margins range from 18.32% to 249.96% and critical circumstances were determined to exist for all companies except Wuxi Suntech Power Co. Ltd. As a result, provisional duty deposits will be collected 90 days prior to the date of publication of the ITA’s preliminary determination (except for deposits applied to Wuxi), although the International Trade Commission must also make an affirmative critical circumstances finding for this early collection requirement to remain in effect. Cash deposits or bonds will be required at the applicable dumping margins less a 10.54% export subsidy rate. 

In the CV duty investigation, net subsidies range from 14.78% to 15.97% and the ITA found that critical circumstances exist for all companies. If the ITC issues a final affirmative CV injury determination, the ITA will instruct CBP to resume the suspension of liquidation of entries of subject merchandise and require cash deposits equal to the final net subsidy rates.

According to press reports, these final determinations rejected a recent request from eight lawmakers asking the ITA to broaden the scope of the investigations to include solar panels produced from non-Chinese crystalline silicon photovoltaic cells. 

The ITC’s final AD and CV injury determinations are due by Nov. 23. If those determinations are affirmative the ITA will issue AD and CV duty orders; otherwise the investigations will be terminated and no AD or CV duties will be assessed. 

Steel Wire Garment Hangers from Taiwan. The International Trade Administration announced Oct. 10 its affirmative final antidumping duty determination on steel wire garment hangers from Taiwan. Dumping margins range from 69.98% to 125.43%, and the ITA will instruct U.S. Customs and Border Protection to continue collecting cash deposits or bonds on entries of subject merchandise at these rates. If the International Trade Commission’s final affirmative AD injury determination (which is due by Nov. 23) is affirmative the ITA will issue an AD duty order; otherwise, this investigation will be terminated and no AD duties will be assessed. 

Grain-Oriented Electrical Steel. The Specialty Steel Industry of North America issued a press release Oct. 8 suggesting that it may soon seek antidumping duties on imports of grain-oriented electrical steel. The press release notes that for the period January through July 2012 imports of GOES from Japan, Korea, Poland and Russia were up 32% over the same period in 2011 and that the average unit values of these imports “are quite low, indicating possible dumping.” Domestic producers are now “assessing the situation to determine whether U.S. trade laws are being violated.” 

Polyester Staple Fiber from China. Effective Oct. 12, the International Trade Administration is continuing for another five years the antidumping duty order on certain polyester staple fiber from China. The merchandise subject to this order is defined as synthetic staple fibers, not carded, combed or otherwise processed for spinning, of polyesters measuring 3.3 decitex (3 denier, inclusive) or more in diameter, classifiable under HTSUS 5503.20.0045 and 5503.20.0065.

Trade Deficit Widens Again as Exports, Imports Both Fall      

Trade statistics released Oct. 11 by the Department of Commerce show that the monthly U.S. trade deficit in goods and services rose for the second straight month in August, gaining $1.7 billion to $44.2 billion. Exports fell another $1.9 billion to $181.3 billion and imports were $0.2 billion lower at $225.5 billion. Compared to a year earlier, the August trade deficit was down $0.6 billion as exports gained $2.9 billion (1.6%) and imports rose $2.3 billion (1.0%). 

According to the DOC, the deficit in goods trade widened by $1.5 billion in August to $59.3 billion. Exports of goods fell $2.1 billion from the previous month to $128.5 billion while imports were down $0.7 billion to $187.8 billion. The services surplus fell another $0.3 billion to $15.1 billion as exports edged up $0.2 billion to $52.8 billion and imports moved ahead $0.5 billion to $37.7 billion. 

The bilateral trade deficit with China fell for the first time in six months, down 2.4% to $28.7 billion. The U.S. also ran deficits with the European Union (down 2.5% to $11.7 billion), Japan (down 1.5% to $6.7 billion), Germany (up 16.3% to $5.7 billion), Mexico (down 10% to $4.5 billion), Canada (up 14.3% to $2.4 billion), Ireland (down 7.7% to $2.4 billion), Venezuela (up 57.1% to $2.2 billion), Korea (down 15.8% to $1.6 billion), Taiwan (down 6.7% to $1.4 billion) and Nigeria (up 37.5% to $1.1 billion). 

The U.S. continued to run surpluses with several trade partners in August, including Hong Kong (up 16.7% to $2.1 billion), Australia (down 14.3% to $1.8 billion), Singapore (up 28.6% to $0.9 billion) and Egypt (unchanged at $0.2 billion).

Textile and Apparel Imports Down 2.1% but Shipments from Turkey Continue Growth      

The Department of Commerce’s Office of Textiles and Apparel reported Oct. 11 that monthly U.S. textile and apparel imports fell 2.1% in August compared to a year earlier. Imports of cotton, wool, manmade fiber, silk blend and non-cotton vegetable fiber textile and apparel products totaled 5.03 billion square meter equivalents for the month, with textile imports unchanged at 2.72 billion SME and apparel imports falling 4.4% to 2.31 billion SME. 

For the year to date as of August 2012, compared to the same period in 2011, imports of textiles and apparel were unchanged at 36.2 billion SME. Textile imports saw a 2.6% gain to 20.6 billion SME while apparel imports fell 3.2% to 15.6 billion SME. For the 12-month period ending in August total imports were down 2.6% to 53.7 billion SME as textile imports were up 0.6% to 30.3 billion SME but apparel imports slumped 6.4% to 23.4 billion SME. 

With respect to specific sources, imports of textile and apparel products (except cotton and silk blend textiles) saw a year-on-year increase in August from only four areas: South Asia (1.8% to 730.2 million SME), the EU 15 (8.9% to 110 million SME), Turkey (10.4% to 63.2 million SME) and Israel (10.5% to 33.8 million SME). On the other hand, imports declined from China (2.8% to 2.53 billion SME), Vietnam (7.1% to 267.1 million SME), Taiwan (3.0% to 71.7 million SME), Hong Kong (28.0% to 4.5 million SME), Korea (2.1% to 108.4 million SME), Canada (7.4% to 95.1 million SME), Mexico 5.7% to 219.7 million SME), the DR-CAFTA region (0.6% to 268.0 million SME), the Caribbean Basin Initiative area (0.7% to 292.5 million SME), and ASEAN (7.2% to 597.1 million SME).

No Import Restrictions on Polyimide Films for Patent Infringement      

The International Trade Commission has terminated without the imposition of import restrictions patent infringement investigation 337-TA-772 of certain polyimide films, products containing same and related methods. This step follows the ITC’s affirmation of the presiding administrative law judge’s determination that the importation, sale for importation and sale within the U.S. after importation of the items at issue were not violating specified patents owned by Kaneka Corporation of Osaka, Japan. 

FTZ Board Seeks Comments on New Evidence Supporting Zone in Arizona      

The Foreign-Trade Zones Board has received new evidence in support of a May 2011 application to establish a general-purpose FTZ at sites in Pinal County, Ariz., adjacent to the Phoenix U.S. Customs and Border Protection port of entry. The FTZ Board is accepting comments on this new information through Nov. 13. The original application said several firms had indicated an interest in using zone procedures for warehousing/distribution activities for a variety of products.

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