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October 15 2012 Issue

Monday, October 15, 2012
Sandler, Travis & Rosenberg Trade Report

States Get Guidance on Developing Freight Transportation Plans      

The Department of Transportation has issued a notice providing interim guidance to states on the development of state freight plans that outline immediate and long-range plans for freight-related transportation investments. The Moving Ahead for Progress in the 21st Century Act (MAP-21) authorizes the DOT to increase the federal share payable for any project to 95% for projects on the interstate system and 90% for any other project if the DOT certifies that the project (a) demonstrates the improvement made by the project to the efficient movement of freight (including making progress on freight performance measures established under MAP-21) and is identified in an SFP. Comments on all aspects of this guidance are due no later than Nov. 15. 

The DOT believes that freight transportation, because its effects are often regional or national in scope and it involves freight providers that own and operate private infrastructure, has often been more difficult for states to incorporate into their planning process than has passenger transportation. As a result, infrastructure investments and other state policy initiatives related to freight transportation have often received less funding and attention than passenger-related initiatives. SFPs, on the other hand, can identify freight transportation facilities that are critical to each state’s economic growth and give appropriate priority to investments in such facilities. They can also identify freight transportation facilities that are critical to export movements and direct resources toward improving those facilities. In addition, the DOT intends to rely “significantly” on SFPs in the development of a multimodal National Freight Strategic Plan. 

Although SFPs may be organized in any structure that works best for individual states (as long as required elements are included), the DOT is suggesting the following as a model. 

Strategic Goals – An SFP must include a description of how it will improve the state’s ability to meet the following national freight goals: improving the contribution of the freight transportation system to economic efficiency, productivity and competitiveness; reducing congestion; improving safety, security and resilience; improving the state of good repair of the system; using advanced technology, performance management, innovation, competition and accountability in operations and maintenance; and reducing adverse environmental and community impacts. The DOT recommends that each SFP also include a discussion of the state’s strategic goals for freight transportation. 

Economic Context – Each SFP should include a discussion of the role that freight transportation plays in the state’s overall economy, including identifying those industries that are most important to the state and what supply chains are critical to the state’s industries and important to exports (whether from that state or another). 

Freight Policies, Strategies and Institutions – An SFP must include a discussion of the freight policies and strategies that will guide the state’s freight-related transportation investment decisions. This section should also discuss how these policies and strategies will guide the state’s broader freight improvement strategy, including operational strategies and policy changes. Among other things, the DOT recommends that this section identify private transportation infrastructure owners, such as railroads, terminals, pipelines and freight transfer facilities; identify statutory and constitutional constraints on freight-related investments and policies, such as prohibitions on spending state funds for certain kinds of freight infrastructure; and discuss regional freight planning activities in which the state participates, such as planning for key multi-state freight corridors, multi-state metropolitan areas or other regional groups. 

State Freight Transportation Assets – An SFP must include an inventory of facilities with freight mobility issues but the DOT recommends that it also include a complete inventory of the state’s freight transportation assets. This would include a description of the state’s transportation infrastructure in all freight-carrying modes, the warehousing and intermodal facilities located in the state, and the freight gateways and corridors that are located in or pass through the state. 

Conditions and Performance of Freight Transportation System – An SFP must include the performance measures that will guide the state’s freight-related transportation investment decisions, and the DOT recommends that this discussion include an analysis of the conditions and performance of the state’s freight transportation system. This analysis would include the identification of bottlenecks that cause delays and unreliability in freight movements as well as other specific locations that are in a poor state of repair, create safety hazards or create other performance problems. In general, the DOT recommends that measures of conditions and performance reflect the state’s freight transportation goals – for each goal, there would be at least one measure that indicates how well the freight transportation system is doing in achieving that goal. 

Freight Forecast – SFPs should include a 20-year forecast of freight transportation demands, including for transportation coming into the state, leaving the state, passing through the state or moving within it. 

Trends, Needs and Issues – An SFP must identify significant freight system trends, needs and issues and the DOT recommends that this discussion include how emerging trends make those needs and issues of greater significance or how these trends affect how those needs and issues can be addressed. 

Strengths and Problems – The DOT recommends that SFPs include an analysis of the strengths of the state’s freight system that it wishes to preserve as well as the problems it wishes to solve. These might include problems that the state expects to develop in the future as a result of increasing demand for freight transportation or other anticipated trends. 

Decision-Making Process – SFPs should include a discussion of the state’s decision-making process on freight transportation improvements, including how the state prioritized the various strategies, projects and policy changes it considered. This discussion would show how the state coordinated improvements to different modes of transportation to achieve its goals in the most cost-effective way as well the ways it coordinated with other states in regional freight planning efforts and with metropolitan areas within the state that have done freight planning. 

Freight Improvement Strategy – An SFP must include a description of the strategies the state is employing to address freight mobility issues. The DOT recommends that this description include a presentation of the state’s complete freight improvement strategy, with different improvements ranked in order of priority or grouped into higher and lower priority groups. The strategy would also include an analysis of how proposed improvements will affect specific supply chains and industries identified as important to the state, a discussion of how the freight plan relates to other transportation plans, and a discussion of how the state’s freight improvement strategy coordinates with plans of other adjacent states. 

Implementation Plan – The DOT recommends that SFPs include a comprehensive implementation plan showing both short-term and long-term strategies and including an approximate time schedule for each proposed freight improvement. The SFP would discuss the state’s proposed partnerships with private infrastructure owners, such as railroads, terminal operators and pipeline companies, as well as the ways the state plans to work with adjacent states on projects or freight corridors that cross state lines.

Classification Rulings on Cooler Bags, Task Lights, Plastic Cups, Work Footwear      

In the Oct. 10, 2012, Customs Bulletin and Decisions, U.S. Customs and Border Protection proposed to revoke classification rulings on the following products. Comments are due by Nov. 9. 

Product: Soft-sided insulated cooler bags. 
Proposed action: Revocation of NY N024831, NY N024015 and NY N024016. 
Current classification: Two bags classified under HTSUS 4202.92.08 (7% duty) as other insulated food or beverage bags with outer surface of textile materials and one bag classified under HTSUS 4202.92.10 (3.4% duty) as other insulated food or beverage bags. 
Proposed classification: Classification would be reversed – the two bags would be classified under HTSUS 4202.92.10 and the other would be classified under HTSUS 4202.92.08. 
Explanation: The essential character of the bags is imparted by the material that comprises the bulk of their outer surface area, which is plastic sheeting for the two bags and a polyester textile material for the other bag. 

Also in the Oct. 10, 2012, Customs Bulletin and Decisions, CBP revoked or modified classification rulings on the following products, effective Dec. 10. 

Product: LED task light. 
Action: Revocation of NY N077436. 
New ruling: HQ H01436. 
New classification: HTSUS 8513.1020 (3.5% duty), other portable electric lamps. 
Explanation: Product exhibits the general physical characteristics of a flashlight but also functions as something else due to the capabilities imparted by the magnetic mount, combination hook/stand and LED bank. 

Product: One ounce plastic cups used primarily to administer oral medications. 
Action: Revocation of NY H81035. 
New ruling: HQ H176516. 
New classification: HTSUS 3926.90.99 (5.3% duty), other articles of plastic. 
Explanation: The cups are not only used in the house and are too flimsy to be reused and therefore do not meet the exemplars of heading 3924. 

Product: Below-the-ankle, lace-up shoes with outer soles of rubber/plastics and uppers of predominantly leather. 
Action: Revocation of NY N039199 and modification of NY N039198. 
New ruling: HQ H050119. 
New classification: HTSUS 6403.99.6025 (8.5% duty) and 6403.99.9015 (10% duty), work footwear. 
Explanation: The shoes meet the requirements to be considered work footwear because they have outer soles of rubber or plastics, are designed for use by food service industry employees and have special oil and slip resistance features.

Of Note: U.S.-China Trade Policy, EU-Japan FTA, 3-D Printing      

This time China-bashing may be more than election-year politics 
Start free trade talks with Japan, say trade MEPs, but look out for EU car sector 
3D Printing: The end of the globalized supply chain? 

U.S. Submits Proposals for Amending International Wildlife Trade Treaty      

The U.S. Fish and Wildlife Service has posted on its Web site the following list of proposals and other agenda items the U.S. has submitted for consideration at the 16th meeting of the conference of the parties to the Convention on International Trade in Endangered Species of Wild Fauna and Flora, which will be held in March 2013 in Thailand. The FWS states that in November it will issue and seek public comments on a tentative agenda for this meeting and that in December it will hold a public meeting to solicit further input. 

Proposals to Amend CITES Appendices 

- add the oceanic whitetip shark to Appendix II 
- transfer the polar bear, the Burmese star tortoise, the big-headed turtle, and the Roti Island snake-necked turtle from Appendix II to Appendix I 
- add one family of Asian pond and river turtles to, and exclude one genus and 11 additional species from, Appendix II 
- add all species of Asian softshell turtles in the family Trionychidae, excluding two species, to Appendix II 
- add Blanding’s turtle, the diamondback terrapin and the spotted turtle to Appendix II 
- amend the annotation to the listings of Asian ginseng and American ginseng in Appendix II 
- remove the Laguna Beach live-forever and Santa Barbara Island live-forever from Appendix II 

Species protected by CITES are included in one of three appendices. Appendix I includes species threatened with extinction and provides the greatest level of protection, including restrictions on commercial trade. Appendix II includes species that, although currently not threatened with extinction, may become so without trade controls. Appendix III includes species protected by at least one country that needs assistance from other parties in regulating international trade. Changes to appendices I and II must be proposed at a CoP and agreed to by a two-thirds majority of those present and voting. Listings to Appendix III can be requested by individual parties at any time. 

Additional Documents 
- proposal for a new resolution and amendments to an existing resolution on permits and certificates to streamline permitting requirements for the cross-border movement of musical instruments 

- proposal for a revised resolution on quotas for leopard hunting trophies and skins for personal use

New IPR Infringement Investigation of Nutraceutical Products      

The International Trade Commission has instituted investigation 337-TA-857 to determine whether imports of certain reduced folate nutraceutical products and l-methylfolate raw ingredients used therein are violating Section 337 of the 1930 Tariff Act by reason of patent infringement. The complainants – South Alabama Medical Science Foundation, Merck & Cie and Pamlab LLC – request that after this 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. The respondents in this investigation are located in Italy, Switzerland and the U.S.

WCO Adds Two Members, Notes New Parties to Harmonized System and Kyoto Convention      

The World Customs Organization reports that Mozambique and Bosnia and Herzegovina recently deposited their instruments of accession to the International Convention on the Harmonized Commodity Description and Coding System, which will enter into force for both countries as of Jan. 1, 2014. The WCO notes that Mozambique’s principal export commodities are aluminum, prawns, cashews, cotton, sugar, citrus, timber and bulk electricity and that its principal import commodities are machinery and equipment, vehicles, fuel, chemicals, metal products and textiles. Bosnia mostly exports metals, clothing and wood products and its imports are led by machinery and equipment, chemicals, fuels and foodstuffs. 

The WCO also reports that Bangladesh has deposited its instrument of accession to the International Convention on the Simplification and Harmonization of Customs Procedures (Revised Kyoto Convention), which now has 83 contracting parties. Some of this convention’s key elements include the application of simplified customs procedures in a predictable and transparent environment, the maximum use of information technology, the utilization of risk management, a strong partnership with the trade community and other stakeholders, and a readily accessible system of appeals. 

Finally, the WCO notes that Somalia and South Sudan have recently become members of the organization.

Foreign Regulatory Changes Could Affect Exports of Appliances, Drugs, Bags, Tiles, Cosmetics      

According to the National Institute of Standards and Technology, the World Trade Organization has been notified of regulatory changes that may affect exports of specific products to the following countries. For information on how these restrictions may affect your business, contact ST&R. 

Argentina – delay until Jan. 1, 2013, of effective date of standard on domestic cooking appliances using gaseous fuels 

Mexico – emergency official standard on biotechnological medicines and biopharmaceuticals 

Peru – draft technical regulation on use of trans fatty acids in industrially produced foods and information to be displayed on labels (comments due by Dec. 17) 

South Africa – amended compulsory specifications for non-pressure paraffin stoves and heaters, hot water storage tanks for domestic use, domestic solar water heaters, and plastic carrier bags and flat bags (comments due by Dec. 10) 

Thailand – revised industrial standard for ceramic tiles (comments due by Dec. 5) 

Turkey – Aug. 18 publication of revised regulation on cosmetics 

Turkey – draft regulation on making-up by weight and volume of pre-packaged products (comments due by Dec. 5) 

United Arab Emirates – draft technical regulation on energy efficiency labeling for electrical appliances (comments due by Dec. 5)

Two DEA Forms on Import/Export of Restricted Chemicals Under Review      

The Drug Enforcement Administration is extending through Nov. 14 the period for public comments on the proposed extension of the following information collections. 

DEA Form 488, Application for Import Quota for Ephedrine, Pseudoephedrine and Phenylpropanolamine – Persons who desire to import these List I chemicals during the next calendar year must use this form to apply for an import quota. 

DEA Forms 486 and 486A, Import/Export Declaration for List I and List II Chemicals – Persons importing, exporting and conducting international transactions with List I and List II chemicals must notify DEA of those transactions in advance of their occurrence, including information regarding the person(s) to whom the chemical will be transferred and the quantity to be transferred. Persons must also provide return declarations confirming the date of the importation and transfer and the amounts of the chemical transferred. For the List I chemicals ephedrine, pseudoephedrine and phenylpropanolamine, importers must report all information known to them on the chain of distribution of the chemical from the manufacturer to the importer.

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