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October 22 2012 Issue

Monday, October 22, 2012
Sandler, Travis & Rosenberg Trade Report

FDA Food Facility Re-Registration Period Opens Oct. 22

The Food and Drug Administration has announced that the food facilities re-registration period under the Food Safety Modernization Act will open at 12:01 a.m. on Oct. 22. Facilities can register online, via mail or by fax, but the FDA encourages online registration. To assist with this process the FDA has made available an updated guidance document that is available here.

Under FSMA §102, all domestic and foreign facilities that manufacture, pack or store food, food ingredients, pet foods or dietary supplements are required to renew their registration with the FDA before the end of 2012 and to re-register every two years thereafter. This represents a change from the registration requirement for food facilities originally established in 2002 under the Bioterrorism Act. According to the FDA, the FSMA improves the registration process by ensuring that the agency has accurate contact information for each facility and including on the form new categories of foods that will help the FDA rapidly communicate with the right facilities in the event of an emergency.

Those affected by the new registration requirements are reminded that FSMA also imposes new burdens and potential liabilities on entities designated as U.S. agents to foreign food facilities. One of these liabilities stems from FSMA §107 concerning re-inspection fees. It is believed that in 2013 the FDA will begin charging $289 per hour for the time it devotes to re-inspecting foreign food facilities, resulting in the potential for invoices to reach several thousands of dollars per re-inspection. The party the FDA will hold responsible for paying these invoices is the U.S. agent. Accordingly, brokers, forwarders and importers of record will likely want to find alternatives to becoming U.S. agents themselves and foreign food facilities will need to seek out entities to become U.S. agents. 

U.S. to Launch Commercial Dialogue, Advances Investment and Facilitation Pacts with East Africa

The Office of the U.S. Trade Representative announced Oct. 19 several steps under the U.S.-East African Community Trade and Investment Partnership formalized earlier this year. First, the two sides will launch a bilateral commercial dialogue in late November. Second, technical teams will meet at the soonest possible date for further consultations toward the negotiation of a proposed investment treaty and a trade facilitation agreement. These teams will also discuss and agree on trade capacity building assistance, including identification and agreement of priority areas to support the TIP. The next ministerial meeting under this partnership will be held on the margins of the 2013 AGOA Forum.

USTR states that the TIP builds on the existing trade and investment relationship to promote EAC regional integration and social and economic growth and expand and diversify two-way trade and investment. It could also “serve as building blocks toward a more comprehensive trade agreement over the long term.”

The EAC includes Burundi, Kenya, Rwanda, Tanzania and Uganda.

$10 Million Penalty, Four Years in Prison for Illegal Exports to Iran

The Department of Justice announced Oct. 18 that a Florida man will forfeit $10 million and has been sentenced to four years in federal prison for conspiracy to violate the International Emergency Economic Powers Act and the Iranian Transaction Regulations. The man was convicted of conspiring with others to unlawfully export nearly $15 million worth of sophisticated, enterprise-level computer and related equipment from the U.S. to Iran in violation of the U.S. embargo against that country. DOJ notes that the man and his co-conspirators shipped the goods through the United Arab Emirates and employed fake identities, fake end-users and coded language in an effort to conceal their activities. 

Iran Sanctions Regulations Revised      

The Treasury Department’s Office of Foreign Assets Control has issued a final rule that, effective Oct. 22, will make a number of amendments to the Iranian Transactions Regulations, including the following.

- renaming these regulations the Iranian Transactions and Sanctions Regulations

- implementing the blocking prohibitions in section 1 of Executive Order 13599 (Blocking Property of the Government of Iran and Iranian Financial Institutions)

- setting forth certain consequences and requirements that stem from the blocking prohibitions,
including the requirement to hold blocked funds in interest-bearing accounts

- specifying that payments or transfers of funds are no longer considered ordinarily incident to a licensed transaction and instead must be authorized by a general or specific license

- adding new general licenses, including one authorizing the exportation and reexportation of medicine and basic medical supplies to Iran, and removing others

- clarifying that “medicine” does not include cosmetics

- providing that payment terms and financing for sales pursuant to the general licenses for exports of food, medicine and basic medical supplies must be limited to, and consistent with, those authorized by section 560.532

- adding a letter of credit issued by an Iranian financial institution whose property is blocked solely pursuant to 31 CFR Part 560 as a new authorized payment term for all sales under the Trade Sanctions Reform Act

- incorporating a general license and a statement of licensing policy that until now have appeared only on OFAC’s Web site

- removing certain general licenses and statements of licensing policy, either because they are out-of-date or because they are no longer consistent with U.S. policy

OFAC notes that the ITSR are separate and apart from the Iranian Financial Sanctions Regulations, 31 CFR part 561, as amended and reissued in their entirety on Feb. 27, 2012, which were promulgated to implement the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010.

AD/CV Notices: Plywood, Urea, Steel Sinks

Agency: International Trade Administration.
Commodity: Hardwood and decorative plywood.
Country: China.
Nature of Notice: Initiation of antidumping and countervailing duty investigations.
Details: Goods covered by these investigations are panels composed of an assembly of two or more layers or plies of wood veneer(s) in combination with a core. The several layers, along with the core, are glued or otherwise bonded together to form a finished product. A hardwood and decorative plywood panel can be composed of one or more species of hardwoods, softwoods or bamboo in addition to other materials that are used for the core. With certain exceptions, all hardwood and decorative plywood is included within the definition of subject merchandise without regard to dimension (overall thickness, thickness of face veneer thickness of back veneer, thickness of core, and thickness of inner veneers; width; and length), wood species used for the face, back and inner veneers (including hardwoods, softwoods or bamboo), core composition, grade of the face and back veneers, and whether or not surface coated.

Agency: International Trade Administration.
Commodity: Solid urea.
Country: Russia.
Nature of Notice: Final results of administrative review of antidumping duty order for the period July 1, 2010, through June 30, 2011.
Details: Weighted average dumping margin of zero for MCC EuroChem. The reviewed entries will be liquidated without regard to AD duties and no AD cash deposits will be required for subject merchandise entered or withdrawn from warehouse on or after Oct. 22.

Agency: International Trade Commission.
Commodity: Drawn stainless steel sinks.
Country: China.
Nature of Notice: Scheduling of final phase of antidumping and countervailing injury investigations.
Details: Hearing scheduled for Feb. 21, 2013, requests to appear due by Feb. 15, pre-hearing briefs due by Feb. 13, post-hearing briefs due by Feb. 28, final comments due by March 19. 

Electronic Cargo Clearance, Certificates to be Discussed at Nov. 7 Shipping Committee Meeting

The State Department’s Shipping Coordinating Committee will hold an open meeting Nov. 7 in Washington, D.C., to prepare for the 38th session of the International Maritime Organization's Facilitation Committee April 8-12, 2013, in London. Requests to attend this meeting are due no later than Oct. 31. Agenda items to be considered include the following.

- e-business possibilities for the facilitation of maritime traffic, including electronic means for the clearance of ships, cargo and passengers and electronic access to, or electronic versions of, certificates and documents required to be carried on ships (e.g., pros and cons of relying on electronic certificates as well as security features of such certificates and the Web sites used to view them)

- ensuring security in and facilitating international trade, specifically through the development of voluntary trade recovery guidelines through analysis and collection of relevant practices, standards and activities, including World Customs Organization and International Organization for Standardization standards

- facilitation of shipments of dangerous cargoes

BIS Examines Effect of Export Controls on Night Vision Equipment

The Bureau of Industry and Security has posted to its Web site a critical technology assessment examining the impact of export controls on night vision equipment controlled under Category XII of the U.S. Munitions List and Export Control Classification Numbers 6A002 and 6A003 of the Commerce Control List. This equipment includes focal plane arrays, image intensifier tubes and low light level sensors as well as cameras and direct-view equipment incorporating these items for the purposes of cooled and uncooled infrared or near-infrared imaging.

The findings in this report include the following.

- The number of current and projected dual-use product lines for night vision sensor components and imaging equipment is greater than the number of military-use-only product lines, except for cooled infrared cameras.

- Sales data show volatility in the market that is likely due to the global recession, increased competition, export controls, and unsteady/unpredictable military sales.

- From 2007-2010 dual-use exports of all night vision components and equipment increased from 310,389 to 498,406.

- Non-U.S. companies have a strong presence in the U.S. market, with 44% of survey respondents purchasing some sensor components from non-U.S. suppliers.

- There was a spike in both U.S. and non-U.S. dual-use uncooled infrared camera sales from 2009-2010 that coincided with the implementation of a 2009 rule that reduced licensing requirements to some regime partners for dual-use uncooled infrared cameras controlled under ECCN 6A003.

- Approximately 27% of survey respondents received some level of research and development funding from the Defense Department for their recent night vision component or equipment products.

- Military-use-only night vision components and equipment have different physical and technical characteristics than dual-use night vision components and equipment (e.g., weapons mounting, stability software, special packaging), which could be used as a discriminator in controlling items on the USML and CCL.

- There is widespread availability of night vision components and equipment among Wassenaar Arrangement regime members.

- There is also evidence that certain items across all types of night vision components and equipment are available from outside of regime members, including Belarus, China, India, Israel, Singapore and Taiwan. 

Export Committee on Information Systems to Meet Nov. 7-8

The Bureau of Industry and Security’s Information Systems Technical Advisory Committee will hold a partially open meeting Nov. 7-8 in Washington, D. C. This committee advises BIS on technical questions that affect the level of export controls applicable to information systems equipment and technology.

The open session of the upcoming meeting will include industry presentations on performance and aggregation in Category 4, graphics processors roadmap, proposal for ECCN 4A003, and issues for Category 5p2. This session will be accessible via teleconference to 20 participants on a first come, first served basis, and requests to participate in this manner are due no later than Oct. 31. In addition a limited number of seats will be available at this session but reservations are not accepted. 

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