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October 25 2012 Issue

Thursday, October 25, 2012
Sandler, Travis & Rosenberg Trade Report

U.S., Others Raise Concerns About Use of Safeguards

Earlier this month the United States, the European Union and several other advanced economies submitted to the World Trade Organization Committee on Safeguards a memo outlining a number of concerns about “ongoing systemic issues” relating to certain safeguard investigations, including with respect to procedures, transparency and due process. These WTO members urged others to “take heed of these systemic concerns and consider how they might improve upon them to ensure that the rules of the Agreement on Safeguards are followed.”

Imposition of Safeguards Without Clear Evidence. While WTO rules allow provisional safeguard measures to be imposed if there is “clear evidence that increased imports have caused or are threatening to cause serious injury,” the “hastiness” with which some members have imposed such measures brings into question whether they are making proper preliminary determinations. For example, in one recent investigation, the time between initiation of the investigation and the imposition of provisional measures was four days, casting doubt on whether the authorities had really confirmed that there was clear evidence of serious injury and otherwise disrupting legitimate trade. In another example, a provisional safeguard was terminated after one government organization asked another to re-examine the findings in its preliminary determination, raising the question of whether the member country is taking sufficient care before adopting provisional measures.

Data Examined During Investigations. The memo alleges a lack of consistency in and explanation of the rationale for the data used and the analysis undertaken in determinations of the existence or threat of serious injury. For example, one member described the use of one specific timeline as the base year and indexed information in that timeline to show trends in areas such as production and capacity utilization but then used a significantly shorter comparison timeline for the loss of production and production hours lost. The members caution that such shifts, without meaningful explanation, may lead to the distortion of the factors being examined to determine the existence or threat of serious injury.

Suspension of Safeguards. Some countries have begun suspending previously imposed safeguards rather than terminating them. This practice is not provided for in WTO rules and creates market uncertainty by raising the question of why, if it is clear that the domestic industry no longer requires the safeguard, the measure is not terminated.

Untimely Notifications. There has been inconsistent compliance with the requirement that members immediately notify the committee when they initiate a safeguard investigation, make a finding of serious injury or threat caused by increased imports, or decide to apply or extend a safeguard measure. In some cases the gap between investigation and notification has been 14 days or longer, which may affect the ability of exporters and other interested parties to prepare and present evidence and views and respond to the presentations of other parties.

Unwarranted Investigations. It appears, the memo states, that some members have been conducting safeguard investigations without considering certain basic and essential requirements. In one example the competent authority recommended a safeguard measure without inquiring into the proper definition of domestic industry. As a consequence, the member relied on assertions made in the petition rather than collecting the necessary data to examine the condition of the properly-defined domestic industry and whether it was seriously injured. In addition, the data submitted by the applicant for the improper domestic industry, upon which the competent authority relied, was admittedly incomplete with respect to several of the injury factors.

Disputes on Chinese Auto Duties, U.S. Aircraft Subsidies Advance

The World Trade Organization established this week a dispute settlement panel to review claims that China is unfairly imposing antidumping and countervailing duties on more than $3 billion worth of U.S. automobiles. The WTO also advanced a proceeding that could see the European Union levy up to $12 billion in trade sanctions against the U.S. in a long-running dispute over aircraft manufacturing subsidies.

Automobiles. China imposes AD duties ranging from 2.0% to 21.5% and CV duties ranging from 6.2% to 12.9% on U.S.-made cars and sport-utility vehicles with engine capacity of 2.5 liters or larger. According to the Office of the U.S. Trade Representative, the U.S. believes that China failed to objectively examine the evidence and made unsupported findings of injury to its domestic industry in assessing these duties. The U.S. also believes that China failed to disclose essential facts underlying its conclusions, failed to provide an adequate explanation of its conclusions, improperly used investigative procedures, and failed to require non-confidential summaries of Chinese company submissions. USTR is seeking comments on the issues raised in this dispute no later than Nov. 16.

Aircraft. Also this week the WTO Dispute Settlement Body (a) authorized a new panel to review U.S. claims that it has complied with a previous ruling against government aid to Boeing and (b) sent to arbitration a request by the European Union, which rejects the U.S. claims, for WTO authorization to impose up to $12 billion in retaliatory sanctions. The EU has said these sanctions could come in the form of higher tariffs on goods imported from the U.S. or the suspension of commitments concerning CV 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. 

OFAC Outlines Licensing Policy, Acceptable Goods for Exports to Iran

Licensing Policy. The Treasury Department’s Office of Foreign Assets Control has issued a statement of licensing policy establishing a favorable licensing regime through which it will expedite license applications submitted by the following categories of U.S. persons to engage in certain human rights, humanitarian and democracy-related activities with respect to Iran.

- entities receiving funds from the Department of State to engage in the proposed activity

- the Broadcasting Board of Governors, an independent, autonomous entity responsible for all U.S. government and government sponsored, non-military, international broadcasting

- other appropriate agencies of the U.S. government

Applicants must fully disclose the parties to the transactions and describe the activities to be undertaken. License applications involving the exportation or reexportation of goods, technology or software to Iran must include a copy of an official commodity classification issued by the Bureau of Industry and Security. The State Department will complete a foreign policy review of a request for authorization no later than 30 days after it is referred by OFAC.

License determinations for complete requests for authorization under this policy will be made no later than 90 days after receipt by OFAC, with the following exceptions: (1) any requests involving the exportation or reexportation to Iran of goods, technology or software listed on the Commerce Control List will be processed in a manner consistent with the Iran-Iraq Arms Non-Proliferation Act of 1992 and other applicable provisions of law, and (2) any other requests presenting unusual or extraordinary circumstances.

OFAC notes that U.S. persons will not be able to take most laptops, personal computers, cell phones, personal digital assistants and similar items with them to Iran, even on a temporary basis, under a license issued under this policy unless the exportation of any such items to Iran is specifically authorized in the license in a manner consistent with the Iran-Iraq Arms Nonproliferation Act of 1992 and other relevant applicable provisions of law.

Medical Supplies OK for Export to Iran. OFAC has also issued the following list of medicine and basic medical supplies that may be exported or reexported to Iran under 31 CFR 560.530(a)(3)(ii).

Adhesive, surgical
Bandages (all)/Gauze/First aid dressings
Beds, hospital
Bed pans
Blood lancets
Blood collecting tubes
Burn dressings
Carts, all
Catheters, all
Chair, dental
Clips, surgical
Coils, guidewire
Contact lenses, corrective
Cotton swabs
Glasses, corrective
Gloves, medical exam, surgical
Guidewires, all
Limb prosthesis
Medicine cup holder
Meter, portable (temperature/pH)
Monitor, glucose management
Needles, all
Padding, under cast
Pads, elbow & foot
Patient gowns, underpads, under garments
Pouches, urostomy
Scale, chair
Scalpels, disposable
Staples, surgical
Stents, all
Suture removal kits
Thermometers, mercury for measuring human body temperature
Tongue depressors
Tube, drainage
Wash basin, plastic
Wound drainage tubes
Wrist band, patient I.D. 

AD Notices: Garlic, Honey

Agency: International Trade Administration.
Commodity: Fresh garlic.
Country: China.
Nature of Notice: Preliminary rescission of new shipper reviews of antidumping duty order for the period Nov. 1, 2010, through Oct. 31, 2011.
Details: Foshan Fuyi Food Co. Ltd.’s new shipper sales are not bona fide, Qingdao May Carrier Import & Export Co. Ltd. does not qualify as a new shipper, and record evidence raises questions concerning the bona fides of May Carrier’s sales during the period of review.

Agency: International Trade Commission.
Commodity: Honey.
Country: China.
Nature of Notice: Scheduling of expedited sunset review of antidumping duty order.
Details: Staff report placed on nonpublic record Oct. 30 and public version issued thereafter; written submissions due by Nov. 2. 

Foreign Regulatory Changes Could Affect Exports of Beverages, Automobiles, Vegetable Oil

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.

Brazil – draft ministerial act on undenatured ethyl alcohol and other spirituous beverages (comments due by Dec. 23)

Canada – proposed amendments to Motor Vehicle Safety Regulations concerning controls, tell-tales, indicators, interior lights and rear impact guards (comments due by Dec. 20)

Canada – proposed amendment to Motor Vehicle Safety Regulations concerning electronic stability control systems (comments due by Nov. 5)

Kuwait – draft technical regulation on edible vegetable oils (comments due by Dec. 19) 

New IPR Infringement Petition on Synthetic Hormone

The International Trade Commission received Oct. 23 on behalf of K-V Pharmaceutical Company a petition requesting that it institute a Section 337 investigation regarding certain hydroxyprogesterone caproate and products containing the same. This substance is a synthetic hormone used to help lower the risk of pre-term births. The proposed respondents are located in China 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. 

Amended Maritime Agreements Filed

The Federal Maritime Commission has issued notice that the following new or amended agreements have been filed. Interested parties may submit comments by Nov. 5.

CSAV/NYKCool Space Charter Agreement – The amendment would revise and expand the space chartering authority under the agreement, expand the geographic scope of the agreement, and restate the agreement to reflect these changes.

Pacific Maritime Services Cooperative Working Agreement – The amendment would add Terminal Link California and Pacific Maritime Services as parties to the agreement and make some corresponding changes.

International Longshoremen’s Association and New York Shipping Association – The amendment revises the agreement to adopt a specific assessment for Mafis that commenced on Oct. 1, 2012. 

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