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November 19 2012 Issue

Monday, November 19, 2012
Sandler, Travis & Rosenberg Trade Report

Legislative Update: Russia PNTR Advances, Miscellaneous Trade Bill Could be Next

A short, post-election session of Congress this month could see progress on at least two trade-related measures. Other bills of interest to the trade community will likely have to wait until a new Congress convenes in January. 

Russia PNTR. Repealing the Jackson-Vanik Amendment and extending permanent normal trade relations status to Russia is necessary to allow U.S. businesses to take advantage of the trade liberalization measures associated with Russia’s accession to the World Trade Organization, which became official Aug. 22. The House of Representatives approved a bill making these changes on Nov. 16 by a 365-43 vote. This bill, which also extends PNTR to Moldova, including language that imposes certain sanctions on those identified as responsible for “gross violations of human rights in Russia.” 

The Senate Finance Committee approved a Russia PNTR bill in July but attached a broader human rights measure not limited to Russia. However, the Senate is expected to soon vote to accept the more limited House bill. 

MTB. Both the House and Senate have been working to assemble a miscellaneous trade bill, which will remove or reduce import duties on hundreds of manufacturing inputs and other products. Some House Republicans oppose the MTB as an earmark, which is prohibited under current House rules, but Republican leaders in that chamber have voiced support for it. There has also been an effort to streamline the process of assembling the MTB by allowing companies to submit their proposals directly to the International Trade Commission and retaining final approval authority for Congress. 

According to Inside US Trade, House Ways and Means Trade Subcommittee Chairman Kevin Brady “is talking to the House Republican leadership about folding a new miscellaneous tariff bill (MTB) into a larger legislative package that would avert the tax hikes and spending cuts that make up the ‘fiscal cliff.’” If existing duty breaks passed as part of the last MTB are not extended before the end of this year they will expire, increasing costs for importers of those goods. 

Other. Other bills that have been the subject of various congressional actions over the past two years but will likely expire at the end of this year include the following. 

- the Retailers and Entertainers Lacey Implementation and Enforcement Fairness (RELIEF) Act (H.R. 3210), which would exempt any plant product imported or manufactured before May 22, 2008, from the requirements of the Lacey Act amendments, limit the import declaration requirement to solid wood and items imported only for commerce, and clarify that the Lacey Act only prohibits the importation of wood products harvested in violation of foreign laws that pertain to plants 

- the Gauging American Port Security Act (H.R. 4005), which directs the Department of Homeland Security to submit to Congress a report that identifies remaining gaps in port security in the U.S., prioritizes those gaps and creates a plan to address them 

- the Securing Maritime Activities through Risk-based Targeting for (SMART) Port Security Act (H.R. 4251), which aims to improve cooperation and coordination among federal agencies with maritime security responsibilities, support and enhance risk-based supply chain programs, and reduce costs 

- the Enforcing Orders and Reducing Customs Evasion (ENFORCE) Act (S. 1133), which would create a set of procedures for U.S. Customs and Border Protection to investigate allegations of evasion of antidumping and countervailing duty orders 

- a measure to create a federal trust fund to support research on diseases affecting the citrus industry; reauthorize through 2015 the Cotton Trust Fund, which temporarily suspended duties on certain cotton shirting fabrics; and fully restore wool trust fund payment levels in calendar years 2010 through 2012 and ensure that the Wool Trust Fund is fully funded through 2014 

- the Safe Chemicals Act of 2011 (S. 847), which would reform and modernize the Toxic Substances Control Act by, among other things, requiring chemical companies to demonstrate the safety of industrial chemicals and encourage the development of safer alternatives to existing chemicals

In the News: U.S.-Mexico Border Inspection Pact, Chinese Commerce Minister Out, U.S. Trade Policy

New U.S.-Mexico Cargo Agreement on Horizon 
China's commerce minister voted out in rare congress snub 
Republican lawmaker urges Obama 'go big' on trade in second term

FMC Levies $383,000 in Civil Penalties for Shipping Act Violations

The Federal Maritime Commission announced Nov. 14 that it has completed compromise agreements with six non-vessel-operating common carriers recovering a total of $383,000 in civil penalties for alleged violations of the Shipping Act of 1984. 

- a bonded and tariffed NVOCC located in China paid $100,000 to settle charges that it knowingly and willfully obtained transportation under service contracts to which it was not a party and that it misdescribed or falsely declared cargo to be shipped on behalf of a named account in the service contract 

- a licensed NVOCC and freight forwarder headquartered in Florida paid $85,000 to settle charges that it provided service to unlicensed or unbonded NVOCCs in the shipment of used automobiles to West Africa 

- a licensed NVOCC located in California paid $68,000 to settle charges that it knowingly and willfully misdescribed commodities shipped under certain service contracts 

- a licensed and bonded NVOCC located in California paid $60,000 to settle charges that it knowingly and willfully obtained transportation under service contracts to which it was not a contract signatory and provided service other than at the rates and charges in its tariff 

- a licensed and bonded NVOCC based in New York paid $50,000 to settle charges that it used service contracts to which it was not a party and misdescribed commodities under service contracts to which it was a contract signatory 

- a business entity based in Maryland paid $20,000 to settle charges that it acted as an NVOCC without obtaining a license as an ocean transportation intermediary, without providing the FMC evidence of a bond, insurance or other form of security, and without publishing an electronic tariff

IPR Enforcement Actions on Lighting Devices, DC-DC Controllers, Communication Devices

ITC Moves Toward Import Restrictions on LED Photographic Lighting Devices. The International Trade Commission has determined to review in part a finding that the importation, sale for importation and sale within the U.S. after importation of certain LED photographic lighting devices and components thereof are infringing some patents owned by Litepanels Inc. and Litepanels Ltd. but not others. 

The ITC is also inviting written comments by Nov. 28 on whether it should issue an order excluding the subject articles from entry into the U.S. The Commission is particularly interested in the following topics. 

- the technical and qualitative interchangeability of Litepanels’ and its licensees’ products with the products that would be excluded under a general exclusion order 

- whether Litepanels and its licensees have sufficient capability to meet the demand for any products that would be excluded under a general exclusion order 

- the lead time that would be required for existing manufacturers to modify their allegedly infringing products to be non-infringing 

- any specialized requirements of the film, video, photographic or any other industries that cannot be met by the products of Litepanels or its licensees but are only met by the products that would be excluded under a general exclusion order 

- the impact, if any, of a general exclusion order on public health and welfare, competitive 
conditions in the U.S. economy, the production of like or directly competitive articles in the U.S., and U.S. consumers 

- the amount of the bond under which infringing articles could enter the U.S. during the 60-day period the president has to review any ITC-ordered remedy 

Civil Penalty Issued in Enforcement Proceeding on DC-DC Controllers. The International Trade Commission has imposed a $620,000 civil penalty against a respondent from Taiwan for violating a consent order by the continued practice of prohibited activities such as importing, offering for sale, and selling for importation into the U.S. DC-DC controllers or products containing the same that infringe one or more specified patents or contain or use trade secrets asserted by complainants Richtek Technology Corp. and Richtek USA Inc. The ITC has also modified its consent order to clarify that it applies (and has always applied) to all of the respondent’s affiliates, past, present or future. 

Investigation of Mobile Data Communication Devices Terminated. The International Trade Commission has terminated without the imposition of import restrictions patent infringement investigation 337-TA-809 of certain devices for mobile data communication manufactured by Apple and Research in Motion due to Openwave Systems Inc.’s withdrawal of its complaint.

Sanctions Violations Net More Than $180,000 in Penalties

The Treasury Department’s Office of Foreign Assets control announced Nov. 15 the assessment of the following two sanctions-related penalties. 

- A Washington state company will pay $128,250 to settle charges that it engaged in seven export transactions that involved the transshipment of goods through Iran. The base penalty amount was $570,000 but was adjusted in light of the following facts and circumstances: the matter was not voluntarily disclosed to OFAC, the alleged violations constitute a non-egregious case, and the company has no history of prior OFAC violations, undertook remedial measures by creating an OFAC compliance program, and cooperated with OFAC by providing information regarding substantially similar additional transactions of which OFAC had not been aware. 

- An engineering company will pay $52,920 to settle charges that it violated the Foreign Narcotics Kingpin Sanctions Regulations by selling various products to an entity on the Specially Designated Nationals and Blocked Persons List and attempting to reimburse that entity for overpayments it had previously made to the engineering company. Although this matter was not voluntarily disclosed, the base penalty amount of $98,000 was reduced because the alleged violations constitute a non-egregious case and because the company has no history of prior OFAC violations and cooperated with OFAC’s investigation.

AD Notice: Silica Bricks and Shapes from China

Agency: International Trade Administration/International Trade Commission. 
Commodity: Silica bricks and shapes. 
Country: China. 
Nature of Notice: Nov. 15 filing of new antidumping petitions.

FTZ Board Approves Expanded Zone and New Subzone, Receives Request for New Zone

The Foreign-Trade Zones Board has recently announced the following actions. 

- granted authority for subzone status (subzone 148C) for activity related to the manufacturing and distribution of oxidized polyacrylonitrile fiber and of 24K or higher tow, standard grade carbon fiber for export at the Toho Tenax America Inc. facilities in Rockwood, Tenn. (the FTZ Board notes that it is unable to approve authority for manufacturing under FTZ procedures of carbon fiber with tow less than 24K or other than standard grade, or of any carbon fiber that TTA would sell in the U.S. market, because the record of the proceeding does not currently demonstrate that such manufacturing would result in a net positive economic effect and be in the public interest) 

- received an application from Tunica County, Miss., to establish an FTZ under the alternative site framework with a service area of Tunica County, adjacent to the Memphis U.S. Customs and Border Protection port of entry (comments due by Jan. 18, 2013) 

- approved the expansion of FTZ 41 under the alternative site framework to include Dodge, Fond du Lac, Jefferson, Ozaukee, Rock, Sheboygan, Walworth, Washington and Waukesha counties in Wisconsin, adjacent to the Milwaukee CBP port of entry

FDA Amends Timeframe for Proposed Unique Identifier Requirement for Medical Devices

The Food and Drug Administration is amending a proposed rule that would establish a unique device identification system for medical devices. Specifically, as required by the Food and Drug Administration Safety and Innovation Act signed into law this past summer, the FDA is modifying the proposed rule to comply with that law’s requirement that final regulations with respect to medical devices that are implantable, life-supporting or life-sustaining be implemented within two years of finalization of the rule. Comments on this amendment are due no later than Dec. 19.

Ocean Transportation Intermediary Licenses Revoked

The Federal Maritime Commission has given notice that the following ocean transportation intermediary licenses have been revoked. A revocation may occur after a license is surrendered voluntarily by the OTI or for failure to maintain a valid bond. 

- license #3667NF: Atlant (USA) Inc., Compton, Calif. 
- license #004242F: Salinas International Freight Co. d/b/a Globe Express Services, Dallas, Texas 
- license #020442N: JWJ Express Inc., Jamaica, N.Y. 
- license #015574N: WW Messenger & Shipping Co., Orange, N.J. 
- license #019370F: Cheryl G. Wilson d/b/a JC Logistics, Des Moines, Wash. 
- license #019480NF: Intrans Logistics Inc., Pacifica, Calif. 
- license #019599F: Trans Global Services LLC, Arlington, Va. 
- license #022069N: Unique Logistics International (ATL) LLC, Atlanta, Ga. 
- license #022136N: Sterling Logistics Group LLC, Spring, Texas 
- license #022330NF: Fluent Logistics LLC, Meggett, S.C. 
- license #022432N: Acher and Chex International LLC, Walkersville, Md. 
- license #022554F: Saheed Olalekan Bello d/b/a Sahbell International Services, Houston, Texas 
- license #023553NF: Airbridge Corp., Dix Hills, N.Y.

Foreign Regulatory Changes Could Affect Exports of Juices, Boilers, Appliances

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 – adoption of amendment to Argentine Food Code concerning fruit and vegetable juices 

Chile – certification procedure for type B gas-fired central heating boilers (comments due by Dec. 14) 

Mexico – draft official standard establishing minimum acceptable thermal efficiency values for domestic cooking appliances (comments due by Dec. 17)

Ex-Im Considers Backing Exports to Ghana, Australia, UAE

The Export-Import Bank of the United States has received three applications for final commitments for long-term loans or financial guarantees in excess of $100 million. These transactions would support the export of (a) goods and design, engineering and construction services utilized in the rehabilitation and expansion of a hospital in Ghana (comments due by Dec. 10), (b) engineering, procurement and construction services and equipment for the construction of a liquefied natural gas plant in Australia (comments due by Dec. 11), and (c) Boeing 777 aircraft to the United Arab Emirates to be used for long-haul passenger air service between the UAE and destinations throughout the world (comments due by Dec. 14). 

Separately, the Ex-Im Bank has received an application for a $135 million direct loan to support the export of approximately $103 million in U.S. aluminum manufacturing equipment and services to a smelter in the UAE. These exports will enable the foreign buyer to increase its production capacity by about 574,000 metric tons of aluminum per year. Available information indicates that the majority of this new production will be sold in the Netherlands, Japan, the UAE, the U.S., South Korea and Thailand. The balance will be sold to China, Cyprus, Egypt, France, Germany, Greece, Hungary, Indonesia, Italy, Kenya, Malaysia, the Philippines, Poland, Romania, Slovakia, South Africa, Spain, Sri Lanka, Taiwan, Turkey and the United Kingdom. Comments on this transaction may be submitted through Nov. 30.

Two African Countries Join Customs Convention

The World Customs Organization reports that the African countries of Swaziland and Gabon have recently deposited their instruments of accession to the International Convention on the Simplification and Harmonization of Customs Procedures (a/k/a the Revised Kyoto Convention). Key elements of this convention, which now has 85 contracting parties, 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.

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