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December 2 2012 Issue

Sunday, December 02, 2012
Sandler, Travis & Rosenberg Trade Report

Greater Miami Chamber of Commerce Celebrates Leading Lawyer’s Pioneering Spirit


The Greater Miami Chamber of Commerce honored Gilbert Lee Sandler, founding member of Miami-based customs and international trade law firm Sandler, Travis & Rosenberg, with its first-ever Ponce de Leon Pioneering Spirit Award Nov. 29. In celebration of the 500th anniversary of de Leon’s arrival in Florida, the Chamber created this award to recognize members who have followed in his footsteps by blazing trails in international business. Global commerce is a key driver of economic growth in the region, and thousands of jobs are dependent on the shipments that flow through local airports and seaports.

“Lee Sandler is a true pioneer who has built bridges and broken down barriers through his vision and leadership,” said Liane Ventura, GMCC senior vice president for international business development and leadership programs. “He was one of the founding members of the Chamber’s international efforts and through his work, tenacity and community service he has ensured that Florida remains at the forefront of international trade. He has marked a course and a legacy for others to follow.”

During the awards ceremony Miami Dade County Commissioner Jose “Pepe” Diaz announced that Nov. 29, 2012, had been proclaimed “Gilbert Lee Sandler Day” by the commission and presented Sandler with a framed copy of the signed proclamation.

A native of South Florida, Sandler has been involved in the region’s trade community for decades, returning home after earning a law degree at Dartmouth and launching his career at the Justice Department in Washington, D.C. For 35 years, under Sandler’s leadership, Sandler, Travis & Rosenberg has aided businesses throughout Florida, the U.S. and the world in complying with the increasingly complex rules and regulations that govern the flow of goods and ideas across national borders. Today, the law firm and its related consulting firm Sandler & Travis Trade Advisory services employ over 600 professionals in 14 cities in the U.S., Latin America, Asia and Europe.

Sandler has also played a leading role in a number of trade and business organizations. He has headed the GMCC’s International Business Committee for more than ten years and has led the International Cargo Network since creating it in 1987. He has also served as chair of ten Customs/Trade Finance Symposiums of the Americas and World Trade Center Miami. Beyond the metro area, he chairs the International Business Committee of the Florida Chamber of Commerce and serves as general counsel to the Florida Customs Brokers and Forwarders Association. His has also helmed the Florida Bar International Law Section and the Florida International Trade and Investment Council.

“I am grateful to the Greater Miami Chamber of Commerce for this honor and humbled by the references to Ponce de Leon’s pioneering spirit,” Sandler said. “I think the history books are wrong to report that Ponce de Leon never found the Fountain of Youth. The Florida international business community reinvents itself all the time, staying current, productive and vital to world commerce. It is the youthful vitality of this ever-evolving community that makes South Florida such a wonderful place to live and work.”

Sandler’s career has also taken him beyond the Sunshine State. He was appointed by five presidents to advise the U.S. government on international trade negotiations and served two terms on the Advisory Committee on Customs Commercial Operations, where he played a leading role in the committee’s work transitioning U.S. Customs to the Department of Homeland Security, designing the Customs-Trade Partnership Against Terrorism, and improving intellectual property rights enforcement and trade facilitation at U.S. borders. He has also served on the board of the American Association of Exporters and Importers, as general counsel to the American Free Trade Association and as chair of the Judicial Conference of the Court of International Trade. 

Uncollected AD/CV Duties Down 90% in Two Years; Remedy Efforts Continue

A report posted recently to the U.S. Customs and Border Protection Web site indicates that the amount of antidumping and countervailing duties uncollected by CBP fell for the third straight year in fiscal year 2012. There appears to have been a coincident decline in the intensity of efforts to address this problem, particularly by changing the way the U.S. assesses and collects AD/CV duties, although the issue is still under consideration by regulatory and legislative authorities.

FY 2012 Statistics. CBP’s statistics reveal the following concerning uncollected AD/CV duties in FY 2012.

- The $28.0 million total was down 73% from a year before and 90.5% from FY 2010.

- China accounted for $23.6 million, compared to $99.6 million in FY 2011, and its 84.3% share of the total was down from 95.9%.

- Uncollected duties on honey from China alone accounted for 43.2% of the FY 2012 total despite having been all but eliminated the previous year.

- Products for which CBP had trouble collecting AD/CV duties in FY 2012 included preserved mushrooms from China ($4.3 million, up from $364,218), crawfish tail meat from China ($3.8 million, down from $15.5 million), and hand trucks from China ($2.3 million, up from $88,200).

- There was a massive decline in uncollected AD duties on wooden bedroom furniture from China, from $82.7 million to $30,650.

- A number of products for which there were no uncollected AD/CV duties in FY 2011 showed up in FY 2012, including pasta from Italy ($496,619), hot-rolled steel products from India ($924,558), activated carbon from China ($175,493) and steel wire rope from Japan ($463,392).

- There were many products that dropped off the list this year. While most of these had only small amounts of uncollected duties in FY 2011, some had been significant, including welded carbon steel pipe and tube from Thailand ($1.3 million) and polyethylene retail carrier bags from Thailand ($424,874).

Solutions. The problem of uncollected AD/CV duties is one that both CBP and the Department of Commerce have been focusing on for several years. One potential solution that has been considered by both the government and the private sector is switching from a retrospective AD/CV duty assessment system to a prospective system. In December 2010 DOC issued a report examining the benefits and drawbacks of the two systems, and at a December 2011 meeting of the Advisory Committee on CBP Commercial Operations (COAC) the Subcommittee on Antidumping and Countervailing Duties formally recommended a prospective system and called for the development of a framework for legislative action within a year. Since then, however, there appears to have been little if any progress on this proposal.

A subcommittee report for next week’s quarterly COAC meeting suggests that other issues have now taken precedence, such as single transaction bonds for high-risk imports and improving collections in AD/CV cases involving critical circumstances. CBP had floated the idea of imposing a bond requirement prior to the lading of goods subject to AD/CV duties in foreign ports, but this was deemed impractical for a number of reasons. The panel added that a recent CBP initiative to require an STB prior to release of an entry if circumvention of an AD or CV duty order is suspected “may help to deter or reduce evasion but will not resolve the under collection issue.”

Lawmakers have taken up the matter as well. Earlier this year the Senate Finance Committee approved the Enforcing Orders and Reducing Customs Evasion (ENFORCE) Act (S. 1133), which would create a set of procedures for CBP to investigate allegations of AD/CV duty evasion. There have been reports that a customs reauthorization bill that could be introduced sometime soon in the House may include the Preventing Recurring Trade Evasion and Circumvention Act (H.R. 5708), which differs from the ENFORCE Act in some respects and appears to be more favored by CBP.

Uncollected AD/CV Duties Down 90% in Two Years; Remedy Efforts Continue

A report posted recently to the U.S. Customs and Border Protection Web site indicates that the amount of antidumping and countervailing duties uncollected by CBP fell for the third straight year in fiscal year 2012. There appears to have been a coincident decline in the intensity of efforts to address this problem, particularly by changing the way the U.S. assesses and collects AD/CV duties, although the issue is still under consideration by regulatory and legislative authorities.

FY 2012 Statistics. CBP’s statistics reveal the following concerning uncollected AD/CV duties in FY 2012.

- The $28.0 million total was down 73% from a year before and 90.5% from FY 2010.

- China accounted for $23.6 million, compared to $99.6 million in FY 2011, and its 84.3% share of the total was down from 95.9%.

- Uncollected duties on honey from China alone accounted for 43.2% of the FY 2012 total despite having been all but eliminated the previous year.

- Products for which CBP had trouble collecting AD/CV duties in FY 2012 included preserved mushrooms from China ($4.3 million, up from $364,218), crawfish tail meat from China ($3.8 million, down from $15.5 million), and hand trucks from China ($2.3 million, up from $88,200).

- There was a massive decline in uncollected AD duties on wooden bedroom furniture from China, from $82.7 million to $30,650.

- A number of products for which there were no uncollected AD/CV duties in FY 2011 showed up in FY 2012, including pasta from Italy ($496,619), hot-rolled steel products from India ($924,558), activated carbon from China ($175,493) and steel wire rope from Japan ($463,392).

- There were many products that dropped off the list this year. While most of these had only small amounts of uncollected duties in FY 2011, some had been significant, including welded carbon steel pipe and tube from Thailand ($1.3 million) and polyethylene retail carrier bags from Thailand ($424,874).

Solutions. The problem of uncollected AD/CV duties is one that both CBP and the Department of Commerce have been focusing on for several years. One potential solution that has been considered by both the government and the private sector is switching from a retrospective AD/CV duty assessment system to a prospective system. In December 2010 DOC issued a report examining the benefits and drawbacks of the two systems, and at a December 2011 meeting of the Advisory Committee on CBP Commercial Operations (COAC) the Subcommittee on Antidumping and Countervailing Duties formally recommended a prospective system and called for the development of a framework for legislative action within a year. Since then, however, there appears to have been little if any progress on this proposal.

A subcommittee report for next week’s quarterly COAC meeting suggests that other issues have now taken precedence, such as single transaction bonds for high-risk imports and improving collections in AD/CV cases involving critical circumstances. CBP had floated the idea of imposing a bond requirement prior to the lading of goods subject to AD/CV duties in foreign ports, but this was deemed impractical for a number of reasons. The panel added that a recent CBP initiative to require an STB prior to release of an entry if circumvention of an AD or CV duty order is suspected “may help to deter or reduce evasion but will not resolve the under collection issue.”

Lawmakers have taken up the matter as well. Earlier this year the Senate Finance Committee approved the Enforcing Orders and Reducing Customs Evasion (ENFORCE) Act (S. 1133), which would create a set of procedures for CBP to investigate allegations of AD/CV duty evasion. There have been reports that a customs reauthorization bill that could be introduced sometime soon in the House may include the Preventing Recurring Trade Evasion and Circumvention Act (H.R. 5708), which differs from the ENFORCE Act in some respects and appears to be more favored by CBP. 

Gain in U.S. Exports to China Dwarfed by Soaring Imports, Report Finds

The U.S.-China Economic and Security Review Commission released Nov. 29 a report that examines patterns in trade between the U.S. and China since the latter’s accession to the World Trade Organization in 2001. The report finds that although U.S. exports to China have more than quintupled in value during that time there has also been a surge of Chinese imports into the U.S., resulting in an expanding bilateral trade deficit.

Total Exports. U.S. exports to China increased by an average of 18.4% from 2000 to 2011, resulting in growth of over 468% (from $16.2 billion to $103.9 billion) for the decade. In comparison, U.S. exports to the rest of the world increased by 55%.

Computers/Electronics. There has been a steady move up the value chain for Chinese imports into the U.S., most noticeably in computers and consumer electronics (although most such goods are still relatively low-tech items such as notebook computers, phones and televisions). As a result, U.S. exports to China in this sector have seen a shift from fully manufactured products to components such as semiconductors. In addition, the largest source of the growing U.S. trade deficit with China has been increased imports of computers and electronic products, whose cumulative value from 2000 to 2011 totaled over $950 billion.

However, the report acknowledges that China often serves as an assembly and export platform for non-Chinese multinational corporations of components manufactured elsewhere in world and that this fact that may not be clearly reflected in trade statistics. “That is to say,” the report adds, “the increase in electronics and computer imports from China from 2000 to 2011 is not necessarily indicative of any newfound dominance in these categories by Chinese corporations or Chinese brands.”

Non-Manufactured Goods. The U.S. now runs a trade surplus with China in non-manufactured goods that totaled $23.8 billion in 2011, compared to a $283 million deficit in 2000. This shift is due in large part to a dramatic rise in U.S. exports of these goods, particularly agricultural products, raw materials, and mined natural resource products, which accounted for roughly twice as large a share of total U.S. exports to China in 2011 as they did in 2000.

Exports of U.S. agricultural products to China have increased especially sharply since 2002, primarily as a result of increased soybean exports. Other major exports like cotton and smaller exports like tobacco have also seen significant growth. The report anticipates continued growth in U.S. agricultural exports to China based on U.S. productive capacity and China’s large and urbanizing population.

Exports of oil, gas, minerals and ores from the U.S. to China grew from around $105 million in 2000 to $2.1 billion in 2010 and more than doubled in value from 2009 to 2010 alone. The report attributes this increase primarily to exports of metal ores and coal and petroleum gases.

Effects on U.S. Employment. According to the U.S. Bureau of Labor Statistics, from 2001 to 2010 the number of U.S. manufacturing jobs fell from 12.2 million to 8.1 million and 39% percent of U.S. manufacturing plants with over 250 employees closed. The report states that while a transition in the U.S. from exporting manufactured to non-manufactured goods, coupled with increased imports of manufactured goods from China, has almost certainly negatively impacted production capacity and employment levels in a number of U.S. manufacturing industries, it has also directly and indirectly created jobs in sectors that have benefitted from more open trade with China. It is therefore difficult to accurately estimate the net number of jobs lost and created as a result of increased trade between the U.S. and China, and the report warns that existing research on this issue may be heavily influenced by ideological outlook or institutional interests.

Future Trends. Domestic trends in China like inflation, higher wages and an aging population may decrease China’s long-term competitiveness in exporting low-value added products like toys, shoes and clothing, and in fact these trends are already beginning to affect sourcing decisions in these industries. As a result, higher tech products should come to make up an increasing share of Chinese exports in the future. 

Gain in U.S. Exports to China Dwarfed by Soaring Imports, Report Finds

The U.S.-China Economic and Security Review Commission released Nov. 29 a report that examines patterns in trade between the U.S. and China since the latter’s accession to the World Trade Organization in 2001. The report finds that although U.S. exports to China have more than quintupled in value during that time there has also been a surge of Chinese imports into the U.S., resulting in an expanding bilateral trade deficit.

Total Exports. U.S. exports to China increased by an average of 18.4% from 2000 to 2011, resulting in growth of over 468% (from $16.2 billion to $103.9 billion) for the decade. In comparison, U.S. exports to the rest of the world increased by 55%.

Computers/Electronics. There has been a steady move up the value chain for Chinese imports into the U.S., most noticeably in computers and consumer electronics (although most such goods are still relatively low-tech items such as notebook computers, phones and televisions). As a result, U.S. exports to China in this sector have seen a shift from fully manufactured products to components such as semiconductors. In addition, the largest source of the growing U.S. trade deficit with China has been increased imports of computers and electronic products, whose cumulative value from 2000 to 2011 totaled over $950 billion.

However, the report acknowledges that China often serves as an assembly and export platform for non-Chinese multinational corporations of components manufactured elsewhere in world and that this fact that may not be clearly reflected in trade statistics. “That is to say,” the report adds, “the increase in electronics and computer imports from China from 2000 to 2011 is not necessarily indicative of any newfound dominance in these categories by Chinese corporations or Chinese brands.”

Non-Manufactured Goods. The U.S. now runs a trade surplus with China in non-manufactured goods that totaled $23.8 billion in 2011, compared to a $283 million deficit in 2000. This shift is due in large part to a dramatic rise in U.S. exports of these goods, particularly agricultural products, raw materials, and mined natural resource products, which accounted for roughly twice as large a share of total U.S. exports to China in 2011 as they did in 2000.

Exports of U.S. agricultural products to China have increased especially sharply since 2002, primarily as a result of increased soybean exports. Other major exports like cotton and smaller exports like tobacco have also seen significant growth. The report anticipates continued growth in U.S. agricultural exports to China based on U.S. productive capacity and China’s large and urbanizing population.

Exports of oil, gas, minerals and ores from the U.S. to China grew from around $105 million in 2000 to $2.1 billion in 2010 and more than doubled in value from 2009 to 2010 alone. The report attributes this increase primarily to exports of metal ores and coal and petroleum gases.

Effects on U.S. Employment. According to the U.S. Bureau of Labor Statistics, from 2001 to 2010 the number of U.S. manufacturing jobs fell from 12.2 million to 8.1 million and 39% percent of U.S. manufacturing plants with over 250 employees closed. The report states that while a transition in the U.S. from exporting manufactured to non-manufactured goods, coupled with increased imports of manufactured goods from China, has almost certainly negatively impacted production capacity and employment levels in a number of U.S. manufacturing industries, it has also directly and indirectly created jobs in sectors that have benefitted from more open trade with China. It is therefore difficult to accurately estimate the net number of jobs lost and created as a result of increased trade between the U.S. and China, and the report warns that existing research on this issue may be heavily influenced by ideological outlook or institutional interests.

Future Trends. Domestic trends in China like inflation, higher wages and an aging population may decrease China’s long-term competitiveness in exporting low-value added products like toys, shoes and clothing, and in fact these trends are already beginning to affect sourcing decisions in these industries. As a result, higher tech products should come to make up an increasing share of Chinese exports in the future. 

No New ATPA Violation Allegations Brought Against Ecuador

The Office of the U.S. Trade Representative states that as part of its annual review of the Andean Trade Preferences Act it has received no new petitions seeking to limit, withdraw or suspend ATPA benefits for Ecuador, the program’s sole remaining beneficiary. USTR did receive updated information concerning a petition originally filed by Chevron in 2004, which is one of three petitions filed with respect to Ecuador (the other two having been filed by Human Rights Watch and the U.S./Labor Education in the Americas Project) that remain under review.

USTR notes that several interested parties made submissions supporting the ATPA. While these comments were not within the scope of USTR’s eligibility review, they do suggest a continuing level of interest in providing trade preferences to products imported from Ecuador. This support could make a difference as the next Congress considers whether to extend the ATPA beyond its current July 31, 2013, expiration date. 

Company Owner Gets Jail Time for Scheme to Avoid AD Duties

U.S. Immigration and Customs Enforcement reports that a Chinese man has been sentenced to 16 months in prison followed by one year of supervised release for understating the value of goods imported into the U.S. from China to avoid antidumping duties. According to an agency press release, on at least two occasions the man falsely reported a lower value for shipments of plastic bags (currently subject to an AD duty rate of 77.57%) and other restaurant supplies from China, resulting in an underpayment of duties that totaled between $5,000 and $10,000. 

AD/CV Notices: Admin Reviews, Magnesium, Polyester Fiber, Rebar

Agency: International Trade Administration.
Nature of Notice: Opportunity to request administrative reviews of the following antidumping duty orders (for the period Dec. 1, 2011, through Nov. 30, 2012, unless otherwise noted) and/or countervailing duty orders (for the period Jan. 1 through Dec. 31, 2011, unless otherwise noted). - honey from China (AD) and Argentina (AD/CV; Dec. 1, 2011, through Aug. 1, 2012)
- carbon steel butt-weld pipe fittings from Brazil and Taiwan (AD)
- preserved mushrooms from China (AD)
- carbazole violet pigment 23 from China (AD) and India (AD/CV)
- hot-rolled carbon steel flat products from India (AD/CV), Indonesia (AD/CV) and Thailand (CV)
- commodity matchbooks from India (AD/CV)
- stainless steel wire rod from India (AD)
- P.C. steel wire strand from Japan (AD)
- welded large diameter line pipe from Japan (AD)
- welded ASTM A-312 stainless steel pipe from Korea and Taiwan (AD)
- uncovered innerspring units from South Africa and Vietnam (AD)
- cased pencils from China (AD)
- hand trucks and parts thereof from China (AD)
- malleable cast iron pipe fittings from China (AD)
- multilayered wood flooring from China (AD and CV; April 6 through Dec. 31)
- porcelain-on-steel cooking ware from China (AD)
- silicomanganese from China (AD)

Agency: International Trade Administration.
Nature of Notice: Initiation of administrative reviews of the following antidumping duty orders for the period Oct. 1, 2011, through Sept. 30, 2012.
- carbon and certain alloy steel wire rod from Mexico
- steel wire garment hangers from China

Agency: International Trade Administration.
Commodity: Pure magnesium in granular form.
Country: China.
Nature of Notice: Final results of administrative review of antidumping duty order for the period Nov. 1, 2010, through Oct. 31, 2011.
Details: Weighted average dumping margin of 305.56% for the China-wide entity. This rate will be used to determine AD duties assessed on entries of subject merchandise made during the period of review, and AD cash deposits at this rate will be required for shipments of subject merchandise entered or withdrawn from warehouse on or after Dec. 2.

Agency: International Trade Administration.
Commodity: Polyester staple fiber.
Country: Taiwan.
Nature of Notice: Amended final results of administrative review of antidumping duty order for the period May 1, 2009, through April 30, 2010, due to court decision.
Details: Weighted average dumping margin of 0.75% for Far Eastern New Century Corporation. If the court ruling is not appealed or upheld on appeal the ITA will instruct U.S. Customs and Border Protection to assess AD duties at this rate on entries of subject merchandise produced and exported by FENC during the period of review.

Agency: International Trade Commission.
Commodity: Steel concrete reinforcing bar.
Country: Belarus, China, Indonesia, Latvia, Moldova, Poland and Ukraine.
Nature of Notice: Scheduling of full sunset reviews of antidumping duty orders.
Details: Staff report will be placed in the non-public record on April 5, 2013, and made public thereafter, a hearing will be held April 25, requests to appear at the hearing are due by April 19, pre-hearing briefs are due by April 16, post-hearing briefs are due by May 6, and final comments are due by June 5.

New IPR Infringement Petition on Consumer Electronic Devices

The International Trade Commission received on behalf of Ericsson Inc. Nov. 30 a petition requesting that it institute a Section 337 investigation regarding certain wireless communication devices, tablet computers, media players and televisions. The proposed respondents are located in Korea 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. 

Port Code for Newport News Now Inactive

U.S. Customs and Border Protection has announced that effective Nov. 30 port code 1402 for Newport News, Va., is inactive for CBP transactions. Instead, all appropriate transactions should be filed using port code 1401 (Norfolk-Newport News). 

Conditions of Entry Removed on Vessels Arriving in U.S. from Indonesia

The Coast Guard has announced that effective Dec. 2 it is removing the conditions of entry on vessels arriving in the U.S. that visited ports in Indonesia during their last five port calls. These conditions, which focus on ensuring the security of the vessels while in a foreign port, were imposed in February 2008 after the Coast Guard determined that ports in Indonesia, with certain exceptions, were not maintaining effective anti-terrorism measures. Based on recent information the Coast Guard has now reversed that determination.

The current list of countries not maintaining effective anti-terrorism measures is as follows: Cambodia, Cameroon, Comoros, Cote d’Ivoire, Cuba, Equatorial Guinea, Guinea-Bissau, Iran, Liberia, Madagascar, Sao Tome and Principe, Syria, Timor-Leste, Venezuela and Yemen. Vessels arriving in the U.S. that visited ports in these countries during their last five port calls but do not comply with the conditions of entry may be denied entry into the U.S. 

Export Privileges Suspended for Unlicensed Exports of Defense Articles to South Korea

The Bureau of Industry and Security has issued an order suspending for five years the export privileges of an Ohio man convicted of exporting certain defense items to South Korea without a license or written authorization. As a result, until Nov. 10, 2016, neither this man nor anyone on his behalf may directly or indirectly participate in any way in any transaction involving any commodity, software or technology exported or to be exported from the U.S. that is subject to the Export Administration Regulations. However, this order does not prohibit any export, reexport or other transaction subject to the EAR where the only items involved that are subject to the EAR are the foreign-produced direct product of U.S.-origin technology. BIS is also revoking all licenses issued pursuant to the Export Administration Act or the Export Administration Regulations in which this man had an interest at the time of his conviction. 

Minor Amendments to Cuban Assets Control Regulations

The Treasury Department’s Office of Foreign Assets Control has issued a final rule that, effective Dec. 2, makes two minor amendments to the Cuban Assets Control Regulations. First, to ensure that the prohibitions in these regulations do not impede third-country diplomatic or consular activities in Cuba, OFAC is adding new section 515.579 to authorize the processing of otherwise prohibited funds transfers for the operating expenses or other official business of third-country diplomatic or consular missions in Cuba. Second, OFAC is amending section 515.548 to add a general license authorizing payments in connection with overflights of Cuba or emergency landings in Cuba by U.S. aircraft, which previously required the issuance of a specific license.

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