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January 25 2013 Issue

Friday, January 25, 2013
Sandler, Travis & Rosenberg Trade Report

Lowering Supply Chain Barriers Has Bigger Payoff Than Removing Tariffs, Report Says

A new report released by the World Economic Forum Jan. 22 finds that reducing supply chain barriers could increase global GDP and world trade much more than reducing all import tariffs. In addition, economic gains from reducing supply chain barriers would be more evenly distributed than gains associated with tariff elimination, with particular benefits for sub-Saharan Africa and Southeast Asia.

Barriers. Supply chain barriers can result from inefficient customs and administrative procedures, complex regulation, weaknesses in infrastructure services, and other factors. The report includes 18 case examples highlighting that clusters of policies jointly impact supply chain performance, that a concerted approach is needed to cut across different policy domains, that there may be specific tipping points that need to be achieved for reductions in supply chain barriers to have a significant impact on trade, and that small and medium-sized enterprises tend to face proportionally higher supply chain barriers and costs. Specific findings include the following.

- In Brazil, managing customs paperwork for exports of agricultural commodities can take 12 times longer than in the European Union (a full day versus a couple of hours).

- Poor quality infrastructure services can increase the input material costs of consumer goods by up to 200% in certain African countries.

- In Madagascar, supply chain barriers can account for about 4% of total revenues of a textile producer (through higher freight costs and increased inventories), eroding the benefits of duty-free access to export markets.

- Obtaining licenses and lack of coordination among regulatory agencies in the U.S. led to delays in up to 30% of chemical shipments for one company, with each late shipment costing $60,000 per day.

- In Russia, product testing and licensing in the computer sector can lead to high administrative costs and delay time-to-market anywhere from 10 days to eight weeks.

- Local content requirements, rule of origin restrictions and pilferage at the border can increase costs of consumer technology products in the Middle East and North Africa by 6-9%.

- India’s Preferential Market Access regulation, which provides preference for locally produced high-tech products in government procurement, could increase costs by 10% over the cost of imports.

Effect of Removing Barriers. The report finds that if all countries improved border administration and transport and communications infrastructure halfway to global best practices, global GDP could increase by 4.7% and world trade by 14.5%, compared to gains of 0.7% and 10.1%, respectively, from the elimination of all import tariffs. Even a less ambitious set of reforms that moved countries halfway to regional best practices could increase global GDP by 2.6% and world trade by 9.4%. For example, adopting electronic documentation for the air cargo industry could yield $12 billion in annual savings and prevent 70-80% of paperwork-related delays. In addition, easing regulatory compliance of international trade that SMEs face when selling through the Internet could increase cross-border SME sales by 60-80%.

Recommendations. To achieve these results, the report recommends that governments take the following actions.

- work with businesses and analysts to create mechanisms to collect data on factors affecting supply chain operations that can then be used to identify clusters of policies that jointly determine key supply chain barriers, identify priorities for action and assess progress

- create a high-level body that has a mandate to coordinate and oversee all regulation that directly affects supply chain efficiency

- ensure that SME interests are represented in the policy prioritization process and that solutions are designed to address specific constraints that impact SMEs disproportionately; e.g., ensuring that initiatives to reduce regulatory compliance costs such as trusted trader programs are open to smaller firms and are complemented by programs to help them address regulatory complexity and lower their costs

- pursue a more holistic approach toward international trade negotiations that spans key sectors that impact trade logistics, including services such as transport and distribution, as well as policy areas that jointly determine supply chain performance, in particular those related to border protection and management, product health and safety, foreign investment, and the movement of business people and service providers

- launch a global effort to pursue the conversion of manual and paper-based documentation to electronic systems using globally agreed data formats

Dates and Deadlines: Export Controls, Drawback, AD/CV Reviews, Food Facilities, GSP

Following are highlights of regulatory effective dates and deadlines and federal agency meetings coming up in the next week.

Jan. 28 – deadline for comments on proposed FTZ production activity at diesel engine plant in Georgia

Jan. 28 – deadline for comments on proposed uses of methyl bromide that qualify for 2013 critical use exemption

Jan. 28 – deadline for comments on BIS proposed rule clarifying the Commerce Control List

Jan. 28 – deadline for comments on USDA proposed rule amending the meat, poultry and egg product import regulations

Jan. 28 – deadline for comments on BIS proposed rule to transfer military electronic equipment to the CCL

Jan. 28 – deadline for comments on USDA proposal to allow imports of poultry products from Korea

Jan. 28 - deadline for comments on potential IPR probe of bark control collars

Jan. 30 – STTAS webinar on customs duty drawback

Jan. 30 – meeting of State Dept. Advisory Committee on International Economic Policy

Jan. 31 – ST&R webinar on antidumping basics

Jan. 31 – deadline for requesting administrative reviews of AD/CV duty orders for the period Jan. 1 through Dec. 31, 2012

Jan. 31 – deadline for registering food facilities with FDA

Jan. 31 – deadline for comments on withdrawing, suspending or limiting GSP benefits for Bangladesh

AD/CV Notices: Kitchen Shelving from China

Agency: International Trade Administration.
Commodity: Kitchen appliance shelving and racks.
Country: China.
Nature of Notice: Final results of administrative review of antidumping duty order for the period Sept. 1, 2010, through Aug. 31, 2011.
Details: Weighted average dumping margin of zero for exporter New King Shan (Zhu Hai) Co. Ltd. This rate will be used to determine AD duties assessed on entries of subject merchandise made during the period of review. No AD cash deposits will be required for shipments of subject merchandise entered or withdrawn from warehouse for consumption on or after Jan. 25. 

Potential IPR Probe of Sealing Rings Evaluated for Public Interest Issues

The International Trade Commission is requesting comments no later than Feb. 4 on any public interest issues raised by a Section 337 intellectual property rights infringement complaint filed on behalf of E.J. Brooks Company against certain sealing rings for utility meters and components thereof. Comments should address whether the issuance of exclusion orders and/or cease and desist orders pursuant to this complaint would affect the public health and welfare in the U.S., competitive conditions in the U.S. economy, the production of like or directly competitive articles in the U.S., or U.S. consumers. In particular, the ITC is interested in comments that:

- explain how the articles potentially subject to the orders are used in the U.S.;

- identify any public health, safety or welfare concerns in the U.S. relating to the potential orders;

- identify like or directly competitive articles that the complainant, its licensees or third parties make in the U.S. that could replace the subject articles if they were to be excluded;

- indicate whether the complainant, the complainant’s licensees and/or third-party suppliers have the capacity to replace the volume of articles potentially subject to the requested orders within a commercially reasonable time; and

- explain how the requested orders would impact U.S. consumers. 

USDA Revises Equivalence Evaluations of Foreign Meat and Poultry Export Systems

The Department of Agriculture’s Food Safety and Inspection Service is inviting comments through March 26 on its revised methodology for conducting ongoing equivalence verifications of the regulatory systems of countries that export meat, poultry or processed egg products to the United States. FSIS states that this performance-based approach allows it to direct its resources to foreign food regulatory systems that pose greater risk to public health compared to others, make its international program more consistent with its domestic inspection system, and improve the linkage between port of entry reinspections and on-site audits.

If both document analysis and on-site audit review show that a foreign country’s food regulatory system meets all U.S. import requirements in the same or an equivalent manner and cumulatively provides the same level of public health protection as that attained domestically, FSIS can issue a determination of equivalence. Once such a determination has been made, FSIS continues to evaluate the country’s inspection system to ensure equivalence is maintained through a three-part process: document reviews, on-site system audits and POE reinspections.

FSIS is now announcing a change to this process that was made in 2009 in response to private-sector recommendations. Specifically, document reviews are conducted at least yearly using the Self-Reporting Tool, which examines factors such as inspection system laws and regulations, actions taken when noncompliant products are shipped, and new controls that have been implemented. On-site system audits of countries eligible to export product to the U.S. are conducted at least once every three years.

FSIS will determine the scope and frequency of on-site systems audits and POE reinspections through analysis of the results of its document reviews and an assessment of each eligible country’s overall food safety performance relative to the performance of other eligible countries. Adequately performing countries receive audits every year, average-performing countries receive audits every two years and countries performing well receive audits every three years. FSIS also conducts more targeted “for cause” audits in response to repetitive POE findings of public health significance or other conditions representing a lack of process control within a country’s food safety system. 

Ocean Transportation Intermediary License Revocations, Reissuances, Applicants

OTI 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 #3549NF: Demetrios Air Freight Company Inc., Woburn, Mass.
- license #004191NF: Genesis Forwarding Group USA Inc. d/b/a Genesis Container Lines, Inglewood, Calif.
- license #8504N: Hyun Dae Trucking Co. Inc., Los Angeles, Calif.
- license #12472N: Delta Express Freight Service Inc., Gardena, Calif.
- license #17642N: Direct Shipping Corp. d/b/a Direct Shipping Line, Compton, Calif.
- license #017663N: Data Cargo Co. Inc., Medley, Fla.
- license #019791N: Ruky International Company, Edison, N.J.
- license #020201F: Genesis Forwarding Services CA Inc. d/b/a Genesis Container Lines, Inglewood, Calif.
- license #020202F: Genesis Freight Forwarding Services Inc. d/b/a Genesis Container Lines, Houston, Texas
- license #020203F: Genesis Forwarding Services IL Inc. d/b/a Genesis Container Lines, Elk Grove Village, Ill.
- license #020204FGenesis Forwarding Services NY Inc. d/b/a Genesis Container Lines, Valley Stream, N.Y.
- license #020252N: Sobe Enterprises Inc. d/b/a Sobe Export Services, Miami Gardens, Fla.
- license #020445F: Freight It Inc., Inglewood, Calif.
- license #022246N: Pelham Services Inc., Miami, Fla.
- license #022299N: KLS Logistics Group LLC, Miami, Fla.
- license #022877NF: Twenty Two Global Transport LP, Houston, Texas
- license #023045F: First America Metal Corporation, Minooka, Ill.
- license #023500N: IMAC International Corp., East Meadow, N.Y.

OTI License Reissued. The following OTI license has been reissued.

- license #020445N: Freight It Inc., Inglewood, Calif.

OTI License Applicants. The following have filed applications for licenses as non-vessel-operating common carrier and/or ocean freight forwarder OTIs. Persons knowing of any reason why any of these applicants should not receive a license are requested to contact the FMC.

- Advantex Express Inc., Humble, Texas
- Amerifreight (N.A.) Inc. d/b/a Freight Team, Walnut, Calif.
- Blue Cargo Group LLC, Jamaica, N.Y.
- Brutos International Corp., Monterey Park, Calif.
- Durard Timothy Gruelle d/b/a D. T. Gruelle Company, Coraopolis, Pa.
- Em-Lines Limited, Central Hong Kong, China
- Global Logistics New Jersey LLC, Rutherford, N.J.
- Harris International Freight Forwarders Inc., Seattle, Wash.
- Jawed Salim d/b/a Continents Shipping & Trading, Cypress, Texas
- JT Freight Solutions, San Gabriel, Calif.
- OceanLink Shipping Logistics, Anaheim, Calif.
- Veco Logistics Miami Inc., Miami, Fla.
- World Link Logistics Inc., Cerritos, Calif. 

Foreign Regulatory Changes Could Affect Exports of Foods, Valves, Water Heaters, Paints

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 – packaging, portable tanks used in land transport of hazardous goods, tires, festive or other entertainment articles (including conjuring tricks and novelty jokes), high chairs (with or without trays) and centrifugal clothes dryers

Israel – olive oil, liquefied petroleum gases, valves, electric water heaters and electrical transformers

Kenya – paints and varnishes, fireworks, industrial gas and acetone

Korea – four-wheeled walking aids for the elderly, toys and household chemical products

United Arab Emirates – cereals, pulses and derived products, fruits, and vegetables 

Ex-Im Bank Asked to Finance Exports of Airliners to Turkey

The Export-Import Bank of the United States has received an application for final commitment for a long-term loan or financial guarantee to support the export of U.S.-manufactured Boeing 737 commercial aircraft to Turkey. These aircraft will be used for short- and medium-haul passenger air service within Turkey and between Turkey and other countries. Comments on this application are due no later than Feb. 19.

New and 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 Feb. 4.

International Council of Containership Operators – The amendment deletes Safmarine Container Lines N.V. as a subsidiary of A.P. Moller-Maersk A/S.

Australia and New Zealand-United States Discussion Agreement – The amendment updates Appendix B and updates references to the Australian statute that governs the agreement in Australia.

The Los Angeles and Long Beach Port Infrastructure and Environmental Programs Cooperative Working Agreement – The agreement would authorize the ports of Los Angeles and Long Beach to discuss and agree upon joint programs and strategies to improve port transportation infrastructure and decrease port-related pollution emissions. 

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