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February 7 2013 Issue

Thursday, February 07, 2013
Sandler, Travis & Rosenberg Trade Report

U.S. Debates Policy Change that Could See Expanded Exports of Natural Gas

Legislation introduced in the Senate recently would make it easier for the U.S. to expand exports of liquefied natural gas, which supporters say could not only prove an economic boon but also serve national security interests. Opponents, on the other hand, worry that the bill could result in higher domestic prices as well as environmental problems. The issue will likely see increasing attention from lawmakers and federal agencies this year.

The 1938 Natural Gas Act requires a permit to export natural gas but mandates that the Department of Energy approve such permits unless it determines that doing so is not consistent with the public interest. Exports to nations with which the U.S. has a free trade agreement are deemed to be in the public interest and thus are effectively exempt from the permitting process. Permit approvals for shipments to all other nations require the DOE to make a determination as to whether they are in the public interest, a process that can take some time.

Previously this policy had little impact because the cost of producing natural gas from domestic reserves that are sizeable but often difficult to reach or utilize was too high for it to be economically viable to ship that gas to any other country. Now, however, advances in drilling technology have changed the equation, prompting increasing calls for a policy change that would make it easier for U.S. producers to supply additional foreign markets.

The Expedited LNG for American Allies Act of 2013 (S. 192) would make such a change by requiring the DOE to approve natural gas exports to NATO allies and Japan. The DOE would also have to approve exports to any other country if the State Department, in consultation with the Defense Department, finds that such exports would promote U.S. national security interests. The bill’s sponsors pointed out that these revisions would not only encourage domestic energy expansion, yielding benefits such as greater energy independence, more jobs and increased exports, but would also promote the energy security of key U.S. allies by helping reduce their dependence on oil and gas from countries deemed not as friendly to U.S. interests.

In the meantime the DOE is considering a similar change on its own. Press reports indicate that more than a dozen LNG export applications are pending before the department, which is still reviewing its options. A recent report commissioned by the DOE found that in “every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased.” Supporters add that the U.S. has taken China to the World Trade Organization at least twice over that country’s restrictions on natural resource exports and that continuing the current policy could open the U.S. to similar complaints.

New York Corporations Indicted for Importing Hazardous and Counterfeit Toys

The Department of Justice reports that five individuals and five corporations have been charged in an indictment unsealed Feb. 6 in Brooklyn, N.Y., for allegedly importing hazardous and counterfeit toys from China. The 24-count indictment charges three Chinese nationals and two naturalized citizens, along with their closely held companies, with importing and trafficking hazardous toys in violation of the Consumer Product Safety Act as well as toys bearing copyright-infringing images and counterfeit trademarks. Other charges include smuggling and money laundering.

According to the indictment, the defendants’ companies had children’s toys seized by U.S. Customs and Border Protection from shipping containers entering the U.S. from China on 33 separate occasions. Seventeen of those seizures were of toys barred from the U.S. because of excessive lead content, excessive phthalate levels, small parts that presented choking, aspiration or ingestion hazards, and easily accessible battery compartments. The other 16 seizures were of toys bearing copyright-infringing images and counterfeit trademarks, including knockoff versions of toys featuring a wide variety of popular children’s characters.

The indictment charges that following each of the 33 seizures the violator toy company was served written notice by CBP detailing the reason for the seizure and a representative of the company signed a release form acknowledging the seizure and abandoning the seized goods. Additionally, the violator company and its principal were served written notice by the Consumer Product Safety Commission of the specific safety violations of the toys, and each time a representative of the company signed a release form acknowledging the seizure and abandoning the seized goods.

A DOJ press release states that due to the number and volume of the seizures the individual defendants allegedly shifted their use of the companies and alternated formal roles in order to continue importing and distributing violative and infringing toys. Each time the number of seizures accumulated for one company, the individual defendants allegedly formed a new toy company to continue importing the toys.

CBP Seeking Applicants to Run Seattle-Area Centralized Exam Station

U.S. Customs and Border Protection is now accepting applications to operate a centralized examination station for the area port of Seattle, Wash., which includes the ports of Tacoma and Seattle. CBP’s area port director has determined that one CES facility is required in this area to meet the agency’s exam requirements, facilitate the movement of cargo in the port and provide competitive service to the trade community. This solicitation is for applicants within the jurisdiction of the area port of Seattle and the length of the CES agreement will be five years. Those interested in applying should contact Assistant Port Director for Trade Judy Staudt at 206-553-1720.

AD/CV Notices: Oil Country Tubular Goods, Silicomanganese

Agency: International Trade Administration.
Commodity: Oil country tubular goods.
Country: China.
Nature of Notice: Amended final results of administrative review of antidumping duty order for the period May 19, 2010, through April 30, 2011.
Details: Weighted average dumping margin of 162.69% for exporters Jiangsu Chengde, Yangzhou Chengde and Taizhou Chengde.

Agency: International Trade Administration.
Commodity: Silicomanganese.
Country: India, Kazakhstan and Venezuela.
Nature of Notice: Sunset review determination that revocation of antidumping duty orders would be likely to lead to continuation or recurrence of dumping at rates of 15.32% to 20.53% for India, 247.88% for Kazakhstan and 24.62% for Venezuela. 

New Trade Secret Infringement Investigation of Robotic Toys

The International Trade Commission has instituted investigation 337-TA-869 to determine whether imports of certain robotic toy fish that autonomously swim when placed in water, and components thereof, are violating Section 337 of the 1930 Tariff Act by using trade secrets asserted by complainants Innovation First International Inc., Innovation First Inc. and Innovation First Labs Inc. The complainants request that after this investigation the ITC issue an exclusion order, which would direct U.S. Customs and Border Protection to prohibit the entry of the infringing products into the U.S., and a cease and desist order, which would require the named respondents to cease actions that violate Section 337, including selling infringing imported articles out of U.S. inventory. The complainants are also seeking ITC orders directing certain other remedial actions. The respondents in this investigation are located in Hong Kong, New Zealand, the British Virgin Islands and the U.S.

USDA Allows Imports of Four Fruits from the Philippines

Bananas. The Department of Agriculture’s Animal and Plant Health Inspection Service has issued a final rule that, effective Feb. 7, allows the importation of fresh bananas from the Philippines into the continental United States. As a condition of entry, these bananas will have to be produced in accordance with a systems approach that includes the following requirements.

- registration, monitoring and oversight of places of production

- trapping for the fruit flies Bactrocera musae, B. occipitalis and B. philippinensis to establish low-prevalence places of production

- covering bananas with pesticide bags during the growing season

- harvesting only of hard green bananas

- requirements for culling, safeguarding and identifying the fruit

- inspection by the national plant protection organization of the Philippines for quarantine pests

The bananas will also have to be accompanied by a phytosanitary certificate with an additional declaration stating that they were grown, packed and inspected and found to be free of quarantine pests in accordance with the proposed requirements.

APHIS notes that commercial production of bananas in the U.S. takes place in Hawaii but that these producers will be little affected by this final rule given the large quantity of bananas already imported and the relatively small quantity expected to be imported from the Philippines. In addition, bananas from the Philippines will not be allowed entry into Hawaii.

Litchi, Longan and Rambutan. APHIS has also issued a notice advising the public of its decision to authorize the importation into the continental U.S. of fresh litchi, longan and rambutan fruit from the Philippines beginning Feb. 7. Such imports will be subject to the following phytosanitary measures.

- the fruit may be imported in commercial consignments only

- the fruit must be irradiated in accordance with 7 CFR part 305 with a minimum absorbed dose of 400 Gy

- if the irradiation treatment is applied outside the U.S., each consignment of fruit must be jointly inspected by APHIS and the NPPO of the Philippines and accompanied by a phytosanitary certificate attesting that the fruit received the required irradiation treatment (for rambutan, the phytosanitary certificate must include an additional declaration stating that the consignment was inspected and found free of the powdery mildew Oidium nephelii)

- if irradiation is applied upon arrival in the U.S., each consignment of fruit must be inspected by the NPPO of the Philippines prior to departure (for rambutan, the phytosanitary certificate must include an additional declaration stating that the consignment was inspected and found free of the powdery mildew Oidium nephelii)

- the fruit is subject to inspection upon arrival at the U.S. port of entry 

FTZ Recommendation on Aircraft Turbine Parts Facility Gets Extended Comment Period

The Foreign-Trade Zones Board is extending from Feb. 13 to March 13 the period for public comments on a revised recommendation concerning an application requesting authority on behalf of Firth Rixson Inc. to manufacture aircraft turbine components under FTZ procedures within FTZ 141. In January 2012 the Board examiner preliminarily recommended approval of this request provided that foreign-origin titanium was admitted in privileged foreign status. In December the examiner reversed that recommendation and called for allowing unrestricted FTZ benefits on foreign titanium used in production for the U.S. market and export for five years, which the examiner believes should result in significant public benefits (e.g., maintained or increased U.S. employment) without negative economic effects (e.g., would not result in increased imports of titanium alloy that otherwise would not have occurred). 

FMC Investigating California Company for Illegal Use of Service Contracts

The Federal Maritime Commission has instituted an investigation to determine whether a licensed, tariffed and bonded non-vessel-operating common carrier based in California committed certain violations of the 1984 Shipping Act. The NVOCC is charged with dozens of instances of unlawfully accessing service contracts to which it was neither a signatory nor an affiliate and providing transportation in the liner trade that was not in accordance with the rates, charges, classifications, rules and practices contained in its published tariff. If such violations are found the FMC will determine whether civil penalties should be assessed, whether the company’s tariff should be suspended or revoked, and whether an appropriate cease and desist order should be issued. An initial decision is due by Jan. 24, 2014, and a final decision is due no later than May 28, 2014.

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