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February 11 2013 Issue

Monday, February 11, 2013
Sandler, Travis & Rosenberg Trade Report

Trade Deficit Plummets in December, Sees Small Decline in 2012

Trade statistics released Feb. 8 by the Department of Commerce show that the monthly U.S. trade deficit fell to its lowest level in three years in December, plummeting 20.8% to $38.5 billion. The DOC also reported that the annual U.S. trade deficit was down $19.5 billion in 2012.

Monthly Figures. Exports gained 2.1% to $186.4 billion in December, the second-highest monthly total on record, while imports sank 2.7% to $224.9 billion. Press reports state that these figures reflect a record high in exports of oil and petroleum products from the U.S., where production is booming due to new mining technologies, and a related decline in imports, which fell to their lowest level since the late 1990s.

The monthly deficit in goods trade saw a 14.3% decline in December to $56.2 billion. Exports of goods rose 2.6% to $132.6 billion but imports were down 3.33% to $188.8 billion. The services surplus was up 4.1% to $17.7 billion as exports edged up 1.1% to $53.8 billion and imports fell slightly to $36.1 billion.

The bilateral trade deficit with China declined for the second straight month, down 15.5% to $24.5 billion. The U.S. also saw smaller deficits with the European Union (down 28.7% to $8.7 billion), Japan (down 8.1% to $5.7 billion), Germany (down 12.9% to $5.4 billion), Mexico (down 20.4% to $3.9 billion), Ireland (down 34.8% to $1.5 billion), Venezuela (down 35% to $1.3 billion), Korea (down 38.9% to $1.1 billion), Taiwan (down 30.8% to $0.9 billion) and Nigeria (down 50% to $0.5 billion).

The U.S. continued to run surpluses with several trade partners, including Hong Kong (up 25% to $4.0 billion), Australia (down 5.6% to $1.7 billion), Singapore (unchanged at $1.1 billion) and Egypt (up 50% to $0.3 billion).

Compared to a year earlier, the December trade deficit was down $13.2 billion as exports rose $8.6 billion (4.9%) and imports fell $4.6 billion (2.0%).

Annual Figures. Record exports of $2.20 trillion (up 4.4%) and imports of $2.74 trillion (up 2.7%) resulted in an overall annual trade deficit of $540.4 billion for 2012, down 3.5% from a year before. This total represented 3.4% of total U.S. gross domestic product, down from 3.7% in 2011.

The goods deficit fell 0.37% to $735.7 billion as exports totaled $1.56 trillion and imports totaled $2.30 trillion. The services surplus rose 9.4% as exports totaled $632.3 billion and imports totaled $437.0 billion.

Trading partners with which the U.S. ran an annual trade deficit in 2012 included China (a record $315.1 billion), Japan ($76.3 billion), Mexico ($61.3 billion), Germany ($59.7 billion), Saudi Arabia ($37.5 billion) and Canada ($31.8 billion). Trade surpluses were registered with, among others, Hong Kong ($32.0 billion), Australia ($21.7 billion), the Netherlands ($18.4 billion), Belgium ($12.1 billion), Brazil ($11.6 billion) and Singapore ($10.3 billion). 

ITC to Study Effect of U.S.-Korea FTA on Smaller Companies

The International Trade Commission has launched an investigation into the effects of the U.S.-Korea Free Trade Agreement, which entered into force March 15, 2012, on the exports of U.S. small and medium-sized enterprises to Korea. The ITC intends to provide to the Office of the U.S. Trade Representative by May 1 a report discussing the effects of the KORUS on the production, distribution and export strategy of U.S. SMEs and describing how they have benefited from specific provisions of the agreement. The report will also explore challenges that U.S. SMEs may have faced in exporting to Korea. The investigation will cover trade in goods and services and intellectual property.

The ITC will hold a public hearing in connection with this investigation on March 14. Requests to appear at the hearing should be filed no later than Feb. 27. Written submissions for the record are due no later than March 25. USTR has said it intends to make the ITC’s report available to the public. 

Trade Legislation: Harbor Maintenance, Defense Exports, Clean Energy

The following trade-related bills have been introduced recently in the House and Senate.

Harbor Maintenance. Sen. Carl Levin, D-Mich., introduced Feb. 4 legislation to ensure that amounts credited to the Harbor Maintenance Trust Fund are used for harbor maintenance. Levin told the Senate Environment and Public Works Committee that there is over $7 billion in this trust fund that is being used for purposes other than harbor maintenance, which is critically needed in many areas of the country. In addition, in fiscal year 2013 $1.7 billion in fees is expected to be deposited into the trust fund but only $872 million was included in the budget request for harbor maintenance.

Defense Exports. Rep. Raul Grijalva, R-Texas, introduced Feb. 4 the Arm Sale and Responsibility Act (H.R. 479), which would deny authorization for an overseas arms transfer if there is substantial risk that the arms will be used to commit or facilitate serious violations of international human rights law or international humanitarian law. Grijalva noted that the bill “seeks to stop the flow of weapons on the legal and black markets to nations that support terrorism or where there is a high risk of weapons being lost or stolen, as in Syria and Bahrain.” The bill was introduced ahead of a United Nations negotiating conference for the International Arms Trade Treaty in March.

Clean Energy Exports. Rep. Doris Matsui, D-Calif., introduced Jan. 23 the Clean Energy Technology Manufacturing and Export Assistance Act (H.R. 400). A press release from Matsui’s office states that this bill would create a $15 million fund administered by the International Trade Administration to (a) support the development, implementation and sustainability of a National Clean Energy Technology Export Strategy and (b) assist U.S. clean technology firms with finding and navigating foreign markets to export their goods and services abroad. The fund would also be required to promote policies that will reduce production costs and encourage innovation, investment and productivity in the domestic clean energy technology industry. 

Dates and Deadlines: Importing into Mexico, Textiles and Apparel, CBP, Broker Fees

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

Feb. 11 – deadline for comments on proposed FTZ export production activity at a Pennsylvania chocolate factory

Feb. 11 – deadline for comments on possible IPR probe of reflector lamps

Feb. 12 – STTAS webinar on importing into Mexico

Feb. 12 – deadline for comments on possible IPR probe of omega-3 extracts

Feb. 12 – deadline for comments on request to expand FTZ in Phoenix

Feb. 13 – ST&R webinar on DR-CAFTA for textiles and apparel

Feb. 14 – deadline for comments on expansion of service area of FTZ 3 in San Francisco, Calif.

Feb. 14 – ST&R webinar on the new and improved CBP

Feb. 15 – due date for annual customs broker user fee

Feb. 15 – effective date of FTC final rule amending the Appliance Labeling Rul

AD/CV Notices: Pasta, PET Film, Ball Bearings, Brass Sheet, Steel Pipe, Steel Plate

Agency: International Trade Administration.
Commodity: Pasta.
Country: Turkey.
Nature of Notice: Final results of administrative review of antidumping duty order for the period July 1, 2010, through June 30, 2011.
Details: Weighted average dumping margin of zero for all reviewed manufacturers/exporters. No AD duties will be assessed on entries of subject merchandise made during the period of review, and no AD cash deposits will be required for shipments of subject merchandise entered or withdrawn from warehouse for consumption on or after Feb. 11.

Agency: International Trade Administration.
Commodity: Polyethylene terephthalate film, sheet and strip.
Country: India.
Nature of Notice: Final results of administrative review of antidumping duty order for the period July 1, 2010, through June 30, 2011.
Details: Weighted average dumping margin of zero for all reviewed manufacturers/exporters. No AD duties will be assessed on entries of subject merchandise made during the period of review, and no AD cash deposits will be required for shipments of subject merchandise entered or withdrawn from warehouse for consumption on or after Feb. 11.

Agency: International Trade Administration.
Commodity: Polyethylene terephthalate film, sheet and strip.
Country: Taiwan.
Nature of Notice: Final results of administrative review of antidumping duty order for the period July 1, 2010, through June 30, 2011.
Details: Weighted average dumping margins of 0.75% for one respondent and 8.99% for the other. AD duties based on these rates will be assessed on entries of subject merchandise made during the period of review, and AD cash deposits at these rates will be required for subject merchandise entered or withdrawn from warehouse for consumption on or after Feb. 11.

Agency: International Trade Administration.
Commodity: Ball bearings and parts thereof.
Country: Germany.
Nature of Notice: Preliminary results of administrative review of antidumping duty order for the period May 1 through Sept. 14, 2011.
Details: Weighted average dumping margin of zero for all reviewed manufacturer/exporters. No AD duties are likely to be assessed on entries of subject merchandise during the period of review, and because the order has been revoked there will be no future AD cash deposit requirements.

Agency: International Trade Administration.
Commodity: Brass sheet and strip.
Country: Japan.
Nature of Notice: Rescission of administrative review of antidumping duty order for the period Aug. 1, 2011, through July 31, 2012, due to withdrawal of request for review of all 22 producers/exporters.
Details: AD duties will be assessed at rates equal to the AD cash deposit required at the time of entry or withdrawal from warehouse for consumption.

Agency: International Trade Administration.
Commodity: Circular welded carbon quality steel pipe.
Country: China.
Nature of Notice: Rescission of administrative review of countervailing duty order for the period Jan. 1 through Dec. 31, 2011, due to withdrawal of requests for review.
Details: CV duties will be assessed on all entries of subject merchandise during the period of review at rates equal to the CV cash deposit required at the time of entry or withdrawal from warehouse for consumption.

Agency: International Trade Administration.
Commodity: Clad steel plate.
Country: Japan.
Nature of Notice: Continuation of antidumping duty order for five years, effective Feb. 11.
Details: The scope of this order is all clad steel plate of a width of 600 millimeters or more and a composite thickness of 4.5 mm or more. Clad steel plate is a rectangular finished steel mill product consisting of a layer of cladding material (usually stainless steel or nickel) that is metallurgically bonded to a base or backing of ferrous metal (usually carbon or low alloy steel) where the latter predominates by weight. Clad steel plate within the scope of the order is classifiable under the HTSUS 7210.90.1000. 

Textile and Apparel Imports Both Rise in December

The Department of Commerce’s Office of Textiles and Apparel reports that monthly U.S. textile and apparel imports saw a 6.7% gain in December compared to a year earlier. Imports of cotton, wool, manmade fiber, silk blend and non-cotton vegetable fiber textile and apparel products totaled 4.04 billion square meter equivalents for the month, with textile imports up 2.1% to 2.25 billion SME and apparel imports up 13.2% to 1.78 billion SME. For all of 2012 imports edged up 0.7% to $54.0 billion SME as textile imports rose 1.8% to 30.4 billion SME but apparel imports fell 0.8% to 23.7 billion SME.

With respect to specific sources, imports of textile and apparel products (except cotton and silk blend textiles) saw a year-on-year increase in December from China (4.5% to 1.89 billion SME), Vietnam (16.1% to 273.7 million SME), Taiwan (11.6% to 65.1 million SME), Hong Kong (4.9% to 5.0 million SME), DR-CAFTA partners (18.1% to 247.7 million SME), Caribbean Basin Initiative partners (19.4% to 271.2 million SME), Association of Southeast Asian Nations partners (12.4% to 589.3 million SME), South Asia (3.9% to 548.3 million SME), the EU-15 (21.5% to 110.0 million SME), Turkey (9.5% to 38.3 million SME) and Israel (14.3% to 41.9 million SME). Imports declined from Korea (5.5% to 96.7 million SME), Canada (14.4% to 72.7 million SME) and Mexico (4.7% to 157.0 million SME). 

CBP Reviewing Information Collections on Entry/Immediate Delivery, Duty-Free Containers

U.S. Customs and Border Protection is soliciting comments on the following information collections.

CBP Forms 3461 and 3461 ALT (Entry and Immediate Delivery Application) and Simplified Entry – There are two procedures available to effect the release of imported merchandise: entry and immediate delivery. Under both procedures, these forms are the source documents in the packages presented to CBP. The information collected on these forms allows CBP to verify that the information regarding the consignee and shipment is correct and that a bond is on file. CBP also uses these forms to close out the manifest and establish the obligation to pay estimated duties in the time period prescribed by law or regulation. CBP Form 3461 is also a delivery authorization document and is given to the importing carrier to authorize the release of the merchandise.

Simplified Entry is a program for ACE entry summary filers in which importers or brokers may file simplified entry data in lieu of filing CBP Form 3461. This data consists of 12 required elements: importer of record; buyer name and address; buyer employer identification number (consignee number), seller name and address; manufacturer/supplier name and address; Harmonized Tariff Schedule 10-digit number; country of origin; bill of lading; house air waybill number; bill of lading issuer code; entry number; entry type; and estimated shipment value. Three optional data elements are the container stuffing location, consolidator name and address, and ship to party name and address.

Comments on these information collections are due by April 12.

Holders or Containers that Enter the U.S. Duty-Free – Substantial holders or containers of foreign manufacture may enter the U.S. duty-free if duty was paid upon a previous importation. 19 CFR 10.41b allows such entry without the filing of entry papers if the holders or containers are marked on a metal tag or plate, in clear and conspicuous letters of such a size that they will be easily discernible, to indicate under which HTSUS subheading they are entitled to duty-free entry. For HTSUS 9801.00.10, these markings must also include the name of the owner and serial number assigned by the owner. For HTSUS 9803.00.50 (used for serially numbered holders or containers of foreign manufacture), these markings must include the port code numbers of the port of entry, the entry number, the last two digits of the fiscal year of entry covering the importation of the holders and containers on which duty was paid, the name of the owner, and the serial number assigned by the owner

Comments on this information collection are due no later than March 13.

FTZ Coverage Sought for Consumer Electronics Facility in California

The Foreign-Trade Zones Board has received from the Board of Harbor Commissioners of the Port of Long Beach, grantee of FTZ 50, a notification of proposed production activity at the Panasonic Corporation of North America facility in Anaheim, Calif., which is used for the kitting of consumer electronics parts into retail packages. Production under FTZ procedures could exempt PNA from customs duty payments on foreign-status components used in export production, including SD cards, leather camera cases, digital still cameras, camera lenses, home theater systems, HDMI cables, quick start guides and dome enclosures (duty rates range from zero to 4.5%). On its domestic sales PNA would be able to choose the duty rates that apply to camera kits, digital cameras with lenses, digital cameras with memory cards, home theater systems and camera systems (duty rates range from zero to 2.1%) for these foreign-status inputs. Customs duties also could possibly be deferred or reduced on foreign status production equipment. Comments on this notification are due no later than March 20.

New Requirements for Horse Imports Effective March 13

The Department of Agriculture’s Animal and Plant Health Inspection Service has adopted as final, with changes, a March 2011 interim rule imposing new requirements for imports of horses from countries affected with contagious equine metritis. This rule incorporates an additional certification requirement for imported horses 731 days of age or less and adds new testing protocols for test mares and imported stallions and mares more than 731 days of age. APHIS is also revising certain CEM testing requirements for imported stallions and mares, and for test mares, that were amended in the interim rule.

The final rule will be effective as of March 13. APHIS had delayed enforcement of the interim rule in light of various concerns raised by commenters.

In issuing the interim rule APHIS stated that over the past 10 years, despite requirements for pre-import CEM testing in the country of origin, more than 28 CEM-positive horses have been identified during quarantine in the United States. These incidents have prompted some countries to no longer recognize the U.S. as a CEM-free country and consequently place restrictions on U.S. equine exports, which have been significantly affected. This final rule will therefore make various regulatory changes to prevent the potential introduction and spread of CEM in the U.S. 

State Dept. Imposes Sanctions for Missile, Nonproliferation Violations

Missile Technology Proliferation. The State Department has determined that Dalian Sunny Industries (China) and Li Fangwei (also known as Karl Lee) of China have engaged in missile technology proliferation activities that require the imposition of missile sanctions pursuant to the Arms Export Control Act and the Export Administration Act. As a result, effective Feb. 11 State is imposing the following measures against these entities and any of their successors or sub-units for two years.

- denial of all new individual export licenses for the transfer of Missile Technology Control Regime Annex items to these entities

- denial of all U.S. government contracts relating to MTCR Annex items with these entities

Iran/North Korea/Syria Sanctions. State has determined that the following foreign persons have engaged in activities that warrant the imposition of measures under the Iran, North Korea and Syria Nonproliferation Act.

- TM Services Limited (Belarus)
- Scientific and Industrial Republic Unitary Enterprise, also known as DB Radar (Belarus)
- BST Technology and Trade Company (China)
- China Precision Machinery Import and Export Corporation (China)
- Dalian Sunny Industries (China)
- Karl Lee, also known as Li Fangwei (China)
- Poly Technologies Incorporated (China)
- Iran Electronics Industries (Iran)
- Marine Industries Organization (Iran)
- Milad Jafari (Iran)
- Al-Zargaa Engineering Complex (Sudan)
- SMT Engineering (Sudan)
- Army Supply Bureau (Syria)
- Venezuelan Military Industry Company (Venezuela)

As a result, effective Feb. 5 the following measures have been imposed on these persons and their subunits and successors for two years.

- ban on U.S. government procurement of goods, technology or services from these persons

- ban on U.S. government aid or assistance to these persons

- ban on U.S. government sales to these persons of any item on the U.S. Munitions List

- termination of all sales to these persons of any defense articles, defense services, or design and construction services under the Arms Export Control Act

- ban on new individual licenses, and suspension of any existing licenses, for the transfer to these persons of items the export of which is controlled under the EAA or the Export Administration Regulations

Weapons of Mass Destruction. State has determined that the following foreign persons have engaged in weapons of mass destruction proliferation activities that warrant the imposition of measures under Executive Order 12938: Dalian Sunny Industries (China), Li Fangwei, also known as Karl Lee (China), Ministry of Defense and Armed Forces Logistics (Iran), Shahid Bakeri Industrial Group (Iran) and Shahid Sattari Ground Equipment Industries (Iran).

As a result, effective Feb. 11 the following measures are being imposed on these entities and their subunits and successors for two years.

- ban on U.S. government procurement of any goods, technology or services from these entities, including the termination of existing contracts

- ban on U.S. government assistance to these entities

- ban on imports of any goods, technology or services produced or provided by these entities other than information or informational materials 

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