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March 6 2013 Issue

Wednesday, March 06, 2013
Sandler, Travis & Rosenberg Trade Report

CBP Details Trade Effects of Sequestration; ACE, CEEs Could be Affected

U.S. Customs and Border Protection has made available a variety of information on how the automatic federal spending cuts (sequestration) that took effect March 1, which will require CBP to reduce its expenditures significantly through Sept. 30, is likely to affect its operations. CBP notes that these cuts are taking place against a backdrop of significant growth in international trade in all environments and that because of the importance of this commercial activity to the U.S. economy CBP will endeavor to operate in a manner that is least disruptive to its mission and the trade community.

CBP Field Operations has identified the following key principles for maintaining priority operations during sequestration: (1) security efforts will remain the highest priority and “under no circumstances will CBP abdicate or diminish” its commitment to preventing the entry of terrorists and/or terrorist weapons, (2) core processing and facilitation operations for both travelers and cargo will be prioritized, (3) border security operations will continue to be carried out consistent with all applicable legal requirements (including mandatory examinations of perishable commodities), and (4) all trusted traveler and trader programs (including Global Entry, SENTRI, NEXUS, C-TPAT and FAST) will be maintained and members will continue to receive existing benefits, including priority treatment for examinations and access to supply chain security specialists, account managers and Center of Excellence and Expertise personnel.

However, the sequestration cuts will include a hiring freeze, reductions in overtime that began March 1 and personnel furloughs that could begin in mid-April. CBP thus anticipates decreased service levels in cargo operations, including increased and potentially escalating delays for container examinations of up to five days or more at major seaports and significant daily back-ups for truck shipments at land border ports of entry. There will also be a reduced flexibility to maintain or extend operating hours or respond to requests for new services. CBP may reduce hours of service at select airports, seaports and land ports of entry but any such changes will be port-specific and will be determined at the local level. There will be no special procedures for conveyance diversions since all ports will be operating with reduced resources.

If sequestration continues through April there may be more risk-based adjustments made regarding inspections, with less impact to trusted traders and travelers (although delays would affect shipments for trusted partners that have been designated for examination). There could be some eventual delays in providing advice and rulings, and strategic initiatives such as the Automated Commercial Environment and the rollout of the CEEs may be impacted. CBP personnel will also not likely be available to attend or speak at trade conferences or meetings in the near to mid-term.

CBP states one thing importers can do to minimize the effects of sequestration is to pre-file their entry information. Doing so “gives CBP and other federal agencies an opportunity to conduct risk assessments and resolve outstanding issues before the cargo arrives in the United States and allows agencies to provide the trade with a release decision as early as possible.” 

GSP Petitions Withdrawn for 11 Products; Eligibility Expected to Continue

The International Trade Commission has terminated its investigation of the potential economic effects of waiving the competitive need limitations under the Generalized System of Preferences for the following products. The petitions seeking these waivers have been withdrawn, likely because imports of these goods did not exceed the CNLs in 2012. As a result, these goods will continue to be eligible for GSP duty-free treatment when imported into the U.S.

- edible products of animal origin, not elsewhere specified or included (HTSUS 0410.00.00) from Indonesia

- orchids: cut flowers and flower buds of a kind suitable for bouquets or for ornamental purposes, fresh, dried, dyed, bleached, impregnated or otherwise prepared (HTSUS 0603.13.00) from Thailand

- rice flour (HTSUS 1102.90.25) from Thailand

- food preparations not elsewhere specified or included, not canned or frozen (HTSUS 2106.90.99) from Thailand

- porcelain or china (other than bone china) household table and kitchenware in sets in which the aggregate value of articles is over $56 but not over $200 (HTSUS 6911.10.37) from Indonesia

- ferrosilicon containing by weight more than 55% but not more than 80% of silicon, not elsewhere specified or included (HTSUS 7202.21.50) from Russia

- ferrosilicon manganese (HTSUS 7202.30.00) from Georgia

- stainless steel, not cast, flanges for tubes/pipes, not forged or forged and machined, tooled and otherwise processed after forging (HTSUS 7307.21.50) from India

- iron or steel (other than stainless), not cast, flanges for tubes/pipes, not forged or forged and machined, tooled and processed after forging (HTSUS 7307.91.50) from India

- copper wire, coated or plated with metal (HTSUS 7408.29.10) from Thailand

- ice skates with footwear permanently attached (HTSUS 9506.70.40) from Thailand 

EU, Canada Add Supply Chain Security to Customs Cooperation Pact

The European Union and Canada signed March 4 an agreement that expands a 1998 customs cooperation agreement to include supply chain security and related risk management matters. The EU states that under the expanded agreement cooperation will include work toward mutual recognition of risk management techniques, risk standards, security controls and trade partnership programs (the EU’s Authorized Economic Operator program and Canada’s Partners in Protection). Both sides must now ratify the agreement for it to take effect.

“In a globalized world with globalized trade, no country can ensure the security of their supply chain in isolation,” said Algirdas Šemeta, EU commissioner for customs issues. “This agreement with Canada will give us the tools to improve customs controls while cutting red tape for safe traders in both our territories.” Canadian trade minister Ed Fast added that “facilitating deeper trade through agreements like these will help our exporters gain even greater access to the dynamic EU market and strengthen the financial security of workers and businesses in every region of our country.” 

AD/CV Notices: Polyester Staple Fiber, Tissue Paper Products

Agency: International Trade Administration.
Commodity: Polyester staple fiber.
Country: China.
Nature of Notice: Preliminary results of administrative review of antidumping duty order for the period June 1, 2011, through May 31, 2012.
Details: Weighted average dumping margin of 44.30% for the China-wide entity, which includes Far Eastern Industries (Shanghai) Ltd., Far Eastern Polychem Industries, Huvis Sichuan Chemical Fiber Corp. and Huvis Sichuan Polyester Fiber Ltd. The review is being rescinded with respect to Hangzhou Best Chemical Fibre Co. Ltd., Hangzhou Sanxin Paper Co. Ltd., Hangzhou Huachuang Co. Ltd., Jiaxing Fuda Chemical Fibre Factory, Nantong Luolai Chemical Fiber Co. Ltd., Nanyang Textile Co. Ltd., and Zhaoqing Tifo New Fiber Co. Ltd. due to the timely withdrawal of the requests for review.

Agency: International Trade Administration.
Commodity: Tissue paper products.
Country: China.
Nature of Notice: Affirmative preliminary determination of circumvention of antidumping duty order.
Details: Tissue paper processed by A.R. Printing and Packaging India Pvt. Ltd. in India from China-origin jumbo rolls of tissue paper and exported to the U.S. is circumventing this order. The ITA will therefore direct U.S. Customs and Border Protection to suspend liquidation and require a cash deposit of estimated AD duties, at the rate applicable to the exporter, on all unliquidated entries of tissue paper produced by ARPP from China-origin tissue paper that were entered or withdrawn from warehouse for consumption on or after May 3, 2012. 

Logistics Company Fined for Shipments to Cuba and Iran

The Treasury Department’s Office of Foreign Assets Control announced March 5 that a Houston-based logistics company has agreed to pay $139,650 to settle potential civil liability for alleged violations of the Cuban Assets Control Regulations and the Iranian Transactions and Sanctions Regulations. OFAC alleges that the company’s foreign affiliates provided freight forwarding services with respect to shipments to and from Cuba and acted as the freight forwarder in ten shipments to an oil drilling rig located in Iranian coastal waters and operated by an affiliated company of the National Iranian Oil Company.

The base penalty amount for the alleged violations was $206,889. OFAC notes that the company made a voluntary self-disclosure of some of the alleged violations, has no history of prior violations, substantially cooperated with OFAC’s investigation (including by producing responsive materials in a clear and organized fashion) and took remedial measures to prevent future violations. On the other hand, the alleged violations resulted in significant harm to OFAC’s sanctions programs and the company had reason to know that the oil rig at issue was operated by an Iranian company in Iranian waters. 

Foreign Regulatory Changes Could Affect Exports of Vehicles, Chain Saws, Foods, Wildlife

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.

France – amended order on agricultural or forestry tractors (comments due by April 22)

Georgia – technical regulation on mandatory testing of road transport vehicles

Israel – revised mandatory standard on low voltage switchgear and control gear assemblies, electric chain saws and electrical circuit breakers (comments due by May 4)

Mexico – Dec. 27, 2012, publication of standard on unplasticized polyvinyl chloride fittings with elastomeric seal joints used in sewage systems (effective 60 days after publication)

Mexico – draft official standard on liquefied petroleum gas storage systems (comments due by March 7)

Mexico – draft amended official standard on motor vehicles using gasoline, LPG, natural gas or other alternative fuels (comments due by March 7)

Qatar – draft technical regulation on oil of onion (comments due by May 4)

Taiwan – amended law on live marine mammalian wildlife and products thereof

United Arab Emirates – draft control regulation on foods allocated for infants and young children (comments due by May 4) 

Texas Foreign-Trade Zone Expanded

The Foreign-Trade Zones Board has approved a request from The Alliance Corridor Inc., grantee of FTZ 196, on behalf of TTI Inc. to establish an additional site in subzone 196A in Fort Worth, Texas. No authorization for production activity has yet been requested.

New Maritime Agreement Filed

The Federal Maritime Commission has issued notice that the following new agreement has been filed. Interested parties may submit comments by March 18.

CSCL/UASC Slot Exchange Agreement – The agreement authorizes the parties to charter space to each other in the trade between U.S. East Coast ports and Mediterranean ports and between ports in Asia and Europe. 

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