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March 15 2013 Issue

Friday, March 15, 2013
Sandler, Travis & Rosenberg Trade Report

Negotiators Report Further Progress at Latest TPP Round

The Office of the U.S. Trade Representative indicated in a March 13 press release that the 11 countries that are currently involved in the Trans-Pacific Partnership negotiations achieved significant progress at the 16th round of talks held this month in Singapore. The USTR noted that the parties achieved the goal of putting the negotiations “on an accelerated track toward conclusion of a next-generation, comprehensive agreement in the 2013 time frame envisioned by President Obama and the Leaders of the ten other TPP countries.”

According to U.S. Chief Negotiator and Assistant U.S. Trade Representative Barbara Weisel, TPP negotiators intensified their drive at the Singapore round to “find mutually-acceptable paths forward on the remaining issues in the legal texts of the agreement” and “succeeded in finding solutions to many issues in a wide range of areas such as customs, telecommunications, investment, services, technical barriers to trade, sanitary and phytosanitary measures, intellectual property, regulatory coherence, development, and other issues.” As a result of this progress, the negotiating groups on customs, telecommunications, regulatory coherence and development will not meet again to discuss the legal texts. Instead, any remaining work in these areas will be addressed in late-stage rounds as the agreement is finalized. According to the USTR, this will enable negotiators to focus on tough issues in the areas of intellectual property, competition and the environment.

The parties also advanced the negotiations in the areas of market access for goods, services and investment, and government procurement. According to the USTR, “productive exchanges occurred on tariff packages on industrial goods, agriculture, and textiles, as well as on rules of origin and how best to promote the development of regional supply chains in order to benefit companies based in the United States and the other TPP countries.” The parties also agreed to conduct additional intersessional work to build on market access advances.

The TPP trade ministers are scheduled to meet in mid-April on the margins of the APEC Trade Ministers meeting in Indonesia to discuss progress achieved to date and provide further guidance to negotiators. The 17th round of talks will be held in Lima, Peru, on May 15-24. The USTR indicates that high-level officials will become more engaged in the process as the discussions draw to a close. 

Senate Unveils Appropriations Bill for Remainder of FY 2013

The Senate Appropriations Committee has released a bill to fund the federal government for the second half of fiscal year 2013. A committee press release indicates that the Consolidated and Further Continuing Appropriations Act of 2013 provides $1.043 trillion in budget authority, consistent with the Budget Control Act of 2011. Highlights of the legislation are provided below.

• The Department of Commerce’s International Trade Administration would see its budget increase from $455.6 million to $471.2 million. Of that amount, $15.1 million would be allocated to the Interagency Trade Enforcement Center, $80 million would go to the Import Administration, and $309 million would be used for trade promotion and the U.S. and Foreign Commercial Service.

• The Office of the U.S. Trade Representative would be funded at $51.3 million, down slightly from $52 million.

• U.S. Customs and Border Protection would receive $11.9 billion while U.S. Immigration and Customs Enforcement would be funded at $5.7 billion. Overall, the Department of Homeland Security would be allocated $39.6 billion, essentially unchanged from the previous fiscal year.

• The Food and Drug Administration would receive $2.51 billion, including increases in budget authority of $12.5 million for food safety and $10 million for food and drug safety inspections in China.  

FWS Outlines Impact of Budget Sequestration on Overtime Activities

The Fish and Wildlife Service recently issued a notice to the wildlife import and export community outlining the effects of budget sequestration on overtime clearances. FWS notes that the funding cuts related to the sequester will immediately impact agency import and export inspection operations. To reduce expenditures for the remainder of fiscal year 2013, the agency has imposed a hiring freeze and suspended all overtime activities, including those at ports of entry. Specifically, FWS will not inspect or clear any wildlife imports or exports during overtime hours on weekdays, weekends or federal holidays. The agency has called on the wildlife trade community to adjust the timing of shipments accordingly to prevent the loss of live or perishable wildlife and wildlife products.

ITC Report Finds ITA Product Coverage Expansion Will Likely Benefit U.S. Exports

The International Trade Commission issued on March 13 the second of two reports on the proposed expansion of the Information Technology Agreement. The ITC found that extending duty-free treatment under the ITA to certain information and communications technology products would likely increase U.S. export opportunities to ITA member countries. The report identifies, for each product on the list, tariffs in major markets, major producing countries, leading U.S. export markets and leading sources of U.S. imports. The report also examines the benefits to the U.S. economy of ITA expansion and provides an overview of key selected subsectors, including information on increased market access opportunities and export opportunities for products in those subsectors.

According to the report, the most frequently occurring major U.S. export markets for products on the list were the European Union, Canada, Mexico, China and Japan. These same countries were also the most common major suppliers of U.S. imports of the products on the list. With the exception of Mexico, all are ITA members. The report profiles five subsectors to illustrate the potential for increased market access opportunities for U.S. firms as a result of ITA expansion: multi-component integrated circuits, medical devices, relay and industrial control equipment, optical media, and loudspeakers and headsets.  

Iranian Financial Sanctions Regulations Updated to Reflect Recent Law

The Treasury Department’s Office of Foreign Assets Control has issued a final rule that, effective March 15, amends the Iranian Financial Sanctions Regulations to implement sections 503 and 504 of the Iran Threat Reduction and Syria Human Rights Act of 2012.

Section 503(a) adds sales of agricultural commodities to Iran to the list of excepted transactions under section 1245(d)(2) of the National Defense Authorization Act for Fiscal Year 2012. Section 503(b) revises the timing of the reports on the availability and price of petroleum and petroleum products produced in countries other than Iran that, pursuant to section 1245(d)(4)(A) of the NDAA, the administrator of the Energy Information Administration is required to submit to Congress. Finally, section 504 revises the types of foreign financial institutions and transactions that can be sanctioned under section 1245(d)(1) of the NDAA. Specifically, the limitation of sanctions in section 1245(d)(3) are amended so that it only applies to foreign central banks and not to other government-owned or government-controlled foreign financial institutions.

As a result, foreign financial institutions owned or controlled by the government of a foreign country, other than central banks, are subject to sanctions under section 1245(d)(1) of the NDAA (with certain exceptions, including the sale of agricultural commodities, food, medicine and medical devices) with respect to any significant financial transaction conducted or facilitated on or after Feb. 6, 2013, including transactions that are not for the sale or purchase of petroleum or petroleum products to or from Iran.

In addition, section 504 of the TRA amends section 1245(d)(4)(D) of the NDAA to limit the exception from sanctions imposed pursuant to section 1245(d)(1) previously available for countries determined to have significantly reduced their crude oil purchases from Iran to certain transactions conducted or facilitated by foreign financial institutions located in significantly reducing jurisdictions. This amendment applies with respect to financial transactions conducted or facilitated on or after Feb. 6, 2013.

Energy and Environment Trade Mission to Malaysia, Thailand and the Philippines

The ITA is inviting applications to participate in a Sept. 15-21 energy and environment trade mission to Malaysia, Thailand and the Philippines. The mission is intended to expose U.S. companies to the growing markets in these countries for energy efficiency and environmental products by helping companies obtain actionable market intelligence, establish business and government contacts, solidify business strategies, and/or advance specific projects. The ITA notes that the mission will directly support the U.S.-ASEAN Expanded Economic Engagement or E3 initiative announced by President Obama at the 2012 U.S.-ASEAN Summit. A minimum of 10 and a maximum of 20 companies will be selected to participate and applications are due no later than Aug. 23.  

DOE Considering New Energy Efficiency Requirements for Ceiling Fans

The Department of Energy has initiated a rulemaking and data collection process to consider amending the minimum energy efficiency standards for ceiling fans and ceiling fan light kits. To inform interested parties and facilitate this process, the DOE has prepared a framework document that details the analytical approach and scope of coverage for the rulemaking and identifies several issues on which the agency is particularly interested in receiving comment. The DOE will hold an informal public meeting on March 22 to discuss and receive comments on its analytical approach and other related issues and will accept comments and relevant data by April 29.

Ex-Im Bank Asked to Finance Exports of Mining Equipment and Services to Mongolia

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 mining equipment and services to Mongolia. This equipment, which includes heavy mining trucks, shovels and drills, will be used to develop and operate a copper and gold mine in that country. The applicant is also seeking to export consulting and engineering services to Mongolia as part of this transaction. Comments on this application are due no later than April 9.  

OFAC Implements Certain Sanctions Imposed on Syrian Oil Company

As previously reported, the State Department announced Aug. 10, 2012, the imposition of sanctions on the Syrian state-run oil company Sytrol under the Iran Sanctions Act for conducting business with Iran’s energy sector. OFAC announced March 14 that it is taking appropriate action to implement these sanctions effective March 7. Specifically, OFAC has (i) blocked all property and interests in property that are in the U.S., that come within the U.S., or that are or come within the possession or control of any U.S. person, including any overseas branch, and which may not be transferred, paid, exported, withdrawn or otherwise dealt in, of Sytrol; and (ii) prohibited any transfers of credit or payments between financial institutions or by, through or to any financial institution, to the extent that such transfers or payments are subject to the jurisdiction of the U.S. and involved any interest of Sytrol.  

AD Notices: Fresh Tomatoes from Mexico

Agency: ITC.
Commodity: Fresh tomatoes.
Country: Mexico.
Nature of Notices: Suspension of AD investigation; termination of five-year review and resumption of AD investigation.
Details: The subject sunset review was instituted on Dec. 3, 2012, to determine whether termination of the suspended investigation on fresh tomatoes from Mexico would be likely to lead to continuation or recurrence of material injury. On Feb. 28, 2013, Mexican tomato growers/exporters accounting for a significant percentage of all fresh tomatoes imported into the U.S. from Mexico provided written notice to the DOC of their withdrawal from the agreement suspending the AD investigation. Effective March 1, the DOC terminated the suspension agreement and the sunset review of the suspended investigation, and resumed the AD investigation on fresh tomatoes from Mexico because the suspension agreement no longer covered substantially all imports of fresh tomatoes from Mexico. Accordingly, the ITC has given notice of the termination of its review and the resumption of its AD investigation of fresh tomatoes from Mexico. A schedule for the final phase of the investigation will be established and announced at a later date.  

IPR Enforcement Actions on Microelectromechanical Systems, Certain Electronic Products

Potential IPR Probe of Microelectromechanical Systems Evaluated for Public Interest Issues. The ITC is requesting comments no later than March 25 on any public interest issues raised by a Section 337 intellectual property rights infringement complaint filed on behalf of STMicroelectronics Inc. against certain microelectromechanical systems and products containing the same. 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.

Section 337 Investigation of Products Containing Interactive Program Guide and Parental Controls Technology Terminated. The ITC instituted on Dec. 21, 2011, a Section 337 investigation of certain interactive program guide and parental controls technology made in China. On Jan. 29, 2013, the complainant and the remaining respondent in this investigation filed an amended joint motion to terminate the investigation based on a settlement agreement. The administrative law judge assigned to this case subsequently granted the motion and the ITC has decided not to review this decision.

Section 337 Investigation of Electronic Devices for Capturing and Transmitting Images Terminated. The ITC instituted on Feb. 27, 2012, a Section 337 investigation of certain electronic devices for capturing and transmitting images and components thereof made in China and Taiwan. The administrative law judge assigned to this case decided on Feb. 12, 2013, to terminate this proceeding for good cause. None of the parties involved petitioned for review of this determination and the ITC has decided not to review the decision.  

FTZ Authority Approved for Bottled and Canned Beverage Plant

The Foreign-Trade Zones Board has approved a request by the Puerto Rico Industrial Development Company, grantee of FTZ 7, for a proposed production activity at the Pepsi Cola Puerto Rico Distributing LLC facility in Toa Baja, which is used for the production of bottled and canned soft drink and fruit drink beverages. Production under FTZ procedures could exempt PCPRD from customs duty payments on the foreign status components and materials used in export production. On its domestic sales, PCPRD will be able to choose the duty rate that applies to canned and bottled soft drink and fruit drink beverages (free) for foreign status inputs (i.e., fruit nectars, excluding orange juice and grapefruit juice; labels; plastic bottles; and plastic caps for bottles). PCPRD will not use foreign-status sugar in the FTZ production activity.   

CBP Reviewing Information Collections on Unaccompanied Articles, Centralized Examination Stations

CBP is soliciting comments by April 15 on the extension without change of the following information collections.

Declaration for Free Entry of Unaccompanied Articles. 19 U.S.C. 1498 provides that when personal and household effects enter the United States but do not accompany the owner or importer on his/her arrival in the country, a declaration is made on CBP Form 3299, Declaration for Free Entry of Unaccompanied Articles. The information on this form is needed to support a claim for duty-free entry for these effects.

Application to Establish a Centralized Examination Station. A CBP port director decides when his or her port needs one or more Centralized Examination Stations. If it is decided that a CES is needed, the port director solicits applications to operate a CES. The information contained in the application will be used to determine the suitability of the applicant’s facility; the fairness of fee structure; and knowledge of cargo handling operations and of CBP procedures. The names of all corporate officers and all employees who will come in contact with uncleared cargo will also be provided so that CBP may perform background investigations.    

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