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March 21 2013 Issue

Thursday, March 21, 2013
Sandler, Travis & Rosenberg Trade Report

Acting Commerce Secretary to Depart, Still No Word on DOC or USTR Nominations

On March 18 President Obama announced that Acting Commerce Secretary Rebecca Blank will be stepping down this summer to take the position of chancellor at the University of Wisconsin. The president has yet to announce a nominee for commerce secretary, an office that has been empty since John Bryson left in June 2012, but Blank said she expects a new secretary to be in place before she departs. Chicago businesswoman Penny Pritzker has been mentioned as a possible candidate.

Also on March 18 the International Trade Administration announced that Chandra Brown has taken the position of deputy assistant secretary for manufacturing, where she will be responsible for identifying key factors affecting competitiveness and barriers to exports for more than 21 industry sectors. Brown has previously served as president of United Streetcars LLC, vice chair of President Obama’s Manufacturing Council and a member of the Oregon Business Development Commission. In 2011, she won the White House Champion of Change Award in Manufacturing.

Finally, acting Office of Management and Budget Director Jeff Zients appears to be out of the running for the post of U.S. trade representative, which was vacated by Ron Kirk as of March 15 and is currently being filled in an acting capacity by Deputy USTR Demetrios Marantis. President Obama has asked Zients, whom White House spokesman Jay Carney said “has been just an enormously valuable player on the president’s economic team” and “brings a unique set of talents and wisdom to this job,” to stay on at OMB while a new director is in the process of being confirmed by the Senate.

Some lawmakers have urged the president to name as USTR someone with trade negotiating experience given the administration’s ambitious 2013 trade agenda, which includes concluding the Trans-Pacific Partnership negotiations, launching talks on a free trade agreement with the European Union, and pursuing multilateral deals on services and information technology products. Senate Finance Committee Ranking Member Orrin Hatch, R-Utah, said at a March 19 committee hearing that “if the United States is to be taken seriously on trade policy around the world, we need a real leader at USTR who understands the agency and is capable of navigating the difficult shores of international trade negotiations.” Hatch indicated his disapproval of the possible choice of Zients to lead this agency, citing in particular a widely criticized proposal authored by Zients that would have melded USTR into a larger federal agency. 

USTR Lists Goods That Could Lose or Regain Eligibility for GSP Duty-Free Treatment

The Office of the U.S. Trade Representative has made available full calendar year 2012 import statistics showing products that could be excluded from or reinstated to the duty-free treatment available under the Generalized System of Preferences based on competitive need limitations. However, USTR states that its lists may not include all articles to which the CNLs may apply and that each interested party should conduct its own review of 2012 import data with respect to the possible application of the CNL provisions.

Exclusions from GSP duty-free treatment where CNLs have been exceeded will be effective July 1, 2013, unless granted a waiver by the president. USTR is therefore accepting public comments through April 12 on the following issues.

De minimis CNL waivers. When the president determines that a beneficiary developing country exported to the United States during a calendar year either (1) a quantity of a GSP-eligible article having a value in excess of the applicable amount for that year ($155 million for 2012) or (2) a quantity of a GSP-eligible article having a value equal to or greater than 50% of the value of total U.S. imports of the article from all countries, the president must terminate GSP duty-free treatment for that article from that BDC unless a waiver is granted in response to a petition previously submitted by an interested party. The 2012 import statistics show that corn (other than seed and yellow dent corn) from Brazil and calcium silicon ferroalloys from Brazil have both exceeded the 50% CNL but that a petition has been filed only with respect to the latter product.

The president may also waive the 50% CNL with respect to an eligible article imported from a BDC if the value of total imports of that article from all countries during the calendar year did not exceed the applicable de minimis amount for that year ($21 million for 2012). USTR has listed over 100 products that qualify for such a waiver.

Redesignation of goods as GSP-eligible. If imports of an eligible article from a BDC ceased to receive duty-free treatment due to exceeding a CNL in a prior year, the president may redesignate such an article for duty-free treatment if imports in the most recently completed calendar year did not exceed the CNLs. USTR’s statistics include approximately 150 products that could be reinstated to GSP eligibility based on this criterion.

Revocation of CNL waivers. A CNL waiver remains in effect until the president determines that it is no longer warranted due to changed circumstances. In addition, not later than July 1 of each year the president should revoke any CNL waiver that has then been in effect with respect to an article for five years or more if the BDC has exported to the U.S. (directly or indirectly) during the preceding calendar year a quantity of the article (1) having an appraised value in excess of 1.5 times the applicable amount for that calendar year ($232.5 million in 2012) or (2) exceeding 75% of the appraised value of total imports of that article into the U.S. during that calendar year. Only one product – new pneumatic radial tires used on automobiles from Indonesia – is listed this year as qualifying to have its CNL waiver revoked. 

COAC Work to Include CEEs, ACE, Trusted Trader Programs, Import Data, Brokers

The Advisory Committee on Commercial Operations of U.S. Customs and Border Protection held the inaugural meeting of its 13th term March 6 in Washington, D.C. According to materials made available by CBP, this meeting included a restructuring of the COAC subcommittees and work groups, which are expected to address the following issues over the next two years.

Trade Modernization. This subcommittee will focus on CBP’s trade transformation efforts, including the Centers of Excellence and Expertise, the Automated Commercial Environment (including the ACE development plan and simplifying ACE cargo and entry processes), and the role of customs brokers.

Trusted Traders. This subcommittee will help CBP develop an enhanced trusted trader program and continue to advise on C-TPAT issues. The subcommittee’s statement of work notes that by developing a program that includes trade compliance and enforcement, CBP is moving C-TPAT toward a true authorized economic operator program, thus creating an opportunity to both amend its current mutual recognition agreements and enhance its future MRAs by including trade compliance criteria and offering corresponding incentives for participants.

One U.S. Government at the Border. The objectives of this subcommittee are to generate advice and develop recommendations pertaining to the current design of document/data and partnership programs. Priorities include asking the Border Interagency Executive Council to identify and work toward implementing actions from the One U.S. Government Master Principles Document; reviewing existing partnership programs, analyzing best practices, and identifying obstacles and possible solutions to ensure an effective, consistent one government approach to partnerships; obtaining trade community feedback on how other government agency holds are impacting cargo processing and trade facilitation efforts; and continuing to support the implementation of single window automation.

Trade Enforcement and Revenue Collection. This new subcommittee blends the former intellectual property rights, bonds and antidumping/countervailing duty subcommittees and adds regulatory audit. Its goal is to develop recommendations to help CBP enforce trade laws while facilitating trade.

Global Supply Chain. The subcommittee will discuss systems for securing trade and global supply chains, including the Air Cargo Advance Screening program, which is slated to begin the transition from pilot to permanent regulatory implementation; the Beyond the Border Initiative with Canada; and the 21st Century Border Framework.

Exports. This subcommittee will focus on export procedures, enforcement and facilitation issues. Work will include identifying existing programs that could be leveraged, both within the U.S. government and globally; assessing current export policies and the impact of international policies and providing recommendations based on the findings; and documenting current export processes and providing recommendations for a strategy to harmonize systems, streamline data collection and share information.

U.S. and Canada to Launch Truck Cargo Pre-Inspection Project

The U.S. and Canada signed last week a memorandum of understanding that paves the way for a pilot project testing the pre-inspection of U.S.-bound truck cargo. This project, which is being undertaken as part of the two countries’ Beyond the Border Action Plan, will take place in two phases. Phase I will be implemented at the Pacific Highway crossing between Surrey, British Columbia, and Blaine, Wash., and will provide U.S. Customs and Border Protection officers a designated preclearance area in Canada to conduct primary inspection activities for eligible truck traffic and drivers seeking to ender the U.S. Phase II will further test how pre-inspection could enhance border efficiency and reduce wait times to facilitate legitimate trade and travel and will be implemented at the Peace Bridge crossing between Fort Erie, Ontario, and Buffalo, N.Y.

Retailers Agree to Settle FTC Charges of False Marketing of Fur Products

The Federal Trade Commission announced March 19 that three clothing retailers have agreed to settle charges that they misled consumers by marketing products as containing “faux fur” when in fact the products contained real fur. The FTC’s administrative complaints allege that these retailers violated the FTC Act and the Fur Products Labeling Act by making these false claims and not naming the animals that produced the fur. One of the retailers also allegedly misrepresented that a rabbit fur product had mink fur and failed to disclose the country of origin of the fur in three products.

Under proposed consent orders that apply for 20 years, the respondents are barred from violating the Fur Act and the rules and regulations under that law. Consistent with the FTC’s enforcement policy statement announced in January, these orders provide that the respondents will not be liable for misrepresentations about fur products that they directly import if they do not embellish or misrepresent claims provided by the products’ manufacturers, do not sell the products as private label products, and neither know nor should have known that the products are marketed in a manner that violates the Fur Act.

Comments on the proposed consent orders will be accepted through April 18, after which the FTC will decide whether to make the orders final. A consent order issued on a final basis carries the force of law with respect to future actions, and each violation of such an order may result in a civil penalty of up to $16,000. 

In the News: EU Keeps Trade Preferences for Bolivia, U.S. Infrastructure Improves

Termination of GSP+ investigation on Bolivia

ASCE’s New Report Card Bumps U.S. Infrastructure Grade Up to a D+

AD/CV Notice: Frozen Fish from Vietnam

Agency: International Trade Administration.
Commodity: Frozen fish fillets.
Country: Vietnam.
Nature of Notice: Final results of administrative and new shipper reviews of antidumping duty order for the period Aug. 1, 2010, through July 31, 2011.
Details: Weighted average dumping margins range from 0.19% to 3.87%. Importer-specific 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 shipments of subject merchandise entered or withdrawn from warehouse on or after March 21. The review was rescinded with respect to ten companies that made no shipments of subject merchandise to the U.S. during the period of review. The ITA denied requests to revoke this order with respect to two companies. 

FTZ Authority Sought for Mississippi Tool Facilities

The Foreign-Trade Zones Board has received from Northern Mississippi FTZ Inc., grantee of FTZ 262, a notification of proposed production activity at the Milwaukee Electric Tool Corporation facilities in Olive Branch, Greenwood and Jackson, Miss. These facilities are used for the production and kitting of power and hand tools and related accessories. FTZ activity would be limited to the specific foreign-status materials and components and specific finished products described in the notification and subsequently authorized by the FTZ Board. A separate application for subzone status at the METC facilities has also been submitted.

Production under FTZ procedures could exempt METC from customs duty payments on the foreign-status components used in export production. On its domestic sales, METC would be able to choose the duty rates that apply to power and hand tools (ranging from zero to 12.5%) for the specified 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 April 30. 

IPR Enforcement Actions on Medical Devices

New IPR Infringement Petition on Surgical Devices. The International Trade Commission received March 19 on behalf of MAKO Surgical Corp. a petition requesting that it institute a Section 337 investigation regarding certain computerized orthopedic surgical devices, software, implants and components thereof. The proposed respondents are located in the United Kingdom and the U.S.

Section 337 investigations primarily involve claims regarding intellectual property rights violations by imported goods, including the infringement of patents, trademarks and copyrights. Other forms of unfair competition involving imported products, such as misappropriation of trade secrets or trade dress and false advertising, may also be asserted. The primary remedy available in Section 337 investigations is an exclusion order that directs U.S. Customs and Border Protection to stop infringing imports from entering the U.S. In addition, the ITC may issue cease and desist orders against named importers and other persons engaged in unfair acts that violate Section 337, including selling infringing imported articles out of U.S. inventory.

No IPR Import Restrictions on Balloon Dissection Devices. The International Trade Commission has terminated without the imposition of import restrictions patent infringement investigation 337-TA-865 of certain balloon dissection devices and products containing same, which are used by surgeons in performing laparoscopic hernia repairs. This action is based on a consent order between complainant Covidien LP and the respondents, which are located in Germany and the U.S. 

Foreign Regulatory Changes Could Affect Exports of Textiles, Paint, Medical Devices

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.

Indonesia – national standard on formaldehyde content and metal content extracted in the fabric for textiles and textile products (comments due by May 19)

Kenya – animal feed, plastic sheets, genetically modified organisms, electricity metering lamps, paints and varnishes, methanol, food grade hexane and orthopedic devices (comments due by May 19) 

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