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Volume 17, Issue 151
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Friday, July 30, 2010
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Correction: House-Passed Deficit Bill Excludes Restriction on FTA Legislation
As previously reported in the July 29 WorldTrade\INTERACTIVE, the House of Representatives approved by voice vote July 28 the End the Trade Deficit Act (H.R. 1875). However, that WTI article reported on the details of H.R. 1875 as introduced, whereas congressional staff have brought to our attention that the bill was substantially modified before being passed by the House. These changes affect the issues to be reviewed by a new Emergency Trade Deficit Commission and include the removal of a provision that would have prohibited the White House from submitting legislation to implement any free trade agreement before this commission submits its report to Congress and the White House.
The House-passed version of H.R. 1875 would require the Emergency Trade Deficit Commission to examine the nature, causes and consequences of the U.S. trade deficit and provide recommendations on how to address and reduce structural trade imbalances, including with respect to the U.S. merchandise trade deficit.
In examining the causes of the trade deficit the commission would have to assess the impact of numerous factors, including currency practices; tariff and non-tariff barriers and the lack of reciprocal market access as a result of those barriers; investment, offset and technology transfer requirements; labor and environmental standards; policies that assist foreign manufacturers; border tax adjustments; free trade agreements; investment flows into and out of the U.S.; and the extent to which U.S. foreign policy interests influence U.S. economic and trade policies.
In reviewing the consequences of the deficit the commission would have to identify and quantify the impact of the trade deficit on the overall domestic economy, assess the effects of trade deficits in the areas of manufacturing and technology on U.S. defense production and innovation capabilities, and assess the impact of significant, persistent trade deficits on U.S. economic growth.
In making its recommendations to the president and Congress, the commission would be required to identify specific strategies for achieving improved trade balances with those countries with which the U.S. has significant, persistent sectoral or bilateral trade deficits, identify trade policy tools (including enforcement mechanisms) that can be more effectively used to address the underlying causes of structural trade deficits, identify domestic and trade policies that can enhance the competitiveness of U.S. manufacturers domestically and globally, address ways to improve the coordination and accountability of federal departments and agencies relating to trade, and examine ways to improve the adequacy of the collection and reporting of trade data.
The commission would have to submit to Congress and the president within 16 months of the bill’s enactment a report that includes its findings and conclusions with respect to the issues specified as well as any recommendations for administrative and legislative actions it may consider necessary.
As passed by the House, the bill does not include a provision in the version that was originally introduced that would have prohibited the president from submitting to Congress “any free trade agreement, or any legislation implementing a free trade agreement” until the commission’s report has been submitted to Congress and the White House and reviewed in hearings by the House Ways and Means and Senate Finance committees.
Source Document 1...
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House Approves Bill to Remove Labeling Exemption for Garments with Small Amounts of Fur
The House of Representatives approved July 28 legislation that, effective 90 days after enactment, would remove the existing labeling exemption for garments that contain small amounts of fur. The bill also directs the Federal Trade Commission to update its Fur Products Name Guide, which Rep. Paul Sarbanes, D-Md., said “has been criticized as inaccurate and outdated.”
The Fur Products Labeling Act currently requires articles of apparel containing fur to be labeled with the name of the species used, the manufacturer, the country of origin and other information but exempts from this requirement products containing a relatively small quantity or value of fur. The Federal Trade Commission has set that amount at $150 since 1998.
The Truth in Fur Labeling Act of 2009 (H.R. 2480) would amend the FPLA by removing this exemption, thus requiring all apparel containing fur to be labeled with the required information regardless of the cost of the garment or the value of the fur used. Rep. Jim Moran, D-Va., said this step will extend the labeling requirement to the estimated 13% of the fur garment market that is excluded under the existing law. The bill contains one exemption from this requirement for fur products sold by hunters and trappers out of their homes or at fairs or other temporary spaces.
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Earned Income Allowance Program Benefits U.S., Dominican Textile and Apparel Industries
The International Trade Commission released July 27 a report finding that the Earned Income Allowance Program has had some initial benefits for firms in the U.S. and the Dominican Republic. The report states that there has been limited use of the EIAP to date and that potential improvements to the program could spur greater interest in the future.
The EIAP provides an uncapped benefit for duty-free imports of woven cotton pants and trousers, bib and brace overalls, breeches and shorts, and skirts and divided skirts (collectively referred to as bottoms) assembled in the Dominican Republic from foreign fabric, provided such imports are accompanied by a certificate documenting the purchase of certain U.S.-produced woven cotton fabric at a ratio of 2:1. Under this formula, for every two units of qualifying fabric (i.e., formed in the U.S. from U.S.-formed yarns) purchased for apparel production in the Dominican Republic, a one-unit credit is received that can be used in the manufacture and importation of apparel using non-qualifying fabric. Nine companies are currently registered to use the EIAP, and the first imports into the U.S. under the program entered in April 2009.
The ITC is required to evaluate the effectiveness of the EIAP and make recommendations for improvements each year. Highlights of this first annual review, much of which the ITC states is “based on anecdotal information,” include the following.
• The EIAP has helped slow job losses and production declines in the Dominican industry that makes woven cotton trousers and other bottoms, and Dominican trouser manufacturers and U.S. apparel companies that import trousers from the Dominican Republic indicated that the EIAP has helped them to be more cost-competitive. However, there were no reports of new investment as a result of the program.
• Most of the benefits to U.S. textile firms under the EIAP to date appear to have accrued to U.S. firms that dye and finish third-country unfinished fabrics.
• As of May 2010, no U.S. firms reported increased sales or exports of domestically woven fabrics as a result of the EIAP.
• Reports on planned use of the EIAP going forward have been mixed, as some Dominican trouser manufacturers and U.S. firms that import woven cotton trousers from the Dominican Republic indicate that the program may become less cost-effective in the future. A few of the firms indicated that they may move production out of the Dominican Republic if it is no longer economical to produce there.
• The ITC received several recommendations from industry and other sources concerning possible improvements to the program, focusing on the legislation establishing the program (e.g., changing the required ratio of U.S. fabric to foreign fabrics from 2:1 to 1:1, similar to the EIAP in place for Nicaragua) and the implementation of the program (e.g., changing how the Department of Commerce interprets the definition of “wholly formed” fabrics). Sources also suggested expanding the program to other DR-CAFTA countries and allowing for the use of cotton polyester blended fabrics, including polyester cotton twill fabrics, as well as broadwoven fabrics such as poplin fabrics, along with denim apparel and/or other apparel items.
Source Document 1...
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President Extends Burma Sanctions for Another Year
President Obama signed July 22 legislation (H.J.Res. 83) extending economic sanctions against Burma for another year. These sanctions include a ban on all products of Burma that are imported directly or indirectly into the U.S., which applies to:
• merchandise intended for commercial and personal use, including gifts or informational materials;
• merchandise landed, but not entered for consumption, in the U.S. (e.g., goods placed in a foreign-trade zone or bonded warehouse); and
• imports for transshipment or in-transit movements of products of Burma intended or destined for a third country.
The ban does not apply to (a) merchandise for which the Office of Foreign Assets Control has issued an import license, which may be entered for consumption or in-transit movement through the U.S., or (b) importations for U.S. or foreign diplomatic and consular officials.
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BIS Clarifies Country Scope of Direct Product Rule
The Bureau of Industry and Security has issued a final rule that, effective July 30, clarifies the scope of the “direct product rule” set forth in the Export Administration Regulations. BIS is also making parallel revisions or clarifications to written assurances required under license exception TSR (Technology and Software Restricted), information required on the license application for national security controlled technology, and the instructional steps in the EAR that provide guidance on how to apply the direct product rule.
Under the direct product rule, foreign-made items are subject to the EAR and require an export license or license exception if they are (a) located outside of the U.S., (b) subject to national security controls under the EAR, (c) the direct product of U.S.-origin software or technology that requires a written assurance as a supporting document for a license or as a pre-condition for the use of license exception TSR, and (d) being re-exported to a destination in a country of national security concern or a terrorist supporting country.
BIS is now changing the direct product rule by expanding the country scope from Country Group D:1 and Cuba to Country Group D:1 and E:1 (Cuba, Iran, North Korea, Sudan and Syria). This change is being made to bring the direct product rule into harmony with the policies the U.S. maintains against terrorist supporting countries in Country Group E:1.
Shipments of items removed from license exception eligibility or from eligibility for export without a license as a result of this rule that were on dock for loading, on lighter, laden aboard an exporting carrier or en route aboard a carrier to a port of export on July 30 pursuant to actual orders for export to a foreign destination may proceed to that destination under the previous license exception eligibility or without a license so long as they have been exported before Sept. 28. Any such items not actually exported before midnight on Sept. 28 will require a license in accordance with this rule.
Source Document 1...
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AD/CV Notices: Paint Brushes, Wire Decking, Frozen Fish
Following are summaries of current antidumping and countervailing actions taken by the International Trade Administration or the International Trade Commission.
Agency: ITA.
Commodity: Natural bristle paint brushes and brush heads, classifiable under HTSUS 9603.40.4040.
Country: China.
Nature of Notice: Final results of changed circumstances review of AD duty order, effective July 30.
Agency: ITC.
Commodity: Wire decking, classifiable under HTSUS 9403.90.80, 7217.10, 7217.20, 7326.20, 7326.90 and 9403.20.00.
Country: China.
Nature of Notice: Final negative AD and CV injury determinations.
Agency: ITA.
Commodity: Frozen fish fillets.
Country: Vietnam.
Nature of Notice: Extension of time limit for preliminary results of administrative and new shipper reviews of AD duty order, effective July 30.
Source Document 1...
Source Document 2...
Source Document 3...
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OFAC Issues Final Rule Implementing Lebanon Sanctions Regulations
The Treasury Department’s Office of Foreign Assets Control has issued a final rule that, effective July 30, adds the Lebanon Sanctions Regulations to implement Executive Order 13441 of Aug. 1, 2007, “Blocking Property of Persons Undermining the Sovereignty of Lebanon or Its Democratic Processes and Institutions.” These regulations implement targeted sanctions that are directed at certain persons who meet the criteria specified in the EO. These sanctions generally do not prohibit trade with or the provision of banking or other financial services to the country of Lebanon, unless the transaction or service in question involves a person whose property and interests in property are blocked pursuant to these sanctions. OFAC notes that transactions otherwise prohibited under these regulations but found to be consistent with U.S. policy may be authorized by one of the general licenses contained in subpart E of the regulations or by a specific license issued pursuant to the procedures described in subpart E of 31 CFR part 501.
Source Document 1...
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ITC Narrows Patent Infringement Probe of Flash Memory
The International Trade Commission has agreed to terminate patent infringement investigation 337-TA-685 of certain flash memory and products containing same with respect to respondents Synology Inc. and Synology America Corp. on the basis of a consent order.
Source Document 1...
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DOC Notes Foreign Regulatory Changes That Could Affect U.S. Exports
According to the National Institute of Standards and Technology, the WTO has been notified by the following countries of proposed regulatory changes that may affect U.S. exports of the products indicated. More detailed information on the nature of the proposed changes can be accessed on the NIST Web site.
• Brazil – maize, medicines, active pharmaceutical ingredients
• Costa Rica – medicines
• Japan – substances with probable effects on the central nervous system
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DOT Reports Small Gain in Monthly Surface Trade with Canada and Mexico
The Department of Transportation reports that U.S. surface transportation trade in goods with NAFTA partners Canada and Mexico edged up 1.5% from April to May. The $66.8 billion total for May represented a 39.5% jump from a year earlier, the largest such gain on record and the third time in the last four months that such a record has been set. Surface transportation consists largely of freight movements by truck, rail and pipeline and in May accounted for about 86% of U.S. trade by value with Canada and Mexico.
Surface trade between the U.S. and Canada totaled $40.2 billion in May, up $0.3 billion from April and 37.5% higher than a year earlier. Exports by truck increased 34.5% by value from the previous year while imports by truck rose 32.0%. U.S.-Mexico surface transportation trade totaled $26.6 billion, up $0.7 billion from the previous month and 42.7% from May 2009. Exports by truck soared 43.2% by value from a year before while imports by truck jumped 36.1%.
According to the DOT, the value of U.S. surface transportation trade with Canada and Mexico in May was up 15.4% compared to May 2005 and 36.2% from May 2000, including a 34.5% increase for exports and a 32.0% gain for imports.
Source Document 1...
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USDA Reviewing Export Certificate for Poultry and Hatching Eggs
The Department of Agriculture’s Animal and Plant Health Inspection Service is requesting public comments by Sept. 28 on the proposed extension of Veterinary Services form 17-6, certificate for poultry and hatching eggs for export. Receiving countries have specific health requirements for poultry and hatching eggs exported from the U.S., and most require a certification that U.S. poultry and hatching eggs are free of diseases of concern to them. This certification generally must carry the USDA seal and be endorsed by an authorized APHIS veterinarian.
Source Document 1...
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