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December 18 2012 Issue

Tuesday, December 18, 2012
Sandler, Travis & Rosenberg Trade Report

Patents, Copyrights, Etc. Targeted for First-Ever Cross-Retaliation in WTO Case

Antigua and Barbuda submitted to the World Trade Organization Dec. 13 a request for authorization to suspend $21 million worth of U.S. intellectual property rights in a long-running dispute over Washington’s ban on Internet gambling. If this request is approved and Antigua proceeds with the sanctions it would be the first time a WTO member has cross-retaliated against another; i.e., suspended concessions in an area other than the one that was the subject of the original dispute.

The WTO ruled several years ago that the Internet gambling ban violates U.S. obligations under the General Agreement on Trade in Services. In its request Antigua said that it “has been working in good faith to obtain a fair negotiated settlement” but that “all efforts have proven fruitless.” In fact, not only has the U.S. failed to comply with the WTO ruling, it has also taken some steps to strengthen the existing restrictions. Antiguan officials said that as a result a once-thriving industry that provided thousands of jobs has been “virtually decimated.”

Antigua has therefore submitted its retaliation request for consideration at the January 2013 meeting of the WTO Dispute Settlement Body. It is specifically seeking authorization to suspend concessions or other obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights concerning copyrights, trademarks, industrial designs, patents, and protection of undisclosed information. However, the specific measures under consideration were not revealed, and the request suggested that they could change every year the U.S. remains noncompliant.

U.S. officials asserted that they have “explored a variety of possibilities” to resolve the dispute, including technical assistance, export promotion for Antiguan businesses and job training for Antiguan workers. They warned that proceeding with retaliation against U.S. intellectual property rights “would undermine chances for a settlement that would provide real benefits to Antigua” as well as “prospects for foreign investment in the Antiguan economy, particularly by high-tech industries.” 

Blanket Year-End CBP Authorization for Immediate Delivery Procedures

In a Dec. 17 message, U.S. Customs and Border Protection issued a blanket authorization for immediate delivery procedures for merchandise to be released on or after Dec. 17 and until Dec. 31. In the event that President Obama declares a federal holiday on Dec. 24, this blanket authorization will cover the period Dec. 14 to Dec. 31. This authorization is offered to filers who may want to take advantage of interim Harmonized Tariff Schedule changes that take effect on or after Jan. 1, 2013.

This blanket authorization does not apply to merchandise moved under an immediate transportation entry. Tariff-rate quota merchandise previously authorized for ID release may still be released under ID, but the entry summary must be presented within 10 working days after release or within the quota period, whichever expires first.

In those instances where the paper CF 3461/CF 3461 (ALT) is used as the entry document and importers wish to elect ID, a line must be drawn through the word “entry” on the document. Automated Broker Interface entry transmissions, including the “paperless” provisional message, will establish the desired entry date by using the estimated entry date in the summary (EI) transmission. This will identify the change from entry to ID and allow filers to elect a date of entry in order to take advantage of duty rate changes or special programs. Under ID procedures, the entry/entry summary must be filed within 10 working days after release.

CBP stresses that no grace period will be granted for the purpose of timely filing ID entry summaries under this one-time allowance. 

New Toolkit Aims to Help Businesses Combat Child/Forced Labor in Global Supply Chains

The Department of Labor’s Bureau of International Labor Affairs introduced Dec. 14 the first guide developed by the U.S. government to help businesses combat child labor and forced labor in their global supply chains. This free toolkit “highlights the need for a social compliance program that integrates a company's policies and practices to ensure that the company addresses child labor and forced labor throughout its supply chain,” a DOL press release states. “It provides practical, step-by-step guidance on eight critical elements that will be helpful for companies that do not have a social compliance system in place or those needing to strengthen existing systems.” The press release notes that an integrated social compliance system includes engaging stakeholders and partners, assessing risks and impacts, developing a code of conduct, communicating and training across the supply chain, monitoring compliance, remediating violations, independent review and reporting performance. 

$450,000 Penalty for Failure to Report Drawstrings on Children's Apparel

The Consumer Product Safety Commission announced Dec. 14 that a Pennsylvania-based retailer has agreed to pay a $450,000 civil penalty to settle allegations that it knowingly failed to report that its children’s hooded jackets and sweatshirts were sold with drawstrings through the hood. The CPSC and three U.S. importers announced three separate recalls of children’s jackets and sweatshirts with drawstrings through the hood in 2010, and the company at issue was a retailer of about 800 total jackets and sweatshirts in all three recalls.

In July 2011 the CPSC issued a federal regulation that designated as substantial product hazards children’s upper outerwear in sizes 2T to 12 (or extra-small to large) with neck or hood drawstrings and children’s upper outerwear in sizes 2T to 16 (or extra-small to extra-large) with certain waist or bottom drawstrings. Federal law requires manufacturers, distributors and retailers to report to CPSC within 24 hours after obtaining information reasonably supporting the conclusion that a product contains a defect that could create a substantial product hazard, creates an unreasonable risk of serious injury or death, or fails to comply with any consumer product safety rule or any other rule, regulation, standard or ban enforced by CPSC. Federal law also prohibits the sale of products that have been subject to a voluntary recall by a manufacturer or a mandatory recall ordered by the Commission.

Central Asian Countries Advance Toward WTO Membership

The World Trade Organization’s General Council has approved the accession package of Tajikistan, which now has until June 7, 2013, to complete its domestic ratification procedures. The country will formally become a WTO member 30 days after that is done. Unless the United States extends permanent normal trade relations status to Tajikistan before that time it will have to invoke a provision specifying that WTO rules do not apply between the two countries.

Kazakhstan and Afghanistan, meanwhile, are working to join the WTO by the end of 2013. A WTO working party considering Afghanistan’s accession bid held its third meeting this month to receive updates on economic, trade and legislative reforms that have been undertaken and to request further information on issues such as state trading enterprises, trading rights, sanitary and phytosanitary measures, trade-related investment measures and intellectual property rights. A working party examining Kazakhstan’s application held a meeting this month as well, with discussion focusing on investment, government procurement, tariff-rate quotas, import licensing procedures and IPR protection. Kazakhstan’s bilateral market access negotiations are reportedly at an “advanced stage.” 

Textile and Apparel Imports Up 3.5% Led by Shipments from Asia

The Department of Commerce’s Office of Textiles and Apparel reports that monthly U.S. textile and apparel imports rose 3.5% in October compared to a year earlier. Imports of cotton, wool, manmade fiber, silk blend and non-cotton vegetable fiber textile and apparel products totaled 4.80 billion square meter equivalents for the month, with textile imports up 1.7% at 2.59 billion SME and apparel imports jumping 5.8% to 2.21 billion SME.

For the year to date as of October 2012, compared to the same period in 2011, imports of textiles and apparel were 0.2% higher at 45.9 billion SME. Textile imports gained another 2.1% to 25.7 billion SME while apparel imports fell 2.0% to 20.1 billion SME. For the 12-month period ending in October total imports were down 1.0% to 53.8 billion SME as textile imports edged up 1.3% to 30.3 billion SME but apparel imports fell 3.9% to 23.5 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 October from China (5.5% to 2.41 billion SME), Vietnam (7.8% to 310.0 million SME), Taiwan (3.2% to 71.0 million SME), Hong Kong (50.4% to 7.1 million SME), Korea (3.2% to 110.1 million SME), Mexico (2.0% to 210.5 million SME), ASEAN (7.8% to 661.3 million SME), South Asia (0.7% to 603.6 million SME), EU-15 (1.5% to 101.5 million SME) and Israel (4.6% to 33.0 million SME). Imports fell from Canada (16.2% to 94.1 million SME), the DR-CAFTA region (1.5% to 263.4 million SME), the Caribbean Basin Initiative area (0.6% to 289.5 million SME) and Turkey (8.9% to 60.1 million SME).

Foreign Regulatory Changes Could Affect Exports of Food, Construction Equipment

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.

Albania – draft decision on marketing and certification requirements for fruit plant propagating material and fruit plants (comments due by Feb. 13, 2013)

Kenya – regulations on baby food (comments due by Feb. 12) and formaldehyde (comments due by Feb. 13)

Korea – draft amendment of safety criteria on construction equipment (comments due by Feb. 12)

Mexico – Nov. 27 publication of official standard on vehicle emissions (effective 60 days later)

Mexico – Nov. 29 publication of official standard on specifications and test methods for Ataulfo mangoes 

South Africa – Nov. 30 publication of draft technical regulation on grading, packing and marking of citrus fruit 

Ex-Im Bank Considers Financing Exports of Locomotives to South Africa

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 exportation of locomotive kits to South Africa. These locomotives would be owned and operated by the state-owned freight transport company for purposes of transporting freight mainly within South Africa but also in some cases in nearby countries. Comments on this transaction are due no later than Jan. 14, 2013.

EPA Proposes Uses of Methyl Bromide that Qualify for 2013 Critical Use Exemption

The Environmental Protection Agency is proposing uses that qualify for the 2013 critical use exemption from the phaseout of methyl bromide and the amount of methyl bromide that may be produced, imported or supplied from existing pre-phaseout inventory for those uses in 2013. EPA is seeking comments on these issues by Jan. 28, 2013.

Under the Clean Air Act, methyl bromide consumption (i.e., production plus imports minus exports) and production was phased out Jan. 1, 2005, apart from allowable exemptions such as the critical use exemption and the quarantine and preshipment exemptions. The critical use exemption is designed to permit the production and import of methyl bromide for uses that do not have technically and economically feasible alternatives and for which the lack of methyl bromide would result in significant market disruption. The proposed critical uses for 2013 affect commodities, mills and food processing structures, dried cured pork, cucurbits, field eggplant, nursery stock (fruit, nut and flower), orchard replants, ornamentals, field peppers, field strawberries, strawberry runners and field tomatoes. 

USDA May Ease Restrictions on Imports of Pork from Italy

The Department of Agriculture’s Animal and Plant Health Inspection Service has determined that the Italian regions of Lombardia, Emilio-Romagna, Veneto and Piemonte and the autonomous provinces of Trento and Bolzano are free of swine vesicular disease. APHIS has found that that the surveillance, prevention and control measures implemented by Italy in these areas are sufficient to minimize the likelihood of introducing SVD into the United States via imports of SVD-susceptible species or products. However, because of their proximity to or trading relationships with SVD-affected regions, APHIS has found that it is necessary to impose certain restrictions on the importation of pork or pork products from these areas. Comments on APHIS’ determination will be accepted through Feb. 19, 2013.

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