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January 4 2013 Issue

Friday, January 04, 2013
Sandler, Travis & Rosenberg Trade Report

U.S. May Need to Rethink Trade Policy Amid Rise of Developing Countries, Report Says

A recent report from the Congressional Research Service states that a handful of developing countries are becoming major players in the global economy and that U.S. trade policy may have to adjust accordingly.

The report names as rising economic powers Brazil, China, India, Indonesia, Mexico, Russia and Turkey, all of which are now among the world’s 20 largest economies (based on purchasing power parity estimates). The report finds that these REPs have greater involvement in World Trade Organization negotiations and dispute settlement cases, have protested U.S. economic and trade policies with greater frequency, and are more able and willing to deflect or reject U.S. trade and market access demands. Other large developing countries, such as Egypt, Iran, Nigeria and Vietnam, could rise if they successfully address underlying political and economic challenges.

Market access for U.S. goods and services in these countries is increasingly important, the report states, but at the same time is becoming more difficult to achieve. U.S. exports to REPs and other developing countries account for a growing source of U.S. economic growth, and that trend will need to continue if the U.S. is to maximize its export potential and boost its living standards. However, not only do trade and investment barriers remain considerably higher in most of the REPs, efforts to reduce those barriers have stalled and several REPs have reactivated industrial policies or found ways to take advantage of gaps in world trade rules to promote home companies at the expense of foreign companies. Moreover, the United States’ ability to persuade these countries to embrace the principles of free and fair trade is constrained by growing differences over the role of the state in economic activity.

Given these circumstances, the report concludes, U.S. trade policymakers may need considerable resources, incentives, flexibility and leverage as they try to tie REPs with very different state-led economic models into the more market-oriented WTO system. For example, progress on trade liberalization within the WTO may require a reexamination of principles that have guided multilateral trade negotiations in the past such as unconditional most-favored-nation and special and differential treatment. Similarly, the U.S. may need to drop some of its own trade barriers and deviate from its standard free trade agreement template if it wishes to further open REP markets (although the conclusion of the Trans-Pacific Partnership Agreement and an FTA with the European Union could serve as incentives for REPs to view higher standard negotiations more favorably). Another option is making more frequent use of the WTO’s dispute settlement mechanism to “engage the REPs directly about their responsibilities for upholding a system of multilateral trade rules.” More broadly, reinvigorating its own economy could help the U.S. reestablish the appeal of an economic model based on free markets and democracy.

CPSC May Need More Statutory Authority to Address New Product Risks

In a December 2012 report the Government Accountability Office told Congress that it may need to give the Consumer Product Safety Commission more statutory authority to enable it to address new risks posed by consumer products in a timely manner.

The report states that the CPSC has broad authority to identify, assess and address product risks but faces some challenges in identifying and responding to new risks in a timely manner. The Commission uses various means to stay informed about risks that may be associated with new or existing products, including market surveillance activities for imported products, retail stores, Internet sales and trade shows as well as formal agreements and various activities with other federal and state agencies to research emerging issues. However, CPSC was statutorily established to respond to risks after products have been introduced into the U.S. market, and neither the Consumer Product Safety Act nor any other law administered by the CPSC requires a premarket registration or approval of consumer products.

Another problem is that the CPSC has been unable to update information-sharing agreements with its foreign counterparts because under the Consumer Product Safety Improvement Act the Commission cannot agree to allow its foreign counterparts to disclose to their own governing bodies or court systems non-public information they receive from the CPSC. Given the growing number of imported consumer products, the report states, this restriction may hinder the CPSC’s ability to identify risks from new products in a timely manner, possibly leading to injury and death if unsafe products enter the U.S. market. Congress may therefore wish to amend section 29(f) of the CPSA to give the Commission greater ability to enter into information-sharing agreements with its foreign counterparts that permit reciprocal terms on disclosure of non-public information.

The CPSC also faces challenges in collecting and analyzing large quantities of data in order to identify potential product risks but has efforts underway to respond to these challenges. First, it plans to complete in fiscal year 2013 and make fully operational in FY 2014 an upgraded data management system designed to enhance its efficiency and effectiveness, enable a more rapid dissemination of information and allow consumers to search the database through a publicly available Internet portal. Second, the CPSC has developed and is pilot testing with U.S. Customs and Border Protection a new approach for identifying unsafe consumer products at U.S. ports that is based on a predetermined set of rules targeting specific hazardous products or importers. Third, the Commission has begun limited testing of a system that when fully implemented in four to seven years will allow it to systematically analyze 100% of shipments within its jurisdiction to ensure that adequate resources are dedicated to the highest risk shipments. 

Dates and Deadlines: Informal Entry Limit, FTZs, Export Enforcement, Food Safety

Jan. 7 – effective date of CBP final rule raising informal entry limit to $2,500

Jan. 7 – deadline for comments on proposed FTZ production activity at vehicle transmission facility in South Carolina

Jan. 7 – deadline for comments on proposals to reorganize FTZs in Pennsylvania and Virginia

Jan. 7 – deadline for comments on proposed extension of CBP information collection on administrative rulings

Jan. 7 – deadline for comments on proposal to tighten export enforcement rules

Jan. 7 – deadline for comments on form ATF F 4587, Application to Register as an Importer of U.S. Munitions Import List Articles

Jan. 8 – deadline for comments on IPR infringement complaint against certain balloon dissection devices

Jan. 8 – deadline for comments on public interest issues raised in IPR infringement complaints on mobile handset devices, paper shredders

Jan. 8 – ST&R webinar on Food Safety Modernization Act enforcement in 2013

Jan. 9 – ST&R webinar on identifying and resolving export compliance issues

Jan. 10 – ST&R webinar on medical device excise tax and establishment registration

In the News: Chemicals Trade, WTO Chief

Nations Move to Stem Trade in Bomb Chemicals

Candidates from nine countries vie to head WTO

AD/CV Notices: Request Admin Reviews, Shrimp, Pipes, Garlic, Plastic Bags, Pasta, Washers

Agency: International Trade Administration/International Trade Commission.
Commodity: Warmwater shrimp.
Country: China, Ecuador, India, Indonesia, Malaysia, Thailand and Vietnam.
Nature of Notice: Countervailing duty/injury petitions filed Dec. 28, 2012.

Agency: International Trade Administration.
Nature of Notice: Opportunity to request administrative reviews of antidumping and/or countervailing duty orders or suspension agreements on the following products for the period Jan. 1 through Dec. 31, 2012.
- prestressed concrete steel wire strand from Brazil, India, Korea, Mexico and Thailand (AD)
- ferrovanadium from China and South Africa (AD)
- crepe paper products from China (AD)
- folding gift boxes from China (AD)
- multilayered wood flooring from China (AD)
- potassium permanganate from China (AD)
- wooden bedroom furniture from China (AD)
- honey from Argentina (CV)
- oil country tubular goods from China (CV)
- circular welded carbon quality steel line pipe from China (CV)
- fresh tomatoes from Mexico (AD)
- cut-to-length carbon steel plate from Russia (AD)

Agency: International Trade Administration.
Commodity: Circular welded carbon steel pipes and tubes.
Country: Turkey.
Nature of Notice: Amended final results of administrative review of antidumping duty order for the period May 1, 2010, through April 30, 2011.
Details: Weighted average dumping margin for Borusan Group lowered from 6.05% to 3.55%. AD duties based on this rate will be assessed on entries of subject merchandise made during the period of review, and AD cash deposits at this rate will be required for subject merchandise entered or withdrawn from warehouse on or after Jan. 3.

Agency: International Trade Commission.
Commodity: Frozen warmwater shrimp.
Country: China, Ecuador, India, Indonesia, Malaysia, Thailand and Vietnam.
Nature of Notice: Initiation and scheduling of preliminary phase of countervailing injury investigations.
Details: Conference scheduled for Jan. 18, written comments due by Jan. 24, and preliminary determinations due by Feb. 11.

Agency: International Trade Administration.
Commodity: Fresh garlic.
Country: China.
Nature of Notice: Initiation of new shipper review of antidumping duty order for the period Nov. 1, 2011, through Oct. 31, 2012.
Details: The ITA will instruct U.S. Customs and Border Protection to allow, at the option of the importer, the posting until the completion of this review of a bond or security in lieu of a cash deposit for entries of subject merchandise exported by Shijiazhuang Goodman Trading Co. Ltd. and produced by Jinxiang Zhongtian Business Co. Ltd.

Agency: International Trade Administration.
Commodity: Polyethylene retail carrier bags.
Country: China.
Nature of Notice: Rescission of administrative review of antidumping duty order for the period Aug. 1, 2011, through July 31, 2012, due to withdrawal of petitioners’ request for review.

Agency: International Trade Administration.
Commodity: Pasta.
Country: Italy and Turkey.
Nature of Notice: Sunset review determination that revocation of countervailing duty orders would be likely to lead to continuation or recurrence of net countervailable subsidies at rates ranging from 5.22% to 13.58% for Italy and 1.63% to 13.09% for Turkey.

Agency: International Trade Commission.
Commodity: Large residential washers.
Country: Korea and Mexico.
Nature of Notice: Revised schedule for antidumping and countervailing injury investigations.
Details: Final release of information on Jan. 16 and final party comments due Jan. 18. 

Hazmat Transportation Regulations Amended to Harmonize with International Standards

The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration has issued separate final rules that, effective Jan. 1, 2013, make a number of changes to the Hazardous Materials Regulations.

The changes in the first rule reflect amendments to a January 2011 rule aligning the HMR with revisions to international standards for hazmat transport, recent actions taken by the International Civil Aviation Organization’s Dangerous Goods Panel regarding certain lithium ion battery-powered mobility aids (e.g., wheelchairs and travel scooters) offered by passengers for air transport and passenger notification of hazardous materials restrictions by operators, and modifications to a February 2010 final rule that revised shipper responsibilities related to packaging design variation, manufacturer notification, and recordkeeping requirements for certain packaging types.

Highlights of the provisions of this final rule include the following.

- extends the expiration date of the authorization to reclassify materials to the ORM-D hazard class from Dec. 31, 2015, to Dec. 31, 2020

- clarifies that not all limited quantity and ORM markings must be visible on overpacks and that the marking requirement is only applicable to the limited quantity and ORM mark itself

- extends from Dec. 31, 2013, until Jan. 1, 2015, the expiration of the authorization to continue using the square-on-point limited quantity marking containing the United Nations identification number of the limited quantity substance or article for other than transportation by aircraft

- requires shippers to maintain a packaging manufacturer’s notification (including closure instructions) for 365 days (not two years) subsequent to offering the package for transportation

The second rule amends the HMR to maintain alignment with international standards and ensure that the domestic hazard classification, hazard communication and packaging requirements are consistent with those employed throughout the world. Compliance with this rule is authorized as of Jan. 1, 2013, but will not be required until Jan. 1, 2014.

Among the amendments included in this rule are the following.

- adds to, revises or removes from the Hazardous Materials Table certain proper shipping names, hazard classes, packing groups, special provisions, packaging authorizations, bulk packaging requirements, and passenger and cargo aircraft maximum quantity limits

- adopts new HMT entries for chemical under pressure and specifies acceptable bulk and non-bulk packagings, filling limits and appropriate segregation requirements

- authorizes the use of wood as a material of package construction for certain explosives and the use of metals other than steel or aluminum for drums and boxes

- adopts a new packaging definition, operational controls, performance-oriented standards and testing requirements for flexible bulk containers 

IPR Enforcement Actions on Wireless and Electronic Devices

New IPR Infringement Petition on Wireless Devices. The International Trade Commission received Jan. 2 on behalf of InterDigital Communications Inc., InterDigital Technology Corporation, IPR Licensing Inc. and InterDigital Holdings Inc. a petition requesting that it institute a Section 337 investigation regarding certain wireless devices with 3G and/or 4G capabilities and components thereof. The proposed respondents are located in Korea, Finland, China 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.

Potential IPR Probe of Electronic Devices Evaluated for Public Interest Issues. The International Trade Commission is requesting comments no later than Jan. 10 on any public interest issues raised by Section 337 intellectual property rights infringement complaints concerning the following products.

- certain wireless communications equipment and articles therein (filed on behalf of Samsung Electronics Co. Ltd. and Samsung Telecommunications America LLC)

- certain cases for portable electronic devices (filed on behalf of Speculative Product Design LLC)

Comments should address whether the issuance of exclusion orders and/or cease and desist orders pursuant to these complaints 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. 

Testing and Recordkeeping Requirements Under Mattress Flammability Standard Under Review

The Consumer Product Safety Commission is accepting comments through March 5 on the proposed extension of information collection requirements in the Standard for the Flammability – Open Flame – of Mattress Sets. This standard prescribes a test to minimize or delay flashover when a mattress is ignited. It also requires manufacturers to test specimens of each of their mattress prototypes before mattresses based on that prototype may be introduced into commerce and to maintain detailed documentation of prototype identification and testing records, model and prototype specifications, inputs used, name and location of suppliers, and confirmation test records.

Healthcare Trade Mission to Russia Scheduled for June 2013

The International Trade Administration is organizing a healthcare trade mission to Moscow and St. Petersburg, Russia, from June 3-7, 2013. The ITA notes that Russia’s healthcare system is evolving rapidly and offers a promising outlook for U.S. healthcare exports, particularly in the medical equipment, dental equipment and biotechnology subsectors.

A minimum of 10 and maximum of 13 companies will be selected to participate in this mission. All applicants must submit by March 15 a completed and signed mission application and supplemental application materials, including adequate information on their products and/or services, primary market objectives and goals for participation. Each applicant must also certify that the products and services it seeks to export through the mission are either produced in the U.S. or, if not, marketed under the name of a U.S. firm and have at least 51% U.S. content of the value of the finished product or service. 

EPA Delays Advance Notice Requirements for Imports of Four Chemicals

The Environmental Protection Agency has removed significant new use rules promulgated under the Toxic Substances Control Act for four chemical substances that were issued in a Sept. 21 direct final rule. The EPA received notice of intent to submit adverse comments on these rules and will therefore subject them to separate notice and comment procedures.

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