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February 8 2013 Issue

Friday, February 08, 2013
Sandler, Travis & Rosenberg Trade Report

FMC Considering Major Changes to OTI Regulations, Will Discuss at Feb. 13 Meeting

The Federal Maritime Commission is moving ahead with its consideration of a number of significant changes to the regulations on ocean transportation intermediaries. These changes and several other issues will be discussed at a Feb. 13 open meeting at FMC headquarters in Washington, D.C.

Ocean Transportation Intermediaries. FMC staff has reviewed current OTI regulations and drafted an advance notice of proposed rulemaking that identifies a number of potential amendments. FMC officials said at a December 2012 meeting that this ANPR seeks to address the current conditions in the industry, improve the transparency of FMC regulations, streamline internal FMC processes and relieve regulatory burdens. Among the proposed changes are the following.

- Foreign-based non-vessel-operating common carriers would have to register with the FMC by providing basic information such as their legal name, trade names, principal place of business, contact person, and name and contact information of their legal agent for service of process in the U.S.

- OTI licenses and registrations would have to be renewed every three years.

- OTIs would have to require their agents to include the OTI principal’s name and license number on all shipping documents prepared or issued by the agents on behalf of that principal. Where there is evidence that this requirement has not been met, there would be a rebuttable presumption that the entity is operating in its own name and not on behalf of a licensed or registered OTI.

- OTIs would be required to ensure that their agents’ advertising is not misleading or false. Where there is evidence that an entity has offered OTI services by means of an advertisement that does not identify an OTI principal there be a rebuttable presumption that the entity performed the advertised services.

- Financial responsibility levels would be increased to $75,000 for ocean freight forwarders, $100,000 for licensed NVOCCs, $200,000 for registered NVOCCs and $4 million for group coverage

- OTIs would no longer have to increase the amount of their financial responsibility by $10,000 for each unincorporated branch office.

- OTIs would have to restore their financial responsibility to the maximum applicable level within 60 days after a claim is paid.

- A priority system for claimants would be added under which shipper and consignee claims would be satisfied in full as a first priority, followed by carrier, marine terminal and other third-party claimants and then finally FMC penalty claims under the Shipping Act.

- Comment would be sought on the establishment of a new license category for NVOCCs operating in the barrel trade, the standards for such a license and how NVOCCs qualifying for the license are to be differentiated from other NVOCCs.

- An expedited hearing process would be added for applicants, licensees and registrants to appeal denials, revocations and suspensions before a hearing officer rather than a formal proceeding before an administrative law judge.

- The circumstances whereby the FMC may receive service of process on behalf of an OTI who is otherwise unable to be served would be expanded.

NVOCC Tariff Publication Exemption. The FMC will continue its discussion on ways to make the tariff filing exemption provided to licensed NVOCCs more useful, including its possible extension to non-licensed foreign-based NVOCCs.

Effective April 18, 2011, the FMC removed from its regulations the requirement that licensed NVOCCs publish in tariffs the rates they charge for cargo shipments. Under this rule licensed NVOCCs who enter into negotiated rate arrangements with their customers are exempted from the tariff rate publication requirement if they meet certain conditions. These include continuing to publish rules tariffs containing contractual terms and conditions governing shipments and providing those rules to the public free of charge, ensuring that the rates they charge are agreed to and memorialized in writing by the date cargo is received for shipment, and retaining documentation confirming the agreed rate and terms for five years and making that documentation available promptly to the FMC upon request. Such NVOCCs are also exempt from regulatory requirements regarding time volume rates, 30 days’ notice of tariff rate increases, carrier refunds due to a tariff error and adherence to published tariff rates.

The deadline for public comment on ways to make this exemption more useful expired nearly a year ago. There has been no indication as to when and how the FMC might move forward on this issue.

Other Issues. Other topics to be discussed at the Feb. 13 meeting include (a) priority of review of service contract and negotiated NVOCC service arrangement rules and (b) passenger vessel operator financial responsibility requirements for nonperformance of transportation. 

U.S. Files WTO Case on Domestic Content Requirements in India’s Solar Program

The Office of the U.S. Trade Representative announced Feb. 6 the filing of a World Trade Organization dispute settlement case against domestic content requirements in India’s national solar program. The move drew praise from congressional Republicans, an show of bipartisanship demonstrating the broad political appeal of trade enforcement measures.

USTR states that India’s solar program appears to discriminate against U.S. solar equipment by requiring solar energy producers to use Indian-manufactured solar cells and modules and by offering subsidies to those developers for using domestic equipment instead of imports. A USTR press release explains that in the first phase of this program India required developers of solar photovoltaic projects employing crystalline silicon technology to use solar modules manufactured in India. This sourcing requirement was subsequently expanded to crystalline silicon solar cells as well. For the second phase India is considering expanding this requirement further to include solar thin film technologies, which currently comprise the majority of U.S. solar exports to India. India also offers participating solar energy developers a guarantee that the government will purchase a certain amount of solar power at a highly subsidized tariff rate provided that they use domestically manufactured solar equipment instead of imports.

USTR Ron Kirk said the Obama administration “is committed to strengthening the American clean energy sector and preserving the millions of jobs it supports” and that “trade enforcement is critical for ensuring that our clean energy goods and services can compete on an equal footing around the world.” Kirk also noted that the Interagency Trade Enforcement Center provided “key support” to USTR’s monitoring and enforcement unit in the development and initiation of this dispute.

Key Republican lawmakers voiced support for the new case. House Ways and Means Committee Chairman Dave Camp, R-Mich., noted that “India’s policies are part of a broader trend” of forced localization policies in countries like China and Argentina and that he intends to work “closely” with USTR to address these barriers. Senate Finance Committee Ranking Member Orrin Hatch, R-Utah, urged the White House to go further by working to resolve “other ongoing trade and investment issues with India, including its continued disregard for the protection of U.S. intellectual property rights.” 

Trade Talks with Egypt Focus on Trade Facilitation, Information Technology

According to a press release from the Office of the U.S. Trade Representative, U.S. and Egyptian trade officials met in Washington Feb. 6 to discuss ways to expand bilateral trade and investment ties. USTR cited “significant progress” in negotiations on establishing a new trade facilitation protocol and adopting core information communication and technology principles. Officials also committed to specific actions to cooperate in the areas of small and medium-sized enterprise development, agriculture, standards, good regulatory practices and intellectual property rights protection. USTR noted that in the months ahead the two sides “will pursue intensified cooperation on economic, trade and investment issues” but offered no further details.

In the News: U.S. Economic Strategy, Trade Job Candidates, Trade Costs

A New U.S. International Economic Strategy

Zients, Pritzker top candidates for U.S. trade and commerce jobs

Developing Countries Face Higher Trade Costs

AD/CV Notices: Pasta, PET Film, Oil Pipes, Scope Rulings, Steel, Tomatoes

Agency: International Trade Administration.
Commodity: Pasta.
Country: Italy.
Nature of Notice: Final results of administrative review of antidumping duty order for the period July 1, 2010, through June 30, 2011. Final no shipment determination for Pastificio Attilio Mastromauro Granoro S.r.L. and revocation of order with respect to that company.
Details: Weighted average dumping margin of 5.11% for other reviewed manufacturers/exporters.

Agency: International Trade Administration.
Commodity: Polyethylene terephthalate film, sheet and strip.
Country: China.
Nature of Notice: Amended final results of administrative review of antidumping duty order.
Details: Weighted average dumping margins of 0.27% for Fuwei Films (Shandong) Co. Ltd. and zero for Shaoxing Xiangyu Green Packing Co. Ltd. AD cash deposit rates will remain the company-specific rates established for the subsequent and most recent periods during which each respondent was reviewed.

Agency: International Trade Administration.
Commodity: Oil country tubular goods.
Country: China.
Nature of Notice: Preliminary results of administrative review of countervailing duty order for the period Jan. 1 through Dec. 31, 2011.
Details: Net subsidy rates of 7.33% for Wuxi Seamless Oil Pipe Co. Ltd. and 1.84% for Jiangsu Chengde Steel Tube Share Co. Ltd..

Agency: International Trade Administration.
Nature of Notice: Scope rulings and anticircumvention determinations made between July 1 and Sept. 30, 2012, with respect to the antidumping and/or countervailing duty orders on the following products.
- petroleum wax candles from China
- glycine from China
- folding metal tables and chairs from China
- polyethylene retail carrier bags from China and Taiwan
- artist canvas from China
- circular welded carbon quality steel pipe from China
- new pneumatic off-the-road tires from China
- steel wire garment hangers from China
- aluminum extrusions from China
- multilayered wood flooring from China
- magnesia carbon bricks from China and Mexico
- coated paper suitable for high-quality print graphics using sheet-fed presses from China and Indonesia
- raw flexible magnets from China and Taiwan
- carbon and certain alloy steel wire rod from Mexico
- honey from China
- small diameter graphite electrodes from China
- ferrovanadium and nitride vanadium from Russia

Agency: International Trade Commission.
Commodity: Corrosion-resistant carbon steel flat products.
Country: Germany and Korea.
Nature of Notice: Feb. 15 open meeting for vote in sunset reviews of antidumping and countervailing duty orders.
Details: If the vote is affirmative the orders will be continued for another five years; otherwise, they will be terminated.

Agency: International Trade Administration.
Commodity: Fresh tomatoes.
Country: Mexico.
Nature of Notice: Intent to terminate suspension agreement, resume antidumping duty investigation and terminate sunset review of AD duty order in light of draft new suspension agreement with Mexico. Conclusion of a new agreement would result in suspension of the resumed investigation. 

Two Nominated to Serve on Court of Appeals for the Federal Circuit

President Obama announced Feb. 7 his nomination of the following individuals to serve as judges on the U.S. Court of Appeals for the Federal Circuit, which among other things handles cases appealed from the Court of International Trade and the International Trade Commission.

Raymond T. Chen has served as the deputy general counsel for intellectual property law and solicitor for the U.S. Patent and Trademark Office since 2008. Since joining the USPTO in 2000 Chen has represented the agency in numerous appeals before the CAFC and personally argued over 20 cases, issued guidance to patent examiners to ensure consistency with developing law, advised on legal and policy issues, and helped promulgate regulations. From 1996 to 1998 he served as a technical assistant at the CAFC, performing the functions of a staff attorney.

Todd M. Hughes is deputy director of the Commercial Litigation Branch of the Civil Division at the Department of Justice, a position he has held since 2007. He also has served as an adjunct lecturer in law with the Cleveland-Marshall College of Law and as an instructor for Duke University’s writing program. Throughout his career with the DOJ, which he joined in 1994, Hughes’ practice has been devoted to matters of federal personnel law, veterans’ benefits, international trade, government contracts, and jurisdictional issues regarding the Court of Federal Claims. He has extensive experience before the CAFC, the CIT and the CFC. 

DR-CAFTA Short Supply Request on Laminated Composite Fabric

The Committee for the Implementation of Textile Agreements has received a short supply request alleging that a certain three-layer composite fabric, classified under HTSUS 6001.22.0000 or 6001.92.0000, is not available in commercial quantities in a timely manner from a supplier in the DR-CAFTA countries. This fabric is described as laminated polyester woven/micro velour grid one-way stretch with polyurethane laminate. It is used to manufacture high-performance outdoor garments.

The petitioner is requesting that this fabric be added to the short supply list in Annex 3.25 of DR-CAFTA in unrestricted quantities. Responses with an offer to supply this fabric are due no later than Feb. 21. 

Foreign Regulatory Changes Could Affect Exports of Alcoholic Beverages, Bananas, Fertilizer

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.

Argentina – amended resolution on wine products

Colombia – draft amendment of regulation on pollutant emissions from land-based mobile sources (comments due by March 5)

Colombia – draft regulation on alcoholic beverages for human consumption (comments due by April 22)

Colombia – draft resolution on fertilizers and soil amendments (comments due by April 16)

Paraguay – technical regulation on establishing identity and quality of bananas (comments due by March 29) 

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