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March 14 2013 Issue

Thursday, March 14, 2013
Sandler, Travis & Rosenberg Trade Report

Administration Holds Hearing on Negotiating Objectives for International Services Agreement

The Interagency Trade Policy Group held a public hearing March 12 on the U.S. negotiating objectives for the recently-announced International Services Agreement, an effort by the United States and 20 other trading partners to achieve an ambitious plurilateral deal that eliminates or reduces barriers to services traded either on a cross-border basis or through a foreign commercial presence. The ISA negotiations should begin in early spring and will initially include Australia, Canada, Chile, Colombia, Costa Rica, the European Union, Hong Kong, Iceland, Israel, Japan, Korea, Mexico, New Zealand, Norway, Pakistan, Panama, Peru, Switzerland, Taiwan and Turkey. This group represents nearly two-thirds of global trade in services and could expand as negotiations progress.

Deputy Assistant U.S. Trade Representative for Services Christopher P. Melly indicated at the hearing that the USTR has received nearly 50 written submissions on the ISA, in addition to the 12 witnesses representing a broad range of interests who testified at the hearing. He added that U.S. objectives for the agreement include ensuring that U.S. service suppliers can compete on the basis of quality and competence rather than nationality; securing greater regulatory transparency and predictability from U.S. trading partners; and addressing new issues arising in the global marketplace. “Our overarching goal is to create an environment that enables our service suppliers to do what they do best, anywhere in the world,” said Melly. Witnesses at the hearing included, among others, the U.S. Coalition of Service Industries, the U.S. Chamber of Commerce and the AFL-CIO. Issues raised at the hearing included enhanced market access and national treatment, cross-border data flows, state-owned enterprises, and regulatory barriers and regulatory discretion.

Census Bureau Issues Final Rule with Mandatory Automated Export System Filing Requirements

The U.S. Census Bureau has issued a final rule requiring mandatory filing of export information through the Automated Export System, or through the AESDirect for all shipments of used self-propelled vehicles and temporary exports. In addition to adopting new export reporting requirements and modifying the post-departure filing program, the Census Bureau is making remedial changes to the Foreign Trade Regulations to improve clarity and correct errors. The final rule is effective Jan. 8, 2014, except for certain sections containing information collection requirements that have not yet been approved by the Office of Management and Budget.

The AES is the primary instrument used for collecting export trade data, which is used by the Census Bureau for statistical purposes only. Through the AES the Census Bureau collects Electronic Export Information, the electronic equivalent of the export data formerly collected on the shipper’s export declaration. The EEI consists of data elements set forth at 15 CFR 30.6 for an export shipment and includes such information as the exporter’s personal identifying information (name, address and identification number) and detailed information concerning the exported product. Other U.S. federal agencies use the EEI for export control purposes to detect and prevent the export of certain items by unauthorized parties or to unauthorized destinations or end users.

Among other things, the Census Bureau decided to eliminate from the final rule a provision included in its original Jan. 21, 2011, proposal that would have required exporters to report the country of origin because of the significant cost and burden the trade community would have incurred as a result of that requirement. Census has also agreed to, among other things, keep the equipment number, the seal number and the transportation reference number as optional reporting fields; clarify that the Shipment Reference Number cannot be reused; remove the requirement to report the address of the license applicant; revise the split shipment definition to remove the burden of having to file for multiple shipments that have been split by the carrier and are departing from the same port within 24 hours of each other; include “other/unknown” as reporting options for the ultimate consignee type; clarify the carrier responsibilities in an export transaction; clarify that manifest amendments must be made in accordance with CBP regulations; eliminate the requirement to report the end user; and continue the moratorium on accepting new applications for post-departure filing pending the development of a program to collect advanced export information that will continue to facilitate trade and address national security concerns.

FMC Votes to Approve Comprehensive Trans-Pacific Shipping Agreement

The Federal Maritime Commission voted this week to approve an agreement that according to the FMC will lead to the deployment of more than 50 ships in the Trans-Pacific trade calling at almost 30 ports in Asia, the East Coast of North America, Canada, Central America, the Caribbean, the Indian Sub-continent, the Mediterranean and the Middle East.

The so-called G6 Alliance Agreement authorizes the parties to charter and exchange space on one another’s vessels and to coordinate and cooperate with respect to the parties’ transportation services and operations in the trade between ports in North Asia, South Asia, the Middle East (including the Persian Gulf region), Spain, Italy, Egypt, Panama, Jamaica and Canada, on the one hand, and U.S. East Coast ports via the Panama and Suez canals, on the other hand, as well as ports and points served via such U.S. and foreign ports. The new partnership is scheduled to begin in May 2013 with six coordinated service loops. Three of the services will transit via the Suez Canal while the remaining three will transit via the Panama Canal. The FMC indicates that sailing frequency at most U.S. East Coast ports will increase compared to what is currently offered by The New World Alliance and The Grand Alliance.

In allowing the agreement to go into effect the FMC voted to monitor the G6 Alliance. Accordingly, the Commission will establish a special purpose monitoring program aimed at early detection of capacity coordination among carriers and agreements operating in the market.

FDA Issues Guidance on Labeling of Medical Products Not Made with Natural Rubber Latex, Will Hold Conference on Medical Devices

The Food and Drug Administration has issued draft recommendations to medical product manufacturers for providing consumers with accurate information about products that are not made with natural rubber latex. The FDA is encouraging manufacturers of FDA-regulated medical products to stop using statements on labels such as “latex free” or “does not contain natural rubber latex” because these statements are not scientifically accurate. Instead, the FDA recommends that manufacturers use the labeling statement “not made with natural rubber latex” to indicate when NRL was not used as a material in the medical product or product container. The FDA notes that prolonged or repeated exposure to NRL can result in sensitivity or allergy.

Also of potential interest to medical device importers is a May 1-3 global medical device conference cosponsored by the FDA and Xavier University that will include presentations from key FDA officials and industry experts with small group breakout sessions. Topics to be discussed at the conference include the future vision and strategy of the Center for Devices and Radiological Health, the FDA Safety and Innovation Act, unique device identification, an update from the Office of Device Evaluation, total product life cycle, pre-submission program, new 510(k) guidance and industry regulations, new guidance and compliance initiatives on PMAs, software and mobile applications, combination products, new regulations in the European Union, entering the EU market and CE mark hot topics, global product strategy, success in Central and South America, and the FDA inspectional approach.

Annual Review of Earned Import Allowance Program for Dominican Republic under Way

The International Trade Commission is conducting its fourth annual review of the Earned Import Allowance Program (also known as the 2:1 arrangement) for trousers and certain other garments made in the Dominican Republic. The EIAP provides that the Dominican Republic may ship duty-free one SME of certain trousers, bib and brace overalls, breeches and shorts, skirts and divided skirts and pants for every two SME of similar garments that are exported using U.S. fabrics.

The ITC is required by law to review this program annually to evaluate its effectiveness and make recommendations for improvements. The ITC has not scheduled a public hearing in connection with this investigation this year. Instead, interested parties are invited to file written submissions no later than April 12. The ITC’s report will be submitted to the House Ways and Means and Senate Finance committees by July 26

AD/CV Notices: Certain Steel Products, Hardwood and Decorative Plywood

Agency: ITA.
Commodity: Corrosion-resistant carbon steel flat products.
Country: Korea.
Nature of Notice: Final results in AD administrative review.
Details: The ITA has calculated weighted-average dumping margins of zero and 1.26% in this review, which covers the period Aug. 1, 2010, through July. 31, 2011. CBP will assess AD duties on all appropriate entries using these rates, which will also be used to determine new AD cash deposit requirements. CBP will not assess AD duties or impose cash deposit requirements on entries subject to a zero rate.

Agency: ITA.
Commodity: Hardwood and decorative plywood.
Country: China.
Nature of Notice: Amended preliminary determination and alignment of final AD and CV determinations in CV investigation.
Details: The ITA has amended its preliminary determination in this investigation to correct a typographical error in the scope of the investigation section. The ITA has also aligned the final determinations in the AD and CV investigations of subject merchandise so that they are both issued on July 15.

Agency: ITA.
Commodity: Certain hot-rolled carbon steel flat products.
Countries: India, Indonesia and Thailand.
Nature of Notice: Final results of CV expedited sunset reviews.
Details: The ITA has determined that revocation of these CV duty orders would likely lead to continuation or recurrence of dumping. The ITC will proceed with its own investigation to determine whether revocation would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time. These orders will be extended for an additional five years if the ITC issues an affirmative determination but will be rescinded if the ITC issues a negative determination.

Section 337 Investigation of Certain Optoelectronic Devices for Fiber Optic Communications Amended

The ITC instituted on Oct. 25, 2012, a Section 337 investigation of certain optoelectronic devices for fiber optic communications, components thereof and products containing the same made in Denmark, Germany, France and Israel. The complainants subsequently requested that the administrative law judge in charge amend the investigation to reflect the merger of the original complainants as well as a change in ownership of the asserted patents by virtue of an assignment from the merger. On Feb. 7, the ALJ granted the complainants’ motion and the ITC has decided not to review this decision.

USDA Meeting to Prepare for Codex Session on Pesticide Residues

The Department of Agriculture’s Food Safety and Inspection Service has announced that a public meeting will be held on March 28 to prepare for the 45th session of the Codex Alimentarius Commission committee on pesticide residues, which will be held in Beijing on May 6-13. Interested parties can participate in this meeting in person or via conference call.

The following items on the agenda for the CCPR session will be discussed during the public meeting.

- matters referred to the committee by the Codex Alimentarius Commission and other subsidiary bodies

- matters of interest arising from FAO and WHO

- matters of interest arising from other international organizations

- report on items of general consideration by the 2012 joint FAO/WHO Meeting on Pesticide Residues (JMPR)

- report on 2012 JMPR responses to specific concerns raised by CCPR

- draft and proposed draft maximum residue limits for pesticides in food and feed at steps 7 and 4

- discussion paper on principles and guidance for the use of the concept of proportionality to estimate maximum residue limits for pesticides

- discussion paper on the review of the commodity groups in the database for maximum residue limits for pesticides to determine the need for revision of relevant group MRLs (revised fruit commodity groups of the Classification of Foods and Animal Feeds)

- draft revision of the Classification of Food and Animal Feeds at Step 7: selected vegetable commodity groups

- proposed draft revision of the Classification of Foods and Animal Feeds at Step 4: other selected commodity groups

- proposed draft table 2- examples of selection of representative commodities for selected vegetable commodity groups (item 7a) and other selected commodity groups (item 7b) (for inclusion in the Principles and Guidance for the Selection of Representative Commodities for the Extrapolation of Maximum Residue Limits for Pesticides to Commodity Groups) at Step 4

- discussion paper on guidance to facilitate the establishment of MRLs for pesticides for minor crops and specialty crops

- discussion paper on performance criteria for suitability assessment of methods of analysis for pesticide residues

- revision of the risk analysis principles applied by the CCPR

- establishment of Codex Priority Lists of Pesticides

- other business and future work

FTZ Actions for Automatic Transmissions and Carbon Fiber Plants, Indiana Zone

The Foreign-Trade Zones Board has recently taken the following actions.

Expansion Application by Indiana FTZ Approved. The FTZ Board has approved an application from the Indianapolis Airport Authority, grantee of FTZ 72, requesting authority to reorganize this zone under the alternative site framework. This zone currently has a service area that includes Bartholomew, Benton, Boone, Carroll, Cass, Clay, Clinton, Decatur, Delaware, Fayette, Fountain, Franklin, Grant, Greene, Hamilton, Hancock, Hendricks, Henry, Howard, Jennings, Johnson, Lawrence, Madison, Marion, Miami, Monroe, Montgomery, Morgan, Owen, Parke, Putnam, Rush, Shelby, Tippecanoe, Tipton, Vigo, Warren, Wayne and White counties in Indiana, and the applicant sought to expand this area to include Union and Vermillion counties.

FTZ Authority Approved for Automatic Transmissions Plant. The FTZ Board has approved a request by the South Carolina State Ports Authority, grantee of FTZ 38, for a proposed production activity at the ZF Transmissions Gray Court LLC facility in Gray Court, S.C., which is used for the production of automatic transmissions for motor vehicles. Production under FTZ procedures could exempt ZFTGC from customs duty payments on the foreign status components and materials used in export production. On its domestic sales, ZFTGC will be able to choose the duty rate that applies to automatic transmissions (2.5%) for foreign status inputs. The company will also be exempt from customs duty payments on foreign components used in the production of automatic transmissions that will be shipped to auto assembly plants operating under FTZ authority. Finally, customs duties could possibly be deferred or reduced on foreign status production equipment.

Export Manufacturing Authority Granted for Carbon Fiber Facility in Washington FTZ. The FTZ Board has approved an application from the Port of Moses Lake Public Corporation, grantee of FTZ 203, requesting export-only manufacturing authority for an SGL Automotive Carbon Fibers LLC facility in Moses Lake, Wash. 

DOC Reviewing Information Collections on Automated Export System, Panama TPA Safeguard and Short Supply Procedures

The DOC is soliciting comments by April 15 on the following information collections.

Interim Procedures for Considering Requests from the Public for Textile and Apparel Safeguard Actions on Imports from Panama. This safeguard mechanism applies when, as a result of the elimination of a customs duty under the U.S.-Panama TPA, a Panamanian textile or apparel article is being imported into the U.S. in such increased quantities, in absolute terms or relative to the domestic market for that article, and under such conditions as to cause serious damage or actual threat thereof to a U.S. industry producing a like or directly competitive article. In these circumstances, The U.S. may increase duties on the imported article from Panama to a level that does not exceed the lesser of the prevailing U.S. normal trade relations/most-favored-nation duty rate for the article or the U.S. NTR/MFN duty rate in effect on the day the agreement entered into force.

Interim Procedures for Considering Requests under the Commercial Availability Provision of the U.S.-Panama TPA. The U.S.-Panama TPA provides in Annex 3.25 a specific list of fibers, yarns and fabrics determined to not be available in commercial quantities in a timely manner from suppliers in Panama or the U.S. A textile or apparel good imported into the U.S. containing fibers, yarns or fabrics that are included on this list will be treated as if it is an originating good for purposes of the specific rules of origin in Annex 4.1 of the FTA, regardless of the actual origin of those inputs. The Committee for the Implementation of Textile Agreements must collect certain information about fabric, yarn or fiber technical specifications and the production capabilities of Panamanian and U.S. textile producers to determine whether certain fabrics, yarns or fibers are available in commercial quantities in a timely manner in the U.S. or Panama.

U.S. Census Bureau Automated Export System. The Census Bureau is requesting continued clearance with revisions for the Automated Export System program. The AES record provides the means for collecting data on U.S. exports. The Census Bureau requires mandatory filing of all export information via the AES. The collected export statistics provide the basic component for the compilation of the U.S. position on merchandise trade. In addition, these data are used for export controls purposes under the Export Administration Act to detect and prevent the export of certain items by unauthorized parties or to unauthorized destinations or end users. 

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