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Vol. I: Issue 17  | December 15, 2006  |


New EU Market Strategy Enters Final Phase With Consultations to Identify Priority Barriers and Key Markets

Citing the recent Report on Market Access prepared by Crowell & Moring, DG-Trade of the European Commission has now opened up a public consultation on the EU's new market access policy, in part, due to the Report's findings that EU industries and enterprises strongly believe that significant changes are required to improve its effectiveness. The shape of the renewed EU's Market Access Strategy is now becoming relatively well-defined, although the policy itself has not been finalised. The main thrust will be to focus more closely on the key barriers to trade today, particularly non-tariff barriers, among the EU's major trading partners with a special focus on the so-called emerging economies. Input from EU business is now being sought to identify precise high-priority barriers for the Commission's attention.

The purpose of the Consultation started by the European Commission is two-fold. First, the European Commission is seeking the views of EU businesses on how it can deliver improved market access for EU exporters of goods and services within the basic framework of the renewed Market Access Strategy. It asks respondents to reflect on how the European Commission can streamline communication and improve information flows between the Commission, Member States and business to deliver the best possible results for EU exporters on the ground.

Second, it concentrates on the operation of the European Commission's Market Access Database, which has been the key operational tool of the Market Access Strategy, providing free on-line information for EU exporters on approximately one hundred countries and many more identified trade barriers. This Consultation process asks how the content and operation of the Market Access Database might be adjusted to improve user-friendliness and to reflect changing needs.

Identification of market access problems for EU exporters tends to be demand driven to the extent that this information and data is gathered through complains and other reports from EU industry. Complaints are passed to the Commission by EU exporters either directly, or through Member States and trade associations. The extent to which a better system can be devised for identifying barriers is a critical question to be addressed in the Consultation, and the answer will determine the new partnership of the Commission with Member States and business to identify and prioritise barriers.

It is also true that many barriers to trade outside (and inside) the EU are increasingly more complicated, technically challenging and resource intensive to detect, analyse and remove. So the Consultation process puts on the table alternative options including surveying markets, detecting enforcement gaps, and encouraging implementation of existing commitments. Preventative actions through improved monitoring of planned new legislation and regulations are also being considered.

The European Commission currently maintains a range of dialogues with business but, as the Crowell & Moring Report pointed out, these may usefully be complemented with a centralised register for trade barrier problems. The Commission will also use the Consultation process to reflect on how it can improve its service to small and medium sized enterprises either directly or working more closely with other organisations which represent SMEs.

To participate in the Consultation process, please click on the link below.

To download a copy of the Crowell & Moring Report on Market Access, please click on the link below.

For further information on this subject please contact Robert MacLean in our Brussels office at:


Canada Changes Drug Data Exclusivity Rules to Address U.S. Industry Concerns. In response to long-standing criticism and concerns raised by the U.S. Government and U.S. innovative pharmaceutical industry, including an alleged violation of its WTO TRIPS obligations, Canada has amended its drug approval regulations. Under Canada's new drug safety system, generic companies will not be able to apply for marketing approval in Canada until six years after a brand name drug has entered the market and cannot obtain marketing approval until eight years after the brand name market entry.

Prior to the amendments, Canada had a five year period of data exclusivity like the United States which prevents generic companies from relying on the clinical data generated by brand name companies to demonstrate safety and efficacy for marketing approval for a period of five years after the market approval of the brand name drug. During that five year period a generic drug cannot obtain marketing approval based on the brand name drug's clinical test data even though the generic drug is bioequivalent to the brand name drug. Although Canada had a five year period of data exclusivity which was intended to implement Canada's WTO TRIPS obligations as well as its NAFTA obligations to protect such clinical test data, a Canadian court decision interpreted the previous regulation very narrowly which allowed generic companies in practice to obtain marketing approval for generic drugs bioequivalent to brand name drugs without having to wait until the end of the five year period.

The United States Government and U.S. innovative pharmaceutical industry had charged that the previous regulation and practice violated Canada's obligations under the WTO TRIPS Agreement. They claimed that Canadian regulators were allowing generic companies to obtain marketing approval by demonstrating bioequivalency to the brand name drug which allowed the generic company to prove the safety and efficacy based on the brand name drug's clinical data before the five year period of exclusivity expired.

Both the U.S. Government and innovative pharmaceutical industry reacted favorably to the changes in Canada's data exclusivity rules, and have stated that the new rules address their concerns. However, Canada's new rules actually go beyond the five year period that the U.S. had demanded and also go beyond the current five year period of data exclusivity in the United States. The Generic Pharmaceutical Association (“GphA”) has criticized the extended length of the exclusivity period and has charged that Canada's eight year period will provide the basis for U.S. innovative pharmaceutical companies to lobby Congress to extend the current five year period in the U.S. as well. GphA has stated in submissions to USTR that Canada's new rules will stifle the generic industry and threaten access to affordable medicines both in Canada and the United States.

Canada's new rules for eight years of data exclusivity will only protect test data for drugs patented on or after October 18, when the new regulations were published in Canada's official gazette. Drugs that have already been patented prior to October 18 will remain subject to the five year exclusivity period for data protection.

For more information please contact Brian Peck in Crowell & Moring's California office, at 949-798-1361 or at

After Doha: Practical Approaches for Cutting the Costs of Trade - Making the Most of FTAs. In our discussion of special duty programs in the last issue, we noted that the U.S. has negotiated a number of “FTAs” with key allies and trading partners, and more are in the works all of the time. At a detailed level, the agreements differ from one to the next, but the over-arching purpose remains the same: to facilitate trade between the signatory countries. As a result, companies that are invested in trade with an FTA partner — or a would-be FTA partner — can realize enormous savings by getting involved in the FTA negotiation process and then reap the rewards when the agreement takes effect.

Current US FTA partners include: Canada/Mexico (under NAFTA), Israel, Australia, Bahrain, Chile, Jordan, Oman, Morocco, Singapore and El Salvador/Honduras/Nicaragua/Guatemala/Costa Rica/Dominican Republic (under CAFTA-DR). Meanwhile, agreements yet to be ratified by the US Congress or still under negotiation include: Korea, Malaysia, Panama, Thailand, UAE, Peru, Colombia and the South African Customs Union.

What Involvement in the FTA Process Can Mean for Your Company

FTAs focus on securing three goals for the signatory countries: (1) the removal of trade barriers; (2) increased market access; and (3) the reduction or elimination of import duties on goods originating in those countries. Those three elements acting in concert can create significant opportunities for cost-cutting by manufacturers, sellers, and importers in those countries.

Officially, FTA negotiations are conducted between governments. The reality, though, is that the private sector plays a large role in shaping the agendas that the governments bring to the negotiating table, including what sectors will be the focus of duty phase-outs (and what sectors will be excepted from those phase-outs). The U.S. government in particular looks to industry for cues about how to maximize the benefits of FTAs that the U.S. ratifies. In many cases, however, private sector companies cede this important role to their trade associations. Those associations can be helpful in a diffuse sense, but they have to be sensitive to the fact that what may benefit one of their members may harm another, which sometimes hampers their ability to craft focused, company-specific solutions in the FTA context. So, as a practical matter, if a particular FTA under negotiation (or under consideration) could have a significant impact on YOUR business, the most effective way to protect your interests is to get directly involved. In other words, the squeaky wheel gets the FTA grease.

Understanding and contributing to FTA negotiations at a company-specific level will enable your managers to be proactive about sourcing, production, and the import/export of inputs and finished products. That understanding in turn helps you help the government ensure that FTA partners meet their existing trade commitments and abide by international trade rules. Coupled with the sectoral and even company-specific cost-cutting that FTAs can create, getting involved is an investment that will almost always pay dividends.

Crowell & Moring's trade lawyers work closely with C&M International's trade policy consultants on all aspects of FTA negotiation and leveraging. For more information on these or other trade issues, please contact Alex Schaefer in Crowell & Moring's Washington, DC office at

Change expected soon in scope of U.S. sanctions on North Korea. Since the United Nations Security Council issued Resolution 1718 on October 14, 2006, imposing sanctions on North Korea for nuclear testing, U.S. sanctions and export laws have not changed. While the U.S. rules are already broader in scope than the UN rules, many of the targeted items — including luxury goods — may be EAR99 and hence could today be exported to North Korea without a license. This may soon change.

On November 29, 2006 the Commerce Department announced that “This ban will be implemented by the Commerce Department's Bureau of Industry and Security. Regulations to implement the luxury goods ban and other steps required by UNSCR 1718 will be published in the Federal Register.”

In October, the UN Security Council adopted a prohibition on the sale of certain items to North Korea, including items controlled by:

  • the Nuclear Suppliers Group
  • the Missile Technology Control regime, and
  • the Australia Group.

In addition, the UNSC list includes a number of industrial products, such as high-strength steel and bearings, a variety of compound metals, high-performance computers and global positioning systems. Many of these items are listed on the CCL and hence require a license for export to North Korea.

As widely reported the Security Council also banned "luxury goods" but did not specify which ones. This process was left to individual member nations. For example, Switzerland is considering a ban on the sale of watches, caviar, wine, tobacco, luxury clothes, carpets, fur overcoats, electronic appliances and cars. Japan in mid-November banned some 24 categories of luxury goods, including cars, jewelry, watches, cigarettes, fountain pens, perfume, musical instruments, audiovisual equipment, caviar, liquor, beef, tuna fillet, cosmetics, and works of art. Canada's list, issued December 1, includes “jewelery, gems, precious metals, watches, cigarettes, alcoholic beverages, perfume, designer clothing and accessories, furs, sporting goods, private aircraft, gourmet foods, and ingredients, lobster, computers, televisions, and other electronic devices.”

The provisional U.S. list includes many of the same items, and adds rugs and tapestries,tableware of porcelain or bone china, items of lead crystal, antiques (more than 100 years old), and collectible items, including rare coins and stamps; flat-screen, plasma or LCD panel televisions or other video monitors or receivers (including high-definition televisions), and any television larger than 29 inches; DVD players; PDAs; yachts and other aquatic recreational vehicles (such as jet skies); racing cars, snowmobiles, and motorcycles; and even personal transportation devices (Segways). Other nations, including Germany, are reportedly drawing up similar lists.

For now, no list includes what is reported to be Kim Jong Il's favorite food: donkey meat. Even that is not banned under current rules. Horses by sea are controlled to all destinations under ECCN 0A980, but donkeys are not horses and are not on the CCL. Publication of the new rules is expected any day.

For more information, please contact Jeff Snyder in our Washington, DC office at

Recent Changes in U.S. Policy Expand Business Opportunities in Sudan

Characterized by ongoing civil war and gross human rights violations, Sudan has been the object of U.S. arms and economic embargoes for years. The concurrent passage of the Darfur Peace and Accountability Act (“DPAA”) and issuance of Executive Order 13412, however, have marked a significant change in the almost total U.S. ban on business in the country.

On October 13, President Bush signed the DPAA into law, which continues, in large part, U.S. sanctions against the Government of Sudan and ongoing human rights abuses occuring in the Northern part of the country. The new legislation, however, also provides for U.S. involvement in the development and growth of Southern Sudan and other regions in the country. A House report accompanying the DPAA states that “the United States Government now must consider lifting, modifying or waiving existing sanctions against Sudan in an effort to contribute to reconstruction and recovery efforts in Southern Sudan without inadvertently rewarding members of a genocidal government in Khartoum.”

In line with this new U.S. policy vision, the Executive Order issued by the President on the same day revises the Sudan Sanctions Regulations administered by the Office of Foreign Assets Control (“OFAC”). Executive Order 13412 lifts restrictions on U.S. person involvement in business transactions in Sudan, in place since 1997, for most activities in “Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, Darfur or marginalized areas in and around Khartoum.”

Under this new regime, U.S. companies may engage in a variety of economic and humanitarian transactions in Southern Sudan without seeking approval from OFAC. Such transactions must be structured carefully, however, in order to prevent entanglement with transportation through or financial services in the Northern part of the country. Transactions involving the transportation or financial services of Northern Sudan still require a license. Additionally, transactions involving the petroleum or petrochemical industries or property interests of the Government of Sudan are prohibited throughout the entire country without a license.

For more information, please contact Erin Mikita in our Washington, DC office at

Commerce Initiates First Countervailing Duty Investigation Involving Chinese Subsidies in 15 Years. The decision by the Commerce Department on November 21, 2006 to investigate subsidies given by the People's Republic of China to the paper industry marks the first CVD petition against China since 1991.

NewPage filed the countervailing duty petition against imports allegedly benefiting from Chinese subsidies on October 31, 2006. The unfair act associated with a countervailing duty petition involves subsidies bestowed by a government or a public entity. Such subsidies are deemed unfair, and thus subject to a possible countervailable duty, if they are provided in law or in fact to a specific enterprise or industry, or group of enterprises or industries.

The novelty of this investigation lies in the fact that is calls into question the U.S. Department of Commerce's practice of refusing to apply U.S. countervailing duty law to imports from designated non-market economy countries (like China). The Federal Circuit sustained this practice 20 years ago in Georgetown Steel Corp. v. United States, 801 F.2d 1308 (Fed. Cir. 1986), and no one has directly challenged the agency's practice since. But as NewPage points out in its petition, U.S. statutes do not prohibit the Commerce Department from applying countervailing duties to imports from a non-market economy country.

Commerce has publicly acknowledged that the initiation of this investigation will cause it to review its long-standing policies regarding the application of CVD law to non-market economics. In a press release, Commerce stated that it had not yet made any determinations on this issue and that this determination will be made “in the context of the investigation.”

Whether such an initiation will eventually lead to the imposition of countervailing duties on imports from China remains to be seen. Our separate discussions with Commerce officials indicate that the agency is having a difficult time figuring out how it will measure whether a subsidy granted by a non-market economy country is countervailable. Therefore, even with the initiation of the investigation, it would not be surprising to learn that the agency's final determination will strictly limit the types of subsidies it considers.

The International Trade Commission will make its preliminary injury determination on or about December 15, 2006. If the ITC makes a positive injury finding, the investigation will continue, and the preliminary countervailing duty determination will take place in the first half of 2007.

For more information, please contact Matthew Jaffe in our Washington, DC office at

U.S. DOT Decision to Scuttle Foreign Control Rule Leaves U.S.-EU Open Skies Accord in Doubt. Bowing to widespread opposition from Congress and U.S. labor, the U.S. Department of Transportation (“DOT”) last week terminated its controversial proposal to redefine “actual control” of U.S. airlines and permit further control by foreign entities, vowing to find “other ways to rationalize and simplify our domestic investment regime.”

In announcing the withdrawal, DOT Secretary Mary Peters conceded that “the Department needs to do more to inform the public, labor groups and Congress about the benefits of allowing more international investment”, while also stressing the Bush Administration's commitment to pursuing the multi-lateral U.S.-EU open skies deal the proposal was designed to achieve. The Administration's capitulation to domestic opposition by scuttling the rule was met with disappointment and regret from top European Union negotiators and left DOT looking for new ways to encourage the Europeans to reach a multilateral open skies agreement.

The U.S. and EU plan to return to the bargaining table in January to see how the deal might be salvaged. Europeans, who want broader access to the U.S. market, could seek alternative concessions from the U.S., as the European Commission's president has hinted, though it is unclear what those might include. EU transport ministers met this week in Brussels to assess the state of play of the potential open skies deal and asked the Commission to enter into urgent talks with the U.S. on elements to restore a proper balance of interests. They face additional pressure to wrap up the talks since a European high court has ruled that the bilateral aviation agreements that all European countries have with the U.S. are illegal and must be replaced with a European regime that gives airlines of every European country the same U.S.-Europe traffic rights in each country. Dissolving those bilateral agreements could disrupt airlines services, including alliances among U.S. and European carriers.

DOT's controversial proposal has drawn harsh criticism on Capitol Hill since last winter, just after the ill-fated Dubai Ports World deal. Lawmakers in the House of Representatives passed, in a two to one bipartisan vote, a measure prohibiting DOT from implementing its proposed rule, and a similar measure was included in a Senate bill approved by a three to one Committee vote. These actions and other opposition forced DOT to announce in late August that the agency was slowing down the rulemaking process and would not finalize the foreign control rulemaking proposal before multilateral aviation talks with the European Commission that had been scheduled for October, without setting a date for further action. Although the U.S. and EU delegations later publicly affirmed their commitment to redouble efforts to conclude a comprehensive aviation agreement before the end of 2006, talks stalled as Brussels waited for further action on the rulemaking. After Democrats won control of the House and Senate, a DOT official indicated that the mid-term U.S. “election … may well make it more difficult to move forward with the proposed investment rule," but rumors circulated that DOT was about to issue the rule in final form to convince the European Union to ratify the “open skies” agreement. These rumors led lawmakers to write the White House urging the Administration to abandon any plan to finalize the proposal in the face of bipartisan congressional opposition and warning that a final rule would be challenged and overturned in court.

For further information, please contact Lorry Halloway ( or Bruce Keiner ( in our Washington, DC office.

Hours before the close of the 109th Session of Congress, the House and Senate approved a package of trade legislation with wide-ranging implications for the international business community. The bill passed 212 -184 in the House on December 8 before moving on to a more contentious vote in the Senate, where the deal was packaged with a popular tax bill and passed by a vote of 79 - 9.

Perhaps the least controversial provision of the trade package is the extension of Permanent Normal Trade Relations (PNTR) to Vietnam, which will allow U.S. companies to take full advantage of market access opportunities made possible by Vietnam 's impending accession to the World Trade Organization (formally scheduled to take place on January 11, 2007). Also included in the bill and provoking little argument was the long-awaited miscellaneous trade legislation, which will reduce tariffs on a variety of U.S. imports.

However, the extension of the African Growth and Opportunities Act (AGOA) and parallel legislation for Haiti garnered significant opposition, primarily from a core group of eight senators who fear that the legislation, which extends preferential treatment to textile and apparel imports from Africa and Haiti, will harm the textile industry of their home states. Led by Lindsey Graham (R-SC) and Elizabeth Dole (R-NC), the group could not muster the necessary votes to block the invocation of cloture, a special rule requiring sixty votes that blocks a filibuster. This, along with their fellow Senators' eagerness to finish the session and return home for break, convinced the eight to call off their bid to delay the bill and let the extension pass through.

Under the trade bill, the Andean Trade Preference Act will also continue for at least six months and possibly longer — Charles Rangel (D-NY), incoming chairman of the House Ways and Means Committee, stated his intention to provide a long-term renewal in the next Congress. The unilateral preference program, which was due to expire on December 31, includes Ecuador, Bolivia, Colombia and Peru. The comprehensive trade package also includes an extension of the Generalized System of Preferences (GSP) program, for two years but includes provisions which lawmakers hope will boost the value of the program to smaller developing countries, while limiting its use by the large developing economies, such as India and Brazil. Currently, GSP provides for duty-free import of thousands of items from 133 beneficiary developing countries,

Congress has sent the trade bill to the White House, where the required signature of the President is virtually guaranteed.

For more information, please contact Addie Cliffe Taylor in our Washington, DC office or Paul Davies with C&M International at or

REACH Regulation on track for adoption by EU Council. On December 13, 2006, the European Parliament irrevocably voted in favor of the intensely debated and highly controversial REACH Regulation. The vote marks the formal end of a three-year negotiation that was subject to unprecedented lobbying from the chemical industry on one side and the green activists on the other.

REACH (Registration, Evaluation and Authorization of CHemicals) will have a huge impact on European industry, from chemical manufacturers to importers and even downstream users, including textile, construction, wood, pharmaceuticals, cosmetics, concrete, paint, electronics, and automobile sectors. The proposal is scheduled to go before the E.U. Council before the end of the year and will become effective on January 1, 2008.

The purpose of REACH is to improve the protection of human health and the environment through improved and earlier identification of the properties of chemical substances. It is based on the idea that industry itself is best placed to ensure that the chemicals it manufactures and markets do not adversely affect human health or the environment. It also aims at increasing transparency as to the chemical properties and safe uses of chemical substances throughout the supply chain, establishing an extensive information exchange system that requires not only manufacturers and importers but also downstream-users to constantly disclose relevant information.

The price for achieving these meritorious goals will be largely paid by the affected industries — REACH is estimated to directly cost €3.2 billion over 11 years for additional research and registration, and an equally impressive €2.8 - 3.6 billion increase in indirect costs for downstream users. Furthermore, it cannot be excluded that many suppliers will decide to stop selling certain chemicals since they will not want to deal with the costly registration procedures. The REACH Regulation could also cause major damage to U.S.-based companies since their products could potentially be banned from the EU market on the grounds that the products do not comply with the Regulation. A large number of U.S. companies have already announced their intention to express their dissatisfaction to the World Trade Organization if their products end up being banned from the EU on this basis.

It goes without saying that this all-embracing proposal for a chemical monitoring system is without precedent, going beyond U.S. protection standards. Therefore, it will undoubtedly be a source of uncertainty for industry with regard to a number of yet unidentified issues, such as intellectual property (data-protection), competition, trade, product liability, and of course regulatory compliance.

For the full story on the REACH regulation, please click here.

The Sanctions Practice at C&M includes seven lawyers with experience in OFAC sanctions programs and other international economic and trade sanctions regimes. Crowell lawyers advise U.S.-based and offshore companies on compliance, licensing, enforcement and other issues.

Crowell lawyers have particular expertise in the development of tailored compliance programs for both domestic companies and those based outside the U.S. who nonetheless have significant interests in the U.S. and must comply with extraterritorial rules. Our lawyers are skilled at performing internal reviews to identify compliance issues and create workable programs to manage those issues.

Crowell lawyers are familiar with the issues that arise in enforcement cases, and can help companies evaluate their options — such as disclosure and its impact — and develop responsive compliance measures.

Our lawyers are also skilled at navigating the overlap between the Bureau of Industry and Security controls, and those enforced by the Office of Foreign Assets Control. They regularly advise on questions such as which agency is responsible for certain transactions, what transactions can and cannot be undertaken, and often advise on the issue of "facilitation," a tool OFAC uses to limit the role of U.S. persons. Crowell lawyers are adept at managing and assisting with BIS and OFAC licensing requirements, and regularly work directly with these agencies to resolve licensing issues. Crowell lawyers are familiar with and advise on the involvement of "new" players in the sanctions area, such as the SEC and ICE. For example, a Crowell lawyer recently hosted a panel presentation comprised of officials from OFAC, State, Commerce, SEC, and ICE/DHS.

The Sanctions practice includes regular assistance to clients on enforcement issues. Whether arising from internal reviews, agency action, or whistleblowers, Crowell lawyers develop a strategy to protect the client and resolve the issues as quickly as possible. Determining whether and how to make a prior disclosure, to coordinate with other parties involved, and to help assess these issues arising in a successor liability context, are all a part of the Crowell Sanctions practice.

Finally, because sanctions are not only targeted at U.S. persons, Crowell lawyers regularly advise offshore interests in the operation and application of U.S. laws aimed at certain countries and individuals. ILSA (now ISA), and Helms-Burton apply specifically to third country companies investing in Iran or Cuba. Helping non-US clients comply with the regulations but not run afoul of them is a challenge, and requires experience and familiarity with a range of legal issues. Crowell lawyers navigate these waters on a regular basis, and are prepared to help others do the same.


Crowell & Moring LLP is a full-service law firm with more than 300 attorneys practicing in litigation, antitrust, government contracts, corporate, intellectual property and more than 40 other practice areas. More than two-thirds of the firm's attorneys regularly litigate disputes on behalf of domestic and international corporations, start-up businesses, and individuals. Crowell & Moring's extensive client work ranges from advising on one of the world's largest telecommunications mergers to representing governments and corporations on international arbitration matters. Based in Washington, DC, the firm has offices in Brussels, California and London. Visit Crowell & Moring online at

The information contained in this Bulletin is of a general nature and should not be construed as constituting legal advice. For specific legal advice on any of the issues mentioned in this Bulletin, please refer to the contact person identified as responsible for the item in question.

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