This Month In International Trade - April 2012

THIS MONTH'S TOP FIVE DEVELOPMENTS

1) ITC Finds No Injury in Three AD/CVD Cases

The International Trade Commission ("ITC") found no material injury in three separate cases last month, ending ongoing antidumping and countervailing duty investigations. Specifically, on April 17 the ITC unanimously found that a U.S. industry was not materially injured or threatened with material injury in its investigations of Bottom Mount Refrigerator-Freezers from Korea and Mexico and Certain Steel Wheels from China, while it held 4-2 on April 23 that there was no injury or threat of injury in Galvanized Steel Wire from China and Mexico.

In all three cases, the Department of Commerce had made an affirmative determination that sales were being made at less than fair value and was prepared to impose duty rates ranging from an all others rate of 10.29% on Refrigerators from Korea to a China-wide rate of 235% on Steel Wire from China. The ITC findings also end the countervailing duty cases on Refrigerators from Korea, Steel Wheels from China, and Steel Wire from China in which the Commerce Department had found subsidy margins of 2.79%, 34.55% and 19.06% respectively.

2) EPA to Require Electronic Reporting for Chemical Information; Seeks Comments

On April 13, 2012, the U.S. Environmental Protection Agency ("EPA") proposed a rule requiring chemical manufacturers and importers to use the EPA's Central Data Exchange ("CDX") and Chemical Information Submission System ("CISS") web-based reporting tool. Companies would use CDX and CISS to submit information under Toxic Substances Control Act ("TSCA") section 4 (pursuant to test rules and enforceable consent agreements ("ECAs")), TSCA section 8(a) Preliminary Assessment Information Rule ("PAIR"), and TSCA section 8(d) Health and Safety Data Reporting rules.

EPA also proposed amendments to TSCA section 5 regulations extending electronic reporting requirements to Notices of Commencement of Manufacture or Import ("NOCs") and certain correspondence, amendment and test data documents related to TSCA section 5 notices submitted to EPA before April 6, 2010. The TSCA section 5 submissions would use the EPA's existing e-PMN software. The EPA seeks comments on:

• the relative time and resource burden of completing CDX registration requirements and making an electronic submission, versus making a submission via the current paper-based method;
• whether persons required to report information under TSCA section 4 or 8(d) rules, or under the TSCA 8(a) PAIR would benefit from moving from paper based reporting to electronic because it is less expensive, faster, and easier;
• the submission of Confidential Business Information ("CBI") via CDX;
• whether persons required to report under these sections of TSCA would benefit from receiving electronic correspondence from EPA via CDX; and
• the submission of forms, reports, and other documents in fielded formats.

The EPA is accepting comments through June 12, 2012. Click here for additional information.

The new proposed rule follows EPA's March 2012 proposal to limit new uses of certain chemical imports used in a wide range of consumer products and industrial applications, including paints, printing inks, textile pigments and dyes, foam flame retardants, and plasticizers.

3) U.S. – Colombia FTA to Take Effect May 15

Over 80 percent of U.S. exports of consumer and industrial products will become duty free on May 15, when the U.S.-Colombia Free Trade Agreement will take effect. Approved by Congress last year, the Agreement required an additional certification by the Obama Administration that Colombia had complied with certain labor commitments it had made.

With the certification now in place, the Agreement will begin full implementation. U.S. exports of such items as construction equipment, aircraft and parts, auto parts, fertilizers and agro-chemicals, information technology equipment, and medical and scientific equipment will immediately become duty free. Tariffs in other sectors will be phased out over the next 15 years. 

4) CBP Rule Allows Disclosure of Identifying Information on Suspected Counterfeit Imports

On April 24, 2012, U.S. Customs and Border Protection ("CBP") issued an Interim Rule, effective immediately, authorizing CBP officials to disclose certain identifying information on imported merchandise to intellectual property ("IP") right holders during the import clearance process. The purpose of sharing such information is for IP holders to assist CBP in identifying counterfeits. The interim rule requires CBP to notify importers within five days of its decision to detain the suspected counterfeits and then the importer has seven business days to respond before CBP may disclose certain information to the IP right holder.

The rule also authorizes CBP to share certain preliminary information to IP right holders immediately upon detention—information that might otherwise be protected under the Trade Secrets Act. Authority for the rule comes from  Section 818(g) of the National Defense Authorization Act for Fiscal Year 2012, which permits CBP to share identifying information as part of counterfeit interdiction efforts, as well as the Lanham Act, which prohibits the importation of merchandise bearing counterfeit marks. Before finalizing this interim rule, CBP is accepting comments which must be filed on or before June 25, 2012.

5) New U.S., EU Sanctions for Syria and Iran

The Obama Administration issued two executive orders within the span of eight days authorizing further sanctions aimed at Iran and Syria, as well as those who do business with them. The first, the so-called Grave Human Rights Abuses Via Information Technology Executive Order ("GHRAVITY EO"), blocks the assets of entities involved in providing IT that facilitates network disruption, monitoring, or tracking and that assists or enables serious human rights abuses by Syria or Iran.

The second, announced on May 1, is the Foreign Sanctions Evaders Executive Order ("FSE EO"). That measure allows Treasury's Office of Foreign Assets Control ("OFAC") to begin identifying and listing foreign entities who facilitate deceptive transactions or who otherwise attempt or conspire to violate Iran or Syria sanctions. Such a move would prohibit U.S. persons from conducting virtually any business with these parties whom Treasury has designated as sanctions evaders. OFAC may use this authority where it finds that a foreign person has violated U.S. sanctions but does not otherwise meet the criteria for inclusion on OFAC's list of "Specially Designated Nationals." No individuals or companies have yet been designated under this new authority.

On April 23, 2012, in view of the gravity of the situation in Syria, the EU Council of Ministers imposed additional restrictive measures on the sale, supply, transfer or export of goods and technology that might be used for internal repression, as well as the sale or supply of luxury goods.

By Council Regulation (EU) No 267/2012 of March 23, 2012, the EU Council of Ministers consolidated and expanded the EU measures in force against Iran.  The measures now include additional restrictions on trade in dual-use goods and technology, as well as on key equipment and technology which could be used in the petrochemical industry, and a ban on the import of Iranian crude oil, petroleum products and petrochemical products, as well as a prohibition of investment in the petrochemical industry. Moreover, trade in gold, precious metals and diamonds with the Government of Iran, as well as the delivery of newly printed banknotes and coinage to or for the benefit of the Central Bank of Iran, is prohibited. The Regulation further develops the application of targeted financial measures by providers of specialized financial messaging services.

Also on March 23, 2012, the Council added prohibitions on the sale, supply, export or transfer, directly or indirectly, to Iran of equipment which might be used for internal repression, and of equipment and software for monitoring or interception of the internet or internet communications, and on the provision of related services. According to the new measures, a prior authorization is required for supplies of equipment, technology or software which may be used for monitoring or interception of the internet or telephone communications, to any person, entity or body in Iran or for use in Iran, and for the provision of telecommunication or internet monitoring or interception services of any kind to, or for the benefit of, Iran's government, public bodies, corporations and agencies.

THIS MONTH IN TRADE – OTHER NEWS

Satellites May Be Next in Line for Export Control Reform

The U.S. satellite industry and its supplier base may soon be better able to compete in the world market. On April 18, 2012, the Departments of Defense and State issued a joint final report to Congress recommending that most communications satellites, lower performing remote sensing satellites, and their components be moved from the International Traffic in Arms Regulations' ("ITAR") United States Munitions List ("USML") to the Export Administration Regulations' ("EAR") Commerce Control List ("CCL"). Defense and State observed that such satellites and components were not purely defense-related articles and thus would more appropriately be designated as dual-use items and controlled on the CCL.

Space-related items such as satellites are the only dual-use items presently required by law to be controlled by the ITAR and listed on the USML. Defense and State noted that the satellite technology under review is now widely available throughout the world, and that current controls "imped[e] the U.S. ability to work with partners and put[] U.S. manufacturers at a disadvantage, but provid[e] no noticeable benefit to national security."

U.S., Canada, Australia, and EU Ease Sanctions on Myanmar/Burma

On April 17, the United States began to relax sanctions against Myanmar/Burma as a quid-pro-quo for recent liberalization efforts and for apparently fair parliamentary elections that elected Nobel laureate Aung San Suu Kyi in a landslide. The U.S. announced that it will normalize diplomatic relations with Burma by appointing an Ambassador and will establish an AID office in the country. In addition, the Office of Foreign Assets Control ("OFAC") issued General License No. 14-C to the Burmese Sanctions Regulations ("BSR"), 31 C.F.R. Part 537, authorizing certain financial services in support of humanitarian, religious or other not-for-profit activity in Burma.

Canada and Australia announced similar easing. Canada, which had some of the world’s harshest sanctions against Burma, has repealed virtually all of those measures. Australia said in lifting some of its sanctions that it would also begin to encourage new investment in the country.

At the EU's foreign ministers meeting on April 23, 2012 in Luxembourg, it was agreed that the EU would suspend its sanctions against Myanmar for one year, but will retain an embargo on arms sales. Council Decision 2012/225/CFSP of 26 April 2012 amended Decision 2010/232/CFSP and put this suspension in place through April 30, 2013.

For more on how developments in Myanmar/Burma may impact market opportunities, click here.

U.S. Releases New Model Investment Treaty

The U.S. State Department released a new model negotiating text for the U.S.'s bilateral investment treaties. The new text preserves much of the structure and language of the prior model but with changes in the areas of labor and environmental protections, as well as new provisions relating to "state-led economies."

Specifically, the text would impose new requirements on contracting states to effectively enforce existing labor and environmental laws and not to arbitrarily waive them in order to encourage investment. In addition, the new model would require countries to offer foreign investors the opportunity to participate in the development of standards and technical regulations on an equal basis with domestic firms.

Bilateral investment treaties offer investors certain legal protections —including enforcement mechanisms—aimed at encouraging foreign investment. The new model text—the first update in eight years—will not impact existing treaties but will serve as a guide for negotiations over future investment treaties. The U.S. currently has investment treaties in place with nearly 50 nations.

Customs Clarifies Requirements for Documentation Substantiating Tariff Preference Claims

U.S. Customs and Border Protection's Office of International Trade published "Supplemental Instructions for Document Review When Verifying Trade Preference Program Claims for Textiles and Wearing Apparel (TBT 12-003)," which supplements previously issued guidance, TBT-07-019 and TBT-11-004. These Textile Book Transmittals ("TBTs") provide guidance to U.S. Customs and Border Protection ("CBP") personnel and importers regarding the type and content of documentation CBP considers in reviewing claims for the preferential tariff treatment of textiles and wearing apparel under various trade preference programs. The supplemental instructions provide guidance on the format and content of certificates of origin or affidavits affirming origin, as well as the types of supplemental documentation an importer can submit and instructions that CBP import specialists should seek clarification or additional information before denying a claim.

Attempted Country of Origin Engineering to Avoid Antidumping Duties Leads to False Claims Act Exposure

The U.S. Department of Justice ("DOJ") announced that it will intervene in a lawsuit, U.S. ex rel. Dickson v. Toyo Ink Mfg. Co., Ltd. (W.D.N.C. 3:09-cv-438), brought under the whistleblower provisions of the False Claims Act. The suit alleges that a U.S. importer of Carbazole Violet Pigment 23 from China, which is subject to antidumping duties, misrepresented the country of origin of the product as Mexico in order to avoid paying the duties.
Read more.

Chile to Eliminate All Import Duties by 2015

Chile plans to phase out all import duties over the next three years, joining Hong Kong and Singapore as the only jurisdictions to have zero tax on imports. Though most of Chile's main trading partners—the U.S., China, Japan, the EU—already have free trade agreements with Chile, the proposal by President Sebastian Pinera would eliminate all remaining import duties by 2015.

Ukraine Added to USTR IP Watchlist, Spain and Malaysia Removed

On April 30, USTR published its annual Special 301 Report on Intellectual Property Rights weak IP enforcement. Ukraine was added to the Priority Watch List this year, while Spain and Malaysia were removed from USTR's list due to recent improvements by their governments in the area of IP protection.

EU Makes Progress on Transition of Competence For FDI and Status of EU Bilateral Investment Treaties

The Lisbon Treaty, which entered into force in 2009, transferred jurisdiction over foreign direct investment from Member States to the EU, and the European Commission made a proposal in 2010 to the Council and the European Parliament for a Regulation that would require Member States to have Commission authorisation to maintain existing bilateral investment agreements ("BITs") with third countries. EU Member States and the European Parliament have now reached an informal compromise on the Commission's proposal, which will preserve over 1000 existing BITs negotiated prior to the Lisbon Treaty.

The compromise would divide Member State BITs into three categories depending on the time when they were negotiated: (1) before the Lisbon Treaty, (2) after the Lisbon Treaty, but before the entry into force of the Regulation, and (3) after the entry into force of the Regulation, and apply different procedures for each group. Importantly, the BITs negotiated prior to the Lisbon Treaty will not require authorisation from the European Commission to remain in force. For the BITs concluded after the Lisbon treaty, but before the entry into force of the Regulation, the Commission would need to provide authorisation, although without the possibility of withdrawal. For the third group, i.e. BITs concluded after the entry into force of the Regulation, the compromise will set up a system which will allow Member States to get authorisation from the Commission to negotiate a new BIT. The Commission would be able to challenge existing Member State BITs in the European Court of Justice if it believes that they are inconsistent with EU law.

The Regulation based on the compromise proposal may be adopted before the summer.

CROWELL & MORING SPEAKS

Alan Gourley will speak at the 28th Annual Ounce of Prevention Seminar ("OOPS"), May 9-10, 2012, at the Newseum in Washington, DC.

Kate Clemans, Senior Director of C&M International, will speak at a meeting of the U.S. Council for International Business on the value of APEC and how best to engage with the forum on May 10 in Washington, DC.;

Alan Gourley, Laurent Ruessmann, and Dj Wolff will speak on "Avoiding Anti-Corruption Violations during Customs Transactions" and "Supply Chain Transparency" at C5's 7th Annual Advanced Forum on Global Customs Compliance, May 23-24, 2012, in Brussels, Belgium.

Laurent Ruessmann will speak at a conference on Export Compliance Management in Rotterdam, The Netherlands, on May 29th.  The conference is organised by The Eagle Compliance Company, a leading export controls and sanctions consultancy based in the Netherlands.

Crowell & Moring is again proud to be a sponsor of the International Trade Compliance Professional Association's EU conference, to be held in Barcelona on June 10-12. Laurent Ruessmann will be speaking on "Enforcement under the New EU Customs Code." Crowell is also hosting a reception on June 11.

Lindsay Denault will speak on a panel about "Facilitating Access to International Markets" at the AICPA International Business Conference, June 11-12, 2012.

Cari Stinebower and Laurent Ruessmann, together with Deirdre Johnson and Paul Kalish, will be hosting a conference in Hamilton, Bermuda on June 19th: U.S. & EU Economic Sanctions: How Recent Changes in Regulations and Increased Enforcement Impacts the Global Reinsurer.