International Trade Law News

On March 31, 2004, antidumping and countervailing duty petitions were filed with the U.S. Department of Commerce and the U.S. International Trade Commission against imports of Silicon Metal from Brazil and South Africa. The petitioners in the case are Globe Metallurgical Inc., International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers, I.U.E.-C.W.A., AFL-CIO, C.L.C., Local 693, and United Steel Workers of America, AFL-CIO, Local 9436.

The U.S. Census Bureau has developed a plan to require the mandatory filing of Shipper's Export Declarations (SEDs) via the electronic Automated Export System (AES) by January 2005. Once implemented, all SEDs must be filed electronically by the exporter (U.S. Principal Party in Interest) or their authorized agent using AES and no paper SEDs will be accepted.

Prior to implementing mandatory AES, Census will have to issue revisions to the Foreign Trade Statistics Regulations. Census hopes to issue the proposed regulations, which will be known as the Foreign Trade Regulations, by the end of May 2004. In its current form, the draft regulation calls for the replacement of the SED with a new filing called the Electronic Export Information (EEI). The draft regulation also contemplates the continuation of Option 4, which permits certain exporters to file the export documentation 10 days after completion of a shipment. However freight forwarders will no longer be permitted to utilize Option 4.

Once the proposed rule is published, there will be a 60-day comment period. Census hopes to issue the final rule in September 2004 and to give exporters 90 days to phase in the mandatory use of AES.

Census has delayed implementing the mandatory use of AES for all exports due to the difficulties associated in implementing mandatory AES for exports of items listed on the Commerce Control List and U.S. Munitions List that began in October 2003 and we would not be surprised if additional delays are encountered. However, it appears that the mandatory use of AES will be required some time in early 2005.

If your company has not already done so, you should begin using the AES system to file SEDs.

The WTO has made a preliminary ruling that a U.S. ban on Internet gambling violates the General Agreement on Trade in Services (GATS). The action was filed in the WTP last year by Antigua and Barbuda, who contended that the U.S. ban on Internet gambling, both at the state and federal level, violated the United States’ obligations under GATS since it prohibits all supply of gambling and betting services outside the United States.

The United States has stated that it will appeal the ruling. Under Article 17 of the WTO’s Dispute Settlement Procedures, the losing side of a preliminary ruling may appeal to the seven-member appellate body.

Last week, the U.S. filed a case with the World Trade Organization alleging that China has imposed a discriminatory tax rebate for integrated circuits produced in China.

U.S. exports of integrated circuits to China, which are subject to a 17% value-added tax (VAT), valued $2.02 billion in 2003. The U.S. contends that China taxes domestically produced integrated circuits at a rate which is significantly lower than the rate foreign producers pay since China offers a refund on integrated circuits that are domestically produced. Specifically, the U.S. notes that the VAT paid by Chinese producers may be as low as 3% in some cases once the allegedly discriminatory refund is assessed. The U.S. contends that this refund is inconsistent with the national treatment obligations that China assumed when it joined the WTO in December 2001.

This action is the first to be filed against China since it joined the WTO. In making the decision to bring the action, the U.S. Trade Representative (USTR) noted that China has made “substantial progress” in areas such as agricultural biotechnology but contended that the U.S. had repeatedly engaged China on the integrated circuit VAT without resolving the dispute over the allegedly discriminatory tax.

Under WTO dispute settlement procedures, filing the case commences a 60-day “consultation” period. If no resolution is reached within sixty days, the U.S. can request the establishment of a panel to determine whether China is acting in accordance with its WTO obligations.

The U.S. Department of Treasury announced this week the creation of the Office of Terrorism and Financial Intelligence (TFI). TFI will be led by an under secretary, which will be one of only three within the Treasury Department.

TFI will coordinate the efforts of the Executive Office of Terrorist Financing and Financial Crimes, the Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC). The Office will focus on the curtailment of terrorist finance, the maintenance of the integrity of the financial system, fighting financial crime, and enforcing economic sanctions against rogue nations.

The creation of the office is expected to strengthen Treasury’s assets in a number of regards. This includes enhancing intelligence analysis, augmenting enforcement efforts, and improving international cooperation.

The EU began enforcing sanctions against U.S. goods pursuant to a WTO decision which ruled that U.S. tax breaks on exports were illegal under the Agreement on Subsidies and Countervailing Measures (SCM Agreement). The tax laws subject to the ruling are the Foreign Sales Corporation (FSC) and its successor, the Extraterritorial Income (ETI) Act.

The ruling allows the EU to implement a total of US$4 billion in sanctions on US goods. The EU will phase the tariffs in gradually in an attempt to encourage the US to amend its tax laws to comply with the WTO decision. It is targeting US goods that compete directly with EU products, which presents a shift in policy from the steel tariff disputes, where the EU threatened to impose tariffs on goods from key political states in the 2004 election.