International Trade Law News
June 18, 2004
Commerce Department Issues Preliminary Antidumping Determination on Wooden Bedroom Furniture From China
Today the U.S. Department of Commerce's International Trade Administration (ITA) announced the preliminary determination in the antidumping duty investigation of wooden bedroom furniture from the People's Republic of China (PRC) that was requested on October 31, 2004 by the American Furniture Manufacturers Committee for Legal Trade and several unions. ITA preliminarily found that producers/exporters have sold wooden bedroom furniture from China in the U.S. market at less than fair value, with margins ranging from 4.90 percent to 198.08 percent.
Because of the large number of Chinese furniture producers, ITA selected seven mandatory respondents in this investigation. The seven companies represent roughly 40 percent of all imports of wooden bedroom furniture from China to the United States. The preliminary dumping margins for these seven firms were as follows:
-Dongguan Lung Dong Furniture Co., Ltd. and Dongguan Dong He Furniture Co., Ltd = 7.04%
-Rui Feng Woodwork Co., Ltd., Rui Feng Lumber Development Co., Ltd., and Dorbest Limited (Dorbest Group) = 19.24%
-Lacquer Craft Manufacturing Company, Ltd. = 4.90%
-Markor International Furniture (Tianjin) Manufacture Co., Ltd. = 8.38%
-Shing Mark Enterprise Co., Ltd., Carven Industries Limited (BVI), Carven Industries Limited (HK), Dongguan Zhenzin Furniture Co., Ltd., and Dongguan Yongpeng Furniture Co., Ltd. = 6.59%
-Starcorp Furniture (Shanghai) Co., Ltd., Orin Furniture (Shanghai) Co., Ltd., and Shanghai Starcorp Furniture Co., Ltd. = 24.34%
-Tech Lane Wood Mfg. and Kee Jia Wood Mfg . (Tech Lane) = 9.36%
Companies not selected as mandatory respondents were given the opportunity to request separate-rate status by providing voluntary responses to ITA's Section A questionnaire. Separate-rate status entitles the exporter to an antidumping duty rate based on a weighted-average of the mandatory respondents' rates rather than the PRC-wide rate. ITA received 118 responses from companies claiming that their export activities are not controlled by the PRC government. As a result of the its analysis of the questionnaire and supplemental questionnaire responses submitted by the Section A respondents, ITA found that 82 of the 118 companies demonstrated that they were eligible to receive a separate rate. Each of these companies will receive a preliminary dumping margin of 10.92%. All companies not eligible for their own rate or deemed to be controlled by the PRC government will be assigned an antidumping rate of 198.08%.
Upon publication of the preliminary determination in the Federal Register next week, U.S. Customs and Border Protection (CBP) will begin to suspend liquidation of entries of subject merchandise and to collect a bond or cash deposit based on the margins in the Department's preliminary determination.
The ITA's Final Determination will be issued on November 5, 2004 and announced at noon the following day. The U.S. International Trade Commission's final injury determination is expected by December 20, 2004. If the ITC makes a final affirmative determination that imports were materially injuring, or threatening to materially injure, the domestic industry, ITA will issue an antidumping duty order and will instruct CBP to collect cash deposits on imports of subject merchandise.
The Commerce Department's Preliminary Determination can be viewed at the following link.
The press release issued by the Furniture Retailers of America, comprised of companies that opposes the antidumping petition, can be found at the following link: biz.yahoo.com/prnews/040618/dcf035_1.html.
Syria Considers Imposing Sanctions on United States
Members of the Syrian Parliament have indicated that 130 members of Parliament are supporting legislation to impose commercial sanctions on U.S. economic interests in Syria. The sanctions would be in response to the U.S. sanctions recently imposed on Syria pursuant to the Syria Accountability Act.
June 17, 2004
Congress Moves Closer to Repealing Foreign Sales Corporation Law
Today the U.S. House of Representatives approved legislation that repeal export tax breaks that have been ruled illegal by the World Trade Organization (WTO). Voting 251-178, the House approved H.R. 4520 that would cut taxes for manufacturers and overhaul U.S. rules dealing with international taxation. The Senate passed its own version of the tax measure in May. Now conferees from both chambers will be appointed to reconcile differences between the two bills.
Despite considerable differences between the two bills, each version includes billions of dollars in corporate tax breaks and share the same core aim: resolution of a long-standing dispute with the European Union (EU) over U.S. tax breaks to exporters under the Foreign Sales Corporation (FSC) law, and its successor regime, the Extraterritorial Income Act (ETI).
One significant difference between the House and Senate measures is that the House bill's $155 billion in tax cuts are offset by $121 billion in tax increases and other revenue-raising provisions, leaving a $34 billion difference. The Senate measure is revenue neutral.
Both the House and Senate measures would reduce the income tax rate for manufacturers from 35 percent to 32 percent by 2008, and include a special one-year 5.25 percent income tax rate for companies that repatriate foreign earnings.
The WTO has repeatedly found FSC/ETI provisions to be impermissible under international trade rules and has authorized the EU to impose up to $4 billion in retaliatory tariffs on U.S. exports. The EU began in March to impose tariffs of 5 percent on a wide range of U.S. products, and said the rate would increase by 1 percentage point a month up to 17 percent. As of June 1, the tariff rate was 8 percent.
The Bush administration repeatedly has called on Congress to repeal the FSC/ETI tax breaks and bring the United States into compliance with its WTO obligations.
ATRIP-USA*Engage Alliance Denounces New Cuba Regulations
The alliance between the Association for Travel-Related Industry Professionals (ATRIP) and USA*Engage issued the following statement in response to the Cuban Assets Control Regulations (CACR) amendments published in the Federal Register by the Office of Foreign Assets Control (OFAC) on June 16, 2004:
Washington, DC – “Today’s publication of new OFAC regulations further restricting access to Cuba does nothing to hurt the Castro regime; instead, the regulations have a direct and sharply negative impact on Cuban-Americans and U.S. businesses. We find it difficult to believe that this is the result U.S. government officials desire; yet their actions today most certainly will hurt Cuban Americans, U.S. businesses and U.S. foreign policy objectives.
“Upon learning last month that the Bush administration endorsed Draconian new restrictions on travel to Cuba, we hoped that cooler heads would prevail, especially in light of the proposed regulations’ seemingly heartless clampdown on the rights of Cuban Americans to visit family members still living in Cuba. Unfortunately, the regulations, which become effective June 30, will further separate Cuban Americans from their relatives and prevent much-needed monetary aid from being sent to ordinary Cubans to be used for everyday necessities. Will these restrictions hurt Castro? Not likely. It is the Cuban people, already in need of our assistance, who will suffer from being cut off from their American families.
“Further, the ATRIP-USA*Engage Alliance is disheartened that U.S. government officials imposed ill-advised and gratuitous restrictions on travel to Cuba, including restrictions on baggage allowances, without consulting travel industry professionals and other affected parties. This in spite of the fact that the new rules will have an impact
on costs, employment, and legal obligations that already have been incurred. At the very least, the new regulations should include reasonable transition periods and grandfathering provisions ensuring that they do not constitute a de facto financial penalty levied on an industry simply because the Administration has made a capricious change in its policy regarding permissible travel to Cuba.
“Particularly disturbing is the elimination of ‘fully hosted’ travel to Cuba. Traditionally, ‘fully hosted’ travelers to Cuba who spent no money there were not considered to have violated any of the provisions of the CACR, but the new regulations have declared that a person who accepts goods or services in Cuba without paying for them is engaging in a prohibited dealing in property in which Cuba or a Cuban national has an interest. If the aim of the regulation—and the embargo—is to prevent the flow of hard currency to Cuba, it is difficult to understand how fully hosted travel—where Americans spend no money during their stay in Cuba—is damaging to U.S. interests and policy. If these regulations are upheld, the government would be denying that Americans have a constitutional right to travel.”
June 16, 2004
Preliminary Determination in Antidumping Investigation on Wooden Bedroom Furniture to be Issued Tomorrow
The U.S. Department of Commerce will issue the preliminary results of the antidumping duty investigation on wooden bedroom furniture on June 17, 2004 and announce the preliminary results to the public on June 18, 2003 at noon. In anticipation of that determination, the Cato Institute's Center For Trade Policy Studies has recently issued a report that severely criticizes the antidumping petition filed by a group of U.S. furniture manufacturers against Chinese wooden bedroom imports. The report, entitled "Poster Child for Reform: The Antidumping Case on Bedroom Furniture from China," analyzes the antidumping petition filed by 26 companies seeking duties as high as 440 percent against $1 billion worth of Chinese wooden bedroom imports and concludes that the case "has nothing to do with unfair trade and is a perfect example of the need for antidumping reform."
Using the Chinese wooden bedroom furniture dumping petition as an example of how poor antidumping rules are abused for commercial gain, the report analyzes the duplicity of the petitioners shift in sourcing from China to other countries such as the Philippines, Indonesia, Brazil and Vietnam; the divisions within the domestic furniture producers in supporting the petition, Byrd Amendment incentives for filing the petition, underlying market distortions and U.S. producers' original cultivation of the Chinese furniture industry.
The report states that the "The filing of this case was a tactical maneuver by one group of domestic producers that seeks to exploit the gaping loopholes of the antidumping laws to get a leg up on its domestic competition. Domestic producers realize that the only way to compete and offer their customers variety is to source at least some production from abroad. Instead of preserving or returning jobs to the U.S. (which is the public justification for the petition) import restrictions will cause a shift in sourcing from China to places like the Philippines, Indonesia, Brazil and Vietnam -- places from which many of the petitioners have begun or are posted to being importing themselves ... the unfortunate result is a greater cost burden for import- using industries and higher prices for consumers."
With respect to the Byrd Amendment, the report says "One can only wonder how much influence the Byrd Amendment and its potential to reward only supporters of the petition affected the level of industry support ... If the prospect of the Byrd Amendment money persuaded even one of the estimated 125 petitioners of wooden bedroom furniture to support the petition, the provision's existence ... might have tipped the balance in favor of initiating the case."
The report concludes, "Imposing restrictions on imports of wooden bedroom furniture from China would amount to nothing more than picking winners and losers. Those who have invested in Chinese facilities and those who have developed relationships and nurtured their Chinese supply chains successfully will effectively be penalized for their success. Those whose business models were less successful and who have begun cultivating relationships with suppliers in other countries will be granted a head start in the inevitable process of foreign source-shifting. Whatever happens, production is highly unlikely to return to the United States."
A copy of "Poster Child for Reform: The Antidumping Case on Bedroom Furniture from China," can be found at: www.freetrade.org.
OFAC Issues Regulation Making Significant Changes to the Cuban Assets Control Regulations
Today the Office of Foreign Assets Control (OFAC) published in the Federal Register an interim final rule amending the Cuban Assets Control Regulations, 31 C.F.R. part 515 (the "CACR"), to implement recommendations made by the Commission for Assistance to a Free Cuba, an interagency commission tasked with identifying ways to hasten Cuba's transition to democracy. The following is a summary of the changes to the CACR that will take effect on June 30, 2004:
A. Fully-hosted travel. The CACR has been amended to remove discussion of and references to fully-hosted travel, whereby all costs and fees are paid for by a third-party national) and the presumption that travelers to Cuba pay expenses for Cuba travel-related transactions. OFAC claims that this significant change in policy was made because it found that persons who claimed their travel was fully-hosted routinely engaged in prohibited money transactions (e.g., payment of entry and exit and docking fees). In addition, OFAC is now taking the position that even a person who accepts goods or services in Cuba without paying for them is in fact engaging in a prohibited dealing in property in which Cuba or a Cuban national has an interest. Therefore, OFAC is removing the language regarding fully-hosted travel from the CACR and is thereby eliminating any authorization of fully-hosted travel. The regulation also specifies that OFAC interprets the prohibition on dealing in property to include a prohibition on the receipt of goods or services in Cuba when those goods or services are provided free-of-charge, whether received as a gift from the Government of Cuba, a national of Cuba, or a third-country national, unless otherwise authorized by an OFAC general or specific license.
In the process of removing references to fully-hosted travel, OFAC is also removing the language stating that any person who travels to Cuba without OFAC authorization is presumed to have engaged in prohibited travel-related transactions there. Notwithstanding the removal of this language, OFAC may still argue, either within the Treasury Department civil penalties process or before a United States court, that the receipt of services or other dealings in property in which Cuba has an interest, such as a stay at a Cuban hotel or the purchase of food in Cuba, can be inferred from evidence of multi-day travel in Cuba.
B. Importation of Cuban merchandise. The CACR is amended to eliminate the general license authorizing licensed travelers to Cuba to purchase in Cuba and return to the United States with up to $100 worth of Cuban merchandise for personal consumption. The amended language now explains that no merchandise (except for informational materials) may be purchased or otherwise acquired in Cuba and then brought back to the United States.
C. Exportation of accompanied baggage. The CACR are amended to provide that the amount of baggage carried by an authorized traveler to Cuba is now limited to 44 pounds per traveler, unless a higher amount is authorized by OFAC or the Bureau of Industry and Security (BIS).
D. Travel to visit relatives in Cuba. The CACR are amended to make a number of changes to the rules regarding travel-related transactions incident to visiting relatives in Cuba. Prior to these amendments, a person with a Cuban national close relative in Cuba could engage in travel-related transactions incident to visiting that relative once every 12 months under a general license and more often pursuant to specific licenses if requested. There was no stated limit to the duration of the first visit, and the traveler could spend up to the State Department per diem (currently $167) for living expenses in Cuba plus any additional funds needed for transactions that were directly incident to visiting that relative.
The amendments to the CACR narrow the category of relatives who can be visited in Cuba. The definition of "close relative" is replaced by the term "member of a person's immediate family," which is defined to include a spouse, child, grandchild, parent, grandparent, or sibling of that person or that person's spouse, as well as any spouse, widow, or widower of any of the foregoing.
The once-per-twelve-months general license contained in the CACR is eliminated. In its place, new language is added that states that OFAC will issue specific licenses authorizing travel-related transactions incident to visits to members of a person's immediate family who are nationals of Cuba once per three-year period and for no more than 14 days. A person subject to U.S. jurisdiction who wishes to engage in travel-related transactions to visit a member of his or her immediate family who is a national of Cuba will need to request and receive specific permission from OFAC before engaging in those transactions. For those who emigrated to the United States from Cuba and have not since that time visited a family member in Cuba, the three-year period will be counted from the date they left Cuba. For all others, the three year period will be counted from the date they last left Cuba pursuant to the pre-existing family visit general license or, if they traveled under a family visit specific license, the date that license was issued. The language that authorized OFAC to issue specific licenses for additional visits, is eliminated. No additional visits will be authorized.
These amendments also reduce the amount of money travelers visiting members of their immediate family may spend for their living expenses in Cuba. The new limit, is $50 per day plus up to an additional $50 per trip, if needed, to pay for transportation-related expenses in Cuba that exceed the $50 per day limit.
E. Attendance at certain professional meetings in Cuba. The amendments to the CACR to clarify that the general license authorizing travel-related transactions incident to certain professional research in Cuba does not extend to transactions incident to attendance at professional meetings or conferences in Cuba. To the extent a professional researcher believes that attendance at a particular meeting or conference in Cuba is important to his or her research and the meeting or conference does not qualify under the general license, the researcher may request a specific license from OFAC.
F. Educational activities in Cuba. The CACR amendments provide that specific licenses are limited to undergraduate and graduate institutions (i.e., no secondary schools) and the duration of such licenses is shortened from two years to one year. Only students enrolled in the licensed institution may travel on that license; therefore, students may no longer travel to Cuba under the license of an educational institution other than their own, even if their own institution accepts the licensed institution's program for credit toward the student's degree. Employees who travel under the license must be full-time permanent employees of the licensed institution. Certain educational activities in Cuba may be no shorter than 10 weeks; others may be for a period of less than ten weeks. Previously licensed travel that no longer meets the new requirements may still go forward as long as the trips and all associated transactions are completed by August 15, 2004.
G. Participation in international sports federation competitions, clinics and workshops. OFAC is eliminating the general license for travel-related transactions incident to participation in amateur and semi-professional athletic competitions that take place in Cuba under the auspices of an international sports federation. In its place, OFAC is implementing a specific licensing policy under which OFAC will authorize those same activities on a case-by-case basis. OFAC also in amending the CACR to eliminate the policy of specifically licensing travel-related transactions incident to participation in clinics and workshops, whether sports-related or otherwise, in Cuba.
H. Quarterly remittances to nationals of Cuba. The general license authorizing quarterly $300 remittances sent by any US person 18 years of age or older to any household or national of Cuba is eliminated. The new general license authorizes such remittances only when they are sent to the remitter's immediate family. They cannot be remitted to certain Cuban government officials and members of the Cuban Communist party. The total amount of family remittances that an authorized traveler may carry to Cuba is reduced from $3,000 to $300.
I. NGO remittances to Cuba. The CACR are amended to clarify the specific licensing policy of authorizing remittances from nongovernmental organizations and individuals subject to U.S. jurisdiction to Cuban pro-democracy groups, independent civil society groups, and religious organizations as well as to individual members of such Cuban groups and organizations.
J. Remittance-related transactions by banks and other depository institutions. The general license authorizing depository institutions to act as forwarders for family and emigration remittances is eliminated. A specific authorization as a remittance forwarder is now required. Depository institutions are still authorized under general license to provide services related to other authorized financial institutions, such as transferring funds to Cuba covered by a specific license allowing overflight payments.
June 15, 2004
U.S. Supreme Court Limits Reach of Antitrust Law
In F. Hoffman-La Roche Ltd. v. Empagran S.A., the U.S. Supreme Court ruled on June 14, 2004 that foreign buyers cannot sue an international business in U.S. courts over price fixing unless they can demonstrate that the company's actions in the United States directly harmed them.
In an 8-0 ruling, the Court overturned part of an appeals court ruling that was opposed by multinational corporations, the Bush administration and antitrust agencies in Canada, Europe and Japan as amounting to unreasonable extraterritorial reach for U.S. antitrust law.
The case, a private lawsuit brought by five companies in Australia, Ecuador, Panama and Ukraine against multinational vitamin manufacturers and distributors, does not end here, however. With the clarification by the Supreme Court, the five foreign companies, mostly large farms that bought the vitamins for adding to cattle feed, could still pursue their claims in U.S. courts.
The five companies' private lawsuit followed the U.S. Justice Department settlement in an international price-fixing scheme by a cartel of vitamin manufacturers that resulted in U.S. criminal fines amounting to $500 million plus heavy civil penalties imposed by European governments.
The central legal issue in the case was an amendment to the U.S. Sherman Act antitrust law called the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA). The FTAIA sought to limit the scope of U.S. antitrust law outside the United States except for behavior that has a "direct, substantial and reasonably foreseeable effect" on domestic U.S. commerce.
The overturned appeals court decision had found that that exception applied in this case. Even assuming that foreign higher prices were independent of higher domestic U.S. prices in this case, the appeals court ruling said, the FTAIA's underlying goal of deterring price fixing made the lack of connection inconsequential.
In effect, the appeals court decision said that, in a global economy, price fixing by a multinational corporation in one country can harm people in other countries.
But Justice Stephen Breyer, writing an opinion for fellow Supreme Court justices, argued that the FTAIA exception does not apply when the antitrust claim depends solely on harm done outside the United States.
"The case involves vitamin sellers around the world that agreed to fix prices, leading to higher vitamin prices in the United States and independently leading to higher vitamin prices in other countries such as Ecuador," Breyer wrote.
"We conclude that, in this scenario, a purchaser in the United States could bring a Sherman Act claim under the FTAIA based on domestic injury, but a purchaser in Ecuador could not bring a Sherman Act claim based on foreign harm," he wrote.
Breyer also wrote, however, that the five companies could still attempt to argue in a U.S. court that the foreign injury to them was not in fact independent of anti-competitive behavior in the United States.
