International Trade Law News

Citing U.S. sanctions on Iran and a poor business climate there, Halliburton Co. announced on Friday that it will no longer conduct future business in Iran once the company's current contractual obligations are finalized. However, Halliburton's CEO said that the company would return to Iran if U.S. sanctions are lifted. Halliburton conducts operations in Iran via Halliburton Products & Services Ltd., a Cayman Islands-registered company with headquarters in Dubai, United Arab Emirates.

Separately, on January 6, 2005 Congresswoman Ros-Lehtinen (R-FL) introduced the "Iran Free Support Act" (H.R. 282). The bill is similar to the ILSA Enhancement Act that she introduced last year, but may gain more political momentum this Congress given the increased concern over Iran's nuclear program. To date, the measure already has 50 co-sponsors. As currently drafted, H.R. 282:

-requires the President to renew his waiver of ILSA sanctions on a foreign company every 6 months as opposed to exercising it only once;

-requires the President to report on efforts to enlist multilateral support for U.S. initiatives every 6 months;

-expands the current scope of ILSA coverage to include insurers and creditors;

-removes the 5 year sunset provision;

-expands the definition of petroleum to include petroleum by-products; and

-limits the President to 90 days from the date of disclosure of an investment to make a determination on sanctions imposition.

The House International Relations Committee is planning to hold a hearing on U.S. policy toward Iran in mid-February.

The text of H.R. 282 can be found at: thomas.loc.gov/cgi-bin/query/z?c109:H.R.282.

This week at the U.S. International Trade Commission:

January 31, 2005 - No meetings, votes or hearings scheduled.

February 1, 2005 - Commission Hearing in Second Sunset Review on Frozen Concentrated Orange Juice from Brazil (731-TA-326 Second Sunset Review Review); 9:30 AM in Main Hearing Room, ITC Building (500 E Street SW). Federal Register notice and ITCs's News Release can be found at: www.usitc.gov/secretary/fed_reg_notices/sunset/731_326_notice08162004sgle.pdf
www.usitc.gov/ext_relations/news_release/2004/er0706bb3.htm

February 2, 2005 - Commission Vote in final phase antidumping investigation: Outboard Engines from Japan, Inv. No. 731-TA-1069 (Final); 11 a.m. Main Hearing Room, ITC Building (500 E Street SW). Federal Register notice and ITC News Release can be found at: www.usitc.gov/secretary/fed_reg_notices/701_731/731_1069_revisedschedule01052005sgl.pdf
www.usitc.gov/ext_relations/news_release/2004/ER0223bb1.HTM

February 3 and 4, 2005 - No meetings, votes or hearings scheduled.

The U.S. Government's Committee on Foreign Investments in the United States (CFIUS) will conduct an extended review of China-based Lenovo Group's planned $1.75 billion acquisition of IBM's personal computer (PC) business. The extended review by CFIUS will last 45 days and will result in a report submitted to President Bush on whether the sale threatens U.S. national security interests. The President will then have 15 days to announce a final decision on whether the transactions should proceed or not.

The Exon-Florio provision of U.S. law (Section 5021 of the Omnibus Trade and Competitiveness Act of 1988, which amended Section 721 of the Defense Production Act of 1950) gives the President the authority to suspend or prohibit any foreign acquisition, merger or takeover of a U.S. corporation that is determined to threaten the national security of the United States. The President can exercise this authority under Exon-Florio to block a foreign acquisition of a U.S. corporation only if he finds:

(1) there is credible evidence that the foreign entity exercising control might take action that threatens national security, and

(2) the provisions of law, other than the International Emergency Economic Powers Act do not provide adequate and appropriate authority to protect the national security.

Labels: CFIUS

The National Council on International Trade Development (NCITD) has announced that the speakers at its February 10, 2005 Trade Compliance Committee meeting include Frank Reynolds, President of International Projects, and Michael C. Mullen, Director of Customs and Border Protection's (CBP) Office of Trade Relations.

Frank Reynolds, the foremost expert on Incoterms in the United States, will be discussing trends in Incoterms, the phase out of the UCC delivery terms, and the burgeoning UCP 600 (which is a work in progress and which is intended to replace UCP 500). Mr. Reynolds represented the United States at the International Chamber of Commerce Incoterms 2000 revision committees. He is a licensed Customs broker and a nine-term appointee to the U.S. Department of Commerce District Export Council.

Mr. Mullen serves as CBP's liaison between the international trading community and senior CBP managers. He is be responsible for policy review and planning, and assisting the Commissioner on outreach to the international trade community on supply chain security and trade facilitation issues. He also reviews concerns voiced by individuals or trade groups and makes policy recommendations to CBP management to resolve those concerns.

The NCITD meeting will be held on February 10, 2005 at the Army and Navy Club of Washington, DC. Please contact the NCITD Secretariat (202-872-9280 or cu@ncitd.org) with questions and to RSVP for this meeting. The non-member fee to attend this meeting is $45. Further information on the NCITD can be found at www.ncitd.org.

Today the U.S. Department of Commerce (DOC) announced that it has issued an amended final determinations in the antidumping duty investigations on imports of certain frozen warmwater shrimp from Brazil, Ecuador, India, the People's Republic of China (PRC), the Socialist Republic of Vietnam (Vietnam) and Thailand. The amended final determination resulted from the correction of clerical errors that were made by DOC in calculating the dumping margins for several respondents.

In addition, DOC concluded that six companies (four from the PRC and two from Vietnam) were incorrectly denied separate rate status. As a result, imports produced or exported by these companies will be subject to the final amended "separate rate" of 53.68% for imports from the PRC and 4.57% for imports from Vietnam. DOC's amended final determination will be published in the Federal Register.

The amended final margins, the list of companies receiving separate rates and other details regarding this case can be found at the following site:
www.ita.doc.gov/media/FactSheet/0105/shrimp_012605.html.

The Commerce Department's Bureau of Industry and Security (BIS) has imposed a $10,000 civil penalty on New Jersey-based Nozzle Manufacturing Company (formerly known as JEP Manufacturing, Inc. and Newton Tool & Manufacturing) for attempting to make an unlicensed export to Iran.

In its charging letter BIS alleged that Nozzle Manufacturing violated 15 C. F. R. § 764.2(c) of the Export Administration Regulations (EAR) in October 1999 by trying to export oil burning nozzles through Germany, to Iran without obtaining authorization from the Treasury Department's Office of Foreign Assets Control (OFAC) as required by Section 746.7 of the EAR.

Nozzle Manufacturing agreed to settle the matter by agreeing to pay a civil penalty of $10,000 to the Commerce Department no later than the date Nozzle Manufacturing is sentenced in the related criminal case, or March 1, 2005, whichever occurs first. The settlement agreement specifies that failure to make timely payment of the civil penalty may result in the denial of all of Nozzle Manufacturing's export or reexport privileges for a period of one year.

The charging letter and settlement agreement can be viewed at the following link: http://efoia.bis.doc.gov/ExportControlViolations/E864.pdf.

The World Trade Organization's (WTO) Appellate Body today released its Annual Report for 2004. The report contains a summary of the Appellate Body's activities in 2004 and a variety of statistical and other information on the history and workings of the Appellate Body. The report can be viewed at the following link (MS-Word document): www.wto.org/english/tratop_e/dispu_e/wt_ab3_e.doc.

The U.S. International Trade Commission (ITC) today announced that it is rescheduling a vote, originally scheduled for tomorrow, January 26, 2005, in connection with its five-year (sunset) review on Sebacic Acid from China. The vote was rescheduled to permit the ITC to reopen the record in this investigation to allow for comments on the results of a changed circumstances review being conducted by the Department of Commerce (DOC). The ITC will reschedule its vote in the five-year (sunset) review for late April 2005 and transmit its views to DOC in May 2005.

Today the State Department's Directorate of Defense Trade Controls published in the Federal Register 18 Notifications of Proposed Export Licenses that were submitted to Congress in November and December 2004. Section 36(c) of the Arms Export Control Act (22 U.S.C. 2776) requires Congressional notification prior to the export of any major defense equipment sold under a contract in the amount of $14,000,000 or more, defense articles or defense services sold under a contract in the amount of $50,000,000 or more and firearms controlled under category I of the United States Munitions List in the amount of $1,000,000 or more. The notifications can be found at the following link: http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/05-1366.htm.

Labels: DDTC, Export Controls

By voice vote, the U.S. Senate today confirmed the nomination of Carlos A. Gutierrez to be the next Secretary of Commerce. While a number of Senators heaped praise on the nominee, several Senators expressed their objections to various aspects of U.S. trade policy. Senator Byron Dorgan (D-ND) raised concerns over OFAC's recent decision to reinterpret the Trade Sanctions Reform Act (TSRA) provisions relating to the payment of sales of agricultural products to Cuba. He also expressed his disapproval over the amount of resources used by OFAC to enforce the U.S. travel restrictions on Cuba.

Thursday, January 27, 2005: No meetings, hearings, or votes scheduled.

The U.S. Court of Appeals for the Federal Circuit (CAFC) has recently upheld the Commerce Department's zeroing methodology in antidumping investigations. In Corus Staal BV v. Dep't of Commerce, released by the court on January 21, 2005, the CAFC affirmed the decision by the U.S. Court of International Trade in Corus Staal BV v. Dep't of Commerce, 283 F. Supp. 2d 1357 (Ct. Int'l Trade 2003), which affirmed the Commerce Department's zeroing methodology to calculate the weighted-average dumping margin for imports of Corus' hot-rolled steel products from the Netherlands in an antidumping investigation.

The "zeroing methodology" refers to the Commerce Department's practice of using only positive dumping margins for purposes of calculating the weighted-average dumping margin and giving negative dumping margins a value of zero. The Cato Institute's Center for Trade Policy Studies calls the use of zeroing "a significant cause of the systemic overestimation of dumping margins and subsequent application of inflated antidumping duties."

Corus argued that the Commerce Department's zeroing methodology was: (1) inconsistent with the statutory scheme for conducting antidumping investigations; and (2) violated the United States' obligation to conform to World Trade Organization (WTO) decisions prohibiting zeroing. However, the CAFC upheld the CIT's decision by finding that zeroing in antidumping investigations is permitted under U.S. law and that the Commerce Department is not obligated to incorporate WTO decisions in its interpretation of U.S. law.

As a result of the CAFC's recent decision in Corus, and the CAFC's prior decision in Timken Co. v. United States, 354 F.3d 1334 (Fed. Cir. 2004) (which upheld the use of zeroing in antidumping administrative reviews), the Commerce Department's use of zeroing will continue unless Congress amends the antidumping statute to conform to the WTO's Antidumping Agreement.

The CAFC's opinion in Corus Staal BV v. Dep't of Commerce can be viewed at the following link: http://fedcir.gov/opinions/04-1107.pdf.

The U.S. Senate has scheduled the debate and vote on the nomination of Secretary of Commerce designee Carlos M. Gutierrez for 3 p.m. on January 24, 2005. Gutierrez should easily be confirmed by the Senate.

The State Department's Directorate of Defense Trade Controls (DDTC) has created a new page on its Web site (www.pmdtc.org/aes.htm#export_data) providing an overview of the electronic reporting requirements of export information using the Automated Export System (AES) and direct reporting of certain export data to DDTC using proposed form DS-4071.

This page was set up in conjunctoin with DDTC's recent publication in the Federal Register of a notice (70 Fed. Reg. 1278 (Jan. 6, 2005)) soliciting public comments on form DS-4071, entitled "Export Declaration of Defense Technical Data or Services." Once implemented, use of form DS-4071 will be mandatory and exporters will have to electronically report transfers of defense technical data or services directly to DDTC under approved licenses and agreements. A facsimile of DS-4071 and instructions for completing the form are available on the web page. A functional version of the form will be available once certain technical details regarding the collection are finalized.

Until use of DS-4071 becomes mandatory, DDTC will retain the current practices for the reporting of exports of technical data and services. That is, for reporting exports of technical data that is licensed on a DSP-5, the applicant must decrement the initial export on the original of the Form DSP-5 and return the license to DDTC. Any additional exports of the licensed technical data (i.e., the transaction must be identical, including the end use and end users) would be the subject of the exemption in Section 125.4 of the ITAR. For reporting on agreements, the initial export of technical data and defense services using an agreement will be by letter.

Labels: DDTC, Export Controls

Today the U.S. International Trade Commission held its conference in the preliminary phase antidumping investigation on Certain Orange Juice from Brazil (Inv. No. 731-TA-1089 (Preliminary)). The list of witnesses appearing at the conference can be found at the following link: www.usitc.gov/ext_relations/thisweek/wl1_0117.pdf.

U.S. Customs and Border Protection's (CBP) Office of Regulations and Rulings has recently issued an updated version of the informed compliance publication entitled What Every Member of the Trade Community Should Know About: Customs Brokers. In addition to providing substantive information on the resposibilities of customshouse brokers, the publication explains the historical background that led to the current licensing and permit regime, and discusses, in detail, the recently revised procedures to become a customs broker, the duties and responsibilities of a customs broker and the procedures for disciplining a customs broker.

The publication (in PDF format) can be viewed at the following link:
www.customs.gov/linkhandler/cgov/toolbox/legal/informed_compliance_pubs/entry/icp048.ctt/icp048.pdf

Samir A. Vincent, the first person to be charged in the Justice Departments investigation of the United Nations' Oil-For-Food Program, has entered a guilty plea to making false statements on income-tax returns, acting as an unregistered agent of a foreign government and violating the International Emergency Economic Powers Act. According to the criminal information filed in the case, Vincent received the rights to nine million barrels of oil and cash payments from the Government of Iraq in return for lobbying U.S. and U.N. officials on issues such as weakening of economic sanctions, the admission of arms inspectors and the oil-for-food program. Vincent faces a sentence of up to 28 years in prison.

The criminal information filed against Vincent can be found at the following link:
news.findlaw.com/hdocs/docs/oil4food/usvincent11805inf.pdf.

The American Association of Exporters and Importers (AAEI) has extended the deadline for its industry-wide data collection project to January 31, 2005. AAEI launched the data-collection project to document the impact of cargo exams performed by U.S. Customs and Border Protection (CBP) on U.S. business and industry. Specifically, AAEI is trying to quantify the extent of increased security, compliance and other types of cargo examination levels and to determine the costs to industry of recent changes in CBP exams, practices and policies.

A Customs Exam Questionnaire is included on AAEI's Web site for importers to complete. The Web site also contains a number of frequently asked questions (FAQs) that indicates that this project is open to all importers, shippers or brokers, regardless of whether they are members of AAEI or not. The data collected will be used to generate reports that will be made available to participating organizations and to Congressional, regulatory and policy groups.

Further information about this project, including a link to the survey form, can be found at the following site: www.aaei.org/about/exam_survey.html.

Stephen Koplan, Chairman of the United States International Trade Commission (ITC), today announced that James M. Lyons has been designated as the ITC's General Counsel. Jim Lyons served as the ITC's Deputy General Counsel from 2001 until appointment as acting General Counsel in February 2004. He has practiced international trade law since 1977, starting his career as an attorney-advisor in the U.S. Department of the Treasury. He entered private law practice in 1982, where he remained until 1993, when he first came to the ITC. From 1997 to 2001, he served as Associate General Counsel in the Office of the U.S. Trade Representative (USTR). At USTR, he was responsible for legal matters related to trade in agricultural products, including related WTO and NAFTA dispute settlement proceedings. His public service experience also includes legal positions in the U.S. Department of Commerce and the U.S. Customs Service, the predecessor of the current Bureau of Customs and Border Protection.

Administrative Law Judge (ALJ) Robert Barton has issued the first written decision in a case challenging a civil penalty imposed by the Treasury Department's Office of Foreign Assets Control (OFAC) against an individual for traveling to Cuba. In the opinion, Judge Barton ordered OFAC to reduce the proposed penalty against Craig Ostrem from $7530 to $780. An enforcement action was brought against Ostrem for traveling to Cuba for a scuba diving trip in 1999 and bringing back rum, candy and artwork to the U.S. During the hearing held before the ALJ earlier this year, OFAC had offered to reduce the penalty from $7530 to $6777.

Tuesday's New York Times contain a story discussing the Bush administration's recent impositoin of additional sanctions on several Chinese companies pursuant to the Iran Nonproliferatoin Act of 2000. The timing of this article is puzzling given that the announcment of the sanctions was published in the Federal Register more than two weeks ago. The article can be viewed at the following link:
www.nytimes.com/2005/01/18/politics/18nukes.html?ei=5065&en=f3105a526f76ab15&ex
=1106629200&partner=MYWAY&pagewanted=print&position=

President Bush notified Congress on January 14, 2005 that he will continue to suspend the provision in the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 (commonly referrred to as Helms-Burton Act)that would permit lawsuits to be filed by U.S. citizens whose property was expropriated by Cuba. The text of the letter from the President to the Chairmen and Ranking Members of the House Committees on International Relations and Appropriations and the Senate Committees on Foreign Relations and Appropriations is as follows:

Dear Mr. Chairman:

Consistent with section 306(c)(2) of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 (Public Law 104-114)(the "Act"), I hereby determine and report to the Congress that suspension for 6 months beyond February 1, 2005, of the right to bring an action under title III of the Act is necessary to the national interests of the United States and will expedite a transition to democracy in Cuba.

Sincerely,

GEORGE W. BUSH

Bernard Smith, the President and part owner of Stealth Components, Inc. (www.stealthcomponents.com), located in Portsmouth, New Hampshire, was indicted on January 13, 2005 on one count of conspiracy and six counts of making false statements in connection with a scheme to avoid paying over $385,000 in U.S. antidumping duties.

According to the indictment, Stealth Components, Inc., is in the business of purchasing electronic components that it imports from overseas countries for resale in the U.S. The indictment claims that from November 1998 through May 2000, Smith and others participated in a scheme to defraud U.S. Customs in order to minimize the payment of antidumping duties that Stealth was required to make on imported Korean dynamic random access memory semiconductors ("DRAMs"). The alleged scheme involved the presentation of false and fraudulent invoices to U.S. Customs that undervalued the purchase price and falsely described the Korean DRAMs that Stealth imported in order to lessen the cash deposit amount for antidumping duties that Stealth was required to submit to U.S. Customs.

According to the indictment, Smith perpetrated this scheme by directing foreign suppliers to prepare fraudulent invoices and other false entry documents that would be presented to U.S. Customs at the time of entry for each shipment of DRAMs that Stealth imported. Over the course of this scheme, it is alleged that Smith avoided the total payment of over $385,000 to Customs in antidumping duties that Stealth was required to deposit on shipments of Korean DRAMs.

If convicted, Smith faces a maximum sentence of 5 years in prison on the conspiracy charge, and 2 years in prison on each of the six false statements charges.

On January 13, 2005, the U.S. asked the World Trade Organization (WTO) to form a dispute settlement panel to hear a U.S. complaint concerning the lack of uniformity in European Union customs procedures after direct talks with Brussels failed to resolve concerns. The U.S. claims that this lack of uniformity in implementing customs rules throughout the 25 EU member states, coupled with lack of procedures for prompt E.U.-wide review, can hinder U.S. exports, particularly those of small to mid-sized businesses.

The U.S. filed a request for consultations with the E.U. on September 21, 2004, and met with E.U. officials in Geneva in mid-November 2004, but the meeting failed to resolve the dispute. Six other WTO Members, Argentina, Australia, Brazil, India, Japan and Taiwan, asked to join the consultations as third parties, but the E.U. rejected those requests.

The text of the USTR press release is as follows:

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Executive Office of the President
Washington, D.C.
January 13, 2005

U.S. REQUESTS WTO PANEL AGAINST EU OVER EUROPEAN CUSTOMS SYSTEM

WASHINGTON - The office of the U.S. Trade Representative today asked the World Trade Organization (WTO) to form a dispute settlement panel in the case against the European Union regarding EU customs laws and regulations. This step follows the September 21, 2004 filing of a request for consultations with the EU. Consultations between the U.S. and the EU were held in mid-November, but were unable to resolve the dispute.

Many important aspects of customs administration in the EU are handled differently by different member State customs authorities, resulting in inconsistencies from country to country. Although the EU is a customs union, there is no single EU customs administration. Lack of uniformity, coupled with lack of procedures for prompt EU-wide review, can hinder U.S. exports, particularly for small to mid-size businesses.

WTO rules require WTO Members to administer their customs laws in a uniform, impartial and reasonable manner. They also require Members to provide tribunals for prompt review and correction of administrative action relating to customs matters. The United States considers that the EU fails to meet either of these requirements.

EU institutions -- including the Commission, the Court of Justice, and the Parliament -- have routinely noted the lack of uniformity in the administration of EU customs law. For example, in its comments on a March 2001 report by the EU Court of Auditors, the Commission stated, "The objective that for all trade in goods the Community should operate as a real customs union with uniform treatment of imported goods can be fully obtained only if the customs union is operating on the basis of a single customs administration, which is not the case." The United States fully agrees.

Variations in the way that goods are treated by the different EU member States can cause problems that burden all traders. These problems are compounded by an inability to obtain prompt EU-wide review of national administrative decisions. An importer or other interested party has to wend its way through national administrative and/or judicial appeals before obtaining an authoritative determination from an EU-level tribunal.

Background:

The lack of uniform customs administration by the EU affects U.S. producers, farmers, and exporters in a number of important ways. For example, goods may be classified differently and thus be subject to different tariffs depending on the EU member State through which they are imported. Similarly, a U.S. exporter may be able to obtain binding guidance in one member State on how its goods will be valued for tariff calculation purposes. But the exporter may not be able to rely on that guidance in another member State; indeed, in some member States the exporter may not be able to obtain binding valuation guidance at all.

These problems fall particularly hard on small and mid-size businesses, which often lack the resources to work their way through member State and EU bureaucracies in order to reconcile inconsistencies in classification or valuation in different States.

There are four reasons to move this dispute to a WTO panel now. First, the EU has just recently expanded from 15 member States to 25 member States. The trade barrier inherent in lack of uniform customs administration expanded when the new member States joined last May. As an indicator of the level of trade potentially affected by this barrier, it should be noted that U.S. goods exports to the EU-25 totaled $155.2 billion in 2003. By pressing this issue now, we hope to address this problem early in the EU's process of dealing with the challenges of enlargement.

Second, enhancing trade facilitation is a key part of the Doha Development Agenda. The United States expects that pressing a major player in world trade to administer its customs laws and regulations in a uniform manner will help to advance that part of the agenda.

Third, over the past year, we have tried to work with the Commission to address the concerns of U.S. exporters. Indeed, this was the culmination of efforts over the past seven years to address such concerns in various WTO fora. Although the Commission has tried to help with individual problems, it has become clear that the allocation of authorities within the EU and even the Commission has precluded achieving the necessary systemic solutions.

Fourth, the United States and the EU held consultations on this matter in Geneva in mid-November. Six other WTO Members -- Argentina, Australia, Brazil, India, Japan, and Taiwan -- asked to join the consultations as third parties, demonstrating the level of concern about the EU system. Regrettably, the EU rejected these requests to join the consultations by major exporters to the EU. Ultimately, the consultations confirmed U.S. concerns and failed to resolve the dispute.

The U.S.-Australia Free Trade Agreement (UAFTA) entered into force on January 1, 2005. As a result, import duties on more than 99 percent of tariff lines covering qualifying industrial and consumer goods have been eliminated. Import duties on other manufactured goods will be phased out over periods of up to 10 years. The following is a brief overview on how importers and exporters can determine the duty rates applicable to their products.

Rules of Origin

In order to take advantage of the benefits for U.S. goods under the UAFTA, exporters and importers will need to understand how to determine that their goods are "originating," that is, qualified for preferential duty treatment under the UAFTA Rules of Origin. The UAFTA Rules of Origin were modeled upon previously negotiated free trade agreements. There are, however, some important differences, which require close attention. The UAFTA rules of origin can be found at the following link:
www.ustr.gov/assets/Trade_Agreements/Bilateral/Australia_FTA/Final_Text/asset_upload_file665_3424.pdf.

The U.S. Attorney for the District of Connecticut announced on January 11, 2005 that a federal Grand Jury sitting in Bridgeport, Connecticut, has returned an Indictment charging Mohammad Farahbakhsh, also known as Hadi Farah, age 50, an Iranian national and a naturalized U.S. citizen holding a residence in Los Angeles, California, with conspiring to ship items manufactured in the United States to Iran, a prohibited destination. The two-count Indictment, returned on September 9, 2004, charges Farahbakhsh with one count of conspiracy to ship to Iran pressure sensor-related products that Farahbakhsh attempted to obtain from Omega Engineering, a Connecticut-based company, and one count of unlawfully attempting to ship these items to the Shahid Hemmat Industrial Group in Iran, which has been sanctioned twice by the U.S. for its role in developing missile technology.

According to the indictment, Farahbakhsh ordered pressure sensors from Stamford-based Omega Engineering in 2003. When the company learned the sensors were destined to Iran, officials notified the FBI. Farahbakhsh subsequently engaged in negotiations with an undercover Special Agent with the U.S. Department of Commerce's Bureau of Industry and Security when he reordered additional equipment in 2004. Farahbakhsh was arrested by Special Agents on October 20, 2004 in Los Angeles and was subsequently presented before a U.S. Magistrate Judge in Los Angeles when he was ordered detained and removed to the District of Connecticut. Simultaneous with the arrest, Commerce Department Special Agents, assisted by Special Agents from the U.S. Department of Homeland Security, Immigration and Customs Enforcement, and Defense Criminal Investigative Service executed search warrants at Farahbakhsh Los Angeles residence as well as the home of his former wife in Iowa.

According to documents filed with the Court and to statements made in open court, the Government has obtained further evidence alleging that, between 1997 and 2003, Farahbakhsh shipped computer-related equipment and simulation software that he procured in the United States to Iran.

Farahbakhsh's attorney claims that the sensors were used for construction of automobile testing components and will seeking to have the case dismissed.

Investigators are also looking for a second person who allegedly conspired to ship the sensors to Iran. The person, whose name is redacted from the indictment, allegedly does business at the Akeed Trading Company in the United Arab Emirates

If convicted, Farahbakhsh faces a maximum term of imprisonment of five years on the conspiracy charge and ten years on the unlawful attempted export charge, and a fine of up to $250,000 on each count.

The Bureau of Industry and Security (BIS) has released the comments submitted by the public on the proposed rule published on October 13, 2004 (69 Fed. Reg. 60689) that would revise the knowledge definition in the Export Administration Regulations (EAR) to replace the phrase "high probability" with the phrase" more likely than not, update and expand the "red flags" guidance and provide a "safe harbor" from liability arising from EAR provisions utilizing the new definition of knowledge. BIS received a total of 17 comments, ranging from one page to 12 pages, from individuals, trade consultants, exporters, industry coalitions, trade associations and a U.S. Government agency.

The public comments were universally critical of the changes set forth in the proposed rule and virtually all of the comments indicated that the proposed changes to the knowledge standard and the increased number of red flags would impose significant burdens on U.S. exporters. The comments expressed major concerns with the proposed "safe harbor" and noted that the safe harbor would simply lead to a "second round" of licensing that would increase costs and cause excessive delays. Many of the comments indicated that they doubted that exporters would even utilize the safe harbor provision and would opt to file for a license instead. While many of the comments provided suggestions on how the safe harbor provision could be improved several comments suggested that BIS withdraw the safe harbor proposal unless major changes were made to the final rule.

Interestingly, the Office of Advocacy of the U.S. Small Business Administration (SBA) submitted a comment indicating that it did not believe that BIS had properly analyzed "the full economic impact of the proposal on small entities as required by the Regulatory Flexibility Act (RFA)" and questioned BIS's conclusion that the proposal would not have a significant economic impact on small entities. SBA noted that small businesses are more likely to incur legal expenses, fines and penalties under the proposed rule than they would have under the current regulations. In addition, the agency stated that "small businesses may also incur additional legal expenses by having to hire attorneys to help them understand the implications of the new standard as well as incur costs due to expenses related to employee training (including lost man hours) to assure that employees understand the new standard and the additional red flags proposed by BIS." SBA recommended to BIS that it prepare and publish for public comment an initial regulatory flexibility analysis (IRFA) to access the economic impact on small entities before proceeding to a final rule.

The public comments on the proposed rule can be viewed at the following link (opens as PDF file):
http://efoia.bis.doc.gov/pubcomm/Knowledge%20and%20Red%20Flags/Final.pdf.

Today the U.S. and the E.U. agreed to to negotiate a bilateral resolution to their ongoing dispute concerning aircraft subsidies rather than continue the cases they had brought in October to the WTO's Dispute Settlement Body. The terms of reference for the bilateral negotiations call for the negotiations to be concluded within three months, during which time there would be a "subsidies standstill" and a "litigation standstill."

Below is the text of the U.S.-EU Agreement on Terms for Negotiation to End Subsidies for Large Civil Aircraft.

U.S.-EU Agreement on Terms for Negotiation to End Subsidies for Large Civil Aircraft.

1. The objective is to secure a comprehensive agreement to end subsidies to large civil aircraft producers in a way that establishes fair market competition for all development and production of LCA in the European Union and the United States.

2. At present, the companies concerned in the EU are Airbus and its principal shareholders, and in the US, Boeing.

3. The agreement will be negotiated within three months.

4. (a) The agreement will be negotiated between and apply to the United States and the European Union.

(b) These parties will subsequently work together to broaden the agreement to include as parties other countries with civil aircraft industries, or countries with risk sharing roles relevant to the objective of the agreement.

5. (a) During the negotiations the parties will not request establishment of WTO panels relating to the pending disputes.

(b) During the negotiations, within the time frame foreseen in paragraph 3 above, the parties will make no new government support commitments for LCA development or production.

6. The Parties will use the definition of subsidies in the ASCM. The parties will agree an illustrative list of subsidies to be covered by the agreement which elaborates the ASCM definition. They will use this list to reach agreement on which form of subsidy should be prohibited, actionable or permitted.

7. The agreement will be enforced through transparency and strong dispute settlement procedures.

8. In negotiating the agreement the parties will establish agreed terms and conditions under which either may withdraw at a future date. On the one year anniversary of the agreement, the parties will review its operation, including whether progress on international participation in it is sufficient to prevent circumvention of its objectives and to justify its continuation.

President Bush issued a proclamation on January 7, 2004 extending unconditional normal trade relations treatment to Armenian products entering the United States, effective immediately. Armenia has made "considerable progress in enacting market reforms" and has "demonstrated a strong desire to build a friendly and cooperative relationship with the United States," Bush said.

The complete text of the proclamation is as follows:

- - - - - - -

BY THE PRESIDENT OF THE UNITED STATES OF AMERICA

A PROCLAMATION

1. Since declaring its independence from the Soviet Union in 1991, Armenia has made considerable progress in enacting market reforms and on February 5, 2003, Armenia acceded to the World Trade Organization (WTO). The extension of unconditional normal trade relations treatment to the products of Armenia will permit the United States to avail itself of all rights under the WTO with respect to Armenia. Armenia has demonstrated a strong desire to build a friendly and cooperative relationship with the United States and has been found to be in full compliance with the freedom of emigration requirements under title IV of the Trade Act of 1974 (the "1974 Act") (19 U.S.C. 2431 et seq.).

2. Pursuant to section 2001(b) of Public Law 108-429, 118 Stat. 2588, and having due regard for the findings of the Congress in section 2001(a) of said law, I hereby determine that chapter 1 of title IV of the 1974 Act (19 U.S.C. 2431-2439) should no longer apply to Armenia.

3. Section 604 of the 1974 Act (19 U.S.C. 2483), as amended, authorizes the President to embody in the Harmonized Tariff Schedule of the United States the substance of relevant provisions of that Act, or other acts affecting import treatment, and of actions taken thereunder.

NOW, THEREFORE, I, GEORGE W. BUSH, President of the United States of America, acting under the authority vested in me by the Constitution and the laws of the United States, including but not limited to section 2001(b) of Public Law 108-429, and section 604 of the 1974 Act, do proclaim that:

(1) Nondiscriminatory trade treatment (normal trade relations treatment) shall be extended to the products of Armenia, which shall no longer be subject to chapter 1 of title IV of the 1974 Act.

(2) The extension of nondiscriminatory treatment to products of Armenia shall be effective as of the date of signature of this proclamation.

(3) All provisions of previous proclamations and executive orders that are inconsistent with the actions taken in this proclamation are superseded to the extent of such inconsistency.

IN WITNESS WHEREOF, I have hereunto set my hand this seventh day of January, in the year of our Lord two thousand five, and of the Independence of the United States of America the two hundred and twenty-ninth.

GEORGE W. BUSH

JPMorgan Chase Bank, N.A. (JPM ) announced on Friday, January 7, 2005 that it had signed an agreement to acquire Vastera (VAST), a provider of global trade management solutions. Upon completion of the merger, Vastera will be combined with the Logistics and Trade Services businesses of JPMorgan Chase's Treasury Services unit. Under the Agreement and Plan of Merger, Vastera shareholders will receive $3.00 for each outstanding share of Vastera common stock they own, for a total transaction value of approximately $129 million.

Dulles, Virginia-based Vastera provides software/managed services and trade management consulting to about 400 companies. However, the company has struggled to turn a profit and to increase revenue. As a result of this acquisition, New York-based J.P. Morgan Chase, one of the world's largest commercial banks, will be the first global financial institution to offer integrated cash, trade and logistics services.

President Bush today announced U.S. Trade Representative Robert Zoellick as his pick to become the No. 2 official at the State Department under Secretary of State-designate Condoleezza Rice. "Condoleezza Rice and Bob Zoellick will form one of the really strong, capable foreign policy teams our country has ever had," Bush said on the South Lawn of the White House just before he departed for a day trip to Michigan.

This appointment had been reported in today's edition of the Washington Post. The Post's article noted that the names being circulated as possible successors for the post of USTR include: Josette Shiner (currently deputy USTR), Gary Edelson (former deputy national security advisor), Representative Jim Kolbe (R-AZ), Grant Aldonas (currently undersecretary of commerce for international affairs) and Robert M. Kimmitt (currently a Time Warner executive and formerly U.S. ambassador to Germany).

U.S. Customs and Border Protection (CBP) has issued the agenda for next week's sold out trade symposium in Washington, DC. The agenda can be found at the following link (opens as MS-Word document):
www.customs.gov/linkhandler/cgov/import/communications_to_industry/trade_symposium%20.ctt/symposium_%20agenda.doc.

We look forward to seeing many of our clients and subscribers at next week's symposium.

CBP has made an additional policy change to the new requirements that were instituted at ports of entry on October 1, 2004 to correct weaknesses in the current CBP policy pertaining to the identification of the ultimate consignee at the time of entry or release. Effective January 1, 2005, CBP will disallows the transmission of "certified from summary" consolidated entries. Details about CBP's ultimate consignee reporting policy can be found at the following link: www.customs.gov/xp/cgov/import/cargo_summary/ult_consignee.xml.

CBP has announced that the interest rate applied to additional monies owed to CBP as a result of the reconcilation process will be 5 percent for the period January 5, 2005 through March 30, 2005. This interest rate has remained unchanged since January 4, 2004.

The commissioners of the U.S. International Trade Commission (ITC) today announced their votes in the final injury phase of the antidumping investigations involving certain frozen or canned warmwater shrimp and prawns from Brazil, China, Ecuador, India, Thailand and Vietnam (Inv. Nos. 731-TA-1063-1068 (Final)) and certain crepe paper products from China (Inv. No. 731- TA-1070A (Final)).