The Office of the United States Trade Representative (USTR) has issued the 2005 version of the National Trade Estimate Report on Foreign Trade Barriers (NTE), an annual report documenting foreign trade and investment barriers and U.S. efforts to reduce and eliminate those barriers. The NTE provides an account of barriers and unfair trade practices to American exports of goods, services and agricultural products. The NTE, which is required to be issued by the Omnibus Trade and Competitiveness Act of 1988, is based upon information compiled by the USTR, the U.S. Departments of Commerce and Agriculture, and other U.S. Government agencies, and is supplemented with information provided in response to a Federal Register notice, and by members of the private sector trade advisory committees and U.S. Embassies abroad. The 2005 NTE report discusses the largest export markets for the United States, including 56 nations, the European Union (E.U.), Taiwan, Hong Kong, the Southern African Customs Union and the Arab League.

The NTE's chapter on the E.U., which is 49 pages in length, states that U.S. exporters in some sectors continue to face chronic barriers to entering the EU market. The report indicates that although the enlargement of the E.U. in May 2004 to include ten new countries represents an important and positive political and economic achievement, it has resulted in new tariff, non-tariff and services-related barriers to U.S. trade. In addition, the report notes that the systemic problems surrounding a lack of uniformity and transparency in the administration of E.U. customs law have assumed greater prominence in light of the addition to the E.U. of 10 new national customs authorities.

The NTE's chapter on the Arab League states that the Arab League's boycott of Israel remains a significant barrier to U.S. trade and investment in some countries in the Middle East and North Africa. The report indicates that enforcement of the boycott remains the responsibility of individual member states and enforcement efforts vary widely from country to country. For example, the report notes that Egypt, Jordan, Algeria, Morocco, Tunisia, and the Palestinian Authority do not enforce the boycott.

With respect to Turkey, the report states that U.S. CE-marked products, particularly medical devices, are often detained by Turkish customs authorities for inspection. In some cases, U.S. products apparently have been subject to additional tests, despite their CE marks, while EU CE-marked products gain immediate entry to the Turkish market.

The USTR's 2005 NTE report can be found at the following link: www.ustr.gov/Document_Library/Reports_Publications/2005/2005_NTE_Report/Section_Index.html.

Labels: Boycotts

In yet another export enforcement case involving a freight forwarder, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) today announced that Air Tiger Express, a freight forwarder located in El Segundo, California, agreed to pay a $49,500 civil penalty to settle charges that it violated the Export Administration Regulations (EAR). BIS charged that, on nine occasions in 1998 and 1999, Air Tiger Express aided and abetted the unlicensed export of items subject to the EAR to organizations in India that were on the Entity List (Supplement 4 to the Part 744 of the EAR).

The Entity List, which can be found at www.bis.doc.gov/Entities/Default.htm, is a compilation of end-users that have been determined to present an unacceptable risk of diversion to the development of weapons of mass destruction or their means of delivery. Exports to end-users appearing on the Entity List require licenses from the Department of Commerce. The export of an item to a Listed Entity without the proper license approval is a violation of the EAR and is subject to criminal penalties and administrative sanctions.

The Office of Foreign Assets Control (OFAC) today published in the Federal Register a final rule revising the Iranian Transactions Regulations (ITR) (31 CFR Part 560) to include definitions relating to registered brokers and dealers in securities and to clarify the application to such brokers and dealers of general licenses relating to funds transfers to and from Iran and to the operation of Iranian accounts.

First, the final rule amends the ITR OFAC by amending section 560.320 of the ITR to clarify that the term "Iranian accounts" includes accounts of persons located in Iran or of the Government of Iran maintained on the books of a United States registered broker or dealer in securities. Second, the rule adds a new provision at 31 CFR 560.321 to establish a regulatory definition of the term "United States registered broker or dealer in securities." Third, the rule amends section 560.516 of the ITR to clarify that United States registered brokers or dealers in securities are authorized to process certain authorized transfers of funds to or from Iran. Finally, the rule amends section 560.517 of the ITR to clarify that U.S. registered brokers or dealers in securities are within the scope of the general license authorizing the exportation of certain Iranian accountrelated services to Iran. A corresponding technical change to section 560.532 of the ITR is also included.

The the final rule can be found at the following link:
http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/05-6046.pdf.

The Bureau of Industry today published in the Federal Register an advance notice of proposed rulemaking (ANPR) seeking public comments on proposed changes to the regulations governing the issuance of "deemed export" licenses for the transfer of controlled technology to foreign nationals in the U.S. The proposed changes are a direct result of a report issued by the U.S. Department of Commerce's Inspector General (IG) in March 2004 that concluded that existing BIS policies under the Export Administration Regulations (EAR) could enable foreign nationals from countries and entities of concern to access otherwise controlled technology. See Deemed Export Controls May Not Stop the Transfer of Sensitive Technology to Foreign Nationals in the U.S. (Final Inspection Report No. IPE-16176, March 2004).

As a result of the IG's report, BIS is considering the following changes to the EAR:
(1) Definition of "Use" Technology -- The IG stated that confusion existed over the definition and implementation of controls associated with the "use" of equipment by foreign nationals in the United States. Specifically, the IG expressed concern over the definition of use in section 772.1 of the EAR which defines "use" as "Operation, installation (including on-site installation), maintenance (checking), repair, overhaul, and refurbishing." The IG expressed concern about the presence of the word "and" in the definition being interpreted to mean that all of the activities enumerated in the definition must be present in order to constitute "use." In its report the IG suggested that BIS revise the definition of "use" in section 772.1 of the EAR to replace the word "and" with the word "or," as follows: "Use"--Means all aspects of "use," such as: operation, installation (including on-site installation) maintenance (checking), repair, overhaul, or refurbishing.

(2) Use of Foreign National's Country of Birth as Criterion for Deemed Export License Requirement -- The IG expressed concern over BIS's deemed export license policy of basing licensing requirements on a foreign national's most recent citizenship or permanent residency. The IG recommended that BIS amend its policy to require U.S. organizations to apply for a deemed export license for employees or visitors who are foreign nationals and have access to dual-use controlled technology if they were born in a country where the technology transfer in question would require an export license, regardless of their most recent citizenship or permanent residency.

(3) Clarification of Supplemental Questions and Answers on Government Sponsored Research and Fundamental Research -- The IG expressed concerns over certain questions and answers in Supplement No. 1 to part 734 of the EAR. Specifically, the IG found that two of the answers provided (answers to questions A(4) and D(1)) were inaccurate or unclear. As a result, BIS is proposing to revise these answers to address the IG's concerns.

Because these changes will require amendments to the EAR, BIS is interested in evaluating the potential impact that the recommended changes will have on U.S. industry, academic institutions, U.S. government agencies and holders of export controlled technology. As a result, BIS is soliciting comments from the public on the proposed changes to the EAR. BIS has stated that it is particularly interested in receiving specific information regarding the impact of the regulations, e.g., data on the number of foreign nationals in the United States who will face licensing requirements if the IG's recommendations were adopted, and impact of compliance with the new licensing requirements on cost, resources and procedures. BIS is also interested in receiving any alternative suggestions regarding the concerns raised by the IG. Comments must be submitted to BIS by May 27, 2005.

The ANPR can be viewed at the following link: http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/05-6057.htm.

A coalition of nearly 30 companies and organizations have called on the U.S. Congress to enact legislation repealing the Office of Foreign Assets Control's (OFAC) new regulation modifying the definition of "payment of cash in advance" for purposes of sales of humanitarian products to Cuba.

In a press release, Bill Reinsch, co-chairman of USA*Engage said "OFAC's February 2005 ruling not only ignores the congressional intent of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), it discounts the fact that export markets are important to the future of U.S. agriculture." He added that "it is critical to U.S. agricultural trade that this issue be resolved expeditiously in a manner that does not jeopardize current or future exports to Cuba." Referring to the Agricultural Export Facilitation Act of 2005 that was recently introduced in both houses of Congress, Bob Stallman, president of the American Farm Bureau Federation stated "we applaud members of both the House and Senate who understand the great importance of this issue to the agriculture community and have introduced legislation to rectify the situation. We will continue to work closely with Congress to resolve this issue."

Since the new regulation was issued, Alimport, the Cuban government agency responsible for purchasing food and medical products is requiring all U.S. sellers to use the following payment terms for all sales: "Irrevocable, payable at sight and Non-confirmed Letter of Credit to be issued by a Non Cuban-Non U.S Bank"

The groups calling on Congress for relief from the OFAC ruling include Ag BioTech, Inc., AlaCaribe Initiative Inc., Alamar Associates, American Farm Bureau Federation, Crowley Liner Services, Cuba Trade Coalition, FC Stone, Kaehler Homedale Farm Enterprise, Louis Dreyfus Corporation, Maybank Shipping Company, Inc., Miller Farm Exports/Miller Medical Exports, Molimar Export Consultants, National Association of Wheat Growers, National Chicken Council, National Grain and Feed Association, National Milk Producers Federation, National Turkey Federation, North American Export Grain Association, Sunlight Foods, Inc., USA*Engage, USA Rice Federation, U.S. Dairy Export Council, US Rice Producers Association, US Wheat Associates, Vista Trade Group, Wheat Export Trade Education Committee, Wide West Exports.

Separately, during a recent trip to Havana, Representative Jeff Flake (R-AZ) said he will make his fourth attempt to get Congress to approve an amendment to the Treasury Department's appropriations bill that would eliminate funding for enforcement of the U.S. travel ban against Cuba and thus allow Americans to travel to the Cuba. Flake said he didn't sponsor the spending bill amendment in 2004 because it was a presidential election year, but did back a similar one in the three previous years. All three times the amendment was eliminated from final spending bill in the conference committee.

The Bureau of Industry and Security (BIS) has entered into settlement agreements with Uni-Arab Engineering and Oil Field Services (Uni-Arab) of Abu Dhabi, United Arab Emirates and two of its senior officials for committing multiple violations of the U.S. Export Administration Regulations (EAR), several of which related to making false statements to a senior BIS official.

BIS imposed a $55,000 civil penalty and denial of export privileges on Jamie Radi Mustafa, Uni-Arab's Assistant Managing Director for committing six violations of the EAR. The settlement agreement specifies that Mr. Mustafa violated the EAR by participating in a transaction concerning the export of oil field parts from the U.S. to Dubai from an oil field equipment broker located in the U.S. that was subject to a denial order. The settlement agreement also stated that Mr. Mustafa committed four violations of 15 CFR 764.2(g) by making false statement to the Assistant Secretary for Export Enforcement in the course of a BIS Administrative Enforcement Proceeding. During the proceeding, Mr. Mustafa represented to the Assistant Secretary for Export Enforcement that he had not had any direct or indirect intentional dealings with Libya, or any other countries subject to U.S. sanctions. Those statements were not correct as BIS had information showing that Mr. Mustafa had, on more than one occasion, participated in transactions involving the sale of items subject to the Regulations to a petrochemical company in Libya.

BIS also imposed a $20,000 civil and denial of export privileges on Nureddin Shariff Sehweil, Uni-Arab's Managing Director, for violating the EAR. The settlement agreement states that Mr. Sehweil violated 15 CFR 764.2(g) by making false statements to the Assistant Secretary for Export Enforcement in the course of a BIS Administrative Enforcement. According to the settlement agreement, Mr. Sehweil represented to the Assistant Secretary for Export Enforcement that Uni-Arab, of which Sehweil was Managing Director, had not had any direct or indirect dealings with countries under U.S. embargo restrictions in connection with merchandise that is subject to U.S. jurisdiction. Those statements were not correct since BIS had information showing that Uni-Arab had, on more than one occasion, participated in transactions involving the sale of U.S. products to a petrochemical company in Libya.

Finally, BIS assessed a $95,000 civil penalty and a denial of export privileges on Uni-Arab for the violations committed by its employees.

The charging letters, settlement agreements and orders in these cases can be found at the following link: http://efoia.bis.doc.gov/ExportControlViolations/TOCExportViolations.htm.

The House International Relations Committee's Subcommittee on Middle East and Central Asia will hold an open markup of H.R. 282, the Iran Freedom Support Act, on April 7, 2005 in room 2200 of the Rayburn House Office Building.

H.R. 282, which was introduced by Representative Ileana Ros-Lehtinen (R-FL) and has more than 100 co-sponsors, would make it more difficult for the Administration to waive sanctions on companies determined to have violated the Iran-Libya Sanctions Act (ILSA) (codified at 50 U.S.C. 1701 note). ILSA, which was enacted in 1996 and renewed for five more years in 2001, sanctions foreign investment of more than $20 million in one year in Iran or Libya’s energy sector (although the Libya sanctions were lifted in April 2004). No sanctions have been imposed under ILSA to date.

H.R. 282 would codify U.S. sanctions on Iran until the President certified to the appropriate congressional committees that Iran has "permanently and verifiably dismantled its weapons of mass destruction programs and has committed to combating such weapons' proliferation." In addition, H.R. 282 would amend ILSA by: (1) eliminating the mandatory sanction provisions on Libya; (2) imposing mandatory sanctions on persons or entities that assisted Iran in acquiring or develop weapons of mass destruction or destabilizing types and numbers of conventional weapons; (3) authorize the Treasury Deparatment to investigate the sanctions to be imposed; (4) revising multilateral regime reporting requirements, including provisions respecting sanctions on individuals aiding Iranian petroleum development; (5) enlarging the scope of sanctionable entities; and (6) eliminating the sunset provision. H.R. 282 also authorizes the President to provide financial and political assistance to eligible foreign and domestic individuals and groups that support democracy in Iran and that are opposed to the Government of Iran.

The United States International Trade Commission (ITC) today issued a final injury determination in the antidumping investigations of magnesium from China and Russia.

Chairman Stephen Koplan, Vice Chairman Deanna Tanner Okun, and Commissioners Charlotte R. Lane and Daniel R. Pearson found one like product consisting of pure and alloy magnesium and voted in the affirmative. Commissioners Marcia E. Miller and Jennifer A. Hillman voted with the majority, except that they found granular magnesium to be a separate like product and found subject imports of granular magnesium from Russia to be negligible. (Imports are generally deemed 'negligible' if they amounted to less than 3 percent of all such merchandise imported into the United States in the most recent 12-month period for which data are available preceding the filing of the petition.)

As a result of the ITC's affirmative determinations, the U.S. Department of Commerce will issue antidumping duty orders on imports of magnesium from China and Russia.

The products covered by this antidumping investigation are primary and secondary pure and alloy magnesium metal, regardless of chemistry, raw material source, form, shape, or size. Pure magnesium is widely used in commercial and industrial applications because it is easily machined and lightweight, has a high strength-to-weight ratio and has special chemical and electrical properties. Alloy magnesium is principally used in structural applications, primarily in castings and extrusions for the automotive industry.

This antidumping investigation was filed by the following petitioners: U.S. Magnesium Corp., United Steelworkers of America, Local 8319 and Glass, Molders, Pottery, Plastics & Allied Workers International, Local 374.

The U.S. Department of Commerce (DOC) today announced that it will implement a new system to monitor U.S. textile and apparel imports. The monitoring system will permit DOC and the public access to preliminary textile and apparel data from U.S. Customs and Border Protection (aggregated on a category basis). DOC anticipates that the new system will be in place by the first week in April 2005, at which time preliminary data on textile and apparel imports for the first quarter of the year should be available. The preliminary data will be posted biweekly on a website maintained by the Department's International Trade Administration Office of Textiles and Apparel at http://otexa.ita.doc.gov/.

The textile monitoring system is primarily aimed at monitoring imports of textile and apparel imports from China, which have surged after the end of the global quota system on December 31, 2004. According to DOC, U.S. imports of Chinese textiles and apparels increased nearly 34% from December 2004 to January 2005. Earlier this month the European Union announced that it will consider emergency trade restrictions on textile products from China when those imports reach certain ceilings. China has sought to limit the imposition of safeguards and other import restraint measures by urging its textile producers to demonstrate self-restraint to prevent disruptions to international textile trade.

The World Trade Organization's Dispute Settlement Body today agreed to establish a Dispute Settlement Panel to rule on the U.S. complaint that the European Union fails to administer its customs laws in a uniform manner (Case No. DS315). The U.S. has alleged that the manner in which the E.U. administers its customs laws laws is not uniform, impartial or reasonable and is therefore inconsistent with Article X:3(a) of the GATT 1994. The U.S. has alleged that because the administration of E.U. customs laws is carried out by the national customs authorities of E.U. member states, such customs administration takes numerous different forms.

Specifically, the U.S. is concerned with the following E.U. customs matters:

*Classification and valuation of goods, including the provision of binding classification and valuation information to importers;

*Procedures for the entry and release of goods, including different certificate of origin requirements, different criteria among member States for the physical inspection of goods, different licensing requirements for importation of food products, and different procedures for processing express delivery shipments;

*Procedures for auditing entry statements after goods are released into the stream of commerce in the E.U.;

*Penalties and procedures regarding the imposition of penalties for violation of customs rules; and

*Record-keeping requirements.

A decision is expected to be issued by the Dispute Settlement Panel in approximately six months.

Monday and Tuesday, March 21 and 22, 2005: No meetings, hearings or votes scheduled.

Wednesday, March 23, 2005:
9:30 a.m. - Commission Vote in final antidumping investigation on Magnesium from China and Russia, Inv. Nos. 731-TA-1072 and 1072 (Final).

9:45 a.m. - Commission Hearing on Advice Concerning Possible Modifications to the U.S. Generalized System of Preferences, 2004 Review, Inv. No. 332-466.

Thursday, March 24, 2005: No meetings, hearings or votes scheduled.

Friday, March, 25 2005:
9:30 a.m. - Preliminary Conference in preliminary antidumping investigation on Superalloy Degassed Chromium from Japan, Inv. No. 731-TA-1090 (Preliminary).

In his opening statement, Committee Chairman Bob Goodlatte (R-VA) noted "I find it disturbing that the Treasury Department’s Office of Foreign Asset Control is placing, with its February 22, 2005 regulations, what I see as unnecessary barriers regarding agricultural trade with Cuba. I am especially concerned about the impact these regulations may have on contracts already finalized. These contracts, including those with delivery dates after March 24, 2005, may have to be renegotiated to the disadvantage of United States exporters and ultimately United States farmers and ranchers." He also pledged his commitment to closely monitor the effects of this new policy to ensure minimal disruption of U.S. trade with Cuba and said "I do not want to see the United States government placing barriers in the way of agricultural exports. Nor do I want to see legitimate contracts, entered into willingly by a seller and a buyer, declared void because of a regulation issued without notice or comment."

Robert Wright, Executive Vice President of Sales and Marketing of Pilgrim's Pride, raised concern over the potential loss of exports due to OFAC's new regulation. He also added that "putting these exports at risk was not necessary" and asked "how do U.S. poultry exporters explain to the Cuban buyer that the contracts signed in good faith can no longer be honored?". He suggested that OFAC should have opted to allow existing contracts for exports to Cuba to remain valid.

OFAC Director Werner explained to the Committee that the guidelines were issued in response to "lingering confusion" among some U.S. exporters about the payment process they are legally required to follow when selling agricultural products to Cuba. He also provided some background information on what led to this policy change. He noted that some exporters were interpreting the term to allow for the shipping of goods to Cuba provided cash payment was received prior to delivery of title to the goods. In addition, U.S. financial institutions sought guidance from OFAC on the question of whether or not the shipment of goods prior to receipt of payment by U.S. exporters was permitted under the law. Werner said that because OFAC found itself unable to provide definitive guidance on the subject, officials began "extensive consultations" within the Treasury Department and with other executive-branch agencies "on the interpretation of the term 'payment of cash in advance.'"

Werner concluded his remarks by warning that "after the 30-day 'cash against documents' financing period ends, any transactions under financing terms resembling 'cash against documents' will be prohibited." But, he noted that "it is also important to emphasize that the provisions allowing for payment through letters of credit issued by third-country banks remain unaffected by the clarification of 'cash payment in advance.'"

The prepared remarks of the witnesses at the hearing can be found at the following link: agriculture.house.gov/hearings/statements.html.

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) recently entered into settlement agreements with two companies for violations of the U.S. Export Administration Regulations (EAR).

On March 11, 2005, BIS issued an order stating that it had imposed a $39,000 civil penalty against BEF Corporation, of Allentown, PA, for attempting to export mini photo labs to Iran. Specifically, BIS charged BEF with one violation of 15 CFR 764.2(d) for conspiracy to export photo labs to Iran. BIS claimed that BEF tried to conceal the ultimate destination of the photo labs by exporting them through the United Arab Emirates to Iran. In addition, BIS charged BEF with three violations of 15 CFR 764.2 for making false statements on Shipper's Export Declarations regarding the value of the exports.

In yet another successor liability case, on March 14, 2005 BIS imposed a $46,750 penalty on Rockwell Automation (Rockwell), of Milwaukee, Wisconsin, for 17 violations of the EAR. Ten of the violations occurred before Rockwell acquired Entek-IRD International (Entek-US) and Entek IRD International Limited (Entek-UK) and seven of the violations occurred after the acquisition had occurred. Specifically, BIS charged Rockwell with multiple violations of 15 CFR 764.2(a) for exporting balancing machines (ECCN 2B229) to Malaysia, Mexico and Venezuela without obtaining the required export license. The company was also charged with making false statements on Shipper's Export Declarations since they reported that the item could be exported from the U.S. as NLR ("No license required") and was classified as 3A992. The company was also charged with reexporting U.S.-origin products from the U.K. to a company on the U.S. Entity List.

President Bush today announced his intention to nominate Rob Portman, of Ohio, to be United States Trade Representative. He currently serves in the United States House of Representatives. Throughout his 12 years in Congress, Congressman Portman has authored numerous bills that have become law including legislation regarding pension laws, capital gains taxes, IRS reform, and community anti-drug efforts. Congressman Portman is a member of the Ways and Means Committee and its subcommittee on Trade. He is also Vice Chairman of the Budget Committee, and he serves as the Chairman of the House Republican Leadership.

Prior to his election to Congress, he practiced business and international law as a partner in the Cincinnati law firm of Graydon, Head and Ritchey. Earlier in his career, Congressman Portman practiced international trade law at the Washington, DC law firm of Patton Boggs. He also served in President George H. W. Bush's Administration as Associate Counsel to the President and later as Deputy Assistant to the President and Director of the White House Office of Legislative Affairs. He received his bachelor's degree from Dartmouth College and his J.D. from the University of Michigan.

The written testimony from today's Senate Foreign Relations Committee hearing on the lifting of the E.U.'s arms embargo on China has been posted on the Committee's Web site at:
foreign.senate.gov/hearings/2005/hrg050316p2.html. The written statement of Dr. Richard Grimmett of the Congressional Research Service contains a comprehensive overview of the embargo and E.U. export controls.

The Miami Herald has reported that John Kavulich, head of the U.S.-Cuba Trade and Economic Council (USCTEC), resigned today. The paper reports that, among other things, Kavulich was frustrated "with a Cuban government that he believed was not interested in free and fair trade but more bent on using the lure of trade to force U.S. companies to lobby for policy changes in Washington." The entire text of the article can be found at the following link: www.miami.com/mld/miamiherald/news/world/cuba/11145709.htm (free subscription required).

The Cato Institute's Center for Trade Policy Studies today issued a Trade Policy Analysis Report entitled Free Trade, Free Markets, analyzing the votes of the members of the 108th Congress on trade issues. The report classifies the members of the 108th Congress into four categories: free traders, who oppose both trade barriers and subsidies; internationalists, who oppose barriers and support subsidies; isolationists, who support barriers and oppose subsidies; and interventionists, who support barriers and subsidies. The report can be found at the following link: www.freetrade.org/pubs/pas/tpa-028es.html.

The U.S. Trade Representatives Office today announced tha the World Trade Organization (WTO) dispute settlement panel has ruled that the European Union (E.U.) system for protecting certain geographical food names, known as geographical indications (GIs), as trademarks violates WTO agreements on protection of intellectual property rights and on trade in goods because it discriminates against non-E.U. products. The WTO panel also clarified the E.U. regulation by ruling that the E.U. could protect GI names only as registered and not foreign translations or linguistic variations of the registered name.

As a result of the WTO's ruling the E.U. will have to change its system to let the U.S. and other non-E.U. producers submit applications for GI protection to the E.U. registry.

On March 16, 2005 the Senate Foreign Relations committee will hold a hearing on the lifting of the E.U. arms embargo on China. The hearing will be held at 2:30 p.m. in room 419 of the Dirksen Senate Office Building. The witnesses scheduled to appear at the hearing include:

*Mr. Peter Brookes, Senior Fellow for National Security Affairs and Director, Asian Studies Center Heritage Foundation, Washington, DC
*Dr. Bates Gill, Freeman Chair in China Studies Center for Strategic and International Studies, Washington, DC
*Dr. Richard F. Grimmett, Specialist in National Defense, Congressional Research Service, Washington, DC

Separately, an E.U. delegation on Monday met with Bush Administration officials and several members of Congress to discuss the lifting of the E.U. arms embargo on China. While the E.U. officials indicated that the lifting of the arms embargo would be matched by tough export controls, many in Washington remain strongly opposed to the E.U.'s proposed action.

In the meantime, the E.U. is working to revise and strengthen the current E.U. Code of Conduct on Arms Exports that was adopted in 1998. The E.U. has stated that strengthening the Code of Conduct would be a prerequisite to lifting the China arms embargo. The Code of Conduct lays down eight criteria against which E.U. Member States assess applications to export military equipment. According to the E.U., the revised Code would include several new elements: Member States' responsibilities with respect to brokering, transit/transhipment, licensed production overseas, intangible transfer of software and technology, end-user certification and national reporting will be clarified. The criteria will include additional references to anti-personnel mines, commitments under the multinational export control regimes and international humanitarian law. Work is also being carried forward on a "tool box" or set of measures providing for increased sharing of information and transparency, to be applied by Member States for a specific period with respect to arms exports to a previously embargoed destination.

Senior officials of the U.S. Department of Defense have recently indicated that if the E.U. arms embargo is lifted, the U.S. will require another layer of review on exports of defense article and services to E.U. countries in order to ensure that adequate measures are in place to prevent diversion to China.

The U.S. International Trade Commission (ITC) today determined that revoking the antidumping duty order on frozen concentrated orange juice from Brazil would not be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time. All six Commissioners found that revoking the existing antidumping order, which was imposed in 1987, would not be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.As a result of the ITC's negative determination in this Sunset Review, the existing order on imports of frozen concentrated orange juice from Brazil will be revoked by the U.S. Department of Commerce (DOC).

The U.S. citrus industry indicated that the original antidumping order was no longer having a beneficial impact on the U.S. market because most of the relevant Brazilian producers had been excluded over the years. A new antidumping petition was filed in December 2004 covering both frozen concentrate orange juice and not-from-concentrate orange juice imported from Brazil. The ITC made a preliminary injury finding in that case on March 3, 2005 and the antidumping investigation is now being conducted by the DOC.

The U.S. Export-Import Bank (U.S. Ex-Im Bank) today unveiled its third bilingual Web portal on its Web site at www.exim.gov. U.S. exporters, Turkish buyers and financial institutions from Turkey and the U.S. will be able to choose either English or Turkish language versions of key U.S. Ex-Im Bank information. The Web pages explain how the U.S. Ex-Im Bank may be able to assist creditworthy Turkish buyers of U.S. goods or services, or U.S. exporters, who may not be able to obtain financing from private sector sources at reasonable commercial terms.

The U.S. Ex-Im Bank's current exposure in Turkey is approximately $3 billion, behind only China, Mexico and Brazil. The expansion of the U.S. Ex-Im Bank's business in Turkey has followed the Turkish government's commitment to economic reform and the development of a hospitable investment climate. Annual authorizations for Turkey have averaged $225 million, a figure that should increase as the demand for U.S. capital goods and Turkish entities capacity to borrow continue to improve.

American companies interested in exporting goods and services to Turkey can access that information directly at www.exim.gov/turkey/index.html, and Turkish companies seeking financing to purchase U.S. goods and services, can access the Turkish language version of that information at www.exim.gov/turkey/index-tu.html.

The Bureau of Industry and Security (BIS) has posted on its Web site several advisory opinions issued by various BIS divisions in 2003 and 2004. The opinions include advisory opinions issued by various BIS divisions, including the Deemed Exports and Electronics Division, Office of Exporter Services, Regulatory Policy Division, Foreign Policy Controls Division and Strategic Trade Division. BIS has indicated that it will add future advisory opinions on the site as appropriate.

The advisory opinions can be found at the following link: www.bis.doc.gov/PoliciesAndRegulations/AdvisoryOpinions.htm.

Today the Bureau of Industry and Security (BIS) published in the Federal Register a Temporary Denial Order (TDO) affecting the export privileges under the Export Administration Regulations (EAR) of the following persons and companies:

(1) Gold Technology Limited, Flat 23C, 97 High Street, Hong Kong;
(2) Hero Peak Limited, Flat C, Block 4, 11/F Golden Bldg., 145 Fuk Wa Street, Sham Shui, Po, Kowloon, Hong Kong; and, Room D, 11/F, Fui Nam Building, 48-51 Connaught Road West, Hong Kong;
(3) Joanna Liu, Flat 23C, 97 High Street, Hong Kong;
(4) Oriental Trading Corporation, 1st Floor, Masco Plaza, Blue Area, P.O. Box 2879, Islamabad, Pakistan;
(5) Portson Trading Limited, Room D, 8/F, 217-223 Tung Choi Street, Mongkok, Kowloon, Hong Kong; and, Room 709 Wing Shan Tower, 173 Des Voeux Road Central, Hong Kong; and, Room 2208, 22/F, 118 Connaught Road West, Hong Kong;
(6) Sunford Trading Limited, Room 2208, 22/F, 118 Connaught Road West, Hong Kong;
(7) Zhenke International Trading Co. Ltd., Tianjin Port Free Trade Zone, Room 801, Gold Beauty Building, No. 88, Haibain 8 Road, TPFTZ, Tianjin, People's Republic of China.

The notice states that BIS issued the TDO based on evidence indicating that the seven persons and companies have conspired with others, known and unknown, to cause items subject to the EAR to be illegally exported to Pakistan, that they caused exports of items controlled for nuclear non-proliferation reasons to Pakistan with knowledge that violations of the EAR would occur and that they took actions intended to evade the EAR.

The TDO can be viewed at the following link:
a257.g.akamaitech.net/7/257/2422/01jan20051800/
edocket.access.gpo.gov/2005/05-4877.htm.

On March 11, 2005, the U.S. Department of Commerce (DOC) published in the Federal Register an interim final rule extending and greatly expanding the Steel Import Monitoring and Analysis System (SIMA). The SIMA system, which requires licenses for imports of certain steel products, was established in connection with the safeguard measures imposed on steel products in 2002 to provide steel producers, steel consumers, importers and the public with information on anticipated imports of certain steel products.

The interim final rule provides that DOC will extend the SIMA system for four years (until 2009) and will require import licenses for more than 30 additional basic steel mill products. In addition, DOC plans to terminate the import-licensing requirement for several downstream steel products (carbon and alloy flanges and pipe fittings) that was part of the original safeguard package. Although the interim final rule is effective March 11, 2005, import licenses for the additional products will not be required until June 9, 2005.

The interim final rule states that DOC does not plan to change the existing deadline for the submission of licenses. SIMA licenses will continue to be required at the time of entry summary, but may be obtained up to 60 days prior to the expected date of importation.

Annex II of the interim final rule contains a list of the new products (and HTSUS numbers) that will be included in the SIMA system. A number of new steel products will now be subject to import licensing, including blooms, billets, slabs, rails, bars, pipe and tube (including standard pipe, line pipe and OCTG), sheets and strip.

Comments on the proposed changes to the SIMA system must be submitted to DOC by May 10, 2005. DOC indicated that it intends to issue a final rule, responding to comments received on this interim final rule, before September 30, 2005.

DOC's interim final rule can be viewed at the following link:
http://a257.g.akamaitech.net/7/257/2422/
01jan20051800/edocket.access.gpo.gov/2005/05-4971.htm.

Sunday's San Jose Mercury News contains an excellent article entitled "What's a gift, what's a bribe?", which discusses the difficult issues that U.S. companies face in doing business in developing countries while ensuring compliance with the U.S. Foreign Corrupt Practices Act (FCPA). Among other things, the article discusses InVision Technologies' recent settlement with the SEC and DOJ, whereby the company paid $1.9 million in civil penalties to settle allegations that the company violated the FCPA in connection with sales of bomb detection equipment to China, the Philippines and Thailand. The article notes that the number of FCPA cases has "risen sharply in recent years" due to more companies "voluntarily disclosing to SEC investigators potential violations they've detected in internal audits."

The article can be viewed at the following link: www.mercurynews.com/mld/mercurynews/business/11125443.htm (note that a user ID will have to be established to view this article).

Congressman E. Clay Shaw, Jr. (R-FL), Chairman of the House Ways and Means Committee's Subcommittee on Trade has advised members of the U.S. House of Representatives that the deadline for submitting tariff legislation or miscellaneous corrections to the trade laws is Thursday, April 28, 2005. This deadline was set to give the Subcommittee on Trade sufficient time to evaluate and consider these bills. After collecting and reviewing bills introduced by this deadline, the Subcommittee on Trade will issue an advisory requesting public comment on the bills it identifies to assist it in marking up the legislation. In addition, the Subcommittee on Trade will request a review and analysis of each bill from the U.S. Trade Representative, the U.S. International Trade Commission and Customs and Border Protection. Bills that create revenue losses exceeding $500,000 per year, operate retroactively or attract significant controversy or opposition are not likely to be included in a miscellaneous trade bill.

The Cato Institute's Center for Trade Policy Studies has recently published a trade briefing paper entitled "Nonmarket Nonsense: U.S. Antidumping Policy toward China". The briefing paper calls for the Bush Administration to take a "hard look" at its antidumping policy toward China, particularly the Commerce Department's nonmarket economy (NME) methodology, as well as some rules changes that the Commerce Department is considering.

The briefing paper notes that the outcome in NME cases is dictated by a series of subjective decisions, including the selection of the surrogate country and the selection of surrogate values. Specific examples from the recent Chinese Wooden Bedroom Furniture case are provided to show why the NME methodology needs to be reassessed. In addition, the briefing paper discusses DOC's proposed changes to its policies that could make it more difficult for Chinese and other NME exporters to obtain the Section A rate.

The trade briefing paper can be found at the following link: www.freetrade.org/pubs/briefs/tbp-022es.html.

March 14, 2005: No meetings, hearings or votes scheduled.