International Trade Law News

According to today's most recent Reuters news report, Iran's National Petrochemical Company (NPC) still expects to purchase Basell NV from its current owners Royal/Dutch Shell Group and BASF AG. The article states that "Iran said it was better-placed to buy polymer joint venture Basell than its Indian rivals and expects to be the final winner in the sale process." The article quotes NPC's managing director as saying "from a contractual point of view, NPC is in good position and will be the final winner, but the decision rests with the shareholders."

U.S. companies and their foreign subsidiaries that purchase polypropylene, polyethylene and other products from Basell's U.S. or non-U.S. plants and/or purchase any parts, components or packaging materials made from polypropylene and polyethylene should determine the impact of Basell's sale to NPC, which is owned by the Government of Iran, on their operations. Specifically, U.S. companies should consider the broad reach of the Iranian Transactions Regulations (ITR) (31 CFR Part 560) on their international operations if Basell is sold to NPC.

The U.S. Senate early this morning confirmed Representative Robert Portman (R-OH) to be the next U.S. Trade Representative. The voice vote, which occurred shortly after midnight, followed Senator Evan Bayh's (D-IN) decision to drop his legislative on the nomination. Bayh agreed to drop his hold after receiving a promise that a hearing would be held on S. 593, the Stopping Overseas Subsidies (SOS) Act. That bill would amend Section 701(a)(1) of the Tariff Act of 1930 (19 U.S.C. 1671(a)(1)) to specify that the provisions relating to countervailing duties apply to nonmarket economy countries. The Department of Commerce considers China, Vietnam and Ukraine as nonmarket economy countries.

President Bush has nominated Shara L. Aranoff to serve as a Commissioner of the U.S. International Trade Commission (ITC) to serve the remainder of a nine-year term expiring December 16, 2012. Once confirmed by the Senate, Ms. Aranoff will replace Commissioner Miller, whose term has expired. Ms. Aranoff currently serves as the Senior International Trade Counsel on the Democratic Staff of the U.S. Senate Finance Committee. She previously served as Attorney-Adviser in the Office of General Counsel at the U.S. International Trade Commission. Earlier in her career, Ms. Aranoff clerked for the Honorable Herbert P. Wilkins, Associate Justice, Massachusetts Supreme Judicial Court. She received her bachelor's degree from Princeton University and her J.D. from Harvard Law School.

The ITC is comprised of six Commissioners who are nominated by the President and confirmed by the Senate. No more than three Commissioners may be of any one political party. The Commissioners serve overlapping terms of nine years each, with a new term beginning every 18 months.

The U.S. Committee for the Implementation of Textile Agreements (CITA) has agreed to consider requests submitted on behalf of a coalition of textile companies and a labor union representing textile and apparel workers for safeguard action limiting imports of seven categories of textile and apparel products from China. The seven categories are: (1) men's & boys' cotton & man-made fiber shirts, not knit (category 340/640); (2) cotton & man-made fiber sweaters (category 345/645/646); (3) cotton & man-made fiber brassieres (category 349/649); (4) cotton & man-made fiber dressing gowns (category 350/650); (5) man-made fiber knit shirts and blouses (category 638/639); (6) man-made fiber trousers (category 647/648); and (7) other synthetic filament fabric (category 620).

As a result of this determination, CITA will soon publish in the Federal Register a notice seeking public comments on whether the U.S. market for those products is disrupted, and, if so, the role of Chinese-origin products in that disruption. CITA will make a market disruption determination within 60 calendar days (which can be extended) after the conclusion of the public comment period. If CITA makes an affirmative determination that imports of Chinese textiles and apparel products are disrupting the U.S. market, the Committee will request consultations with China, with a view to easing or avoiding such market disruption. On the date consultations are requested by the U.S., a quota will be put in place to limit U.S. imports from China of those textile and apparel products with respect to which CITA has reached an affirmative determination of market disruption.

The fallout over InVision's recent settlement of Foreign Corrupt Practices Act violations in the U.S. in connection with a sale of bomb detection equipment to Bangkok's new airport has created an uproar in Thailand. The Nation, one of Thailand's leading newspapers, reports today that Prime Minister Thaksin Shinawatra has tried to distance his government from the procurement scandal by announcing that a secret investigation he ordered late last year found that no officials in his administration had accepted bribes in relation to the deal. The paper also reports that Patriot Business Consultants, the Bangkok company at the heart of the airport scandal, has received a "large sum" of money for the supply of the explosives detectors, despite delays in their shipment. The Bangkok Post, also has weighed in on this issue and has called on the Prime Minister to launch an independent inquiry into bribery allegations, rather than allow the Ministry of Transportation to conduct its own investigation.

The Bureau of Industry and Security's Office of Export Enforcement today published a new edition of their publication entitled "Don't Let This Happen to You!" Each chapter of the publication, which is in PDF format, covers a particular area of the Export Administration Regulations (EAR), followed by examples of relevant actual criminal and administrative cases that resulted in fines, imprisonment, and/or denial of export privileges. The publication includes chapters on deemed exports, freight forwarders, antiboycott issues, successor liability and other provisions of the EAR.

The publication can be found at the following link:
www.bis.doc.gov/ComplianceAndEnforcement/Dont_Let_This_Happen_To_You_2005.pdf.

A group of companies, state agencies and organizations have formed the U.S.-Cuba Trade Association (USCTA), whose mission is "to protect current trade with Cuba, expand and increase the potential for future business, and promote the full normalization of commercial relations between the U.S. and Cuba."

The Board of Directors of the USCTA is headed by Bill Reinsch, former Under Secretary of Commerce and current President of the National Foreign Trade Council (NFTC). The USCTA has formed a strategic partnership with the NFTC and its USA*Engage Coalition of more than 600 U.S. companies which have opposed the use of unilateral economic sanctions, including the Cuba embargo.

The USCTA has a distinguished Board of Advisors, chaired by William D. Rogers, former Assistant Secretary of State and a Vice Chairman of Kissinger Associates.

More information on the USCTA, including a list of the members of the Board of Directors, Board of Advisors and membership information, can be found at www.uscuba.org.

Today the Bureau of Industry and Security (BIS) published a notice in the Federal Register adding Parrlab Technical Solutions, Ltd., located at 1204, 12F Shanghai Industrial Building, 48-62 Hennesey Road in Wan Chai, Hong Kong Special Administrative Region, to the Unverified List. A "red flag" now exists for transactions involving Parrlab Technical Solutions, Ltd. due to its inclusion on the Unverified List. As a result, exporters have an affirmative duty to inquire, verify, or otherwise substantiate the proposed transaction to satisfy themselves that the transaction does not involve a proliferation activity prohibited in 15 CFR part 744, and does not violate other provisions of the EAR.

The Senate Finance Committee today unanimously approved the nomination of U.S. Representative Rob Portman (R-OH) to serve as the next U.S. Trade Representative. As previously reported, however, Senator Evan Bayh (D-IN) has placed a hold on the full Senate vote until the Senate leadership schedules a vote on S. 593, the Stopping Overseas Subsidies (SOS) Act.

The Treasury Department's Office of Foreign Assets Control (OFAC) today added the names of 30 companies and four individiuals to the list of Specially Designated Nationals (SDN List) that are believed to be linked to international arms dealer Victor Bout. The U.S. government claims that Bout runs a network of air cargo companies that are based in various countries in the Middle East, Africa, Eastern Europe and the U.S. In addition, Bout is said to control what is reputed to be the largest private fleet of Soviet-era cargo aircraft in the world.

OFAC's action was taken under the authority of Executive Order 13348 which allows the U.S. government to block the assets of people connected to former Liberian President Charles Taylor. Bout was designated as a SDN in July 2004 because of his association with Taylor. Today's action not only blocks any U.S. bank accounts and other financial assets belonging to these companies and persons in the U.S. but also prohibits U.S. persons and companies from engaging in any transactions with them. Several of the companies added to the SDN list are located in Richardson, Texas, a Dallas suburb. The U.S. will submit the names of the 30 companies and four individuals to the U.N. Sanctions Committee established by U.N. Security Council Resolution 1521, which will consider adding them to the consolidated list of individuals and entities tied to Taylor. The complete list of the 34 new SDNs can be found at the following link:
www.treas.gov/offices/enforcement/ofac/actions/
20050426.shtmlwww.treas.gov/offices/enforcement/ofac/.

The Space Review has published an article describing the export control-related issues that were raised at last week's hearing on the future markets for commercial space operations held by the House Science Committee's Subcommittee on Space and Aeronautics. The hearing featured testimony by Burt Rutan, famed aircraft and spacecraft designer and founder of Scaled Composites LLC, and Will Whitehorn, president of Virgin Galactic, the personal spaceflight company founded by Richard Branson.

During the hearing, it was noted that suborbital vehicle developers and operators of personal spacecraft are facing significant regulatory burdens imposed by the U.S., including barriers imposed by the International Traffic in Arms Regulations (ITAR). In his testimony to the subcommittee, Will Whitehorn indicated that uncertainty about possible licensing requirements has prevented Virgin Galactic from viewing Scaled Composites' designs for the commercial space vehicle that it intends to use, known as SpaceShipTwo. He also indicated the delays have prevented Virgin Galactic from placing a formal order with Scaled Composites for the vehicles.

Elon Musk, CEO and Chief Technology Officer of Space Exploration Technologies Corp. (SpaceX), also expressed concerns about U.S. export controls and stated that "we really need to do something about ITAR. It is really hurting U.S. industry."

Former subcomittee chairman Dana Rohrabacher (R-CA) noted that revisions to U.S. export control regulations are in order and that streamlined regulations are needed for close U.S. allies, such as the U.K. Current subcommittee chairman Ken Calvert (R-CA) promised to work with Rohrabacher to achieve "some streamlining to make this process work" more smoothly.

The prepared testimony presented by Rutan, Whitehorn, Musk and others at the hearing can be found at the following link:
www.house.gov/science/hearings/space05/Apr20/index.htm.

April 25, 2005: No meetings hearings or votes scheduled.

April 26, 2005: Commission Hearing in Five-year (sunset) reviews: Stainless Steel Sheet and Strip from France, Germany, Italy, Japan, Korea, Mexico, Taiwan, and the United Kingdom, Inv. Nos. 701-TA-381-382 and 731-TA-797-804 (Review), 9:30 a.m. in ITC Main Hearing Room (500 E Street SW).

April 27, 2005: No meetings hearings or votes scheduled.

April 28, 2005:

Commission Vote in Five-year (sunset) review: Sebacic Acid from China, Inv. No. 731-TA-653 (Second Review), 11:00 a.m. in ITC Main Hearing Room (500 E Street SW).

Report Due to Requester -- Economic effects investigation: Effect of Modifications to the U.S.-Morocco Free Trade Agreement, Inv. No. Morocco FTA-103-11 is due to the U.S. Trade
Representative.

April 29, 2005: No meetings hearings or votes scheduled.

The U.S. Department of the Treasury has designated two Latvian financial institutions, Multibanka and VEF Bank, as "primary money laundering concerns" under Section 311 of the USA PATRIOT Act for money-laundering activities and financial abuse. As a result of this designation, the Treasury Department's Financial Crimes Enforcement Network (FinCEN) will publish a Notice of Proposed rulemaking in the Federal Register on April 26, 2005 that, when finalized, will prohibit U.S. financial institutions from establishing, maintaining, administering or managing any correspondent account in the U.S. for or on behalf of these two banks.

-- Multibanka offers confidential banking services and numbered accounts for non-Latvian customers. Reports substantiate that a significant portion of its business involves wiring money out of the country on behalf of its accountholders.

-- Information available to the U.S. Government shows Multibanka has been used by Russian and other shell companies to facilitate financial crime by allowing criminals to disguise illegal proceeds in countries known for lax enforcement of anti-money laundering laws.

-- According to information available to the U.S. Government, certain criminals use accounts at Multibanka to facilitate financial fraud schemes. Specifically, an individual involved in financial fraud reported carrying out large sum transactions through his account at Multibanka. In addition, an individual arrested in 2004 for his involvement in an access device fraud ring used an account at Multibanka to launder proceeds of his criminal activities.

VEF, with headquarters in Riga, is one of the smallest of Latvia's 23 banks. It has one subsidiary, Veiksmes lîzings, which offers financial leasing and factoring services. In addition to its headquarters in Riga, VEF has one branch in Riga, and one representative office in the Czech Republic. The Notice of Proposed Rulemaking issued today identifies several reasons for the designation of VEF Bank as a primary money laundering concern:

-- VEF Bank lacks adequate controls and procedures to detect and combat money laundering. These deficiencies, coupled with the bank's dealings with foreign shell companies and provision of confidential banking services, make VEF vulnerable to money laundering and other financial crimes.

-- VEF Bank offers confidential banking services for non-Latvian customers. Less than 20 percent of these deposits are from individuals or companies located in Latvia, an indicator that a bank may be used to launder money.

To date, the Treasury Department has previously identified the following financial institutions as "primary money laundering concerns," pursuant to Section 311 of the USA PATRIOT Act:

-- The First Merchant Bank of the "Turkish Republic of Northern Cyprus" ("TRNC") and Infobank of Belarus in August 2004;

-- The Commercial Bank of Syria and its subsidiary Syrian Lebanese Commercial Bank in May 2004; and

-- Myanmar Mayflower Bank and Asia Wealth Bank in November 2003.

Labels: FinCen

The business section of today's Washington Times contains an article describing the impact of OFAC's recent "clarification" of the term "payment by cash in advance" for sales of licensed agricultural products to Cuba. The article describes the plight of a Massachusetts company whose exports of eggs to Cuba were rising until the new regulation went into effect. Now, the company has no pending orders. The article also correctly notes that while the OFAC regulation makes it more difficult to sell licensed agricultural products to Cuba it does not necessarily prohibit U.S. exporters from engaging in transactions with Cuba.

The entire article can be viewed at the following link:
http://washingtontimes.com/business/20050420-093237-1177r.htm

The Senate Finance Committee today held a hearing on the nomination of U.S. Trade Representative-designee Congressman Robert Portman (R-OH). Much of the hearing focused on U.S. trade policy with China and Portman told the members of the Finance Committee that the U.S. needs "a tougher approach" to China. He indicated that once he is confirmed he will order a "top to bottom review" of the various trade complaints against China and would make a trip to China to deliver his message to the Government of China.

Senate Finance Committee Chairman Charles Grassley (R-IA) indicated that his committee will vote on Portman's nomination next week. However, as previously reported in International Trade Law News, Senator Evan Bayh (D-IN) has placed a procedural hold on the vote until until the Senate leadership schedules a vote on S. 593, the Stopping Overseas Subsidies (SOS) Act. S. 593 would apply the countervailing duty laws to nonmarket economy countries, including China. Senator Voinovich (R-OH), a co-sponsor of S. 593, is trying to convince Senator Bayh that it is not in the best interests of their cause to block Portman's confirmation.

Representative Portman's prepared testimony presented at today's hearing can be found at the following link: finance.senate.gov/hearings/testimony/2005test/rptest042105.pdf.

On April 18, 2005, the U.S. International Trade Commission (ITC) issued negative injury determinations in the antidumping and countervailing duty investigations on bottle-grade Polyethylene Terephthalate (PET) Resin from India, Indonesia and Thailand (Investigations Nos. 701-TA-439 and 731-TA-1077, 1078 and 1080 (Final)). By a 5-1 vote, the ITC Commissioners determined that a U.S. industry is not materially injured or threatened with material injury by reason of imports of polyethylene terephthalate (PET) resin from India that the U.S. Department of Commerce has determined are subsidized and imports of this product from India, Indonesia, and Thailand that the U.S. Department of Commerce has determined are sold in the U.S. at less than fair value. Chairman Stephen Koplan, Vice Chairman Deanna Tanner Okun, and Commissioners Jennifer A. Hillman, Charlotte R. Lane, and Daniel R. Pearson voted in the negative. Commissioner Marcia E. Miller voted in the affirmative. As a result of the Commission's negative determinations, no countervailing duty or antidumping duty orders on imports of this product from India, Indonesia and Thailand will be issued.

The antidumping and countervailing petitions that launched this case were field by the U.S. PET Resin Producers' Coalition, consisting of DAK Americas, LLC, Nan Ya Plastics Corporation, Voridian, a division of Eastman Chemical Company and Wellman, Inc.

Labels: FinCen

April 18, 2005: No meetings, hearings or votes scheduled.