International Trade Law News

The Office of the U.S. Trade Representative (USTR) announced today that the U.S. and Vietnam have signed a bilateral market access agreement that is required as part of Vietnam’s bid to join the World Trade Organization (WTO).

Under the agreement, Vietnam will eventually reduce tariffs to 15% or less on nearly 94% of industrial and consumer goods. In addition, Vietnam's tariffs on construction equipment and pharmaceuticals will be ultimately reduced to 5% and 2.5%, respectively. Vietnam will bind tariffs at zero on 91% of medical equipment products within five years of accession to the WTO. Vietnam will also eliminate all import duties on 96% of scientific equipment within three years after accession.

With respect to antidumping issues, the agreement provides that Vietnam’s status as a non-market economy can be maintained for up to 12 years from the date of accession, unless Vietnam qualifies for market economy status before then. The USTR's fact sheets on the agricultural, indusrial and services related provisions of the agreements can be found here.

On a personal note, be sure to add Vietnam to your list of travel destinations. I was there in December and I assure you it is worth the trip. Hoi An, Ha Long Bay, Hue and My Son are all UNESCO World Heritage sites.

U.S. Customs and Border Protection has posted on its website registration information for the next Customs Broker License Examination, which will be held on Tuesday, October 3, 2006.

U.S. Customs and Border Protection's (CBP) C-TPAT Security Link Internet Portal is now live. In addition, after a brief hiatus, CBP is once again accepting online C-TPAT applications from new participants. As we previously reported, CBP recently revealed the capabilities of the C-TPAT Security Link Internet Portal in a PowerPoint presentation posted on its website.

Labels: Customs

"many individuals may have ethnic ties to a particular nation, but bear no loyalty towards states where they were born. Further, BIS notes that an individual's act of obtaining citizenship or permanent residency adequately demonstrates affiliation and allegiance to the adoptive nation. Thus, the current deemed export licensing requirement, based on a foreign national's most recent country of citizenship or permanent residency, recognizes the importance of declarative assertion of affiliation over the mere geographical circumstances of birth."

"It is essential to distinguish the information or product (which may be in the form of a scientific paper or publication that describes and/or details the results of the fundamental research) that results from fundamental research from the conduct that occurs within the context of the fundamental research. While the product of the fundamental research is not subject to the EAR because the results of that research are intended for publication and dissemination within the scientific community, authorization may be required if during the conduct of the research controlled technology is released to a foreign national."

Labels: BIS

Today's Washington Times contains an op/ed piece discussing U.S. dual-use export controls on China by William Hawkins, a senior fellow for national security studies at the U.S. Business and Industry Council. Mr. Hawkins notes that the Defense Department's recently released annual report on Chinese military power (see below) quotes Chinese President Hu Jintao as saying that China needs "to build an innovative system of defense science and technology... to create a good structure under which military and civilian high technologies are shared and mutually transferable." Mr. Hawkins states that this remark "highlights the danger of 'dual use' items U.S. firms provide Chinese business partners being used to strengthen Beijing's defense industry and military capabilities."

Section 1202 of the National Defense Authorization Act for Fiscal Year 2000 (Public Law 106-65), requires the Secretary of Defense to submit a report to Congress “on the current and future military strategy of the People'’s Republic of China." The 2006 version of the report on the Military Power of the People's Republic of China can be found here.

In it continuing series of articles on the Arab boycott of Israel, today's Jerusalem Post reports that Saudi Arabia continues to prohibit Israeli-made goods from entering the country. The story cites several examples of Saudi officials confirming that Israeli-made goods are not permitted to enter Saudi Arabia. For example, the article quotes a Saudi customs official as stating that "there is still a ban on Israeli products, and anything declared as coming from Israel will not be allowed." The official added that "some people may try to say that a product was made elsewhere, but if there is anything which shows it was made in Israel, then it is a problem."

The article notes that the "Saudi position appears to contradict assurances given last week by US Deputy Trade Representative Susan Schwab. In written responses to questions raised by members of the Senate Finance Committee, Schwab said that Saudi Arabia had told Washington that it was abiding by its pledge to end the boycott of the Jewish state."

Separately, UPI reports that the Saudi Ministry of Health is "investigating the possibility of infiltration of medical equipment manufactured in Israel to the Saudi market."

Saudi Arabia, along with Bahrain, Kuwait, Lebanon, Libya, Oman, Qatar, Syria, United Arab Emirates and Yemen, appear on the most recent version of the Treasury Department's "List of Countries Requiring Cooperation With an International Boycott," which was last updated in December 2004.

Labels: Boycotts

The World Customs Organization (WCO) will conduct a training program on the tariff classification of textile products at the WCO headquarters in Brussels, Belgium on June 13-14, 2006. This training session is aimed at importers and exporters of textile products, customs brokers, legal advisers, customs and trade consultants and textile industry employees. For more information on this program contact sales@wcoomd or see learning.wcoomd.org.

As we previously reported, U.S. Customs and Border Protection (CBP) recently announced the creation of a new C-TPAT Internet Application and Communications Portal. The mandatory C-TPAT Security Link Portal, which should be going live in the very near future, is intended to improve the processing and communication for all C-TPAT participants.

CBP has for the first time recently revealed the capabilities of the Portal in a PowerPoint presentation posted on its website. The PowerPoint presentation contains several screenshots of the features of the C-TPAT Security Link Portal as well as accompanying explanatory information. The following is a summary of some of the key aspects of the Portal revealed in the PowerPoint presentation:

• At least one company officer must be designated as a company contact.

• Consultants or contractors may not be designated as the primary point of contact for the C-TPAT participant.

• The C-TPAT Supply Chain Security Profile will be required to be maintained in a structured template format found in the Security Profile section of the Portal. The template contains a text box where a narrative description of each security procedure must be provided. Back-up documentation can be uploaded into the system using the Document Exchange function of the Portal.

• Each C-TPAT participant must certify the accuracy of their Supply Chain Security Profile on an annual basis.

• The Portal contains a C-TPAT Public Document Library Area where C-TPAT personnel can post documents for all participants to view or download. This area can also be used for CBP to disseminate information to all C-TPAT participants, such as security bulletins, conference information notices, etc.

• A C-TPAT Program Supply Chain Security Discussion Board Public Area is included in the Portal so that C-TPAT program personnel can post discussion items for all participants to view.

• The Portal includes a private messaging area where C-TPAT participants can send and receive messages directly to and from C-TPAT Supply Chain Security Specialists.

Labels: Customs

In a joint statement issued today by President Bush and Prime Minister Blair, the U.S. has agreed to increase Britain's access to ITAR-controlled technology for production of the F-35 Joint Strike Fighter. The pertinent text of the statement reads as follows:

Both governments agree that the UK will have the ability to successfully operate, upgrade, employ, and maintain the Joint Strike Fighter such that the UK retains operational sovereignty over the aircraft. Further, both governments agree to protect sensitive technologies found within the Joint Strike Fighter program. Together, we are working out the details, while remaining committed to these principles.

Jeffrey Sparshott reports in today's Washington Times that Senator Charles E. Schumer (D-NY) will place a hold on the Senate confirmation of Susan Schwab as U.S. Trade Representative "until the nominee provides detailed answers on the administration's efforts to open China's market for U.S. brokerages and other financial service firms."

The Transportation Security Administration (TSA) published in today's Federal Register the long-delayed final regulation requiring airport operators, aircraft operators, foreign air carriers and indirect air carriers to implement security measures in the air cargo supply chain as directed under the Aviation and Transportation Security Act. The final rule provides for screening of all property, cargo, carry-on and checked baggage, and other articles, that will be carried aboard a passenger aircraft operated by domestic or foreign air carriers and establishes a system to screen, inspect, or otherwise ensure the security of freight that is to be transported in all-cargo aircraft.

The TSA's final rule imposes many new requirements on freight forwarders. For example, the final rule will require employees of freight forwarders to attend TSA security training courses. Freight forwarders will also have to develop security plans and have them approved by TSA.

This final rule becomes effective on October 23, 2006. By November 22, 2006, indirect air carriers must comply with the requirements for indirect air carrier training. By December 1, 2006, aircraft operators, foreign air carriers and indirect air carriers must comply with the requirements for security threat assessments.

Jerusalem Post reporter Michael Frend has written another original and interesting story relating to the Arab boycott of Israel. The story, published, in today's edition of the Jerusalem Post, notes that despite its "decade-old membership in the World Trade Organization (WTO), which aims to liberalize international commerce, Israel has never filed a formal complaint against the Arab boycott of the Jewish state, nor does it have any plans to do so in the immediate future." Rather, the paper reports, "Israel has opted for what one government official in Jerusalem termed 'a more discreet method to try and open channels of communication,' maintaining that a behind-the-scenes approach would ultimately prove more effective in contending with the embargo." The article notes that "U.S. officials have publicly stated if an Arab country were to enforce a boycott against Israe, the Jewish state would be entitled to take the matter up with the WTO, and that Washington would likely back such a move."

Labels: Boycotts

Labels: BIS

China's Xinhua news agency reports that China's Ministry of Commerce has imposed antidumping duties ranging from 5% to 61% on imports of Spandex from Japan, Singapore, the U.S., South Korea and Taiwan.

Labels: Antidumping

The National Council on International Trade Development (www.ncitd.org) has announced the program for its next monthly meeting to be held on June 8, 2006 from 9:15 a.m. to noon at the University Club in Washington. The speakers include:

• Anne Ganzer, Director of the Office of Defense Trade Controls Policy, U.S. Department of State.

• Mark Mendelsohn, Deputy Chief, Criminal Fraud Section, U.S. Department of Justice. Mr. Mendelsohn will discuss the Foreign Corrupt Practices Act.

• Cherie Rusnak, Senior Trade Policy Advisor, International Trade Administration, U.S. Department of Commerce.
  

The next meeting of the Bureau of Industry and Security's Regulations and Procedures Technical Advisory Committee (RPTAC) will occur on June 13, 2006. The meeting agenda and other details can be found here.

Labels: BIS

Senator Tom Harkin (D-IA) has called for the U.S. to investigate AWB Ltd.'s alleged violations of the United Nations Oil-for-Food Program. AWB Ltd., the Australian company that oversees Australia's exports of wheat, was found by the Volcker Commission to have paid $220 million dollars in kickbacks to the Government of Iraq. Senator Harkin has asked the "Inspectors General for the Department of Agriculture, State Department and Iraqi Reconstruction look into who benefited from payments after the fall of Hussein and whether these illicit payments may be recovered under U.S. or international law and returned to the Iraqi people."

More than a year after the Bureau of Industry and Security (BIS) published an advance notice of proposed rulemaking proposing significant changes to the "deemed export" rule, BIS has decided to make no changes to the deemed export provisions of the Export Administration Regulations after all. The most controversial changes, which included using a foreign national's country of birth as a criterion for issuing a deemed export license and changing the definition of "use" technology, generated a firestorm of controversy. As previously reported, the proposed changes generated more than 300 public comments, the most in the agency's history. More than two-thirds of the comments were academic and research institutions, with the remainder submitted by industry, trade associations, law firms and individuals. BIS will publish a Federal Register notice later this week announcing its decision maintain the status quo.

Meanwhile, BIS has announced that it will create a 12-person Deemed Export Advisory Committee (DEAC) that will review and provide recommendations to the Department of Commerce on deemed export policy. The DEAC is intended to provide a further in-depth technical information exchange between and among BIS and the academic, corporate, and other interested sectors."

In addition, BIS has "significantly increased" its outreach to the academic and research communities in order to "raise the level of awareness and to improve the understanding of the deemed exports regulatory requirements."

Labels: BIS

The Office of Foreign Assets Control (OFAC) has published a final rule in the Federal Register amending the agency's International Emergency Economic Powers Act (IEEPA) based sanctions programs by raising the maximum civil penalty for a violation, or attempted violation, of any license, order or regulation issued under IEEPA from $11,000 to $50,000 and increasing the maximum prison term for willful violations to 20 years. These regulatory changes are required by the USA PATRIOT Improvement and Reauthorization Act of 2005 (Public Law 109-177) that was signed into law on March 9, 2006.

This final rule affects the following sanctions programs administered by OFAC:

• Burmese Sanctions Regulations
• Global Terrorism Sanctions Regulations
  
• Highly Enriched Uranium Agreement Assets Control Regulations
• Iranian Assets Control Regulations
• Iranian Transactions Regulations
• Narcotics Trafficking Sanctions Regulations
• Sudanese Sanctions Regulations
• Syrian Sanctions Regulations
• Terrorism Sanctions Regulations
• Weapons of Mass Destruction Trade Control Regulations
• Western Balkans Stabilization Regulations
• Zimbabwe Sanctions Regulations
  

Labels: OFAC

The Directorate of Defense Trade Controls (DDTC) today published in the Federal Register a notice clarifying the coverage of Category VIII of the U.S. Munitions List (USML) to reflect the results of a recent commodity jurisdiction involving aircraft parts and components. Specificallly, DDTC's commodity jurisdiction held that any airframe parts and components common to the C-130 Hercules (Models A through H) and L-100 aircraft (the civilian equivalent to the C-130) that have no current use on any other commercial aircraft will be subject to the jurisdiction of DDTC, effective 90 days from today.

Labels: DDTC, Export Controls

U.S. importers that purchase and import products covered by the Generalized System of Preferences (GSP) should closely monitor the status of the reauthorization of the GSP program, which is set to expire on December 31, 2006. Congress has passed legislation extending the GSP program's statutory authority on a retroactive basis the seven previous times it has come up for renewal. However, there is increasing evidence that this year may be different.

House Ways and Means Committee Chairman Bill Thomas (R-CA) and Senate Finance Committee chairman Charles Grassley (R-IA) have recently suggested that Congress should let GSP's statutory authority lapse. Even if GSP is renewed, Congress will likely require significant changes to the program, including the possible removal of large developing countries from eligibility for GSP benefits. Senator Grassley has questioned whether Brazil and India should receive GSP benefits. Other large developing countries that have come under scrutiny as to whether they should received GSP benefits include Argentina, China, Russia, Thailand and Turkey.

If Congress extends GSP's statutory authority without mandating the graduation of any individual countries, the USTR could unilaterally decide to to graduate some countries from GSP. The USTR conducted a public hearing in late 2005 to consider whether some beneficiary countries are now sufficiently competitive that they should no longer be kept in the GSP program.

GSP provides preferential duty-free entry for more than 4,650 products from 144 designated beneficiary countries and territories. GSP was reauthorized by the Trade Act of 2002 for the five-year period ending on December 31, 2006.

Believe it or not, the week of May 21-27 has been designated World Trade Week. Below is the proclamation issued by the president:

World Trade Week, 2006
A Proclamation by the President of the United States of America

Free and fair trade is a powerful engine for growth and job creation in the United States and in countries throughout the world. World Trade Week is an opportunity to celebrate the benefits of trade for people everywhere.

America is a great force for prosperity, and our country's economic and national security interests are advanced through strong economic ties with our friends and allies. Since 2001, my Administration has concluded or implemented free trade agreements with 15 countries. We are working toward agreements with 14 additional countries, and we will continue to pursue further opportunities.

Last August, I was pleased to sign legislation implementing the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR). CAFTA-DR will reduce tariffs on American goods and expand export opportunities for American businesses. When the rules are fair, American people and businesses can compete with anyone in the world. CAFTA-DR will also advance our commitment to democracy and prosperity for our neighbors.

Studies have shown that the elimination of global trade barriers could help lift hundreds of millions of the world's poor out of poverty and boost economic growth around the world. An important opportunity to deliver the full benefits of trade to people around the world is the Doha Round of trade negotiations at the World Trade Organization. An ambitious Doha agreement could bring benefits to all nations, especially the developing world, and my Administration is working for a successful conclusion to these negotiations.

During World Trade Week and throughout the year, the United States remains committed to increasing free and fair trade and to improving the standard of living for our citizens. By working with our friends and allies, we will continue to help build a world that lives in liberty, trades in freedom, and grows in prosperity.

NOW, THEREFORE, I, GEORGE W. BUSH, President of the United States of America, by virtue of the authority vested in me by the Constitution and laws of the United States, do hereby proclaim May 21 through May 27, 2006, as World Trade Week. I encourage all Americans to observe this week with appropriate events, trade shows, and educational programs that celebrate the benefits of trade to our Nation and people around the world.

IN WITNESS WHEREOF, I have hereunto set my hand this nineteenth day of May, in the year of our Lord two thousand six, and of the Independence of the United States of America the two hundred and thirtieth.

GEORGE W. BUSH

The Senate Finance Committee has announced that it will vote on the nomination of Susan C. Schwab to be United States Trade Representative on May 22, 2006

The Seattle Post-Intelligencer reports on the steps that Boeing must undertake to ensure ITAR compliance for the Navy's Multimission Maritime Aircraft (MMA), which is based on the commercial version of the 737.

The proclamation extending the nine-year old sanctions on Myanmar (Burma) was published in Friday's Federal Register. U.S. sanctions prohibit the import of goods from Myanmar, as well as the exportation of financial services to and new investment in the country.

Michael Freund of the Jerusalem Post reports that the interim Government of Iraqi sent a representative to this week's meeting of the Arab League Boycott Office in Syria. Needless to say, the Bush Administration and Congress were not pleased. The article quotes a State Department spokesman as saying "we are disappointed by the decision of the Iraqi government to attend this meeting, and will be noting our concerns with Iraqi officials." The spokesman noted that the U.S. "has raised this issue with Iraqi officials in the past and expect to raise it with them again."

U.S. exporters doing business with Iraq should closely review tenders and other trade-related documents to ensure that they do not contain prohibited boycott language.

Labels: Boycotts

• The latest news on the long-delayed mandatory AES final rule is that a stalemate still exists between the Census Bureau and Customs and Border Protection (CBP) over certain provisions of the final rule. The issues of concern still remain CBP's quest to eliminate or restrict Option 4 (post-departure) filing and CBP's insistence that it be able to share AES data with foreign governments. The two agencies are apparently not close to reaching a solution to this impasse.

• CBP recently held its quarterly meeting of the Commercial Operations Advisory Committee (COAC). During the meeting, CBP officials said that they are planning to hire nearly 90 import specialists, as the number of import specialists has declined nearly 10% since U.S. Customs was moved from Treasury to DHS. Regarding C-TPAT, while CBP has completed more than 1,900 validations, the agency still needs to conduct more than 2,200 validations. More than 140 applicants have been suspended from C-TPAT due to failed validations or for engaging in illegal activity. CBP now appears to accept the proposal currently pending in Congress to allow private third-party validators.

• The Spring 2006 edition of Region Focus, a quarterly business magazine published by the Federal Reserve Bank of Richmond, contains an article entitled "Trade Wars." The article notes that many U.S. products, from steel to wooden bedroom furniture, are protected by antidumping duties, economists say antidumping cases are often misused.

• Bloomberg reports that AWB Ltd., the Australian company that oversees the exports of wheat, admitted making illegal payments for inland transportation and after sales service to the Government of Iran in violation of the U.N.'s Oil-for-Food Program.

• This morning, NPR's Marketplace carried a story on the Bureau of Industry and Security's proposal to impose restrictions on commercial exports to China if they are intended for a military end-use. The story notes many U.S. companies worry that the proposal will cause them to lose business to companies in other countries. You can listen to the story by clicking here.

• The U.S. Trade Representative today submitted a report to Congress on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth and Opportunity Act (AGOA) with respect to sub-Saharan Africa.

• The Senate Finance Committee today voted 19-0 to approve the proposed legislation to implement the U.S.-Oman Free Trade Agreement.
  

• The USTR released a letter from Bahrain's ambassador to the U.S. stating "In the hope of advancing peace and regional cooperation, the Kingdom of Bahrain recognized the need to dismantle the primary boycott of Israel and despite recent press accounts, the Boycott of Israel Office is closed." Click here to see related story.
  

• State Department publishes certification that Cuba, Iran, North Korean, Syria and Venezuela are not cooperating fully with United States antiterrorism efforts.

• The Transportation Security Administration has issued the long-awaited Air Cargo Final Rule. Among other things, the final rule will require employees of freight forwarders to attend TSA security training courses. Freight forwarders will also have to develop security plans and have them approved by TSA. The final rule will be published in the Federal Register in the coming days.

Labels: Boycotts