International Trade Law News

The Associated Press has reported that the U.S. has prepared a list of "luxury goods" that will be prohibited from being exported to North Korea under the sanctions imposed under U.N. Security Council Resolution 1718. According to the article, the list of items that will be prohibited from being exported from the U.S. to North Korea includes certain electronic goods, such as iPods and plasma television; cognac; Rolex watches; cigarettes; artwork; expensive cars [the definition of "expensive" is not defined]; Harley Davidson motorcycles; personal watercraft (Jet Skis); music and sports equipment.

U.N. Resolution 1718 did not specify which "luxury goods" would be prohibited from being exported to North Korea. Given the difficulty in defining the term, each U.N. member nation is responsible for coming up with its own definition of prohibited "luxury goods".

It is likely that the Bureau of Industry and Security (BIS) will be responsible for administering the U.N. sanctions on North Korea. The prohibition on the export of luxury goods, as well as the other type of products prohibited under U.N. Resolution 1718, will take effect when published in the Federal Register.

Labels: BIS, Export Controls

Robert W. Werner, who has served as Director of the Treasury Department's Financial Crimes Enforcement Network (FinCEN) since March 2006, has announced that he will leave the agency at the end of this year to become head of Merrill Lynch's Monetary and Financial Control Group and its Bank Compliance Group. Prior to joining FinCen, Werner served as Director of the Treasury Department's Office of Foreign Assets Control (OFAC). Deputy Director William F. Baity will act as FinCEN Director effective upon Werner's departure.

Labels: FinCen, OFAC

U.S. importers and customs brokers should be advised that the U.S. International Trade Commission (ITC), the U.S. agency responsible for issuing the Harmonized Tariff Schedule of the United States (HTSUS), today issued an important announcement regarding the 2007 changes to the HTSUS in order to implement the modifications made to the Harmonized System by the World Customs Organization. These changes are to go into worldwide effect on January 1, 2007. The ITC advised that the implementation date for the WCO amendments probably will be delayed until later in January or until February 2007." The complete text of the ITC's announcement is reprinted below:

Air Cargo News reports that Great Wall Airlines Company Limited, a Chinese air cargo company that was forced to shut down its operations after being designated by OFAC as a “proliferation” entity on the Specially Designated Nationals (SDN) List, has restructed its ownership and will attempt to relaunch its services.

Great Wall Airlines, a joing venture between China Great Wall Industry Corporation (CGWIC), a Chinese government-owned enterprise, Singapore Airlines Cargo and Dahlia Investments, commenced operations from Shanghai to Amsterdam in June 2006 and to Seoul, Mumbai and Chennai in August 2006 using two B747-400Fs leased from Singapore Airlines. The airline was forced to suspend its operations after being added to OFAC's SDN List on August 25, 2006 due to its relationship with CGWIC, which was added to OFAC's SDN List for its alleged role in supplying missile parts to Iran.

Because of its inclusion on OFAC's SDN List, Great Wall Airlines was unable to purchase parts and components for its aircraft from U.S. suppliers or to engage in any transactions with U.S. companies.

Labels: Export Controls, OFAC

The Hong Kong Customs and Excise Department has announced that a series of textile factory observation visits with U.S. Customs and Border Protection will commence in Hong Kong starting on December 2, 2006. According to the notice recently issued by Hong Kong's Trade and Industry Department, the purpose of the visits is to:

"to enhance the understanding of the US authorities of the textiles and clothing manufacturing operations in Hong Kong, and the effectiveness of Hong Kong's origin control system in ensuring that textiles and clothing exports claiming Hong Kong origin are genuinely manufactured in Hong Kong."

Labels: Customs

The Associated Press has reported that the U.S. has agreed to terminate the sanctions imposed on the Sukhoi Company (also spelled Sukhoy), Russia’s major aircraft holding company.

The sanctions on Sukhoi were imposed on July 28, 2006 pursuant to the Iran Nonproliferation Act of 2000, which imposes a number of restrictions on dealing with entities that transfer prohibited equipment and technology to Iran. As a result of Sukhoi's designation, the U.S. will not issue licenses for U.S. firms to export defense articles or dual-use goods to Sukhoi.

Even if today's news report is accurate, exporters should be aware that the U.S. sanctions on Sukhoi will remain in place until the State Department publishes a notice in the Federal Register advising that the sanctions have been terminated or modified.

The Bureau of Industry and Security (BIS) has published a final rule in the November 20, 2006 Federal Register imposing new export and reexport controls on surreptitious listening devices and related software and technology. Surreptitious listening devices include a number of spy-like gadgets, such as microphones disguised as wristwatches, cufflinks and cigarette packs.

BIS's final rule, which is effective immediately, amends the Export Administration Regulations (EAR) by imposing new "SL" foreign policy controls on devices primarily useful for the "surreptitious interception of wire, oral, or electronic communications" and related software and technology. The rule states that BIS is taking this action "in order to prevent the unlawful interception of oral, wire, or electronic communications by terrorists and others who may put the information gained through intercepted communications to an unlawful use; to promote the protection of privacy of oral, wire, or electronic communications; and to protect against threats of terrorism around the world."

This rule amends the EAR by imposing a license requirement to all destinations on items classified under Export Control Classification Number (ECCN) 5A980. The rule also creates two new ECCNs, 5D980 and 5E980, to cover software and technology associated with listening devices classified as 5A980.

BIS has indicated that it will generally approve applications for the export and reexport of items classified under 5A980, 5D980, or 5E980 to all destinations, except for destinations for which a license is required for anti-terrorism (AT) reasons (currently, Cuba, Iran, North Korea, Sudan and Syria), by "providers of wire or electronic communication service acting in the normal course of business; or officers, agents, or employees of, or persons under contract with, the United States, a State, or a political subdivision thereof in the normal course of activities of any of the governmental entities listed." License applications from other parties will generally be denied.

Labels: BIS, Export Controls

The Directorate of Defense Trade Controls (DDTC) has published in the Federal Register a list of the 20 persons that are currently debarred as a result of violating the the Arms Export Control Act (AECA).

Section 127.7 of the ITAR provides for "statutory debarment" of any person who has been convicted of violating or conspiring to violate the AECA. Persons subject to statutory debarment are prohibited from participating directly or indirectly in the export of defense articles, including technical data, or in the furnishing of defense services for which a license or other approval is required.

Exporters of defense articles or services should be sure to screen their transactions to ensure that none of the 20 debarred parties are involved in their transaction.

Labels: DDTC, Export Controls

U.S. Customs and Border Protection has published a notice in the November 20, 2006 Federal Register advising that the deadline for paying the 2007 customs broker permit fee of $125 is January 19, 2007.

Labels: Customs

One of the many issues left for the "lame duck" session of Congress to deal with is the extension of the Generalized System of Preferences (GSP) program that is set to expire on December 31, 2006. While a number of bills have been introduced to reauthorize GSP (see, e.g., S. 3933, S.3905, H.R 6076, H.R. 5070), it is unclear whether GSP can be reauthorized before its expiration date and in what form it will be reauthorized.

GSP extends duty-free treatment to selected imports from beneficiary developing countries. In 2005, U.S. imports under GSP were greater than $27 billion.

On the House side, outgoing Ways and Means Chairman Bill Thomas (R-CA) has indicated his support for including GSP reauthorization language in a tax-cut extension bill expected to come before the full House during the first week of December. However, Chairman Thomas has indicated his intention to modify the GSP program to exclude certain products from India and Brazil.

The issue of graduating India and Brazil entirely from the trade preference program has remained somewhat of a contentious issue on Capitol Hill. Many Members of Congress remain reluctant to agree to a preference program that extends benefits to India and Brazil given these countries obstinacy in concluding the current multilateral Doha round of free trade talks.

On the Senate side, outgoing Senate Finance Committee Chairman Grassley (R-IA), a stern critic of India and Brazil given their actions in the Doha Round, has stated his preference to graduate Brazil and India from GSP.

In the meantime, the U.S. Chamber of Commerce, the GSP Coalition and other pro-GSP groups continue their efforts to make the case that reauthorization of GSP is beneficial for U.S. manufacturing companies and consumers.

Labels: Customs

USA*Engage and the National Foreign Trade Council (NFTC) recently released an analysis of the 2006 mid-term election, which compares the voting records of departing Members of the U.S. Congress with the statements of incoming Representatives and Senators on international trade, immigration and foreign policy issues.

The key findings of the Elections Analysis include:

• In 8 of the 10 U.S. Senate races analyzed, successful candidates mentioned trade explicitly on his or her website when discussing campaign issues. Based on these websites and other statements, USA*Engage estimates that 5 of the successful candidates are clearly less-inclined towards free trade and engagement than the incumbent based upon his or her historical voting record. Two incoming Senators advocated policies that could be construed as more inclined towards free trade and/or international engagement than the predecessor.
  
  
• In the House races analyzed, only 29 out of 53 successful candidates made any mention of international trade in the section on his or her website devoted to key campaign issues.
  
  
• Of the 29 House races in which trade was featured in the “on the issues” section of the successful candidate’s website, only 10 winners appear to advocate policies that are clearly less-inclined towards free trade and engagement than his or her predecessor.
  
  
• Of the 29 House races, 6 candidates advocated policies on their websites or in other statements that could be construed as more inclined towards free trade and/or international engagement.
  
  
• 37 out of 53 successful House candidates discussed immigration or border security. Platforms among successful candidates ranged from building fences and deporting illegal immigrants to supporting comprehensive immigration and border reform to defeating “rabidly anti-immigrant” forces in the United States.

Representative Henry J. Hyde (R-Ill.), the chairman of the House Committee on International Relations, today announced that the Government Accountability Office (GAO) has released another in a series of reports on the Commerce Department's dual-use export licensing system. The report, entitled, "Analysis of Data for Exports Regulated by the Department of Commerce", supplements a June 26, 2006 GAO report (GAO-06-638) which found that improvements were needed to correct weaknesses in Commerce's dual-use licensing system for the export of controlled products and technology.

The major findings of the GAO analysis included:

-- Sensitive dual-use goods and technologies specially designated on the Commerce Control List (CCL) only rarely require a license before being exported. The report states that 98.5 percent of goods and technology on the CCL, totaling more than $69 billion, were exported in 2005 without any U.S. Government review or license. This includes 98 percent of all "controlled" dual-use goods and technologies that were exported to China without a license in 2005 ($6.2 billion) , as 93 percent increase from 2004.

-- 99.9 percent of goods classified as EAR99 do not require a license before being exported. More than $555 billion worth of EAR99 goods were exported in 2005 without any license, including 99.9 percent of EAR99 merchandise exported to China, worth more than $33 billion.

-- The leading commodities of EAR 99 merchandise exported without any license in 2005 included industrial machinery ($61 billion), computers, peripherals and semiconductors ($59 billion) and chemicals ($58 billion).

The full text of the GAO report will soon be available on the GAO's website.

Update: The report can be found at the following link: www.gao.gov/new.items/d07197r.pdf.

Labels: Export Controls

The U.N. Security Council's Sanctions Committee (UNSC) has distributed to member countries a list of equipment and technology that will be prohibited from being exported to North Korea under the sanctions imposed under U.N. Resolution 1718.

Many of the items on the sanctions list were selected based on restrictions under the Nuclear Suppliers Group, the Missile Technology Control regime and the Australia Group.

In addition, the UNSC has distributed another list that prohibits a number of industrial products from being exported to North Korea, such as high-strength steel and bearings, a variety of compound metals, high-performance computers and global positioning systems.

The UNSC's list did not specify which "luxury goods" would be prohibited from being exported to North Korea. Given the difficulty in identifying such goods, each member nation will be responsible for coming up with its own definition of prohibited "luxury goods". It has been reported that Switzerland has decided to prohibit the sale to North Korea of watches, caviar, wine, tobacco, luxury clothes, carpets, fur overcoats, electronic appliances and cars.

While many of these items are already prohibited from being exported to North Korea without a license (U.S. law currently permits the export of EAR99 products to North Korea), the U.S. Government is expected to modify the list of permissible exports to North Korea in the near future.

Labels: Export Controls

The Jerusalem Post reports that "despite the public perception that the Arab trade embargo of Israel is on the wane, the number of boycott-related requests made to US companies this year by Arab states has registered a sharp increase." The article, which examines recent data issued by the Commerce Department's Bureau of Industry and Security (BIS), indicates that the number of boycott-related requests submitted to BIS in 2006 is "nearly 20 percent over the rate recorded last year." The article notes that the largest number of boycott requests came from the United Arab Emirates, followed by Syria.

The antiboycott provisions of the U.S. Export Administration Regulations (EAR) (15 CFR Part 760) prohibit U.S. persons from engaging in certain activity relating to restrictive trade practices and unsanctioned foreign boycotts, including implementing letters of credit containing prohibited boycott terms or conditions and entering into agreements containing prohibited boycott language. The antiboycott provisions also require U.S. persons to report quarterly requests they have received to take certain actions to comply with, further or support an unsanctioned foreign boycott.

Labels: BIS, Boycotts, Export Controls

The European Union has published in the Official Journal of the European Union the 2007 version of its Combined Nomenclature (the EU's version of the Harmonized Tariff Schedule) in order to conform to the amendments made by the World Customs Organization (WCO) to the Harmonized Tariff System. The amendments to the HTS will go into effect in all countries, including the U.S., on January 1, 2007. The 880 page document can be found at the following link (click on the number 1 at the right hand side of the page to access the PDF document).

The U.S. International Trade Commission (ITC), which oversees the Harmonized Tariff Schedule of the United States (HTSUS), is expected to release the 2007 version of the HTSUS in the near future. In the meantime, U.S. importers are encouraged to review the ITC's final report on the proposed amendments to the HTSUS (Publication 3851) to see how particular HTSUS numbers will be affected. In addition to the changes in numerous HTSUS headings and subheadings, the changes will include revisions to the Rules of Origin set forth in NAFTA and other trade agreements.

Labels: Customs

The Emergency Committee for American Trade (ECAT) has released a report evaluating Congressional voting patterns on trade and investment related legislation during the 109th Congress. ECAT’s Trade and Investment Report for the 109th Congress evaluated Members of the House and Senate on the following votes in each chamber:

House Votes
Oman FTA
DR-CAFTA (counted twice)
Withdrawal from WTO
Bahrain FTA
No Temporary Entry Changes

Senate Votes
Oman FTA
No Trade Remedy Law Changes
DR-CAFTA (counted twice)
Extraterritorial Sanctions
Table China Tariff Amendment
Lift Cuba Economic Embargo

The PDF version of the report can be found here.

The U.S. Chamber of Commerce recently issued a report describing the benefits to U.S. consumers and companies of the U.S. Generalized System of Preferences (GSP) program and urged Congress to extend the program beyond its December 31, 2006 expiration date.

The report entitled, "Estimated Impacts of the U.S. Generalized System of Preferences
to U.S. Industry and Consumers" states:

• GSP keeps U.S. manufacturers and their suppliers competitive. In 2005, three quarters of U.S. GSP imports were raw materials, parts and components, or machinery and equipment used by by U.S. companies to manufacture goods.
  

• American families benefit from GSP. Finished consumer goods sold by U.S. retailers accounted for 25% of GSP imports in 2005. Relatively inexpensive jewelry was the most significant item.
  

• GSP is particularly important to U.S. small businesses, many of whom rely on the program's duty savings to compete with larger companies.

• GSP imports support U.S. jobs. Moving GSP imports from the docks to retail shelves supported nearly 82,000 U.S. jobs in 2005.
  

Labels: Customs

NewPage Corporation of Dayton, Ohio recently petitions with the U.S. International Trade Commission (ITC) and U.S. Department of Commerce seeking the imposition of antidumping and countervailing duties on U.S. imports of coated free sheet paper from China, Indonesia, and South Korea. Coated free sheet paper is used by the commercial printing industry to produce high-quality books, gift wrap and advertising materials. The ITC's notice of initiation of this case, as published in the Federal Register on November 6, 2006, can be found here.

What makes this case unique is that the petitioner is requesting the U.S. to impose countervailing duties on China, a country designated as a non-market economy (NME). The petition states that the Government of China subsidizes the Chinese paper industry through a "host of government programs and special incentives both at the national and local levels." The petition also alleges that Chinese producers of coated free sheet paper benefit from China's exchange rate regime that substantially undervalues the between the Chinese Yuan (RMB) and the U.S. dollar.

Since 1984 it has been the policy and practice of the Commerce Department not to impose countervailing duties on NMEs, such as Vietnam and China, because government intervention in a NME is so pervasive that one cannot make meaningful comparisons between market-determined prices and those that have been distorted by government intervention. This decision was sustained by the the U.S. Court of Appeals for the Federal Circuit in Georgetown Steel Corp. v. United States, 801 F.2d 1308 (Fed. Cir. 1986).

The petitioners in this case, however, claim that "there is no statutory bar to applying countervailing duties to imports from China or any other NME country." They also state that "the Federal Circuit’s decision in Georgetown Steel . . . is no impediment to the [Commerce] Department’s conducting a CVD investigation on imports from an NME country" since Georgetown Steel involved a countervailing duty law that has since been repealed (section 303 of the Tariff Act of 1930)." The petitioners also note that the countervailing duty statute does not specifically provide that countervailing duties should not be applied to NME countries. They also noted that the Chinese economy is entirely different than the economies investigated in Georgetown Steel (Poland, East Germany, Soviet Union and Czechoslovakia) and thus "there is little reason to expect any special difficulties to arise in the identification and valuation of subsidies in an investigation involving China that would not arise in a market economy CVD investigation."

The petitioners face an uphill battle, which was recently confirmed in a report issued by the Government Accountability Office (GAO). The GAO report, entitled, "U.S.-China Trade: Challenges and Choices to Apply Countervailing Duties to China" notes that while the Commerce Department could reverse its previous decision not to impose countervailing duties on NME countries, that "absent a clear grant of authority from Congress, such a reversal could be challenged in court" and that "the results of such a challenge would be uncertain." The GAO also indicated that the Commerce Department would "face substantial practical challenges in identifying Chinese subsidies and determining appropriate CVD levels."

This case promises to be an interesting one . . . stay tuned.

Labels: Antidumping, Countervailing Duties

Registration has closed for U.S. Customs and Border Protection's (CBP) 2006 Trade Symposium in Washington, DC because the program is at full capacity. CBP is establishing a waiting list for the program, which can be found here.

Labels: Customs

By a 6-0 vote, the commissioners of the U.S. International Trade Commission (ITC) voted on Friday that there is a reasonable indication that a U.S. industry is materially injured or threatened with material injury by reason of imports of lemon juice from Argentina and Mexico that are allegedly sold in the United States at less than fair value. As a result of the ITC's affirmative determinations, the U.S. Department of Commerce will continue to conduct its antidumping investigations of imports of lemon juice from Argentina and Mexico, with its preliminary determinations due on or about February 28, 2007.

This antidumping investigation was requested by Sunkist Growers, Inc. (Sunkist). Sunkist's has claimed that the "U.S. has simply been flooded with unfairly priced juice in recent years, disrupting the market and making it very difficult to earn a reasonable return." Sunkist's has also indicated that while antidumping duties imposed on imports would increase the the bulk price for lemon juice in the U.S., "the limited volume of lemon juice used in making beverages" is unlikely to "higher prices at the checkout counter."

Labels: Antidumping

The National Council on International Trade Development's (NCITD) next monthly meeting will be held on Thursday, November 2006. The speakers include:

• Adam Szubin, Director, Office of Foreign Assets Control, Department of Treasury
• Ned Weant, Director, Office of Antiboycott Compliance, Bureau of Industry and Security, Department of Commerce
• David W. Fulton, Director, Office of Strategic Planning and Resource Management, International Trade Administration, Department of Commerce

Labels: BIS, Export Controls, OFAC