International Trade Law News

The Bureau of Industry and Security (BIS) today posted on its website the agency's Fiscal Year 2006 Annual Report. The 2006 Annual Report contains a great deal of useful information and statistics on export licensing, export enforcement and antiboycott reporting.

The PDF version of the 2006 Annual Report can be found at the following link.

Labels: BIS, Boycotts, Export Controls

The Federation of American Scientist's (FAS) Strategic Security Blog has posted on its website a list of “unfavorable determinations” during fiscal years 2002 through 2004 resulting from end-use checks of U.S. arms exports performed under the State Department's Blue Lantern Program. Blue Lantern end-use checks are conducted by U.S. mission personnel abroad and, in some instances, DDTC personnel to verify the destination and specific end-use and end-users of U.S. commercial defense exports. FAS obtained the document pursuant to a Freedom of Information Act (FOIA) request.

According to FAS:

The FOIA document - and the annual reports that it supplements - are poignant reminders of the importance of strong arms export controls, including rigorous end-use monitoring. US defense articles and services are sought by terrorists, criminals, and rogue regimes the world over, and too often the only thing that stands between them and the weapons they seek is a vigilant licensing officer. In 2004, for example, a pre-license check on a request to send pistols to violence-racked Central America revealed that the purported end-user was a front company set up by a firearms retailer under investigation for violating local gun laws. The license was denied and both countries were added to the State Department's watchlist.

The document also speaks to the importance of strong export controls on all transfers, including exports to close allies. As recently as 2004, proponents of arms export control “reform” were calling for a relaxation on controls on exports to certain countries. Congressional opponents balked at these requests, pointing out that even arms exports to America's closest allies are not exempt from end-use problems. The FOIA document supports these claims. Of the 191 unfavorable determinations identified in the document, 26 involve NATO members and 34 involve the so-called “NATO +3” countries (NATO members + Australia, Japan, and New Zealand). While the document is too vague to determine the exact nature of the problems that led to the determinations, past end-use monitoring reports provide some insight. In 2002, for example, the State Department reported that, "[a]s in previous years, the incidence of Western European-based intermediaries involved in suspicious transactions continues to be notable. In FY 2002, 26% of the 50 unfavorable checks, mostly for the export of aircraft spare parts, involved possible transshipments through allied countries. Possible transshipments through Europe as a whole accounted for 34% of the unfavorable checks."

Labels: DDTC, Export Controls

House Ways and Means Committee Chairman Charles B. Rangel (D-NY) has announced that the Committee will hold a hearing on trade and globalization on January 30 in in the Longworth House Office Building.

The hearing will "explore the integration of markets brought about by globalization and examine how U.S. trade policy can be used as a tool to shape globalization to maximize its benefits, ensure that they flow evenly throughout society, including to working people, and to ensure that the forces of the global economy are harnessed most effectively and efficiently to generate the maximum amount of broadly based economic growth."

Labels: Congress

The House Committee on Foreign Affairs has formed the following seven subcommittees and elected the following chairmen:

• Africa and Global Health – Donald M. Payne (D-NJ)
• Asia, the Pacific, and the Global Environment – Eni F.H. Faleomavaega (D-American Samoa)
• Europe – Robert Wexler (D-FL)
• International Organizations, Human Rights, and Oversight – Bill Delahunt (D-MA)
• The Middle East and South Asia – Gary L. Ackerman (D-NY)
• Terrorism, Nonproliferation, and Trade – Brad Sherman (D-CA)
• The Western Hemisphere – Eliot L. Engel (D-NY)

Labels: Congress

U.S. Customs and Border Protection (CBP) has posted on its website a page entitled"Questions and Answers Regarding the Conversion to the 2007 Harmonized Tariff Schedule of the United States with WCO Updates". Many of the answers shed new light on the transition to the new Harmonized Tariff Schedule of the U.S. that will go into effect on February 3, 2007.

For example, CBP explains that the "grace period" for implementing the new version of the U.S. Harmonized Tariff Schedule will work as follows:

Q: How does the “Grace Period” work, does it mean that both 2006 and 2007 data will be available simultaneously - or just that the filers have an extra 17 days to respond?

A: The “Grace Period” applies to classification errors related to tariff classification made by the WCO. These could be either the late filing of a rejected entry for correction or a post entry correction for entries filed during the “Grace Period” that were later found to have classification errors.

ACS will only have "active" HTS numbers available in the reference files for processing entry/entry summary transmissions. For example, if a HTS declared on the transmission of an entry summary on February 10, 2007 is for an HTS that expired on February 2, 2007, the transmission will be rejected by ABI/ACS back to the filer without acceptance. Therefore, the Trade MUST utilize an active HTS number at the time of transmission.

If upon subsequent review of the entry summary by the Import or Entry Specialist CBP determines that the HTS successfully used on the February 10th ABI transmission is not the correct HTS and consequently issues either a penalty or formally rejects the entry summary package, this situation may be mitigated/resolved by using this “Grace Period”. This may also be the case if these same errors are discovered during an audit.

The NAFTA product specific rules are being amended to reflect the 2007 HTS. However, they are not likely to be implemented on February 3, 2007 with 2007 HTS. However, because the amended rules do not include any substantive, but are merely re-stated using HS 2007 nomenclature, COs completed using the 2006 rules of origin will be valid for 2007. COs completed prior to implementation will need to continue to reference the 2006 HTS numbers because the product specific rules are directly related to those HTS numbers.

To avoid confusion, it may be helpful for exporters to include both the old and new HTS on the CO. Once the new rules are issued, CBP may request that an amended CO be presented if there is no reference to the 2007 HTS number.

Please keep in mind that this only pertains to importations into the US and not procedures for importing into Mexico and Canada.

Labels: Customs, HTS

President Bush has nominated Mario Mancuso to serve as the Commerce Department's Under Secretary for Export Administration. Mr. Mancuso currently serves as Deputy Assistant Secretary of Defense for Special Operations and Combating Terrorism at the Department of Defense. He previously served as Special Counsel to the General Counsel at the Department of Defense.

BIS has been without an Under Secretary since David McCormick was nominated in August to serve as Deputy National Security Advisor for International Economic Affairs.

Labels: BIS

The Bureau of Industry and Security (BIS) has imposed a $22,000 civil penalty on the National Bank of Egypt's New York Branch (NBE) for violating the antiboycott regulations. Specifically, BIS alleged that the NBE committed four violations of the antiboycott regulations by providing commercial invoices to a trading company in Syria that contained prohibited negative certificate of origin clauses. In addition, BIS charged NBE with four additional violations for failing to maintain records for five years. The proposed charging letter, settlement agreement and order can be found here.

The warning letters issued during 2006 by the Office of Antiboycott Compliance can be at the following link.

Labels: BIS, Boycotts

The DDTC's Director of Defense Trade Control Licensing announced on Friday that the implementation of the new version of the D-Trade software has been "postponed until further notice." As in previous notices, this notice states that applications submitted via D-Trade between January 8 and 10, 2007 must be resubmitted. The complete message is reprinted below:

We are still awaiting receipt of the new D-Trade software. Our goal was to begin production testing by 20 January; however, that is now postponed until further notice. The previous version of D-Trade is fully functional, so applicants should continue to submit DSP-5s, -61s and -73s as new applications.

If you submitted a D-Trade license application between January 8 and 10, you MUST resubmit the application beginning with “XXX” in the Transaction ID block. For example, an application for OIF/OEF should be identified as follows: “XXXOIF/OEF (followed by your unique Transaction ID). The only exception is if you submitted the “downloadable” paper application between January 8 and 10 (for these cases, resubmission is not necessary).

If you have received an issued license via D-Trade between January 8 and 10, send an e-mail to slyghpc@state.gov identifying the license number, as well as the company name, company contact, and date received. Do NOT resubmit cases for which a license was received.

We are working diligently with the vendor to correct the internal problems caused by the rollback to the previous software and regret the length of time taken to resolve the software problems.

Thanks for your continued patience.

Labels: DDTC

The United States Trade Representative has announced in the January 22, 2007 Federal Register that Bulgaria and Romania are no longer eligible for Generalized System of Preferences (GSP) benefits due to their accession to the European Union on January 1, 2007.

Labels: Customs, GSP

The Bureau of Industry and Security has announced in the January 22nd Federal Register that the Transportation and Related Equipment Technical Advisory Committee will meet on February 7, 2007 in Washington, DC. One of the items on the agenda is a report by the Aerospace Industries Association (AIA) on Export Control Reform Proposals.

Export control reform is one of AIA's top prioriries for 2007. The AIA's 2007 export control position paper can be found here: www.aia-aerospace.org/pdf/07issue_exportcontrol.pdf.

In a separate announcement, BIS announced that the Materials Technical Advisory Committee will meet on February 1, 2007.

Labels: BIS, Export Controls

The AP reports today that Japan Customs intends to increase penalties for filing false customs declarations involving transactions with North Korea. The article states:

The new laws would give prison terms of up to a year to people refusing to have their cargo inspected by Japanese customs officials and provide prison time for ship captains or airplane pilots who make false customs declarations . . .

The revisions would also include a fivefold hike in the maximum prison term and fines for exporters who file false customs forms.

Under current law, captains and pilots are only punishable by fines up to $4,160 for false cargo claims, while exporters are subject to prison terms of one year or maximum fines of $8,300 . . .

Labels: Customs

The Center for Democracy in the Americas and USA*Engage have released a report entitled "In Our National Interest: The Top Ten Reasons for Changing U.S. Policy Towards Cuba". The top ten reasons covered in the report are:

• The policy has produced nothing in decades
• Enforcing the policy drains resources from the war on terror
• The policy hurts American companies and American workers
• The policy is an assault on family values
• The policy infringes on the rights and liberties of all U.S. citizens
• The policy hurts America’s image abroad
• The Castro government uses our policy to advance its own ends
• The policy puts political interests above the national interest
• Important people oppose the policy and want to see it changed
• The policy stops Americans from doing what they do best

Labels: Cuba

The Office of Foreign Assets Control (OFAC) has published its monthly list of civil penalties. In its January 2007 notice, OFAC announced the imposition of the following two penalties:

• Organization Resources Counselors, Inc. (ORC) paid $746.35 to settle allegations of violations of the Libyan Sanctions Regulations occurring between September and October 2003. OFAC alleged that ORC imported services from Libya without an OFAC license.
  

• OFAC imposed an $850 penalty on one individual for engaging in travel-related transactions with Cuba, including the receipt of and payment for goods and services. The individual traveled to and from Cuba through third countries.

Labels: OFAC

U.S. Customs and Border Protection (CBP) has announced that it intends to beef up its staff by hiring more than 25,000 CBP Officers around the country. CBP has published a series of Frequently Asked Questions on becoming a CBP officer at the following link.

Labels: Customs

In the first civil penalty imposed by the Bureau of Industry and Security (BIS) in 2007, BIS has imposed a $6,000 penalty on El Salvador-based El Salvador Networks, S.A. ("SALNET") for engaging in a prohibited reexport of U.S.-origin equipment and software to Cuba. Specifically, BIS alleged that SALNET reexported U.S.-origin telecommunication hardware and software that was classified as ECCN 5A991 to Cuba without obtaining a reexport license.

BIS controls the export and reexport of U.S. origin goods to Cuba.

Labels: BIS, Cuba, Export Controls

The repaired D-Trade software is expected to be delivered 8 AM Tuesday January 16. Our goal is to begin the three day testing cycle when we receive the new software. In order to minimize the impact on business, we do not upgrade software Monday through Friday. As a result, the next possible opportunity for upgrading is Saturday January 20.

Today’s discussions with the software developers showed me that license applications submitted between January 8 and January 10 have a very high probability of needing to be resubmitted. Please check back Tuesday for updates as we determine exactly which data sent during the January 8-10 period require resubmission to DDTC.

In the meantime, D-Trade remains functional, utilizing the previous software. Industry may continue to submit DSP-5s, -61s and -73s as new applications.

If you have a case that requires expedited attention, please bring it to the attention of our Response Team.

Thanks for your patience as we work to correct this problem.

Labels: DDTC, Export Controls

To facilitate the need for an easier transition to the World Customs Organization (WCO) 2007 Harmonized Tariff Schedule of the U.S. (HTSUS), U.S. Customs and Border Protection (CBP) announced a 17 day grace period to U.S. importers to assist in the HTSUS conversion.

The 17 day grace period, which will begin on February 3, 2007 and ends on the close of business on February 20, 2007, pertains to:

• Entries rejected by an Import Specialist or Entry Specialist either manually or electronically by RLF and returned to the filers for classification correction; and
• Post-entry classification corrections.

Labels: Customs, HTS

The Bureau of Industry and Security has announced that the Sensors and Instrumentation Technical Advisory Committee (SITAC) will meet on January 30, 2007 at 9:30 a.m. SITA advises the Office of the Assistant Secretary for Export Administration on technical questions that affect the level of export controls applicable to sensors and instrumentation equipment and technology.

Labels: BIS

U.S. Customs and Border Protection has announced that it will hold a C-TPAT Supply Chain Security Training Seminar from April 3-7, 2007 in New Orleans. The program is open to certified C-TPAT members only.

According to CBP, the program will include joint Customs/Trade presentations, panel discussions and concurrent workshops on a number of supply chain security topics.

Registration will be conducted via an on-line registration process beginning January 15, 2007. Click the following link for more details on the program.

Labels: C-TPAT, Customs

U.S. Customs and Border Protection (CBP) has announced that the next Customs Broker License Examination will be held on Monday, April 2, 2007. The deadline for submitting exam applications to CBP is March 2, 2007. For further details on the Customs Broker License Examination, including a copy of the application form and previous exams, see the following link.

Labels: Customs

By a vote of 299 - 128, the U.S. House of Representative tonight passed H.R. 1, legislation that includes a number of measures to implement the 9/11 commission. The bill contains a number of trade security measures. For example, section 406 of the bill would require the Department of Homeland Security to establish a "system to inspect 100 percent of cargo transported on passenger aircraft operated by an air carrier or foreign air carrier in air transportation or intrastate air transportation to ensure the security of all such passenger aircraft carrying cargo" within three years from the date of enactment. Section 501 would require impose the following requirements on the entry of containers into the U.S.:

• The container must be scanned with equipment that uses the best-available technology, including technology to scan a container for radiation and density and, if appropriate, for atomic elements"; and
  

• The container must be secured with a seal that uses the "best-available technology, including technology to detect any breach into a container and identify the time of such breach."

Labels: Cargo Security, Customs

The Bureau of Industry and Security (BIS) announced today that the old version of the SNAP licensing system will be decommissioned on January 15, 2007. After that date, all electronic license and classification requests will have to be submitted via the Simplified Network Application Process Redesign (SNAP-R).

Labels: BIS

The State Department's Directorate of Defense Trade Controls (DDTC) has issued its 2006 "Defense Trade Overview", which contains a summary of current defense trade control laws and regulations and a summary of the defense licensing activity in fiscal year 2006. Some of the more useful pieces of information contained in the Defense Trade Review include:

• More than 5,000 entities are registered with DDTC as manufacturers, exporters, or brokers of U.S. defense articles or services [with an annual registration fee of $1,750, this generates nearly $9 million in revenues for DDTC]. The report notes that less than half of currently registered entities are likely to apply for a license in any given year.
  

• In FY 2006, DDTC took final action on 66,000 cases (i.e., licenses and agreement), with case volume increasing at about 8% per year.

• Approximately 1/3 of license applications are referred to other State Department bureaus or the Department of Defense's Defense Technology Security Administration (DTSA) or other agencies for review.

• The median review time for cases handled internally at DDTC (2/3 of total cases) is 18 calendar days. Review time for the 1/3 third of cases that are staffed to DoD and other offices in the State Department is about 55 calendar days.
  

• About 15% of applications are returned without action to the applicant, usually because "required documentation is missing or because DTCL does not have confidence in some specific aspect of the transaction."
  

• In FY 2006, more than 7,000 agreement applications (e.g., TAAs and MLAs) were received and that almost all agreements are referred to DTSA for national security and technical review.

• In FY 2006, 78 DDTC speakers participated in 58 events around the U.S. and in foreign countries, including Australia and India.
  

• DDTC’s Response Team handled roughly 25,000 phone inquiries and 8,500 e-mails from the public.
  

• DDTC expect to make the use of D-Trade available for all unclassified authorizations, including agreements, during 2007.

• DTCC maintains a “Watchlist” of more than 130,000 foreign and domestic companies and individuals identified from various open and classified sources. All parties on license applications and agreement applications are checked against this Watchlist. If the name of a party is on the Watchlist, the licensing officer evaluates the information on the listed party, and the license may be denied.

• In FY 2006, there were 613 Blue Lantern [an end-user monitoring program] checks (surpassing the previous record number of 563 in FY 2005), and unfavorable information was identified in over 90 cases.

• DDTC provided support for law enforcement agencies that initiated criminal actions pursuant to the Arms Export Control Act and ITAR, resulting in 119 arrests, 92 indictments and 60 convictions.

• DDTC imposed $22 million in civil penalties in FY 2006.

• DTCC visited 23 companies in FY 2006, helping to identify compliance issues or specific problem areas.
  

• In FY 2006, 340 commodity jurisdiction cases were completed.

Labels: DDTC, Export Controls

On January 5, 2006, the State Department published a notice in the Federal Register announcing that the U.S. has imposed sanctions on 24 foreign entities pursuant to the Iran and Syria Nonproliferation Act. The Iran and Syria Nonproliferation Act (P.L. 109-112) provides for the imposition of penalties on entities and individuals that transfer to Iran or Syria equipment and technology controlled under multilateral export control lists or otherwise having the potential to make a material contribution to the development of weapons of mass destruction (WMD) or cruise or ballistic missile systems.

The list, which is reprinted below, includes four Russian companies and others in China, Iran, Iraq, Malaysia, Mexico, North Korea, Sudan and Syria:

1. China National Electronic Import-Export Company (CEIEC) (China) and any successor, sub-unit, or subsidiary thereof;
2. China National Aero-Technology Import and Export Company (CATIC) (China) and any successor, sub-unit, or subsidiary thereof;
3. Zibo Chemet Equipment Company (China) and any successor, sub-unit, or subsidiary thereof;
4. Defense Industries Organization (DIO) (Iran) and any successor, sub-unit, or subsidiary thereof;
5. Iran Electronics Industries (IEI) (Iran) and any successor, sub-unit, or subsidiary thereof;
6. Sanam Industrial Group (SIG) (Iran) and any successor, sub-unit, or subsidiary thereof;
7. NAB Export Company (Iran) and any successor, sub-unit, or subsidiary thereof;
8. Abu Hamadi (Iraq) and any successor, sub-unit, or subsidiary thereof;
9. Kal Al-Zuhiry (Iraq);
10. Korea Mining Development Corporation (KOMID) (North Korea) and any successor, sub-unit, or subsidiary thereof;
11. Target Airfreight (Malaysia) and any successor, sub-unit, or subsidiary thereof;
12. Aerospace Logistics Services (Mexico) and any successor, sub-unit, or subsidiary thereof;
13. Arif Durrani (Pakistan);
14. Rosoboronexport (Russia) and any successor, sub-unit, or subsidiary thereof;
15. Kolomna Design Bureau of Machine-Building (KBM) (Russia) and any successor, sub-unit, or subsidiary thereof;
16. Tula Design Bureau of Instrument Building (KBP) (Russia) and any successor, sub-unit, or subsidiary thereof;
17. Alexey Safonov (Russia);
18. Al Zarga Optical and Electronics Co. (Sudan) and any successor, sub-unit, or subsidiary thereof;
19. Giad Industrial Complex (Sudan) and any successor, sub-unit, or subsidiary thereof;
20. Yarmouk Industrial Complex (Sudan) and any successor, sub-unit, or subsidiary thereof;
21. Army Supply Bureau (Syria) and any successor, sub-unit, or subsidiary thereof;
22. Industrial Establishment of Defense (IED) (Syria) and any successor, sub-unit, or subsidiary thereof;
23. Ministry of Defense (Syria) and any successor, sub-unit, or subsidiary thereof; and
24. Scientific Studies and Research Center (SSRC) (Syria) and any successor, sub-unit, or subsidiary thereof.

Labels: State Department

The House Committee that would consider any bill to reauthorize the expired Export Administration Act (EAA) has a new name. In a bow to tradition, Chairman Tom Lantos (D-CA) restored the name of the House International Relations Committee to the House Committee on Foreign Affairs. The Republican leadership had renamed the Committee in 1994.

The EAA provides the statutory authority for the Export Administration Regulations (EAR), which are administered by the Commerce Department's Bureau of Industry and Security. The EAA, which originally expired in 1989, periodically has been reauthorized for short periods of time, with the last incremental extension expiring in August 2001. Since the EAA expired in 2001, the U.S. dual-use export control regime has relied on the president's emergency powers under the International Emergency Economic Powers Act (IEEPA) (P.L. 95-223). Legislation to renew the EAA was introduced in Congress in 2003 and 2005, but was never passed.

Labels: BIS, Export Controls

The National Council on International Trade Development (www.ncitd.org) will hold its next monthly meeting on January 11, 2006 in Washington, DC. The speakers include:

• Michael D. Turner, Director of the Bureau of Industry and Security's Office of Export Enforcement
  

• Michael C. Mullen, Assistant Commissioner, Customs and Border Protection's Office of International Affairs and Trade Relations
  

Labels: BIS, Customs

The Treasury Department's Office of Foreign Assets Control (OFAC) recently added three Syrian entities to the List of Specially Designated Nationals (SDN List). The three entities, the Higher Institute of Applied Science and Technology (HIAST), the Electronics Institute, and the National Standards and Calibration Laboratory (NSCL), were designate as WMD proliferators under Executive Order 13382 since they are affiliated with the the Syrian Scientific Studies and Research Center (SSRC), the Syrian government agency responsible for developing and producing non-conventional weapons and the missiles to deliver them.

Labels: OFAC

The Bureau of Industry and Security has announced that the newly created Deemed Export Advisory Committee (DEAC) will meet in open sessions on January 22, 2007 from 8 a.m.-12 p.m. and January 23, 2007 from 8 a.m.-10 a.m. at the American Electronics Association in Santa Clara, California.

Labels: BIS, Export Controls

On Friday, the U.K.'s Guardian newspaper reported on "one of the most ferocious lobbying campaigns in recent history . . . the battle between EADS, owner of Airbus, and Boeing, for a $200bn . . . contract to supply the U.S. armed forces with 400 new air-to-air refuelling aircraft."

The January 8, 2007 edition of the Federal Register contains the Treasury Department's periodic "List of Countries Requiring Cooperation With an International Boycott." The list of countries includes: Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, United Arab Emirates, Republic of Yemen. The notice states that "Iraq is not included in this list, but its status with respect to future lists remains under review by the Department of the Treasury." This list is unchanged from the previous version published by Treasury in October 2006.

Labels: Boycotts, Treasury Department

The Bureau of Industry and Security (BIS) has announced that it will hold its second annual "Update West" in Newport Beach, California on March 10, 2007. According to BIS:

This one-day event will feature key management, policy, and licensing specialists from the Bureau of Industry and Security who will provide updates on key developments in the export control field. The event will conclude with a gala reception, offering you the opportunity to mingle and discuss issues of concern with the presenters and other participants.

The extended one-day format is intended to provide an Update-like offering on the west coast. The schedule is compressed to offer a lot of information in a package that fits into your busy schedule. Last year’s event was well attended. We encourage you to register early as space is limited.

Labels: BIS

As we previously noted, the Presidential Proclamation authorizing the modification of the Harmonized Tariff Schedule of the U.S. (HTSUS) to conform to the numerous changes made to the Harmonized System was recently issued. The Proclamation states that the modifications to the HTSUS will apply to "goods entered, or withdrawn from warehouse for consumption, on or after the later of (i) February 1, 2007, or (ii) the thirtieth day after the date of publication of this proclamation in the Federal Register."

The Proclamation will be published in the Federal Register on January 4, 2007. The thirtieth day after January 4, 2007 is February 3, 2007.

In the meantime, today the U.S. International Trade Commission (ITC) posted on its website for the first time the complete 10-digit version of the HTSUS, incorporating the changes made by the World Customs Organization (WCO) and other changes required by U.S. law. The draft chapter-by-chapter listing of the 2007 Harmonized Tariff Schedule and general notes can be found at the following link: www.usitc.gov/tata/hts/bychapter/index.htm. As you will note, this version is prominently labeled "DRAFT" in red on each page, since it will not take effect until February. The ITC has advised that the final version of the basic edition of the 2007 HTS will be posted on the ITC's website on or about February 3, 2007 and a hard copy version will be published by the Government Printing Office at that time.

Another major change that will occur with the implementation of the new HTSUS in February, is that in most cases the tariff codes contained in the HTSUS can be used instead of Schedule B codes for reporting exports on the Shipper's Export Declaration or under the Automated Export System. The list of products for which a Schedule B number still must be used can be found in the "Notice to Exporters" section of the HTSUS at http://hotdocs.usitc.gov/docs/tata/hts/bychapter/0700n2x.pdf.

Labels: Customs, HTS, ITC

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) and the Chinese Ministry of Commerce will hold a conference on China-U.S. High Technology and Strategic Trade on January 29 & 30, 2007, in Shenzhen, China.

Companies doing high technology business in China and importing controlled goods from the U.S. or re-exporting them to/from China are invited to attend the program. Christopher Padilla, Assistant Secretary for Export Administration, will be the keynote speaker.

According to BIS, the program will include the following topics:

• The market opportunities and prospects for U.S. high technology and strategic trade exports to China
• The status, issues of China-U.S. high technology and strategic trade and export licensing issues affecting this trade
• Discussion of Proposed Regulatory Changes, including the proposed “Revisions and Clarification of Export and Reexport controls for the People’s Republic of China; New Authorization Validated End-User”
• China Export Control System
• U.S. Export Control System to China

Labels: BIS, Export Controls

The AP has reported that U.S. Customs and Border Protection (CBP) plans to conduct an audit of Byrd Amendment funds paid to U.S. shrimpers and seafood processing houses following reports of overpayments resulting from the antidumping case on frozen and canned warmwater shrimp from China and Vietnam.

The article reports that at two businesses received more than $3 million in overpayments. In one case, a shrimp boat owner received a $2.1 million check from CBP, due to a misplaced decimal point. The proper amount of the payment should have been $210,000.

In September 2005, the Government Accountability Office issued a report critical of Byrd Amendment payments made by CBP. The report entitled "Issues and Effects of Implementing the Continued Dumping and Subsidy Offset Act" discussed the numerous problems faced by CBP in implementing Byrd Amendment payments.

The Byrd Amendment was repealed by Congress in February 2006 after it was found to be in violation of the World Trade Organization's Antidumping and Subsidies Agreements. However, the bill did not provide for immediate repeal, but provided that disbursements from the U.S. government to U.S. companies will continue on good subject to antidumping and countervailing duties that are entered before October 1, 2007.

Labels: Antidumping, Customs

The Houston Chronicle has published an interesting interview with Alexandra Wrage, president of Transparent Agents and Contracting Entities (TRACE International ) on the difficulties U.S. companies face in complying with the Foreign Corrupt Practices Act (FCPA). TRACE International is a non-profit association that specializes in anti-bribery due diligence reviews and compliance training for international commercial intermediaries.

On a related note, the TRACE Institute — the research and publication arm of TRACE International — is holding its 2007 essay contest on the topic of “Why Bribe?”. Entries must not exceed 2,500 words and must be original, unpublished work, submitted by May 1, 2007. First and second prizes of $10,000 and $5,000 respectively will be awarded and a collection of the best essays will be published in 2007.

According to TRACE, the essay should respond to the following: “Can bribes be avoided? Extortion resisted? Do businessmen try? Do companies care?” and the "language should be simple and direct. Anecdotes are welcome. The judges admire the prose style of The Economist and Foreign Policy magazine and the stylistic advice of William Strunk." Entries are to be submitted to Essay@TRACEinternational.org.

Labels: FCPA

In a major development in U.S. antidumping law and practice, on December 27, 2006, the U.S. Department of Commerce (DOC) published a notice in the Federal Register announcing that it will no longer use the "zeroing" methodology in antidumping investigations, including the antidumping investigations that are currently underway.

DOC made this change as as a result of a decision made by a World Trade Organization (WTO) dispute settlement panel in the case entitled "United States - Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing'') (WT/DS294). In that case, the WCO panel found, among other things, that the DOC's denial of offsets when using the average-to-average comparison methodology in certain antidumping investigations challenged by the European Union was inconsistent with Article 2.4.2 of the Antidumping Agreement.

The Cato Institutes's Center for Trade Policy Studies has called zeroing "probably the most distortive of a multitude of methodological tricks the DOC undertakes in the name of fighting unfair trade." In research conducted by the Cato Institute, they found that "zeroing was the most significant cause of dumping margins" and "affected the outcomes in 17 of the 18 cases analyzed." They found that on average "eliminating the practice of zeroing caused the margins to decrease by 88.65 percent" in the 18 cases that were reviewed.

It is important to note that this decision only applies to new and ongoing antidumping investigations and will not apply (at least for the time being) to antidumping administrative reviews conducted by DOC.

Labels: Antidumping

On December 28, 2006, the Department of Homeland Security (DHS) published in the Federal Register a proposed rule to develop mandatory chemical facility security programs at high-risk chemical facilities.

Failure to comply with performance standards may result in civil penalties up to $25,000 per day and "egregious" instances of noncompliance could result in an order to cease operations.

Public comments on the proposed rule must be submitted by February 7, 2007.

On January 1, 2007, customs tariff schedules around the world will undergo significant changes as a result of modifications made to the International Convention on the Harmonized Commodity Description and Coding System (the "Harmonized System"). While most countries finalized their new tariff schedules prior to the January 1, 2007 deadline, the U.S. has not yet issued the final version of its 2007 tariff schedule. As a result, implementation of the 2007 version of the Harmonized Tariff Schedule of the United States (HTSUS) will be delayed until February 2007.

On December 29, 2006, President Bush issued a Proclamation authorizing the modification of the HTSUS to conform to the numerous changes made to Harmonized System. The Proclamation states that the modifications to the HTSUS will apply to "goods entered, or withdrawn from warehouse for consumption, on or after the later of (i) February 1, 2007, or (ii) the thirtieth day after the date of publication of this proclamation in the Federal Register." Thus, assuming that there is not an unusual delay in publishing the Proclamation in the Federal Register, the new HTSUS will take effect in early February 2007.

The U.S. International Trade Commission (ITC) will soon issue the final version of the HTSUS, incorporating the changes to the Harmonized System as well as a number of other changes, including revisions to certain duty rates as a result of the Tax Relief and Health Care Act of 2006 (HR 6111). The ITC has already published a preliminary version of the 2007 HTSUS, which includes scheduled duty rate changes made by several free trade agreements and changes in reporting at the statistical (10-digit) level.

In the meantime, U.S. importers should review the draft version of the 2007 HTSUS published by the ITC in Publication 3851 to see how particular HTSUS subheadings will be affected in 2007 (note that this document only shows the HTS subheadings at the 8-digit level).

Many countries have already issued their 2007 tariff schedules, which will go into effect today. For example, the 2007 tariff schedules of the 27 countries in the European Union was published in the Official Journal of the European Union's website in October (note that Bulgaria and Romania joined the EU today). Canada's 2007 tariff schedule can be found on the Canada Border Service Agency's website.

Labels: Customs, HTS

U.S. Customs and Border Protection (CBP) announced that it has developed new minimum-security criteria for Customs Brokers already enrolled in the C-TPAT program or those wishing to join the program. According to CBP, the "new minimum-security criteria solidifies membership expectations, and clearly defines and establishes the baseline level of security measures, which must be employed by member Customs Brokers."

The new C-TPAT minimum-security criteria for customs brokers are effective on December 31, 2006. However, customs brokers who are already members of the C-TPAT program will have until March 31, 2007 to implement the new security criteria. Customs brokers that are currently enrolled in C-TPAT will not be required to provide any written certification to CBP that the new security criteria have been met and will not be required to submit new security profiles to CBP.

Customs Brokers wishing to join the C-TPAT program after December 31, 2006 will need to meet or exceed the security criteria before they will be "certified" and eligible for benefits.

The new C-TPAT Minimum Security Criteria for Customs Brokers and CBP's Implementation Plan can be found here.

Labels: Customs