CUSTOMS AND INTERNATIONAL TRADE

MISCELLANEOUS

SOLID WOOD PACKAGING MATERIAL
06/05
USDA has revised its import regulations for wood packaging material. The revised regulations take effect on September 16, 2005. By that date, all wood packaging materials must be treated and marked. Approved methods are either heat treatment to a minimum wood core temperature of 56° for a minimum of thirty (30) minutes, or fumigation with methyl bromide. USDA also recognizes certain marks as reflecting proper treatment:


XX Represents the ISO country code.
000 represents the unique number assigned by the national plant protection organization.
YY represents either HT for heat treatment or MB for methyl bromide fumigation.
 
If goods are imported out of compliance, they may be ordered re-exported at their first port of arrival. Also effective September 16, 2005, paper certificates of treatment will no longer be required.  For more information, see http://www.aphis.usda.gov/ppq/swp/Import.html.v

USDA AND SECURITY
06/05

A great deal of focus has been placed on the efforts undertaken by CBP and DHS in the security arena. However, USDA has also taken action. It recently published an Industry Self-Assessment Checklist for Food Security. The Food Safety and Inspection Service has also issued Security Guidelines for Food Processors. Copies of both documents are available at: www.fsis.usda.gov.

SWPM UPDATE
06/05

In early May, APHIS issued a Federal Register notice correcting the annual printed version of Code of Federal Regulations. Due to an inadvertence, the solid wood packing materials (SWPM) regulations for China and Hong Kong were removed. What is in the printed copy is the version which takes effect on September 16, 2005. If you visit the on-line version of the CFR, it is correct.

The best way to stay informed about the SWPM regulations is to regularly check the APHIS website: http://www.aphis.udsa.gov/ppq/swp. This site is a reliable source for the SWPM regulations in the U.S., but also those enacted worldwide, including those which take effect in the Philippines on June 1, 2005.

SAY WHAT?
05/05

There is no doubt that U.S. immigration policy needs revamping. While the topic is sensitive and involves many factors to consider, sometimes you just have to think someone took a stupid pill. NASA and the Office of Naval Research recently hosted the Marine Advanced Technology Remotely Operated Vehicle Competition, an underwater robotics contest. One team was from MIT, another from a high school in Arizona. The high schoolers raised $800 and, using off-the-shelf parts, won the contest and several awards,  but they can’t go to college in the U.S. as they are all undocumented!

APHIS BAN UPDATED
04/05
APHIS has posted to its website an updated list of trade bans imposed by foreign countries on U.S. exports due to BSE and avian influenza. The BSE list contains information regarding 61 countries, while the avian flu trade ban details information for 24 countries.

For more details, visit the APHIS website at www.aphis.usda.gov/lpa/issues/

WOOD ITEMS BANNED FROM CHINA
04/05
APHIS is also banning the importation of craft items from China containing wooden logs, limbs, branches or twigs greater than 1 centimeter in diameter having intact bark. Artificial Christmas tress with wooden trunks and trellises are also affected. APHIS’ concern has to do with wood-boring quarantine pests being imported through decorative and craft items, particularly brown fir longhorn and Japanese cedar longhorn beetles.

EU DELAYS DEBARING REQUIREMENT
04/05
In response to strong objections from the U.S. government and U.S. shipping interests, the EU has delayed implementation of the debarking and “DB” marking portion of its wood packaging material regulations until March 1, 2006 for hardwood and softwood raw wood packaging materials. Despite this delay, the heat-treatment/fumigation provisions took effect on March 1, 2005 as expected.

Customs Update: What Was Congress Thinking?
(Printed in the Journal of Commerce Online April 1, 2005)
 for a printable version of this article

In what amounts to the blink of an eye given how slow it usually moves, almost overnight Congress recently passed a bill intended to help the family of the late Terri Schiavo get the brain-damaged woman's feeding tube restored. But the very steps which Congress undertook in passing the bill, which granted the family no new legal rights, are the very things that are wrong with much of the legislation currently being passed, and certainly are emblematic of everything that is missing from a thoughtful discussion, regarding security.

In an almost knee-jerk reaction to the events of 9/11, Congress passed the bill which established the Department. of Homeland Security. Was it well thought out? Most would say the effort was sincere, but no, it wasn't well thought out. For example, there are years of history in which the investigative arm of Customs and the trade facilitation/enforcement arm of Customs were in the same agency but often Memoranda of Understanding were needed for specific types of background checks and investigative work to be concluded in a timely fashion. What genius thought putting the agents in one section of DHS and Customs in another was going to work? It hasn't and we are now hearing rumors the two halves of a very important whole may be reunited.

Similarly, if Congress was serious about heightening security, that would be reflected in the budget allocations. There is really little dispute that if the U.S. is to be safer than it was pre-9/11, it will require international agreement and implementation regarding security standards. Where is the push in that direction by Congress?

Similarly, there is widespread agreement that for Customs to perform meaningful cargo screening, it needs better information and earlier in the process. Manifest data is almost meaningless, given how easy it is to misdescribe cargo. Why didn't Congress put sizable amounts of money into development of the Automated Commercial Environment? If Customs is ever going to be able to receive shipment specific data from exporters and importers, the computer system needs to be overhauled now and not in another five to seven years. Yet, we are three years past 9/11 and, while progress has been made, little of it has direct and tangible security benefits for the American public.

Returning to the structure of DHS, there are discussions occurring about moving Customs' international affairs activities into the International Affairs section within DHS. This would seem to be such an obvious consolidation that it makes one want so to say "Duh!"

What about the Customs Commissioner's position? Did it strike anyone as odd that Customs and Border Protection became the only organization which reported to the secretary through an undersecretary? The commandant of the Coast Guard and the director of the Secret Service report directly to the secretary. Requiring Customs to report through an undersecretary was a recipe for confusion and turf wars, exactly what has transpired. Of course, a major contributor to the mess was the lack of clear divisions of authority between Customs and the Transportation Security Administration, something else for which we can thank Congress.

Isn't it about time Congress took the time to do a proper job instead of passing laws which, in retrospect, look to be passed strictly for the sake of seeming to have done something? Isn't it about time to talk about the white elephant in the room that everyone wants to ignore? While it is true the efforts of the government have made it that much more difficult for targets of opportunity to be found, if we learned anything from 9/11 it is that terrorists don't act rashly or happen upon an opportunity. They act after much planning and effort. So, do you really feel any safer than you did on September 10, 2001?

CRIMINAL CASES OF NOTE
3/05

The president and part-owner of a Mass. corporation were indicted for allegedly defrauding Customs out of $385,000. The allegations arise out of a supposed conspiracy to minimize the payment of antidumping duties on Korean DRAMs.

Given these allegations, it is not surprising to hear the claim is there were false and fraudulent invoices submitted which undervalued the purchase price and misdeclared the DRAMs.

In this same vein, a father and son were sentenced to four years probation for conspiracy and false reporting. In  addition, some $2.7 million in cash was forfeited. The claim here was the importer failed to maintain business records pertaining to its importations of cantaloupes.

EU Rice Dispute
Unfair EU Restrictions on U.S. Rice Force U.S. to Notify WTO of Intent to Raise Tariffs
01/05
 for a printable version of this article

WASHINGTON - Facing an imminent deadline, the United States announced  today it has asserted its World Trade Organization (WTO) rights and notified the WTO of its intent to withdraw certain tariff concessions because it has not reached agreement with the European Union (EU) over access to the European rice  market.

The EU unilaterally decided last September to change its rice import system  by raising tariffs on brown rice imports above the rate to which it had agreed as part of the EU’s Uruguay Round obligations. The new system unfairly limits the access of American rice farmers to the European market, affecting U.S. brown  rice exports valued at approximately $33 million a year on average since  1999.

Under WTO rules, when a Member makes a change in its tariff obligations, certain trading partners are able to negotiate offsetting benefits. Because the U.S. and the EU were not able to reach agreement, the U.S. has the right to  raise tariffs on an offsetting amount of imports. The EU has substantially  increased tariffs on U.S. rice exports.   The U.S. action will allow tariffs to  be increased on products of which the EU is the dominant supplier in order to compensate for the higher EU tariff. March 1, 2005 is the deadline for the U.S. to assert its rights, and WTO rules require the U.S. to provide a 30 day notice  of the action.

"I’m disappointed we have not been able to resolve this dispute with Europe. We feel that the new European system is unfair," said U.S. Trade Representative Robert B. Zoellick. "We have been trying for months to find a fair resolution that balances the concerns of both sides. Since we have not resolved this  problem through negotiations, we have to notify the WTO of our intent to exercise our rights to withdraw concessions."

Background:

Until September 1, 2004, the EU had determined the tariff for brown rice imports under the margin of preference (MOP) regime negotiated during the  Uruguay Round. The MOP regime allowed the EU’s applied tariff rate to be set  lower than the bound tariff rate, based on the differential between the EU  intervention (support) price and the reference import price, taking into account an adjustment factor. EU reforms to the Common Agricultural Policy (CAP) in 2003  significantly lowered the intervention price for rice, which would have led to a  substantial reduction in the EU rice tariff under the MOP. As part of the CAP  reform package, the EU received a mandate from the Council to renegotiate the MOP under the terms of GATT Article XXVIII.

Pursuant to WTO rules, the EU has been negotiating with the United States  since 2003 with respect to trade compensation, but no agreement has been  achieved appropriately compensating the U.S. for the EU’s tariff change.

List of Products Subject To Possible Withdrawal of Concessions in  Response to European Union (EU) Changes to its Rice Import Regime

HSCode	Product
04031090	Yogurt, not in dry form, whether or not flavored or containing add fruit or  cocoa
04063085	Processed cheese (incl. mixtures), nesoi, n/o 0.5% by wt. butterfat, not grated or powdered, subject to Ch4 US note 23, not GN15
07052100	Witloof chicory, fresh or chilled
07108065	Brussels sprouts, uncooked or cooked by steaming or boiling in water, frozen,  not reduced in size
08052000	Mandarins (including tangerines and satsumas); clementines, wilkings and  similar citrus hybrids, fresh or dried
09042020	Paprika, dried or crushed or ground
09102000	Saffron
20019025	Artichokes, prepared or preserved by vinegar or acetic acid
20032000	Truffles, prepared or preserved otherwise than by vinegar or acetic  acid
20049010	Antipasto, prepared or preserved otherwise than by vinegar or acetic acid,  frozen
20057050	Olives (not green) in a saline solution, canned, not pitted
20057070	Olives (not green), in a saline solution, in airtight containers of glass or  metal but not canned
20057075	Olives (not green) in a saline solution, not canned, nesoi
20059030	Sauerkraut, prepared or preserved otherwise than by vinegar or acetic acid,  not frozen
20087020	Peaches (excluding nectarines), otherwise prepared or preserved, not elsewhere specified orIncluded

Note: The product descriptions supplied above for the items of the Harmonized  Tariff Schedule of the United States (HTS) are for the convenience of the reader  and are not intended to delimit in any way the scope of the products that would be subject to increased duties.

MANGO FEE IMPOSED
02/05

Importers are reminded the mango fee takes effect on January 3, 2005.
 

BSE CONCERNS OVERCOME
02/05

The U.S. Dept. of Agriculture has announced that importations of cattle and beef will be allowed provided the animals are under thirty (30) months of age and the country involved is able to demonstrate it has an effective BSE prevention and detection program. Canada will be the first country to take advantage when it resumes exports to the U.S. on March 7th. The enabling regulations run about 500 pages so traders are encouraged to carefully read them to determine exactly how your imports are impacted.

STATE CHANGES SHRIMP RULES
02/05

Importations of shrimp harvested in ways that are harmful to sea turtles are prohibited. However, each year the President may certify that a harvesting nation has adopted a program governing the incidental capture of sea turtles by its commercial fishing industry which is comparable to the U.S. program, and that the fishing environment in the harvesting nation does not pose a threat of the incidental taking of sea turtles.

Shrimp imports must be accompanied by a properly executed and completed DS-2031. If the shrimp is harvested in a certified country, only the exporter must sign the certification. If the shrimp is sent to a third country for processing or shipment, copies or faxes of the form may be used. For shrimp from uncertified nations, both the exporter and a government official from the harvesting country must provide the certification. However, given the problems which have existed with fraudulent certifications, importers are encouraged to obtain the original DS-2031, the production of which may be required even if a copy was originally accepted.

MORE DUMPING ON CANDLE SHIPMENTS
12/04

The International Trade Administration of Department of Commerce has postponed its decision as to whether to initiate a scope ruling regarding candles.  ITA will now decide whether to initiate an investigation on the "later developed" claim on December 13, 2004. It will decide whether to initiate on the "minor alterations" claim on December 17, 2004.  ITA then has up to 300 days in which to issue a decision. Normally, ITA takes all the time that is allotted, so if an investigation is initiated, a decision would be made around the middle of October 2005. It is likely ITA will initiate under one of the claims, and perhaps under both.

The time frames for submitting comments (20 days after initiation of the investigation) and rebuttal comments (10 days) are extremely short.  Therefore, if you wish to participate in the investigation, you should begin work immediately.

Also please note that an affirmative finding made in October would relate back to entries made on or after notice of initiation of the investigation is published in the Federal Register.  Normally, this is a few days after ITA initiates, so the effective date will be a few days after December 13 and 17, assuming that ITA does decide to initiate.

Click Here for more information, or feel free to contact us.

MORE DUMPING HEADACHES!
12/04

On October 12, 2004, the National Candle Association filed two (2) petitions with the Commerce Department alleging that Chinese manufacturers were circumventing the antidumping duty order in effect against petroleum wax candles from China.  One petition alleged the shift to "palm oil or vegetable-based waxes" as the majority ingredient was not commercially developed at the time of the investigation and, therefore, falls within the scope of the investigation as "later-developed products."  The second petition alleges the shift to palm oil or vegetable-based waxes is a "minor alteration" that ITA should disregard, instead finding these candles fall within the scope of the antidumping duty order.

           The filing of these petitions raises a number of questions and issues, some of which are included below:

1.         The scope of the petition is not clear. Although the petition seems to address candles containing more than 50% palm oil or vegetable wax, past experience with the NCA indicates that a more cautious reading of the scope may be necessary. Therefore, until the scope is clarified, we are assuming that NCA is complaining of candles that contain any petroleum wax. 

2.         Can the complained of products be differentiated from petroleum wax candles?  Different burning qualities, aroma, feel, appearance, perception in the market, channels of trade, etc.?

3.         Are you dealing with Chinese exporters that have not exported candles previously subject to the order, i.e., petroleum wax candles? This is important because if your supplier has not heretofore exported petroleum wax candles, then a question may exist as to what margin will apply to their products, if ITA agrees with the NCA that vegetable wax candles circumvent the order.

4.         Are your suppliers eligible for the lower margins applicable to privately controlled entities (non-state-owned entities)? 

5.         If the pricing/cost of vegetable and palm oil wax candles is different than the pricing/cost of petroleum wax candles, then different margins may exist, assuming circumvention is found to exist.

6.         A possible defense is that circumvention petitions are not appropriate in this case.  That is, if the vegetable and palm oil wax candles are not within the scope of the investigation, then  ITA should require NCA to file completely new petitions.

7.         Importers should bring this to the immediate attention of their foreign suppliers so they are aware of the matter and can formulate an appropriate strategy.

8.         If  ITA determines that vegetable and palm oil wax candles circumvent the order, when will an importer become liable for antidumping duties?  Although ITA has already ruled that vegetable and palm oil wax candles are not within the scope of the order, if ITA were to make a preliminary finding that circumvention existed,  antidumping duties would be imposed no later than November 26, 2004 (45 days  after the filing of the petitions).   Theoretically, ITA could initiate immediately, which would mean that antidumping duties could become applicable right away. In our opinion, however, the most likely effective date will be on or about November 26, 2004 and so entries made on or after this date would be subject to antidumping deposits.

Although the ITA could make an affirmative determination based merely on the petitions, it appears unlikely it will do so, but instead might initiate an investigation and issue questionnaires as to the volume, production cost, timing of and shift in candle production operations, and other similar criteria.  We can assist you in answering these questionnaires. It is essential that effected importers take immediate steps to minimize duty exposure for shipments on the water.

 9.        The time frames for submitting comments (20 days after initiation of the investigation) and rebuttal comments (10 days) are extremely short. Therefore, anyone wishing to participate in the investigation should begin work immediately.
10.      The most important thing is to obtain the full and complete cooperation of your manufacturer/exporter. While they must provide the information, the importer is ultimately liable for the duties.

           If you have any questions or wish to discuss this matter in more detail, please call Tom O'Donnell at 312-372-2641 or by e-mail at todonnell@chicago.rofgw.com.

SWPM FINAL REGULATIONS ISSUED
10/04

In the September 16, 2004 Federal Register, APHIS issued the final rules regarding solid wood packing materials (now called wood packaging). These new regulations will apply to all wood packaging, including from China, but will not take effect until September 15, 2005.

We will provide more details about these final rules in a later article. What is important to know right now is the long-awaited final rules have finally been published!

SWPM AND MEXICO
07/04

Would your company benefit if Mexico was exempt from the SWPM regulations? Many trade associations are looking at this question. What do you think? Let us know.

SWPM TIME FRAME?
05/04

One of the issues plaguing traders is the solid wood packing materials rules. The proposed rule has been pending in the U.S. since May 2003. The big question is when will it take effect? Apparently now even APHIS is not willing to guess when that will happen!

SMUGGLER SENTENCED
05/04

A Polish caviar smuggler has been sentenced to 30 month in prison. He had couriers smuggle suitcases filled with caviar on flights to Miami. Forged Fish & Wildlife licenses and false invoices were used for import purposes.

FORUM SHOPPING IN INTERNATIONAL TRADE LITIGATION- BAD IDEAS
06/04
to view article in pdf format

WOOD PACKING TAKING EFFECT?
03/04

One of the many regulations which has been delayed are those related to solid wood packing materials (SWPM). The latest word from APHIS again confirmed the heat treatment or fumigation rules were approved by the Interim Commission on Phytosanitary Measures of the International Plant Protection Convention on March 15, 2002. As a result, APHIS still expects these regulations to take effect in the U.S. in April or May 2004 upon publication in the Federal Register.  While SWPM and other unmanufactured wood articles from Canada remain exempt, the exemption which originally applied to Mexico was invalidated by proposed regulations published in 1999 which are now expected to go the final rule stage.

APHIS seems to also be comfortable with the oft discussed six
(6) month phase-in period.

For more information, check www.nwpca.com/ExportTreatment/ExportTreatmentProg.htm and www.alsc.org/WPM_summary_mod.htm

Approximately 120 countries have agreed to implement the standard, called ISPM 15. For a copy of the Canadian version – www.inspection.gc.ca/english/plaveg/protect/dir/d-98-08e.shtml. These regulations have already taken effect in Mexico and the U.S. is not exempt.
 

STATE ROLLS OUT D-TRADE
02/04

Joining the 21st Century, the Dept. of State now has electronic export license processing. Check http://www/pmdtc/org/getting_started_with_dtrade.htm for more details.

COOL RULES DELAYED
11/03
The effective date of the Agriculture country of origin labeling rules will apparently be delayed. Supposedly the rules may be lifted for two (2) years for meat, produce and peanuts, but not fish. Seafood will be required to comply by September 2004.  The outbreak of Hepatitis A from Mexican green scallion onions is apparently confounding the issue. For more details about the COOL rules, check our website - www.rorlaw.com.

WCO'S IT CONFERENCE
09/03

The World Customs Organization has announced the “Information Technology for Customs in Africa - Catalyst for Development” conference to take place October 8 - 10, 2003 in Johannesburg, South Africa. The WCO is particularly interested in private sector participants given the focus on IT.

Customs Update:  Just What is Going On?
Published in the Journal of Commerce Sept. 15, 2003
CLICK HERE for a printable version of this article.

Over the Labor Day weekend, Harley-Davidson held its 100th Anniversary celebration in Milwaukee. It was an event attended by approximately 300,000 people and went off on time and without a hitch, at least to those of us who attended.

Why mention this in a column dedicated to commentary about international trade? Because, everything that was right about Harley-Davidson's event is what is wrong with what Homeland Security is doing.

First, there was a clear vision. Harley-Davidson knew that it wanted to create an atmosphere where its most devoted customers would have a good time and boy, did we! Riders came from all over the world and the people of Milwaukee could not have been more welcoming. Can Homeland Security say the same? No. It is working closely with first responders such as police, fire and hospitals, as well it should, but the trade has been essentially ignored, despite the statements of Secretary Tom Ridge and Under Secretary Asa Hutchinson that national security equals economic security.

Leaving Customs' actions aside, can any of us honestly say that DHS has put forth statements which are anything more than feel-good generalities?

The streets of Milwaukee take many twists and turns. If you got lost, folks pulled over to give you directions, often without being asked. Can Homeland Security say the same? No, it can't provide a road map for any of us. In fact, with each action by the agency, things seem to get more convoluted.

For example, recently a directive was issued which put the Transportation Security Administration in charge of cargo security, as required by law. But DHS didn't even make clear whether TSA sets policy and Customs and Border Protection carries it out, or, even more basic, will the two parts of the agency work together to set policy? In fairness to the folks at DHS and TSA, they were asked to get up and running quickly, but the agency has yet to establish that it understands the movement of goods and people.

The DHS has not even come close to explaining how it intends to operate. Understandably, it takes time to consolidate 22 agencies into one smooth-running organization, but national security is too important to only focus on structure. Any question about how vulnerable the trading system is was answered by the man who recently air-freighted himself home to Dallas from New York undetected! Then there is the nonsense about ABC News' shipment of spent uranium which was targeted and cleared by Customs. There was nothing illegal about ABC's shipment, but when the press fuRodriguez O’Donnell hit, instead of standing behind the actions of the Customs folks involved, it is threatening ABC with criminal sanction. Come on! If the public is going to have faith in what DHS is doing, we need to dispel grandstanding, whether by the press or Congress.

As international traders, we are in a unique position to make sure the system works, but all our talent is for naught if DHS isn't prepared to work with us. It's wonderful that there is a private sector liaison in the Secretary's office. It's a good sign that the Commercial Operations Advisory Committee will continue to operate, at least in part, under the jurisdiction of DHS. But that is hardly enough.

Customs has learned the lesson well. Government needs to reach out to the trade even on the most fundamental of issues so that when it moves forward in the decision making process, it finds the most expeditious way to proceed. Leaving aside concerns about our livelihoods for a moment, can there possibly be any excuse for DHS/TSA at this late stage to still not have established security standards by which airports are advised how to staff at the different alert levels? What a waste of tax dollars! At major airports throughout the country, the difference in cost can be as much as $1 million per month between staffing and precautions at one alert level to the next. As the Federal Aviation Administration (FAA) was wrapped into TSA and the FAA clearly has expertise regarding aviation issues, the lack of clear alert level standards is unforgivable and portends poorly for things to come.

The decisions being made now by DHS and Congress are critical to how we all do business in the future. Make sure your voice is heard through such simple steps as filing comments as agency proposals are published in the Federal Register; by pushing your trade associations to be more vigorous in their comments and, finally, calling your elected representatives to task. It is appalling that Members of Congress have all but abandoned their oversight responsibilities as DHS has gotten organized and they won't take up that mantle unless we push them to do so. President Bush's $87 billion request to support the efforts in Iraq is bound to quickly overwhelm all other debate, but in the end, how goods and people flow into and out of this country is a more direct and tangible economic issue inexorably tied to the future growth of the U.S. and all of us.

What have you done to help that effort lately?

Steel Import Licensing and Surge Monitoring System for Steel Products Subject to Safeguard Measures - just what is required and what does it mean to your company.
03/03

Byrd Amendment WTO Illegal
02/03

World Trade Organization judges recently found the U.S. inconsistent with the WTO's dumping rules for enforcing the Byrd Amendment which distributes anti-dumping and countervailing duties collected by U.S. Customs to affected companies. Customs Closes Three Drawback Centers Affirming its earlier actions, Customs adopted as a final rule in the January 24th Federal Register the procedures to apply as it closes down the Boston, Miami and New Orleans drawback centers.

U.S. Proposes Broad Tariff Reductions
12/02

In an effort to kick-start the WTO's Doha Round of trade negotiations, the Bush Administration has made a bold proposal. If the other members will agree, duty rates on manufactured goods drop to zero! The drop would occur in two stages. From 2005 to 2010, all tariffs currently at 5% or less would be eliminated. Tariffs at higher rates would be lowered to no more than 8%. The second stage occurs between 2010 and 2015, during which time the remaining tariffs drop to zero.

Not surprisingly, there are objections from many quarters. In the U.S., traditionally protected industries like textiles have objected on the ground that more U.S. jobs would be lost. Domestic textile advocates have also argued that tariffs are less of an issue than market access concerns such as testing regimes, country-driven mandatory distribution systems, and similar foreign requirements.

Also objecting are less developed countries which rely on the duty revenue raised to run their countries. These advocates argue they need to sell their textile products and agricultural goods internationally in order to grow domestically and so before dealing with tariff rates, the U.S. and other developed countries should end existing trade barriers.
 

WILL THERE BE A LABOR DISRUPTION OR WON'T THERE?
07/02

On July 1st, the current longshore labor contract expires. In view of the fact that no new contract has yet been signed, the question on everyone's mind is what is going to happen? Will there be a slowdown? a strike? a lock-out? Truthfully, no one knows right now but it certainly seems a bit of brinkmanship is being employed by both sides. What we do know is the week of July 4th has traditionally been one where the flow of cargo just about stops.

One reason, of course, is the Independence Day holiday. A further slowdown comes as longshore workers remember a long-ago strike and commemorate the death of a few co-workers through Bloody Thursday, celebrated on July 5th. In short, regardless of the status of the contract negotiations, little cargo will move from Wednesday afternoon through the weekend.

The bigger concern is the "trying" of the issues in the press. While no one believes a lot of progress was made as the parties met during recent weeks, the two sides had imposed a press blackout. The fact that self-imposed blackout was lifted is seen by many as a  sign the situation is rapidly deteriorating.

The union is concerned about loss of jobs despite a PMA guaranty of jobs for all current workers. The ILWU is also claiming the PMA is trying to cut its health benefits. Given the average cost per year is $42,000 per person, it is not unreasonable for the PMA to want to curb that expense.
 
The PMA also wants increased productivity through the use of technology. The ILWU argues the only reason to expand the use of technology is to do away with high paying jobs. Recent figures suggest ports in other parts of the world are able to move many times more containers per hour with the implementation of minimally intrusive technology. Perhaps the concern of the ILWU is their members will have jobs but they may be less desirable? Either way, the fact that the parties continue to meet is seen as encouraging, despite no concrete progress.

For those of us waiting for the outcome, one concrete thing step can take is to write to your Member and Senator and ask him or her to urge the parties to stay at the bargaining table until they reach a resolution. The economy is hardly in a position to suffer a strike or a lock-out, much less a work slowdown.

CPSC Requires Reporting of Foreign Problems
06/02

The Consumer Product Safety Commission has amended its rules to require importers, manufacturers, distributors and retailers of consumer products to report possible substantial product hazards even if they occur outside the U.S.. See 66 Fed.Reg. No. 211.

VIETNAM NOW APPROVED
06/02

USTR has issued the much anticipated notice confirming that as of December 10, 2001, Vietnam is now eligible for column one - normal trade relations (formerly called most favored nation) - rates of duty in accord with Presidential Proclamation 7449.

SENATE VOTE NOT YET SET
06/02

Although the House of Representatives passed fast track/normal trade relations by one vote, it remains unclear when the Senate will hold its vote. Democrats have made clear that to have any chance of Democratic support, Pres. Bush will have to move on assistance to the U.S. steel industry. It remains unclear whether Democrats will also insist that revisions to the Trade Assistance Act and other remedies for the unemployed are conditions for support.

FAST TRACK VOTE SCHEDULED
12/01

The U.S. House of Representatives has scheduled a vote on Trade Promotion Authority (formerly called fast track) for December 6, 2001. Many Members remain opposed or on the fence, especially because so few supporters have made their voices heard. There is a real possibility the vote will go down to defeat. If that happens, it will compromise the ability of the U.S. to enter into trade agreements and otherwise retain its leadership position on many important international trade issues. Such a result will also take away most of the leverage the U.S. has to open foreign markets to U.S. exporters.

NOW is the time to tell your Member how you feel. All you need to do is call 1-866-PASS-TPA. Your phone call generates a letter to your Member.

MUST A FOREIGN COMPANY DISCLOSE DEALINGS IN COUNTRIES SUBJECT TO U.S. SANCTIONS?
11/01

Can foreign companies listed on the U.S. stock exchanges be compelled to disclose business dealings in countries subject to U.S. sanctions? The question arises as the SEC addresses the definition of what materially impacts stockholders' financial interests. Much of the debate centers around business dealings with Sudan, but the issue has broader implications.

WAYBILL LIMIT OF LIABILITY INAPPLICABLE
11/01

A decision from the New South Wales Supreme Court (Australia) found the FIATA air waybill limit of liability (also part of the internationally accepted Warsaw Convention) of US$20 per kilo did not cover the situation of a truck dropping cargo off the back due to poor strapping even though the trucker was affiliated with the freight forwarder whose waybill was intended to transport the cargo. The cargo was en route to a bonded warehouse. The forwarder argued the term “Airport” as used in the Warsaw Convention provided coverage even though the cargo was not physically on airport grounds. The court rejected that argument finding the cargo was being handled outside the dimensions of Melbourne airport.

The trucker also argued the terms of the waybill provided that even if the Warsaw Convention did not apply, the carrier’s liability could nonetheless be limited to US$20 per kilo. The court found this argument, too, did not apply because the term air carriage did not apply to truck movement to a bonded warehouse.

U.S. BLOCKS ATTEMPT TO CHALLENGE BYRD AMENDMENT
11/01

The Byrd Amendment requires U.S. Customs to distribute to U.S. domestic industry dumping and counterveiling duties collected. It was challenged by the European Union and ten (10) individual countries. The World Trade Organization’s Dispute Settlement Body confirmed in late August that it will accept a request for review of the law. While Customs has promulgated regulations and is prepared to distribute the funds to those eligible, the U.S. appears to be without supporters at the WTO.

The U.S. exercised a veto power which exists as a matter of right when the first challenge is filed. Using that one time opportunity, the U.S. blocked a move to challenge the Byrd Amendment the U.S. saying the law does not impact how these duties are calculated, only how they are distributed and disbursed and so are not part of any WTO agreement.

The challenging countries argue the law allows domestic industry double protection, once by the assessment of the duties and a second time by their distribution to those same affected domestic companies. Australia, Brazil, Chile, the EU, India, Indonesia, Japan, Korea and Thailand also argued the law goes beyond the allowable remedies, plus, as the law limits disbursal to those companies which participated in the petition process, it encourages dumping and counterveiling duty petitions to be filed.

FISH & WILDLIFE GET THEIR HAUL
03/01

U.S. Caviar was recently fined $10.4 million and its former owner and president sentenced to prison. The company pled guilty to 22 charges and the individual to 12, including conspiracy, smuggling, making false statements, submitting false wildlife records, mail fraud, and violations of the Endangered Species and Lacey Acts. Others were also sentenced in a scheme to import caviar using forged Russian caviar labels. In actuality, the caviar had been smuggled out of countries bordering the Caspian Sea. Through the use of false labels, forged wildlife documents, forged health certificates, and false permits, invoices and packing lists, tons of caviar was imported into the U.S. Additionally, real beluga caviar was imported and relabeled as less valuable caviar, again using false documents. DNA testing was used to determine the true origin and quality of the imported caviar.  Due to over-harvesting which caused depletion of fish populations, there are international agreements which limit legitimate caviar gathering.


USDA BANS EU MEAT IMPORTS
03/01

Because of the outbreak of foot-and-mouth disease in France, USDA has banned the importation from the European Union of ruminants (e.g., cattle, sheep, goats, deer) plus swine and certain other meats and products made therefrom. For more information, check the USDA website - www.aphis.usda.gov.


FOREIGN NARCOTICS KINGPIN REGULATIONS ENACTED
08/00

The Office of Foreign Assets Control is now charged with enforcing the regulations enacted under the Foreign Narcotics Kingpin Designation Act which was signed into law in December 1999. The Act seeks to block all property and interests in property within the U.S. belonging to foreign narco-traffickers. The existing regulations regarding Columbian narco-traffickers remain in effect. These new regulations prohibit transactions and dealings by U.S. persons or within the U.S. which assist identified narco-traffickers. Any persons found to violate this law are subject to imprisonment and/or substantial fines. While generally international traders might be tempted to ignore narco-traffickers, the enactment of this new law emphasizes to traders once again the importance of knowing your customers.

E-COMMERCE
03/00

Interested in seeing how it works in the international trade arena? check out Bolero.net a new web site underwritten by one of the largest international insurance and indemnity groups in the world - the TT Club.

GUILTY PLEA FOR HAZMAT VIOLATION
03/2000

Alejandro Craig and Alpa International Inc. have both pleaded guilty to violating DOT hazardous materials handling regulations. The manufacturer's papers clearly identified the shipment as hazardous goods. The labels were supposedly removed and the shipment repackaged by the forwarder prior to export. The subterfuge was apparently discovered when the carrier had to break down one pallet to arrange belly stowage and found some of the hazmat placards.

FAST TRACK RENEWAL STATUS
10/97

Late last week, the House Ways and Means Committee reported out a bipartisan version of a bill which would renew fast track authority for trade negotiations. Fast track is a legislative method whereby whatever agreement the Administration negotiates, rather than the usual Congressional arrangement where related provisions may be added to a bill, with fast track the vote is approve or disapprove only, no amendments.

Republicans supported the measure in great numbers in both the Senate Finance and House Ways and Means Committees. The same cannot be said for Democrats, many of whom want to add tough environmental clean up and labor rights provisions to any future trade agreements. Others will only approve fast track if there are "fixes" provided to what are seen as the short-comings of NAFTA, e.g. Trade Adjustment Assistance to secondary workers, and NAD Bank and BECC reforms.

Whatever your views on fast track and the negotiating authority which should be granted to the Administration, Members of Congress are now in their home districts for the Columbus holiday break. Let them know your feelings. Bear in mind that labor and other traditional elements of the Democratic party intend to use this break to register their negative votes and voices regarding fast track. Call or write your Member and Senator as soon as possible. If you are unable to make the time to meet or write, at least call 1-800-500-4252 so that a letter may be sent in your name supporting fast track. America Leads on Trade (ALOT), the business supported group leading the charge for fast track renewal, operates this telephone number. For more information about fast track or sample letters for personal preparation, contact ALOT at 202-347-0911 or alot@conx.com

OVERWEIGHT CONTAINERS
THE "JENNY CRAIG" ACT?
04/97

On the drawing boards for sometime, the question of how to deal with shipping containers which weigh more than highway limits allow was negotiated between the federal government and the shipping public in the context of implementation of the Intermodal Safe Container Transportation Act of 1992 (the Act), Pub.L. 102-548, 49 U.S.C. §5901 et seq. Agreement has now been reached, the law has been appropriately amended and the revised act takes effect on April 9, 1997.

In 1990 the Federal Highway Administration conducted a study of shipping documents only and concluded that over one-third of all ocean containers (over three (3) million) entering the U.S. weighed more than was legally allowed. [The actual number of problem shipments could be considerably less because there is a permit process allowing for the movement of some overweight goods. As well, some goods could have been reloaded in such a fashion as to become of legal weight.] For example, in California, Vehicle Code §35550 limits the weight on one axle to 20,000 lbs. and on any one tire to 10,500 lbs., subject to revision based upon the tire manufacturer's recommendations. It was perceived that unwitting truckers were picking up containers of cargo which would be overweight and then hauling those containers to destination. Often the trucker would be cited by local authorities because the weight of the combined truck, trailer and cargo exceeded the state's weight limit. Truckers complained that often they could not properly gauge the fact that a shipment was overweight until local law enforcement required the loaded rig to be weighed. At that point, it was too late to take appropriate action. Truckers received support for their position because the perception was that overweight shipments were causing damage to the American highway system.

The Act was signed on October 28, 1992 by then President Bush. The Dept. of Transportation was given 270 days to issue implementing regulations and did so on July 14, 1993.

In simple terms, the Act originally included every shipment with a gross cargo weight of more than 10,000 lbs. (container tare weight was excluded) and required that each such shipment had to be accompanied by a notice from the shipper or consolidator as to the approximate gross weight (including outer packing) of the shipment, along with an accurate description of the cargo. When the cargo was tendered to the motor carrier, the written certification had to be tendered as well and then had to pass from carrier to carrier as the shipment moved from origin to destination.

The fact that no certification was provided was itself actionable, as was trying to coerce a carrier to move a shipment without proper certification. If the information in the certification was false, the company issuing it could be fined and a lien could be placed against the cargo.

The way the Act works is a manufacturer, for example in Asia, selling a shipment to a New York importer would now have to certify the weight of his export shipment on a per container basis at the time it was given to the ocean carrier at the port of export. That steamship line would then have to transfer the written certification to its U.S. office where the cargo was taken off the vessel and that office, in turn, would have to provide the certification to the trucker who picked up the container once it was released by U.S. Customs.

As originally passed, the shipping public was concerned that the weight threshold was too low. The feeling was that too many shipments would be affected. In support of its position, one steamship line cited the fact that 90% of the shipments it transported would have to be accompanied by certifications and a goodly number of those shipments were not overweight. The other area of concern was the requirement that a "reasonable" description of the cargo had to be provided. In practice, the description on a steamship bill of lading corresponds to the carrier's freight rate description, e.g. electronic products. That description is then generally used throughout to describe the goods while they are transported. However, under the Act, it could become necessary to describe the shipment as, for example, computers, high definition t.v. sets, etc. The concern was that a "reasonable" description could lead to a greater likelihood of cargo theft, already a serious problem in some parts of the country.

The third and equally important area of concern was that the magic piece of paper had to accompany the shipment. The key here was not an objection to the need for certification but rather to the requirement that it be in paper form and accompany the shipment. The direction of international trade documentation is toward electronic data interchange. The Act's requirement for paper ran counter to that time honored trend. As a result, the trade recommended that shipments be able to travel without the certification. It was also observed that some cargo changes weight during transit due to accumulations of moisture and other weather consequences and there is no provision in the Act for such natural events.

As the result of these efforts, DOT agreed to delay the regulations and negotiations ensued. Technical amendments language was finally agreed upon and so in October 1996 the National Transportation Safety Board Amendments of 1996 - Intermodal Safe Container Transportation Amendments Act of 1996 was signed into law. See Pub. L. 104-291. In summary, it raised the weight threshold for certification to 29,000 pounds. It also allows a carrier to assume that no certification is required if one is not tendered at time of shipment receipt. However, if the first carrier is a trucker, notification of the weight and contents must first be made by telephone or electronically. [Outbound shipments are included under the Act, too.] The person preparing the certification is responsible for its accuracy and must be the party who is legally responsible for loading the container or trailer. Also if the cargo moved through various forms of surface transportation (e.g. rail and truck) but did so at the direction of one company, that company was not required to provide certification to itself. These revisions also make specific that the Act applies to foreign persons who tendered cargo for transport within the U.S.

Actual certification can now be provided directly on the shipping document (e.g. bill of lading) or it can be provided on a separate document but, if done separately, it must be specifically labeled as an "Intermodal Certification." Both forms can be transmitted electronically. Intermediaries are only responsible for the accurate transmission of information received from other sources. For example, if a bill of lading states the gross weight, a description of the contents, the container number and a date and shipper's name, it could constitute a weight (intermodal) certification which has to be forwarded to the trucker. Failure to forward the document could itself give rise to liability.

In effect, if the trucker has a certification which proves to be erroneous, a problem arises, if at all, because that driver is stopped while out on the road. Local law enforcement tickets the driver following a proper weighing. The trucker then has a lien on the cargo, except if perishable cargo is involved. Suppose you are the innocent importer who had no idea there was a weight problem and you are now faced with a several thousand dollar lien because your supplier failed to properly document the shipment. What are your options? Obviously you will end up reimbursing the trucker his fine in order to mitigate your damages. Then you end up trying to recover from your supplier. But if the supplier was honest at the outset, would you now be facing this problem?

What about if the trucker should have known the shipment was overweight (the equivalent of driving the family car as it sinks to the rear because of something very heavy in the trunk)? The Act provides that when the gross weight is known to exceed 29,000 lbs., the trucker must give appropriate notice to his driver. On the enforcement side, "political subdivisions" (e.g. states, counties, municipalities) are now given the authority to enact laws which allow the offending containers to be impounded until the fine or penalty has been paid by the proper party. DOT is allowed to impose fines of $500 per offense, up to $2,500. If there is a pattern of violations, the fine rises to $1,000 per violation, up to $10,000. If serious injury results, the fine may be $10,000 per offense without limitation. Individual employees may also be fined in an amount not to exceed $1,000 if they act with gross negligence or reckless disregard for safety.

As to the trucker's, the carrier is allowed to recover the amount of any bonds, fines, penalties, storage costs, interest and possibly even attorneys' fees.

The new law takes effect on April 9, 1997. Affected U.S. buyers would be wise to include a provision in their letters of credit and/or purchase orders requiring suppliers to provide an accurate weight certification on a per container basis as part of the routine set of documents required for each shipment. It would also be wise to have a written agreement with your regular truckers which includes a provision that all weight certifications will be forwarded through the chain of carriage. Otherwise, if one trucker forgets to give the certification to the next one and a fine is levied, the U.S. importer could end up having to pay the fine and be faced with seeking recovery from an errant trucker later in time.

OVERWEIGHT CONTAINERS
03/97

On April 7, 1997 the recently revised Intermodal Safe Container Transportation Act takes effect. It applies to all motor carrier shipments where the gross weight of the cargo itself exceeds 29,000 lbs. It will apply to imports and exports alike. Each carrier transfers the written certification to the next one until the goods are delivered, although the certification may be transmitted electronically and does not actually have to accompany the shipment.

If a freight forwarder or customs broker prepares a certification, he is responsible for any inaccuracies. However, if the certification was prepared by the shipper or consolidator, the broker/forwarder’s only obligation is to convey it to the actual carrier. If no certification is provided, the trucker is allowed to assume none is required. If the first carrier is a trucker, initial certification must occur by telephone or electronically. The party preparing the certification must be the one who is legally responsible for loading the container or trailer.

Actual certification can be provided directly on the shipping papers or by a separate document; if the latter, it must be labeled "Intermodal Certification." The required information is the weight, a description of the contents, the container number and a date and shipper’s name. Failure to transmit the certification when it is required is itself a violation.

If incorrect information is provided and the trucker is cited, he has a lien on the cargo unless it is perishable. Trucking companies may not conceal weights from their drivers. States, counties and cities are permitted to write laws which allow overweight goods to be impounded until the fines/penalties are paid. Trucker’s liens includes the cost of any bonds, fines, penalties, storage costs, interest and possibly even attorneys’ fees. The Dept. of Transportation is also allowed to assess fines for violations.

Prudence dictates that U.S. importers should require foreign suppliers to provide accurate and complete weight certifications as part of their regular package of international documentation.

OVERWEIGHT CONTAINERS 
08/96

Regulations implementing the Intermodal Safe Container Act are currently scheduled to take effect on September 1, 1996. While there is a measure pending before Congress to revise it, Congress did not act before its summer recess. As a result, Transportation Secretary Peña has instructed the Federal Highway Administration to prepare a notice which will extend the effective date of the implementing regulations until January 2, 1997.

OVERWEIGHT RULES MAY BE STAYED

On September 1, 1996 the rules regarding documentation and liability for overweight containers are due to take effect. Under those new rules, any shipment of 10,000 lbs. or more has to have its weight certified by the shipper through a written confirmation. On July 16, 1996 a bill was introduced in the Congress which is intended to address what many consider the biggest problems with the new rules. S.1957 would raise the certification amount to 29,000 lbs. and allow carriers to presume a lack of certification means the gross weight is under 29,001 lbs. In this day of electronic communication, S.1957 also allows greater use of the electronic transmission of data. It is expected that efforts will be made to achieve quick enactment of this bill, although the Dept. of Transportation has inferred it will further delay the overweight container rules if S.1957 has not been approved by September 1, 1996.