This bulletin has been prepared especially for clients of A. N. Deringer, Inc. by:
SERKO & SIMON LLP – Customs & International Trade Law
March 22, 2006
CUSTOMS and BORDER PROTECTION (CBP)
- CAFTA-DR Retroactive Refunds: CBP issued a Federal Register Notice announcing its interim rule regarding requests for retroactive duty refunds under the Central America-Dominican Republic Free Trade Agreement (CAFTA). Under CAFTA, eligible textile and apparel imports from designated CAFTA countries are eligible for duty refunds retroactive to January 1, 2004. Written refund requests must be filed with CBP no later than December 31, 2006, or 90 days after the entry into force of CAFTA for that specific country, whichever is later; comments must be received by May 8, 2006.
- C-TPAT Update:
CBP recently published an update to its C-TPAT program entitled "Supply Chain Security Best Practices Catalog: Customs-Trade Partnership Against Terrorism (C-TPAT)." CBP notes that to date over 10,000 companies have applied for membership under the program and over 6,000 have been certified. CBP is using a three-tiered structure for membership benefits, where companies with higher security standards are awarded greater benefits. Tier One (certified) grants importers risk score reductions, resulting in fewer security cargo examinations, fewer compliance examinations, and expedited inspection privileges, e.g., "front of line" and use of FAST lanes. Tier Two (validation) benefits encompass all benefits provided under Tier One but the company’s risk factor will be twice as low, resulting in significantly less inspections. Tier Three (best practices) status will be granted only to companies adopting "security best practices." Benefits under Tier Three will result in only rare security inspections and will afford the company access to the soon to be established "Green Lane," amounting to almost no inspections upon importation, provided that other requirements are met. CBP’s updated Best Practices document can be accessed at:
http://www.customs.gov/linkhandler/cgov/import/commercial_enforcement/ctpat/ctpat_best_practices.ctt/ctpat_best_practices.pdf
Cotton Research Program: The U.S. Department of Agriculture’s Agricultural Marketing Service (AMS) is soliciting importers and other interested parties on whether to conduct a review of the Cotton Research and Promotion Order which assesses a charge on imported upland cotton and products containing same; comments are due by June 15, 2006.
Braided Materials With Metallic Strip: CBP is revoking its classification of certain braided yarn construction incorporating a metallic strip, currently under subheading 5605.00.9000 (13.2% duty), HTSUS, the provision for "Metalized yarn, … combined with metal… Other." As braided constructions are not provided for under heading 5605, CBP notes that the proper classification is under subheading 5808.10 (4.2% duty), HTSUS, depending on the construction of the materials.
Mastering Equipment for CD/DVD Recordation: CBP is proposing to revoke its classification of certain machines used to produce metal coated glass discs encoded with data used to produce master discs for mass production of CD/DVD’s from subheading 9013.80.9000 (4.5% duty), HTSUS, the provision for "other optical appliances not specified elsewhere." CBP notes that because the results of the digitally encoded data of mastering machine’s laser beam is exposed as an image, it is similar in process to the way photographic film is developed and is properly classified under subheading 9010.50.6000 (duty free), HTSUS, the provision for "Other apparatus and equipment for photographic … laboratories;…: Other."
TRADE TALK
1) The latest round of scheduled FTA talks with the United Arab Emirates (UAE) has been postponed. Authorities refused to connect the postponement to the failed purchase of the company operating several U.S. ports by a UAE company.
2) Both houses of U.S. Congress approved the extension of normal trade relations (NTR) to Ukraine. The bill is now ready for the President’s signature.
3) Sources indicate that Honduras implemented the required legislation and is seeking to become the second Central American country, after El Salvador, to enjoy duty free benefits with the U.S. under CAFTA.
4) India and Chile recently signed a preferential trade agreement (PTA) whereby almost 95% of bilateral trade will enjoy up to 50% reductions in duties.
- AD/CVD Developments: The U.S. Department of Commerce (DOC) recently:
- Initiated an administrative review of its antidumping (AD) order on certain wooden furniture from China. The review will cover 107 companies and the results may impact the AD rate of those specific companies as well as the China-wide rate.
- Determined that any revocation of the AD order on certain cut-to-length carbon steel plate from Belgium, Brazil, Finland, Germany, Mexico, Poland, Romania, Spain, Sweden, and the U.K., and carbon steel plate from Taiwan, will lead to recurrence of injury to the domestic industry.
- Determined to revoke the CV order on certain brass sheet and strip from France.
- The U.S. and Mexico announced a three year import agreement with regard to gray Portland cement and clinker. The agreement calls for the suspension of all outstanding NAFTA and World Trade Organization litigation, allows for the liquidation of open entries, and revokes the existing AD order on Mexican cement at the conclusion of the agreement on April 1, 2009. The agreement establishes a an AD rate of $3 per metric ton, requires both an export and an import license to be presented along with each shipment, and subjects imports into the U.S. to specific regional quotas for each of the three years covered by the agreement.
WORLD TRADE ORGANIZATION (WTO)
- EU May Reinstate Sanctions on U.S. Exports: The EU notified the WTO that unless the U.S. repeals the transition clause of the now repealed Foreign Sales Corporation (FSC) tax law by May 13, 2006, it will reimpose retaliatory sanctions (textiles, foodstuffs, automotive parts, and steel) it suspended from January 1, 2006, a WTO Dispute Settlement Body found that the transition clause is illegal under WTO rules.
- USTR Seeks Input for DSB:
The U.S. Trade Representative (USTR) is seeking comments from interested parties by May 19, 2006 regarding Argentina’s request for a WTO Dispute Settlement Body claiming that the U.S. DOC’s re-determination in the AD case involving oil country tubular goods is inconsistent with WTO rules.
BUSINESS BRIEFS
- China Trade Developments:
Direct Sales – Sources report that China will lift its seven-year ban on direct sales to homes. Under the ban, cosmetic sellers were only able to sell out of retail outlets. However, certain limits will be applicable, i.e., agents would not be able to recruit new salespeople (preclude collecting royalties) and commissions will be lower than in other countries.
Currency Policy – U.S. Senators Graham and Schumer, sponsors of a bill to impose 27.5% tariffs on all Chinese imports due to its currency policies, are in China this week to discuss currency issues. Ahead of a March 31 deadline for a Senate vote on the bill, the senators are seeking commitments that the Chinese will allow the Yuan to float more freely than in the past, and within a reasonable amount of time.
In a related vein, the WTO is set to release its first review of China’s trade policies on April 10, 2006, where it will call for China to be more flexible with its currency exchange policies and do more for the protection of intellectual property rights (IPR).
- India Trade Developments:
India Presents its Budget – India’s Finance Minister recently presented India’s budget for 2006-07. The budget proposes to slash peak Customs duties for non-agricultural products from 15% to 12.5% (down from 20%), reduce even more significantly the duty rates for certain raw materials and intermediate products (e.g. minerals, refractories, inorganic chemicals, certain hydrocarbons and catalysts, certain bulk plastics, certain foodstuffs, packaged foods, instant food mixes), and proposes no change in the tax rate for personal and corporate income taxes.
Currency Convertibility – India’s Prime Minister stated that India is ready to make its currency, the Rupee, fully convertible to foreign currencies. Currently, India only allows free currency conversions for trade purposes while restricting those for pure investment purposes.
TRANSPORTATION TIDBITS
- Container Security Initiative: 1) CBP announced that the port of Salalah, Oman has become operational under the Container Security Initiative (CSI); 2) Pakistan recently signed a Declaration of Principles and its port of Qasim will join the CSI program.
- Bill Would Allow Only Scanned Containers:
A bill (H.R. 4899) recently introduced in the U.S. House of Representatives would allow entry to containers only if they have been scanned and sealed prior to loading for import to the U.S. The bill asks the Secretary for Homeland Security to require scanning all containers set standards for container seals.
- Container Tracking Test:
The Port of Newark, New Jersey is testing the Global Sentinel device, which attaches to a container and transmits the container’s position, signals whether it has been opened, and detects carbon monoxide and radiation.
LEGISLATIVE DEVELOPMENTS
- Miscellaneous Trade Bill Passed: The U.S. House of Representatives recently passed the "Miscellaneous Trade and Technical Corrections Act of 2006" (H.R. 4944), which contains amendments to tariff regulations as well as temporary duty reductions for a host of merchandise. The bill now goes to the U.S. Senate for approval.
- Counterfeiting Law Signed:
President Bush recently signed the "Stop Counterfeiting in Manufactured Goods Act" (H.R. 32), which makes it a crime to deal in counterfeit labels, patches, stickers, badges, emblems, hangtags, etc., in order to stop the practice of importing cheap merchandise and affix a counterfeit mark once the merchandise arrived in the U.S., thus avoiding charges of importing a finished counterfeit product. The bill also requires forfeiture of all proceeds from trade in counterfeit goods and requires restitution to the owner of the genuine trademark.
- Export Control of Internet Equipment:
The recently introduced "Global Online Freedom Act of 2006" (H.R. 4780) calls for export controls of internet technology equipment to countries responsible for restricting internet freedom and establishes civil and criminal penalties, up to $2 million, for U.S. entities which provide such countries with the identification of internet users.
- Liberia:
U.S. Congressman Charles Rangel (D-N.Y.) indicated that he intends to introduce legislation to extend benefits available under the African Growth and Opportunity Act (AGOA) to Liberia as well as calling for a one-year extension of GSP benefits for Liberia past December 31, 2006, when the GSP program is set to expire.
Serko Simon Gluck & Kane LLP
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New York, New York 10019
Phone (212) 775-005 Fax (212) 839-9103
Outside of New York State: 1-800-46-TRADE
E-mail address: serko-simon@customs-law.com On the internet at: www.customs-law.com
Note: This information is current as of the date of this document, and is not, nor is it intended to be, legal advice, which can only be provided by Serko Simon Gluck &Kane LLP on a case-by-case basis. ©2006
This Trade Alert has been prepared by Chaim Appel, Technical Advisor.