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Thursday, September 30, 2010

Better Late Than Never: U.S. Senate Approves U.S.-U.K. and U.S.-Australia Defense Trade Treaties

Posted on 5:44 PM by Unknown
More than three years after they were signed, yesterday the U.S. Senate ratified the U.S.-United Kingdom and U.S.-Australia Defense Trade Cooperation Treaties. While the Treaty Clause of the U.S. Constitution require two-thirds vote of Senators present to concur, both treaties were approved by an unrecorded division vote.

The two treaties allow for the export or transfer of certain defense articles and defense services controlled pursuant to the International Traffic in Arms Regulations (ITAR) between certain persons in the U.S. and the United Kingdom or between certain persons in the United States and Australia without the need for export licenses or other ITAR authorizations to be issued by the State Department's Directorate of Defense Trade Controls (DDTC).

Specifically, the treaties create Approved Communities of government and private sector entities that may receive defense articles and defense services under the treaties. To qualify for membership in these communities, private entities must meet specific requirements, which for U.K. and Australian private entities includes approved for inclusion by the USG and their respective governments.

Under the treaties, it will be possible for most U.S. defense articles to be exported into, and within, these communities without licenses or other authorizations pursuant to the ITAR as long as the exports are in support of:

  • Certain combined military and counter-terrorism operations;
  • Certain cooperative security and defense research, development, production, and support programs;
  • Certain Mutually agreed security and defense projects where the end-user is the Government of the United Kingdom or the Government of Australia; or
  • Certain U.S. Government end-uses.

The United States and the U.K., and the U.S. and Australia must jointly agree on which projects, programs and operations qualify for processing under the terms of the treaties. U.K. and Australian retransfer or re-exports of items originally exported pursuant to either treaty to a person outside the respective Approved Communities will require U.S. Government approval and U.K. or Australian authorization as appropriate.

The full text of the treaties, along with the implementing arrangements, list of exempted defense articles and definitions, can be found here.
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Posted in Export Controls, ITAR | No comments

Tuesday, September 28, 2010

House Foreign Affairs Committee Indefinitely Postpones Markup of Cuba Travel Bill

Posted on 5:51 PM by Unknown
House Foreign Affairs Committee Howard L. Berman (D-CA), chairman of the House Foreign Affairs Committee, today announced that the Committee's markup of H.R. 4645, the Travel Restriction Reform and Export Enhancement Act, a bill that would lift the ban on Americans traveling to Cuba, has been postponed indefinitely.

The following is the text of his statement explaining the delay:
For a very long time, I have either led or supported efforts to repeal restrictions on the freedom of Americans to travel. The current prohibition on Americans traveling to Cuba is the last obstacle to the full enjoyment of this right. I strongly support H.R.4645, the Travel Restriction Reform and Export Enhancement Act, which would eliminate the Cuba travel restrictions.

The Committee had been scheduled to consider this legislation tomorrow, but it now appears that Wednesday will be the last day that Congress is in session before an extended district work period. That makes it increasingly likely that our discussion of the bill will be disrupted or cut short by votes or other activity on the House floor. Accordingly, I am postponing consideration of H.R. 4645 until a time when the Committee will be able to hold the robust and uninterrupted debate this important issue deserves. I firmly believe that when we debate and vote on the merits of this legislation, and I intend for it to be soon, the right to travel will be restored to all Americans.

In July, the House Agricultural Committee voted 25-20 to report H.R. 4645 to the full House, but the House Foreign Affairs Committee has asserted primary jurisdiction over the bill bill due to the foreign policy-related aspects of sanctions on Cuba.

The agriculture-related provisions in H.R. 4645 include restoring the ability of U.S. exporters to receive payment of licensed agricultural products to Cuba by cash in advance. In addition, the bill would authorize Cuban banks to transfer funds directly to U.S. banks for sales of products authorized for sale under the Trade Sanctions Reform and Export Enhancement Act of 2000 (includes medical and agricultural products).

Given the political sensitivity of this issue in some jurisdictions, it appears that there were not enough votes on either side of the aisle to get this bill passed by the House Foreign Affairs Committee during this session of Congress.  
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Posted in Cuba, TSRA | No comments

Today's Import and Export News and Notes

Posted on 6:25 AM by Unknown
Today's import and export news and notes:

Miscellaneous

An interesting trade-related cartoon in the op-ed section of yesterday's New York Times shows importance of U.S. National Export Initiative.

Export Controls and Sanctions

House Foreign Affairs Committee to markup bill (HR 4645) on September 29th that would end Cuba travel restrictions.

Politico: Retired generals urge U.S. to lift Cuba travel ban.

Washington Times: India continues to press US to remove govt organizations from BIS Entity List (see our comment on this issue here).

Under Secretary of Treasury for Terrorism and Financial Intelligence Stuart A. Levey spoke last week at the Center for Strategic and International Studies on the effectiveness of sanction on Iran.  The transcript and video of his testimony can be found here.

New GAO Report: Defense Exports: Reporting on Exported Articles and Services Needs to Be Improved.

VOA: Targeted U.S. sanctions on Zimbabwe to stay until human rights situation improves. 

Next meeting of Defense Trade Advisory Group (DTAG) will take place in Washington, DC on October 20, 2010. 

Foreign Policy: How U.S. Sanctions Made Haystack (discussing anti-censorship software intended for Iran). 

Customs

U.S. Customs and Border Protection (CBP) publishes quarterly interest rates applied to overpayments and underpayments of customs duties. 

CBP announces that Customs-Trade Partnership Against Terrorism program (C-TPAT) reaches 10,000 members.

CBP issues 2010 C-TPAT Partner Survey (information on costs and benefits of C-TPAT program).

Upcoming Programs of Note

The North Texas District Export Council is holding a full day FCPA conference in Dallas on Oct. 13, 2010. Program will include experienced practitioners, including in-house and outside counsel. Details of the FCPA program can be found here.

NACM Oregon to present Incoterms® 2010 program in Portland on November 9, 2010 (Doug Jacobson is speaker). Program details and registration can be found here. A similar Incoterms 2010 program will be presented in Seattle (near SEATAC) on November 11, 2010.
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Posted in Customs, Export Controls, Miscellaneous | No comments

OFAC Issues Final Rule Prohibiting Importation into U.S. of Iranian Origin Food and Carpets

Posted on 5:44 AM by Unknown
The Department of the Treasury's Office of Foreign Assets Control (OFAC) published a final rule in today's Federal Register amending the Iranian Transactions Regulations (ITR) to prohibit the importation into the U.S. of foodstuffs and carpets of Iranian origin starting tomorrow, September 29, 2010.

As we previously reported, this final rule is required to implement the import prohibitions contained in section 103 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 that was enacted by Congress on July 1, 2010.

Prior U.S. law authorized the importation into the U.S. of foodstuffs from Iran that are classified under chapters 2-23 of the Harmonized Tariff Schedule of the United States (HTS) (such as pistachios and non-beluga caviar). In addition, the importation of carpets and other textile floor coverings of Iranian origin that are classified under chapter 57 or heading 9706.00.0060 of the HTS were also authorized.

However, as a result of the change to the ITRs issued today any Iranian food or carpets must be entered by U.S. Customs and Border Protection by midnight tonight. OFAC has stated that the agency will not issue any specific licenses authorizing any imports after that date, even if the goods were in transit or were at the port.

Efforts to import Iranian origin foodstuffs and carpets on or after September 29, 2010 can lead to significant civil and criminal penalties. For example, civil penalties of up to $250,000 or twice the amount of the transaction that is the basis of the violation can be imposed administratively. Criminal penalties of up to $1,000,000 in fines and imprisonment for up to 20 years can be imposed for willful violations of the Iranian Transaction Regulations.
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Posted in Sanctions; Iran | No comments

Thursday, September 16, 2010

Summary of Xe Services LLC's Settlement Agreement with State Department for Alleged ITAR Violations

Posted on 7:24 PM by Unknown
Below is a detailed summary of the recent $42 million settlement entered into between the State Department's Directorate of Defense Trade Controls and Xe Service LLC, formerly known as Blackwater Worldwide, for numerous alleged violations of the ITAR and the Arms Export Control Act. This document, prepared and provided by John Priecko, summarizes the 288 counts contained in DDTC's Proposed Charging Letter and Consent Agreement.Xe Services 081810 Settlement Summary 090610



Mr. Priecko is the President of Trade Compliance Solutions, a network of experienced compliance-related professionals. He is a trade compliance veteran with more than 15 years of experience in government and in the private sector.

The Proposed Charging Letter, Consent Agreement and Order in this case can be found here.
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Posted in DDTC | No comments

President's Export Council to Meet Today/Export Promotion Cabinet Releases Plan to Double Exports

Posted on 5:41 AM by Unknown
The President's Export Council (PEC) will meet at 9:30 a.m. today in Washington to discuss topics related to the National Export Initiative (NEI). President Obama is scheduled to deliver remarks to PEC at 9:45 a.m. The meeting will be shown via live webcast on the White House's website.

In advance of today's PEC meeting, this morning the Trade Promotion Coordinating Committee (TPCC) issued a report to the President that presents the Export Promotion Cabinet’s recommendations for doubling exports in five years. This report will be followed by the National Export Strategy which will detail the implementation of these recommendations and measure progress.

The TPCC consists of the Export Promotion Cabinet, which includes the Secretaries of Commerce, State, Treasury, Agriculture and Labor and the heads of all the trade-related government agencies.
In preparing the report, the TPCC Secretariat reviewed over 175 responses to a Federal Register notice requesting input to the National Export Initiative from small, medium, and large businesses; trade associations; academia; labor unions; and state and local governments.

The report notes that the administration’s efforts, through the NEI, are focused on five areas including: access to credit, especially for small and midsize firms; more trade advocacy and export promotion efforts; removing barriers to the sale of U.S. goods and services abroad; enforcement of trade rules; and pursuing policies that will increase global economic growth so that there’s a strong worldwide market for U.S. goods and services.

The report outlines ways the U.S. government can expand efforts to help U.S. businesses win more foreign government contracts, find buyers worldwide, participate in more trade missions and trade shows, receive more export financing, and learn new ways to sell products and services overseas. A central focus of the plan is providing additional assistance to small and medium-sized businesses.

Part I of the report, titled “The NEI in Context,” sets out eleven key factors and assumptions that form the basis of a plan to double exports, ranging from assessments of the U.S. and global economies and identification of priority markets, to determining the most promising and appropriate roles for the Federal Government in increasing exports.

Part II of the report, titled “Recommendations,” examines each of the eight NEI Priorities, describes the rationale underlying each Priority, and presents short- and long-term recommendations for the Federal Government to implement, consistent with the Executive Order that mandated the Report.

Finally, Part III presents conclusions, discusses the National Export Strategy that will be published later this year, and highlights suggestions for further advancing the NEI goals.

Key recommendations in the report include:
  • Small and Medium-Sized Enterprises (SMEs): a National Outreach Campaign led by the SBA and other Trade Promotion Coordinating Committee (TPCC) agencies to raise awareness of export opportunities and government export assistance for U.S. small and midsize companies; a re-launch of export.gov, the Government’s export internet portal, with new export training opportunities to help companies learn how they can begin selling their products overseas or break into new markets if they’re already exporting.
  • Federal Export Assistance: bring more international buyers to U.S. trade shows and encourage more U.S. companies to participate in major international trade shows. For the first time, implement a government-wide export promotion strategy for six newly designated “next tier” markets (Colombia, Indonesia, Saudi Arabia, South Africa, Turkey and Vietnam).
  • Trade Missions: substantially increase the number of trade missions abroad, particularly those led by senior U.S. Government officials, and foreign buyer trade missions to the United States.
  • Commercial Advocacy: level the playing field for companies bidding on projects abroad through improved coordination among government export promotion programs; formalize a path to escalate, for the first time ever, critical advocacy projects for direct White House and National Economic Council involvement where necessary.
  • Increasing Export Credit: extend more export credit through existing trade finance agencies, increase awareness of credit products, focus on SMEs and companies from underserved sectors of the U.S. economy, expand the eligibility criteria for SME export finance lending, and streamline the application and review process for SME exporters.
The report notes that the Administration’s plans for export control reform are completely separate from the National Export Initiative, but that a by-product of this important reform process will allow for exporters in some of the most competitive industries to export products consistent with the new export control process.

The entire Report to the President on the National Export Initiative: The Export Promotion Cabinet’s Plan for Doubling U.S. Exports in Five Years can be found here.

Update: The text of the President's remarks made at the opening of today's President's Export Council meeting can be found here.
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Posted in Exports | No comments

Thursday, August 26, 2010

Commerce Department's Proposed Changes to AD/CVD Policy and Procedures Likely to be Criticized by U.S. Trading Partners

Posted on 8:23 PM by Unknown
The U.S. Department of Commerce announced today a number of proposed changes to U.S. antidumping (AD) and countervailing duty (CVD) policy and procedures intended to "strengthen trade enforcement and help keep U.S companies competitive." These measures, which are certain to be controversial and provoke criticism from China and other U.S. trading partners, will be reviewed by the Commerce Department during the next few months through a "transparent review" that will include an opportunity for public comments.

Most of the proposed changes are targeted at countries designated as non-market economies, which currently include China and Vietnam.

U.S. importers of products subject to AD/CVD investigations are likely to oppose the proposed change that would require importers to post cash deposits rather than bonds to secure entry of their products into the U.S. once a preliminary affirmative determination is made in an AD/CVD case.

A number of the proposed changes to current AD/CVD law and practice are also likely to generate a strong reaction by attorneys that handle AD and CVD cases on a regular basis. There will also be questions as to whether these changes are in compliance with the WTO Anti-dumping Agreement and the WTO Agreement on Subsidies and Countervailing Measures.

Another controversial aspect of this proposal is that the press release announcing these proposed changes claimed that these changes were being made in support of the President's National Export Initiative, which aims to double U.S. exports during the next five years. If implemented, these measures are likely to increase the AD and CVD duties paid by importers and the cost of certain imported products subject to such duties. However, it is unlikely that these measures will have any positive impact on the ability of the U.S. manufacturing sector to export their products.

If the Commerce Department chooses to go forward with these changes, revisions to the AD/CVD regulations (19 CFR Part 351) will be required in most cases.

The following is a summary of the 14 proposed changes:
  1. Expanded use of random sampling to select companies as individual respondents in AD investigations and reviews rather than choosing the largest exporters;
  2. Strengthening Commerce’s current practice regarding the issuance of company-specific AD rates in NME cases;
  3. Clarification of Commerce’s current NME practice that when the Department uses import prices for valuing a production factor, such prices should include all applicable freight and handling costs;
  4. Clarification of Commerce’s current NME practice to require companies to report production inputs for all products produced at each of their facilities – not just those facilities that produced merchandise destined for the United States – for use in the Department’s NME dumping calculations;
  5. Clarification of Commerce’s current CVD practice to reiterate that Commerce considers state-owned enterprises (SOEs) as constituting a “specific” group when they are alleged to be receiving countervailable subsidies from the government;
  6. Reconsidering the treatment of export taxes and value-added taxes (VAT) in Commerce’s NME AD methodology; and
  7. Strengthening the treatment of resellers and other non-reviewed parties in NME cases to ensure that such parties pay the full amount of AD duties.
  8. Adoption of a new methodology for valuing wage (labor) rates in NME cases by using surrogate wage rates that fully capture all labor costs (including benefits and taxes paid to workers by their employers) in the NME country;
  9. Eliminating the practice of allowing individual companies to seek removal from an antidumping (AD) or countervailing duty (CVD) order based on their ability to show zero dumping margins or subsidy rates for three (AD) or five (CVD) consecutive years;
  10. Tightening the rules in non-market economy (NME) cases for determining when the price of production inputs purchased from market economy countries will be substituted for the Department’s standard valuation for such inputs;
  11. Considering whether importers will be required to post cash deposits rather than bonds for imports that fall within the scope of an AD/CVD investigation starting with the issuance of Commerce’s preliminary determination (rather than following the imposition of an AD/CVD order);
  12. Strengthening the certification process for the submission of factual information to the Department;
  13. Strengthening the accountability of attorneys and non-attorneys practicing before Commerce; and
  14. Tightening the deadlines for submitting new factual information in AD/CVD cases.
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    Posted in Antidumping, Countervailing Duties | No comments
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