Matthew T. McGrath
    International Trade Club of Chicago
              October 24, 2008

> Renewal of Preferential Trade Programs
> Free Trade Agreements and Trade Negotiating
> Duty suspensions and miscellaneous trade
> Customs reauthorization and Duty Drawback
> What’s happening in the Lame Duck session?

> 10 + 2 reporting requirements
> Lacey Act implementation
> Origin Rules proposal
> Commerce Department administration of
  countervailing duty law against China
> Other -- Consumer Product Safety
  Improvements Act implementation

> Doha Round of WTO trade negotiations
> FTA negotiations
> WTO Trade Disputes
> Impact of the Financial Rescue program on
> Multilateral Trade negotiations
> FTAs – Implementation of Agreements,
  negotiation of new agreements
> Enforcement Activity
> I tell you who will win
Legislative – Trade Preference Renewal

> One year extension of GSP, AGOA, ATPDEA
> Signed October 16, 2008
> Permanent GSP reform still under discussion
  between Congress and Administration
> Andean Program extended a full year for
  Colombia and 6 months for Bolivia (drug
  interdiction) and Ecuador (investor treatment)
Legislative – Trade Preference Renewal

> 2 for 1 textile apparel allowance program for
  Dominican Republic
> Repeal of Abundant Supply provision for
  AGOA, which created technical
  impediments to LDDCs
> Reinstatement of LDC AGOA status for
  Mauritius (lapsed in 2005)
> New administration – no effect
Legislative – Free Trade Agreement Approval

> Pending legislative approval: Colombia,
  Korea, Ecuador, Panama
> Colombia FTA issues – labor union
> KORUS issues – beef import restrictions,
  automotive tariff treatment
> Lame duck session – could include FTA
  approval as part of stimulus package
Legislative – Tariff Suspensions and
Miscellaneous Trade Measures
> MTB partially advanced in 2008 – must be reintroduced
> Miscellaneous customs modifications and reliquidations
> Legislative suspension process
   >   Ways & Means and Finance Committees
   >   Revenue limits
   >   Non-controversial
   >   “Administrable”
   >   Administrative review and report
   >   4 year, renewable
Legislative – Tariff Suspensions and
Miscellaneous Trade Measures

> Miscellaneous customs measures
   > Reliquidations for CBP or importer error
   > Process for introduction and limitations
   > Administrative review of legislative proposals
> Procedure unlikely to change in new
  Administration; priority will drop for either
Legislative – Trade Promotion Authority

> Congressional consideration of trade
  agreements reached by the President under
  fast track procedures, 60 day up-or-down
  vote, without amendment
> Expiration: July 2007
> Terms of renewal likely to change
Legislative – Customs Reauthorization

> Duty Drawback simplification will be included in
  the bill
   > CBP goals to make administration of drawback
     easier, “protect the revenue”, and be consistent with
     automation efforts
   > Claimant’s goals of simplifying the claims
     documentation process
   > Terms unlikely to change in new Administration
Legislative – Duty Drawback (cont.)

> Drawback may be claimed under proposed new
  law if
   > imported and exported article have the same 8-
     digit HTS, or
   > Imported and exported article have different 8
     digit HTS, and the claimant provides a bill of
     materials showing how imported article is
     incorporated into exported article
Legislative – Duty Drawback (cont.)

> Main distinctions between current and proposed law:
  > “same kind and quality” replaced by 8 digit HTS
  > “commercially interchangeable” replaced by simple
    tracking at the 8 digit level
  > Tracking of substitution at the invoice level replaced
    by BOM bridge record
  > 5 year limitation, from import to claim
Legislative – Duty Drawback (cont.)

> Additional distinctions between current and proposed
   > No requirement for rulings or approvals under new
   > Receipt and use requirement eliminated – claimant
     need not “use” imported merchandise
   > Therefore, no distinction between unused
     merchandise and manufacturing drawback
Legislative – Duty Drawback (cont.)

> Drawback for 8-digit substitution calculated
  on lesser of average duties paid per unit on
  entry line item, or average duties paid using
  the declared export value
> Drawback for change in HTS calculated on
  average duties per unit on import entry line
Administrative – Importer Security Filing

> 10 + 2 – Data elements to be required prior to
  loading of vessel for transport to the US
> Implementation of the SAFE Ports Act of 2006
> Publication and comment period completed in
> Publication expected in the next few weeks, in
  force within 60 days
Administrative – 10 + 2

> Importer data elements
  > Name and address of manufacturer
  > Name and address of seller
  > Name and address of buyer
  > Ship-to
  > Container stuffing location
  > Consolidator name and address
Administrative – 10 + 2 (cont.)

> Importer data elements
  > Importer or FTZ identification number
  > Identity of consignee
  > Country of origin
  > HTSUS classification
Administrative – 10 + 2 (cont.)

> Carrier data elements
  > Vessel stow plan
  > Container status messages showing any
    change in status of container in transit
> CBP will send acceptance code to importer
Administrative – 10 + 2 (cont.)

> Incomplete or inaccurate filing will result in
  no load message, delays, potential penalties
  up to value of cargo
> Data mining used to identify higher risk
  cargo; 10+2 may result in fewer inspections
> Procedure to correct errors
> Unaffected by change in Administration
Administrative – Lacey Act Amendments

> Amendments to Farm Bill, law designed to
  restrict illegal logging and taking of wild
> Import declaration required
> Scope: “any wild member of the plant
  kingdom, including roots, seeds, parts or
  products thereof”
Administrative – Lacey Act Amendments

> Potential coverage: lumber, wood furniture, textile
  and apparel products of rayon, paper products,
  cellulose fiber-containing products,
  pharmaceuticals, printed matter, other products
  with wood or plant components.
> Effective date – Technically December 15, 2008;
  enforcement commencing after electronic
  declaration implementation, April 1, 2009
Administrative – Lacey Act Amendments

> Declaration must contain:
   > Scientific name of plant
   > Value
   > Quantity
   > Country from which plant was taken (as opposed to
     article’s county of origin) (special focus on Indonesia,
     Russia, and Brazil)
   > Percentage recycled material (paper and paperboard)
Administrative – Lacey Act Amendments

> Specific exclusions:
   >   Common cultivars (not yet defined)
   >   Common food crops
   >   Scientific specimens for research
   >   Plants for re-planting
   >   Packaging material used to support, protect or carry
       another item. But it does include hangtags, labels,
       and instruction booklets.
Administrative – Lacey Act Amendments

> Implementation team: APHIS, CBP, Fish &
  Wildlife, DOJ, State, USTR
> APHIS FR notice 10/8/08: Enforcement phase in
  > April 1 – Ch. 44 (wood and articles of wood); Ch. 6
    (live trees and plants)
  > July 1 – Ch. 47 (wood pulp), 48 (paper and articles of
    paper), 92 (musical instruments), 94 (furniture)
Administrative – Lacey Act Amendments

> APHIS notice (cont.)
  > After September 30, 2009 – “including but not limited
    to” Ch. 12 (seeds and fruits), Ch. 13 (gums, lacs,
    resins), 14 (vegetable plaiting materials), 45 (cork), 46
    (basketware), 66 (umbrellas), 82 (tools), 93 (guns), 95
    (toys and games), 96 (brooms and pencils), 97 (works
    of art).
  > No deminimis level
Administrative – Lacey Act Amendments

> Oct. 10 Sponsor and leadership letter
  interagency group:
  > Highlights agency discretion to define
    inclusions and exclusions
  > Paperless processing is critical for trade
  > Legacy F&W system is available for
Administrative – Lacey Act Amendments
  > Approve delayed enforcement and phasein
  > Suggest further limitation of coverage, consider risk
  > Suggests 6 month phases: (1) wood (2) furniture and
    flooring (3) paper, blinds, billiard cues, instruments
  > Proposed exemption for the first two years:
    beverages, cosmetics, footwear, textiles and apparel,
    rubber and cork
  > Exclude tags, labels, manuals as excluded
    “packaging materials”.
Administrative – Origin Rules

> CBP proposed application of NAFTA origin
  marking rules to all non-preferential trade
> This change has been debated for 15 years,
  since NAFTA was implemented
> Would replace substantial transformation
  test with a tariff shift rule of origin
Administrative – Origin Rules

> Would change origin in some instances,
  overturning rulings and court decisions
> Would require significant resources to document
  “reasonable care” by classifying all articles, as
  well as upstream articles, to prove “tariff shift”
> Impact of new administration questionable
Administrative – Trade Remedies

> Department of Commerce assessment of
  countervailing duties against China
> DOC antidumping calculation methodology:
  “zeroing” increases margins
> DOC antidumping methodology: targeted
  dumping increases incidence of zeroing
Administrative – Other

> Consumer Product Safety Improvements Act –
  August 14, 2008
> Importer and manufacturer must have
  Certification of compliance with specific rules of
  Consumer Product Safety Act applicable to
  article, based on reasonable testing program, for
  articles covered by CPSC rules
> check website for regulated and excluded articles
Administrative -- CPSIA

> Applies to goods manufactured after
  November 12, 2008
> Lower lead content levels applicable to
  goods manufactured after February 14,
> Tracking labels and registration for
  children’s products
Administrative -- CPSIA

> Independent third party testing for children’s
> State attorneys general may enforce CPSC
  laws through civil enforcement action
> Implementation underway at CPSC
> Views from staff – children’s products
  defined as 12 or younger – label intent
Executive – Doha Round Negotiations

> Trade Promotion Authority – under what
  conditions will it be renewed?
> Scope of Doha/DDA – more ambitious than
  past rounds
> The impact of new major players
> The role of FTAs
Executive – Doha Round Negotiations

> Status of the Round through June 2008
> Standoff at the Ministerial meeting July 2008
> The issues in Agriculture
> The issues in NAMA
> Other issues
> Next steps
Executive – FTA Negotiations

> Thailand
> Malaysia
> P4 – US, New Zealand, Singapore and
The Candidates’ Positions on Trade Issues

> FTA approval – sooner vs. later
  > Obama – no quick votes on Colombia and
    Korea – wants progress on anti-union violence
    in Colombia and improvement on automotive
    sector provisions in KORUS
  > McCain – prefers earlier consideration but
    realizes Congress is run by the opposition
The Candidates’ Positions on Trade Issues

> Trade Adjustment Assistance – a difference
  of perception
  > Obama – expand TAA to include service
    workers and job loss due to non-FTA trade
  > McCain – fold TAA into single, non-import
    dependent job relief program
The Candidates’ Positions on Trade Issues

> Doha Round – the sunset of multilateralism
  > Obama – US was right to reject the deal
    proposed in July, consistent with majority view
    that current deal is beyond rescucitation. No
    agriculture subsidy cuts proposed.
  > McCain – Doha should be closed quickly. US
    agriculture subsidies should be cut, but avoids
    listing which cuts.
The Candidates’ Positions on Trade Issues

> Enforcement focus vs. new agreements
  > Obama – shift focus from new agreements to
    enforcement of existing deals. WTO disputes
    underway; add dispute or legislation on
    Chinese currency manipulation
  > McCain – Renew TPA immediately, avoid
    adding new labor and environment conditions
The Candidates’ Positions on Trade Issues

> NAFTA renegotiation – past as prologue
  > Prior revisions to NAFTA – investors rights,
    origin rules, tariff acceleration; ruling on
    reduced value not expropriation
  > Obama – labor, environment, investment, and
    energy provisions on trilateral basis.
  > McCain – opposes NAFTA renegotiation
  > Obama for COOL, McCain opposed

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