22 November 2011
WTO questions U.S.' origin labeling - (American Shipper)

While a World Trade Organization panel on Friday affirmed the right of the United States to require origin labeling for meat products, it challenged certain aspects of the regulation.

In December 2008, Canada and Mexico initiated dispute settlement proceedings against the United States’ country of origin labeling (COOL) requirements. Among other claims, Canada and Mexico alleged that the COOL statute, implementing regulations, and a U.S. Department of Agriculture letter related to the requirements discriminate against their livestock exports to the United States in breach of U.S. WTO obligations. Canada and Mexico also alleged that the U.S. COOL requirements were protectionist-based.

The WTO panel confirmed that the United States had not adopted the requirements to achieve any protectionist objective, but rather to provide consumers with information about the origin of the meat products they buy at the retail level. The panel agreed with the United States on other claims, including that labeling under COOL is not required to be on the basis of “substantial transformation” (where the animal was slaughtered).

However, the panel disagreed with the way the United States designed its requirements and determined that they provide less favorable treatment to Canadian and Mexican livestock. Additionally, the panel determined that the U.S. COOL requirements fail to meet their consumer information objective because the information included on the labels is always clear. The panel also decided that the USDA letter represents an unreasonable administration of the U.S. COOL requirements.

“Although the panel disagreed with the specifics of how the United States designed those requirements, we remain committed to providing consumers with accurate and relevant information with respect to the origin of meat products that they buy at the retail level,” said Andrea Mead, spokesman for the Office of the U.S. Trade Representative. “In that regard we are considering all options, including appealing the panel’s decision.”

USTR said it will review the panel reports and work with USDA to help ensure that U.S. consumers continue to be provided with accurate and relevant information about the origin of beef and pork retail products. The next step in the process is for the reports to be adopted by the WTO Dispute Settlement Body (DSB) or appealed to the WTO Appellate Body.

U.S. Customs and Border Protection is proposing to increase the informal entry limit from $2,000 to its maximum statutory limit of $2,500. CBP also proposes to remove regulatory language requiring the use of a formal entry for certain shipments of textile or apparel products, which is no longer needed due to the elimination of quotas formerly established under the Agreement on Textiles and Clothing. Comments on this proposed rule are due no later than Dec. 27.

All merchandise imported into the customs territory of the United States is subject to entry and clearance procedures. Formal entry generally involves the completion and filing of one or more forms (such as CBP Form 7501, Entry/Entry Summary, which contains detailed information regarding the import transaction) or their electronic equivalent as well as the filing of commercial documents pertaining to the transaction. However, CBP regulations exempt from formal entry imported merchandise whose aggregate value does not exceed a specified amount.

The informal entry limit has remained at $2,000 since 1998. CBP believes that increasing this limit by $500 will reduce the overall administrative burden on importers and other entry filers by expanding the availability of the simplified informal entry procedures. CBP has also determined that this increase will save the trade community approximately $11 million in merchandise processing fees annually (a figure that could rise considering that the MPF was recently increased from 0.21% to 0.3464%).

> Source Document 1

Recent trade legislation H.R. 2832 changed the merchandise processing fee rate for formal entries (class code 499) from 0.21% (.0021) to 0.3464% (.003464). The minimum merchandise processing amount of $25.00 and the maximum merchandise amount of $485.00 were not changed.

U.S. Customs and Border Protection is in the process of modifying its automated system (ABI) to accept the new MPF rate of 0.3464%. At the present time, CBP does not have an exact date when the MPF system changes will be completed.

CBP will notify the trade in a future message when the trade can begin submitting their summaries with the new MPF rate. CBP plans to provide the trade with an approximately one weeks’ notice regarding the date that CBP will be able to accept the new MPF rate. This procedure applies to both ACS and ACE filed summaries.

More details at: http://apps.cbp.gov/csms/viewmssg.asp?Recid=18507&page=&srch_argv=11-000262&srchtype=all&btype=&sortby=&sby

The legislation for the newly passed Free Trade Agreements and the GSP extension contain provisions to increase the MPF from 0.21% ad valorem to 0.3464% ad valorem.

The new MPF assessment will apply to entries from October 1, 2011 to June 30, 2021. The cap per formal entry will remain the same at $485.00. For importers, this means that previously the cap was reached when the entry was worth $230,952.00, however now it will be reached for entries of $140,011.00 and higher. This will result in significant cost increases to many importers, particularly companies shipping lower value articles.

Congress and Customs are working on how the retroactive MPF payments will be assessed and collected. We will advise of developments in that area. Importers should make sure to account for the increased MPF for their formal entries on or after October 1, 2011. Also please note that existing MPF exemptions were not changed and once the FTAs become effective, qualifying imports from Colombia, Korea and Panama will not be subject to the MPF.

http://www.shipamerican.com/newsletter/PDF/NF102011.pdf

Signed into law on Jan 4, 2011 The FSMA aims to ensure US food supply is safe by shifting the focus of regulators from responding to contamination to preventing it. It provides the FDA with new enforcement powers and shifts costs to importers and US Agents through newly introduced User Fees. A short fact sheet is attached which briefly describes some of the key elements of the new legislation as well as a more comprehensive document which includes important implementation dates.

One of the more significant changes will be an increase in the number of facility reinspections by FDA. Previously the FDA had performed in the neighborhood of 200 facility inspections per year. The FDA will be gradually increasing this number over the next five years to an expected 16000 inspections in 2016.

The fees for these reinspections are 'to be paid by the United States agent for each foreign facility" (Federal Register, Vol. 76, No. 147, Page 45825). These fees will be billed at a rate of $335/hr (outside US) without limit and are payable within 30 days. These fees became effective on 10/1/2011. Previously the US Agent was only responsible for accepting service of process, so this financial responsibility is new.

Of concern to us:

is the possibility of having been listed as a US Agent without our knowledge. Per Registrar Corp's research, 10% of US Agents were found to be Customs Brokers. Additionally, many registrations were found that contained falsified information, such as, Customs Broker named as agent with false address and foreign facility email contact information. There apparently is currently no authorization required to be listed a US Agent. In such a case the US Agent would be unaware that they were listed but would still be liable for reinspection fees.

For our clients:

beginning in 2012 FDA will be requiring that FDA registration be updated every two years. Facilities will also be required to develop written plans for safety controls with updates every three years. In addition to the reinspection fees there will be other User Fees implemented which will be issued to importers and manufacturer's (recall non-compliance, detention w/o examination, etc). A voluntary Qualified Importer Program will also be created which will allow for facility certification and provide expedited review and importation.

Currently these regulations apply only to food facilities and not to other FDA regulated products (medical devices, cosmetics, drugs).

Full text of the legislation and additional information can be found at:http://www.fda.gov/food/foodsafety/fsma/default.htm

Congress on Wednesday passed free trade agreements with Colombia, Panama and South Korea.

Once the terms of the deals are implemented - experts expect it will be early 2012 - exports under the trade agreements will increase U.S. GDP by an estimated $12 billion.

"After years of unnecessary delay, American manufacturers, farmers and service providers will gain greater access to nearly 100 million consumers through lower tariffs on our exports to Korea, Colombia and Panama," said Sen. Rob Portman, R-Ohio. "According to the President’s own metrics, these agreements, which passed with strong bipartisan support, will create up to 250,000 American jobs."

Rep. Linda Sanchez, D-Calif., told CNBC the aggreements were created on the Bush Administration's "broken trade model" in which U.S. manufacturing jobs were lost through past free trade pacts. Sanchez, a member of the president's export council, said the free trade agreement with South Korean will cost the U.S. roughly 40,000 textile jobs.

Trade groups and companies were quick to congratulate members of Congress for their bipartisan efforts to approve the free trade agreements with South Korea, Colombia and Panama.

Thomas J. Donohue, president of the U.S. Chamber of Commerce, said that the FTAs are a victory for American workers and competitiveness. “It means we will immediately stop losing jobs to our competitors who have cut their own deals and we can start creating hundreds of thousands of new jobs for Americans.”

Peter M. Robinson, president of the U.S. Chamber of International business, said the agreements send an important message that the U.S. will not shrink from global leadership.

“The United States must be in the vanguard of efforts to open up markets abroad - bilaterally, in regional forums, and at the multilateral level," Robinson said. "Passage of these free trade agreements will also assure countries in Latin America and Asia that the United States continues to be engaged in those regions and to support its allies.”

http://www.joc.com/trade/congess-approves-three-free-trade-agreements

Customs has a storage problem, and how it is adapting will dramatically affect importers who file paper entries.

The change involves Customs’ elimination of paper-based courtesy notices of liquidation (CBP Form 4333-A), as announced in the Aug. 17 Federal Register. The notices, which Customs says cost $3 million-plus a year to print and mail, advise importers when individual entries are liquidated or finalized.

Because of storage size limitations, Customs will store data in the Automated Commercial Environment about entries filed in the current fiscal year and the previous four years. Older data can be obtained through Automated Broker Interface queries or Importer Trade Activity reports Customs will provide. Importer Self-Assessment members will not be charged. Other importers will face a cost to receive the report, currently assessed per IRS number per year....

This article is available in its entirety at:http://cscb.ca/sites/default/files/uploads/LiquidatedChanges-US-20110906.pdf.

The Nashville and Memphis factories of a major guitar manufacturer were raided by U.S. agents,the second time the company has been targeted by efforts to enforce the Lacey Act amendments of 2008. The chief executive officer said his company “has complied with foreign laws and believes it is innocent of any wrongdoing.”

Federal agents first investigated the company in December 2009 in an effort to find evidence that it was using illegally harvested wood imported from Madagascar, but no criminal charges were ever brought as a result. Authorities are now apparently probing allegations that the company violated the Lacey Act by importing unfinished ebony wood from India in contravention of Indian law. According to The Financial Times, another charge is that one such shipment “misidentified the final destination of the woods” by failing to name the company as the buyer. Pallets of wood, computer hard drives and guitars were among the items seized in the raid.

http://www.strtrade.com/wti/wti.asp?pub=0&story=37872&date=8%2F30%2F2011&company

18 August 2011
Customs, IG reach corruption probes accord [U.S.] - (American Shipper)

The following is from the 18 August 2011 edition of the American Shipper.

Overcoming years of mistrust, the Department of Homeland Security's Office of Inspector General and U.S. Customs and Border Protection announced Tuesday they will work together to investigate corruption within the border security agency.

Under the agreement, CBP will immediately assign investigators from its Office of Internal Affairs to participate in corruption investigations of border officers and other CBP employees. The Inspector General needs the additional manpower because its growth remains relatively flat while CBP's workforce continues to expand significantly. The resolution also creates an integrated departmental approach to dealing with other law enforcement agencies investigating internal malfeasance, DHS said.

"We welcome partnerships and innovation in our ongoing efforts to ensure the highest standards of integrity within CBP," Commissioner Alan Bersin said in a statement. "We owe it to the American people and to our highly ethical employees to quickly and thoroughly investigate indications of misconduct, which this agreement will help us accomplish."

At a hearing in early March, Sen. Mary Landrieu, D-La., expressed concern that CBP's rapid rate of hiring to beef up the Border Patrol and Customs officers at ports of entry could lead to more cases of bribery to turn a blind eye to smuggling or other types of corruption.

Customs in the past five years has hired about 16,000 new employees, representing a 37 percent increase in its workforce.

Landrieu questioned whether the department's fiscal year 2012 budget request of $26 million for anti-corruption efforts, such as integrity training and investigations, was sufficient, and told Homeland Secretary Janet Napolitano that clear lines of authority were needed for conducting internal investigations. A Senate budget report last year included a similar recommendation.

"We will not stand for corruption among our troops. We do not want that bad seed to take root," Napolitano said, of efforts to improve internal policing.

One of the greatest threats to law enforcement integrity is on the Southwest border, where smuggling of drugs, guns, cash and illegal immigrants is prevalent and drug traffickers have escalated efforts to find uniformed accomplices to get contraband in and out of the country. Drug cartels are even attempting to infiltrate CBP by sending members to take entrance examinations.

Since 2003, 129 CBP officers have been arrested on corruption charges.

There are plenty of examples of CBP officers who process international passengers or cargo at land or airports being caught abetting criminals. In March, a Customs officer in Atlanta pleaded guilty to smuggling guns and cash on a plane on behalf of drug traffickers.

Last September, a Customs officer working at the Calexico crossing in California on the Mexican border was charged with conspiracy to import cocaine and methamphetamine and bribery. The federal complaint alleges that he received $52,000 for allowing vehicles he believed to be carrying narcotics to pass through his primary inspection lane at the plaza. In August 2010, a former CBP technician was sentenced to 20 years in prison for conspiring to smuggle marijuana and undocumented aliens into the country and trying to bribe CBP officers to ignore inbound drug shipments.

The friction between CBP's Office of Internal Affairs and the Inspector General relates to whether CBP has the authority to independently investigate certain types of criminal wrongdoing within its ranks, said former CBP Commissioner Ralph Basham, now a partner in Washington-based Command Consulting Group.

"The Inspector General wanted to relegate them to administrative types of investigations and basically refused to share information with them and prevented Immigration and Customs Enforcement from sharing information in some cases," he told American Shipper after participating in a roundtable discussion about homeland security at the U.S. Chamber of Commerce.

In 2009, the IG sent a letter to CBP telling it to cease and desist from doing internal investigations, according to aides for a U.S. senator.

The Inspector General has primary jurisdiction for investigating criminal activity within the department, "but I never believed that the Inspector General had all of the resources that they needed to get the job done," Basham said. Adding CBP's top-level capabilities to the investigative mix would greatly help the effort to stamp out corruption, he said.

CBP Internal Affairs is required to notify the IG about allegations of employee misconduct. The ability to team up on investigations will enhance information sharing and data analysis, and enable officials to more quickly resolve unfounded allegations against personnel, CBP said.

The accord builds upon a December 2010 agreement between CBP and ICE under which CBP internal affairs agents have been detailed to the ICE Office of Professional Responsibility to jointly investigate allegations of misconduct by CBP employees that have been declined by the IG.

"We know the integrity of the vast majority of our workforce is beyond reproach," Bersin said. "But this is one more indication that ethical lapses will not be tolerated."

Legislation passed last year mandates that CBP require polygraph tests of all applicants for law enforcement positions. The Anti-Border Corruption Act of 2010, sponsored by Sen. Mark Pryor, D-Ark., also requires the agency to initiate background checks on all backlogged employees within six months. DHS says it can meet the two-year deadline to implement the polygraph requirement with the amount of funding it seeks for anti-corruption efforts.

In a Nov. 24 letter to Pryor, Napolitano stated that polygraph tests are an effective tool for preventing corruption. Among CBP officials who have successfully passed polygraph tests since 2006, only one has been the subject of an investigation for corruption. There were 585 allegations of improper conduct by CBP officials in 2009.

CBP policy requires all applicants for law enforcement officer positions to receive polygraph exams and a background investigation before being hired, with a periodic reinvestigation every five years. In 2009, less than 15 percent of applicants received a polygraph, according to the act.

DHS reduced the backload of reinvestigations from 13,029 to 3,881 from April to November of last year, Napolitano said in her letter.

CBP officials have previously stated they have not been given the resources to fully conduct polygraph exams. - Eric Kulisch

The following is excerpted from the 17 August 2011 edition of World Trade\INTERACTIVE.

U.S. Customs and Border Protection has issued a final rule under which it will discontinue its practice of mailing paper courtesy notices of liquidation to importers of record whose entry summaries are electronically filed in the Automated Broker Interface. This change will be implemented as of the first day on or after Sept. 30 that CBP can provide importers with complete liquidation reports, including liquidation dates, electronically through the Automatic Commercial Environment portal. IORs whose entries are not filed through ABI will continue to receive paper courtesy notices of liquidation...

This article is available in its entirety on the World Trade\INTERACTIVE website at:
http://www.strtrade.com/WTInt/WTI_Article.aspx?id=37789

Importers involved with the Import of the following products into the United States should consult the US Consumer Product Safety Commission web site on a regular basis.

All-Terrain Vehicles (ATVs)
Durable Nursery Products
Definition of 'Children's Product'
Effectiveness of CPSC's Authority over Unsafe Consumer Product Imports
Labeling of Toys and Games
Toy Safety Standards

The U.S. government hopes to finalize a strategy for securing international supply chains sometime this spring, Christa Brzozowski, director of cargo and transportation security policy at the Department of Homeland Security, said last month.
The draft plan to create a holistic, government-wide plan for enhancing the security of international freight transportation across all modes is undergoing final review at the White House, she said during the April 12 meeting of DHS's Commercial Operations Advisory Committee. The goal is to have a single approach for preventing, mitigating and responding to supply chain disruptions from manmade causes such as terrorism or natural disasters.
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