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CUSTOMS AND INTERNATIONAL TRADE
TRADE REMEDIES
FRAUD NETWORK BUSTED
09/06
U.S. and Brazilian authorities have cooperated to break up an
alleged scheme whereby traders undervalued U.S. exports to Brazil allowing for the evasion of millions of dollars in duty payments. ICE worked with its counterparts leading to 182 arrests of
Brazilian business leaders plus several federal and state government officials. While most of the enforcement activity took place in Brazil, ICE also took action in the Miami area where it
aided the effort by searching, with the Brazilians, two warehouse and a residence.
These efforts were part of the Trade Transparency Unit which was formed in March to combat
trade-based money laundering and other finance-related crimes in Argentina, Brazil, Columbia, Paraguay and the U.S. ICE and law enforcement agencies in each of these nations have formed
dedicated units and joint computer databases to facilitate the exchange of import and export data and financial information. Using shared data, these units are able to detect and investigate
anomalies which could be evidence of criminal activity.
SWPM PHASE III
06/06
Traders are reminded that Phase III of the soft wood packing
materials regulations takes effect on July 5th. Full enforcement will now take place, meaning look out for penalties!
Customs issued updated operating procedures on June 27, 2006.
While it is still possible to request separation of the violative wood from the rest of the shipment, Customs continues to frown on this option because, so it is reported, frequently the
problem wood is so contaminated as to infest the entire shipment and make the situation unsafe for all concerned. So, dont count on segregation.
Customs Announces New Rules Re Antidumping Certificates of Reimbursement
 to view document in pdf format
Customs Update: Antidumping Complications
(As published in the Journal of Commerce Online January 23, 2006)
to view document in printable format
Whether as the result of the General Accounting Office audit which severely criticized the
manner in which Customs attempts to collect antidumping duties, or the equally severe comments coming from domestic industry and Congress, Customs has substantially changed
the way in which antidumping cases are processed.
Much has been written about the change in bond requirements regarding aquaculture
products. In November 2005, Customs published a guidance document regarding Certificates of Reimbursement, and recently an International Trade Administration (ITA) change in policy
for resellers came to light which many would say was less than well-publicized.
In its Guidance for Certificates of Reimbursement dated Nov. 18, 2005, Customs made clear
that for entries made prior to Feb. 5, 1980, the regulations required the importer to file his reimbursement statement before Customs can liquidate the entry. After April 27, 1989, the
importer is given until prior to liquidation. For the period in between, the filing had to be made
within 30 days of the earlier of the publication of the order or any administrative review, or importation into a new Customs district. With the 1989 revision, importers have until the
liquidation bulletin is posted at the customhouse (yes, that antiquated legal definition still applies despite the advent of automation).
In 1992, the Commerce Department implemented a change which allows the importer to file the reimbursement statement prior to the liquidation cycle for the relevant review period.
Failure to comply leads to the presumption of reimbursement and so, upon liquidation, twice the antidumping margin may be imposed.
In its guidance document, Customs makes clear the burden to file is on the importer, and so on the customs broker. Customs is no longer free to reject an entry due to the lack of a
reimbursement certificate. If one is not present at liquidation, twice the applicable antidumping duty is to be imposed. However, before so doing, Customs will issue a Notice of Action taken.
If the importer acknowledges reimbursement, an amount equal to that reimbursement is to be assessed, but not more than twice the antidumping duties.
Customs also insists a competent officer of the importer sign the certificate. Commerce has interpreted its regulations to eliminate the customs broker as an authorized signatory. That
said, what is the title of the person who signs your reimbursement certificates? If he or she is
not a corporate officer, how are you establishing the authority of that person to sign on behalf of the corporation? When your customs broker files the reimbursement certificate, how does
he or she make sure to have it receipted? Is that receipt provided to you?
Because Commerce does not require an original, but will accept a fax or photocopy, Customs
is barred from requiring the original. However, unless you are using a blanket certificate, best
practice would suggest the original should be filed at time of entry. If you are using a blanket certificate, it would be best to file the original either with the first or the last entry. An
appropriate notation about the entry against which the original is filed is also advisable when actually filing the original.
Also, Customs has stated that any protest for entries filed after the 1989 changes in which the importer asserts the reimbursement certificate was filed after liquidation should be denied.
In the case of counvervailing duty cases, Customs is not mandated to require a reimbursement certificate, so individual instructions will be issued for this category of cases.
Complicating matters even further, as noted above, ITA has changed its policy regarding resellers. Traditional ITA policy was to apply the antidumping rate for the producer even in
cases where a reseller was the party who sold the goods to the U.S. buyer. Now, ITA allows the importer to deposit the producer's antidumping duty rate at time of entry. However, if at the
time of liquidation there is no reseller's rate, then the All Others rate applies. The sole exception is where the producer has provided evidence to ITA that it knew or should have
known its goods were destined for the U.S.
If the producer has its own rate, it is required to report all sales to the U.S. to the ITA during
an annual review. If the producer fails to report the specific sale to your reseller, ITA's presumption is the producer neither knew nor should have known that shipment would be sold
to the U.S. and so the producer's rate no longer applies. This change in policy has led to rather huge increases at time of liquidation to some fairly unsuspecting importers. If you
import goods from a reseller, have you pushed him to get his own antidumping rate? If not, you are at serious risk for a rather nasty surprise!
And then there is the issue of the bond amounts required to import aquaculture subject to antidumping duties. As most importers know by now, to qualify to import this category of
goods, a bond must be posted in the approximate amount of the dumping duties due in the 12-month period covered by the bond, plus $50,000 for the "regular" Customs bond. What has
been so problematic for importers is the requirement of the sureties to have those bonds fully collateralized. Tying the funds up was bad enough, but then if the original bond becomes
insufficient a larger bond must be posted, but the collateral from the first bond cannot be made available to collateralize the replacement bond because the first bond remains at risk
until the underlying entries are liquidated. So, if the first bond was for $500,000 and the second for $1 million for that one calendar year, the importer has collateral of $1,5 million
pledged to the surety.
Now comes a lawsuit filed by the National Fisheries Institute on behalf of several of its
members. In that lawsuit which was just filed in late December 2005, NFI argues:
1) The new bond policy violates 19 U.S.C. 1623(a) which limits Customs' ability to require a
bond in cases where a bond or security is not otherwise required by law;
2) Customs' bond policy violates 5 U.S.C. 706(2) as "arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law" and "in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;" and
3) There is no rational reason why this new bond requirement applies only to one segment of the importing community, importers of aquaculture products.
As this case makes its way through the process, one more serious question has arisen. For many foreign suppliers of shrimp (the primary product subject to this new bond policy), in
order to continue to do business in the U.S., they have qualified as a foreign importer of record and import on a Delivered Duty Paid (DDP) term of sale. As such, they file reimbursement
certificates for their entries stating they are not being reimbursed any antidumping duties. But we are beginning to hear that some within Customs conclude that since the antidumping duty
is factored into the cost at which these companies resell to their American buyers, perhaps reimbursement really does take place despite the certificates to the contrary. One is left to
wonder, how will this issue further complicate the importation of goods subject to antidumping duties?
WHO WOULD BELIEVE IT?
04/06
Congratulations to our colleagues in Canada who succeeded in getting a no injury determination on behalf of Canadian and American companies in the pending grain corn case.
While it has been quite common for there to be antidumping cases brought in the U.S., until now they were rare in Canada. Not any more!
BYE, BYE BYRD-IE
03/06
Thanks to a colleague for that too cute title, but thank goodness the Byrd Amendment has finally been repealed. It remains in force until September 30, 2007 so stay tuned for additional
possible retaliation by our trading partners.
ITA REVISITS RESELLERS
01/06
Did you know the International Trade Administration (ITA) has changed its policy regarding
resellers? Traditional ITA policy was to apply the antidumping rate for the producer, even if the reseller sold the goods to the U.S. buyer. Now, ITA allows the importer to deposit the
producers antidumping duty rate at time of entry. However, if at time of liquidation there is no resellers
rate, then the All Others rate applies. The sole exception is where the producer has provided evidence to ITA that it knew or should have known its goods were
destined for the U.S. Does your reseller have his own rate? If not, look out!
MORE ABOUT DUMPING BONDS
01/06
Most importers now know that to qualify to import aquaculture, a bond must be posted in the
approximate amount of the dumping duties due in the 12 month period covered by the bond, plus $50,000 for the regular Customs bond. The bigger hurdle is the surety requirement to
fully collateralized those bonds. Satisfying this requirement is especially complicated if the original bond becomes insufficient. Then a larger replacement bond must be posted, but the
collateral from the first bond cannot be used as collateral for the replacement bond, simply
because the first bond remains at risk until the underlying entries are liquidated. So, if the first
bond was for $500,000 and the second for $1,000,000, for that one calendar year, the importer has $1,500,000 pledged to the surety.
Now comes a lawsuit filed by the National Fisheries Institute filed in late December 2005
arguing:
- The new bond policy violates 19 U.S.C. 1623(a) which limits Customs ability to
require a bond in cases where a bond or security is not otherwise required by law;
- Customs bond policy violates 5 U.S.C. 706(2) as arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law and in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; and
- There is no rational reason why this new bond requirement applies only to importers of
aquaculture products.
As this case progresses, another complication may have arisen. Many foreign suppliers of
aquaculture (especially shrimp) have qualified as a foreign importer of record on a DDP term of sale. Some within Customs think that since the antidumping duty is factored into the cost at
which these companies resell their products to their American buyers, perhaps reimbursement really does take place.
Will twice the dumping margin at time of liquidation rear its ugly head at some time in the
future? Beware!!!!
CANADA & DUMPING
01/06
If you export Chinese made residential furniture to Canada, you will be interested in efforts to
defeat the antidumping case which is likely to be initiated in Canada later this year. For more details, contact us at la@Rodriguez ODonnellgw.com.
CAVIAR TRADE SUSPENDED
12/05
The Fish and Wildlife Service has issued a notice announcing that Beluga sturgeon caviar and meat originating in the Black Sea states of Bulgaria, Georgia, Romania, the Russian
Federation, Serbia and Montenegro, Turkey and the Ukraine is no longer exempt from the FWS threatened species permit requirement. FWS took this position as it did not receive the
required basin-wide cooperative management plan by the September 6th deadline. Trade in Beluga sturgeon from the Caspian Sea region was previously suspended due to the failure to
file the same report.
Beluga sturgeon caviar is defined as processed unfertilized eggs from female Huso huso
intended for human consumption, including products containing eggs (e.g., cosmetics). Beluga meat is defined as the excised muscle tissue of Huso huso destined for human consumption.
DUMPING CASES GET MORE ATTENTION
11/05
On November 16, the U.S. Senate approved the "New Shipper Review Amendment Act" (S. 659) which suspends the bonding privilege of new shippers during the period in which their
reviews are being conducted by Commerce. Put another way, cash deposits will be required. The House still must consider the bill, see H.R. 1039.
ORIGIN LABELING DELAYED?
10/05
The U.S. House of Representatives has just passed a bill which would again delay implementation of mandatory country of origin labeling on meat, fish, vegetables, fruits and
peanuts until 2008. These requirements have not previously moved forward due to lack of implementation funding. H.R. 2744 also continues the ban on importation of prescription drugs
from third countries. The Senate and House versions will have to be reconciled, so look for further developments.
DUMPING CASES DOWN
10/05
While dumping cases have increased in visibility in the U.S., the WTO reported that in the first six months of 2005, the number of new antidumping investigations and new measures applied
continued their declining trend. During this 2005 period, 96 investigations were reported, down from 106 in the same 2004 period. 53 new final measures were also reported, down from 58 in
the same time span.
A BRIEF OVERVIEW OF ANTIDUMPING DUTIES AND INVESTIGATIONS
10/05
for printable version of this article
Introduction
Antidumping duties are special duties assessed by the United States (and other countries) to
combat an unfair trade practice known as "dumping." Legislation making dumping a special tariff concept was first enacted by Australia in 1907. The first U.S. civil statute, the
"Antidumping Act of 1921," was enacted in that year as part of the Emergency Tariff Act passed in reaction to the international debt crisis after World War I. Many other countries
adopted similar legislation. In 1979, as a part of the Tokyo Round of GATT negotiations, an international agreement intended to harmonize all such legislation was established. In
response, the U.S. repealed the 1921 Act and adopted new antidumping legislation, as did many other countries. Both the international agreement and the U.S. implementing legislation
have since been modified more than once, but the basic concepts remain the same and are internationally recognized, although implemented in different ways in different countries.
What constitutes dumping, how it is proven, and when and how antidumping duties must
be paid on imports to the United States are the topics of this overview. Antidumping investigations are very complicated administrative proceedings. Only the general concepts
can be reviewed here, although a general time line is provided at the end of this summary.
What Is Dumping?
Dumping, for tariff purposes, occurs when exporters from one country cause or threaten to
cause injury to an industry making like products in the United States by selling their merchandise to the U.S. market at less than fair value prices. Generally speaking, sales at less
than fair value occur when goods are sold in the country of manufacture at prices which are higher than the prices at which the goods are sold to the United States. Before antidumping
duties may be imposed, two findings must be made: (1) that sales at less than fair value exist; and (2) that such sales are causing injury to a U.S. industry making a like or competitive
product.
What Is Fair Value?
Fair value or "normal value" is defined as the price in the market of the country of exportation
for the first sale of merchandise like that exported to the U.S., generally at the wholesale level. The normal value (home market price) is compared to the price of such or similar
merchandise exported to the United States, called "export price" or, if the importer is affiliated
with the exporter, "constructed export price." If no sales or inadequate sales exist in the
"home" market, the prices for sales to third countries are used for comparison. This is typically what happens with non-market economies such as China. It has been U.S.
administrative practice that only if there are no adequate sales of like merchandise in the home market or to any other country, will the constructed value (production cost) of the
merchandise be used to establish the fair value.
Antidumping Proceedings Are Investigations Of Companies Not Governments
Antidumping proceedings do not involve charges against any foreign government. The pricing practices of manufacturers/exporters in one or more exporting countries are
investigated on a country-by-country basis. Thus, an antidumping proceeding might be entitled " Frozen or Canned Warmwater Shrimp and Prawns From Brazil, China, Ecuador,
India, Thailand, and Vietnam." It is not, however, directed to the policies of the individual
governments mentioned, but rather to the pricing practices of exporters of shrimp from Brazil, China, Ecuador, India, Thailand and Vietnam. Since pricing practices vary from company to
company and exporter to exporter, it is possible for some manufacturer/exporters located in a country to be found to be dumping while others are not.
What Is A Dumping Margin?
The prices at which each manufacturer has made sales in its home market for a particular
period (the "period of investigation") are to be compared to sales prices during that same
period to the U.S. market. To the extent that prices charged by a company in its home market exceed those charged to the United States, there will be dumping by that company. The price
differential, expressed as a percentage, is called the "dumping margin." If exports from the country at issue (or from that country and other countries) are found to be causing or
threatening injury to a U.S. industry, this dumping (margin) percentage will be assessed as a special antidumping duty on subsequent exports. Antidumping duties are almost never
assessed retroactively to a period before the investigation was begun.
Dumping Is Not Necessarily Predatory
Dumped merchandise is not necessarily sold at less than its production cost, fixed or average
variable. A dumping investigation is usually based on a comparison of prices in two markets, not of price and cost. Therefore, although a finding of dumping constitutes a finding of an
"unfair" trade practice, it does not amount to a finding of "predatory" pricing as that term is
understood in U.S. anti-trust law. The assumption underlying the antidumping law is that the home market producers are protected from foreign competitors by tariff or non-tariff
barriers. Such protection allows them to realize high profits on home market sales which can be used to offset scant profits in export markets. This underlying assumption is not open to
question in any particular dumping investigation.
As tariffs and non-tariff barriers among nations decline and markets become more open and
"transparent," dumping (except for sales at less than production costs) should also decline.
As exporters and importers into the U.S. know, however, this state of equilibrium has not yet been achieved and antidumping investigations are very common in the U.S.
Antidumping Investigations Are Product Specific
Like almost all matters involving Customs law, antidumping proceedings involve particular
products. Those which are covered by the investigation are said to be within its "scope."
Some investigations by the United States Government, such as those involving antifriction bearings or power transmission belts, concern almost all of the products made by an industry.
Other investigations, such as tapered roller bearings or carbon steel pressure pipe, involve only certain products, which are very carefully defined and do not constitute the entire output
of any manufacturing company. The U.S. antidumping statute allows both "blunderbuss" and
"rifle-shot" proceedings. Although the official publication of antidumping notices, findings and orders contain tariff heading and subheading numbers, those numbers are not
considered definitive. The actual description of the products given in the petition and adopted by the International Trade Administration, U.S. Department of Commerce (ITA),
defines what products are covered by an investigation and by any antidumping duty order which results. The definition specific to the proceeding may cover merchandise which is
covered by one tariff heading or it may cover merchandise which falls into several tariff headings.
The U.S. industry which initiates the proceeding defines what products are covered. For
instance, the U.S. bearing industry argued that its description of antifriction bearings included automotive wheel hubs and slewing rings. The foreign manufacturers of slewing
rings, which were not specifically mentioned in the petition, managed to convince the U.S. government that those products were not cited by the petitioning U.S. industry. Automotive
wheel hubs, however, were specifically mentioned in the petition and so were included in the antidumping order, even though they are usually thought of as auto parts. On the other hand,
in the antidumping investigation of power transmission belts, the U.S. industry specifically excluded those for automotive use, even though they were made by the same companies in the
same plants and generally on the same equipment.
Finally, the scope of an antidumping proceeding may include not only the finished products,
but also the products in knock-down or kit form or even substantial subassemblies or component parts of the products in question. This was the situation in the investigation of
cellular telephones. The reason given is that, if the final antidumping duty applied only to the finished product, foreign manufacturers could set up assembly plants in the United States,
import mere subassemblies instead of the finished product, and avoid payment of the antidumping duties, a result U.S. domestic industry clearly did not want.
Thus, in evaluating whether a product is subject to an antidumping duty investigation or an
outstanding antidumping duty order, one must carefully review the product descriptions used by the ITA in its notice of initiation, in the final antidumping finding, and in any
subsequent "scope" determination(s). As concerns outstanding antidumping duty orders, an importer, U.S. manufacturer or foreign exporter may ask for a scope ruling from the ITA in
order to clarify whether specific products are covered by or excluded from the pending dumping case. If the issue is not clear, the ITA will hold a special scope investigation.
How Does A U.S. Antidumping Investigation Proceed?
A Petition is Filed
An antidumping investigation is usually begun by the filing of a petition. The petitioners are
supposed to be a majority of the U.S. manufacturers or wholesalers of specific products like or directly competitive with the imported products about which they are complaining. The
petition complains about imports from one or more foreign countries.
The petition is filed simultaneously with two U.S. government agencies: ITA and the United
States International Trade Commission (ITC). Each has a separate function.
ITA Investigates Sales At Less Than Fair Value
The ITA determines whether the facts alleged in the petition are sufficient to warrant the
commencement of an investigation. If so, and generally they are, the ITA then investigates whether the merchandise is being sold or offered for sale to the United States market at less
than fair value. That is, the ITA determines what dumping margins, if any, are applicable to exporters from each country.
ITA almost always finds the petition sufficient. If it does not, it assists the U.S. industry in
correcting any deficiencies. Thus, almost no investigations fail because the petition is insufficient.
ITA investigates sales at less than fair value in a two step process. The first step relies upon
very detailed questionnaires which generally require participating foreign exporters to report all sales of the merchandise in the home market and to the UnitedStates for the six (6) month
period prior to the date when the antidumping petition was filed. ITA also sends questionnaires to U.S. importers requiring them to report all sales to themselves of the subject
products. The answers to the questionnaires must be made in the computer formats required by ITA. Generally it requires thousands of man-hours to gather and properly format the
necessary data. Even for foreign manufacturers with computerized records, difficulties arise in almost every investigation.
Major factors which cause such difficulties are:
(1) the products included in the scope of the investigation are fewer than the foreign
manufacturer's complete product line, requiring segregation of sales records in the home market;
(2) the products sold in the home market are similar to, but not the same as, those sold
to the United States, requiring adjustments to be made for differences in merchandise;
(3) the distribution chain in the home market is different from that in the United States,
requiring that different deductions be made to reach comparable ex-factory prices; and/or
(4) the merchandise is sold in the United States through or only by a wholly-owned
subsidiary, in which case "constructed export price," a special and more complicated computation, must be used to determine the price in the United States.
A complete response to ITA's questionnaire must usually be filed within four (4) months of
the beginning of the investigation. Parts of it must be filed within one (1) month of receipt. Complying with these deadlines is very difficult for most importers and exporters. In these
complicated cases, we find that exporters can easily be overwhelmed by the sheer volume of data which must be compiled. When this happens, the focus of the case tends to shift to
gathering the required information instead of developing an overall analysis and presentation which disproves the allegations of dumping or minimizes the dumping
margins. Logistical problems cannot be permitted to interfere with devising a responsive strategy.
After the questionnaires are answered, ITA reviews the responses and informs the
respondents of any deficiencies which must then be corrected within very short deadlines, typically two (2) weeks or less. ITA then calculates a "preliminary" dumping margin and
orders Customs and Border Protection (CBP) to collect dumping duties provisionally on all subsequent entries of that merchandise until a final dumping order is issued.
In the second (or "final") stage of its investigation, ITA sends verifiers to both the U.S.
importers and the foreign exporters to check the accuracy and reliability of the information supplied. If the information is found to be accurate, ITA relies on it to calculate the final
dumping margin for the company involved. If there is no dumping margin, then the company will be excluded from any dumping finding. For those companies with dumping margins,
ITA issues the "final" determination of margins.
If at any point ITA decides the importer or exporter is not cooperating or that the data
supplied is inaccurate or otherwise unreliable, it may use the "facts available" to calculate the
dumping margin for that respondent. The "facts available" are usually considered to be the
information supplied by the U.S. petition, which almost always results in very high dumping margins.
Not All Foreign Manufacturers Receive Questionnaires
ITA normally sends its questionnaire to foreign manufacturers who account for 60% of the
exports from the foreign country. Thus, it is possible that some foreign companies with smaller U.S. market share will not receive a questionnaire. Unless such a company
specifically requests a questionnaire and ITA agrees to send it one and review its data, such a
company will be assigned the "all others" dumping margin. The "all others" margin is the
weighted average of the margins actually calculated (not based on "facts available") for all
companies from the country concerned, except that margins less than 2% are omitted from the
computation. Such a company can only be relieved of the "all others" margin at the time of the
"first annual review," about two (2) years after the original dumping finding.
ITC Determines Whether A U.S. Industry Is Injured
The ITC determines separately from the ITA whether an industry in the United States is
injured or threatened with injury because of imports of the allegedly dumped products. The ITC also conducts a two-step investigation. First, it makes a preliminary determination:
whether there is no indication that the allegedly dumped products are causing or threatening injury to the U.S. industry. This inquiry takes place before ITA calculates any dumping
margins. The ITC usually finds, based upon information in the petition and some which it collects, there is some indication that the allegedly dumped imports may be causing injury
and so it is the rare case where the investigation stops at this point.
ITC's final investigation is aimed at determining whether the imports which are being sold at
less than fair value are, in fact, causing or threatening injury. This final ITC investigation is
made after ITA has made its final determination that less than fair value sales are being made. Like ITA, ITC sends questionnaires to U.S. importers and the foreign exporters. They are,
however, not as difficult to answer. ITC also holds a very important fact-finding hearing in Washington for each case. Because U.S. law allows the effects of sales at less than fair value
from a number of countries to be considered by the ITC, the hearing frequently involves imports of the same or similar products from several countries.
In making its determination, the ITC considers all of the available economic factors, including
supply and demand for the product, underselling by imports or U.S. companies, elasticitys of supply and demand, capacity utilization in the United States and in the foreign countries,
employment and capitalization trends in the industry in question, and the like. There have been occasions in the past where the ITC found no injury even where ITA's investigation
showed sales at less than fair value. Therefore, it is always in a company's best interest to
participate in the ITC investigation, even if it did not receive a questionnaire from the ITA. ITC will allow any exporter or importer of the products to appear and participate in its
proceedings.
Final Determination And Antidumping Duty Order
If ITA determines there are sales at less than fair value and ITC determines that those sales are
causing or threatening injury to a U.S. industry, ITA will issue a final antidumping duty order. A separate order will be issued for imports from each country investigated. This order
will restate the scope of the investigation and will set out the margin for each company for
which a specific margin was calculated. It will also set out the "all others" margin for the
remaining companies. This "all others" margin will also be applied to any new shippers selling the product into the U.S. from the country/countries in question.
CBP will continue to demand deposit of antidumping duties on all products within the scope
of the order imported from each country for which an order is outstanding at the dumping margins published in the final order. CBP will ordinarily not liquidate these entries before the
results of the first annual review of the dumping order. If CBP does liquidate by mistake, the importer must nevertheless protest assessment of any antidumping duties made at
liquidation. Protests must be filed within the time frame called for in 19 U.S.C. 1514.
Annual Reviews Of Antidumping Duty Orders
On the anniversary date of the publication of each final antidumping duty order, the U.S.
manufacturers who petitioned, the U.S. importers, or the foreign exporters may ask ITA for an annual review of the order. The ITA conducts the annual review in the same manner in which
it conducted the original investigation: it sends questionnaires to each importer and exporter who participated in the original investigation and to any other importer or exporter who
requests a questionnaire. Each exporter and importer has the right to receive its own questionnaire in an annual review proceeding so that, no matter how small its market share,
a specific margin may be determined for it. A "new shipper," one which has not exported to the U.S. during the period of investigation and which is not related to any company which
did, may request a review of its exports six (6) months after the final antidumping duty order and thereby establish its own margin.
Again, the ITA questionnaire must be answered in the required computer format. As in the
original investigation, collection of the information is time-consuming and costly. ITA also
usually does not finish its "annual" review within a year. It is, therefore, possible for a company to be in the process of two reviews at once (although they will usually be in two
different stages). Consultation beforehand with Customs attorneys experienced in antidumping proceedings can, however, prepare a company to request a review and provide
information with a minimum of disturbance to normal company functions. Advance preparation can also help a company that has an "all others" margin or has newly entered the
market to determine whether it should request an annual review of its imports.
Final Assessments Of Antidumping Duties
If no one requests an annual review, the ITA will order CBP to liquidate the entries upon
which antidumping duties have been deposited at the rate of deposit for the prior period and to continue all prior deposit rates for the next year. The following year companies may again
request an annual review. Again, if no such request is made, CBP will liquidate the entries from the previous period and demand deposit at the existing rates. If a company requests an
annual review and shows that it is no longer selling at less than fair value, its margin will be reduced to zero.
Under current U.S. law, the antidumping duty order will march forward for five (5) years even
if no party requests an annual review. At that point, the ITA and the ITC will conduct a sunset review to determine whether revocation of the order would be likely to lead to
continuation or recurrence of dumping.
Practical Advice for Importers and Exporters
Because the statutory calculation of a dumping margin is very difficult, some exporters do not
know whether they are making sales at less than fair value. If the final margin in any proceeding is less than 10%, it is very possible the exporters did not know they were selling at
less than fair value. Likewise, some exporters who know they are selling to the U.S. for less than their home market price may be under estimating the dumping margin, it could even be
by a considerable amount. They may be doing so, because the price in the U.S. market is being offered to meet competition or to undercut it by only a few percentage points. Exporters and
importers must always remember that selling at less than fair value is not the undercutting of
competitors' prices in the U.S. market. It is selling in the U.S. market at a price less than that
obtained in the exporter's home market. Thus, if the price offered in the U.S. market is less than the prevailing price offered by U.S. producers, but more than price in the exporter's home
market, no dumping exists.
If an exporter wishes to know whether it is selling at less than fair value, experienced counsel
can explain the procedures used by U.S. government agencies in such investigations and the company can make its own informed calculations. Such preparation will enable a company
to know its position and to answer any antidumping questionnaires quickly and accurately.
If a company wishes to export a product to the United States, but finds that an antidumping
duty order is outstanding against that product from its country, it will need to ascertain the
"all others" margin and make an assessment of whether it can enter the market and eventually reduce the antidumping duty by requesting a review and obtaining its own margin.
Finally, an importer or a foreign manufacturer may avoid an antidumping duty assessed on
merchandise from one or more countries by sourcing the merchandise in a country that is not subject to an antidumping duty order. This sometimes is possible as some U.S. industries
which bring antidumping petitions have their own factories abroad from which they sell at least part of their output to the United States. They usually omit such countries from the list of
those against which an antidumping duty petition is filed.
We have reviewed the general concepts explained above and find them accurate as of the date
hereof. However, as explained, the calculation of the normal value and the export price (or constructed export price) in an antidumping proceeding is a difficult matter. The object is
supposed to be able to deduct all costs on both sides of the equation to arrive at an ex-works price for the merchandise sold in the home market and that sold for export to the United
States. However, the calculation is weighted in favor of finding a dumping margin. The most flagrant example is the fact that sales in the home market and to the United States are
compared on a month-by-month basis. A margin is calculated for each sale. Then, the margins for each sale are averaged to obtain a weighted average margin. However, sales at a
negative dumping margin (i.e., the price to the U.S. is higher than the price in the home market) are zeroed out in calculating the final weighted average margin. Therefore, if there is
dumping on any sales, there will always be a dumping margin. For example, if there are 10 sales of 100 widgets each and there is a dumping margin of 10% on five of them, and a
dumping margin of -10% on five of them, the weighted average dumping margin is 5%, not 0%. For these reasons, advice from experienced counsel that is specific to a company's sales
practices needs to be obtained in order to make proper estimates.
We should also point out that, in general, a U.S. industry will not initiate an antidumping
duty investigation until the foreign market share is about 7%, unless it is an industry with a
history of fighting unfairly priced imports, e.g., steel, bearings, machine tools, textiles. Further,
if prices have been rising in the U.S. market and U.S. industry profits are high, the industry will also ordinarily not initiate an antidumping investigation. However, U.S. industries have
become very adept at initiating "rifle-shot investigations, where they believe, for instance, that their low-end products are meeting competition from dumped imports, even though they
remain profitable as a result of sales of their high-end products, or vice versa. They merely define one set of products as a separate industry. U.S. dumping law, as explained above,
allows such manipulation of the industry and product definitions.
ITC has also published a good summary of its procedures entitled Antidumping and
Countervailing Duty Handbook, Eleventh Edition, January 2005, which can be downloaded from the ITC website at: http://www.usitc.gov/publications/webpubs.htm
Cycle of an Antidumping Case
Step 1: Filing a Petition
Self-initiation by Commerce
Initiated by an interested party alone or simultaneously with Commerce and ITC
Early termination due to withdrawal of petition or conclusion of suspension agreement
Step 2: Commerce and the Sufficiency of the Petition
Petition must allege elements necessary for the imposition of a dumping margin
Petition must contain information reasonably available to petitioners
Petition must have been filed by or on behalf of the industry
If these determinations are negative, the case terminates.
Step 3: ITCs preliminary injury determination
ITC renders a preliminary determination as to a reasonable indication of injury. If negative, the petition is dismissed.
Step 4: Commerces preliminary dumping margin determination
After ITCs affirmative preliminary injury determination, Commerce renders a determination as to whether there is a reasonable basis to believe the subject
merchandise is sold at less than fair value.
Whether that determination is affirmative or negative, the case proceeds.
Step 5: Commerces final dumping margin determination
Affirmative determination of preliminary dumping margin:
(1) Determination of final margin by Commerce
(2) Suspension of liquidation of entries
(3) Deposit of estimated antidumping duties
Negative determination of preliminary dumping margin, Commerce proceeds with determination of final margin.
Step 6: ITCs final injury determination
Affirmative determination of final dumping margin by Commerce, ITC renders a final injury determination.
Negative determination of final dumping margin:
(1) Dismissal of petition
(2) Suspension of liquidation of entries
(3) Refund of estimated duty deposits
Step 7: Commerces Antidumping Duty Order
Affirmative determination of final injury by ITC, Commerce issues an antidumping order.
Negative determination of final injury by ITC:
(1) Dismissal of petition
(2) Lifting of suspension of liquidation
(3) Refund of estimated duty deposits
Step 8: Appeal of Antidumping Duty Order
To the Court of International Trade and Court of Appeals for the Federal Circuit
To a NAFTA panel, if a NAFTA party is involved
Step 9: Review of Antidumping Order
Annual administrative review
Changed circumstances review
Sunset review
Step 10: Circumvention of Antidumping Duty Order
Commerce may expand an antidumping order to avoid circumvention by:
Assembly of imported subject merchandise in the U.S. or a third country
Alteration of subject merchandise in a minor way
Development of later-developed merchandise
MEXICO RETALIATES RE BYRD AMENDMENT
08/05
Under what is called the Byrd Amendment, U.S. antidumping law allows domestic industry to receive a large portion of the dumping duties collected. To date, $284 million has been
disbursed to petitioners with more than 40 companies receiving more than $1 million each.
On August 18, 2005, Mexico announced that it will impose retaliatory tariffs against $20.9
million worth of U.S. exports, by imposing a 30% duty on dairy products, including baby formula; plus wine, candy and chewing gum in amounts between 9% and 20%.
Japan, the EU and Canada have already imposed such tariffs which amount to nearly $114 million. Japan has elected to impose additional duties worth up to $52 million by imposing a
15% tariff on U.S. steel and ball-bearing products.
EU & CANADA RETALIATE
04/05
Still scheduled to take effect on May 2nd is EU and Canadian retaliation in the form of 15% duty rates for U.S. failure to repeal the Byrd Amendment which allows those bringing U.S.
anti-dumping petitions to receive a portion of what is collected. The Amendment was ruled illegal by the WTO in 2003. A list of products against which retaliation will be taken has been
published.
ITC TO RECONSIDER
04/05
The ITC has announced it will review injury determinations concerning shrimp from India and Thailand due to the impact of the December 2004 tsunami. Traders should keep in mind
that agreeing to review the situation is not a guarantee of the outcome.
MISC. TRADE BILL CHANGES
12/04
On December 3rd, the Misc. Trade and Technical Corrections Act of 2004 was signed into law. While much of the bill deals with the usual litany of duty suspensions, there are
provisions of general interest to the trade and take effect for entries filed on or after December 18, 2004. For more details, review the bill H.R.1047, but here are some of the highlights:
Protests the time within which to file has been extended from 90 days to 180 days after
liquidation, but clerical erRodriguez ODonnell claims under 1520(c) [which could be filed up to a year after entry] are eliminated. Claimants will now only have one method by which to
challenge Customs actions upon liquidation or other protestable action the filing of a protest.
Reconciliation is extended to 21 months from earliest entry summary date. However, NAFTA claims are still governed by the one year rule due to language in the NAFTA agreement itself.
Of particular interest is the provision which extends the time within which to pay the duty from 10 to 12 working days. While Customs Headquarters has not yet issued its interpretation, it is
expected the 12 day time limit will regularize the way in which ACH payments are processed, nothing more, and will not extend the current 10 business day rule.
CHINESE BEDROOM FURNITURE
06/04
In the June 24th Federal Register, the ITA announced the imposition of dumping duties on Chinese-made bedroom furniture.
Unlike many other dumping cases involving Chinese manufacturers, in this instance many responded and so the list of unique dumping margins is quite long.
FSC Penalty Sanctioned by WTO
09/02
$4 billion is the price tag of the penalties sanctioned by the WTO against the U.S. tax break
system called Foreign Sales Corp., a program which allows U.S. companies with a foreign presence to exempt themselves from certain taxes based upon their exports. The EU brought
the case claiming that tax loophole allowed these products to be cheaper than those of competitors and so gave them an advantage over foreign competitors.
The U.S. and EU have spent a good deal of time trying to resolve their differences on this issue. Because of the size of the award, the parties are expected to continue with their
settlement efforts as neither is thought to want to face the consequences of such a large penalty, estimated at 20 times the size of any previous award. To collect this award, the EU
could impose retaliatory tariffs on American products being imported into the EU.
This decision could also impact carriers in the sense that between the FSC decision and the
U.S.'s additional steel tariffs, the amount of traffic moving between the U.S. and EU could be severely reduced.
07/02
Wondering about Trade Promotion Authority (formerly called fast track)? It is currently in
conference between the House and Senate. For a side-by-side comparison of the bills passed by the two Houses of Congress, click here.
06/02
WILL STEEL TARIFFS MAKE A DIFFERENCE
(Published in the Journal of Commerce on 3/24/02)
Click Here for a printable version of this article.
The protective steel tariffs announced by President Bush on March 7 are designed to salve the ills of the domestic steel industry, and although imports from Canada, Mexico, Jordan and
Israel were excluded, the scope of products covered by the measures raise as many questions as the cure itself.
In announcing the higher duty rates, Mr. Bush excluded certain sources of steel products, i.e., those from what are described as "developing countries" which are WTO members,
provided the quantity of products imported from an individual developing country does not exceed 3% of imports, or the developing countries as a whole do not account for more than
9% percent of all imports. Exempt from the safeguards are such countries as Argentina, Bulgaria, The Czech Republic, Hungary, India, Indonesia, Moldova, Poland, Romania,
Slovakia, South Africa, Thailand and Turkey. Kazakhstan, Russia and Ukraine are covered by the safeguards because they are not WTO members. Data is to be reviewed on a quarterly
basis and the United States Trade Representative is instructed to initiate consultations with countries whose quantities increase. If quantitative reductions do not follow, the USTR is
authorized to modify the safeguards accordingly. Imports from Generalized System of Preferences (GSP) eligible countries are accorded similar treatment. Therefore, China is not
exempt as it is not GSP eligible. In total, it is estimated that 35% of the steel-producing market was excluded from the Bush safeguard measures.
The safeguard measures apply to certain flat steel, hot-rolled bar, cold-finished bar, rebar, certain welded tubular products, carbon and alloy fittings, stainless steel bar, stainless steel
rod, tin mill products, and stainless steel wire. Because the safeguards are imposed under Section 202 of the Trade Act of 1974, the President was able to impose the higher rates of
duty for a definite period of time, in total three years. Had the safeguards been imposed under the anti-dumping rules, these cases could have dragged on for years. As such, while the
higher rates of duty apply over a three-year period, the rates drop progressively each year. For example, any finished flat plates over the established quota amount will be subject to a 30%
rate of duty in year one, 24% in year two and 18% in the final year. Rebar is subject to a 15% tariff in the first year, 12% in the second and 9% in the third year. The Secretary of Commerce
is also directed to create an import license procedure.
The higher duty rates took effect on March 20, 2002. However, no sooner was Mr. Bush's
announcement made than the European Union filed a formal complaint at the World Trade Organization. Australia, New Zealand, Japan, Korea, Switzerland, Norway, Taiwan and Brazil
also filed complaints. In his remarks announcing the safeguards, U.S. Trade Representative Robert Zoellick made the point that Japan, Korea, India, the European Union and Brazil have
all employed safeguard measures at one time or another. Ambassador Zoellick set the total at "about 21" as the number of safeguard measures currently in effect throughout the world.
In the American press, one of the major criticisms of Mr. Bush's actions is that they seem
aimed at trying to help Republicans in the 2002 elections in such states as West Virginia and traditional labor strongholds throughout the country, especially in states like
Illinois and Indiana. However, by doing so, the President also angered some of his traditional supporters. For example, the Louisiana Congressional delegation was opposed to steel tariffs
and contains a number of key Republicans. Some of those and other members have signaled they may stop supporting Mr. Bush on Trade Promotion Authority because they see the
imposition of these higher duties as harming businesses, such as the Port of New Orleans, in their local communities.
To date, the Commerce Department had received about 1,000 requests for exemptions from the higher tariffs, mainly from small manufacturing concerns claiming they are unable to
obtain the specialized steel they need to make their products without importing. So far, about 150 exemptions have been granted, including some to foreign steelmakers, further angering
the U.S. steel companies. The Zoellick's office and the Commerce Department have until July 3 to act on all such requests.
Further complicating matters was a Federal Register announcement on March 20 deferring the payment of the higher duty rates until April 19, 2002. The stated reason for the deferral is
to allow the U.S. more time to consult with its foreign trading partners. Not waiting for the U.S. to act, the EU has developed a list of products on which retaliatory duty rates may be
imposed. Supposedly this list is intended to cause political harm to Mr. Bush and the Republicans in this year's elections. The list is rumored to include such products as Florida
orange juice, Pennsylvania and West Virginia steel, textiles from the Carolinas, Harley Davidson motorcycles, rice, paper products, prefabricated buildings and thermometers.
Further confounding things is the recent announcement by Commerce that it will impose anti-dumping tariffs averaging 29% on Canadian softwood lumber.
A major impetus for action by the Bush Administration was the alarming number of steel companies which have filed for bankruptcy protection. Since 1998, the figure is estimated to
account for approximately 30% of U.S. steel-making capacity. Those workers remain unhappy because a large concern for them is their health and pension benefits which, because their
companies are bankrupt, are no longer being funded. These benefits have been referred to as legacy costs and remain a festering problem. Mr. Bush chose not to deal with this issue in
fashioning the remedy he selected, but Congress may still act.
Against this backdrop, the obvious question to ponder: how these actions effect the ability of
the U.S. to keep together the coalition of governments which are fighting terrorism? If the primary goal of the U.S. government is to secure our borders, what are the long-term
implications of these ongoing trade wars with our trading partners? Returning to the more narrow focus of the steel industry, one of the goals of Mr. Bush's action is to get the steel
producing countries to agree to reduce production so the overcapacity problem is reduced. Does the Administration really think imposing high rates of duty is the way to bring our trading
partners to our point of view? Really now!
APHIS Announces Increased Civil Penalties
05/02
USDA's Animal and Plant Health Inspection Service's (APHIS) Plant Protection and Quarantine (PPQ) program has undertaken a review of its penalty provisions in accord with the Plant Protection Act (PPA) which took effect in June 2000. PPQ has now announced
increased penalties. Any business or organization which violates the PPA may be fined up to $250,000 per violation but no more than $500,000 per adjudication. Smugglers face fines of up
to $250,000 per violation or twice the gross financial loss or gain caused by the violation. PPQ's actions are designed to reach those who do not declare prohibited agricultural products
when entering the U.S. as well as those who violate domestic quarantines and other laws.
EU May Challenge Steel Dumping Findings
06/02
The EU is said to be considering challenging the findings of the International Trade Commission that steel from several countries is being dumped in the U.S. The EUs
objections are said to focus on how the product categories under investigation were defined. A second area of concern has to do with whether the procedures used are appropriately
transparent and predictable as required by GATT Article X. The EU is also said to question the finding of injury when imports for the most recent period under investigation declined.
Finally, the EU may contend that allowing the 201 proceeding to go forward, in effect, gives double protection because many of the steel products under investigation are already subject
to antidumping and counterveiling duties.
The ITC recommended a 20% margin which has not yet been adopted. If it were, approximately 70% of all EU steel would be covered by the order.
EU/US BANANA DISPUTE SETTLED
4/01
The settlement includes transition to a tariffonly system by 2006. In the meantime, bananas
will be imported into the EU through import licenses distributed on the basis of past trade. Because past history will be the criteria for issuance of these import licenses, Dole has
already objected that the agreement favors Chiquita over it.
STEEL INDUSTRY RAMPS UP ANTI-IMPORT EFFORTS
11/00
Trying to head off the damage said to be caused by cheaper products from abroad, steel companies and labor unions have heated up their campaign against imports using both
political pressure and existing trade remedies. More anti-dumping cases are expected along with pressure on President Clinton for broader import restraints. The product most often
mentioned as the likely cause of the new cases is hot-rolled steel. However, there is also reported to be dissension within the coalition because those who want to proceed
immediately versus those who want to take more time to gather broader facts and figures.
One question this effort raises is whether the issue was aired with the hope of extracting
promises during the Presidential election? Another question is how well these efforts will be received in a Bush Administration?
FOREIGN SALES CORPORATION RETALIATION
11/00
Still dissatisfied with the latest American efforts revising the tax benefits provided by Foreign
Sales Corporations (FSC), the European Union (EU) is seeking WTO relief. The EU has gone to the WTO and asked for imposition of trade sanctions totaling up to $4 billion in retaliation
for export subsidies, as found by a WTO appellate body. It is thought the EU is pushing this point in large to offset the trade sanctions gained by the U.S. in the been and banana
disputes with the EU.
Trafficking Troubles New Drug Kingpin Act Regulations Affect Exporters, Attorneys
9/00
Published in the Los Angeles Daily Journal, September 26, 2000
In December 1993, President Bill Clinton signed into law the Narcotics Kingpin Designation
Act, 21 U.S.C. Sections 1901-1908; 8 U.S.C. Section 1182(a)(2)(C)). It provides authority to the U.S. government to impose sanctions against significant foreign narcotics traffickers and
their organizations worldwide.
Section 805(b) of the act blocks all property and interests in property within the United States
in the possession or control of any U.S. person or entity as identified by the President (or foreign person or entity as identified by the secretary of the treasury in consultation with
specific cabinet officials) that are owned or controlled by significant foreign narcotics traffickers. This person or entity must be:
Materially assisting or providing financial or technological support or goods or services to
the international narcotics trafficking activities of a significant foreign narcotics trafficker or designated foreign persons.
Owned, controlled or directed by, or acting on behalf of, a significant foreign narcotics trafficker or designated foreign persons.
Playing a significant role in international narcotics trafficking.
Following the proscribed consultations, the Secretary of the Treasury is empowered to take
such actions as he deems necessary to carry out the Act. The Office of Foreign Assets Control (a part of the Treasury Dept.) has promulgated regulations which were published in
July. 65 Fed.Reg. 41335-41342 (2000).
These regulations are separate from the Foreign Narcotics Kingpin Sanctions Regulations
found at 31 C.F.R. Part 536 which implement Executive Order 12978 and focus on narcotics traffickers located in Columbia.
Executive Order 12978 was signed in October 1995. Through it, President Clinton found the actions of certain foreign narcotics traffickers centered in Columbia to constitute a
national-security, foreign-policy and economic threat to the United States. A state of national emergency was declared and all property and interests in property of designated foreign
persons who play a significant role in international narcotics trafficking centered in Columbia or materially assist in, provide financial or technological support for or goods or services in
support of these traffickers, and of entities as being owned or controlled by these designated persons, was blocked.
The executive order went further and prohibited any dealings by U.S. persons in the property or property interests of such designated persons and also prohibited any transactions by a
U.S. person that evades or avoids, or has the purpose of evading, avoiding or attempting to violate, any of the prohibitions.
The definition of a person includes an entity such as a partnership, corporation or group. Actions offshore are prohibited as well. Narcotics trafficking is defined as . any activity
undertaken illicitly to cultivate, produce, manufacture, distribute, sell, finance or transport, or
otherwise assist, abet, conspire, or collude with others in illicit activities relating to, narcotic
drugs, including, but not limited to, cocaine.. The Secretary of the Treasury was directed to promulgate regulations in consultation with the Secretary of State and the Attorney General.
Over the next four years, the state of emergency continued. The first set of regulations were published in June 1996. Therein, the Office of Foreign Assets Control sought to consolidate
and organize the various lists of blocked persons it was under authority to administer. The enabling regulations were published in February 1997 and establish when the ownership rights
of foreign narcotics traffickers may be blocked by U.S. government regulation and law.
What is important for Americans is the provisions that prohibit transactions and dealings by
U.S. persons in the property and property interests of designated narcotics traffickers.
The 1997 regulations quite clearly form the basis for the ones published in 2000, prohibiting
similar activities, although the 1997 penalty provisions are modest in comparison. Between 1997 and 2000, various lists were published by Office of Foreign Assets Control naming the
specially designated narcotics traffickers, sometimes adding people and entities to the list and other times removing them.
With the 2000 regulations, transactions that are barred by the Act but are nonetheless consistent with U.S. policy may be authorized by a general license issued by the Office of
Foreign Assets Control. Because much of the Act and the implementing regulations is foreign-policy related, it is likely many of the underlying records will be not be available under
the Freedom of Information Act. See 5 U.S.C. Section 552 et seq.
The Act not only blocks transactions or dealings by a U.S. person but also blocks those
activities if they take place outside the United States. See Section 598.407. The property or interest in property may not be transferred, transported, imported, exported or withdrawn. Any
transactions or dealings are barred if they evade or avoid the act, have the effect of evading or avoiding the act or are an endeavor, attempt or conspiracy to violate the Act. Any transfers
after the effective date are null and void and provide no basis for an ownership claim.
Recognizing that mistakes may be made, the regulations at Section 598.205(d) allow
transactions to stand up if: They did not . represent a willful violation. by the person holding or maintaining the property.
The person holding or maintaining the property did not know or could not have known from the surrounding circumstances that the transfer required a license.
The person files a report with the Office of Foreign Assets Control providing full disclosure.
Of particular interest to lawyers is Section 598.205(e), which bars . any attachment,
judgment, decree, lien, execution, garnishment or other judicial process,. making them null and void if they occur.
The regulations spend a good deal of time addressing how financial institutions are to handle their accounts if held by a significant foreign narcotics trafficker. Not surprisingly, the
definitions in the regulations are generally broadly written so as to bar just about any imaginable activity which could compromise property or a property interest. In fact, legal and
accounting services (along with financial, brokering, freight forwarding, transportation and public relations) are specifically mentioned as prohibited.
Section 598.507 addresses providing legal services. A license authorizing providing those legal services is required in advance in all cases except where providing advice about how to
comply with the Act or the laws of any jurisdiction within the United States. [Advice provided to evade the Act. s prohibitions is specifically excluded.]
Legal services are also authorized without first obtaining a license if the specially designated narcotics trafficker is named as a defendant or is a party to any U.S. legal, arbitration or
administrative proceeding; before any federal or state agency with respect to the imposition, administration or enforcement of U.S. sanctions against the person; or in any other context
where U.S. law requires access to legal counsel at public expense.
Even though providing legal services in these limited circumstances does not require first
obtaining a license, the lawyer must obtain a license in order to accept payment for his/her services. This section also contains the prohibitions regarding levying on the property of
specially designated narcotics traffickers.
Finally, there are the penalty provisions of Section 598.701. The 1997 regulations directed at
Columbian narco-traffickers call for a civil penalty not to exceed $11,000 per violation, except in the case of willful actions, where the maximum fine is increased to $50,000 per violation
and the maximum jail sentence is ten years.
Willful violations under the 2000 regulations may result in imprisonment up to 10 years, but
the maximum fine has been raised to $10 million. Any officer, director or agent of any entity that willfully violates the Act is subject to up to 30 years imprisonment and a fine of not more
than $5 million.
A civil penalty of not more than $1 million may be imposed by the Secretary of the Treasury
on any violator. Interestingly, these new regulations (and the ones published in 1997) also refer to 18 U.S.C. Section 1001, which allows incarceration where, during the course and
scope of an official investigation, someone makes material misrepresentations, verbally or in writing.
Imagine the mess if an exporter orders goods from a third party in a foreign country and looks for payment for those goods from a letter of credit but, in the meantime, that buyer is named
as a significant foreign narcotics kingpin. He is in a terrible predicament because, to date, no one has been publicly named under the 2000 regulations. What happens if such a list comes
out in the near future and is published between the time the exporter has shipped his goods and the time his bank pays the letter of credit proceeds? He have to go through hoops to get paid.
CUBAN EMBARGO UNDER CHALLENGE AGAIN!
09/00
The EU is has challenged the U.S. embargo of Cuba once more at the WTO. This time the
provision under challenge is a U.S. law which prohibits courts from enforcing trademarks used in connection with expropriated property. This dispute arises out of the Havana Club
trademark dispute between Bacardi Martini USA and the joint venture headed up by Pernod Ricard.
NORTH KOREAN SANCTIONS EASED
06/00
As the result of the thaw in the political climate in Korea, the Office of Foreign Assets Control will now authorize certain transactions with North Korea. Interim rules were issued effective
June 19, 2000. While certain restrictions have been eased, North Korea remains a country subject to column 2 rates of duty.
MORE HEADACHES FOR IMPORTERS
06/00
The Foreign Narcotics Kingpin Designation Act of 1999 has taken effect and requires U.S. companies engaged in international trade to make sure they are not dealing with known drug
traffickers. The Act authorizes civil fines up to $1 million.
MASS. LOSES ONCE MORE
06/00
The question of whether anyone but the federal government may determine foreign policy has again been answered by the U.S. Supreme Court with a resounding no! The Massachusetts
attempt to sanction those doing business with Burma (Myanmar) failed when the high court again overturned Mass. law finding it to violate the Supremacy Clause, i.e. only the President
can make foreign policy; plus Congress had mandated flexibility in dealing with Burma.
RETALIATION PRODUCTS MAY CHANGE
05/00
Part of the Africa-CBI bill which was just enacted (Trade and Development Act of 2000) contains a provision authorizing USTR to rotate the products against which retaliation is
taken, called the carousel retaliation process. USTR is currently accepting comments on possible changes to the list of products being retaliated against as part of the banana and
beef wars between the U.S. and EU. A decision as to any change is expected by mid-June 2000.
Good Trade - New Law Encourages African and Caribbean Commerce
07/00
Published by Daily Journal on July 10, 2000
The Africa-CBI bill was signed into law on May 18 (Pub.L. 106-200) and provides for duty and
quota free treatment for selected textile products from eligible countries effective Oct. 1 through Sept. 30, 2008.
The major aim of the bill is to allow African countries to expand their economy through growth in trade with the United States by granting duty and quota free status to selected goods and
giving Caribbean countries greater equality in trade with the United States as was given to Mexico in NAFTA.
The new law also includes a somewhat controversial measure that allows the U.S. Trade Representative to rotate the products against which retaliation is taken, called carousel
retaliation. If the U.S. Trade Representative retaliates on behalf of the United States because an adverse decision has been entered against another country through the World Trade
Organization dispute-resolution process and the losing country fails to take corrective action, the U.S. Trade Representative will now every six months will now every six (6) months be able
to change the products against which retaliation is taken. The U.S. Trade Representative had claimed it already had such power, but one is hard pressed to find instances where the
products under retaliation were changed.
Evidence of the new law being quickly embraced is the list recently published by U.S. Trade
Representative that proposes to alter the products against which the United States is retaliating in its beef and banana wars with the European Union.
The European Union's response was equally quick. The European Union has already called for a World Trade Organization dispute- resolution panel to address the question of whether
carousel retaliation is compliant with World Trade Organization rules and regulations.
Duty and quota-free treatment is granted to apparel assembled from U.S. made and cut fabric,
made from United States formed yarn, if the process is undertaken in eligible countries.
Recalling the controversy surrounding oven baking and similar treatments, the new law allows
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