Jimmie V. Reyna
jreyna@williamsmullen.com



The International Law Section of Williams Mullen prepared the following brief descriptions of selected issues in international trade and commerce for general information purposes and use by clients and friends of Williams Mullen.

HIGHLIGHTS:

1. U.S. Producers Legislate to Lessen Duties on Imported Ingredients.
2. Congress Ponders Administration's Import Safety and Food Protection Plans.
3. GAO Report Reviews Trade Preferences Programs.
4. Zero-Worship (Again).

1. U.S. Producers Legislate to Lessen Duties on Imported Ingredients:

The House Ways and Means Committee, Subcommittee on Trade, has requested the introduction of miscellaneous tariff and duty suspension bills by Friday, December 14. Designed to help U.S. manufacturers compete, a comprehensive Miscellaneous Tariff Bill (“MTB”) incorporating these measures will eventually amend the U.S. tariff schedule by temporarily suspending or reducing duties on intermediate products or materials that no domestic producer makes (or where no domestic company opposes). Stand-alone bills sponsored by individual representatives undergo a vetting process before they merge into a single MTB. The MTB does not generally include proposals that create excess revenue losses, operate retroactively or attract significant controversy or opposition. After collecting and reviewing bills introduced, the Subcommittee will request public comments. The U.S. Trade Representative, the U.S. International Trade Commission, the U.S. Department of Commerce and U.S. Customs and Border Protection will also review and analyze proposals. Companies interested in lowering or eliminating their import duties should have their representatives put in a bill before time runs out.

2. Congress Ponders Administration's Import Safety and Food Protection Plans:

On November 6, the Interagency Working Group on Import Safety (“Working Group”), chaired by Health and Human Services Secretary Mike Leavitt and comprised of 12 Federal departments and agencies, presented to President Bush its Import Safety Action Plan, which contains 14 broad recommendations and 50 action steps for improving the safety of imports. That same day, Secretary Leavitt announced the Food and Drug Administration’s (“FDA’s”) Food Protection Plan, which proposes to use a three-part scientific and risk-based approach (prevention, intervention and response) to ensure the safety of domestic and imported foods. Both the Food Protection Plan and the Import Safety Action Plan recommend that the FDA be authorized to pursue the mandatory recall of food products, where the adulterated or contaminated food threatens serious health consequences or death and where a firm either refuses to undertake a voluntary recall or is not acting with sufficient speed. The U.S. Department of Agriculture already has the authority to withdraw its inspectors from a food processing facility when faced with similar situations. In addition, both plans propose to replace the current "snapshot" approach to import safety, in which inspections are made at the border, with a prevention-focused model that identifies and targets critical points in the import life cycle where risk is greatest. The two plans do not propose physically inspecting every item. Implementation of certain provisions would require new legislation—for example, authorizing the FDA to require mandatory preventive controls for intentional contamination. Meanwhile, various import safety and food protection bills are currently pending in Congress. On November 15, House Energy and Commerce Committee Chairman John Dingell (D-MI) said he would move a comprehensive product safety bill through his committee quickly, in hopes that it would come to the floor after the Thanksgiving recess. President Bush established the Working Group on July 18. On September 10, it presented a Strategic Framework that called for, among other steps, a directive to Federal agencies to accelerate their participation in an automated "single window" system for reporting imports electronically. Stayed tuned, as Congress, having now received the administration’s proposals, determines how to respond.

3. GAO Report Reviews Trade Preferences Programs:

A recent report from the General Accounting Office (“GAO”) examined four major U.S. trade preference programs: the Generalized System of Preferences (“GSP”), the Caribbean Basin Initiative (“CBI”), the Andean Trade Preference Act (“ATPA”) and the African Growth and Opportunity Act (“AGOA”). All four programs unilaterally reduce U.S. tariffs on imports from developing countries so that they may improve their economies. Critics complain that beneficiaries lose interest in reciprocal multilateral or bilateral trade liberalization. Supporters counter that GSP motivates multinational corporations to bring advanced technology, worker training and investment to less-developed regions. The regional programs also serve certain foreign-policy interests (for example, ATPA and U.S. counternarcotics initiatives). U.S. imports under trade preference programs have escalated since 2002, totaled $92 billion in 2006 and now constitute a significant share of many beneficiary countries' exports to the United States (though only 5% of U.S. imports overall). While more than 130 countries receive benefits, around 10 accounted for over 75 percent of preference imports in 2006. The largest suppliers are Nigeria and Angola, primarily because of fuel, which in 2006 accounted for over half of preference imports by value. India, Thailand and Brazil are the three largest non-fuel suppliers. Growing preference sectors besides fuel include machinery, electronics, jewelry and agriculture. U.S. administrative reviews, which usually result from petitions, can change country and product eligibility. Also, unless a beneficiary requests a waiver and the United States grants it, the GSP statute excludes products above import-share or value thresholds. Legislation passed in 2006 required a review of existing GSP waivers. Of the nine reviewed, eight were revoked. If U.S. trade preference programs are to survive, Congress must renew most of them over the next several years. In a related development, House Ways and Means Chairman Charles Rangel (D-NY) on November 7 asked the U.S. International Trade Commission to conduct an investigation under Section 332(g) of the Tariff Act of 1930, identifying ways that U.S. trade and aid policy can most help the Caribbean Basin.

4. Zero-Worship (Again):

On November 16, the Office of the U.S. Trade Representative invited more public comments on issues raised in the World Trade Organization (“WTO”) dispute between the European Communities (“EC”) and the United States over the latter’s use of “zeroing” in antidumping (“AD”) investigations. As explained in previous HIGHLIGHTS, "zeroing" describes the practice of ignoring negative dumping margins. Negative dumping margins occur when imports are not dumped--that is, when the export price is higher than the home market price or cost of production. Until recently, Commerce "zeroed" any negative dumping margins so that the existence of non-dumped imports would not diminish AD duties collected with respect to dumped imports. Commerce did not "credit" exporters for the fact that some of their sales were not dumped. After losing a WTO dispute on the practice, however, Commerce late last year gave notice that it would stop zeroing, thereby pleasing many foreign producers and exporters, because elimination of zeroing could only reduce AD margins. In March 2007, after consultation with Congress, Commerce stated that it would implement the WTO decision by recalculating dumping margins with respect to 12 of 15 specific investigations challenged by the EC (the three remaining AD orders having already been revoked). The WTO Dispute Settlement Body has now established a panel to determine whether the United States has in fact complied with the WTO zeroing decision. Comments are due by December 21, 2007.


If you have any questions concerning the subject matter addressed above, please feel free to contact one of our International Attorneys.

Highlights in International Trade and Commerce by Williams Mullen is prepared for information purposes only and does not constitute legal advice. Persons seeking legal advice concerning the issues addressed in this issue are encouraged to contact competent legal counsel.