January 2004 - Issue 21
In This Issue:
FDA Bioterrorism Regulation Took Effect December 12, 2003
U.S. - Central American Nations Strike Trade Deal
Historic Maritime Treaty Signed Between U.S. and China
Advanced Electronic Presentation of Cargo Information Effective January 5, 2004
Section 201 Steel Remedy is Rescinded by President Bush
FAST Program Inaugurated at U.S.-Mexico Border
TSA and FMCSA Enhance HAZMAT Transportation Security
TSA Air Cargo Strategic Plan
Customs Trade Update
Product Safety Chairman Warns Holiday Shoppers of Hazardous Recalled Toys
Transportation Update
Samuel Shapiro & Company, Inc. Announces its Bioterrorism Registration Service
Trade Industry News
FDA Bioterrorism Regulation Took Effect December 12, 2003
The Food and Drug Administration's Bioterrorism Act (BTA) took effect on December 12, 2003. The critical objective facing the Bureau of Customs and Border Protection (CBP) and the Food and Drug Administration (FDA) is to protect public health without impeding the free flow of international trade.
The Regulation requires all foreign and domestic facilities that manufacturer, process, pack, distribute, receive, or hold food for consumption by humans or animals in the United States, to register with the FDA. The Regulation also requires that FDA be provided with advanced notice of expected arrivals of shipments of food. This advanced notice is known industry-wide as Prior Notice (PN).
Concern had been expressed in the past about FDA's inconsistent enforcement of its regulations. FDA believes this will now be addressed since all PN decisions will be made by the PN center at the national level and not at the local district. The center will then provide information to FDA and CBP inspectors in the field. The goal is to streamline the process and render it more efficient. Consequently, and for the first time ever, FDA has established a true "24/7" operation with the establishment of the national Prior Notification center.
The various phases of enforcement will be ushered in over the next eight months. Under FDA's "good guidance practices" enforcement information will be made public and available for comment. FDA also intends to provide an aggregate list of general deficiencies in order to enlighten the trade. FDA anticipates that, at the early stages, there will only be refusals for flagrant violators and for critical health concerns.
The Food and Drug Administration recognizes the CBP concept of "one face at the border" as well as the importance of integration with the C-TPAT program. FDA claims to be moving in the direction of becoming uniform with CBP, with its advanced notification requirements, the integration of its system requirements, and its approach to risk management.
Sources: Samuel Shapiro & Company, Inc. has participated in numerous training seminars relating the Bioterrorism Regulation.
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U.S. - Central American Nations Strike Trade Deal
On Wednesday, December 17, 2003 the United States Trade Representative announced the completion of a comprehensive Central American trade agreement with Guatemala, El Salvador, Nicaragua and Honduras called The Central American Free Trade Agreement (CAFTA).
Costa Rica left the talks on Tuesday, December 16 reportedly over demands to open its telecommunications and insurance industries to foreign competition. CAFTA is designed to eliminate tariffs and other barriers to trade in goods, agriculture, services and investment.
In early 2002, President Bush announced his vision for a free trade agreement with Central America that “supports regional stability, democracy, and economic development”. The estimated trade between the U.S. and the four participating nations is $15.4 billion a year.
As a result of the agreement, more than 80 percent of U.S. exports of consumer and industrial goods would become duty-free in Central America immediately, with the remaining tariffs to be phased out over a decade. The U.S. industries that are expected to benefit most are information technology products; agricultural and construction equipment; paper products, and chemical, medical, and scientific equipment.
The Bush administration is required to notify Congress within 90 days before it intends to sign the trade agreement and CAFTA would need to be ratified by Congress. The draft text of the agreement will be available for review next month.
Source: “U.S. strikes C. American trade deal,” appearing in the Journal of Commerce Online dated December 17, 2003.
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Historic Maritime Treaty Signed Between U.S. and China
Under a new bilateral maritime agreement signed by the United States and China on Monday, December 12, 2003, U.S. maritime interests will have the same access to the China market that Chinese companies have enjoyed here in the United States for the past several years.
The new treaty will allow U.S. shipping companies or companies that have a U.S. flag vessel in the China trade to open agencies in cities in China’s interior. Also, for the first time in history, U.S. carriers may conduct business in China without a requirement to have a Chinese partner.
U.S. Secretary of Transportation, Norman Y. Meneta, and China’s minister of communications, Jhang Chunxian, also signed a memorandum covering issues that the U.S. and China have agreed upon, but are not included in the treaty. Under the memorandum, U.S.-licensed NVOCCs may use their U.S. bond as credit to comply with China’s law requiring NVOCCs to post large cash bonds to do business in China.
China’s government-owned carriers, such as COSCO, would also get some relief from the U.S. controlled-carrier law, which highly restricted ratemaking and rate filing by the Federal Maritime Commission. The old restriction meant that shippers using COSCO could have to wait up to a month to establish a rate for a new trade lane with the carrier.
Source: “U.S., China Sign Historic Maritime Treaty,” appearing in the Journal of Commerce Online dated December 8, 2003.
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Advance Electronic Presentation of Cargo Information Effective January 5, 2004
The Bureau of Customs and Border Protection (CBP) has published a final rule, effective January 5, 2004, which will require the electronic submission of cargo information to CBP prior to its arrival into the U.S. The information must be transmitted through an authorized electronic data interchange system and will be required for all modes of transportation. The ultimate goal of this rule is to allow CBP officers to review the cargo information in advance in order to identify high-risk shipments that may pose a threat to security.
Here are some highlights of the new rule, by mode of transportation:
- Inbound vessels: All ocean carriers and NVOCCs must be automated on the Vessel AMS system at all U.S. ports of entry by March 5, 2004, and provide the CBP with 24-hour advance notice before the cargo is unloaded from the vessel in the U.S.
- Inbound air: All affected air carriers and other parties that choose to participate in the advance automated cargo information filing, such as importers or brokers, are required to comply with the mandatory requirements by March 5, 2004.
- Inbound rail: Rail carriers will be required to comply with the advance electronic cargo information requirement on or after 90 days from the date CBP publishes notice in the Federal Register, noting that the electronic data interchange system is operational.
- Inbound truck carrier: Truck carriers will be required to comply with the advance electronic cargo information requirement on or after 90 days from the date CBP publishes notice in the Federal Register in reference to that specific port of entry. After the notice is published, truck carriers will be asked to provide the required cargo information to CBP upon their arrival at the port of entry in the U.S.
- Outbound, all modes: The Department of Commerce has still not issued an effective date for mandatory filing for all outbound cargo; this date will be published in the Federal Register. The requirements for exports will include the presentation of cargo information such as pre-departure time and the redesign of the Automated Export System (AES) commodity module.
Source: “CBP Issues Final Rule on the Advance Electronic Presentation of Cargo Information for Inbound and Outbound Sea, Air, Rail, and Truck Cargo” appearing in International Trade Today dated December 5, 2003, and “Regulatory Text of CBP’s Final Rule on the Advance Electronic Presentation of Cargo Information (Part A – Cargo Information for Inbound Vessels” appearing in International Trade Today dated December 8, 2003.
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Section 201 Steel Remedy is Rescinded by President Bush
In an effort to avert the threat of a trade war between the United States and the European Community, President Bush repealed the Section 201 Steel Remedy that was initially imposed in March, 2002. The steel safeguards had been scheduled to remain in effect until March, 2005.
The U.S.-imposed steel tariffs were ruled illegal earlier last month by the World Trade Organization. The 15-nation European Union vowed to retaliate against American products unless the United States removed the steel tariffs. Japan and South Korean said they were also considering retaliation.
Although the additional duties were rescinded, the president stated that the U.S. will continue the steel license monitoring program. It is believed that the monitoring program will guard against an anticipated flood of foreign steel into U.S. markets once the doors are reopened. The monitoring program requires foreign steel exporters to apply for an import license, giving the government a means to swiftly detect possible import surges (as opposed to waiting for data from Customs and Border Protection) when the steel arrives at U.S. ports. The Bush administration pledged an aggressive use of anti-dumping laws, as a means to impose tariffs on specific steel products should imports surge once the tariffs are lifted.
Sources: "President Expected to Scrap Steel Tariffs to Avoid Trade Sanctions" appearing in Sandler, Travis & Rosenberg, P.A.'s World Trade \ Interactive dated December 2, 2003; The Washington Post dated December 1, 2003; "EU Expected to Apply Additional Duties of 8-30% on Selected U.S.-Origin Products in December, 2003 (if U.S. Section 201 Steel Measures are Not Removed)" appearing in International Trade Today dated November 13, 2003.
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FAST Program Inaugurated at the U.S. - Mexico Border
On December 4, 2003, Secretary of Homeland Security, Tom Ridge, declared the inauguration of the Free and Secure Trade (FAST) program at the U.S.-Mexico border. The first available FAST lanes are located in El Paso, Texas. FAST allows for the expedited processing of cargo through the border for certain companies, with the approval of the Bureau of Customs and Border Protection (CBP).
In order to become eligible to participate in the FAST program, importers, manufacturers, and carriers must be certified members of the Customs-Trade Partnership Against Terrorism (C-TPAT) program. C-TPAT is a voluntary initiative designed by the CBP, focusing on the development of cooperative relationships between Customs and the business community. C-TPAT members are expected to review current security procedures, discover areas in need of improvement, and develop and implement security enhancements. C-TPAT participants qualify to receive many benefits, which are likely to include a reduced number of inspections as well as eligibility for bi-monthly or monthly duty payments.
In order to qualify for FAST treatment, truck drivers must provide CBP with sufficient information to allow officials to analyze and assess any potential security risk. If approved, drivers are given a FAST Commercial Driver Identification Card. In addition, manufacturers and carriers are required to use high security seals for all containers or trailers coming into the U.S. FAST shipments will continue to be inspected by the CBP with tools such as x-rays and canine screenings to ensure the effectiveness and integrity of the program.
Participants of the FAST program enjoy special FAST lanes for expedited processing, while FAST trucks are equipped with special radio frequency transponders that convey information about commercial cargo.
A few other facts about FAST:
- New FAST lanes will be opened at designated ports of entry along the U.S.-Mexico border during the next few months.
- CBP will perform a comprehensive security analysis of each designated port of entry before opening new FAST lanes.
- The government of Mexico will be designating special FAST lanes from Mexico in locations where the local highway infrastructure permits.
- CBP has received 1,153 driver applications since November 23, 2003, and has granted 974 FAST identification cards.
- Approximately 3,000 trucks have taken advantage of the FAST lane expedited service in El Paso since October 27, 2003.
Our Consulting Team can provide you with assistance in becoming a certified C-TPAT partner. For more information on how we can help you, please contact our Consulting Team at consulting@shapiro.com.
Source: “DHS Secretary Ridge Inaugurates FAST Program at the U.S.-Mexico Border” appearing in International Trade Today dated December 8, 2003.
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TSA and FMCSA Enhance Hazmat Transportation Security
The Transportation Security Administration (TSA) issued an amendment to its May 5, 2003 interim final rule which amended the TSA Regulations to establish security threat assessment standards for determining whether an individual poses a security threat when applying for a commercial driver’s license (CDL) to transport hazardous materials.
The Federal Motor Carrier Safety Administration (FMCSA) has also issued an amendment to its May 5, 2003 interim final rule under the Federal Motor Carrier Safety Regulations (FMCSRs) to prohibit States from issuing, renewing, transferring, or upgrading a CDL with a hazmat endorsement unless the TSA has first conducted a background record check of the applicant and determined that the applicant does not pose a security risk warranting denial of the hazmat endorsement.
TSA has postponed states’ deadline for starting criminal history record checks. TSA declared that it will not authorize a state to issue a hazmat endorsement unless the state is collecting the biographical and criminal history information required, including fingerprints, and submitting fingerprints by April 1, 2004 (instead of November 3, 2003). If unable to collect this information by April 1, 2004, the state must submit a request for extension to TSA on or before April 1, 2004. TSA may approve the extension request, but will not extend the due date beyond December 1, 2004.
In addition, if the state cannot begin submitting fingerprints of hazmat endorsement applicants as of April 1, 2004, the state must submit a plan to TSA outlining the fingerprint process that it will deploy and a timeline to ensure that the state will be submitting fingerprints by December 1, 2004. The plan must be submitted by April 1, 2004, and be consistent with Federal Bureau of Investigation (FBI) fingerprint collection and submission procedures.
TSA will publish a proposed rule to address the criminal history background check process for hazmat endorsement applicants, and will seek comments at that time.
TSA Amendment to Interim Final Rule (D/N TSA-2003-14610, Amendment No. 1572-2; FR Pub 11/07/03) available at http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/pdf/03-28136.pdf
FMCSA Amendment to Interim Final Rule (D/N FMCSA-2001-11117, FR Pub 11/07/03) available at http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/pdf/03-28175.pdf
For further information, please contact compliance@shapiro.com.
Source: "ITSA, FMCSA Amend Interim Final Rules on Enhanced Hazmat Transportation Security" appearing in International Trade Today dated 12/20/2003.
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TSA Air Cargo Strategic Plan
An Executive Summary presented by the Transportation Security Administration (TSA) details aspects of its Air Cargo Strategic Plan. According to the TSA, this plan represents the culmination of ten months of work and reflects extensive outreach to the air cargo community and cooperation with our federal partners in the Department of Homeland Security (DHS). TSA recognizes that vulnerabilities in air cargo security threaten our entire air transportation system and, if they were exploited, could prove damaging to the national economy and general well being of our nation. This Strategic Plan details a multi-phased, risk-based blueprint for implementing a comprehensive air cargo security approach by applying existing capabilities and pursuing emerging technologies.
TSA's agenda for achieving this goal can be divided into four strategic objectives:
- Enhance shipper and supply chain security;
- Identify elevated risk cargo through prescreening;
- Identify technology for performing targeted air cargo inspections; and,
- Secure all-cargo aircraft through appropriate facility security measures.
- The Plan will be supported by a Notice of Proposed Rule Making, which TSA will publish in the coming months, and accompanying specific programs and initiatives.
For more information, please contact compliance@shapiro.com.
Please see the following link to review the full text of the TSA Strategic Plan: http://www.tsa.gov/public/display?theme=44&content=0900051980069bfe.
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Customs Trade Update
The Bureau of Customs and Border Protection (CBP) hosted a Washington, DC trade industry symposium in late November. Commissioner Bonner was one of several a key speakers during the two-day event and touched on a number of important topics.
One Face at the Border
Now that Customs is one united agency providing “one face at the border," the trade community will begin to see noticeable improvements with the combined organization of both CBP officers and CBP agricultural specialists. CBP provided several examples of the success of this streamlining initiative. For example, only one phone call will be required to schedule overtime clearance for cargo that is regulated by both CBP and agriculture.
CSI – Container Security Initiative
The CSI is progressing well. In greater numbers, foreign ports are permitting U.S. inspectors on their soil to exam foreign cargo before departure. The U.S. has reciprocated the invitation. CSI is strictly focused on anti-terrorism measures; should CBP identify a trade violation at a foreign port, the issue would not be addressed until the cargo reached U.S. soil.
Smart Container Initiative
In the coming New Year, Customs plans to implement the Smart Container Initiative which provides evidence if the doors of a container have been compromised.
Smart Container devices include:
- High security mechanical bolt seals with unique identifying numbers
- A “Pardo Hole” -- a devise for sealing containers and preventing access without cutting the seal
- Sensor equipment that can be installed inside the container for detecting intrusions. Sensors are also capable of alerting CBP and C-TPAT logistics personnel that particular containers have been opened or tampered with.
"Smart" containers are a requirement for participation in the Free and Secure Trade program (FAST) at the Canadian and Mexican border. CBP has suggested that the "smart" container will become a standard for C-TPAT membership. It is likely that, in order for C-TPAT members to be compliant, they will need to utilize the “smart” container.
USDA Update
A proposal has been made recommending that USDA phyto-sanitary certificates be required for all fruits and vegetables entering at land border ports of entry along with a 6-month phase in period. The intention is to implement the program nationally and internationally, and to communicate the changes as broadly as possible.
Another pending USDA issue relates to the final version of the solid wood packaging material (SWPM) rule, which is scheduled to be implemented in the spring of 2004. In anticipation of the finalized Rule, Customs is encouraging all importers to meet requirements that all wood packaging material be appropriately treated and marked under an official program, developed and overseen by the National Plant Protection Organization (NPPO) in the country of export. For additional information please refer to http://www.aphis.usda.gov/ppq/swp.
Source: Customs Trade Symposium held in Washington, DC on November 20-21, 2003, representative of Samuel Shapiro & Company, Inc. in attendance.
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Product Safety Chairman Warns Holiday Shoppers of Hazardous Recalled Toys
The U.S. Consumer Product Safety Commission (CPSC) Chairman Hal Stratton warned holiday season gift buyers to be on the lookout for recently recalled toys and children's products that pose serious safety threats to youngsters. To provide consumers easier access to all recall announcements, Chairman Stratton also announced the launch of a new federal government inter-agency Web site -- www.Recalls.gov.
"Before purchasing or giving any gift, particularly one intended for a child, double-check to be sure it does not pose a hazard,” Stratton said. Visit CPSC's Web site to determine if it has been recalled. Another option is to go to the easy-to-remember Web address www.Recalls.gov. It's a 'one-stop shop' for the latest information on all federal government recalls.
Source: CPSC announcement dated 11/25/03 located at http://www.cpsc.gov/cpscpub/prerel/prhtml04/04037.html or visit the CPSC web site for additional information concerning recalls. This can be accessed at http://www.cpsc.gov.
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Transportation Update
Zim and Norasia lines have announced a new service from Northern Europe to the east coast of the United States commencing in early 2004. They will add new ships to the trade lanes which will help to stabilize rates. Port calls on this service will be announced soon.
Carriers in all trades will try their best to increase rates, especially if the economy continues to strengthen. It remains to be seen if the weakening of the dollar will impact imports from Europe and help raise exports from the U.S.
It is reported that the Currency Adjustment Factor from Northern Europe will rise from 3% to 5% as of January 15, 2004.
Air Carriers are raising the fuel surcharge worldwide. The average increase from England is GBP .02 and the increase from the European Union is EUR .05/kg. The worldwide average for both import and export is USD .05/kg.
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Shapiro Products & Services
Have you Registered with FDA?
Samuel Shapiro & Company, Inc. Announces its Bioterrorism Registration Service
The Food and Drug Administration’s new Bioterrorism Regulation (BTA) will significantly impact your company’s domestic and international supply chain. The Regulation requires all foreign and domestic facilities that manufacturer, process, pack, distribute, receive, or hold food for consumption by humans or animals in the United States to register with the FDA.
Samuel Shapiro & Company, Inc. offers a new Bioterrorism Registration Service to assist domestic and foreign facilities required to register with the FDA under the scope of the Bioterrorism Act. Shapiro can reduce your headaches by registering your domestic and/or foreign facilities for you. Our new service is available at very competitive rates.
Please contact our Compliance Department at compliance@shapiro.com for pricing details or to request a copy of our Bioterrorism Registration Kit.
