February 2004 - Issue 22
In This Issue:
Chile and Singapore Free Trade Agreement Took Effect January 1, 2004
USDA Strengthens Protection Against Mad Cow Disease
FDA Updates Guidance for Registration of Food Facilities
DOT's Final Rule for Reporting HAZMAT Incidents
State Department Offers On-Line Training for D-TRADE System
Customs Proposed Rule: Threshold for Publishing Forfeiture Notices Increased
Airfreight Industry Receives Additional Time to Implement Advanced Manifest Rule
Transportation Update
Trade Industry News
Chile and Singapore Free Trade Agreement Effective January 1, 2004
On December 30, 2003, President Bush released proclamation 7747 announcing the implementation of the U.S.-Chile (UCFTA) and U.S.-Singapore Free Trade Agreements (SFTA).
The Free Trade Agreements amend the Harmonized Tariff Schedule (HTS) to reflect the changes in preferential duty rates now available to goods of Chilean and Singaporean origin entered or withdrawn for consumption as of January 1, 2004. Consequently, Chile no longer qualifies for lower duty rates under the Generalized System of Preferences (GSP). The agreement also includes staged duty reductions, which will become effective in subsequent years, and contains special rules for textile and apparel articles.
In order to identify commodities that qualify for UCFTA and SFTA benefits, new symbols, CL and SG respectively, were created to represent the eligibility under the HTS Column 1 Special sub column. Even though UCFTA and SFTA benefits are available beginning January 1, 2004, the Automated Broker Interface (ABI) has not yet been programmed to allow the transmission of entries using the new CL and SG symbols. Consequently, ABI filers are required to transmit entries as dutiable and file for a refund or process them as non-ABI entries.
Sources: “President Issues Proclamations on Chile and Singapore FTA’s” appearing on International Trade Today dated December 31, 2003; “Update on the Presidential Proclamation Which Implements the U.S.-Chile FTA” appearing on International Trade Today dated January 5, 2004; “Update on the Presidential Proclamation Which Implements the U.S.-Singapore FTA” appearing on International Trade Today dated January 6, 2004.
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USDA Strengthens Protection Against Mad Cow Disease
The U.S. Department of Agriculture (USDA) announced that further steps are being taken in order to improve protection against Bovine Spongiform Encephalopathy (BSE), commonly known as mad cow disease. BSE in its human form causes a fatal human neurological disease that mainly affects people less than 30 years of age.
The latest BSE case was confirmed during a preliminary diagnosis on December 27, 2003, in Weybridge, England, of a dairy cow slaughtered on December 9, 2003, in Washington State. According to research, the BSE-infected animal was imported from Canada. Since BSE has been confirmed, several countries, such as Japan, Mexico, and Taiwan, have banned U.S. beef.
USDA has taken several measures to ensure public health safety, to include:
- All downer cattle are banned from the human food chain;
- USDA will continue its BSE surveillance program, which prevents cattle from entering the food supply until confirmation is received that it tests negative for BSE;
- Other cattle body parts, such as skull, brain, and vertebral column, will also be specified as risk material, and will not be used in the human food supply;
On January 6, 2004, USDA declared notice of Extraordinary Emergency since it was concluded that the State of Washington might be incapable of taking appropriate actions to quarantine and dispose of animals that may be exposed or infected with BSE. The notice of Extraordinary Emergency allows the Secretary of Agriculture to take certain actions to prevent the dissemination of BSE.
The Food and Drug Administration (FDA) and USDA recommend that Americans maintain their usual diet since appropriate measures have been taken to ensure public safety.
Sources: “Update on the U.S. BSE (Mad Cow) Case” appearing on International Trade Today dated December 30, 2003; “USDA Announces Additional Protection Measures Related to U.S. BSE (Mad Cow) Case” appearing on International Trade Today dated January 2, 2004; “USDA Issues Five Interim Final Rules/Notices to Implement Additional BSE Protection Measures” appearing in International Trade Today dated January 13, 2004; “Where's the Beef?” appearing in Customs and Border Protection Today dated September 2003.
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FDA Updates Guidance for Registration of Food Facilities
On January 12, 2004, the Food and Drug Administration (FDA) revised its guidance document regarding the registration of food facilities.
FDA now exempts post offices and facilities owned or operated by express courier services from registration. FDA states that postal services and express courier facilities generally focus on the transfer of packages and other freight, or function as a point of transfer, including packages containing food. Both are viewed as types of facilities involved in the transportation network.
FDA also expanded the exemption to exclude truck terminals and freight forwarders that house, have custody of, or control of food only because they are part of the process of transporting it from one location to another.
For additional information, please refer to: http://www.cfsan.fda.gov/~dms/ffregui2.html
Sources: "FDA Revises its Q&A on the Registration of Food Facilities" appearing in International Trade Today dated January 12, 2004.
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DOT's Final Rule for Reporting HAZMAT Incidents
The Department of Transportation's (DOT) Research and Special Programs Administration (RSPA) has issued a final rule effective July 1, 2004. This rule revises the incident reporting requirements to the Hazardous Materials Regulations (HMR) (49 CFR Part 171) and the hazardous materials (hazmat) incident report form (DOT Form F 5800.1). The major changes adopted in this final rule include: Collecting more specific information on the incident reporting form; expanding reporting exceptions; expanding reporting requirements to persons other than carriers; reporting undeclared shipments of hazardous materials; and reporting non-release incidents involving cargo tanks. These revisions hope to assure an increase in the usefulness of data collected for risk analysis and management by both government and industry.
The Federal Register Notice is located at: http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/pdf/03-29597.pdf
For more information, please contact compliance@shapiro.com.
Source: "RSPA Final Rule Revises Hazmat Incident Reporting Requirements and Report Form" appearing in International Trade Today dated December 24, 2003.
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State Department Offers On-Line Training for D-TRADE System
The Directorate of Defense Trade Controls (DDTC) is offering on-line training and tutorials open only to companies who are currently registered with DDTC. Registration for training must be done by an authorized company official. The training is designed to familiarize registered industry users on the licensing process to be introduced with the advent of D-TRADE licensing system in January 2004. The new electronic Defense Trade licensing process offers significant improvements over the current licensing process including improved security, electronic submission of attachments, as well as revised forms in response to industry needs.
Web training seminars will focus on providing information to users on filing DSP-5s, Technical Assistance Agreements (TAA), obtaining and using digital certificates, certificate types, certificate and user management, as well as obtaining status information on filed license applications. The training will focus on forms preparation, file submissions, digital certificates, and issues related to usage but will not include DDTC policy or procedures.
Please note that live training event dates are now closed. Registrations will be accepted for recorded events from January 19, 2004. Industry users who register using the site will also be provided with D-Trade licensing CD-ROM training discs at no cost. The training CD-ROM's are expected to be mailed to users during the month of February 2004. Recorded events mirror live training and can be accessed on convenient dates and time for a limited period by registered users only.
Register to access recorded events and obtain the CD-ROM
at: http://pmdtc.ocr-inc.com/feed/request.asp.
Complete event information and descriptions of the training are located at: http://pmdtc.ocr-inc.com.
For more information, please contact compliance@shapiro.com.
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Customs Proposed Rule: Threshold for Publishing Forfeiture Notices Increased
Customs and Border Protection (CBP) has issued a proposed rule that would amend requirements regarding the publication of administrative forfeiture notices.
Currently, if the value of seized property exceeds $2,500, CBP is required to publish the notice of seizure and intent to forfeit in a newspaper circulated at the Customs port and judicial district where the seizure occurred. When the value of the seized property does not exceed $2,500, CBP may publish the notice by posting it in a conspicuous place accessible to the public at the customhouse.
CBP now proposes to raise the threshold value of seized property for which it must publish a notice in a newspaper from $2,500 to $5,000. This will reduce publication costs that often exceed the value of the seized property. As a result, for seized property valued at $5,000 or less, Customs would only have to post notice in a conspicuous place accessible to the public at the customhouse nearest the place of seizure.
Written comments on the proposed rule will be accepted until March 15, 2004. The CBP contact is Mr. Greg Olsavsky (202)-927-3119.
CBP proposed rule, Federal Register Publication dated January 14, 2004, is available at:
Sources: "CBP Issues Proposed Rule on the Publication of Administrative Forfeiture Notices" appearing in International Trade Today dated January 12, 2004.
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Airfreight Industry Receives Additional Time to Implement Advanced Manifest Rule
In December, 2003, Customs completed the airfreight version of the advance-manifest rules that were rolled out last February requiring that ocean manifests be submitted 24 hours before U.S.-bound cargo is loaded in overseas ports. The airfreight version of the rule would require that the airlines submit manifest information electronically at least four hours prior to arrival of the flight into the U.S. airport, or in case of shorter flights, upon takeoff. Data on U.S. Exports would be required to be submitted two hours prior to departure.
Customs had hoped to enforce their 24-hour advance manifest requirements for inbound cargo to the U.S. to the airfreight industry by March 4, 2004, but Customs has recognized that the entire industry would not be ready by that date. There is no firm alternative deadline date set at this time.
Customs is now planning to roll out the enforcement of the rule geographically by launching the system at different dates around the country. Customs realizes that there are still many issues to work out. Customs is now saying that they may roll out both import and export manifest rules in several phases, perhaps starting with a few gateways or countries. Some countries, such as Japan, have a high level of awareness; others, such as China, show little evidence of preparedness.
Northwest Airlines is taking no chances in this regard. It has announced that it is going to levy a processing charge on manifest data received on paper. Other airlines intend to move in the same direction and will require forwarders to have the capability to file manifests electronically. Once the regulation is enforced, it will force the industry to improve productivity by further embracing electronic data processing of data on a larger scale.
Source: “Customs Stretches Manifest Deadline,” appearing in The Journal of Commerce Volume 5, Issue 4, dated January 26, 2004.
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Transportation Update
IMPORT
The Currency Adjustment Factor (CAF) from Northern Europe rose from 3% to 5% as of January 15, 2003. It may rise as high as 7% in February. The continuing weakness in the U.S. dollar has resulted in the introduction of the CAF.
The stronger euro has caused ocean imports to soften and vessels from Europe are functioning at less than full capacity. Space is not at a premium for ocean freight in this lane. The additional capacity being added by the new Zim/Norasia service should keep rates stable.
Italy will be adding a CAF in February. The rate may be determined on a per container basis or as a percentage of the ocean freight.
The bunker surcharge from the Mediterranean region (Italy, Spain, and Portugal) will be going down in February from $176.00 to $131.00 per TEU.
Ocean freight rates from Asia are expected to rise in May. Currently, the carriers are projecting increases of $400.00 to $500.00 per 40’ container. Carriers have begun negotiations with major importers who tend to dictate market conditions, and are expected to maintain the Peak Season Surcharge even though there was no real peak season in 2003. Ships were not overbooked from Asia to the U.S., partially due to the additional all-water service added to the East Coast. It is expected that carriers will continue to increase all-water service to the East Coast because of the great demand for Asian commodities.
There is an expected increase in freight rates from Turkey in February. The amount of the increase is not known as of this writing. It might be as high as $200.00 per container.
EXPORT
Carriers have announced general rate increases effective in February from the U.S. to Europe. Carriers are holding firm that the increase will take place. In the past, carriers have made announcements about rate increases and then retracted them at the last minute due to market resistance. The planned February rate increase from the U.S. to Asia has been postponed until March.
AIR FREIGHT
Space continues to be tight from Europe to North America. In spite of the higher euro, there still is a strong demand for airfreight from Europe. Airfreight rates from the U.S. to points around the world are still in a slump.
As the Lunar New Year celebration ends, rates for the air market from Asia should drop from key gateways such as Hong Kong and Shanghai. The slack season should remain in place barring any sudden change until early summer.
DOMESTIC TRANSPORTATION
New regulations concerning the amount of time a driver can stay behind the wheel of a tractor-trailer have come into effect as of January 4, 2004. The result of the new change in procedure will most likely raise domestic rates by 4% to 7%. The new rules greatly affect truckload carriers covering long distance routes.
Under the Federal Motor Carrier Safety Administration rules that took effect on January 4, 2004, the time that drivers spend waiting at marine terminals, receiving warehouses, trans-loading facilities, and inter-modal rail ramps is included in the number of hours that a driver may stay on duty.
The new rules will allow drivers to stay on the road for eleven hours at a time, but only after a ten-hour off-duty break. Previously, drivers were limited to ten hours of driving after an eight-hour break. Drivers' total work shifts will be limited to fourteen hours; the previous limit was fifteen hours.
Formerly, drivers waiting at a freight yard or dock could count the hours sitting idle in the cab as off-duty hours. Under the new rules, time spent waiting or handling cargo counts as on-duty time against the fourteen-hour limit. That provision is the most controversial part of the new Federal Motor Carrier Safety Administration rules.
The new rules will change the way truckers, terminals, and warehouses do business at ports, where drivers regularly encounter delays. A driver forced to wait for two or three hours while his container is being unloaded at a warehouse in the past could eat lunch or take a nap without that time counting against the day's hours-of-service limit. Under the new rules, the driver will be considered on duty the entire time.
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