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February, 2005 - Issue #34

In This Issue:
Customs & Border Protection Fifth Annual Trade Symposium
FDA Final Rule on Record-keeping Under the BTA
Rice Indicates US Will Seek to Strengthen Relationships with NAFTA Partners
U.S. Trade Deficit Surges as Exports Fall, Oil Imports Rise
CBP Comments on the Miscellaneous Trade and Technical Corrections Act of 2004
U.S.-Australia Free Trade Agreement Goes Into Effect on January 1, 2005
FDA Cautions Safety of Products from the Indian Ocean Region
CBP Reports First-Year Successes
CPB Goals for the New Year
RSPA Proposal for Safe Transport of Food Products
Mexico: Export Opportunities South of the Border

Trade Industry News
Customs & Border Protection Fifth Annual Trade Symposium

Customs & Border Protection (CBP) held its trade symposium on January 13 and 14, 2005 in Washington.  The two-day briefing focused on their strategy to both secure and facilitate the movement of legitimate trade and traffic with greater efficiency and predictability and to strengthen security against global terrorism.

During the program, CBP enforced its commitment to the C-TPAT initiative and the major role it will continue to play in building a continually more secure international trade process.  Several changes to the program were mentioned during the meetings. First, it was discussed that a clearer definition of the C-TPAT program would soon be released. As well, it was suggested that some “recommended” practices would become mandatory under the program. This document was posted by CBP on their website on January 19th can be accessed at http://www.cbp.gov/linkhandler/cgov/import/commercial_enforcement/ctpat/ctpat_strategicplan.ctt/ctpat_strategicplan.pdf.

In conjunction with these changes, CBP is looking to provide tiered benefits to C-TPAT members with the goal of establishing a “green lane” for ocean cargo.  Interestingly, to spur participation, CBP also announced that they would be removing the C-TPAT requirement for becoming an ACE account and taking advantage of periodic monthly statement.

CBP spoke extensively about the success of the CSI program.  Currently there are thirty-four CSI ports; they are projecting fifty by the end of 2005, and sixty by the end of 2006. This accounts for 80% of the US bound container traffic. Other topics of interest included “smart” containers, expanding US security initiatives to other governments, development of a trade restoration contingency plan in the event of a terrorist attack, and an update on ACE, CBP’s replacement for their current automated entry processing system, ACS.

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FDA Final Rule on Record-keeping Under the BTA

The Food and Drug Administration (FDA) issued the final regulation that requires “the establishment and maintenance of records” by persons, who manufacture, process, pack, transport, distribute, receive, hold, or import food in the United States.

The Public Health Security and Bio-terrorism Preparedness and Response Act of 2002 (The Bio-terrorism Act / BTA) was enacted to help address credible threats of serious adverse health consequences or death to humans or animals.

The requirement to establish and maintain records will help improve FDA's ability to respond to, and further contain, threats of serious adverse health consequences or death from accidental or deliberate contamination of food to humans or animals.

The maintenance of records must allow for the identification of the immediate previous sources and immediate subsequent recipients of food. In the event of an outbreak of food-borne illness, such information will help FDA and other authorities determine the source and cause of the event. In addition, the information will improve FDA's ability to quickly notify the consumers and/or facilities that might be affected by the outbreak.

The final rule is effective February 7, 2005.  The compliance date is December 9, 2005; except that for small businesses employing fewer than 500, but more than 10 full-time equivalent employees, the compliance date is June 9, 2005; and except that for very small businesses that employ 10 or fewer full-time equivalent employees, the compliance date is December 11, 2006.

Highlights of the final rule and summary of the significant changes were published in the Federal Register, dated December 9, 2004, Volume 69, Number 236, pages 71561 – 71655, and can be viewed at http://www.fda.gov/OHRMS/DOCKETS/98fr/04-26929.htm

For additional information contact: Nega Beru, Center for Food Safety and Applied Nutrition (HFS-305), Food and Drug Administration, 5100 Paint Branch Parkway, College Park, MD 20740, 301-436-1400.

Sources:   Federal Register Vol. 69, No. 236, Thursday, December 9, 2004 / Department of Health and Human Services, Food & Drug Administration

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    Rice Indicates US Will Seek to Strengthen Relationships with NAFTA Partners

    Secretary of State-designee Condoleezza Rice has indicated that trade will be a major part of her agenda as the nation’s top diplomat. Expanded cooperation with Canada and Mexico under NAFTA will be an important aspect of this approach.

    Rice said that deeper trade and economic integration among the three NAFTA countries will become increasingly vital in light of growing competition from the European Union (EU), which expanded to twenty-five members last spring.

    Additional and more formalized discussions may be on the horizon. President Bush is considering hosting a meeting with Canadian Prime Minister Paul Martin and Mexican President Vicente Fox in March or April of 2005 that would be aimed at developing further economic integration.

    Discussions would likely focus on actions that can be taken in the near term without additional legislation. In other words, major revisions to the North American Free Trade Agreement (NAFTA) or discussions relating to a tri-lateral Customs union would not be on the agenda.

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    U.S. Trade Deficit Surges as Exports Fall, Oil Imports Rise

    The U.S. Department of Commerce reported that the U.S. trade deficit surged in the latter part of 2004 to another record as the volume of oil imports went up and exports of capital goods, autos and industrial supplies dropped, reflecting weak foreign demand.

    U.S. exports fell to $95.6 billion, with especially large decreases in oil drilling equipment, aircraft, telecommunications equipment, machine tools and autos.

    To date, the U.S. trade balance does not seem to reflect the sharp decrease in the foreign exchange value of the U.S. dollar, down by about half against the euro over three years.  The dollar fell again against the euro and yen after the report was released.

    Although the price of crude oil dropped to $41.15 per barrel in November 2004 from $41.79 in October 2004, the volume of oil imports went up sharply. Excluding petroleum, total U.S. imports actually decreased in November 2004 by about 0.6 percent.

    The trade deficit for the first 11 months of 2004 amounted to $561.3 billion, far ahead of the previous record deficit for all of 2003, $496.5 billion.

    The largest bilateral November 2004 deficit was recorded with China at $16.6 billion. Other large deficits were with Japan, $7.3 billion; Canada, $7.3 billion; Germany, $4.2 billion; and Mexico, $3.9 billion.

    Sources: The Washington File, dated January 12, 2005 (Product of the Bureau of International Information Programs, U.S. Department of State. Website http://usinfo.state.gov)

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    CBP Comments on the Miscellaneous Trade and Technical Corrections Act of 2004

    U.S. Customs and Border Protect (CBP) communicated additional details regarding the Miscellaneous Trade and Technical Corrections Act of 2004 (Public Law 108-429), signed into law on December 3, 2004.

    The Act includes significant changes to laws related to entry of merchandise, liquidation, duty collection, protest, reconciliation and drawback.

    The provisions affecting technical amendments relating to protests under 19 U.S.C. 1514, and petitions under 19 U.S.C.1520(c), will affect entries that are filed or withdrawn from warehouse on or after December 18, 2004.

    Section 2103 of the Act amends 19 U.S.C. 1514 to include the matters subject to a 520(c) petition (clerical error, mistake of fact) to the types of protestable decisions, extends the time frame to file a protest from 90 days to 180 days after the date of liquidation or re-liquidation, extends the time for a surety to file a protest from 90 days to 180 days, and prohibits amending a protest if a request for accelerated disposition is made.

    Section 2105 of the Act amends 19 U.S.C. 1520(c) and repeals the authority of CBP to re-liquidate an entry or reconciliation to make certain corrections, such as clerical errors, and mistakes of fact.

    CBP Memo and Summary of the Scope and Effective Dates – Miscellaneous Trade and Technical Corrections Act of 2004 - can be viewed at:

  • http://www.cbp.gov/xp/cgov/import/communications_to_industry/
  • http://www.cbp.gov/linkhandler/cgov/import/communications_to_industry/hr1047misc_trade.ctt/hr1047misc_trade.doc

    • The entire Legislative text can be viewed at:

  • http://waysandmeans.house.gov/Special.asp?section=1644
  • http://waysandmeans.house.gov/media/pdf/hr1047/HR1047confreptlegtext.pdf

    • Sources:   Customs and Border Protection Website at www.cbp.gov Import Communications to the Trade; Committee on Ways and Means at  http://waysandmeans.house.gov/ What’s New, Conference documents for H.R. 1047 – Miscellaneous Trade and Technical Corrections Act of 2004

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    U.S.-Australia Free Trade Agreement Goes Into Effect on January 1, 2005

    On January 1, 2005, U.S. Trade Representative Robert B. Zoellick announced that the United States - Australia Free Trade Agreement (FTA) entered into force. The U.S. - Australia FTA is the first FTA between the United States and a developed country since the U.S. - Canada Free Trade Agreement in 1988. More than 99 percent of U.S. manufactured goods exports to Australia have immediately become duty-free.  Manufactured goods account for 93 percent of U.S. exports to Australia.

    Australia is a large and growing trade and investment partner of the United States.  Two-way annual goods and services trade is nearly $29 billion, a 53-percent increase since 1994.  Australia purchases more goods from the United States than from any other country, and the United States enjoys a bilateral goods and services trade surplus of $9 billion. The FTA will open markets and streamline mutual access in intellectual property, services, government procurement, e-commerce, and investment.  Australia is a key export market for important U.S. manufacturing sectors such as aircraft, autos and auto parts, machinery, computers and electronic products, chemicals, and wood and paper products.

    According to Ambassador Zoellick, “This is the most significant immediate cut in industrial tariffs ever achieved in a U.S. free-trade agreement, and manufacturers are the big winners. I am also pleased that U.S. workers, businesses, farmers, and consumers will now begin to enjoy the wide-ranging benefits of this landmark agreement. This is a 21st Century, state-of-the-art agreement that reflects the modern globalized economy. Ambassador Zoellick also notes that “by opening trade in goods and services; eliminating barriers in the agricultural sector, investment, and government procurement; and increasing protection for intellectual property; the agreement will strengthen U.S. - Australian economic ties and has the potential to increase trade between our countries by billions of dollars.”

    The Bush Administration has completed FTAs with twelve countries -- Jordan, Chile, Singapore, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Australia, Morocco, and Bahrain -- and negotiations are under way or about to begin with twelve more countries: Panama, Colombia, Peru, Ecuador, Thailand, the five nations of the Southern African Customs Union (SACU), and soon the United Arab Emirates and Oman.  New and pending FTA partners, taken together, would constitute America’s third largest export market and the sixth largest economy in the world.

    Source: “Landmark U.S.-Australia Free Trade Agreement Goes Into Effect Today” at http://www.ustr.gov/Document_Library/Press_Releases/2005/January/Lmark_U.S.-Australia_Free_Trade_Agreement_Goes_Into_Effect_Today.html appearing on The Office of the United States Trade Representative’s website on January 1, 2005.

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    FDA Cautions Safety of Products from the Indian Ocean Region

    U.S. Customs and Border Protection (CBP) and the Food and Drug Administration (FDA) issued Administrative Message 05-0026 dated January 6, 2005 on the safety of FDA regulated products from the Indian Ocean region.

    FDA requested Customs brokers to communicate this information to the trade community, as they are try to reach out to the import community as far and wide as possible.

    Due to the catastrophic events in the Indian Ocean region, the massive infrastructure disruptions and damaged facilities, FDA is concerned that regulated products may become contaminated and they must assure the safety of products being offered for import into the United States.

    They ask that the import community be proactive and diligent, checking the quality of products, looking for obvious physical and water damage, conscious of the possibility that goods may have been repackaged.

    Any concerns or issues should be directed first to your local FDA District or you may contact the FDA Division of Import Operations and Policy (301)-443-6533.

    Sources:   Customs and Border Protection Administrative Message 05-0026 dated January 6, 2005

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    CBP Reports First-Year Successes

    On January 11, 1005, U.S. Customs and Border Protection (CBP), the unified agency of the Department of Homeland Security responsible for securing our nation’s borders, released statistics for Fiscal Year (FY) 2004. For the first time in our nation’s history, data from all aspects of law enforcement at and between U.S. borders and the 317 ports of entry are captured by a single government agency, U.S. Customs and Border Protection.

    The FY 2004 statistics provide a snapshot of CBP's efforts to prevent terrorists and terrorist weapons from entering the country; interdiction of illegal drugs and other contraband; collection of duties and other revenues; and enforcement of the laws of other federal agencies at our nation’s borders – while at the same time facilitating legitimate international trade and travel.

    Here are some of the 2004 statistical highlights from CBP (partial list):

  • Processed and cleared 428 million passengers and pedestrians to the United States at our air, land, and seaports of entry. This represents an increase of nearly four percent.
  • Cleared 121 million privately owned vehicles enter the United States. Of the total, 91 million crossed the U.S.-Mexico border and 30 million crossed the U.S.-Canada border.
  • Processed and cleared 23.5 million sea, truck, and rail containers entering the United States, an increase of more than 5 percent over FY2003 levels.
  • Processed nearly 30 million entries of goods, up seventeen percent over FY03, and conducted more than 3 million document reviews. In trade enforcement, CBP officers completed 2,722 merchandise seizures in FY04, totaling nearly $242 million in merchandise.
  • Affected 7,250 seizures of counterfeit commodities, with a domestic value of $130 million. There was a sixty percent increase in criminal Intellectual Property Rights (IPR) arrests during the first half of FY04.
  • CBP officers and agents made 56,321 seizures of illegal drugs, with a total weight of 2,199,619 pounds.
  • Processed more than 262 million aliens attempting entry to the United States through ports of entry. Of that number, 643,091 were deemed inadmissible under U.S. laws.
  • Collected $27 billion in revenue, second only to the Internal Revenue Service.

    • In March 2003, employees from the U.S. Customs Service, the Immigration and Naturalization Service, the Border Patrol, and part of the U.S. Department of Agriculture came together to form U.S. Customs and Border Protection (CBP). CBP is the unified border agency within the Department of Homeland Security charged with the management, control, and protection of our Nation’s borders at and between the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the country, while enforcing hundreds of U.S. laws.

    Source: “Border Agency Reports First-Year Successes” at http://www.cbp.gov/xp/cgov/newsroom/press_releases/01112005.xml appearing on The Bureau of Customs and Border Protection’s website on January 11, 2005.

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    CPB Goals for the New Year

    The Homeland Security Department’s Bureau of Customs and Border Protection (CBP) has several goals it intends to accomplish in 2005. CBP Commissioner Robert Bonner listed three key initiatives that he plans to test or implement this year. The initiatives include further development and refinement of programs already underway.

    CBP is considering refining the Customs-Trade Partnership Against Terrorism (C-TPAT) program by introducing a tiered-benefits approach that would give lower-risk companies increased benefits for participating. Among the proposals under serious consideration is a C-TPAT Plus program for companies that exceed C-TPAT’s minimum-security requirements and best practices. In exchange for adopting tighter security measures outlined by CBP, top tier, low-risk shippers would receive a “green lane” through Customs. In most instances, such “green lane” goods would receive no further inspection and would be released immediately.

    CBP will open its Periodic Monthly Statement (PMS) program to all importers. Currently, only participants in C-TPAT are allowed to be included in the PMS program, which permits qualified users to make a single monthly payment of duties, taxes, and fees, instead of requiring payment ten business days after shipments are released by CBP. By expanding membership in PMS, CBP will open an opportunity for a new long-term uniform method of payment. CBP is scheduled to publish a notice in the Federal Register announcing the effort.

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    RSPA Proposal for Safe Transport of Food Products

    The Research and Special Programs Administration (RSPA) has issued a proposal to address the safe transportation of food and food products. The proposal outlines requirements of the U.S. Department of Agriculture (USDA) and the Food and Drug Administration (FDA) which apply to persons transporting food in commerce by motor vehicle or rail car. This action is intended to implement the Sanitary Food Transportation Act of 1990.

    Comments regarding the proposal must be received by January 20, 2005. You may submit comments identified by DOT DMS Docket Number RSPA-91-13289 (FS-1) to the website: http://dms.dot.gov, or fax, mail, E-mail, hand delivery, or Federal e-Rulemaking.

    Please refer to the Federal Register Notice dated December 15, 2004 for details.

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    Mexico: Export Opportunities South of the Border

    The U.S.-Mexico relationship is one of the most important as demonstrated by the size and scope of our diplomatic mission in Mexico (which includes representatives from over 30 federal agencies). Besides these official contacts, extensive networks of commercial, cultural, and educational ties flourish between our countries.

    Ten years after enactment of NAFTA, Mexico has become our second most important trading partner; Canada is our most important one. In fact, U.S. exports to Mexico are greater than our exports to all of Latin America combined.

    The Mexican market is large and diverse, presenting opportunities for sales of a wide range of goods and services. There are several sectors that represent especially “hot” prospects for domestic companies. Telecommunications, information technology, pollution control and water treatment, inter-modal transportation, security and safety, medical equipment, and training services are just a few of the sectors that are strong and are among some of the most attractive prospects for sales in Mexico.

    Another hot prospect is Mexico’s manufacturing sector, which imports over $80 billion in machinery, components, and inputs annually. The opportunity is so significant that the U.S. Commercial Service has developed the Marketing to Manufacturers in Mexico program that consists of a regular e-newsletter, market research, promotional trade events for U.S. companies, and matchmaking events.

    Although Mexico offers bountiful opportunities, it is important to keep in mind that business practices differ significantly among the primary commercial centers of Mexico City, Guadalajara, Monterrey, Tijuana, and Ciudad Juarez as well as the growing secondary markets. These differences require tailored market entry and expansion strategies.

    It is also critical to understand that Mexico’s legal environment, regulations, standards, banking system, and labor laws can present significant challenges for U.S. companies. Finally, everything takes more time to accomplish in Mexico. Have patience, and remember that it is important to take time to develop personal relationships with potential business partners.

    The U.S. Commercial Service operates four offices in Mexico that not only provides U.S. companies with valuable advice on how to do business in Mexico, but also offers an array of services to assist you in your efforts.

    To learn more, visit their website at www.buyUSA.gov/mexico/en or, the U.S. Export Assistance Center in Baltimore, Maryland at 410-962-4539 or Bryan.Larson@mail.doc.gov. Another excellent resource is the Maryland Department of Business and Economic Development, which operates an office in Mexico City. Feel free to contact María-Angélica Vargas at 410-767-0939 or mvargas@choosemaryland.org.

    Contacts:

    U.S. Export Assistance Center in Baltimore
    Tel: 410-962-4539
    e-Mail: office.baltimoreUSEC@mail.doc.gov
    http://www.buyUSA.gov/baltimore

    U.S. Commercial Service
    U.S. Embassy in Mexico City
    Tel: 011-52-55-5140-2600
    e-Mail: office.mexico@mail.doc.gov
    http://www.buyUSA.gov/mexico/en

    Maryland Department of Business and Economic Development
    María-Angélica Vargas
    Tel: 410-767-0939
    e-Mail: mvargas@choosemaryland.org
    http://www.choosemaryland.org

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    This newsletter is for informational purposes only.  Although every effort is made to ensure accuracy, Samuel Shapiro & Company, Inc. assumes no legal liability for any erroneous information. Links to other websites are provided for reference and convenience and do not constitute endorsement of the content of those sites.