ShapTalk 43 - November, 2005

“Shap” Talk

November, 2005 - Issue #43

In This Issue:

Changes to Textile Regulations
Food Facility Registration Final Rule
TSA Announces Launch of Pilot Project to Track Hazmat Trucks
PierPASS Ahead of Schedule
Byrd Amendment Problems Reported by GAO
Comments Requested on Foreign Policy Based Controls
Cosmetically Redesigned CBP 7501 Entry Summary
CBP to Migrate ACH Debit Transactions
Generalized System of Preferences (GSP) Program Update
USDA Establishes New User Fee
News from the Port of Philadelphia
Port of Colombo Now Targets and Pre-Screens Cargo Destined for U.S.
Transportation Update
Import Essentials Seminar – There is Still Time to Register!
Headquarters Relocation - October 28, 2005

Trade Industry News

Changes to Textile Regulations

Customs and Border Protection has made two important changes to the regulations concerning the importation of textiles and wearing apparel. The first is the elimination of the requirement for submission of a textile declaration. The second is a requirement to identify the actual manufacturer of the goods through the manufacturer identification code (MID).

With the elimination of textile quotas, there are no longer quantitative restrictions for entry of textiles and wearing apparel into the United States. The exception is for certain Chinese goods subject to safeguard actions and for non-WTO countries still subject to bilateral textile agreements. Nevertheless, these new regulations are applicable to all textile products from all countries. Eliminating the need for the textile declaration is seen as an important step toward paperless entries for textile shipments and will reduce the paperwork burden on importers.

Generally, the MID can be reported for either the manufacturer or the shipper. However, for shipments of textiles and wearing apparel, the MID must identify the actual manufacturer. This will better enable Customs to enforce trade in these products by preventing entry into the U.S. with a false country of origin. The correct MID will assist Customs in verifying the actual country of origin, thereby upholding our international obligations by properly enforcing the international textile restraint agreements to which the U.S. is a party. The MID will ensure that only eligible textile imports receive preferential trade benefits. Reporting the actual manufacturer by way of the MID will help prevent the circumvention or frustration of the bilateral textile restraint agreements which remain in force or which may be negotiated in the future, as well as prevent the contravention of Chinese safeguard actions.

Food Facility Registration Final Rule

In October 2003, the Food and Drug Administration (FDA) published an interim final rule that required all facilities that manufacture, process, pack, or hold food for human or animal consumption to register with the FDA by December 12, 2003. This interim final rule implemented the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism Act or BTA). The FDA adopted the interim final rule as a final rule on October 3, 2005. The final rule makes no changes to the regulatory requirements outlined in the interim final rule.

Some of the highlights of the registration rule are:

The owner, operator, or agent in charge of a facility is responsible for registering the facility.
Foreign facilities that manufacture, process, pack, or hold food that is exported for consumption in the U.S. must register unless the food undergoes further processing or packaging at another facility outside the U.S.
If the further processing is limited to affixing a label or other de minimis activity, then the facility that conducts the de minimis activity also must register.
Foreign facility registrants must nominate a U.S. agent.
Registered facilities must notify FDA within 60 days of any change to registration information.
Information on registered facilities is confidential and is not subject to public disclosure under the Freedom of Information Act.

This last point is very important. As your customs broker, Samuel Shapiro & Company, Inc. cannot obtain any information on your suppliers’ registration information from FDA. Please ensure we are provided with complete registration numbers to enable us to timely file Prior Notice.

Failure to register a facility is a Prohibited Act. Food imported from an unregistered facility will not be allowed entry into the U.S.

TSA Announces Launch of Pilot Project to Track Hazmat Trucks

The Transportation Security Administration (TSA) has announced the launch of the Hazardous Material (hazmat) Truck Security Pilot. The pilot was kicked off the week of September 26, 2005. The TSA awarded contracts to General Dynamics Advanced Information Systems and SAIC in connection with this project. The program was designed to increase awareness regarding the transportation of hazardous materials, and to provide for coordinated responses to potential terrorist threats.

Source: TSA press release, dated 09/26/05 http://www.tsa.gov/public/display?theme=44&content=0900051980170e05)

PierPASS Ahead of Schedule

PierPASS has issued a press release announcing that the OffPeak program has reached its two-year goal in just two months. More than half a million truck trips have been diverted to OffPeak since the program was initiated on July 23, 2005. According to the release, more than 10,000 trucks use the new OffPeak shifts during a typical day. That’s enough trucks to stretch from Long Beach to San Diego if lined up end-to-end.

The OffPeak program was initiated to reduce congestion in and around the Ports of Los Angeles and Long Beach. Combined, these ports handle about 35 percent of all U.S. waterborne container cargo in the U.S. According to PierPASS Inc. President and CEO Bruce Wargo, “The success of the program demonstrates the ability of the goods movement industry to respond to evolving needs with industry solutions.”

Byrd Amendment Problems Reported by GAO

The Government Accountability Office (GAO) issued a report in late September on the Issues and Effects of implementing the Continued Dumping and Subsidy Offset Act (CDSOA), otherwise known as the Byrd amendment. Congress enacted this legislation to strengthen relief to injured U.S. producers.

The law’s key eligibility requirements limit benefits to producers that filed a petition for relief or that publicly supported the petition during a government investigation to determine whether injury had occurred. This law differs from trade remedy laws which generally provide relief to all producers in an industry.

This report found that 50% of all payments through 2004 went to five companies:

The Timken Company ($205 million)
The Torrington Company ($135 million)
MPB Corporation ($55 million)
Candle-lite ($57 million)
Zenith Electronics Corporation ($33 million)

Another key CDSOA feature requires that Customs and Border Protection (CBP) disburse payments within 60 days after the beginning of a fiscal year, giving CBP limited time to process payments and perform desired quality controls. This time frame, combined with a dramatic growth in the program workload, presents implementation risks for CBP.

CBP faces three key problems:

First, processing of company claims and CDSOA payments is problematic because CBP’s procedures are labor intensive and do not include standardized forms or electronic filing.
Second, most companies are not accountable for the claims they file because they do not have to support their claims, and CBP does not systematically verify the claims.
Third, CBP’s problems in collecting duties that fund CDSOA have worsened. About half of the funds that should have been available for disbursement remained uncollected in fiscal year 2004.

There are mixed feelings about the benefits among industries that were examined by the GAO. Recipients reported benefits, but non-recipients noted CDSOA payments gave their competitors an unfair advantage.

The United States has been under fire from other countries because it has not brought the CDSOA or the Byrd amendment into compliance with WTO obligations. The U.S. faces additional tariffs on U.S. exports covering a trade value of up to $134 million based on 2004 CDSOA disbursements. Recently, Canada, the European Union, Mexico, and Japan imposed additional duties on various U.S. exports. Four other WTO members may follow suit. Exporters must watch these developments carefully.

The full 116 page GAO report titled Issues and Effects of Implementing the Continued Dumping and Subsidy Offset Act, dated September 2005, can be found at: http://www.gao.gov/new.items/d05979.pdf.

Comments Requested on Foreign Policy Based Controls

The Bureau of Industry and Security (BIS) is reviewing the Foreign policy-based export controls in the Export Administration Regulations to determine whether they should be modified, rescinded or extended. To help make these determinations, BIS is seeking comments on how existing foreign policy-based export controls have affected exporters and the general public. Comments must be received by November 14, 2005.

Foreign policy based controls in the Export Administration Regulations (EAR) are implemented pursuant to section 6 of the Export Administration Act of 1979, as amended. The current foreign policy-based export controls maintained by BIS are set forth in the EAR, including in parts 742 (CCL Based Controls), 744 (End-User and End-Use Based Controls) and 746 (Embargoes and Special Country Controls).

BIS is particularly interested in the experience of individual exporters in complying with the proliferation controls, with emphasis on economic impact and specific instances of business lost to foreign competitors. Some other items that BIS is interested in are industry information relating to the sales of U.S. products to third countries, to what extent do they have similar controls on goods and technology on a worldwide basis or to specific destinations, licensing policies or practices by our foreign trade partners, requirements for pre- and post-shipment verifications, and actions that would make multilateral controls more effective.

For further information contact: Joan Roberts, Director, Foreign Policy Division, Office of Nonproliferation and Treaty Compliance, Bureau of Industry and Security, Telephone: (202) 482-4252.

The Federal Register Notice dated October 13, 2005, “Request for comments on foreign policy-based export controls” can be found at http://frwebgate3.access.gpo.gov/cgi-bin/waisgate.cgi?WAISdocID=8171411414+4+0+0&WAISaction=retrieve.

Cosmetically Redesigned CBP 7501 Entry Summary

U.S. Customs and Border Protection (CBP) has introduced a cosmetically redesigned version of the old CF 7501 Entry Summary. The new form is available on the customs website http://www.cbp.gov/xp/cgov/toolbox/forms/ for immediate download at https://forms.customs.gov/customsrf/getformharness.asp?formName=cf-7501-form.xft. The form is also available from the National Distribution Center at (317) 290.3149.

Either form, whether the legacy CF 7501 or the CBP 7501, may be used at this time. Customs is providing ample time to allow brokers and other interested parties to consume existing supplies of the legacy form; they are also allowing sufficient time to complete additional programming.

The cosmetic changes do not affect the data that was previously collected; the amount of data collection remains the same. Given that the changes were essentially aesthetic in nature, there was also no need for a formal review, comment, and approval period by the Office of Management and Budget.

The new CBP 7501 is produced as a single page with a continuation page if necessary. CBP will continue to require multiple copies of the form at the time of filing. Major changes include:

Larger font size (to comply with the Americans with Disabilities Act);
New blocks with the following titles: Total Entered Value, Total Other Fees, Surety Number, Broker/Filer information (Name, Address, Phone Number), Other Fee Summary for Block 39;
A total of 43 numbered blocks (formerly 41);
Slightly revised layout for the declaration of importer of record (owner or purchaser) or authorized agent;
Replacement of references to TSUSA with references to HTSUS.

CBP has posted detailed instructions for completing the CBP 7501 on their website at http://www.cbp.gov/linkhandler/cgov/toolbox/forms/7501_instructions.ctt/7501_instructions.doc.

Customs Directive 3550-061dated September 18, 1992 was cancelled as of October 1, 2005 and is now superseded by the new instructions. Two key changes to the CBP 7501 instructions include reporting requirements for the ultimate consignee at the time of entry, and how to properly identify a foreign manufacturer.

Questions regarding the new CBP 7501 may be directed to cpb.7501questions@dhs.gov.

CBP to Migrate ACH Debit Transactions

Under the direction of the Financial Management Service (FMS), U.S. Customs and Border Protection (CBP) will soon be migrating their current ACH debit application to www.pay.gov.

Customs explains this migration will be seamless to its ACH debit payers and there will be no change in the ABI transmission process. The only change the ACH debit payers will see is a change in the bank customer information used to retrieve the funds from the ACH debit payers’ accounts.

CBP advises that the current customer number 9000000640, and the transit routing number 043000261, will be replaced with the new customer number 7005009701, and the new transit routing number 042736141.

All ACH debit payers must notify their banks from which their ACH payments are drawn, of the new customer number 7005009701 and the new transit routing number 042736141 for your Customs duty payments as soon as possible.

During the transition, there is a possibility that either customer information (9000000640 or 7005009701) could be used for ACH debit transactions; however, CBP expects the migration to be completed by December 31, 2005. At that time, all transactions will reflect the new customer information.

Customs has stated that any ACH debit rejections caused by ACH payers who failed to notify their respective banks of this change will be subject to all penalties currently imposed by law.

Questions concerning their notification can be directed to Nan Voll at U.S. Customs and Border Protection, Revenue Division at (317) 614-4458.

Source: CBP Administrative Message 05-1140 dated October 4, 2005.

Generalized System of Preferences (GSP) Program Update

As mandated in the Trade Act of 1974 and extended under the Trade and Tariff Act of 1984, the Generalized System of Preferences (GSP) grants duty free status to certain products from designated countries. The intended role of GSP is to provide economic development in the designated beneficiary countries. GSP is currently due to expire on December 31, 2006.

The Office of the U.S. Trade Representative (USTR) is reviewing whether the program should be changed so that benefits are not focused on just a few countries, and that developing countries that have not participated in the program due to lack of trade will increase their participation and receive more GSP benefits. The Trade Policy Staff Committee of the USTR is seeking comments on whether some countries have sufficiently developed so that participation in GSP is no longer necessary. Comments are also invited concerning the period for which Congress should renew the legislation authorizing the GSP program. The Trade Policy Staff Committee (TPSC) will hold an open public hearing on November 3, 2005, 10am in Rooms 1 and 2, 1724 F Street NW., Washington, DC. Written comments must be submitted by November 14, 2005.

USDA Establishes New User Fee

Effective October 25, 2005, The Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS) established a new user fee of $108 per hour for services performed under the Quality Systems Verification Programs (QSVP). USDA has also expanded the extent of the QSVP to include all agricultural products and services under the jurisdiction of the Livestock and Seed Program, which include: livestock, meat, meat products, seed, and feedstuffs, as well as processes involving the production of these products, agricultural product data storage, product traceability, and identification.

QSVP is a voluntary, audit-based, user-fee program developed and conducted at the request of industry as a cost effective alternative to product certification. The programs are designed to assist in the global marketing and trade of agricultural products and provide consumers the opportunity to differentiate the distinctiveness involved in the production and processing of agricultural products.

News from the Port of Philadelphia

A USDA Agricultural Marketing Service, Section 8e Compliance Seminar was recently held in Philadelphia. Customs brokers were in attendance at the seminar designed to inform all importers of fruits and vegetables what needs to be done to comply with Section 8e. USDA's Agricultural Marketing Service, otherwise known as : AMS or AgMS in under the Marketing Order Administration Branch (MOAB) is not to be confused with USDA's Animal Plant Health Inspection Service, otherwise known as: APHIS.

Section 8e requires that when the Secretary of Agriculture issues regulations under domestic marketing orders, the same or comparable quality regulations for imports must be issued. This Section covers avocados (AVEP-Avocado Varietal Enforcement Program), dates (other than dates for processing), grapefruit, hazelnuts, kiwifruit, olives (other than Spanish-style green olives), onions, oranges, plums, potatoes, prunes, raisins, table grapes, tomatoes (round red tomatoes only), and walnuts.

The Importer of Record must:

Stamp & Fax the CF3461/CF7501 for "conditional" line release from Customs, and;
Present shipment to AgMS for inspection. AgMS Inspection covers size, grade and quality. They will also accept Canadian Inspection Certificates covering size, grade and quality (for potatoes only).
THIS IS THE NOT THE SAME AS AN APHIS INSPECTION!
OR
File an original FV-6 exemption form. This form is for commodities destined for processing, distribution by relief organizations, or donation to charity.
Possible outcomes for 8e imports: Pass, Exempt, Fail. If inspection fails you can have the product Reconditioned, Re-exported, or Send to Exempt Use.

Penalties for violating 8e include:

$1,100 penalty per violation and each day the violation continues
Re-delivery by Customs.
Civil forfeiture of the market value
Stipulation Penalty

For more information please visit their website at http://www.ams.usda.gov/fv

Marketing Order Administration Branch (MOAB)
1400 Independence Avenue, SW
Stop Code 0237, Room 2525-S
Washington, D.C. 20250-0237
Phone: 202-720-2491
Fax: 202-720-5698

Port of Colombo Now Targets and Pre-Screens Cargo Destined for U.S.

On September 29, 2005, United States Customs and Border Protection (CBP) Commissioner Robert C. Bonner and Director General of Sri Lanka Customs Sarath Jayathilake announced that the port of Colombo is the 40th operational Container Security Initiative (CSI) port to target and pre-screen maritime cargo containers destined for U.S. ports.

The declaration of principles with Sri Lanka was signed on June 25, 2003. Under the Container Security Initiative, CBP has entered into bilateral partnerships to identify high-risk cargo containers before they are loaded on vessels destined for the United States. CBP will deploy a small team of officers to be stationed at the port of Colombo to target maritime containers destined for the United States. Colombo Customs officials, working with CBP officers, will be responsible for screening all containers identified as a potential terrorist risk.

"With the port of Colombo becoming operational, U.S. Customs and Border Protection’s Container Security Initiative has achieved another milestone – 40 operational ports. Through CSI partnerships we are protecting the trade lanes and the global economy from being exploited and disrupted by terrorists," said Commissioner Bonner. "CSI began in 2002 as a proactive stance in screening sea containers at foreign ports before they reached U.S. soil. Our goal back then was to establish CSI at the top 20 seaports and we continue to forge ahead after surpassing that goal. Today, approximately 75 percent of cargo containers destined to the U.S. originate in or are transshipped from a CSI port."

Today, a total of 24 customs administrations have committed to join CSI and are at various stages of implementation. Currently there are 40 operational ports in Europe, Asia, Africa, the Middle East, and North and South America.

Now CSI has become a model of international cooperation to protect the global supply chain against terrorism. CBP’s goal is to have 50 operational CSI ports by the end of 2006. At that time, approximately 90 percent of all transatlantic and transpacific cargo imported into the United States will be subjected to pre-screening.

Source: “40th CBP Container Security Initiative Port Operational” at http://www.customs.gov/xp/cgov/newsroom/press_releases/09292005_2.xml appearing at The Bureau of Customs and Border Protection’s website on September 29, 2005.

Transportation Update

Far East
Carriers from the Far East to the USA have reported that their vessels are still running nearly 100% full on all water service to the USA east coast. Southern California ports are still reporting no major delays on cargo moving through those ports.

There are still some delays for rail shipments going through Chicago. This is a normal bottleneck at this time of year. The delays are averaging about 2-3 days. There is a need for a complete overhaul of the way containers transit through Chicago, however right now there isn’t enough money appropriated by Washington to move forward.

Bunker Surcharges from Far East ports to the USA will remain stable through November. Current levels are as follows:

20’ container $ 345.00
40’ container $ 455.00
40 HC cont. $ 510.00
45’ container $ 580.00

Carriers will maintain the emergency rail fuel surcharge at the current level of $158.00 for any size container.

The next possible change will be on January 1, 2006.

EUROPE
Northern Europe

Bunker fuel surcharges that were increased on October 16, 2005 from Northern Europe to United States will not rise in November.

Current bunker surcharges are as follows:

East Coast Ports 20’ containers $ 423.00
East Coast Ports 40’, 40’ HC and 45’ containers $ 846.00.
West Coast Ports 20’ containers $ 635.00
West Coast Ports 40’, 40’ HC and 45’ containers $ 1270.00

Mediterranean Shipping Company has announced a new rotation for their vessels that will now have Baltimore the first port of call on the USA east coast. They have dropped Norfolk as a direct port of call and have added Hamburg Germany as a direct port of call. Norfolk will now be served via Freeport Bahamas.

The Mediterranean
Carriers that announced rate increases effective October 1, 2005 did not follow through on the increases. The bunker fuel surcharge will be going up on November 1, 2005.

Bunker surcharges will be going up for Atlantic and Gulf ports from all Mediterranean ports.

20’ container from $ 323.00 to $401.00
40’, 40 HC cont. from $ 646.00 to $802.00

Air News
Fuel surcharges are going up worldwide. The high rates have added considerable expense. Effective October 28, 2005, the fuel surcharge from Hong Kong will be 0.62/kg. This is the height of the peak season from Asia. Space is very tight from all points in China and Hong Kong.

Capacity from Europe and Indian sub-continent remain strong. Rates are stable though fuel surcharges have gone up. The fuel surcharge from Europe went up twice during October. The current rate is now EUR 0.60/kg from all countries using the euro. The amount from non-euro countries is similar.

Export Ocean News
There haven’t been too many changes in exports in the last month. Space is still tight on some trade lanes. There will most likely be a push to raise rates on January 1, 2006.

Domestic USA
Domestic fuel surcharges are still climbing nearly on a daily basis. We have seen some truckers charge fuel surcharges of 28%. Most truckers are raising or reducing their fuel surcharges based on the weekly index of fuel prices nationwide.

Carrier News
Some of the large container ships that have been under construction are now being put into service. This will continue into 2006 and will change the landscape around the world. Carriers will be redeploying vessels in order to add these huge vessels into their service. Most of these large vessels (exceeding 10,000 TEU’s) will ply from Asia to Europe and Asia to the USA west coast. Carriers should be adding capacity on to the market to and from many trade lanes. It remains to be seen how it will look in 2006, however, rates should stabilize worldwide.

The two largest steamship alliances, The Grand Alliance and the New World Alliance are discussing an arrangement where they share space on each other’s vessels. This is a direct result of the Maersk Sealand purchase of P & O Nedlloyd. Vessels belonging to P & O Nedlloyd will be pulled out of their alliance and will move over to Maersk.

Samuel Shapiro & Company, Inc. Products & Services

Import Essentials Seminar – There is Still Time to Register!

Samuel Shapiro & Company, Inc. will be hosting a one-day import seminar on Tuesday, November 15th, 2005, from 9:00 a.m. to 4:00 p.m., at the Four Points Sheraton in Harrisonburg, Virginia. The Import Essentials seminar will discuss how to be a compliant importer and will feature a bonus session, “What’s New with C-TPAT.” Seminar topics will include importer responsibilities under reasonable care, how to establish a compliance program, and Incoterms, among others. This event is a must attend for experienced and novice importers alike looking to improve their import compliance program or exporters interested in learning about import opportunities.

Seminar Location:

Harrisonburg Four Points Sheraton
1400 East Market Street
Harrisonburg, Virginia 22801
Tel: 540-433-2521

Cost (includes seminar materials, lunch, and refreshments):

$150 per person
$125 for each additional attendee from the same company
$75 for students (with valid student ID)

Register Now! Click on the link below:
http://www.shapiro.com/html/import_seminar.html

For more information please contact the Compliance Department by phone at 800-695-9465 ext. 290 or by email at compliance@shapiro.com.

Headquarters Relocation - October 28, 2005

On October 28, 2005, the Baltimore office of Samuel Shapiro & Company, Inc. will be moving to:

100 North Charles Street
Suite 1200
Baltimore, MD 21201

Tel: 410-539-0540
Tel: 800-695-9465
Fax: 410-547-6935 – Import
Fax: 410-332-1274 – Export

Our phone and fax numbers will remain the same as will our extensions.

We will be closing the Baltimore office at noon on the 28th. Samuel Shapiro & Company, Inc. will be open and ready for business Monday, October 31st at our new location.

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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.