December 2005 - Issue #44
In
This Issue:
The ABC’s of ADD and CVD
House of Representatives Votes to Repeal the Byrd Amendment
Export License Application Sins
FDA Issues Revised BTA Prior Notice Policy Guide
DHS Looks to the Next Generation of Supply Chain Security
Iran Returns to the ATA Carnet System
Naval Protection Sought for Pirate Attacks of Vessels
TSA Names Three Area Directors to Oversee Transportation Security Nationwide
Buenos Aires, Argentina, Becomes 41st Operational CSI Port
Transportation Update –December 2005
News from our New York Office
Import Essentials Seminar – A Huge Success!
Baltimore Headquarters Relocation
Trade Industry News
The ABC’s of ADD and CVD
One of the elements of Reasonable Care is knowing if your goods are subject to antidumping and/or countervailing duties (ADD/CVD). ADD/CVD helps the United States compete with foreign industry by providing a legal remedy against unfairly traded imports that injure or threaten to injure a domestic industry. Dumping occurs when goods are sold at less than fair market value. Antidumping margins are set to represent the difference between the fair market value of the merchandise and the exporter’s sale price. Countervailing duties are assessed when a foreign country pays grants or subsidies to the manufacturer, producer, or exporter of goods in order to encourage exportation or to help the exporter compete in the U.S. Countervailing margins are imposed to “countervail” or offset the subsidy margins.
ADD/CVD cases are brought before the Department of Commerce (DOC) by domestic manufacturers. The petitioners must represent at least 25% of the affected industry, and 50% of domestic producers expressing a position must support the case. The DOC will review foreign sales practices and subsidies, determine the scope of the investigation, and set the ADD/CVD margins. The International Trade Commission (ITC) is responsible for making the determination of whether there is injury to U.S. industry. Once there are affirmative determinations of dumping or subsidies AND injury, the DOC will issue an order to Customs and Border Protection to impose the antidumping and countervailing duties. Customs is then responsible to enforce the ADD/CVD determinations and to collect the appropriate ADD/CVD duties. Customs also ensures the ADD/CVD entries are liquidated timely when notification is received from the DOC.
Historically, ADD/CVD involved primarily steel and bearings. Today, just about any commodity can be subject to ADD/CVD: candles, pasta, honey, pencils, wooden bedroom furniture, and cooking ware, to name a few. Some cases carry extremely high dumping margins which can impact your Customs bond. For example, garlic from China has a dumping rate of 376.67% as of this writing.
Accurate commercial invoices with detailed product descriptions and correct value declarations are critical to ensure correct ADD/CVD case reporting and duty payment. The scope of the ADD/CVD case will define the boundaries and specifically state what goods are included or excluded. Determining whether a particular product falls within the scope of the case, can be complex at times and is best determined by seeking a scope ruling from the Department of Commerce.
Customs and the Department of Commerce are also concerned that the ADD/CVD duties may be reimbursed to the importer in some fashion. Therefore, the DOC asks that the importer complete an affidavit to the fact that they have not entered into some type of agreement for the reimbursement of the ADD/CVD duties. This non-reimbursement statement cannot be completed by Samuel Shapiro & Company, Inc. as your Customs broker. Only the importer is authorized to sign the statement. Our policy is to file the statement at the time duties are paid. Failure to file the non-reimbursement statement prior to liquidation will result in ADD/CVD duties being doubled.
ADD/CVD represents a contingent liability to the importer as these type entries may take years to liquidate. There is a possibility that the Department of Commerce can rule for a low preliminary margin in an ADD/CVD case and then issue a final determination at a much higher rate. Continuous monitoring of case updates and liquidations are key to the exercise of reasonable care. This can be achieved by checking the Federal Register (http://www.gpoaccess.gov/fr/index.html), the Department of Commerce website (http://ia.ita.doc.gov/ia-reference-material.html), and the ITC website (http://www.usitc.gov/trade_remedy/731_ad_701_cvd/index.htm). If you have questions, please feel free to contact us at compliance@shapiro.com.
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House of Representatives Votes to Repeal the Byrd Amendment
The U.S. House of Representative voted on November 18, 2005, and approved H.R. 4241, the Deficit Reduction Act of 2005, which includes a provision to repeal the Continued Dumping and Subsidy Offset Act, otherwise known as the “Byrd Amendment.” Named after its author, Sen. Robert C. Byrd, D-W.Va., the so-called Byrd Amendment allows the federal government to distribute money collected from punitive duties on foreign goods and instructs Customs to put all antidumping tariffs it collects into special accounts, one for each case, and distributes the trade dumping penalties to aggrieved competing American companies. Previously, that money went directly into the general Treasury.
The U.S. has been under pressure to repeal the Byrd Amendment, a U.S. trade law deemed illegal by the World Trade Organization, causing retaliatory action from major trading partners such as Mexico, Japan, the European Union and Canada.
The House vote sets the stage for a tough fight with Senate supporters; it is unclear whether or not the bill will survive a conference with the Senate.
Source: http://waysandmeans.house.gov
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Export License Application Sins
The Bureau of Industry and Security (BIS) held its Annual Update Conference in late October in Washington, DC. Over 700 people attended the event which is held to inform and advise on regulatory and policy issues affecting the exporting community. The Operating Committee for Export Policy held an informative session entitled “Common License Application Sins” with representatives from the Department of Commerce, Department of Defense, Department of State, and Department of Energy. This session discussed the pitfalls exporters face when applying for an export license from BIS.
License requirements are dependent upon an item's technical characteristics, the destination, the end user, and the end use. If an item under the Commerce Control List requires a BIS license to be exported, the exporter must apply to the BIS for an export license. If the application is approved, BIS will issue a license number and expiration date to use on the export documents. A BIS-issued license is usually valid for two years. The agency conducts a complete analysis of the license application along with all documentation submitted in support of the application. BIS reviews the item, its destination, its end use, and considers the reliability of each party to the transaction.
An effective license application must include complete end user information including complete name and address (a street address is preferred over a P.O. Box). If the item is going to a large organization, include a department or point of contact. If the end user is a subsidiary of another company, be sure to include the relationship between the parent company and the subsidiary. Include in the application if you have ever met the end user or visited their facility. Advise Commerce how long you have had a relationship with the end user. The Department of Commerce wants to ensure the end user actually exists.
The license application must be specific regarding the end use. Details of each item and its capability should be included. Don’t use vague statements such as “could” be used versus “will” be used. Be sure technical specifications are complete. Include a technology control plan, list all ECCN’s under “items to be exported,” provide the ECCN information at the lowest level, and describe exactly how the commodity will support the specific end use. Provide model numbers where applicable. License applications should only be for the actual quantities to be shipped. Commerce advises against padding the quantity to be exported versus the quantity actually needed by the end user. Proper Schedule B classification is essential.
If you have received prior license numbers, include those in your application to facilitate the processing. If there is a contract of sale, include pertinent contract clauses such as those that limit the use of the item to what the buyer states the intended use will be, or the stated method of payment. Be sure to explain any red flags, for example, why payment is in cash. Although obvious, the Department of Commerce recommends the application include a backup point of contact in case you are away from the office. All of the above should ensure smooth processing for your export license application.
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FDA Issues Revised BTA Prior Notice Policy Guide
The Food and Drug Administration (FDA) has revised the compliance policy guide (CPG) {http://www.cfsan.fda.gov/~pn/cpgpn6.html} regarding the prior notice requirements of the BioTerrorism Act (BTA). The CPG provides written guidance on enforcement of section 307 of the BTA and the FDA’s implementing regulations. Advanced notice is required for food imported or offered for import into the U.S. The revised policy guide provides additional flexibility in filing prior notice when (a) due to geography, the only practical transportation route available for the shipment is through the U.S., and (b) there is a violation because the prior notice does not include the 6-digit HTSUS number for the article of food.
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DHS Looks to the Next Generation of Supply Chain Security
During the annual Customs Trade Symposium, the Department of Homeland Security announced the next generation initiative in response to continued terrorist threat risks and will be employed on a global basis. It will build on the elements contained in the first-generation response -- from ACE to C-TPAT to CSI. The initiative envisions a greater role by the private sector, with a non-government unit responsible for gathering data throughout the supply chain from order to delivery. The new entity will act as an intermediary to collect data that can be passed to the government where the cargo is heading for its own risk-management analysis.
The next generation initiative will enable Customs and Border Protection to obtain data in a more timely fashion and with additional details. It was recently dubbed "ACE on steroids." DHS will launch a very contained pilot program to test the ideas.
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Iran Returns to the ATA Carnet System
The International Chamber of Commerce reports that Iran has agreed to re-introduce the ATA Carnet system starting November 15, 2005. This appears to be a major breakthrough in spreading the use of the ATA system in that part of the world.
The ATA Carnet is operated by the International Chamber of Commerce in cooperation with the World Customs Organization (WCO). The ATA Carnet provides a method for temporary import of goods free from duties, taxes and other customs charges for imports of professional equipment, commercial samples and goods for display or use at trade fairs, exhibitions and similar events.
This agreement with Iran has involved several years of negotiation with the Iranian Government. Iran will become the 63rd member of the ICC/ATA international guarantee chain.
For the full article titled dated October 25, 2005, please refer to the International Chamber of Commerce website at: http://www.iccwbo.org/id4824/index.html
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Naval Protection Sought for Pirate Attacks of Vessels
An alarming rise in the number of piracy attacks off the coast of Somalia is reported by the ICC International Maritime Bureau (IMB).
The International Maritime Bureau is a specialized bureau of the International Chamber of Commerce. The IMB’s responsibilities lie in fighting crimes related to maritime trade and transportation, particularly piracy and commercial fraud, and in protecting the crews of ocean-going vessels.
Since March 2005, there have been 31 serious attacks off the Somali coast. Four of these attacks took place over two days in the first week of November. These attacks are carried out in international waters, far from the East African coast.
Gangs of pirates in fast fibreglass-bottomed boats attacked the luxury cruise ship Seabourn Spirit with AK-47 assault rifles and rocket-propelled grenades. In one incident a ship was lured into danger by pirates firing bogus distress flares.
The ICC feels that unless international action is taken against the pirates, they believe it is difficult to see how shipping can be protected. The ICC has appealed for naval patrols by some of the world’s established maritime powers to fend off these attacks.
For more information on these attacks, visit the International Chamber of Commerce Commercial Crimes Services website at: http://www.icc-ccs.org/main/news.php?newsid=58.
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TSA Names Three Area Directors to Oversee Transportation Security Nationwide
The Transportation Security Administration (TSA) has named Maggie Rhodes, Leo Vasquez, Jr., and Dennis Clark as the three Area Directors to oversee transportation security at airports and in other modes of transportation for the East Coast, Central, and Western areas, respectively.
Full-time Area Director positions are being established to give greater flexibility and coordination in providing TSA support to all Federal Security Directors in the field. Area Directors are now in a position to work directly with headquarters staff in a team approach to resolve issues and be an integral part of responses to incidents affecting the transportation systems in their respective areas. Area Directors will not only oversee Federal Security Directors at airports, but ensure security procedures and responses are carried out in an effective manner for the viability of the national transportation system.
For the complete article in full, please refer to the TSA website at: http://www.tsa.gov/public/display?theme=44&content=090005198017e8d3.
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Buenos Aires, Argentina, Becomes 41st Operational CSI Port
On November 17, 2005, United States Customs and Border Protection (CBP) Commissioner Robert C. Bonner and the government of Argentina announced the port of Buenos Aires as the 41st operational Container Security Initiative (CSI) port to target and pre-screen maritime cargo containers destined for U.S. ports.
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. Today, a total of 25 administrations have committed to join CSI and are at various stages of implementation.
“The Container Security Initiative is a deterrent to terrorists seeking to use containerized cargo as a conduit for terrorism within the maritime environment. Having CSI ports, such as the one in Buenos Aires, is making U.S. borders more secure and more efficient,” said Commissioner Bonner. “CSI is a way of addressing the threat to global trade making it more secure against terrorist exploitation and Argentina was the first South American country to agree to participate in CSI. CBP will continue to cast out the CSI security blanket to additional foreign ports.”
CBP will deploy a team of officers to be stationed at the port of Buenos Aires to target maritime containers destined for the United States. Argentine Customs officials, working with CBP officers, will be responsible for screening any containers identified as a potential terrorist risk.
Currently, there are 41 operational CSI ports in Europe, Asia, Africa, the Middle East, and North and South America. Approximately 75 percent of cargo containers headed to the U.S. originate in or are transshipped from CSI ports. 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: “Buenos Aires, Argentina, 41st Operational CSI Port to Target and Pre-Screen Cargo Destined for U.S.” appearing at CBP’s website at http://www.cbp.gov/xp/cgov/newsroom/press_releases/11172005.xml on November 17, 2005.
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Transportation Update –December 2005
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. With that in mind they have extended the Peak Season Surcharge on all water shipments until January 31,2006. The published Peak Season Surcharge is as follows:
- 20’ container $ 300.00
- 40’ container $ 400.00
- 40 HC container $ 450.00
- 45’ container $ 510.00
Peak Season for shipments to the west coast or via the west coast will end on November 30, 2005.
There are still some delays for rail shipments going through Chicago. The delays are averaging about 2-4 days.
Bunker Surcharges from Far East ports to the USA will remain stable through December. Current levels are as follows:
- 20’ container $ 345.00
- 40’ container $ 455.00
- 40 HC container $ 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. There is a good chance some of these charges will go down as the price of oil has decreased over the last 2 weeks, and hopefully the trend will continue into December.
Northern Europe
Bunker fuel surcharges that were increased on October 16, 2005 from Northern Europe to United States will not rise in December.
- 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
China Shipping and CMA/CGM have announced in Europe that they will begin a direct service from Northern Europe next March. They will call on the following ports: Le Havre, Antwerp, Rotterdam, Bremerhaven or Hamburg, New York, Baltimore, Norfolk and Charleston. The vessel size is expected to be between 2400 and 2500 TEU’s and will be equally shared between China Shipping and CMA/CGM. Further information should be available in January 2006. This should be very good news for The Port of Baltimore that is need of additional service to and from Europe.
The Mediterranean
The bunker fuel surcharge that went up on November 1, 2005 will remain the same through the month of December.
Bunker surcharges will remain as follows to Atlanta and Gulf ports from all Mediterranean ports.
- 20’ container $ 401.00
- 40’, 40 HC cont $ 802.00
Space is not as big a problem now as it was earlier in the year.
Air News
Fuel surcharges are finally going down worldwide. The high rates have added considerable expense.
Effective November 22, 2005, the fuel surcharge from Hong Kong will be 0.57/kg. This is the tail end of the peak season from Asia. Space is very tight from all points in China and Hong Kong. Space should ease up during December and remain that way until Chinese New Year in late January.
Capacity from Europe and the Indian sub-continent remain strong. The fuel surcharge from Europe is expected to keep dipping over the next 3 weeks. This will drop to EUR 0.55/kg in late November and will keep dropping as the price of oil goes down. It is expected to reach EUR 0.45/kg by Mid December.
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. As of this writing there is no official word from the carriers. With added capacity it will be hard for the carriers to significantly raise rates.
Domestic USA
Domestic fuel surcharges seem to have leveled off and are going down in some areas. We had seen some truckers charge fuel surcharges of 28%. Lately we have seen FSC in the 20-25% range.
Carrier News
The buyout of CP Ships by the parent company of Hapag Llloyd should happen in early 2006. It remains to be seen how this will affect service worldwide.
Maersk SeaLand will change its name in February to Maersk Line and drop SeaLand from its name. They will also absorb P & O Nedlloyd into the Maersk name as well.
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Samuel Shapiro & Company, Inc. Products & Services
News from our New York Office
The latest figures from the Port Authority of New York and New Jersey indicate an overall growth rate of 8.5% with regard to the number of TEU’s handled in 2005. There has been a 10% increase on the import side and a 6 % growth in the number of export containers. In order to handle the anticipated future volume, the Port Authority is exploring the possible expansion of existing terminals and the construction of new facilities.
Port Newark Container Terminal continues to experience congestion difficulties and some truckers are refusing to go into this site. The truckers which will pick up there may soon be instituting a surcharge to cover the cost of their drivers' waiting time.
Our import manager, George Galestro, entered and completed the New York Marathon on November 6, 2005. He attributes having the stamina to complete the 26 mile race to his years of working as a Customs broker. Way to go George!
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Import Essentials Seminar – A Huge Success!
On November 15, 2005, Samuel Shapiro & Company, Inc. hosted its Import Essentials Seminar at the Sheraton Four Points Hotel in Harrisonburg, Virginia. The Import Essentials Seminar discussed what it takes to be a compliant importer and featured a bonus session on “What is new with C-TPAT”.
The seminar covered topics such as reasonable care, the entry process, and how to establish a compliance program. Our Samuel Shapiro & Company speakers were Jane Taeger, Corporate Compliance Manager; Liz Gant, Trade Compliance Analyst; Jim Shapiro, VP of Transportation; and Brunella Caldas, Business Development Manager.
Over twenty importers attended the event along with several Shapiro representatives from our East Coast offices. Jane Taeger, the director of the event, was extremely pleased with the outcome. “It's wonderful to see so many companies committed to compliance," explained Taeger. “Our seminar program is just one of the ways we strive to educate our customers.”
Here is what one importer had to say about the seminar. “The Import Essentials Seminar held on November 15th of this year opened my eyes to the reality of needing to establish a Compliance Program--to avoid and/or be prepared for: supply chain disruptions, customs audits, fines and penalties, etc.... Any importer should have a compliance program in place--Samuel Shapiro can help establish one for you.
”The main reason I attended the seminar was to learn about the Customs-Trade Partnership Against Terrorism or C-TPAT. This program offers businesses an opportunity to join customs in the war against terrorism. Samuel Shapiro & Company provided a full understanding of the program--requirements needed to join, benefits of membership, and the application process. Samuel Shapiro & Company is very knowledgeable with the C-TPAT program and can provide help for companies who wish to become C-TPAT certified.
”I want to thank everyone at Samuel Shapiro & Company for the continued education. The laws are always changing and Customs expects the importer to know what they are -- Samuel Shapiro & Company understands this and keeps me informed.”
Samuel Shapiro & Company, Inc. hosts public seminars, available throughout the year, for the importing and exporting communities, in addition to presenting private seminars. It is our way of creating an engaging environment for all interested parties, allowing for an exchange of ideas and information, all with the ultimate goal of strengthening our customers’ compliance programs. For more information, contact us at consulting@shapiro.com.
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Baltimore Headquarters Relocation
On October 28, 2005, the Baltimore office of Samuel Shapiro & Company, Inc. relocated 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 remain the same.
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