|
|
Greetings!
Welcome to the first addition of Global Trade Expertise's newsletter, the Global Trader. This newsletter strives to provide relevant news updates to the international trade community. We would greatly appreciate your feedback as to what in topics are of interest to you. Thank you for reading! Jennifer Kessinger Global Trade Expertise
|
|
Discrimination Alleged in Tariff Rates
Duty Savings and Refund Opportunity
Several lawsuits have been filed recently by importers of apparel, footwear, and accessories at the U.S. Court of International Trade (USCIT) alleging the government's assessment of different tariff rates for imported products based on the gender or age of the product's user amounts to unconstitutional gender or age discrimination. If successful, the government may be forced to refund the higher amount of duties paid based on gender or age differences on such products, which some estimate to be close to $1 billion.
The USCIT has designated one case as a "test case" to litigate the issue before a three-judge panel. The test case is Totes-Isotoner Corporation v. United States. All other cases alleging essentially the same cause of action will be held, pending the resolution of the Totes-Isotoner case.
In the meantime, by filing suit at the USCIT, an importer can protect its right to any potential refunds of higher duties paid due to such discrimination from 2 years prior to the date of filing the complaint and going forward. The sooner the case is filed, the greater the amount of potential refunds.
The case is likely to take many years to progress through the courts -- as occurred with the constitutional challenge to the Harbor Maintenance tax, which was ultimately successful. However, plaintiffs hope to secure a settlement with the government before then.
Importers who would like to protect their right to potential refunds of higher duties paid for products where the duty rate is determined based on the gender or age of the product's user should assess the classifications of their imports over the previous two years and contact an international trade attorney to assess whether filing a suit in the CIT is in the importer's best interest. |
Holiday Apparel & Other Products Eligible for Duty-Free Classification
Duty Refund Opportunity
On September 11, 2007, in Michael Simon Design, Inc. v. United States, the U.S. Court of Appeals for the Federal Circuit affirmed a decision of the U.S. Court of International Trade holding that holiday apparel may be reclassified as duty-free festive articles. Although the government argued that holiday apparel were utilitarian in nature and thus, cannot be classified as festive articles under heading 9505 of the Harmonized Tariff Schedule of the United States (HTSUS), the Court of Appeals rejected that argument and stated, "[B]ecause we conclude that the goods' utilitarian nature does not prohibit classification under chapter 95, and because the relevant chapter and section notes render classification proper under chapter 95, the trial court was correct to reverse Customs' classification ruling." The court also noted that it is not bound by a contradictory Explanatory Note, which expressly excludes articles having a utilitarian function from classification as a festive article.
This decision makes it clear that holiday apparel, and other goods, may be classified as festive articles under HTSUS heading 9505 regardless of their utilitarian value if they meet two criteria: "(1) it must be closely associated with a festive occasion and (2) the article is used or displayed principally during that festive occasion." Although an appeal from the government may follow, the legal reasoning of the court appears sound.
Nevertheless, importers may be entitled to refunds for duties paid on such articles for past entries that are still within the protest time period. (Entries made in 2007 will not be eligible for protests as the 2007 amendments to the HTSUS now specifically exclude apparel and other utilitarian articles from classification as festive articles.) Protests of customs entries must be filed within 180 days of the entry's liquidation and Customs generally liquidates entries within 11 to 12 months. Thus, importers may be able to file protests for products imported within the past 18 months. Global Trade Expertise can assist importers with obtaining such refunds. Just contact us.
|
Government Steps Up Export Enforcement
DOJ Forms New Counter-Proliferation Task Forces in High Tech Areas
The U.S. Department of Justice (DOJ) announced on October 11, 2007 the launch of a national counter-proliferation initiative. The DOJ states that the initiative will be undertaken in conjunction with the State Department's Directorate of Defense Trade Controls (DDTC) and the Commerce Department's Bureau of Industry and Security (BIS). As part of the initiative, the DOJ's National Security Division has begun monthly meeting with the leadership of these offices to ensure that investigations, prosecutions, and enforcement issues are fully coordinated. Counter-Proliferation Task Forces have been formed in U.S. Attorney offices around the country in regions with large concentrations of high-tech businesses and research facilities.
DOJ states that the threat posed by illegal acquisition of restricted U.S. technology is "substantial and growing." It states that a 2006 U.S. Defense Department report found a 43 percent increase in the number of suspicious foreign contact with U.S. defense firms and an Intelligence Committee report issued last year found that entities from a record 108 nations were engaged in efforts to obtain controlled U.S. technology.
DOJ reports that China and Iran pose particular concerns for U.S. export control with the majority of criminal prosecutions in recent years involving restricted U.S. technology bound for these nations. Recent prosecutions have involved illegal exports of stealth missile technology, military aircraft components, Naval warship data, night vision equipment, and other restricted technology destined for China or Iran.
The DOJ has appointed its first National Export Control Coordinator to implement this initiative and foster coordination among the different agencies involved in export control. Based in the Counterespionage Section of the National Security Division, the National Export Control Coordinator is responsible for managing the nationwide training of prosecutors and monitoring the progress on export control prosecutions around the country.
In addressing these export control threats, DOJ states that law enforcement agencies and federal prosecutors have stepped up their enforcement activity in recent years. U.S. Immigration and Customs Enforcement (ICE) has recently doubled the number of agents assigned to export control cases and reports making 149 export-related arrest last fiscal year. The FBI reports that it is investigating approximately 125 economic espionage cases and has increased counterintelligence instructions for new agents by 240 percent.
The Commerce Department reports that more than 80 percent of its export convictions in fiscal year 2207 were related to WMD proliferation, terrorist support, or diversion to military end-use. In fiscal year 2007, the DOJ states there was more than a 50 percent increase in defendants charged with violating export control statutes compared to the prior year.
|
BIS Issues New China Rule
Regulations on Exports to China are both Tightened and Loosened
 On June 19, 2007, the U.S. Commerce Department's Bureau of Industry and Security (BIS) published BIS China Regulationswith regard to exports to the Peoples' Republic of China (PRC or China) in the Federal Register at 72 Fed. Reg. 33646. In the view of BIS, the new regulation serves the dual purposes of facilitating trade with trusted civilian end users and prevents the modernization of China's military.
New Military End Use Control: The new rule establishes additional licensing requirements, based on the exporter's knowledge of a "military end-use," for exports and reexports to the PRC of certain items on the Commerce Control List (CCL) that otherwise do not require a license to the PRC. "Knowledge" of a military end-use includes not only positive knowledge or substantial certainty of a military end-use, but also an awareness of a high probability of existing or future military end-use for an export or reexport. Such awareness can also be inferred from evidence of the conscious disregard of facts known to a person or a person's willful avoidance of facts.
Covered Items: Not all U.S. origin items or technology are prohibited from export to the PRC under the new military end use control. The final list of items subject to the military end use restriction covers approximately 20 items and associated technologies, including commercial aircraft and aircraft engines, depleted uranium, certain lasers and optical sensing fibers, flash X-ray machines and components, airborne communication systems and inertial navigation systems, underwater systems, certain types of bearings and machine tools, certain composite materials, high performance computers, space communications, air defense, and certain highly specialized telecommunication equipment.
Military End Use: The rule's broad definition of military end use covers incorporation into or operation, installation, maintenance, repair, overhaul, refurbishing, development, design, production, manufacture, integration, and testing of any item listed on the United States Munitions List (USML) or the International Munitions List.
Validated End-User Program: The new rule creates a new authorization for "validated end-users" to which specified items may be exported or reexported without a license. Validated end-users (VEUs) will be placed on a list in the Export Administration Regulations (EAR) after review and approval by the U.S. Government. To be certified as VEUs, entities would need to submit an advisory opinion request to BIS that includes, among other things, a list of the items to exported to the candidate VEU, a description of the intended end-uses, details on the end-user's internal control procedures, and overview of the entity's ownership structure, business activities, and any relationship with either government or military organizations. To be approved as a VEU, the entity would have to agree to comply with certain recordkeeping requirements and permit on-site inspections by U.S. government officials. The VEU review request can be initiated by a U.S. exporter, a Chinese end-user, or the U.S. government and will be vetted by the multi-agency End-User Review Committee (ERC).
MOFCOM End-User Statement: The new rule changes what was previously described as "End-User Certificates" to "End-User Statements" (EUS), with respect to the PRC. While significantly increasing the threshold amount necessary before an Import Certificate or End-User Statement is required (from $5,000 to $50,000), BIS now requires the Import Certificate or End-User Statement for any product requiring a license to the PRC for any reason (not only national security controlled items). If a PRC End-User Statement must be signed by an official of the Department of Mechanic, Electronic and High Technology Industries, Export Control Division I, of the PRC Ministry of Commerce (MOFCOM), with MOFCOM's seal affixed.
|
BIS Announces First 5 VEU Authorizations
Is Your Company At A Competitive Disadvantage?
BIS announced the approval for the first five companies in China for Validated End-User authorization. The VEU authorization will remove individual license requirements on exports of certain controlled items to the approved companies. BIS stated that, "The VEU program for China will make transactions easier, faster and more reliable with customers that meet rigorous security requirements established by an interagency review process, and will help U.S. exporters remain competitive in one of the fastest-growing markets for American companies. The VEU program is an innovative way to facilitate exports to civilian end-users in China."
The first companies approved for VEU authorization are:
· Applied Materials China
· Boeing Hexcel AVIC I Joint Venture
· National Semiconductor Corporation
· Semiconductor Manufacturing International Corporation (SMIC)
· Shanghai Hua Hong NEC Corporation (HHNEC)
BIS also stated that, "These companies, which accounted for 150 licenses between 2002 and 2006, were approved for VEU status after a thorough review of such factors as the entity's record of exclusive engagement in civil end-use activities; the entity's compliance with U.S. export controls; the need for an on-site review prior to approval; the entity's capability of complying with the requirements of authorization VEU; the entity's agreement to on-site reviews to ensure adherence to the conditions of the VEU authorization by representatives of the U. S. Government; and the entity's relationships with U.S. and foreign companies."
With a VEU authorization, these companies may now export certain U.S.-controlled items to China without obtaining individual export licenses. If your company frequently exports items to a particular end user for which you need licenses, it may be at a competitive disadvantage without a VEU authorization. Global Trade Expertise can assist clients with applying for VEU authorization. Contact us at info@globaltradeexpertise.com for more information.
|
BIS Extends Validated End User Authorization to India
News for Clients with Subsidiaries in India
 The Bureau of Industry and Security (BIS) has announced the issuance of a final rule, effective on October 2, 2007, which amends the Export Administration Regulations (EAR) by adding India as an eligible destination for exports, reexports, and transfers under the new Validated End-User (VEU) authorization. BIS has also created a webpage with helpful information on the new rule, such as a fact sheet, Q&A for Exporters, text of the VEU authorization regulations, and guidance for submitting an Advisory Opinion Request for VEU authorization.
BIS had created the new VEU authorization in a final rule on June 19, 2007 for eligible destinations (then, only China). The VEU authorization allows the export, reexport, and transfer of commodities, software, and technology (except those controlled for missile technology (MT) or crime control (CC) reasons) to the approved VEU without a license.
To qualify for VEU authorization, various conditions and restrictions must be met, including, but not limited to: (1) VEUs must be approved by the End-User Review Committee and listed in 15 CFR Part 748, Supplement 7; (2) requests for VEU authorization must be submitted via an Advisory Opinion Request; (3) items to be exported under VEU authorization must be for civil uses only; and (4) certifications must be obtained from the VEU prior to the initial export regarding end-use and compliance with VEU requirements.
|
Who's Hiring?
A Summary of Current Trade Job Opportunities
As a service to the international trade community, Global Trade Expertise compiles links to trade job opportunities from many different sources. New trade job listings are posted frequently at on our website. The following regions have trade job opportunities (the number of opportunities are current as of October 20, 2007):
West - 25
Midwest - 27
South - 16
Northeast - 14
DC Metro - 4
Current trade jobs are available in the following fields:
Customs - 17 Export - 18 Import/Export - 46 Logistics/Transportation - 8 Current trade job opportunities are available at the following levels: Analyst/Specialist/Coordinator/Officer - 47
Manager - 33
Director - 3
Attorney - 2
To sort the job opportunities by region, fields, or levels, click on the appropriate "Tag" in the right column on our Trade Jobs webpage. |
Calendar of Events
Upcoming Industry Events & Seminars
Bureau of Industry & Security (BIS) 20th Anniversary Update Conference
Oct. 31 - Nov. 2
Washington, D.C. [Registration is now full - waitlist available]
Women in International Trade - Northern California (WIT-NC) - Encryption: How to Talk to Your Engineers
Nov. 7
Palo Alto, CA
BIS Seminar - Technology Controls
Nov. 7
Seattle, WA
Society for International Affairs (SIA) Fall Advanced Conference
Nov. 7 - 8
Washington, D.C. [Registration is now full - waitlist available]
U.S. Customs and Border Protection (CBP) Trade Symposium 2007
Nov. 14 - 15
Washington, D.C. [Registration is now full - waitlist available]
BIS Seminar - Essentials of Export Controls
Nov. 20
Washington, DC
BIS Seminar - Intermediate License Exception
Nov. 21
Washington, DC
|
|
|
|
|
|
Thanks again for your interest in our newsletter!
Sincerely,
|
Jennifer Kessinger Attorney & Consultant  www.globaltradeexpertise.com jk@globaltradeexpertise.com
Tel. 925.876.1381
|
| |
|
|
