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Greetings!
Welcome to the June 2008 edition of Global Trade Expertise's newsletter, the Global Trader. Highlights from this month's news include: the Mandatory AES Census Final Rule is Issued; CBP States "First Sale" Valuation will Remain Permissible through 2010 and "10+2" Final Rule will Likely be Issued by End of Summer; CBP Develops New Online Trade Violation Reporting System; USTR Initiates GSP Review for Vietnam; Laptop Border Searches Criticized at Senate Hearing; and EU Duty Suspension Applications Due Mid-July. As always, we would appreciate any comments or suggestions you may have to improve this newsletter either by email to info@globaltradeexpertise or via our feedback survey link in our left column. Thank you for reading! Jennifer Kessinger & Tammie Goldstein Krauskopf
globaltradeexpertise
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Mandatory AES Rule Issued
Rule will not be implemented until September 30, 2008
 On June 2, 2008, the U.S. Census Bureau (Census) issued a final rule requiring mandatory filing of export information through the Automated Export System (AES) or through AESDirect for all shipments where a Shipper's Export Declaration (SED) is required (an announcement of the rule can be found here). The new rule substantially revises Census' export regulations, significantly increases penalties, and allows for greater enforcement by Bureau of Industry and Security (BIS) and U.S. Immigration and Customs Enforcement (ICE). The effective date for this rule is July 2, 2008, however, the rule will not be implemented until September 30, 2008.
Census has posted mandatory AES frequently asked questions (FAQs) here and "A Quick Guide to Title 15, Part 30 Foreign Trade Regulations" here.
The final rule was issued following a three year dispute between Census and the Department of Homeland Security (DHS) involving the sharing of confidential export information with foreign governments and the Option 4 program, which allows export data to be filed up to 10 days following vessel departure. DHS had pushed for the sharing of certain export data with foreign governments for antiterrorism purposes and Census strongly opposed this. In addition, DHS sought to end the Option 4 program because it believed it created an avenue for illegal exports, while Census disagreed. In the end, Census maintained the confidentiality of export data that existed in its previous regulations and continued the moratorium on new users for the Option 4 program with the program only allowed for current users.
Key changes made by the new regulations are as follows:
· The Foreign Trade Statistics Regulations are renamed, "Foreign Trade Regulations" (FTR);
· All export data must be filed electronically through AES -- no paper SEDs will be accepted after September 30, 2008;
· Electronic Export Information (EEI) is the term for data filed through AES and is the equivalent to the data in the SEDs;
· Increased civil penalties of a maximum of $1,100 per day of delinquency (but, not more than $10,000 per violation) for failures to file or delinquent filings; a maximum of $10,000 per violation for false filings or misleading information in AES, in addition to other penalties; and civil forfeiture of any property involved in a violation of the FTR;
· Criminal penalties of a maximum of $10,000 per violation or five years' imprisonment or both for a knowing failure to file or a knowing filing, directly or indirectly, of false or misleading information;
· New voluntary self-disclosures are "strongly encouraged" by Census of any violation or suspected violation of the FTR. Voluntary disclosures are to be directed to Census, which will notify Customs and Border Protection (CBP), BIS' Office of Export Enforcement (OEE) and ICE.
· Specific rules on what constitutes proper proof of AES filing citations or exemptions are provided as well as how they are to be annotated on other shipping documents. For example, only the Internal Transaction Number (ITN), which confirms that the shipment information has been accepted in AES, is acceptable as proof of filing citation. The External Transaction Number (XTN) will no longer be accepted as proof of filing.
· Time frames for filing AES are provided based on the mode of transportation.
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CBP States "First Sale" Valuation to Remain Permissible Through 2010
Final "10+2" Likely by End of Summer
 On June 24, 2008, U.S. Customs and Border Protection (CBP) Commissioner Ralph Basham testified before the Senate Finance Committee regarding CBP's trade functions and enforcement actions. (Basham's written testimony can be found here.) Of great interest to the trade community was Basham's remarks regarding first sale valuation.
Specifically, Basham stated that in January of this year, CBP published in the Federal Register a Notice of Proposed Interpretation seeking public comment of the phrase "sold for exportation to the United States" for purposes of applying the transaction value method of valuation in a series of sales scenario. Under the proposed interpretation, transaction value would be based on the price paid by the buyer in the U.S. to the foreign manufacturer, which is a departure from the current application of the valuation statute, which allows importers to use the price paid by an intermediary to the foreign manufacturer as the basis for transaction value. Basham noted that the proposed re-interpretation of the valuation statute that would disallow "first sale" valuation has been "controversial."
Basham noted that the recently passed Farm Bill (Food, Conservation and Energy Act of 2008 (Pub. L. No. 110-246)) requires CBP to collect valuation information from importers and included a sense of Congress that CBP should not publish a final interpretative rule on this issue before January 1, 2011. He then stated that, "CBP does not intend to proceed further on the proposal on first sale before January 1, 2011. Nor will we change the current interpretation with respect to first sale without consulting with Congress and the private sector, or without the explicit approval of the Secretary of Treasury." With respect to first sale, Basham stated:
· The Farm Bill instructs CBP to require each importer of merchandise to declare whether the transaction value of the imported merchandise has been determined on the basis of a first or earlier sale.
· CBP is required to submit a report that includes the number of importers that declare transaction value on the basis of first sale, the tariff classification of such merchandise and the value of the merchandise, on a monthly basis to the United States International Trade Commission (USITC).
· We have had preliminary discussions with the trade and are examining the most efficient means of collecting the required information while minimizing the impact on the trade.
· The Farm Bill also includes a sense of Congress that CBP should not proceed with its proposed interpretative rule until January 1, 2011 and upon certain coordination and consultation with Congress, the Commercial Operations Advisory Committee, the International Trade Commission, the Secretary of Treasury, and the trade. CBP does not intend to proceed further on the proposal on first sale before January 1, 2011. Nor will we change the current interpretation with respect to first sale without consulting with the Congress and the private sector, or without the explicit approval of the Secretary of Treasury.
Other items of interest include the status of the proposed "10+2" rule or Importer Security Filing, which requires importers to provide CBP with 10 data elements plus 2 data elements from carriers electronically at least 24 hours prior to vessel loading at foreign ports of origin. The proposed ten data elements are:
· Manufacturer (or supplier) name and address
· Seller (or owner) name and address
· Buyer (or owner) name and address
· Ship-to name and address
· Container stuffing location
· Consolidator (stuffer) name and address
· Importer of Record number/foreign trade zone (FTZ) applicant identification number
· Consignee number(s)
· Country of origin
· Commodity Harmonized Tariff Schedule number
The two additional elements required from carriers are: (1) a vessel stow plan used to transmit information about the physical location of cargo loaded aboard a vessel bound for the United States; and (2) container status messages, which report container movements and changes in status (e.g., empty or full).
It has been reported that in response to questioning by the committee, Basham stated that CBP hopes to submit the rule to the Office of Management and Budget (OMB) by the end of the week and have it ready for publication by the end of the summer.
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CBP Develops New Online Trade Violation Reporting System
New System Allows for Anonymous Reporting
 On June 17, 2008, U.S. Customs and Border Protection (CBP) announced the development of a new online trade violation reporting system called eAllegations to provide concerned members of the public a means to confidentially report suspected trade violations to CBP. eAllegations is open for public use as of June 17, 2008.
CBP states that eAllegations is not intended to be used for reporting security issues such as terrorism or weapons of mass destruction, but rather is intended for trade violations such as misclassification, under valuation, country of origin markings, health and safety violations, intellectual property rights violations, and/or textile or other trade violations. CBP provided the following example --
eAllegations will provide a means to report a possible violator who is importing substandard steel, claiming that it is of a higher grade, therefore creating a potential safety issue. Other possible violations that can be reported include a company claiming a lower than actual value on a product they are importing to pay less duty or a company who is importing textiles from one country to avoid quota restrictions.
To report a possible violation, the following information must be submitted via eAllegations: the type of trade violation, description of what has occurred, the products or goods involved in the violation, and the alleged violator's name and/or company. Other information may be provided on a voluntary basis.
CBP has provided frequently asked questions (FAQ) here.
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USTR Initiates GSP Review for Vietnam
Comments are due by August 4, 2008
 On June 20, 2008, the United States Trade Representative (USTR) announced in the Federal Register the initiation of a review to consider designating the Socialist Republic of Vietnam as a beneficiary developing country (BDC) for purposes of the Generalized System of Preferences (GSP) program and solicits public comments on whether Vietnam meets eligibility requirements for designation as a BDC. Comments are due by Monday, August 4, 2008 and must be submitted in accordance with the requirements set out in the notice.
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Laptop Border Searches Criticized at Senate Hearing
Advocacy groups claim searches are unreasonable
 On June 25, 2008, the Senate Judiciary Committee (Subcommittee on the Constitution, Civil Rights and Property Rights) held a hearing on "Laptop Searches and Other Violations of Privacy Faced by Americans Returning from Overseas Travel." At the hearing, advocacy groups and some legal experts stated that it was unreasonable for federal officials to search the laptops of U.S. citizens when returning from traveling abroad.
In April, the U.S. Court of Appeals for the Ninth Circuit ruled that U.S. Customs and Border Protection (CBP) could conduct searches of electronic devices such as laptops without reasonable suspicion. Specifically, the court ruled that border control agents who found child porn on a traveler's laptop didn't violate the man's right to be free from unreasonable searches. Judge Diarmuid O'Scannlain wrote, "We are satisfied that reasonable suspicion is not needed for customs officials to search a laptop or other personal electronic storage devices at the border." In 2005, the U.S. Court of Appeals for the Fourth Circuit upheld computer searches by border guard when a man drove from Canada to the U.S. with child porn on his computer.
As reported by the New York Times:
"If you asked most Americans whether the government has the right to look through their luggage for contraband when they are returning from an overseas trip, they would tell you 'yes, the government has that right,' " Senator Russ Feingold, Democrat of Wisconsin, said Wednesday at the hearing of a Senate Judiciary subcommittee.
"But," Mr. Feingold continued, "if you asked them whether the government has a right to open their laptops, read their documents and e-mails, look at their photographs and examine the Web sites they have visited, all without any suspicion of wrongdoing, I think those same Americans would say that the government absolutely has no right to do that."
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Applications for EU Duty Suspensions Due Mid-July
Applications due July 25, 2008
 Are you importing products into the EU and paying duties? It may be possible to have the duties suspended on a particular product if the EU Commission approves your application for duty suspension. The EU Commission will allow the suspension of customs duties to companies that apply for the relief on the basis of a valid economic argument as to why the import of duty-suspended goods will benefit and stimulate economic activity in the EU Community.
The EU Commission accepts duty suspension applications twice annually. The application process itself takes 12 months to complete. The current deadline for duty suspension applications is July 25, 2008 for applications that would take effect on July 1, 2009.
All current duty suspensions are listed by the EU Commission by EU Regulation. Normally, if a company succeeds in getting a duty suspension on a product, it remains on the list unless an objection is lodged at some point in the future.
Duty suspensions will not be granted where:
· Identical, equivalent or substitute products are manufactured in sufficient quantities within the Community
· The goods in question are finished products intended for sale to end-consumers without further substantial processing or without forming an integral part of a bigger final product for whose functioning they are necessary
· The goods are covered by an exclusive trading agreement
· A suspension would entail a conflict with any other Community policy
· Uncollected customs duties of the goods in question is estimated to be less than ECU 20,000 per year
Many multinational companies have been seeking duty suspensions of late. It appears this is due to: the fact that PCC and IP customs economic procedures (similar to special trade programs in the U.S.) are proving time consuming to administer, create risk if not done correctly, and put a company of Customs' radar re: audits, etc. Duty suspensions, if granted, operate by assigning a unique ten-digit code at import and no additional compliance is required thereafter.
If you are interested in learning more about obtaining a duty suspension in the EU, please contact Global Trade Expertise or Eamonn Flood (eamonn@crannaghtrade.eu) or Carol Lynch (carol.lynch@crannaghtrade.eu) of Crannagh & Co. (www.crannaghtrade.eu).
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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 on our website.
Companies with new listings this month include:
ITT Communications - Various locations
Lockheed Martin - Sunnyvale, CA
Alcoa - San Antonio, TX
Invensys - Foxboro, MA
TESCO - Houston, TX
Millipore Corp. - Burlington, MA
eBay - Phoenix, AZ
Polo Ralph Lauren - Lyndhurst, NJ
Abercrombie & Fitch - Columbus, OH
Nike - Beaverton, OR
BAE Systems - Minneapolis, MN
Rockwell Automation - Mayfield Heights, OH
DynCorp International LLC - Fort Worth, TX
Redcats USA - Indianapolis, IN
REI.com - Kent, WA
Mylan, Inc. - Morgantown, WV
General Dynamics AIS - Santa Clara, CA
Colorox Corp. - Oakland, CA
The Home Depot - Atlanta, GA
Golden Beach, Inc. - Torrance, CA
American Honda Motor Co. - Torrance, CA
To sort the job opportunities by region, fields, or levels, click on the appropriate category or tag in the right column on our Trade Jobs webpage. |
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Calendar of Events
Upcoming Trade Events & Seminars
 Our website has a comprehensive listing of import and export conferences held throughout the country, as well as Customs training, EAR training, ITAR training, and other training. Below is a small sampling of what's available in July 2008:
Summer Back to Basics Conference - Society for International Affairs (SIA)
July 14 - 15, 2008 - Arlington, VA - $700 Members, $800 Non-Members
Where the Rubber Meets the Road Workshop - SIA
July 16, 2008 - Arlington, VA - $350 Members, $400 Non-Members
How to Develop an Export Management and Compliance Program - Bureau of Industry and Security (BIS)
July 9-10, 2008 - San Jose, CA - $375
Export Best Practices Workshop - Women in International Trade - Northern California (WIT-NC)
July 9, 2008 - Palo Alto, CA - $45 Members, $60 Non-Members
Essentials of Export Control - BIS
July 22, 2008 - Washington, DC - $100
How to Classify Your Item - BIS
July 23, 2008 - Washington, DC - $75
ITAR Compliance and Audits - Federal Publication Seminars
July 17-18, 2008 - Hilton Head, SC - $995
Intermediate ITAR Seminar - Using Export Controls to Your Advantage: Developing a Licensing Plan - Export Compliance Solutions (ECS)
July 22-23, 2008 - San Diego, CA - $950
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Thanks again for your interest in our newsletter!
Sincerely,
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Jennifer Kessinger & Tammie Krauskopf
Attorneys & Consultants
jk@globaltradeexpertise.com
Tel. 925.876.1381 (Jennifer Kessinger)
tk@globaltradeexpertise.com
Tel. 708.707.4087 (Tammie Krauskopf)
www.globaltradeexpertise.com
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