USITC Launches Patent Infringement Investigation of Certain Flash Memory Controllers and Products Containing Them
The investigation is based on a complaint filed by SanDisk Corporation of Milpitas, CA, on October 24, 2007. The complaint alleges that certain flash memory controllers, drives, memory cards, and media players and products containing same infringe patents owned by SanDisk.
The ITC has identified the following as respondents in this investigation:
- Phison Electronics Corporation of Taiwan;
- Silicon Motion Technology Corporation of Taiwan;
- Silicon Motion, Inc., of Milpitas, CA;
- USBest Technology, Inc., of Taiwan;
- Skymedi Corporation of Taiwan;
- Chipsbrand Microelectronics (HK) Co., Ltd., of Hong Kong;
- Chipsbank Technology (Shenzhen) Co., Ltd., of China;
- Zotek Electronic Co., Ltd., of Taiwan;
- Infotech Logistic, LLC, of Fremont, CA;
- Power Quotient International Co., Ltd., of Taiwan;
- Power Quotient International (HK) Co., Ltd., of Hong Kong;
- Syscom Development Co., Ltd., of Tortola, British Virgin Islands;
- PQI Corporation of Fremont, CA;
- PNY Technologies, Inc., of Parsippany, NJ;
- Kingston Technology Company, Inc., of Fountain Valley, CA;
- Payton Technology Corporation of Fountain Valley, CA;
- MemoSun, Inc., of Fountain Valley, CA;
- Melco Holdings, Inc., of Japan;
- Buffalo, Inc., of Japan;
- Buffalo Technology (USA), Inc., of Austin, Texas;
- Verbatim Corporation of Charlotte, NC;
- Transcend Information, Inc., of Taiwan;
- Transcend Information Inc. of Orange, CA;
- Transcend Information Maryland, Inc., of Linthicum, MD;
- Imation Corp. of Oakdale, MN;
- Memorex Products, Inc., of Cerritos, CA;
- Add-On Computer Peripherals, Inc., of Irvine, CA;
- Add-On Technology Co. of Taiwan;
- A-Data Technology Co., Ltd., of Taiwan;
- A-Data Technology (USA) Co., Ltd., of Fremont, CA;
- Acer, Inc., of Taiwan;
- Apacer Technology Inc. of Taiwan;
- Apacer Memory America, Inc., of San Jose, CA;
- Behavior Tech Computer Corp. of Taiwan;
- Exprex Technologies Corp. of Taiwan;
- Behavior Tech Computer (USA) Corp. of Fremont, CA;
- Corsair Memory, Inc., of Fremont, CA;
- Dane-Elec Memory S.A. of France;
- Deantusaiocht Dane-Elec TEO of Ireland;
- Dane Elec Corp. USA of Irvine, CA;
- EDGE Tech Corporation of Ada, OK;
- Interactive Media Corp. of Holliston, MA;
- Kaser Corporation of Fremont, CA;
- LG Electronics, Inc., of Korea;
- LG Electronics U.S.A., Inc., of Englewood Cliffs, NJ;
- TSR Silicon Resources Inc., of Englewood, NJ; and
- Welldone Company of Taiwan.
CBP Plans to Launch New Message Broadcast System
U.S. Customs House Guide states:
Currently, the only automated commercial system with an administrative messaging capability is the Automated Broker Interface. CBP has no broadcast mechanism for other commercial systems, such as ocean/rail manifest, air manifest and electronic truck manifest. The new CSMS listserve will allow CBP to broadcast messages not only to ABI users, but to users of all CBP automated commercial systems including the Automated Commercial Environment (ACE), Automated Commercial System (ACS) and more.
To
receive messages via CSMS, a user must subscribe
and create a subscriber profile with an email
address, password (optional), and an indication of
subjects of interest. A link to the subscription
page will be available at a later date.
Senate Votes 77-18 to Approve Peru Free Trade Agreement
On December 5, 2007, the United States Senate voted
77-18 to approve the
U.S.-Peru
Trade Promotion Agreement
as reported by the Washington Post
here.
The Senate approval comes after the House voted
285 to 132 to approve the agreement. The
agreement will now be sent to the President for
approval.
The Washington Post reports that this agreement is
the first bilateral trade agreement approved by
Congress this year and is also the first under a
Democratic formula that requires negotiators to put
labor rights and environmental standards on par
with tariff reductions, investor protections, and
other key elements of the accord.
As reported, the agreement:
The Administration is now urging Congress to approve three other pending bilateral trade agreements with Colombia, Panama, and South Korea.It would immediately eliminate duties on 80 percent of U.S. consumer and industrial product sales to Peru and most agriculture goods, and gradually phase out all tariffs. Almost all Peruvian goods already enjoy duty-free status under trade breaks the United States extends to Andean nations to boost their economies and provide alternatives to illicit drug production.
Commerce Announces New Textile and Apparel Website
“We are
pleased to announce the launch of this valuable
tool that will help American manufacturers supply
the men and women of our Armed Forces with the
necessary textiles and apparel as they fight for
freedom across the globe,” said Priest. “This new
Web site will be a one-stop-shop for information to
help members of industry navigate the complexities
of the Berry Amendment.”
The Web site, which is limited to covered items of
clothing, fabrics, fibers, yarns, and other made-up
textile items, includes information on the
following:
-
Implementation of Berry Amendment;
-
Application of the Berry Amendment;
-
Exceptions to Berry Amendment domestic source requirements;
-
Domestic non-availability determinations (DNADS, or waivers);
-
Currently-approved DNADS;
-
Penalties for noncompliance with the Berry Amendment; and
-
A list of contacts and references.
National Retail Federation Advocates for Improvements in WTO Rules
“One of
the key objectives of American retailers in the
Doha round is to obtain improvements and
clarifications in the rules governing the use of
anti-dumping and countervailing duty actions
against imported products that will prevent abusive
and unfair use of these measures and ensure that
they do not undermine the competitiveness of U.S.
retailers, manufacturers, and farmers,” NRF Vice
President and International Trade Counsel Erik
Autor said. “We will carefully review the text
released today to ascertain whether it can serve as
a basis for achieving the retail industry’s goals
in these negotiations.”
Silicon Valley Export Broker Sentenced to 2 Years in Prison for Illegal Exports to China
Philip Cheng, an export broker, was indicted in 2004 on export control and arms trafficking violations for his role in brokering the sale of night vision gear to Chinese governement authorities. Cheng, 60, pleaded guilty after a mistrial in which a jury voted 11-1 for conviction. He was sentenced by United States District Court Judge Ronald M. Whyte in San Jose today.
The Mecury News reports:
Federal authorities accused Cheng and Martin Shih, founder of Night Vision Technology, of selling a Panther series infrared camera to the North China Research Institute of Electro-Optics and the China National Electronics Import & Export Corporation. Authorities said the equipment could be used by China's military. Shih has since died of cancer. Cheng will begin serving his sentence on Feb. 18.
China Agrees to End Subsidies Challenged by the U.S. in the WTO
China agreed to sign a Memorandum of Understanding (MOU) that is designed to settle a WTO case that the United States and Mexico initiated in February 2007. In the WTO case, the U.S. had alleged that China was maintaining several subsidy programs that are prohibited under WTO rules. The USTR states that most of the challenged subsidies were tied to exports, giving an unfair advantage to Chinese products and denying U.S. manufacturers the chance to compete fairly with them in the U.S. and in third countries.
Under the MOU, China has committed to complete a series of steps by January 1, 2008 to ensure that the WTO-prohibited subsidies cited in the U.S. complaint have been permanently eliminated, and that they will not be re-introduced in the future.
The agreement was made only two weeks before the USTR is to join Treasury Secretary Henry M. Paulson Jr. and other Cabinet members for a high-level meeting of the "strategic economic dialogue" with China that Paulson launched last year to reduce tensions with China.
The USTR's remarks on this issue can be found here.
Qantas Airways Agrees to Plead Guilty and Pay $61 Million Fine for Cargo Price Fixing
The DOJ reports that during the time period of the felony charge, Qantas was the largest carrier of cargo between the United States and Australia and earned more than $600 million from its cargo flights to and from the United States. Under the plea agreement, which is subject to court approval, Qantas has agreed to cooperate with the DOJ in the ongoing investigation.
Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division, stated:
Qantas’ guilty plea sends a clear message that those who engage in price fixing and other forms of illegal collusion will pay a heavy price for their crimes. The shipment of consumer products by air transportation is critical to our global economy. Our investigation into this important industry will continue, and we will aggressively pursue those who engage in criminal conduct that harms American consumers.
In August 2007, British Airways Plc and Korean Air Lines Co. Ltd. pleaded guilty and were sentenced to pay separate $300 million criminal fines for their roles in conspiracies to fix the prices of passenger and cargo flights
The ongoing investigation is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the Federal Bureau of Investigation.
ITC Institutes Section 337 Investigation of HP Computers, Printers & Scanners
The investigation is based on a complaint filed by Acer Incorporated of Taipei, Taiwan, on October 30, 2007, and supplements filed on November 13, 2007 and November 16, 2007. The ITC has identified Hewlett-Packard Company of Palo Alto, CA as the respondent in this investigation.
OFAC Issues Updated Enforcement Information
OFAC states that these new penalties are applicable to all enforcement actions that are pending or commenced on or after October 16, 2007 and interprets this provision to mean that the new civil penalty provisions apply to all violations with respect to which a Final Penalty Notice had not been issued as of October 16, 2007.
OFAC intends to publish revised enforcement guidelines and procedures to account for the new maximum penalty amounts set forth in the IEEPA Enforcement Act. Until that time, OFAC will continue to apply its current enforcement guidelines which are set out in the notice. As a practical matter, OFAC states that this means that prepenalty notices will generally be issued at the transaction amount. Aggravating and mitigating factors and percentages set forth in the current guidelines will continue to be applied.
However, OFAC lists the following exceptions to those rules:
- PPN Mailed - Where a prepenalty notice ("PPN") has been mailed to the cited party prior to October, 16, 2007, OFAC will not impose a penalty in excess of the PPN and will continue to apply the current enforcement guidelines to calculate the penalty amount.
- Tentative Settlement Amount Communicated and Memorialized - Where OFAC has communicated to a party that an settlement amount would be recommended internally, and the party has made a written settlement offer to OFAC, OFAC will continue to process the settlement under the terms of the communication from OFAC.
- SOL Waivers - In those cases where a party has agreed to a statute of limitations ("SOL") waiver and the SOL would have expired prior to October 16, 2007, OFAC will calculate the penalty amounts in accordance with the maximum penalty applicable at the time the waiver was signed.
HHS Secretary to Visit China to Strengthen Safety of U.S. Imports
While in China, Secretary Leavitt hopes to finalize two binding agreements to ensure the safety, quality, and effectiveness of food, feed, medical devices, and drugs exported to the U.S., and a third agreement to strengthen the U.S.-China partnership in combating HIV/AIDS.
Secretary Leavitt chairs the President's Cabinet-level Import Safety Working Group, convened in July. The group issued its Action Plan to improve import safety to President Bush earlier this month.
Cisco Unveils $16 Billion China Expansion Plans
Cisco's expansion plans involve:
- doubling Cisco's manufacturing capabilities in China over the next three to five years;
- a $100 million venture capital partnership with the government-owned China Development Bank to explore jointly providing capital and expertise for Chinese businesses in fields such as information technology, health care, and communications; and
- a partnership with China's Education Ministry to open 300 centers at vocational colleges to train students in networking technologies, adding to the 200 current centers that have taught some 90,000 students. Cisco will donate equipment worth $6 million to the project.
Retail Container Traffic Sluggish
"Container traffic is expected to continue at a slow pace due to weakness in the US economy,” said Global Insight economist Paul Bingham. “Volumes will continue to decline, but all ports are rated low for congestion, as are truck and rail operations.”
CBP Moves Ahead on C-TPAT for Air Carriers and 3PLs
American Shipper reports that CBP officials had previously said they intended to open up enrollment for the first time to logistics providers by the end of last summer, but CBP is carefully studying the dynamics of the outsourced logistics sector and developing a common definition for such a service provider, which is proving difficult because the industry is using so many subcontractors. CBP wants to ensure that any security plans instituted by the 3PL are also pushed down the pipeline to the companies doing the actual work.
The C-TPAT office plans to complete a draft proposal for 3PL minimum security requirements by early December, get executive approval by the end of the month and present the standards to the Commercial Operations Advisory Committee for final review.
Wall Street Journal Reports on Problems with International Trade of Ginger from China
In the case of tainted pet food that first raised concern over Chinese imports in March, neither the Chinese government nor the U.S. Food and Drug Administration has pinpointed the original source of the problem ingredient, contaminated wheat gluten. In that probe, FDA officials traveled to China and worked with the Chinese government. But often, U.S. officials trace problem with food imports within American borders, due partly to limited resources.
An interesting read. What are your thoughts? How can importers protect themselves from being similarly featured in such an article?
White House Battle with Congress May Be Brewing for Arms Sale to Saudi Arabia
World Tribune reports that while the Administration believes they have the support needed in Congress to approve this sale, others believe opposition is growing both publicly and privately. If a battle ensues over the proposed sale, it would mark the first fight between Congress and the White House over an arms sale to Saudi Arabia since 1990 when the House persuaded the administration of then President George H. W. Bush to reduce the $20 billion defense package to $7.3 billion and remove the airborne early warning and control aircraft and the KE-3 tanker aircraft.
Officials of the Bush Administration say that the proposed sale would be formally relayed to Congress soon while prenotification of the sale was given to House Speaker Nancy Pelosi on November 13, 2007. The article states:
"People of all political stripes have come out against this deal," Rep. Anthony Weiner, a New York Democrat said. "It's mind-bogglingly bad policy because the Saudi's at every turn have been uncooperative. The idea that we are going to reward the Saudi's with precision weaponry is a stunningly bad idea, and clearly deserves the full review of Congress."
New U.S.-India Trade Initiative Created
Crafted by the US-India Business Council (USIBC), the comprehensive initiative will focus on developing ways to lower trade barriers and create “substantial market opening arrangements designed to bring broadly inclusive growth to both countries,” according to USIBC President Ron Somers. The effort, he added, “seeks to change the paradigm on US-India trade and develop broad-based support in both countries for a robust trade and investment relationship appropriate for these dynamic economies and strategic partners.”
China to Host C-TPAT Meeting
CBP reported last month that China's Minister of Customs, Mu Xinsheng, had finally agreed to allow U.S. CBP inspectors in the country to verify security compliance of manufacturers and logistics providers whose customers participate in C-TPAT. Prior to this, CBP had authorized the use of 11 private companies in the Third Party Validation Pilot program, but interest from the trade community had been minimal due to concerns about sharing proprietary business and security data and the costs associated with the validation, which were to be incurred by the importer. China had been the only country to refuse to allow access to U.S. Customs teams seeking to validate that foreign suppliers are following the security plans submitted by their U.S. import customers and approved by CBP.
Mullen stated that the two customs administrations have exchanged letters about moving forward with joint validations in which CBP supply chain specialists would accompany Chinese officials during on-site visits of domestic companies. The two sides are still in the process of setting up a meeting at the invitation of Mu, Mullen stated.
Importer Fined $7.5 Million for Declaring Incorrect Customs Values
Based on the facts found at trial, Seaveg would negotiate the initial price for the produce with the Mexican growers by telephone and then, under an agreement with its suppliers, receive an invoice at 70% of the negotiated price, with the understanding that the remaining 30% would be paid within 60 days of delivery into storage after certain adjustments were made. At the time of entry, the invoice at 70% of the true sales price was declared value to Customs. However, neither Inn Foods, Seaveg, nor the customs broker informed Customs that the invoice values declared at the time of entry were "provisional."
Firstly, the court found that Inn Foods was responsible for all of the liabilities despite the fact that Seaveg and Inn Foods were incorporated as two separate entities because it found that Seaveg was an alter ego or alias of its sister subsidiary Inn Foods.
Secondly, the court found that Inn Foods' conduct was fraudulent as Customs had proved that Inn Foods had deliberately introduced merchandise into the commerce of the United States by means of material false statements with the intent to defraud the revenue or otherwise violate the laws of the United States. Although Inn Foods and Seaveg argued that there was no evidence adduced at trial that indicates that "Inn Foods knew or understood the legal effect of post-importation price adjustments to the price actually paid or payable to the grower/packers based on the U.S. resale prices," the court found the argument to needlessly confuse the crux of the wrongdoing. The court stated that the wrongdoing is that:
Inn Foods knew that (1) the prices on the subject entries were significantly undervalued, (2) these undervaluations caused a commensurate reduction in lawful Customs duties owed and (3) there was no plan or intention to correct these undervaluations. . . . Therefore, while Inn Foods correctly states that "there is nothing sinister, per se, about provisional pricing agreements," it is not the provisional pricing agreement here that is at issue, but the underlying undervaluation scheme which the provisional pricing agreements only play a part.
Customs sought $624,602.55 in unpaid duties and merchandise processing fees and civil penalties in the amount of $15,319,513.35 if Inn Foods' conduct was found to be fraudulent. In determining the penalty to be assessed, the court noted that for violations of fraud, the maximum penalty is the domestic value of the merchandise with no set minimum penalty and that the court possesses the discretion to determine a penalty within the parameters of the statute. After considering a number of factors as set forth in United States v. Complex Machine Works Co., 23 CIT 942, 949-50, 83 F. Supp. 2d 1307, 1315 (1999), the court ordered that Inn Foods pay $624,602.55 for unpaid duties plus pre-judgment and post-judgment interest, and civil penalties in the amount of $7,500,000.00, plus costs and fees and interest from the date of judgment.
This case represents a cautionary tale for importers who use any type of provisional invoices, including those importers who true-up customs valuations at some point after entry due to the additions to value, such as assists, royalties, buying commissions, etc. Importers have a continuing obligation to review the correctness of information contained in invoices used as entry documents, and to declare to Customs the true and correct value of the goods at the time of entry. See 19 U.S.C. §§ 1484 and 1485. Accordingly, importers should maintain proactive internal controls over their Customs valuation and understand the impact of the full financial transaction for imported goods, including any possible additions to value.
If an intercompany or transfer price is declared as the customs value of an imported good, an importer should assess whether the intercompany or transfer price satisfies the customs valuation statute independent of the acceptability of the price for tax purposes. See Customs' Informed Compliance Publication, Determining the Acceptability of Transaction Value for Related Party Transactions. In addition, importers who utilize a customs value that must be adjusted subsequent to entry should consider joining Customs' Reconciliation program. This program allows importers to declare estimated customs values and subsequently adjust those values to final values and pay or be refunded any additional duties or fees owed.
Finally, an importer may be able to limit its liabilities for valuation and other errors it discovers on its own by filing a prior disclosure with Customs. By filing a prior disclosure, an importer voluntarily discloses to Customs the factual circumstances of a violation of the customs statute and tenders any duties and fees owing. If the prior disclosure is done properly, the importer's liability for penalties can be reduced to the interest owed, unless fraud is found.
Global Trade Expertise can assist with an importer in assessing the validity of their customs valuations, joining CBP's Reconciliation program, and/or filing a valid prior disclosure with CBP. Please contact us for assistance.
U.S. Exports Surge Despite Financial Woes
The sliding value of the dollar has driven US export sales to record highs with the US trade deficit plunging to its lowest level in more than two years, even as worries grow over a surge of mortgage losses, credit write-downs, and fluctuating stock values.
US Commerce Department (DOC) figures released yesterday show that the trade deficit for September dipped by 0.6% to $57 billion from the previous month.
That was the narrowest trade imbalance since May 2005 and took many economists, who had forecasted that the deficit would rise would rise, by surprise.
The improvement in the deficit, the DOC said, came from a full 1% jump in US exports, which climbed to a record $140 billion. The dollars' decline against many major currencies has made US goods cheaper and more competitive in foreign markets.
Miss the BIS Update Conference?
Interagency Working Group on Import Safety Presents Action Plan to President Bush
More information can be found at: www.importsafety.gov.
House Passes Peru Free Trade Agreement
U.S. Trade Representative Susan C. Schwab issued the following statement:
Today’s vote marks an historic achievement for the U.S. and Peruvian people. The U.S.-Peru Trade Promotion Agreement is the foundation of an enduring partnership with one of America’s key friends and allies in Latin America. … I look forward to an equally strong and bipartisan vote as soon as possible in the Senate, and additional successes on the Colombia, Panama, and Korea FTAs.
Her full statement can be found here.
Customs Seizes Counterfeit Footwear and Jackets Worth $2 Million
The report states that during fiscal year 2006, CBP made more than 14,000 seizures of counterfeit goods worth more than $155 million that violated intellectual property laws. Footwear and wearing apparel are among the top commodities seized by CBP in fiscal year 2006.
BIS Publishes Final Rule to Implement December 2006 Wassenaar Arrangement Plenary Agreement
In publishing the rule, BIS states that:
This final rule revises the Export Administration Regulations (EAR) to implement changes made to the Wassenaar Arrangement’s List of Dual Use Goods and Technologies (Wassenaar List), and Statements of Understanding maintained and agreed to by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual Use Goods and Technologies (Wassenaar Arrangement, or WA). The Wassenaar Arrangement advocates implementation of effective export controls on strategic items with the objective of improving regional and international security and stability. To harmonize with the changes to the Wassenaar List, this rule revises the EAR by amending certain entries that are controlled for national security reasons in Categories 1, 2, 3, 5 Part I (telecommunications), 6, 7, 8, and 9; and adding new entries to the Commerce Control List (CCL), amending EAR Definitions, as well as adding new definitions to the EAR, and adding a new Statement of Understanding on source code.
The purpose of this final rule is to make the necessary changes to the CCL, definitions of terms used in the EAR, and Wassenaar reporting requirements to implement Wassenaar List revisions that were agreed upon in the December 2006 Wassenaar Arrangement Plenary Meeting.
This rule also adds and expands unilateral U.S. export controls and national security export controls on certain items to make them consistent with the amendments made to implement the Wassenaar Arrangement’s decisions. In addition, this rule removes the remaining references to ‘‘Composite Theoretical Performance (CTP)’’ and ‘‘Millions of Theoretical Operations Per Second (MTOPS)’’ in the EAR, which is consistent with agreements made by the Wassenaar Arrangement with regard to microprocessors.
President Bush Addresses the White House Forum on International Trade and Investment
We've negotiated fair agreements, and now it's up to the Congress, it's time for the Congress to pass these trade agreements to help build a hemisphere that lives in liberty, and trades in freedom, and grows in prosperity. These trade bills are important economic measures, and they are important national security measures, as well.
BIS Issues Press Release and Fact Sheet on Implementation of Enhanced IEEPA Penalty Provisions
In its press release, BIS states:
The significant changes provided under the Act include:
- Additional Unlawful Acts: Section 206(a) of IEEPA is amended to clarify that civil penalties may be assessed against those who conspire to violate, or cause a violation of any license, order, regulation, or prohibition of title 50 of the United States Code.
- Administrative Penalties: A civil penalty amounting to the greater of $250,000, or twice the value of the transaction that is the basis of the violation (Enhanced Penalties), may be imposed for each violation of IEEPA.
- Effective Date/Retroactivity: The new civil penalties apply to enforcement action that are pending, which BIS interprets an action to be if a Final Order has not been signed, or commenced on or after October 16, 2007.
- Criminal Penalties: Violators can be fined up to $1,000,000 and/or up to 20 years in prison. Additionally, criminal liability is provided for anyone who “willfully conspires to commit, or aids or abets in the commission of” an unlawful act described in the statute.
- Effective Date: The new criminal penalties apply to criminal enforcement actions commenced on or after October 16, 2007.
Commerce Secretary Guiterrez's BIS Update Comments Published
WTO Hosting Global Review of Aid for Trade
The Global Aid-for-Trade Review is the focal point of WTO's monitoring mandate for 2007. It will provide an overview of what is — and what is not — happening in the delivery of Aid-for-Trade, including current flows, existing gaps, and where improvements need to be made. It will also create incentives — by shining a “spotlight” on the issues — to deliver more and better Aid-for-Trade, and to strengthen mutual accountability between partner countries and donors.
A tentative program can be found here.
House Ways and Means Committee Approves U.S.-Peru Free Trade Agreement
On
October 31, 2007, the House Ways and Means
Committee unanimously approved the U.S.-Peru
Free Trade Agreement (FTA) by a 39-0 margin
after two years of debate. The FTA will move
to the House floor for consideration.
The agreement will life tariffs immediately for the 80 percent of U.S. industrial and consumer products exported to Peru and will phase out the remaining over ten years. If the House approves the bill and the Senate and President follow, it will become the 10th U.S. free trade agreement in effect.
The Houston Chronicle reported the news here. Further information regarding the U.S.-Peru FTA can be found here.
BIS Publishes Final Rule on Burma
This rule creates a new section 744.22 to set forth the new license requirements. Further, in part 740 of the EAR (License Exceptions), this rule moves Burma from Computer Tier 1 to Computer Tier 3, restricting access to high-performance computers and related technology and software under License Exception APP (Section 740.7).
In Supplement No. 1 to part 740 (Country Groups), this rule moves Burma from Country Group B (countries raising few national security concerns) to Country Group D:1 (countries raising national security concerns), which further limits the number of license exceptions available for exports to Burma. Burma will remain in Country Group D:3 (countries raising proliferation concerns related to chemical and biological weapons).
On October 30, 2007, BIS published Questions and Answers regarding the final rule on Burma.
WTO Reports Drop in Antidumping Investigations
Specifically, the Secretariat reported:
The Member reporting the highest number of new initiations during January-June 2007 was India, with 13, followed by New Zealand (6). Ranked next were Korea (5); Brazil, China and Japan (4 each); Argentina and South Africa (3 each); Mexico and the United States (2 each); and Chile, Colombia and Egypt (1 each). These figures represented declines for Argentina, Egypt, India, and Mexico compared with the first half of 2006, and increases for Brazil, Chile, Japan, Korea, New Zealand, South Africa, and the United States. In addition, Australia, Canada, Costa Rica, the European Communities, Indonesia, Jordan, Pakistan, Peru, Chinese Taipei, and Turkey, each of which reported new initiations for the first half of 2006, reported no new initiations for the first half of 2007.
China remained the most frequent subject of the new investigations, with 16 initiations directed at its exports during January-June 2007, down sharply from the 31 new investigations on exports from China that were reported for the corresponding period of 2006. Chinese Taipei, the European Communities (including individual member States) and Korea were the second most frequent subjects, with four initiations of new investigations each directed at their exports during the first half of 2007, compared with seven, four and five, respectively, during the first half of 2006. India, Indonesia, Japan, Malaysia, and the United States were tied for third place, with two initiations each in respect of their exports, compared with three, two, five, five and seven initiations, respectively, during January-June 2006. Argentina, Australia, Brazil, Canada, Hong Kong China, New Zealand, Russia, Singapore, South Africa, Thailand, and Uruguay, were the subject of one initiation each during the January-June 2007 period.
The products that were most frequently subject to the reported new investigations during the first half of 2007 were in the chemicals sector (24 initiations), followed by pulp and paper (9 initiations) and plastics (6 initiations). Of the 24 reported initiations in respect of chemicals products, India reported 10, China and Japan each reported four, the United States reported two, and Argentina, Brazil, Korea, and South Africa each reported one.
New Customs Bulletin Issued
Of interest:
U.S.-Bahrain Free Trade Agreement - Interim rule effective October 16, 2007; comments must be received by December 17, 2007.
BIS Publishes Q&As for Regulation on Burma
Could UK Export Control Investigations Have Halted Iran's Nuclear Program?
BIS Publishes Q&As for New China Rule & VEUs in India
DDTC Key Personnel Listing
U.S. Imposes New Sanctions Against Iran
The administration also accused the entire Revolutionary Guard Corps, a part of Iran’s military, of proliferating weapons of mass destruction, the officials said. While the United States has long labeled Iran as a state sponsor of terrorism, the decision to single out the Guard reflects increased frustration in the administration with the slow pace of diplomatic negotiations over Tehran’s nuclear program.
The designations put into play unilateral sanctions intended to impede the Revolutionary Guard and those who do business with it. This is the first time that the United States has taken such steps against the armed forces of any sovereign government.
The article goes on to state:
The immediate legal consequence of designating the Quds unit as a terrorist organization will make it unlawful for anyone subject to United States jurisdiction to knowingly provide material support or resources to it, according to the State Department. Any United States financial institution that becomes aware that it possesses, or has control over, funds of a foreign terrorist organization would have to turn them over to the Treasury Department.
Because Iran has done little business with the United States in more than two decades, the larger point of the designation would be to heighten the political and psychological pressure on Iran, administration officials said, by using the designation to persuade foreign governments and financial institutions to cut ties with Iranian businesses and individuals.
Pratt & Whitney Canada Engines Found in Chinese Military Attack Helicopter
The Times reports that while the Canadian government has no plans to take action against Pratt & Whitney for the military diversion, a State Department spokesman, Karl E. Duckworth, said that the U.S. government is continuing an investigation into the company's actions.
In an e-mailed statement, a Pratt & Whitney spokesman, Jean-Daniel Hamelin, stated that the company was selected by a Chinese aircraft maker in 2000 to provide engines for the civilian variation of a helicopter that was simultaneously being developed for the military. He wrote that when Pratt & Whitney applied for the Canadian export license, the company understood that the Chinese would develop their own engine for the military model. The two helicopters were being developed, he said, on a "common platform" that shared rotors and transmissions. Mr. Hamelin stated, "the Chinese engine encountered delays, and our engines were used during the development of the common platform," adding, "The program has undergone changes by the Chinese. The Canadian government is currently re-evaluating the program."
The New York Times states that, "Several aviation publications have reported that the Chinese military has still been unable to create its own copter engine and that it continues to rely on engines made by Pratt & Whitney."
The Canadian Department of Foreign Affairs and International Trade, which issued the export license, said on Friday that it had no concerns about the way the engine sale was handled or the effectiveness of its export control program for technologies with potential military applications. François Jubinville, a spokesman for the international trade minister stated, "Pratt & Whitney lived up to the condition of the licenses. We're pretty confident that our control system was used properly."
When asked whether the system was working properly given that the engines had ultimately been put to military use, Mr. Jubinville replied, "The question should be asked to the Chinese."
New Customs Bulletin
Of interest in the Bulletin is:
HQ W968251, dated October 3, 2007, a Customs tariff classification ruling holding that individually sheathed single mode (SM) optical fibers, used in long-distance telephony and cable television applications for voice and data transmissions are classified under HTSUS subheading 9001.10.0030, dutiable at 6.7% ad valorem, rather than under subheading 8544.70.0000, duty-free.
Woman Indicted for Attempting to Export Accelerometers to China
According to court papers, Li conspired with an individual in China to locate and procure Endevco 7270A-200K accelerometers for what her co-conspirator described as a "special" scientific agency in China. DOJ states that the Endevco 7270A-200K accelerometer measures massive shocks up to and beyond 200,000 g, and has many military applications, including use in "smart" bombs and missile development. Julie Myers, Department of Homeland Security Assistant Secretary for Immigration and Customs Enforcement stated,
These devices are simply not for export to China or anywhere else without explicit permission from the U.S. Government. Stopping the illicit export of weapons technology is paramount to the national security of our country and the public safety of all.
The government claims that from April 2007 to October 2007, Li and her co-conspirator used e-mail messages and telephone calls to negotiate the illegal export transaction with an undercover ICE agent in San Diego. The government alleges that Li and her co-conspirator urged the undercover agent to deliver the accelerometers directly to China, advising the undercover agent that if the accelerometers tested properly, large orders would follow.
Rick Gwin, Special Agent in Charge for the DCIS, Western Field Office, stated,
This investigation signifies the aggressive pursuit by the DCIS, in cooperation with our other federal law enforcement partners, to identify and pursue prosecution of those that illegally export or steal our sensitive military technology.
If you are interested in reading more details regarding this case, you can find it here.
BIS Publishes Final Rule re: VEUs
BIS Publishes Proposed Rule on SNAP-R
Five Approved as Validated End Users
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."
New Customs Bulletin
Contents:
CBP Decisions
- Approval to use authorized facimile signature and seal
General Notices
- Quarterly IRS interest rates used in calculating interest on overdue accounts and refunds on customs duties
- U.S. Customs and Border Protection Trade Symposium 2007: ‘‘Partnerships — Meeting the Challenges of Securing and Facilitating Trade’’
Customs Ruling Letters and Treatment
- Tariff Classification:
- Certain articles of semi-precious stones
- Certain stemmed tobacco
U.S. Court of International Trade
Slip Opinions
- Koyo Seiko Co., Ltd., et al. v. United States
- Ugine and ALZ Belgium, N.V., Arcelor Stainless USA, LLC, and Arcelor Trading USA, LLC v. United States
- Sherri N. Boynton v. United States
U.S.-Bahrain Free Trade Agreement
regulations on an interim basis
to implement the preferential tariff treatment
and other customs-related provisions of the
United States-Bahrain Free Trade Agreement
entered into by the United States and the
Kingdom of Bahrain. The interim rule is
effective on October 16, 2007 and any comments
must be received by December 17, 2007.
DOJ Targets Illegal Tech Exports
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.
The Associated Press has reported this story as well, see here.
DOJ Report of Export Prosecutions
- Illegal Exports of F-4 and F-14 Fighter Jet Components to Canada - 10/5/07
- Products with Nuclear & Missile Applications to Pakistan - 10/4/07
- Military Night Vision Goggles and Aviation Helmets - 9/8/07
- Economic Espionage and Theft of Trade Secrets to China - 9/26/07
- Sensitive Aircraft Components to Iran - 9/18/07
- 100,000 Uzi Submachine Guns to Iran - 8/27/07
- U.S. Military Source Code to China - 8/1/07
- Restricted Technology (controlled microwave integrated circuits) to China - 8/1/07
- Controlled Vibration Amplifiers, Cable Assemblies and Vibration Processor Units to India - 7/30/07
- Illegal Exports of F-5 and F-14 Fighter Jet Components to Malaysia - 7/19/07
- Telecommunications Equipment to Iraq - 7/19/07
- Missiles, Arms to Terrorists in Colombia and Various Armed Factions - 6/7/07
- U.S. Naval Warship Data to China - 6/5/07
- F-14 Fighter Jet Components to Iran - 5/8/07
- Telecommunications Equipment from China to Iraq - 4/10/07
- Software to Iran - 4/8/07
- Surface-to-Air Missiles, Arms to Terrorists in Sri Lanka and to Indonesian Military - 4/5/07
- Ballistic Missile Technology to Government Facilities in India - 4/3/07
- Outsourcing Manufacture of Armaments to China - 3/28/07
- Ballistic Helmets to Suriname - 3/28/07
- ITT Corp. Agrees to Pay $100 Million Penalty for Illegal Exports of Military Night Vision Technology to China, Singapore & UK - 3/27/07
- Machine Guns, Arms to Indonesia - 6/18/07
- Trade Secrets Stolen from 2 Silicon Valley tech companies to Chinese Nationals - 12/14/06
- "Guided Wave" Scanning Device to Iranian National - 12/5/06
- Technology with Nuclear Applications to Iran - 11/30/06
- Rifle Scopes, Weapons to Iran - 11/22/06
- U.S. Stealth Missile Data & Military Secrets to China - 11/8/06
- Military Weapon Scopes to China - 10/26/06
- U.S. Military Vehicles to the Middle East - 10/26/06
- Terrorist Transactions, Computer Exports to Libya and Syria - 10/13/06
- Machinery to Iran - 10/13/06
- Aircraft Parts to Iran - 10/13/06
- Industrial Furnace to Missile Institute in China - 10/4/06
ITC Investigates Hard Disk Drives
The investigation will target both drive makers and companies that use hard-disk drives in their products: Western Digital, Seagate Technology, Toshiba America Information Systems, Hewlett-Packard and Dell.
BIS Seeks Israel Industry Input
In order to maximize the impact of the dialogue, we are seeking private sector input about barriers or challenges to bilateral high technology trade and investment, including but not limited to the impact of dual-use export controls. We will work closely with our interagency partners and the Government of Israel to address these challenges through the HTF.We welcome and encourage your input. Please provide your comments to: US_IsraelHTF@bis.doc.gov. If you have questions in reference to the HTF, please contact Sarah Heidema, at 202-482-2906.
Free Trade Support Eroding
BIS Extends VEU Authorization to India
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.
Court Refuses to Dismiss $42 Mil Recordkeeping Penalty
The Court disagreed with Ford and claimed that the "(a)(1)(A) list"of entry records includes "NAFTA Certificate[s] of Origin and supporting records." It then held, as a matter of law, that the documents requested by CBP were "supporting records" to the NAFTA Certificates of Origin and therefore qualified as entry records.
The Court went on to reject Ford's arguments that it should not be responsible for documents that were both created and maintained solely by the exporter. Even though the Court noted that the CBP publication, NAFTA Focused Assessment Program Guidelines, states that an importer is not responsible to maintain supporting documentation that is certified by the exporter of the NAFTA Certificate of Origin, the Court stated that the publication does not have the force of law to contradict the (a)(1)(A) list recordkeeping requirements.
The Court's order will allow CBP to continue pursuing the $42 million recordkeeping penalty against Ford. More importantly, it may create judicial precedent that should cause NAFTA importers to greatly expand their recordkeeping programs.
Gov Group Calls for Risk-Based Testing for Import Safety
The U.S. imports the $2 trillion of products from more than 150 countries, from more than 825,000 importers, through 300 ports of entry. The value of imports is expected to triple by 2015. The American Shipper's Journal of International Logistics sets forth specifics of the report in this article. The prevention framework and risk-based monitoring system appears to borrow heavily from the existing Customs-Trade Partnership Against Terrorism (C-TPAT) program, whereby the Department of Homeland Security works with importers to adopt best practices and require trade partners to also adhere to them.
The report also calls for improved information-sharing, promotion of technological innovation and development of "a culture of collaboration" among regulatory agencies and with foreign governments. Health and Human Services Secretary Michael O. Leavitt, who led the task force, stated that the changes will likely require additional funding and new powers, such as making consumer product recalls mandatory, however, he stated that it was too early to provide specifics. The group expects to provide details in mid-November, after hearing public comment. Congress intends to hold another hearing on import safety, and Chinese delegations plan to meet with federal officials.
Export Control Freaks?
Holiday Apparel Eligible for Festive Article Classification
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.
Gender & Age Discrimination Alleged in Tariff Rates
If you are an importer who has paid tariffs based on gender differences and would like to explore filing suit in the USCIT to protect your claim to potential refunds, please contact Global Trade Expertise via our contact form or by phone at 925.876.1381.
U.S. and Israel Agree to U.S.-Israel High Tech Forum
BIS Issues New Regulation re: Exports to China
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.