CUSTOMS AND INTERNATIONAL TRADE

CHINA

Commerce Department Applies Anti-Subsidy Law to China
07/07
 to view Federal Register notice

The Commerce Department today reversed a 23-year-old policy of not imposing countervailing duties against subsidized imports from nonmarket economies. Countervailing duties (CVDs) are imposed when it has been determined that a foreign government is subsidizing the exportation of a particular commodity. When such a determination is made, CVDs are assessed against those same products imported into the United States in an amount equal to the foreign government's subsidy level.  Assessment of CVDs, therefore, is designed to offset the foreign export subsidy in order to provide a "level playing field" for U.S. producers of competitive products.

Commerce Secretary Carlos Gutierrez announced at a press conference on March 30, 2007 that the Department has found preliminary subsidizes on imports of special coated free sheet paper from two major Chinese producers.  Subsidies of 10.9% and 20.35% had been found to exist. Commerce is conducting a separate antidumping investigation on the same product. Secretary Gutierrez said China is no longer the nonmarket economy it was in the 1980s, and data on specific government subsidies can now be isolated to give a true picture of the unfair trade advantage they impart.

A final determination is due by June 13, but Commerce could also enter into a suspension agreement with China – which has not yet been requested.

The Government of China went to the U.S. Court of International Trade to enjoin Commerce from conducting the CVD investigation. In a decision handed down on Thursday, March 30, 2007, Judge Gregory W. Carman rejected China's request for an injunction. See  Government of China, et al. v. United States, et al., Slip Op. 07-50 (CIT, March 29, 2007).

The decision in this case applies only to a very specific kind of paper from China.  Its the real importance is that this decision reverses Commerce's long-standing policy of not imposing CVDs on nonmarket economies. It could very well lead to similar actions being filed against other Chinese products and against products from Vietnam and other nonmarket economies.

CHINA, CHINA AND MORE CHINA
07/07
It is impossible to read a newspaper or listen to a TV news report without hearing about all the things supposedly wrong with trading with China. Well, if you are interested in learning how to do business in China and take advantage of what has been described as its “Wild West,” the U.S. Commercial Service is hosting a program called “Dueling With The Pirates: Seven Successful Strategies” on August 15, 2007 in Philadelphia. For more details visit the agency’s website at:
 http://www.buyusa.gov/philadelphia/254.html

ANOTHER CHINA ISSUE
07/07
In mid-June, China’s MOC warned ocean carriers they may no longer carry cargo shipped by NVOCCs who are not licensed by MOC. For more about what you can do to comply, visit the OTI corner of our website at:

http://www.rorlaw.com/Practice_Areas/OTI_Corner/oti_corner.html

SOLID WOOD PACKING MATERIALS FORM REVISED
10/00

U.S. Dept. of Agriculture has revised the form used to report solid wood packing material for goods from China as being properly heat treated. Check the USDA web site for more details, www.aphis.usda.gov/library/forms

FINLAND ADDED TO LIST OF COUNTRIES RE SWPM
05/00

Finland has notified APHIS that it will also require certificates for all U.S. origin conifer solid wood packing material as a means to prevent introduction of the pinewood nematode. For more information check http://www.aphis.usda/gov/ppq/swp

HOUSE APPROVES CHINA PNTR
05/00

In late May, the U.S. House of Representatives approved the granting of permanent normal trade relations to China by a surprisingly wide margin. The U.S. Senate is expected to vote on this bill sometime in June. PNTR would take effect for China only upon its accession to the WTO.

WOOD TREATMENT RULES EXTEND TO BRAZIL
3/00

Joining several other countries, Brazil is seeking to keep out wood-eating insects by imposing new rules on wood packing materials. Brazil is concerned about shipments from China, Hong Kong, Japan, South Korea, North Korea and the United States. Other countries imposing limits on wood packing materials are the U.S., Canada, China, the European Union, Australia, New Zealand and Japan.

One problem with the Brazilian rules is they require fumigation by a private company endorsed by the government of the exporting country. Since APHIS does not endorse private laboratories, American shipments cannot be treated until arrival. For more details, check the APHIS web site.

CHINA TO CHANGE RULES REGARDING WOOD PALLETS
11/99

Effective for exports on and after January 1, 2000, China is expected to require different treatment for goods accompanied by solid wood packing materials in the form of heat treatment for U.S. made conifers. Additional certification requirements will also take effect. Japanese conifers are expected to be similarly restricted. For more information, contact the U.S. Dept. of Agriculture or see its web site at www.usda.gov.

CHINA IMPOSES LIMITS ON US WOOD PACKING MATERIALS
7/99

The Chinese government has informed USDA it found Bursaphelenchus Xylophilus in shipments from the U.S. containing wood packing materials. The pest is quarantined under Chinese law so USDA has advised U.S. exporters to eliminate the possibility of the pine wood nematode being transmitted in wood packing materials.

USDA & WOOD PACKAGING
12/98

The USDA requirements for the fumigation of all wood packaging out of China took effect on December 17th (the trigger is the date of export). In the last minute a few changes were made to those rules by USDA in partial response to industry comments. There is a statement signed by the exporter which is now required and must be accompanied by a fumigation certificate if wood packaging is present. The fumigation certification must be issued by a government authority in China or Hong Kong, depending on origin. The importer then issues his own statement attesting to having the fumigation certificate in his files. If wood packaging is not included with the shipment, a statement to that effect by the exporter is required. In either case, Customs has created a special ABI indicator to flag these transactions. However, if the entry is not filed electronically, the fumigation certification must accompany the entry. Either way, the exporter?s statement must also accompany the entry.

This change in rules now makes clear the regime applies to goods which originate in either China or Hong Kong or are entered into either country for further processing or packaging. If, however, goods are simply transhipped through China or Hong Kong without adding either merchandise or wood packaging, they are excluded from these requirements.

The beetle was discovered in about 30 warehouses in the U.S. as well. It was also discovered chewing holes in trees in New York (Brooklyn) and Chicago. As a result, the Department of Agriculture has set up a quarantine zone around Chicago to stop the infestation discovered there. Local shippers are being required to allow packing crates to simply pile up until federal investigators can incinerate them.  Officials are concerned the beetle problem will spread if any wood (e.g. stumps, branches and roots from infested trees or the pallets themselves, along with many other types and forms of wood) is moved. The quarantine covers Ravenswood, Summit and Addison. The list of affected wood is lengthy.

To further deal with the problem, USDA has posted a plant-quarantine specialist in China to provide answers to shippers about U.S. regulations for a period of about four (4) months.  In response, Chinese officials now agree that wooden packaging material used for export to the U.S. will be fumigated. Untreated packing material will not pass Chinese export inspections after December 17th. Despite its cooperation, Chinese officials continue to claim China is being singled out as the beetle genus is also native to Korea and Japan. U.S. officials respond saying those countries do not generally use wood packaging.

USDA WOOD PACKING RULE MAY BE DELAYED
10/98

The USDA rule for certification of wood packing is currently scheduled to take effect on December 17th. However, at recent public hearings, USDA APHIS officials conceded a later implementation date may be necessary to give importers sufficient lead time to comply.

CHINESE BUG INVADES WOOD PACKING MATERIAL
9/98

The U.S. Dept. of Agriculture has enacted an interim rule to halt what is described as the infestation of the Asian longhorned beetle. The rule prohibits untreated solid wood packing materials from China entering the U.S. If the Chinese exporter heat treats, fumigates or treats the wood material with preservatives, the packing material may be imported into the U.S. If the packing material is treated, a certification from the Chinese government must accompany the shipment and attest to the treatment. Goods without wood packing material must have an exporter’s statement certifying the shipment contains no solid wood packing material.

Wood packing material includes pallets, crating and dunnage. The new rule becomes effective December 17, 1998.

U.S. Threatens Retaliation Against China ...

Following two years of monitoring the efforts of China at enforcing its intellectual properly rights, the U.S. has found those efforts to be wanting. Scrap resulted during the manufacturing process, its value was not part of the dutiable value for Customs purposes. Effective February 20, 1996, waste and scrap which result during manufacturing become part of the value of the assist as they are consumed in production. In its ruling, Customs made clear that if a defect is identified prior to commencement of production, its value is not dutiable. If the waste or scrap is sold and the importer receives some of the sale proceeds, the value of the assist is reduced accordingly. If the resulting scrap is used to produce another article, the value of the assist is apportioned appropriately. But if a defect is discovered which leads to the scrap or waste during production, its value is dutiable.

An assist arises where the importer provides something to his supplier free of charge or at a reduced price which is used in production. Its value includes the freight to transport it to the manufacturing site and the attendant international insurance premium.

For most companies the result of this change in position by Customs will mean doing a better job of documenting when and how defects are discovered.

... And China Responds.

Not more than an hour after the U.S. list was published, China announced its own list of U.S. products against which it threatens retaliation. The Chinese list includes planes, drugs and telecommunications equipment . Of most concern is the Chinese threat to stop processing permits for U.S. companies which want to operate in China. For copies of the U.S. and China lists. please feel free to contact us.