Blog/News

Obama Signs Trade Facilitation & Trade Enforcement Act

Sadie Keljikian, Express Trade Capital
Two weeks ago, President Obama signed H.R. 644, or the Trade Facilitation and Trade Enforcement Act of 2015. The Act includes supplemental provisions to international trade agreements including the recent Trans-Pacific Partnership.

The Act provides general policy adjustments and covers potential loopholes to existing and future trade agreements. Among them is the official authorization of CBP, allowing Customs and Border Patrol to operate within the Department of Homeland Security for the first time since its establishment in 2003. The Act also provides funding to the CBP to update automated tracking systems to ensure that US customs laws are upheld.

H.R. 644 also provides enforcement against currency manipulation and “dumping,” or predatory pricing used in international trade to undercut local markets and drive away competition. The Act combats these practices with strengthened semiannual currency reports and more specific guidelines to identify and quickly rectify any currency manipulation attempts by foreign governments.

Labor practices are also addressed in the Act. While it has proven difficult for the US to combat unethical labor practices abroad and even at home, particularly in the apparel industry, one aspect of the difficulty has been negated with H.R. 644. Formerly, there was an exception known as “consumptive demand,” meaning that if a scarce product was available, it would be allowed into the US regardless of the conditions under which it was produced. This exception no longer applies, limiting the irresponsible and illegal behaviors that occur in many supply chains, including forced or indentured labor.

Trade between the US and Israel as well as between the US and Nepal will also be bolstered, as the Act combats politically motivated obstructions to Israel and allows duty free export of certain products from Nepal to the US. This will create a more open trade route to strengthen the relationship between the US and Israel as well as assisting Nepal in its economic and social recovery.

The Act has several other provisions, including clear criteria regarding intellectual property protection, a permanent ban on taxing internet access on a state or local scale, promotion of small business exports, and strengthening of the Trade Promotion Authority, or TPA. The reaffirmation of TPA is unsettling to those who oppose trade agreements like the recent Trans-Pacific Partnership and NAFTA, since it allows the President to fast-track these agreements, allowing less time for Congress to review and discuss the potential effects of the deal.

In general, H.R. 644 seems to protect the US from dishonest trade practices and solidify systems that are already in place, making international trade simpler and more cost effective. It also seems to streamline the customs process and discourage unsafe and irresponsible labor practices, but obviously, it is yet to be seen what the real effects will be.

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West Bank Country of Origin Marking Requirements

As per U.S. Customs and Border Protection (CBP), those manufacturing goods in West Bank must ensure that all goods produced in West Bank or Gaza Strip are marked correctly. Goods entering the U.S. from these locations must abide by these marking requirements.
Goods produced in West Bank or Gaza Strip must be marked as originating from:
• “West Bank”
• “Gaza”
• “Gaza Strip”
• “West Bank/Gaza Strip”
• “West Bank and Gaza” or
• “West Bank and Gaza Strip”
It is not acceptable to mark these goods with “Israel”, “Made in Israel”, “Occupied Territories-Israel” or any variation.

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CBP Begins Third Phase of New GSP

U.S. Customs and Border Protection (CBP) has entered the third phase of its renewed Generalized System of Preference (GSP) Retroactive Refund Processing. The system was enacted on July 29th, 2015 and remains in effect through December 31, 2017.

During the third phase, importers can now initiate requests for refunds and submit them to CBP ports.


Second Explosion Contaminates Exports in Tianjin

Sadie Keljikian, Express Trade Capital

Officials warn that a second explosion at the port in Tianjin, China on October 12th could have contaminated goods scheduled for export.

The FDA is requiring importers to submit entry and shipping documents for all human and animal food products, human and animal drug products, and medical devices that were originated from, stored in, or transmitted through the Binhai New Area industrial center or Xiditou Township of Beichen District in Tianjin. The FDA is taking these precautions due to the large quantities of hazardous materials stored in the area. The agency requires importers to report where exactly products were stored, how they were packaged and what testing is being done to ensure that they are not contaminated.

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CBP Updates GSP

US Customs and Border Protection (CBP) has completed 98% of the automatic refunds for Generalized System of Preference (GSP) for entries filed with the “A” SPI and were duty paid. CPB is reviewing the remaining 2% of qualifying entries for expected refunds manually and hope to have them completed by early November. Those who have not received their expected automatic refunds by the end of the first week of November are advised to file a request with CBP.

CBP will also update their Automated Commercial Environment (ACE) Reports on October 31st to include a new homepage, more intuitive design to simplify navigation, and revisions to the training resource page.


Update on ACE PGA Pilot Rollout Plan

The first phase of the Partner Government Agency (PGA) Pilots in the Automated Commercial Environment (ACE) was initiated last week. The Food and Drug Administration (FDA) and the National Highway Traffic Safety Administration (NHTSA) are two of the fourteen agencies participating in the pilots.

The second phase of the PGA Pilots is scheduled to begin on September 2, 2015.

You can find the schedule here: ACE PGA Pilot Rollout Plan 2015


Key Trade Bills & Programs Enacted

Esther Shmunis, Express Trade Capital

Trade Preferences Extension Act Signed

Yesterday, the President signed the Trade Preferences Extension Act of 2015 into law.

The Act grants the President the broad power to submit trade deals to Congress for an up-or-down vote, free from Congressional amendments.

Proponents of the Act maintain that it will provide assistance to U.S. workers displaced by global trade as well as extend programs to create jobs and boost economic output in developing countries.

GENERALIZED SYSTEM OF PREFERENCES EXTENSION ACT OF 2015 (GSP) RENEWED

Congress also renewed the Generalized System Preferences Extension Act, which had expired July 31, 2013.   The renewal allowed for reinstatement of the GSP program, allowing all GSP certified goods to be eligible for duty refunds on the condition that the goods were both entered between July 31 and the date the law takes effect. The date of reinstatement also marks the date of liquidation for goods claimed GSP eligible.

Importers must continue to pay all duties on GSP goods, until the reinstatement period transpires.

All refund requests must be filed within 180 days of the reinstatement date, and if approved, will be provided within 90 days of the liquidation period.

Importers that possess goods that may be considered, but not claimed as GSP eligible, should seek assistance through CBP.

ACE EXPORTER ACCOUNTS AND ACE TRADE EXPORT REPORTS

In other related news, the ACE Secure Data Portal has agreed to support the establishment exporter account. The exporter account enables trade users to access ACE Trade Export reports that includes five years of useful export commodity data. An exporter account is required in order to gain access to the ACE data portal.


GOVERNMENT UPDATE: PORTS ACT

Esther Shmunis, Express Trade Capital

In response to the recent West Coast port work stoppages that have strained the U.S. economy, enraged the nations’ embattled retailers and impacted millions of American jobs, the federal government has begun deliberations on whether to amend the Taft-Hartley Act to provide local state authorities the power to adjudicate port disputes.

taft-hartley primer

Enacted in 1947 by Senator Robert Taft and Representative Fred Hartley, the Taft-Hartley Act empowered the President of the United States to intervene and demobilize “labor strikes that threaten to cripple the nation.”  The Act sought to promote “the full flow of commerce and to prescribe the legitimate rights of both employees and employers in their relations affecting commerce.”  In recent years, American Presidents – including President Obama – have been reluctant to invoke their powers under the Act.  The recent port disputes, however, have renewed discussions about the Act’s effectiveness in preventing or mitigating work stoppages that threaten the nation’s economic well-being.

the ports act

On June 5th Senator Cory Gardner of Colorado introduced the Protecting Orderly and Responsible Transit of Shipments (PORTS) Act to “safeguard the American economy from the threat of labor shutdowns and slowdowns at seaports.”  Co-sponsored by Senator Lamar Alexander of Tennessee, Gardner’s proposal would shift the power to adjudicate port work stoppages from the President of the United States to state governments,  effectively “empower[ing] the local leaders who are most affected by these port disruptions, to apply pressure to their state governments to bring these damaging disputes to an end.” The PORTS Act’s proponents contend that the changes will “help the millions of American jobs and workers who rely on the efficient flow of goods through our nation’s ports…ensuring the continual free flow of cargo in and out of our ports is in everyone’s interest.”

The PORTS Act has already garnered support from the United States Chamber of Commerce, National Association of Manufacturers, Agriculture Transportation Coalition, and the National Retail Federation.

Labor unions enraged

Labor unions, who never warmed to the Taft-Hartley Act, were dismayed by the recent proposal.  ILWU spokesman, Craig Merrilees, viewed the proposed bill as “outrageous, extremist, antiworker legislation.” Michael H. Leroy, labor law professor at University of Illinois, added proposals to alter the basic mechanics of the Taft-Hartley Act, such as Gardner’s PORT Act, are not “realistic proposals in terms of political dimensions… any tinkering with law is just going to involve a lot of chasing ones tail over and over.” (JOC).

End in sight?

Neither side, however, questions the importance of expediently resolving labor disputes at the nation’s ports.  At last count, 23 million Americans depend on the ports for jobs.  Moreover, the Federal Reserve Board attributed the West Coast port disputes as the key culprit for the 0.7 % decline in GDP in the first quarter of 2015.  However, it remains to be seen whether shifting adjudicatory authority to local leaders will alleviate delays at the country’s ports.


Government Updates

Speculation and Talks in the Trade Market Remain High in Regards to TPA, GSP, and AGOA

With little movement on trade from Congress, several lobbyists are commenting on the likelihood of The Senate Finance Committee marking up a Generalized System of Preferences (GSP) renewal bill and Customs Reauthorization right alongside Trade Promotion Authority (TPA) sometime in April.

Trade Promotion Authority (TPA)

During the American Apparel and Footwear Association¹s summit last week, Senator Orrin Hatch discussed the nation¹s trade agenda with an emphasis on renewing TPA. As Hatch stated ³Without TPA, our trading partners will not put their best offers on the table because they will have no guarantees that the agreement they sign will be the same one Congress considers.² In addition he stated that ³The Obama Administration is currently negotiating some of the most ambitious trade agreements in our nation¹s history. The first is the Trans-Pacific Partnership, or TPP, an Asia-Pacific trade agreement being negotiated between the United States and eleven other countries. And, on the other side of the world, the U.S. is negotiating an agreement with the twenty-eight countries of the European Union.²

Generalized System of Preferences (GSP)

In addition, another trade priority for the Finance Committee agenda is renewing the Generalized System of Preferences (GSP) program which allows certain products from specified developing nations duty-free tariff treatment. Senator Hatch commented that ³Although the GSP program was initially created to assist with economic growth in the developing world, it now assists hundreds of our businesses here in the United States. Across our country, manufacturers and importers benefit by receiving inputs and raw materials at a lower cost. But, unfortunately, these U.S. businesses have faced high tariffs on these imports since the program expired in 2013. Without the GSP program in place, American companies paid over $600 million in tariffs in 2014.² As the non-renewal of GSP extends over time, it will be harder than ever to fully recover any potential financial damages companies faced waiting for a change to take place.

African Growth and Opportunity Act (AGOA)

The African Growth and Opportunity Act (AGOA), which allows sub-Saharan African countries duty-free access into the U.S. market with set regulations, is set to expire at the end of September. Trade with these beneficiary countries has tripled since the agreement enacted in 2000 and the U.S. direct investment in Africa has increased as a result. ³Of course, right now, only a small number of Sub-Saharan African countries are reaping the benefits of AGOA and American exporters continue to face challenges in Sub-Saharan Africa¹s growing markets. We need to do more to ensure the program reaches its full potential. I¹m working with my colleagues on the Finance Committee to craft a reauthorization bill that will improve upon AGOA¹s success, to remove obstacles to trade in Sub-Saharan Africa, and allow both that region and our job creators here at home to benefit from expanded market access,² Sen. Hatch said.

Malaysia Goods and Service Tax (GST)

Effective April 1, 2015, the Malaysian government will be implementing the Goods and Service Tax (GST), a multi-stage consumption tax on goods and services. All goods and services, including imports*, made in Malaysia will be effected by this new tax. To find out more information about how this might affect your business, visit the Official Website for Malaysia Goods and Services Tax.

*Imports excluded from this are specific goods and services categorized under zero rated supply and exempt supply orders as determined by the Minister of Finance and published in the Gazette