Volume 22, No. 32 -- August 12, 2002

Posted Monday, August 12, 2002 12:00 am

JOHNS HOPKINS PAYS ANTIBOYCOTT FINE FOR NOT HIRING JEWISH WOMEN

Johns Hopkins University's Health Systems (JHHS) has agreed to pay a $10,000 civil fine to settle Bureau of Industry and Security (BIS) charges that it refused to hire a Jewish woman to help recruit customers in the Middle East. "BIS believes that the discriminatory conduct was motivated by the company's concern about having a Jewish person in that position because of the Arab League boycott of Israel," the agency said in a statement.

JHHS self-disclosed the alleged violation, but neither admitted or denied it had violated the antiboycott rules. According to the draft charging letter it received, the health provider in 1995 was recruiting for a marketing person to promote its services to Middle Eastern customers. During an interview with one prospective employee, a JHHS executive asked the woman her religious affiliation.

"In the course of this interview with the director [of international services] on or about 26 April 1995, the director asked Candidate A the origin of her family name," the charging letter reported. "Subsequently, the director asked Candidate A, Are you Jewish?' Candidate A responded affirmatively. The director explained that the Health System already had a Jewish person working on the Jewish population. You did not select Candidate A for the position," the letter charged. BIS lately has stressed the enforcement of the antiboycott regulation. "This case demonstrates that resolve," said BIS Assistant Secretary for Enforcement Michael Garcia.

GAO DEFENDS REPORT ON EXPORTS OF SEMICONDUCTOR EQUIPMENT TO CHINA

Three months after issuing a report criticizing State and Commerce for relying on outdated data to justify controls on the export of semiconductor manufacturing equipment to China, General Accounting Office (GAO) staffers say the departments still haven't provided an adequate argument to support their licensing policies. At a recent meeting of the BIS Information Systems Technical Advisory Committee (ISTAC), GAO analysts repeated their charges that current controls aren't based on up-to-date analysis of the contribution such exports may be making to China's military capabilities or of the foreign availability of the equipment in China.

U.S. export controls on chip making equipment are based on studies dating back to 1996 and 1985, according to GAO Assistant Director Stephen Lord. The study conducted by the GAO, the investigatory arm of Congress, was conducted in 2001 and 2002 and included visits to actual Chinese semiconductor manufacturing plants in China. The GAO was not advocating decontrol of this equipment, but arguing there is not adequate analysis to support current restrictions.

The agency made similar complaints last year about the Clinton administration's decision to raise the control levels for high-performance computers. In both cases, it claimed the government lacks information on the real impact of controls. Lord also defended the GAO's contention that U.S. controls are aimed at limiting exports of this equipment to China to products that are two generations behind the state of the art in the field. Defense and BIS officials denied that this wasn't their policy, but manufacturers who were interviewed said that from their experience this is the policy. BIS claimed all licenses are reviewed on a case-by-case basis, and the majority of licenses are approved, albeit with conditions.

Although other members of the Wassenaar Arrangement in Europe and Japan maintain the same level of controls on semiconductor manufacturing equipment, the speed with which they process export applications gives their producers an advantage over American firms, said GAO analyst David Bruno. Licensing policies among all Wassenaar members "are fairly close," but firms in those countries "get decisions faster," Bruno told the ISTAC.

When BIS denied licenses for this equipment in two specific cases, the GAO found that China was able to obtain similar products from Germany and Sweden. Other Wassenaar members don't consider China the strategic threat that the U.S. does, the GAO found.

The end result is that China has not had difficulty getting the manufacturing equipment it needs. Lord noted that China in the mid-1990s decided to stop trying to build an indigenous semiconductor manufacturing equipment and chip industry and began seeking foreign partners. Now most plants in China are joint ventures run mostly by foreign nationals, including a large contingent from Taiwan. While these plants were not state of the art by intention, they are improving and the gap between them and U.S. semiconductor plants is narrowing.

RULINGS MOUNT AGAINST U.S. IMPLEMENTATION OF "SUNSET" REVIEWS

Hardly a week goes by without some international forum or court issuing a ruling against U.S. implementation of the "sunset" provisions in the Uruguay Round trade accord (see WTTL, July 8, page 2). Negative rulings from World Trade Organization (WTO) dispute-settlement panels, bilateral NAFTA panels and the U.S. Court of International Trade (CIT) have challenged the policies and methodologies the International Trade Administration (ITA) and International Trade Commission (ITC) use to decide that revocation of existing antidumping and countervailing duty orders would lead to renewed dumping, subsidies and injury.

In the latest case issued July 16, a NAFTA binational panel -- on a split 4-1 vote -- found the ITC had not adequately explained why the likely injury that it said would recur if the antidumping order on pure magnesium from Canada and countervailing orders on pure and alloy magnesium were revoked would be attributable to the subject goods.

It remanded the case back to the ITC "to examine the likely impact of substitutable nonsubject imports sufficiently to establish the extent to which material injury that might be likely to occur, within a reasonable foreseeable time following revocation of any of the orders, would be attributable to revocation of the orders."

In its opinion, the panel said a 1997 Federal Circuit opinion in Gerald Metals v. U.S. on the "by reason of" standard in the antidumping law in original dumping cases is applicable to sunset reviews. In the statutory provisions for both original and sunset reviews, "the plain language mandates that the Commission determine the impact of any substitutable nonsubject imports that are on the domestic market during the relevant period," the panel declared.

The panel sustained the ITC's decision to consider the expected imports of a new Canadian entrant into the U.S. market, Magnola Metallurgy, in its review. "The panel finds that the Commission's inclusion of Magnola's likely exports is in accordance with the law," it ruled. The panel also said the ITC's review of the nature of the Canadian subsidy complied with the law. It also sustained the Commission=s interpretation of the concept of "likely." Nonetheless the panel said the ITC didn't have sufficient record to find that Magnola was likely to enter the market by underselling, and it remanded that portion of the ruling back for the ITC to provide more price and volume data.

This was the third remand order involving magnesium from Canada. Another binational panel had partially remanded the case to the ITA to provide a better explanation of the subsidy rates it reported to the ITC for subject imports and to justify its determination of an "all other" rate. ITA's remand decision was submitted to that panel June 25. In its new ruling, ITA dropped its expected subsidy rate to 1.84% from 7.34% for both subject imports and all others.

Magnesium imports from Canada and other countries have been the subject of a long bitter fight initiated by Magnesium Corporation of America (Magcorp), a subsidiary of Renco Group, a privately-owned, multibillion dollar holding company. Magcorp in 2001 filed for Chapter 11 bankruptcy protection, and on June 24, 2002 a federal bankruptcy court approved the auction sale of its magnesium producing facilities in Utah to U.S. Magnesium Corp., another Renco Group subsidiary. U.S. Magnesium July 31 informed ITA that it would now be the petitioner of record in the antidumping and countervailing duty cases and would continue to be represented by Magcorp's lawyers, King & Spalding.

BYRD AMENDMENT DOESN'T VIOLATE FIFTH AMENDMENT, COURT SAYS

Antidumping duties that are paid to domestic petitioners under the provisions of the Byrd Amendment aren't a "penalty" under the law, so they don't violate the Fifth Amendment right of due process for importers, according to Court of International Trade (CIT) Judge Gregory Carmen. In an Aug. 6 ruling (Slip Op. 02-83) rejecting the arguments of importers of crayfish from China, Carmen said antidumping duties are "remedial" and "Congress has exercised its constitutional powers in choosing to further the goal of remediation through the distribution of collected duties to parties affected by dumping," Carmen wrote.

The CIT ruling comes as the Byrd Amendment, which authorizes the distribution of collected antidumping duties to firms that were parties to the complaints, has been found in violation World Trade Organization (WTO) antidumping rules by a dispute-settlement panel (see WTTL, July 22, page 4). The separate constitutional challenge to the amendment focused on whether it violated due process rights by making an antidumping duty a form of penalty.

Carmen disagreed with the importers' claims. "A penalty amount usually has no relation to the cost of remedying the harm caused by the prohibited act," he explained. "After passage of the Byrd Amendment, however, the amount of antidumping duty assessed continues to be >directly related to the remedial goal of equalizing competitive conditions'," Carmen added.

A second argument against the respondents' plea is the fact that the duty is not enormously greater than a regular duty in similar cases, the judge noted, citing a 1902 precedent in Helwig v. U.S. "Because the antidumping duty assessed here is identical to that assessed prior to implementation of the Byrd Amendment, the amount cannot be considered so large as to constitute a penalty," he stated.

CUSTOMS PROPOSAL COULD SLOW CONTAINER LOADING OVERSEAS

Efforts in foreign ports to speed the transfer of sea containers from trucks and trains to ships may be interrupted by a red light installed by a proposed Customs regulation that would require carriers to submit cargo manifests to the agency 24 hours before the U.S.-destined containers are laden along ships for loading in foreign ports. As part of its post-Sept. 11 Container Security Initiative (CIS), Customs wants to know what sea containers contain before they get on vessels so it can identify high-risk cargo for inspection either before it's loaded or when it arrives at U.S. ports.

In addition to potential civil fines for failing to provide the manifests 24 hours ahead of lading, carriers might have their containers blocked from unloading when they reach the U.S. The proposal in the August 8 Federal Register provides only 30 days for public comment, and Customs wants final rules in place very shortly after the comment period ends.

Customs believes the 24-hour in advance period fits with normal loading patterns at foreign ports and won't delay the lading process. The agency has consulted with the trade to determine customary practices. "A large number of containers, whether they are transshipped or originating, are actually sitting at the port prior to lading, many times, for days," Customs Commissioner Robert Bonner said.

Customs already receives a high volume of sea container manifests in advance, Bonner also noted. The proposed regulation will continue to allow non-vessel operating common carriers (NVOCCs) to file manifests directly with Customs. The agency will be prepared to accept filings electronically through the Automated Manifest System (AMS).

Bonner admitted that the actual mechanics of how the advance filing system will work and how scrupulous Customs will be in enforcing the 24-hour deadline will need to be worked out. He expects many of these issues to be raised in public comments. Clearly, however, most of the burden and legal liability for failing to submit the information will fall on carriers.

"I would think that a reasonable and prudent carrier, given the fact that Customs would retain the power to not issue a permit to unladen that container, may decide that it does not want to put that container on board unless the advance manifest information has been provided to U.S. Customs for that container in a timely way," Bonner said. "As a practical matter, if no information is provided or if that information is manifestly incomplete, there is a question of whether or not the carrier should even be loading the container on the vessel," he said.

* * * BRIEFS * * *

FAST TRACK: At ceremony Aug. 6 where he signed fast-track negotiating authority bill (H.R. 3009) into law, President Bush promised to "move forward globally" with Doha Round negotiations. "We'll move quickly to build free trade relationships with individual nations, such as Chile and Singapore and Morocco," he said. "We'll explore free trade relationships with others, such as Australia. The United States will negotiate a Free Trade Area of the Americas and pursue regional agreements with the nations of Central America and the Southern Africa Customs Union," he declared.

FISH FILLETS: ITC on 5-0 vote made preliminary finding Aug. 8 that allegedly dumped imports of frozen fish fillets from Vietnam may be injuring U.S. industry.

STEEL: It was no, yes, no at ITC on question of injury from imports of dumped circular seamless stainless steel hollow products from Japan. On 3-2 vote Aug. 6, ITC issued remand decision that imports are not injuring U.S. industry. On previous remand from CIT, Commission had voted affirmative after it had initially voted negative on original final determination in August 2000.

MORE STEEL: Customs in Aug, 9 Federal Register proposed requirement for including import license numbers on entry documents for steel subject to Section 201 tariff restrictions.

FERROSILICON: Acting on remand order from CIT, ITC Aug. 6 voted 5-0 that dumped ferrosilicon from Brazil, China, Kazakhstan, Russia, Ukraine and Venezuela, and subsidized imports from Venezuela are not injuring U.S. industry. In another convoluted case, Commission had originally found injury in cases, but had undertaken changed circumstances review in 1998. During review, ITC took into account fact that three domestic producers of ferrosilicon had pleaded guilty or been convicted of price fixing and decided to reopen original cases. It then reached negative determinations upon reconsideration. Petitioners complained to CIT, which said ITC proceedings were defective and remanded case back to Commission.

WTO: At Doha Round meetings in Geneva Aug. 9, U.S. proposed new rules to expand transparency of dispute-settlement proceedings, including open hearings, public briefs and accepting amicus briefs.