Internal policy problems that caused licensing delays for night vision products at the Defense Technology Security Administration (DTSA) six months ago have been resolved and the agency is meeting its deadlines for reviewing export license applications, a DTSA staffer told skeptical industry representatives Aug. 13. Under a Clinton-era executive order, Defense has 30 days to review a license application referred to it from Commerce. "We never miss that deadline," DTSA staffer Joe Omaggio told the Bureau of Industry and Security's (BIS) Sensors and Instrumentation Technical Advisory Committee (SITAC).
Complaints about getting licenses through DTSA have come from other industries besides night vision producers. In many cases, the criticism has focused on the restrictive conditions DTSA wants placed on licenses. Industry representatives have said part of the problem at the agency arose in 2001 when then-Director Dave Tarbell left and was replaced by Lisa Bronson, who brought in a tougher position on export licensing. "That change was not a factor," stated Omaggio, who stressed that he was not speaking as an official spokesman for DTSA."We diligently try to come to a way of reasonably evaluating the export of thermal imaging cameras," Omaggio told SITAC. "We're not happy with the way it was being done six months ago. At the moment we think we are doing it in a very good way," he declared.
After the meeting, one BIS staffer called the claim of on-time reviews "disingenuous," because of the conditions DTSA tries to attach to licenses. The interagency debates over those conditions often force the cases to be escalated to political levels for resolution (see story page 3). This has added weeks or more to the license process (see WTTL, April 15, page 1).
Omaggio suggested that the backlog
of night vision cases at the end of 2001 and in early 2002 reflected interagency
policy differences that had to be escalated to get a political-level policy
decision for these products. "Sometimes in order to make a change
happen you have to create some turmoil, because out of that turmoil comes
change," he said. "That is not a good thing for U.S. industry, but
maybe that was a necessary thing at that time," he added.
U.S. HAS BECOME BIGGEST TARGET OF WTO COMPLAINTS
Along with the honor of being the
world's largest exporter and importer, the U.S. has become the largest
target of dispute-settlement complaints at the World Trade Organization
(WTO). But Washington gives as good as it gets, and it also is the
biggest complainant. Despite its claim of being the most open market
in the world, the U.S. increasingly is the subject of complaints primarily
aimed at its implementation of antidumping and countervailing duty laws
and the imposition of Section 201 safeguard relief (see table below).
This mounting record is a major factor behind congressional attempts to
limit Doha Round negotiations that might lead to changes in WTO rules and
further open U.S. trade laws to international challenge.
TOP 10 PARTICIPANTS
IN WTO DISPUTES 1995-July 2002
Country
Defendant
Complainant
No. of cases
No. of cases
(1) United States 70 66
(2) EC Plus 49 59
(3) Argentina 15 4
(4) India 13 15
(5) Japan 13 11
(6) Brazil 12 18
(7) Canada 10 18
(8) Korea 10 7
(9) Chile 9 7
(10) Mexico 7 10
In the first half of 2002, the U.S. was the target of 14 of the 20 dispute-settlement cases initiated at the WTO. In all, the U.S. has been the target or defendant in 70 cases since 1995 and the complaining party in 66 cases, according to a WTTL analysis of recent WTO statistics. At least 19 (27%) of the cases brought against the U.S -- for which specific products could be identified -- involved U.S. actions against steel imports. From the time the WTO came into existence on Jan. 1, 1995 until July 30, 2002, there have been 262 dispute-settlement cases initiated at the trade body.
International Trade Commissioner (ITC) Commissioner Jennifer Hillman notes that the U.S. has lost at least part of 17 out of 18 disputes that have gone through the WTO panel and Appellate Body process. The U.S., however, isn't alone in losing cases at the WTO. Other countries that are hit with complaints don't do better. "Everybody has lost all their cases," she points out. Dispute-settlement panels are showing a negative bias toward all trade restricting practices, Hillman suggests.
The European Community (EC) and several of its members states individually have collectively drawn the second largest number of trade complaints (49), but have been complaining parties more often (59). Surprisingly, Japan is ranked only in fifth place among countries that are the subject of trade complaints, despite historical criticism of its trade practices. Canada, Brazil and India have shown themselves to be aggressive users of the WTO dispute-settlement process, bringing complainants in more cases than they are defendants.
Since 1995, the number disputes initiated
annually has declined slightly. After peaking in 1998 at 44, the
number of disputes dipped to 30 in 2000 and 27 in 2001. Although
cases involving the largest trading countries have attracted the most attention,
numerous WTO cases feature disputes between developing countries.
For example, Turkey has brought complaints against Egypt, and Costa Rica
sought dispute settlement against Trinidad and Tobago.
ITA CUTS DUTIES FOR 17 CANADIAN SOFTWOOD LUMBER EXPORTERS
Fourteen Canadian lumber exporters will get dramatic reductions in the cash deposits they must pay toward countervailing duties (CVD) on shipments to the U.S. as a result of the Inter-national Trade Administration's (ITA) preliminary rulings on the first batch of requests for expedited duty reviews. Three other firms will be excluded from CVD tariffs entirely because they were found to be benefiting from de minimis subsidies of less than 1%.
The ruling in the Aug. 14 Federal Register covers border mills that asked ITA to waive or reduce the 19.34% CVD duty on their shipments, because the majority of the lumber they produce come from logs from the U.S., private lands or Canadian Maritime provinces and therefore don't benefit from the subsidies ITA found in its CVD ruling (see WTTL, July 1, page 3). A final determination on these reduced duties is scheduled for publication in September.In this first batch, one firm, Meunier Lumber of Ontario, apparently failed to calculate its expected rate accurately and had its subsidy rate increased to 35.35%. "I have no way of knowing what they were thinking," one ITA source said. At least two other firms withdrew their requests fearing higher rates.
Most of the firms that ITA reviewed will get their CVD deposits cut to single-digit levels of 1.16% to 9.98%. Two firms will be reduced to CVDs of 10.32% and 13.42%. About 80 other requests are still pending at ITA, mostly for exporters who get less than 50% of their logs from the U.S., private lands or Maritime provinces. These firms are also hoping to see their CVD payments cut but are not likely to get them reduced as much as this first group.
ITA rejected a plea from the Coalition
for Fair Lumber Imports, which wanted the agency to perform a more detailed
calculation of the residual subsidies from which each company might be
benefiting. "Consideration of more in-depth methodologies, such as
those presumably envisioned by petitioners, would require extensive information
collection and analysis, and we simply are unable to do this consistent
with our dual goals of providing company-specific analyses and conducting
these reviews in an expedited manner," ITA responded.
BIS PROPOSAL ON NIGHT VISION PRODUCTS FINALLY NEARS
After a three-month delay, a BIS proposal for clarifying commodity jurisdiction issues with State and setting standard licensing conditions for night vision products is close to being submitted for interagency review, agency officials report. The proposal was supposed to have been sent to other licensing agencies in May, but BIS apparently could not reach internal agreement on a position (see WTTL, May 27, page 1).
"We are very, very close to putting together our proposals for the interagency review," Bernie Kritzer, head of BIS's strategic trade office, told the Sensors and Instrumentation Technical Advisory Committee Aug. 13. The proposal "will contain two parts dealing with jurisdiction and the license conditions," he added."We are in the process of concluding talks in this agency with regard to some of these issues to make sure we have a common position that is sound operationally and everything from a legal and regulatory standpoint is consistent. I fully expect shortly to table that proposal interagency," Kritzer told the SITAC. The BIS plan is expected to become part of the ongoing interagency review of the night vision portions of the Munitions List (ML).
Kritzer's report came at a SITAC meeting where members heard reports on how foreign producers of thermal imaging products have turned to foreign suppliers of focal plan arrays to avoid delays and complications that have become common with U.S. export licensing for these products. Richard Gagg of Land Instruments told the committee his parent firm in the United Kingdom usually gets license applications for thermal imaging products through the UK's Office of Defense Trade and Industry in about 30 days. It has gotten licenses for exports to China, Ukraine and Iran, although review times for these cases are longer.
Rather than face the need for re-export
licenses and other controls if it used U.S. focal plan arrays, Land has
turned to France's Sofradir for its components. Gagg noted that some
people in the industry have said Sofradir would not be in business without
U.S. export controls.
MCTL REVIEW WILL COVER BROAD ARRAY OPTICAL PRODUCTS
Defense plans for updating the laser section of the Militarily Critical Technologies List (MCTL) will go beyond lasers and also cover four other sectors: optics, optical materials, imaging technology, including some radar products, and photonics, according to Edwin Myers of the Institute for Defense Analyses (IDA), which is conducting the MCTL review for the Pentagon. An IDA working group on the laser section is well along in its effort, and a draft proposal for updating this sector could be ready by the end of 2002, Myers told the BIS Sensors and Instrumentation Technical Advisory Committee (SITAC) Aug. 13. Work on the other four areas won't begin until after Oct. 1.
Myers stressed that the MCTL itself isn't a control list and any changes in the Commerce Control List (CCL) or the Munitions List (ML) would require further interagency decisions. He admitted, however, that the MCTL can form the basis for future controls (see WTTL, Aug. 5, page 3). New control changes also may require agreement by the Wassenaar Agreement, Myer indicated.The MCTL was mandated by the Export Administration Act (EAA) of 1979 and identifies technologies "that make our forces superior to others," Myers explained. EAA requires the MCTL to be updated on an ongoing basis, but the laser and optics section hasn't been updated since 1996, and those changes were based on older reviews, he noted. Although an item may be on the list, it still may not be controlled because of foreign availability or other reasons, Myer said. .
"This work is extremely important," said William Wells, SITAC co-chair and vice president of Spectra-Physics Lasers. "Even though it has not been updated for a while, it is significant that the list is being updated now with all the laser technology that has come to the forefront," he said. "Although this list is not a control list, it will form the basis and reference point for going forward over the next five or so years in terms of what DoD would like to see controlled. So it is very possible that thing that show up on this list will come before this committee and the Department of Commerce in the future," said Wells, who also is on the IDA working group.
* * * BRIEFS * * *
WASSENAAR: Working-level meetings in September will begin reviewing proposals to present to high-level meeting of members in December. One French proposal would add controls on number of materials, including amorphous silicon. Separate proposal seeks to update controls on analogue-to-digital convertors. Controls on convertors "have not been adjusted in about a decade and there have been a lot of changes in the market," according to BIS's Bernie Kritzer. "We are working fairly intensively interagency and I am optimistic that a compromise is going to be achieved among the agencies. I don't think any of the agencies will be fully satisfied with that compromise, but that is the nature of compromises," he said.
ANTIDUMPING: To come into compliance with WTO dispute-settlement panel ruling, ITA in Aug. 15 Federal Register said it is seeking comments on possible revision of antidumping regulation to change method for treating arm's-length sales to affiliated parties when calculating normal values.
GENERIC DRUGS: GlaxoSmithKline has turned to ITC to fight competition for its antibiotic Augmentin, which reports say has $2 billion-plus in annual sales. Firm filed complaint at ITC Aug. 9 seeking Section 337 unfair trade investigation of imports of generic version of drug. Company asked ITC to investigate "misappropriation of trade secrets" by firms that intend to produce generic version of drug, which combines amoxicillin and clavulanate. Complaint cites Swiss drug maker Novartis and its generic drug division, Geneva Pharmaceuticals. Also named are Biochemie of Austria and Italy. Federal court in June ruled three of Glaxo's patents were invalid, opening way for introduction of generic competition.
FSC/ETI: In follow-up to Finance Committee hearing July 30, committee chairman Max Baucus (D-Mont.) and ranking member Charles Grassley (R-Iowa) wrote to USTR Robert Zoellick and Treasury Deputy Secretary Kenneth Dam Aug. 12, inviting administration to send representatives to meeting in September to organize working group to develop legislative proposals for replacing FSC/ETI tax laws.
STEEL: USTR and Commerce Aug. 12 announced exclusion of 37 more products from Section 201 tariffs.
UKRAINE: ITA Aug. 8 said it won't decide on Kiev's nonmarket economy status before Aug. 23 deadline for reaching final determination in antidumping case on steel wire rod (see WTTL, July 29, page 3).
EDITOR'S NOTE: In keeping with our regular publishing schedule, there will be no issue of Washington Tariff & Trade Letter Aug. 26. Next issue will be dated Sept. 2.
Copyright 2002 by Gilston Communications Group. Reproduction or retransmission in any form is prohibited. Washington Tariff & Trade Letter is published weekly 50 times a year.
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