Volume 22, No. 41 -- October 21, 2002

Vol. 22, No. 41                                                                                                     October 21, 2002

                                * BIS Can Do Little to Fight Grassroots Boycott of Israel;
                                * New Visa Policy Blocking Entry of Foreign Customers to U.S.;
                                * U.S. Wants to Link Market Access And Trade Rules in Doha Talks;
                                * Commerce Asks for More Information in Canadian Wheat Case;
                                * Briefs on: Doha Round, Steel, China, EU, Trade Figures, Port Security, Macedonia.
 

BIS CAN DO LITTLE TO FIGHT "GRASSROOTS" BOYCOTT OF ISRAEL

The efforts of activists and academics in the U.S. and abroad to cut trade and investment with Israel in reaction to the current violence in the Palestinian territories are not subject to U.S. antiboycott rules, according to Dexter Price, director of the antiboycott compliance office in the Bureau of Industry and Security (BIS).  Noting the emergence of a "grassroots boycott," Price said his agency has not found any formal link between these activities and the Arab League boycott of Israel, which is subject to antiboycott requirements.

Requests that companies receive from private citizens or even foreign firms as part of this grassroots boycott "may not fall within Commerce Department regulations," he told the BIS Update 2002 conference.  However, a similar request from a Saudi Arabian firm may, he warned.

The grassroots campaign against Israel has been centered on American college campuses where activists have called for university endowments to end their investments in Israel and for schools to cut ties with Israeli athletes, scholars and performing artists.  Similar boycotts have been reported in Europe, Japan, Latin America, Japan and Australia, Price told Update.

A parallel grassroots boycott has surfaced in the Arab world against American-made goods, Price reported.  Arab consumers may be boycotting American brand names as a way to protest the close ties between the U.S. and Israel, Price suggested.  He noted that U.S. exports to the Middle East declined 11% in the first six months of 2002 compared to the same period in 2001.  Whether that decline is due to a boycott or general economic conditions isn't clear.
 

NEW VISA POLICY BLOCKING ENTRY OF FOREIGN CUSTOMERS TO U.S.

In a meeting with some 100 business community representatives Oct. 16, State Department officials offered little hope that they will be able to do anything to speed up the approval of non-immigrant visas for foreign business people seeking to enter the U.S.  Since tighter visa review procedures were imposed in July, industry sources claim a backlog of about 25,000 visas has developed, preventing visits to the U.S. of foreign customers, employees and persons coming for training.  State officials admitted that it is taking up to four months to get a visa approved through the system. The new procedures for temporary business visas are having a serious adverse impact on sales and exports, industry sources report.

The business community has mounted a new lobbying effort to get the process improved, but industry representatives admit they face a hard time getting the system changed.  "This is a very difficult issue," one source told WTTL.  The White House homeland security office and Justice Department "have dug their heels in," he said.  "They've said, >sorry it hurts business, but national security takes priority'," he added.

Examples of business community problems with the new process are beginning to mount.  In one case, a deal reportedly fell through when a foreign client couldn't get permission to come to the U.S. to sign a contract.  Foreign visitors have been unable to attend major trade shows and, in one instance, a Chinese firm wasn't able to participate as an exhibitor at a machine tool industry show because visas couldn't be granted in time for its executives

Boeing reportedly has had difficulty getting approval to bring foreign pilots to the U.S. for training, and in another example, a foreign employee working in the U.S. was stranded abroad when he couldn't get permission to re-enter the U.S.  Universities have complained about students missing the start of the new school year, and some hospitals and medical centers have said they can't get foreign patients into the U.S. for treatment

Even foreign nationals who are the subject of "deemed export" licenses issued by the Bureau of Industry and Security (BIS) are not exempt from the tighter screening procedures and the need for separate approval of their visas by U.S. intelligence agencies.  State officials told the business executives that  "deemed export licenses carry no weight under the new visa procedures.  They have no relevance whatsoever," one participant told WTTL.

State has long had a process for screening visa applicants to see if they were coming to the U.S. to do anything related to 16 categories of dual-use technology on a "technology alert list."  Intelligence agencies also matched the names against a data bank of some 13 million foreign nationals.  Problems apparently have arisen, however, for foreigners who are not on any list and for whom intelligence agencies have no information either positive or negative.

The criteria being used to review new applications is classified, but reports have indicated that the process has focused on citizens of the home countries of known terrorists.  Nonetheless, business sources say the approval process is hitting legitimate business visitors from China, India, Russia and Vietnam.  U.S. business groups want State to establish better methods for vetting these cases and to allow American companies to vouch for persons with whom they have a long, well-established business relationship.

 
U.S. WANTS TO LINK MARKET ACCESS AND TRADE RULES IN DOHA TALKS

The U.S. provided a preview of its negotiating strategy in the Doha Round Oct. 17 when American officials in Geneva presented the World Trade Organization (WTO) negotiating group on trade rules with a four-point set of principles on how those talks should proceed.  Faced with widespread demands for changes in WTO antidumping and countervailing duty rules, the U.S. is making it clear that the price for any revisions will be the removal of trade-distorting practices in other countries and the opening of foreign markets to U.S. goods and services (see WTTL, Oct. 7, page 1).

For now, the U.S. is avoiding a quid-pro-quo formula for accepting new antidumping and CVD rules in exchange for greater disciplines on market distortions.  Many members of Congress have said they would oppose any trade deal that would required a weakening of U.S. trade laws.  At the end of the round, however, U.S. negotiators may have to accept changes in WTO rules and then will have to justify the deal by showing a balancing payoff in greater market access for U.S. firms and disciplines on trade-distorting practices.

Other participants at the WTO rules group meeting questioned U.S. officials on how they anticipate linking these market access issues with the rules negotiations.  No specific answer apparently was provided to that question.  "A number of the issues we've outlined don't even belong in the WTO necessarily or don't lend themselves to binding disciplines," said Assistant Secretary of Commerce Faryar Shrizad.  "What we were trying to do with the steel paper, and part of the reason we put it forward [at the WTO], was to demonstrate what we thought ultimately the purpose of the rules negotiations is," he said.  That purpose is "the broader effort of the WTO to encourage the elimination of market-distortions from any number of sources, including issues that are part of the mandate of the rules group," Shirzad told reporters.  Subsidies are the most obvious example, he noted.

Shirzad also emphasized the importance of requiring dispute-settlement bodies, including WTO panels and the Appellate Body, to adhere to the standard of review for dispute settlement in Article 17.6 of the WTO antidumping agreement.  There has been growing criticism in Washington, most recently by Senate Finance Committee Chairman Max Baucus (D-Mont.), about WTO panel rulings that appear to go beyond the mandate in WTO rules.

The addition of language on standards of review in the U.S. paper apparently responds to that criticism.  "We are not suggesting that the standard of review needs to be changed," Shirzad said.  "Our view is that the same standard of review [as in the dumping rules] should be applied in countervailing duty cases," he added.
 

COMMERCE ASKS FOR MORE INFORMATION IN CANADIAN WHEAT CASE

International Trade Administration (ITA) analysts still aren't convinced that the antidumping and countervailing duty petitions filed against durum wheat and hard red spring (HRS) wheat from Canada were filed "on behalf of" the domestic producers of those crops (see WTTL, Sept. 23, page 4).  Although the North Dakota Wheat Commission (NDWC) and the U.S. Durum Growers Association revised their petitions to include a newly created Durum Growers Trade Action Committee (DGTAC), the agency wants more information on how the committee was formed and its members selected.

It also wants more information on the difference between HRS and hard red winter wheat.  To allow more time for reviewing this added information, ITA has extended the deadline for initiating its investigation of the cases.

"The petition has not clearly established that this newly formed committee represents the views of the North Dakota durum wheat growers," the ITA memo stated.  "As a result, there remains an issue as to whether there is adequate industry support for the petition," it added.

Meanwhile, the Canadian Embassy has written to ITA, urging the agency to dismiss the cases entirely.  The petitioners "have failed to fulfill the minimum requirements for an investigation" under WTO countervailing duty rules, wrote Agriculture Counsellor Ron Krystynak.  He said the petition lacked evidence to support its claims.  In particular, the alleged transportation subsidies and export credit guarantees, which are at the heart of the complaints, are not applied to shipments to the U.S., Krystynak argued.  In addition, he pointed to an OECD study, which found support levels for U.S. wheat growers in 2000, before the increases in the 2002 Farm Bill, to be five times higher than those in Canada.
 

DOHA ROUND: In report to General Council Oct. 15, WTO Director General Supachai Panitchpakdi tried to put good face on progress in Doha Round talks, noting new deadlines and global participation.  Nonetheless, he voiced concern about "shortage of written inputs" by countries into each of negotiating groups.  "I would encourage delegations to move rapidly away from defensive positions.  We no longer have the time to wait for someone else to make the opening move," he said in prepared statement.  Supachai said main issues emerging "at forefront of everyone's minds" in talks are agriculture, special and differential treatment, implementation, and TRIPS and public health.
 
STEEL: On 4-1 vote Oct. 16, ITC made final determination that U.S. industry is not being injured by dumped imports of cold-rolled steel from Argentina, Belgium, Brazil, China, France, Germany, Korea, Netherlands, New Zealand, Russia, South Africa, Spain, Taiwan, Turkey or Venezuela; nor by subsidized imports from Brazil, France and Korea.

CHINA: Voting Oct. 18 on first case ever to invoke safeguard provisions in section 421 of legislation granting China permanent-normal-trade-relations status, ITC reached split 3-2 determination that increased imports of pedestal actuators from China are causing market disruption to U.S. producer (see WTTL, Sept. 2, page 3).  Commission must now decide what remedy to propose and send to President Bush by Nov. 7.

EU: USTR Robert Zoellick downplayed new EU directive, which became effective Oct. 17, for the review and approval of genetically modified organisms (GMOs).  "While we welcome today's announcement by the European Commission, it remains unclear whether it will lead to any real change," he said in statement.  EU's four-year moratorium on approving GMOs is based on politics and not science and "is illegal under both EU and international law," he said.

TRADE FIGURES: U.S. merchandise exports in August of $58 billion were down 1.6% from August 2001, while services exports declined 1.1% to $23.9 billion from year earlier.  Compared to year ago, goods imports jumped 7.7% to $100.3 billion and services imports rose 4.7% to $20.1 billion.  Merchandise trade deficit hit record $42.2 billion, as monthly trade deficit in goods with China reached $10.9 billion and with Mexico, $3.5 billion.

PORT SECURITY: House and Senate conferees reached agreement on legislation (S. 1214) to tighten security at U.S. ports, give Coast Guard greater powers, provide closer cooperation between federal and local authorities on port security and require ports to establish security plans.  Vote on legislation expected when Congress returns for lame-duck session in November.

MACEDONIA: WTO General Council Oct. 16 approved accession of Macedonia to world trade body.  Macedonia signed protocol of accession same day and will become WTO member formally 30 days after WTO receives notification that its parliament has ratified protocol.

SOYBEANS: U.S. and China have again put off confrontation over Chinese biotech regulations that could block $1 billion in sales of U.S. soybeans to China.  Beijing has issued nine-month extension of interim rules, which will allow continued issuance of temporary safety certificates for U.S. soybeans.  Trade was blocked between January and March until earlier deal was reached on interim certification measure.  "China's announcement is an important step in assuring that the market continues to function smoothly as China implements its regulations," said U.S. Agriculture Secretary Ann Veneman.

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. Electronic subscription is $659 annually. Editor & Publisher: Samuel M. Gilston, P.O. Box 467, Washington, DC 20044. Phone: 301-570-4544. E-mail: Info@WTTLonline.com