Volume 23 No. 13 -- March 31, 2003

IN THIS ISSUE:

* Customs 24-Hour Rule Delaying NVOCC Shipments
* Interim WTO Panel Ruling Rejects U.S. Safeguard Action on Steel
* WTO Members Will Try to Revamp Doha Round Plans
* WTO Negotiators Search for Doha Round Strategy
* Importers Wary of Customs Self-Assessment Program
* Briefs: BIS, Cuba, State, New Shippers, Apple Juice, CIT
 

CUSTOMS 24-HOUR RULE DELAYING NVOCC SHIPMENTS

Some small or medium-size importers who use nonvessel-operating common carriers (NVOCCs) to consolidate and handle their shipments are beginning to experience delays and problems getting their goods delivered in the U.S. because of glitches in the implementation of Customs' 24-hour in advance notification requirements, industry sources report.  The trouble is being felt particularly for goods being transferred for in-bond shipment to inland destinations.  There are anecdotal reports of delays at the ports, with some containers allegedly waiting for weeks for release.

Customs is aware of the problem, an agency spokesman told WTTL.  A Customs team went to Long Beach, Calif., in mid-March to investigate the problem.  Long Beach has had the greatest problems because of the volume of containers moving across its docks and the large number of NVOCC-processed shipments coming from Asia.  "We are working with them to try and fix it," the Customs source said.

Because NVOCCs don't want to share their customer names with carriers, who are their compe-titors, separate bills of lading are often produced for containers with consolidated shipments.  NVOCCs file their information with Customs to meet the 24-hour rule, but the carrier at the port of arrival doesn't have the same information to present to Customs or to stevedores.  The agency's current Automated Manifest System (AMS) isn't capable of handling more than one bill of lading.  As a result, containers sometimes can't be matched electronically with bills of lading.

In some cases, NVOCCs have to provide the information to Customs or stevedores manually.  This has slowed processing and apparently stopped some containers from being delivered at the port or transferred to in-bond transportation.  "The NVOCCs have had a problem because there is new information requirements that they are being asked to meet," the Customs spokesperson said.

The troubles facing NVOCCs are only part of the difficulties the trade community is having with the 24-hour rule, several sources complained.  Although Customs is only enforcing the cargo description portion of the regulation, the whole system is being affected.  The 24-hour rule "was done in a hurry and it wasn't done well," complains Billy App, president of J.W. Allen & Co. in New Orleans. "It's creating chaos," he asserts.  While Customs is studying the NVOCC problem, that may not be enough, App contends.  "The whole package has to be looked at," he says.
 

INTERIM WTO PANEL RULING REJECTS U.S. SAFEGUARD ACTION ON STEEL

Despite the heat and anger that an interim WTO panel ruling against the U.S. safeguard action on steel has generated in Congress and among domestic steel firms and unions, Washington will eventually comply with the decision, and the steel industry isn't likely to have the political clout to prevent it.  The industry's power of persuasion probably peaked when President Bush agreed to invoke Section 201 tariffs on 10 types of steel imports in March 2002.  The Steel Caucus in Congress remains vocal, but U.S. trade officials believe they broke the back of the anti-trade faction in Congress when they succeeded in passing fast-track legislation last year.

The interim -- supposedly confidential-- report circulated to parties March 26 found the 201 action to be inconsistent with WTO rules for safeguard actions.  A U.S. trade official, speaking on background, said the 900-plus-page report "identified methodological errors" in each of the International Trade Commission's injury determinations for the 10 product lines covered by the 201. The panel's final ruling, which is due in about a month, is likely to be the same.

"We believe the steel safeguard measures comply with our international obligations," the trade official said.  "We will appeal the panel report, if it is finalized without change," he added.  Based on the WTO's record of rulings against safeguard actions by the U.S. and other countries, it appears certain the WTO Appellate Body also will find the steel 201 to be WTO-illegal some time this fall.  That will present the U.S. with the politically unpopular choice of having to revoke the safeguard measures or face retaliation from the eight countries that brought the case to the WTO.

Although WTO members often get up to 15 months to comply with panel rulings, Washington won't have that much time.  The EU has been withholding retaliation against the U.S. action while waiting for the WTO ruling.  A longer implementation time might be given, if the U.S. needed legislation, but in this case "the president just has to sign an executive order," one lawyer noted.

The congressional reaction to the news of the ruling was not unexpected.  "I am appalled but not all together surprised by the WTO's ruling, especially since they've never once upheld a legal safeguard action," said Rep. Phil English (R-Pa.), chairman of the Congressional Steel Caucus.  Rep. Sander Levin (D-Mich.) had a similar comment.  "This decision furthers a trend that jeopardizes the credibility of the WTO dispute-settlement system and must serve as a wake up call for the administration," he said.
 

WTO MEMBERS WILL TRY TO REVAMP DOHA ROUND PLANS

With chances nil that Doha Round negotiators will meet the March 31 deadline for agreeing on the "modalities" for key agriculture talks, senior officials of World Trade Organization (WTO) members will gather in Geneva April 2-4 to decide how to reshape preparations for the WTO ministerial planned for Cancun in September.  Trade sources caution against predicting Cancun's failure at this stage in the negotiations.  Nonetheless, they admit the original schedule for the Doha Round -- which many viewed as overly ambitious from the start -- may have to be revised.

Some sources don't consider the possible failure in Cancun as serious as the collapse of the Seattle Ministerial or the need for success at Doha.  One source compared it to the mid-term Uruguay Round review in Montreal in 1988.  Although the divisions in Montreal foreshadowed the deadlock of talks in Brussels in 1990, the round con-tinued, albeit for longer than scheduled, until it was concluded in 1993.

The agriculture deadline isn't the only one negotiators have missed (see story below).  They have also failed to reach key milestones in talks on applying Trade-Related Intellectual Property Rights (TRIPs) rules to drug patents in the world's poorest countries, as well as in talks on Uruguay Round implementation issues and special and differential treatment for developing countries.

It is the cumulation of missed deadlines that is drawing senior officials, including Deputy U.S. Trade Representative (USTR) Peter Allgeier, to Geneva for the Trade Negotiations Committee (TNC) meeting.  While looking at the technical issues blocking the talks, they also will be making political assessments and decisions on the future of the round.  "This is more than a stock-taking meeting," one source said.  "They will have to decide where we go from here," he said.  A statement on the future of talks is likely to come after a formal TNC meeting on April 4.

The trade officials are likely to press negotiators to continue to work on their individual sectors, despite setbacks, and not push all the important decisions off until the Cancun meeting.  This position reflects the concern that the Cancun agenda could become overcrowded and ministers won't have the time or ability to resolve every technical issue that is brought to them.
 

WTO NEGOTIATORS SEARCH FOR DOHA ROUND STRATEGY

Doha Round trade negotiations have been compared to a three-dimensional chess game.  As negotiators prepare for the WTO Cancun Ministerial, which is just over five months away, the pieces of the game have become clear, but the strategy for bringing them all together remains a theory more than a practical plan. The key to a final deal will lie in building a package of trade benefits that will overcome European Union (EU), Japanese and Korean resistance to an agreement on agriculture.  Sources in Geneva say some of that package is beginning to emerge.

While the agriculture talks have become deadlocked, sources claim good progress is being made in talks on rules, services, non-agriculture market access and in the so-called Singapore Issues, including environment, investment and competition. These are all issues on which the EU has place great importance.

The goal, one source said, "is to build a pile of poker chips across the table that will make the EU want to stay in the game."   As that pile of chips gets bigger, the EU and Japan may realize what they could lose if no agreement is reached on agriculture, the source added.

There had been hope that interim steps in the farm talks could move the negotiations along in a systematic way.  The EU's rejection of the second draft modalities paper prepared by Stuart Harbinson, chairman of agriculture negotiating committee, dashed that hope (see WTTL, March 24, page 4).  Intense negotiations of the committee and bilateral side talks in Geneva the week of March 24 did not appear likely to bridge the differences before the March 31 deadline

An agreement on the modalities was supposed to provide the framework for WTO members to make trade liberalization offers over the next two years.  The next planned step called for each country before the Cancun meeting to submit draft schedules, outlining offers on import barriers, export subsidies and domestic supports.  That timeline will now have to be redrawn.

The main roadblock in the agriculture talks has been the narrow mandate EU negotiators have been given to make commitments that might affect the EU's Common Agriculture Policy (CAP).  A major EU review of the CAP is planned for early summer.  At that time, EU members may adopt some of the changes EU Farm Commissioner Franz Fischler has proposed for shifting the CAP away from commodity-focused aid and toward direct, untied aid for farmers.  Until the EU acts on  the CAP, especially with its planned enlargement, no progress is likely in Doha Round farm talks.

The EU is also at the heart of the debate over expansion of rules for geographic indications (GIs).  Siding with many developing countries, the EU wants to expand GI rules beyond their current coverage of wines and spirits to include other products, including cheese, rice and tea.

Developing countries, which are playing a bigger and more unified role in the Doha Round than in any previous trade talks, also are frustrated with the failure of negotiations to make progress in the areas of most concern to them.  In Doha they proved their ability to play the U.S. and EU against each other, and they could block any final accord unless their special needs are satisfied.
 

IMPORTERS WARY OF CUSTOMS SELF-ASSESSMENT PROGRAM

One of the latest efforts by Customs to build cooperation with the trade community apparently isn't attracting the participation the agency hoped.  The Importer Self-Assessment Program (ISA) launched in June 2002 has drawn only 28 applicants, of whom only five have completed the Customs approval process.  The total trade handled by the applicants is less than 10% of all imports, according to a Customs staffer.  One reason for the slow response to the program is the feeling among many importers that the work required to qualify for ISA isn't worth it.  "Firms are being told not to bother because there is no benefit," one industry source said.

ISA certification is supposed to help importers by exempting them from comprehen-sive Customs audits and removing them from the agency's pool of companies subject to focused assessments.  Participants also may be given better treatment when violations are found, including having 30 days to investigate and correct self-disclosed violations.  In addition, ISA participation will be a mitigating factor in any Customs enforcement action.  Customs also will provide help with training and risk assessment and will tailor an ISA program to specific company or industry needs.

But the requirements for qualification may be perceived as more of a burden than the benefits the program offers.  Firms that already have high compliance rates may not want to put more demands on their compliance programs at a time that Customs is adding new security requirements, such as prior notification requirements.  To be eligible for ISA, an importer also has to be an approved participant in the Customs-Trade Partnership Against Terrorism (C-TPAT), maintain a system of business records to demonstrate compliance with Customs rules, establish internal documentation and implementation controls, conduct periodic testing of the system, and make appropriate self-disclosures to Customs of any discovered violations.

Customs is offering to tailor ISA programs for specific industries, particularly for autos and apparel.  Agency staffers are waiting for comments from apparel importers on a draft matrix they have provided the industry, offering guidance for establishing ISA systems. The draft reportedly is getting a cool reception from apparel firms.  "We have problems with it," one source said.

The push for the ISA program comes as major importers already have a high compliance rate with Customs rules and are facing new requirements.  The top 1,000 importers have a compliance rate of 93.19% and the top 3000, a rate of 92.88%, according to Customs.  The remaining pool of more than 523,000 importers has a compliance rate of 90.53%.  Just as the export side of U.S. trade is dominated by a relatively small number of firms, imports also are concentrated.  Of the 526,084 importers of record in fiscal year 2001, the top 100 accounted for 34% of the value of all imports; the top 1,000 for 61% and the top 3,000 for 72%, Customs reports.
 

 * * * BRIEFS * * *

BIS: Commerce sources confirm that they expect Assistant Secretary for Export Administration James Jochum to be named assistant secretary for import administration, filling vacancy left by Faryar Shirzad's moved to White House to be deputy to presidential assistant Gary Edson.

CUBA: Ten senators have formed bipartisan working group on Cuba to examine U.S. policies toward Havana.  Members are Republicans Mike Enzi (Wyo.), Chuck Hagel (Iowa), Norm Coleman (Minn.), Jim Talent (Mo.) and Pat Roberts (Kans.).  Democrats are Max Baucus (Mont.), Byron Dorgan (N.D.), Blanche Lincoln (Ark.) and Jeff Bingaman (N.M.).

STATE: Department has filled leadership posts in realigned Directorate of Defense Trade Controls (DDTC) (see WTTL, Feb. 24, page 4).  Robert (Turk) Maggi, who is deputy assistant secretary for trade controls, will hold post of managing director of DDTC temporarily.  Office directors are:  Michael Dixon, office of defense trade controls management; Ann Ganzer, office of defense trade controls policy; Peter Berry, office of defense trade controls licensing; David Trimble, office of defense trade controls compliance.

NEW SHIPPERS: ITA has issued new policy bulletin (03.2) clarifying how it determines who in anti-dumping cases is "new shipper" that is eligible for posting of bond or security in lieu of cash deposits and accelerated antidumping review.  Bulletin addresses new exporters who are not also producers.  It will require certification that neither the exporter nor the producer exported subject merchandise to U.S. during period of investigation of original antidumping case.

APPLE JUICE: CIT Judge Richard Eaton has remanded (Slip Op. 03-33) for second time ITA antidumping determination on nonfrozen apple juice concentrate from China.  Although agency in first remand redeterm-ination met court's instructions to select new surrogate country, shifting choice to Turkey from India, it still failed to allocate dumping margins correctly to noninvestigated, cooperative respondents, Eaton ruled.

UREA AMMONIUM: Voting 4-0, ITC March 24 made final determination that U.S. industry is not being injured by dumped imports of urea ammonium nitrate solutions from Belarus, Russia and Ukraine.

CIT: Court will hold training sessions in Washington April 2, 3, 8 and 9 on new automated case management/electronic case files (CM/ECF) system.  Contact: cmect training@cit.uscourts.gov.

Copyright 2003 by Gilston Communications Group.  Reproduction or retransmission in any form is prohibited.  Washington Tariff & Trade Letter is published weekly 50 times a year.  E-mail: Info@WTTLonline.com