Volume 23 No. 27 -- July 7, 2003

Posted Monday, July 7, 2003 12:00 am

IN THIS ISSUE:

* Appellate Court Refuses to Rehear FoIA Suit for Export Licenses
* Chances For Finishing FTAA on Time Are Fading
* Doha Round Agriculture Talks Remain Adrift
* Bush Picks Justice Lawyer for BIS Enforcement Post
* Customs Promises Not to Give Regions Too Much Control
* Self-Disclosure Can Avoid Sanctions Under Corrupt Practices Act
* BRIEFS: Lumber, Ironing Tables, GSP, Gambling, Express Delivery

APPELLATE COURT REFUSES TO REHEAR FoIA SUIT FOR EXPORT LICENSES

The D.C. U.S. Circuit Court has rejected a request from the Wisconsin Project for en banc rehearing of an earlier ruling by a three-member panel of the court, denying the group's suit for the release of export license application information under the Freedom of Information Act (FoIA). Lawyers for the Wisconsin Project on Nuclear Arms Control will have until Sept. 5 to decide whether to file a writ of certiorari with the Supreme Court for a review of the panel's decision.

The decision to file a writ will have to weigh the likelihood of the High Court agreeing to review a ruling which agrees with a similar opinion reached in the 11th Circuit in the Times Publishing Co. case. Supreme Court lawyers say the court is not inclined to accept a case when there are no conflicting rulings among circuits. Another potential basis for a writ may be the hope that the Supreme Court would want to clarify the application of FoIA (see WTTL, March 17, page 1).

The D.C. Circuit on June 5 voted 6-3 against having the whole court rehear the Wisconsin Project suit, which claimed the prohibition against the Bureau of Industry and Security (BIS) releasing export license information, which was included in Section 12 (c) of the Export Administration Act (EAA), no longer applied because the EAA has lapsed. Only Judges Douglas Ginsburg, A Raymond Randolph and David Sentelle voted in favor of an en banc rehearing. Randolph was the dissenting judge in the 2-1 ruling in January which upheld the continued application of Section 12 (c) despite the expiration of EAA. The Appellate Court issued its denial order on June 23.

CHANCES FOR FINISHING FTAA ON TIME ARE FADING

As U.S. Trade Representative (USTR) Robert Zoellick was preparing to meet with Caribbean trade ministers in Jamaica July 2 to bolster support for a Free Trade Area of the Americas (FTAA), Latin American experts were predicting that the hemispheric trade talks won't be complete by the end of 2004 as scheduled. They say success of the FTAA is tied to the World Trade Organ-ization's (WTO) Doha Round, which isn't likely to finish by its December 2004 deadline either.

"I think what will happen is that it will come mid-next year and they will say they will keep negotiating, that time is less important than having a good agreement," said Peter Hakim, president of the Inter-American Dialogue, a Washington think tank that specializes in Latin American issues. "I don't think they will break off negotiations, but it will be almost impossible to reach that deadline by the end of next year," he said.

The main problem remains the split between the U.S. and Brazil. "At this moment, there seems to be irreconcilable differences between the U.S. and principally Brazil on a whole slew of issues, particularly agriculture," Hakim said. These differences remain despite the apparent successful visit of Brazilian President Lula da Silva to Washington in June (see WTTL, June 23, page 3). The U.S. position on agriculture in the FTAA depends on what concessions it gets from the European Union (EU) in the WTO talks. "If no progress can be made between Europe and the U.S. on agriculture subsidies, than no progress can be made in the FTAA," Hakim said. He dismissed the chances for success of a less ambitious FTAA, which some people are calling "FTAA-Lite."

Such proposals suggest pulling difficult agriculture issues out of the FTAA, if there is no Doha agreement on farm trade. If agriculture were taken off the table, Brazil would probably insist that other issues, such as services, intellectual property rights and government procurement, also be excluded from the deal, Hakim said.

"My sense is that won't happen," he added. Removal of key elements of the accord would reduce support for the agreement while still raising political risks. "Why would you want to push forward an agreement no one is very enthusiastic about," he said.

If the U.S. and Brazil can reach agreement on an FTAA, most of the rest of Latin America would go along with the deal, Hakim argued. Nonetheless, Brazil is concerned the U.S. might make concessions to other Latin American countries, which would then put pressure on Brazil to come on board. "The Brazilians are worried about that," he noted. "That is why Brazil wants to move the negotiations to the four plus one, Mercosur-U.S. negotiations," Hakim said. .

Meanwhile, Hakim foresees trouble completing the U.S.-Central American Free Trade Agreement (CAFTA). In those talks the main problem may be Guatemala, which is taking a different stand on several key issues from its four neighbors in the talks. Guatemala, which is the largest country in the area, has major political, economic and social issues that need to be addressed, Hakim noted. Still, the Central Americans "are not in a great position to negotiate," he said. "There is not a lot they can demand of the U.S.," he continued. "For the Central Americans, it's really a seller's market. Are they willing to pay what the U.S. wants for this agreement?" he said.

DOHA ROUND AGRICULTURE TALKS REMAIN ADRIFT

WTO talks on agriculture June 26-July 1 revealed a continuing broad lack of consensus on any of the key farm trade issues the Doha Round is supposed to address. The EU's announced reform of its Common Agriculture Policy (CAP) came too close to the WTO meeting and with too few details to give negotiators any sense that the changes in the program would help move the talks forward, according to sources in Geneva (see WTTL, June 30, page 2).

But the meaning of CAP reform was just one of many subjects raised at the meeting, which showed wide gaps in the positions of various WTO members. The central issue remains the disagreement over the so-called "modalities" or formula that would be used to negotiate further liberalization of farm trade as part of the round.

The discussion focused on the draft modalities proposal presented in March by the chairman of the agriculture talks, Stuart Harbinson, Hong Kong's ambassador to the WTO. The EU, Switzerland, Japan and Norway were among countries that insisted the Harbinson draft cannot be used as the basis for negotiations. "They called for a substantially different text," one source reported. This position left some countries confused as to whether a completely new proposal would have to be offered. Harbinson told the meeting that members would have to negotiate among themselves to find a consensus and not with him. "I would urge you to redouble your efforts at the bilateral and plurilateral level over the coming weeks to broaden the scope for eventual consensus," he said.

There was also contention over provisions in the Harbinson draft which would allow developing countries to use "special safeguard" and "special product" rules to react to import surges on certain products and to maintain higher tariffs on sensitive farm products. Countries such as China and Indonesia want wide latitude in how such rules could be applied. Others, especially Latin American countries that belong to the Cairns Group of agriculture exporting nations, objected to allowing the provisions to be too open-ended and not subject to discipline. Without restrictions, such exceptions would allow protectionist policies to be maintained rather than keeping the focus on export subsidies and domestic support in developed countries, they argued.

BUSH PICKS JUSTICE LAWYER FOR BIS ENFORCEMENT POST

The long-vacant post of assistant secretary for export enforcement at BIS will be filled by a Justice attorney with experience prosecuting money laundering and financial crimes. President Bush has announced his intention to nominate Julie Myers to the position. She is currently chief of staff to the assistant Attorney General for the criminal division at Justice, the office which has played an increasing role in the criminal prosecution of export control violations.

Before taking her current position, Myers was a deputy assistant secretary for money laundering and financial crimes in Treasury's enforcement office. From November 1999 to October 2001, she was an assistant U.S. attorney in Brooklyn, N.Y. Earlier in her career Myer was an associate at the law firm of Mayer, Brown and Platt. She was a law clerk for the Eighth Circuit Court in St. Louis. Myer received her B.A. degree from Baylor and her law degree from Cornell.

CUSTOMS PROMISES NOT TO GIVE REGIONS TOO MUCH CONTROL

Customs officials are trying to defuse trade community concerns that the centralization of power in the Department of Homeland Security (DHS) will reduce the authority of port directors and the commissioner of Customs. In particular, industry executives are worried about DHS plans for reestablishing a regional office structure to control all the functions it has acquired.

In meetings with business groups and advisors, DHS and Customs officials have tried to explain that the reconstitution of the regional office system is intended to assure adequate command and control of the department's varying functions during an emergency. DHS Under Secretary Asa Hutchinson told one recent advisory committee meeting that the department wants ports and Customs headquarters to stay in direct contact. He said DHS doesn't want to go back to the past.

Since the 1993 enactment of the Customs Modernization Act, the agency has given more authority and flexibility to port directors, while developing common policies that were imposed by head-quarters. Its goal has been to provide the trade community a single set of policies and practices at all ports and to avoid the "port shopping" of the past, when importers could go from port to port in search of the best treatment on any specific issue.

Customs officials admit they have not worked out the details of how the new regional system will work. One industry representative said she is comfortable with the reassurances that DHS and Customs have given but will withhold judgment until the reorganization is complete. She said the business community recognizes the need for a strong central organization, but is worried about the role of port directors.

SELF-DISCLOSURE CAN AVOID SANCTIONS UNDER CORRUPT PRACTICES ACT

In some cases, the voluntary self-disclosure of violations of the Foreign Corrupt Practices Act (FCPA) may preclude government prosecution, according to a Justice Department opinion. The departments advice was cited in Commerce's annual report on the implementation of the Organization for Economic Cooperation and Development's (OECD) Antibribery Convention. The report also noted that Justice or the Securities and Exchange Commission (SEC) initiated or concluded eight prosecutions for alleged violations of the FCPA in the last 12 months.

One lost case, U.S. v. David Kay, appears to have become a precedent. The Hous-ton, U.S. District Court in 2002 dismissed an indictment against a former executive of American Rice, Inc., because the alleged bribery activities in Haiti sought the acceptance of false bills of lading or other shipment documents and were not "to obtain or retain business" as required by the FCPA. The same court cited that case to dismiss charges in a separate action against ex-executives of Baker Hughes, Inc.

In explaining the Justice opinion, Commerce said "a U.S. company, which in the process of acquiring another U.S. company had discovered illicit payments, could proceed with the transaction without fear of FCPA prosecution for pre-acquisition payments" in certain circumstances. "These circumstances included the disclosure to the SEC and the Department of Justice of the payments, both companies' cooperation with the ensuing investigations, and implementation of rigorous compliance programs," the report added.

Each annual Commerce report on bribery estimates the extent to which illegal payments abroad have hurt U.S. companies. From May 1, 2002, to April 30, 2003, the department estimated that competition for 40 contracts worth $23 billion may have been affected by foreign firms bribing foreign officials. This was down from the average of 60 contracts over the five previous years.

* * * BRIEFS * * *

LUMBER: ITA in July 1 Federal Register initiated first administrative review of antidumping and countervailing duty orders on softwood lumber from Canada. Announcement didn't explain how agency would handle different firms and provinces. Meanwhile, U.S. and Canadian industries remain split over interim deal. U.S. industry reportedly is insisting on limiting Canada's share of U.S. market to 29% under TRQ proposal, but Canadians want 34%. Canadians also want lumber under quota to be duty-free, but U.S. industry is calling for 13% minimum export tax.

IRONING TABLES: Home Products International June 30 filed antidumping complaints at ITA and ITC against ironing boards from China.

GSP: President Bush July 1 issued annual proclamation revising GSP eligibility for countries and goods, increasing benefits especially for Argentina, Philippines and Turkey.

GAMBLING: U.S. June 30 blocked WTO's first attempt to form dispute-settlement panel to hear complaint by Antigua and Barbuda against U.S. measures which bar cross-border supply of gambling and betting services. Caribbean nation requested panel to judge its complaint that U.S. law hurts its Internet gaming industry. It contends rules violate U.S. commitments under WTO services agreement. U.S. says it made no commitments on cross-border gambling and betting services. Moreover, U.S. argues that it prohibited cross-border gambling and betting from domestic and foreign service suppliers alike because of the social, psychological dangers and law enforcement problems that they create.

EXPRESS DELIVERY: Ways and Means Chairman Bill Thomas (R-Calif.) asked ITC July 1 to conduct study of competitive conditions facing U.S.-based express delivery services.