IN THIS ISSUE:
* BIS Attempting to Remove Kalinoski from OC Chairmanship
* Zoellick Sets Stage For Next Round of FTA Talks
* Bush Will Nominate DC Lawyer to Head Export Administration
* Lieberman Paper Stymies Review of Semiconductor Equipment
* ITC Will Keep Reports on Steel 201 and Consumer Industries Separate
* Backlog of Deemed Export Licenses Is on Rise Again
* Thomas Introduces FSC/ETI Bill with More Goodies for Manufacturers
* Customs Proposes Advance Notification Requirements
* BRIEFS: Textiles, Cambodia, Technology Controls, WTO Cancun
BIS ATTEMPTING TO REMOVE KALINOSKI FROM OC CHAIRMANSHIP
Bureau of Industry and Security (BIS) managers have told Carol Kalinoski that she will no longer chair the key Operating Committee (OC), which manages the interagency export license review process, and will reassign her to a research job in the office of exporter services, according to Commerce and industry sources. Kalinoski, who was supposed to return to work July 24 from an unpaid four-month sabbatical to earn an advanced law degree, has been highly regarded in the export community for her efficiency in trying to keep the licensing process moving on time and her refusal to kowtow to Defense objections to approvals or demands for restrictive conditions.
While popular with exporters for her support of their interests in the licensing process, Kalinoski has had a fractious relationship with Defense licensing officers and top managers in the Defense Technology Security Administration (DTSA). These disagreements apparently have upset BIS managers who have wanted to maintain cooperative relations with Defense.As word spread in the trade community about Kalinoski's reassignment, concerns were raised about the future of the OC process. Her potential departure has compounded worries about the move of Assistant Secretary James Jochum, who is also well respected, from BIS to Commerce's import administration office. Industry executives have become alarmed by the growing influence and near-veto power Defense has had on export licenses in the last two years.
They are also worried about the loss of institutional memory at BIS. In addition to the moves of Kalinoski and Jochum, President Bush has said he intends to nominate BIS Deputy Under Secretary Karan Bhatia to be assistant secretary of Transportation for aviation and international affairs.
"She is one
of the few who brought some balance to the process and took into account
exporter interests," one industry executive told WTTL. "She ran the
OC like an administrative law judge," he added. "Other agencies have
been targeting her for a number of years," one trade lawyer noted.
Kalinoski has "held people to legal standards" to justify the denial of
licenses, he said.
ZOELLICK SETS STAGE FOR NEXT ROUND OF FTA TALKS
U.S. Trade Representative (USTR) Robert Zoellick alerted members of Congress July 24 that the Bush administration may seek a quick set of negotiations with the Dominican Republic early in 2004 to allow the Caribbean nation to reach a free trade agreement (FTA) with the U.S. at the same time Washington will be signing a Central American Free Trade Agreement (CAFTA). Briefing the Congressional Oversight Group (COG) on trade, Zoellick also describe U.S. goals for FTA talks next year with Bahrain.
Zoellick is also preparing the way for FTA talks with Colombia and Peru, either individually or as a dual-pact. He will visit Colombia Aug. 8 to discuss FTA requirements with Colombian President Uribe (see WTTL, May 26, page 4)."If they are committed to that process, then we will look very seriously at how we could possibly move forward with a free trade agreement with them," Zoellick told reporters July 24. Peru has also indicated interest in FTA talks. "One of the things we are thinking about is could we do something with Colombia and Peru and, if we do that, what door can we keep open for Bolivia and Ecuador," Zoellick explained.
Colombia's Ambassador to the U.S. Luis Moreno says his country wants an FTA because the current Andean Trade Preference Act expires in 2006 and business needs a more permanent trade climate before it will invest in the country. Even though potential FTA talks might not be finished until after a Free Trade Area of the Americas is completed, Colombia does not expect the FTAA to provide all the trade benefits it wants.
"We don't think the Free Trade Area of the Americas, the way it is going, is going to accomplish the depth and the breath that it requires," he says. While the agreement may be called a free trade area, "it might not be what you generally call a first generation-type free trade agreement like you have today with Chile and Mexico," he asserts.
As Zoellick
looked ahead to the next set of bilateral FTA talks, the House July 24
approved the Chile and Singapore FTAs by wide margins. It voted 270
to 156 to approve the Chile accord and 272 to 155 to okay the Singapore
pact. The strongest justification opponents of the agreements could
muster for voting against them was the need to send a signal to U.S. negotiators
not to use these deals as the template for future FTAs, especially with
Central America.
BUSH WILL NOMINATE D.C. LAWYER TO HEAD BIS EXPORT ADMINISTRATION
President Bush didn't wait for BIS Assistant Secretary for Export Administration James Jochum to leave the post before announcing the name of the person who will replace him. The president July 18 said he will nominate DC lawyer Peter Lichtenbaum, who is currently a partner with the firm of Steptoe & Johnson, to take the BIS position.
Jochum, who has been nominated to be Commerce assistant secretary for import administration, is still waiting for Senate Finance Committee and Senate confirmation. Sources said they expect that confirmation to come the week of July 28 before the Senate leaves for its August recess.Lichtenbaum is highly regarded among his legal peers in Washington. "He's a real pro," said one lawyer who has known him. "He is one of those guys you can work with as a competitor and still be proud of your profession," this attorney said.
Lichtenbaum has specialized primarily in international law in recent years, counseling clients on WTO disputes and negotiations, Section 301 cases and government procurement issues. In the past, he has represented Motorola and Netscape. His export control work has focused on encryption and software technology, including electronic authentication technology, and U.S. economic sanctions.
Among his published
papers is one on the affect of export controls on emerging companies going
international. Lichtenbaum received his undergraduate degree from
Princeton in 1986 and a masters in public policy and his JD from Harvard
in 1990. He was an honors attorney at Treasury and served as a political
advisor to the U.S. embassy in Madagascar.
LIEBERMAN PAPER STYMIES REVIEW OF SEMICONDUCTOR EQUIPMENT
The planned review of U.S. export controls on semiconductor manufacturing equipment has been sidelined by a request to Defense from Sen. Joe Lieberman (D-Conn.) for a broader review of the ability of the U.S. manufacturing base to meet military needs for semiconductors. Pentagon officials have told the industry that most of their energy and resources are going into responding to a White Paper Lieberman issued in June and therefore there will be little for a major review of export controls.
Earlier in the year, the Semiconductor Equipment and Materials International (SEMI) launched an effort to get the government to review the entire list of controls on semiconductor equipment with the aim of having proposals for possible changes ready in time for the next Wassenaar List review in January (see WTTL, April 28, page 4). Some list changes still may be sought but on a much more limited basis, SEMI executives say.In June, Lieberman wrote to Defense Secretary Donald Rumsfeld, asking Defense to prepare a report on how it plans to respond to the national security threat from the migration of high-end semiconductor manufacturing to Asia and especially China. "This report should provide an analysis of the semiconductor manufacturing issues that relate to defense and national security, as well as an analysis of the potential solutions that are discussed in the White Paper," Lieberman wrote.
The White Paper warned that the "U.S. is facing an imminent threat to national security as a result of foreign actions that have capitalized on the changing composition of the semiconductor indu-stry." It said China is becoming a center of semiconductor manufacturing because of government programs that give its industry advantages over foreign competition.
Defense "should
survey all possible technologies that the Chinese government may be targeting
for subsidies that would assist in the transfer of U.S. chip-making and
related fields to China and then develop a list of those subsidies that
are in violation of GATT trade rules and seek USTR action," the paper advised.
ITC WILL KEEP REPORTS ON STEEL 201 AND CONSUMER INDUSTRIES SEPARATE
In an attempt to walk a political tightrope, the International Trade Commission (ITC) will keep its Section 204 report on whether current steel safeguards should remain in place separate from its Section 332 report on how Section 201 import tariffs are affecting domestic steel consumers, according to ITC sources. The two reports will be submitted simultaneously to President Bush by mid-September, but will be in two separate volumes.
The legerdemain will try to satisfy law-makers who requested that the consumer report go to the White House with the 204 report, while also meeting legal requirements limiting what must be addressed in the 204 report. Concern about the consideration of consuming-industry interest in the 204 report was a recurring objection raised by representatives and senators who testified during three days of ITC hearings, July 22-24 on the Section 204 investigation."I oppose any linkage between the 332 investigation and this mid-term review," Sen. Max Baucus (D-Mont.) said in his prepared statement to the commission. "The 332 request was one-sided and the information it requests is not legally relevant to the outcome of this review," he added.
BACKLOG OF DEEMED EXPORT LICENSES IS ON RISE AGAIN
Even though the high-tech industry's hiring of foreign nationals has slowed due to the economy, BIS is receiving more "deemed export" licenses because changes in technology are forcing many existing license holders to come in for upgrades of previously issued licenses. BIS sources say the backlog has jumped to around 200 cases from less than 40 just a few months ago.
Much of the increase stems from firms seeking changes in existing licenses for foreign nationals who are already employed because the level of technology they want to assign these workers exceeds their original licenses, explained Bernie Kritzer, the director of the BIS office of strategic trade. In addition, more foreign nationals who were exempt from licensing under technology exemption TSR now need licenses because firms want them to work on technology exceeding the TSR level of 33,000 million theoretical operations per second (MTOPS)."What we've seen is that as the thresholds remain for Group B and Group D at 33,000 and 28,000 MTOPS, respectively, the technology and the chips are pushing way beyond that," Kritzer told the Information Systems Technical Advisory Committee (ISTAC) July 23. These limits are "being penetrated rapidly by people trying to design new computers," he added. BIS is seeing more
"We are at a point with the technology threshold going so far for computers and chips above 33,000 MTOPS that we may soon have a Group B problem," he stated. In the last few months, BIS has had about 150 license applications from companies going through technology upgrades for the second or third time for previously screened and licensed foreign employees or coming in for the first time for Group B national, he told the committee.
During the
week of July 14, Kritzer and other BIS staffers conducted their first site
visits of two deemed export license holders, Sun and Intel, he reported.
The visits, at the invitations of the two companies, examined their information
technology control plans and best practices. "The visits were extremely
successful," Kritzer said. "This will be of immeasurable assistance
to us in the interagency process in our licensing deliberations," he added.
The three-person team of BIS staffers did not include anyone from the Office
of Export Enforcement, he assured the committee.
THOMAS INTRODUCES FSC/ETI BILL WITH MORE GOODIES FOR MANUFACTURERS
House Ways and Means Committee Chairman Bill Thomas (R-Calif.) July 25 introduced his revised bill (H.R. 2896) to repeal over two years the Foreign Sales Corporation/Extraterritorial Income (FSC/ETI) tax laws. In an effort to build a broad coalition to support the measure, Thomas has proposed $100 billion in tax cuts for business to offset the $50 billion tax increase due to repeal of FSC/ETI. Knowing he needed to do more for domestic manufacturers, he has included provisions that would cut the corporate tax rate to 32% for manufacturers with less than $10 million in taxable income and extend the R&D tax credit for 2 ½ years.
As with his previous FSC/ETI bill, Thomas has included extensive provisions to give multinational firms better treatment, including revisions to foreign tax credit rules and tax reductions for repatriated profits. He also has proposed extensive improve-ments in Subpart F rules and for base company sales (see WTTL, July 21, page 3).
CUSTOMS
PROPOSES ADVANCE NOTIFICATION REQUIREMENTS
Importers and exporters along the Canadian and Mexican will still be able to operate in a "just-in-time" environment under advance notice requirements Customs published for comment in the July 23 Federal Register. Trucks participating in the FAST program will only have to give 30 minutes advance notice before arrival in the U.S., while non-FAST participants will have to give notice one hour before arrival.
Rail shipments will have to provide two hours advance notice before arrival at the U.S. port of entry. Air cargo and courier shippers will only need to give notice when they are "wheels up" when they leave any point in North America and four hours from anywhere else.On the export side, air cargo and couriers will need to give two hours advance notice, rail will need to submit notice four hours prior to attachment to the engine, and trucks will need to submit notification one hour before arrival at the U.S. border. For inbound sea vessels, 24 fours before lading remains the rule, while for outbound containers, notice 24 hours before departure will be required.
* * * BRIEFS * * *
TEXTILES: After asking President Bush to self-initiate safeguard actions against apparel imports from China, U.S. textile industry decided to go ahead and file its own petitions to get Commerce to invoke special anti-surge restrictions on Chinese goods (see WTTL, July 21, page 2). The industry July 24 asked Committee on Implementation of Textile Agreements (CITA) to launch safeguard investigations against imports of brassieres, gloves, dressing gowns and knit fabric from China. Another petition will be filed soon on sox.
CAMBODIA: Working Group on Cambodia's accession to WTO completed its report and accession package July 22, setting stage for approval of Cambodia's membership at ministerial meeting in Cancun in September.
TECHNOLOGY CONTROLS: Current export controls on microprocessor technology are out of date and need to be replaced with a system that doesn't relay on a fixed level of technology, semiconductor manufacturers argue. In a presentation to the BIS Systems Information Technical Advisory Committee (SITAC) July 23, industry representatives said current controls are impeding the design and development of new microprocessors because they restrict intra-company transfers of technology with subsidiaries offshore and with foreign nationals who need "deemed export" licenses.
WTO CANCUM: Preparations for the World Trade Organization (WTO) Ministerial Meeting in Cancun, Mexico, in September are in such bad shape that Europeans will be forced to cut short their sacred August vacations to come back to Geneva in mid-August to resume negotiations.
Copyright 2003 by
Gilston-Kalin Communications, LLC. Reproduction or retransmission
in any form is prohibited. Washington Tariff & Trade Letter
is published weekly 50 times a year. E-mail: Info@WTTLonline.com
Comments
No comments on this item Please log in to comment by clicking here