U.S. Department of Agriculture
Lacey Act Enforcement Action Involving Importer of Wooden Cribs
In early May, the U.S. Justice Department, acting for the U.S. Department of Agriculture, announced a plea agreement with an importer accused of violating the Lacey Act by importing certain cribs made from an internationally protected wood species. The company involved, Style Craft Furniture, agreed to make a $40,000 payment into the Lacey Act Reward Fund and also agreed to a three year probation period, during which time it must not violate U.S. laws, or the Convention on International Trade in Endangered Species of Wild Fauna and Flora (cited as CITES).
The violation actually occurred prior to last year’s amendment of the Lacey Act, with the expanded ambit and new declaration requirement. Rather the violation is based upon a 2005 violation of the CITES authorization requirements. However, the action highlights that the Justice Department is taking the issue of use of illegally harvested timber very seriously.
U.S. Department of Homeland Security
100% Scanning Concept Dropped by Homeland Security Secretary Janet Napolitano
According to Inside U.S. Trade, May 15, 2009 print edition, Homeland Security Secretary Janet Napolitano has internally agreed to drop the concept of 100% scanning of all inbound containers in favor of a “risk-based deployment strategy”. As I have commented in this Trade Update previously, it would be physically impracticable for the U.S. to scan all inbound containers; it would cost billions of dollars and it is extremely unlikely that our trading partners would agree to do it. Thus, a risk-based deployment strategy makes a great deal of sense. Risk-based deployment, per Napolitano, apparently means the use of non-intrusive scanning equipment and radiation detection equipment at certain strategic locations (not identified).
If Napolitano chooses to go this route, Homeland Security will have to make a request to Congress to change the 9/11 legislation that mandated 100% scanning by 2012. Whether Congress will agree to this change is a question mark.
Ironically, Napolitano’s apparent strategy appears very similar to a proposal by former Republican Homeland Security Secretary Chertoff only twelve months ago. Chertoff’s proposal was panned by Democrats in Congress at the time.
Office of U.S. Trade Representative
Mexican Retaliatory Tariffs Imposed on Writing Instrument Categories
As reported last month, in March, the Mexican Government had imposed punitive tariffs (ranging from 10% to 45%) on approximately $2.5 billion worth of U.S. exports to that country, including a number of writing instrument HTS items. The retaliatory tariffs were imposed because of the Obama Administration’s decision to end a controversial trucking program that allowed Mexican truckers access to the U.S. market.
In early May, new Secretary of Transportation Ray LaHood reported that DOT would be meeting with Congress “soon” to discuss how to resolve the controversy over the trucking program. However, near the end of the month, LaHood was allowing that other issues had dominated both Congress and the White House in May, including the swine flu pandemic issue and the GM, Ford, Chrysler bankruptcy issue. As a result, it appears that DOT has no current plan on how to resolve this issue and the tariffs are therefore likely to remain in place for many more months. Indeed, Jose Luiz Paz Vega of the Mexican Embassy suggested that the issue may play out nearer to the end of the year.
In the interim, U.S. companies exporting the affected goods to Mexico must pay the additional duties. Once the retaliatory tariffs are dropped, the companies will be able to apply for a refund of the additional duties, much like filing a Protest under the U.S. Customs procedures. However, we are told it takes much longer under the Mexican procedures to obtain a refund, than in the U.S.
U.S. Department of Commerce
Commerce Task Force Obtains Right to Use Non-Metric Labeling in EU
On May 15th, the U.S. Department of Commerce announced that its EU Metric Only Task Force had reached a successful conclusion in its negotiation with the European Union. The European Union agreed to allow U.S. firms to use non-metric units on packaging for U.S. products exported to the EU. The new directive was published on May 7, 2009 in the Official Journal of the European Union and after being transposed by the 27 member states in the European Union, should be fully in force by January 1, 2010.
As noted in the Commerce press release, “As a result of the new directive, the United States can continue its efforts to go metric according to its own timeline without facing a major trade barrier in the EU.”
Bureau of Economic Analysis Reports Decrease in Exports for March 2009
The Bureau of Economic Analysis and the Bureau of Census of the U.S. Department of Commerce reported on May 12th that U.S. exports of goods and services decreased by $3 billion as compared to February. Exports for March 2009 were just shy of $124 billion, with a large decrease in capitol goods ($1.7 billion), a negative sign for the U.S. economy. Exports had increased in February for the first time in many months, which appeared to be a very positive sign. However, the March numbers make that increase appear to be an aberration. This data is, of course, somewhat historical (going back 60 days) and there were many other positive reports on the economy in late May. Nonetheless, Commerce was certainly disappointed to report this decrease. I will continue to watch the key trade statistics and report in future trade updates.