U.S. Congress


GSP Extension Bill Passes Congress in December

In the waning hours of Congress, on December 22, 2009, the Senate passed a bill extending the Generalized System of Preferences program for an additional year.  The GSP Program, which provides duty-free entry for the majority of imported goods from column 1 countries, was scheduled to expire on December 31, 2009.  The Senate bill matched a previously passed House bill, thereby avoiding the need for a Conference bill on the issue.  As of this date, there has been no word from The White House that the bill has been formally signed. However, there is no question but that President Obama will sign the bill and the GSP program will continue without interruption. Technically, goods entered January 1, 2010 and after will not be entitled to GSP treatment until the President signs the bill.  However, in checking with Customs, it is not their intention to assess duties at this time, given the high likelihood that President Obama will sign the bill imminently.  This avoids the messy issue of requiring importers to pay the regular duty, wait for liquidation of the entry and then file protests to reclaim the duty paid.  This process normally takes two to three years.

I will report as soon as I learn that the President has signed the bill into law. It may have actually already happened by the time you read this update.  The President has a handful of bills before him to review and sign into law.


Miscellaneous Tariff Bill Fails

In last month’s Trade Update, I predicted that the group of miscellaneous tariff bills, known as the MTB, would pass before Congress adjourned in December.  I was wrong.  While the GSP program and the Andean Trade preference program were extended, the miscellaneous tariff bill failed.  I am not sure why it did not pass, but it will pass early in 2010.  Like the GSP program, many of the preference programs covered by the MTB expired on December 31, 2009.  As a result, if you are entering imported goods covered by an expired provision, you will to pay the applicable duty, effective January 1, 2010 and then go through the laborious protest process referenced above to reclaim the duty paid.

The latest rumor is that an initial MTB will pass in February, covering all of the issues that were agreed upon by the International Trade Commission and supposed to have been covered in the bill in 2009.  Then a second MTB will be considered later in the year, with other miscellaneous tariff provisions. I will report further on this issue in the next trade update.

Office of U.S. Trade Representative

Whatever Happened to the Trucking Dispute with Mexico?

In a story that seems to have disappeared from the news, the retaliatory tariffs on certain U.S. goods exported to Mexico remain in place.  And movement is slow on the underlying issue of the U.S. restoring Mexican trucks access to the U.S. market.  When a pilot trucking program at the U.S. Department of Transportation was terminated in the spring of 2009, Mexico imposed these ad valorem tariffs on various U.S. goods.  At the time, it was thought that the tariffs would be lifted in a month or so.  However, the tariffs have now been in effect nine months. 

According to World Trade Online, the new omnibus spending bill signed into law by President Obama in late December, does not prohibit DOT from putting in place a new pilot program to allow Mexican trucks access to the U.S. market.  So DOT can initiate a pilot program and then Mexico likely will drop the tariffs.  However, in checking with the Federal Motor Carrier Safety Administration, which administered the prior pilot program, nothing is ready to go at this time.  So the tariffs are likely to stay in place a while longer. If I had guess, I would say it will take another 60 to 90 days for DOT to reinstitute a pilot program and for Mexico to relent on its retaliatory tariffs.

I will report further on this issue once the pilot program is announced.


U.S. Department of Commerce

Exports Increase Again!

In the category of good news, U.S. exports increased again in November 2009.  This was the seventh monthly increase in a row, and represented an increase of $1.2 billion over the export of goods and services for October. The increase in exports includes increases in industrial supplies and materials (2.1 billion), consumer goods ($1.4 billion) and capital goods ($1.2 billion). 

By late February, the Census Bureau should have year end statistics, which usually includes a number of corrections in the monthly reports, and therefore are much more accurate than the normal monthly numbers.  We will report further at that time.  However, at present, it appears that exports are a very bright spot in the U.S. economy.  Very good news indeed!




China

If it’s not Lead, then it’s Cadmium!

Finally, in the “you can’t make this stuff up” category, on January 11, 2010, we learned  from media reports that certain Chinese manufacturers, in response to the new federal ban on total lead in children’s products (at levels of 600 parts per million or above), switched from lead to cadmium in certain children’s products, including jewelry.  Cadmium is not per se prohibited by any U.S. law, but is arguably an even worse actor than lead.  It is a known carcinogen, and like lead, can hinder brain development in very young children.  According to the AP story on the use of cadmium, it is the seventh most dangerous substance on the CDC’s list of dangerous substances.  And the level of cadmium in some of the jewelry measured was significantly higher than any lead levels previously seen.

Apparently, what happened is the price of cadmium dropped on the world market, and the Chinese therefore seized upon it as a replacement for lead.  So the result of the new federal legislation on lead (“CPSIA”) was to move certain foreign manufacturers to cadmium.  This was obviously not what Congress intended.

The CPSC will have to make a finding that such products are a substantial product hazard and bar entry under Section 15, or make a determination that they are banned hazardous substances under the FHSA and bar entry that way.  However, either course of action is likely to take a few weeks to implement as there is no specific federal law banning cadmium in consumer products. (ASTM F963, which is now a mandatory standard administered by CPSC, prohibits cadmium and other heavy metals in toys.  But jewelry is not likely to be considered a toy.) 

It is my understanding that CPSC Chairman Tenenbaum was scheduled to give a taped presentation to Asian exporters last week and apparently was planning on thanking them for their cooperation with compliance with CPSIA.  However, according to one report that I read, the nature of her presentation changed dramatically after the cadmium story broke on January 10th.

As I said at the outset, you can’t make this stuff up.