Other GSP administrative issues are also moving forward. However, once again, the initial due dates have CHANGED; this time to provide more time! USTR originally announced the initiation of the 2011 Annual Review, setting the deadline for country practice petitions and product petitions as December 5, 2011. CNL waiver petitions were due December 16, 2011. Subsequently, after the initial December 5, 20011 due date, USTR extended the deadlines for all the preceding petitions to December 30, 2011. No comment was given as to the reason behind the extension, but the additional time will allow for the inclusion of the recently released October 2011 trade data by the USITC.

USTR has also released an interim list of 24 products in line to breach CNL based on January-September 2011 trade data as it continues to prepare for the 2011 Annual Review. In addition, a list of Country Practice petitions mostly based on worker and intellectual property rights under review so far in the process has also been released. Interested parties can keep track of all public comments filed during the 2011 Review by using the docket USTR-2011-0015 at regulations.gov. Note also that the ITC released this week new 2011 import data covering the months from January-October.

For questions related to the GSP program, please feel free to contact David Olave, dolave

First Sale valuation was first established as US law in a 1988 case litigated by ST&R Senior Member Len Rosenberg (E.C. McAfee Co. v. United States, 842 F.2d 314 (Fed Cir. 1988)). Since that seminal case was decided, importers have been able to take advantage of appraisement under the First Sale Rule in the United States. The EU had allowed similar treatment to the US but had been considering the possibility of changing that policy. With this decision, first sale is “safe” for a few more years.

Now the two largest consumer economies, the US and EU both allow the use of first sale…and there are opportunities for you to save $$money$$ on your imports into both markets. If you have questions or would like to explore how you can save money by using the first sale doctrine, contact Nicole Bivens Collinson, nbc@strtrade.com, or David Cohen, dcohen@strtrade.com

All three bills to implement the FTAs passed Congress comfortably, showing strong bipartisan support. The Colombia FTA passed with a vote of 262-167, Panama FTA with 300-129, and the Korea FTA with 278-151. In the Senate, the Korea FTA passed 83-15, Panama FTA 77-22, and Colombia FTA 66-33. A “poison pill” motion proposed by Rep. Levin to recommit the Colombia-FTA with instructions to the Ways and Means committee to deal with the China currency issue was overwhelmingly voted down in the House, allowing the votes to resume a normal course without jeopardizing their fast-track status. President Obama is expected to sign the FTAs into law as early as next week. Congress meanwhile was pleased that they were able to “do their portion” for the FTAs the day before the President of Korea addressed a joint session of Congress on the 13th. All of the FTAs will prove beneficial, however, the KORUS-FTA in particular is heralded as the most economically significant trade agreement since NAFTA, which was signed over 15 years ago.

Alongside the passage of these FTAs yesterday, Congress also approved the long-overdue renewal of the Generalized System of Preferences (GSP) and the Andean Trade Preference Act (ATPA) through July 31st, 2013. Both programs will be retroactive, allowing importers refunds from the date of the programs’ original expiration. Our previous coverage on this issue highlights the political rollercoaster well.

Moving forward, the issue of artificially depreciated Chinese currency will be the next political battlefield as the Administration tries to wade in very sensitive waters. With the House Speaker appearing firmly against any such measure, the Democrats, led by Sander Levin ((MI) will try to force the bill to the full House by using a “discharge petition” measure. The FTAs votes were an important moment that showcased the speed the political process can move if pushed to take action. A legion of international companies, Hill staffers and trade policy wonks are now ready to start dealing with all trade issues that have been waiting on the backburner for years.

This week nearly all republican members of the house finance committee sent a letter to President urging him to submit the pending FTA’s. However, the White House is waiting for passage of TAA and has not been willing to submit the FTA’s until TAA is renewed. Despite Speaker Boehner’s assurance to President Obama that he will pass the FTA’s in tandem with GSP and TAA, the two are still at odds over the exact definition of “in tandem.”

There’s some pressure to pass the Korea FTA prior to the visit by President Lee Myung-bak on October 13, but the official dignitary visit may not be enough as there is talk about a China currency bill coming to the floor soon. That legislation seems to have plenty of support in the Senate but House leadership has kept their view silent for now. The worst fear for FTA advocates is that the China currency debate will create incendiary debates between the two parties, yet another rift between Obama and Boehner, and take away precious little time for the FTA to get approved before the end of this year. Keep in mind that come November, the super committee in charge of budget discussions will start presenting its deficit reduction proposals and this is certainly going to start taking precedence over the FTAs, especially since both issues will be handled by the same Congressional committees.

For those who are more optimistic, the White House could send the FTAs to Congress as soon as next week. After that, the FTAs would need to be marked up in the House Finance Committee and the House Ways and Means Committee; the latter will only do so with a 48-hour advanced notice. Once the bills are marked up, an additional 72- hour period must pass before they can be transmitted to the floor for a final vote. This could technically all happen in October, but it will require tremendous focus and effort on the part of lawmakers.

Needless to say the window to quickly pass the FTA’s quickly is closing fast. Even if disagreements over Chinese currency and congressional time constraints fail to derail the FTA’s, we are still left to wonder what else could possibly go wrong. Let’s just hope that by the end of October we can compare the FTAs to the resurging Rays or Cardinals, and not to the collapsing Red Sox or Braves…Play Ball!

The bill is a hybrid of legislation passed in the House last year, and a bill proposed earlier this year by Senators Sherrod Brown and Olympia Snowe. Although it does not refer specifically to China its supporters have been focusing only on China and its currency value. Senator Schumer remarked it (passage of the act) will “send a shot across China’s bow,” and Senator Reid wants to “send a message to the Chinese.” Other countries have at times been accused of currency manipulation but none have had the economic impact of China.

As proposed, the bill would replace the guidelines used to identify countries who manipulate their currency. Among other things, Treasury is to create a biannual report identifying countries misaligned currencies and priority countries. For priority countries, if the country does not take steps to rectify the misalignment then US sanctioned consequences would be triggered. These actions could include opposition to many forms of international financing for projects in the designated countries, implementation of trade remedies such as antidumping duties and bans on federal government procurement agreements with the designated countries, a request for a WTO dispute settlement panel to hear the dispute and other forms of remedial currency intervention.

Another important provision is that it limits the President’s waiver authority. It is quite possible that the President will not agree with Congress limiting its ability to issue waivers in instances of national economic need or security. If the bill is passed by both Chambers and sent to the President, he will be hard pressed not to sign it. At the same time, he can also use his authority to notify Congress that he will not implement those provisions which limit his authority.

The Obama administration doesn’t seem to be on board with this type of action aimed at China. They have not directly spoken out on the proposed bill but Treasury Secretary Geithner has recently stressed the importance of dealing with China’s currency undervaluation with positive leverage and in accordance with our international obligations. Some fear that passage of this bill could reverse recent progress made by the administration in pressuring China to open up their markets further to American goods. Despite opposition Obama likely does not have a choice as he is working with diminishing clout, against vast bipartisan support of the bill (20 Senate co-sponsors and rising, including 5 Republicans) and the continual strong public perception that China is to blame for US job loss.

As we partly highlight in our blog post ‘Showdown’ on May 18th, getting this bill through has taken wrangling over the TAA extension, cutting through a Senator’s hold (over sleeping bags), and poisonous verbal barbs by both sides.

Thankfully, both parties in the Senate managed to table their differences, albeit momentarily, and approve the GSP with TAA attached. Now, the bill gets sent back to the Republican controlled House, where it faces another challenge. Because the GSP-TAA is in their hands, it is highly unlikely that the bill gets sent to the President without submission of the FTAs to Congress. Once the President sends the FTA’s to Congress they will have to decide over the matter of linking the bills– likely through establishing a rule that will link the fate of these bills together.

The report’s authors offer a number of policy options, including a restoring trade negotiating authority to the President, better enforcement of trade laws, the establishment of a comprehensive worker retraining policy to assist displaced workers reintegrate into the job market, and a call for the creation of a national investment initiative to attract the kinds of investment that lead to high wage, high productivity jobs.

However, throughout the Report, public sceptism over the benefits of trade shadows the Report’s analysis and conclusions. Anti-trade sentiment from back home resonates in the Congress and with the Administration and effects decision making on trade policy. While Congressional action to move the pending three FTAs will provide significant momentum for trade liberalization and provide an opportunity to begin the next trade debate, reconciling a divided and skeptical public to the benefits of trade will be one of the real challenges for the future of trade policy. The full report can be found here

The bill packs a pretty big punch for a relatively small piece of legislation – only 29 pages. First, it makes the new 100PPM lead limit in content prospective as of August 14, 2011. In other words, whereas before the limit would have applied to inventory, now it only covers products manufactured after August 14. The sighs of relief from industry are audible. Next, the bill creates a “functional purpose exception” to the lead limit. That means that the CPSC, on its own or following a petition, can exempt certain products or product types from the lead ban under certain conditions. It’s not open season, but now there’s light at the end of the tunnel, for some. The bill also tries to allow more flexibility on third-party testing, with an explicit eye towards helping to reduce cost which has been so crippling, particularly for small and medium-sized businesses. A special rule is created especially for small batch producers. Again, trying to lessen the burden of testing. We’ll see how much that helps.

There are provisions in HR 2715 to exclude used children’s products and printed books from the lead limit – addressing an issue that had been a thorn in the side of charities, second-hand shops and school libraries across the country. Phthalates are given an inaccessibility exclusion, similar to the one for lead, and tracking labels get the same treatment as the lead limit – the CPSC may exclude a product from the requirement upon petition. Finally, the dreaded database gets a make-over, preventing comments from being immediately published if the CPSC receives information from industry that the comment is materially inaccurate. As I said, an ambitious agenda for a pint-sized bill.

Of course, implementation, as always, will be the key. While the lead limit change takes effect right away, the other provisions – the functional purpose and the tracking label exceptions, for example – will see their effectiveness revealed over time. In some ways, once the President inks the deal, the ball will be in industry’s court.

For more information please follow this space or contact Ned Steiner at esteiner@strtrade.com

What does this mean now for industry? It means that on that date, no children’s product on a shelf anywhere can have a metal or non-metal component above that limit. Not in assembly, not in the pipeline, not in inventory. Nowhere.

Many have complained of the arbitrariness of the rule – overnight good children’s products that were perfectly safe transform gremlin-like into evil children’s products. So why the draconian rule? Well, first of all, because it’s the law. According to the Consumer Product Safety Improvement Act (CPSIA), three years after the date of enactment “any children’s product… that contains more lead than the limit established… shall be treated as a banned hazardous substance.” The effective date is not the date of manufacture, or date of sale. It is August 14; the limit takes effect immediately on that date.

Some of you will recall that the CPSC tried to get creative with phthalate limit provision, which arguably has more flexible language. The CPSC tried to make the limit for phthalates prospective as opposed to retroactive. And how did that go over? Like a lead balloon – the CPSC was taken to court over the interpretation and they lost. So, they won’t be trying creative again.

The only other option was to prove that making products under the 100PPM was unfeasible, which CPSC was not able to do.

And the good news? You have until the end of the year to test and certify for the new level. That’s right. The stay of enforcement for testing and certification of lead content is still in effect until December 31, 2011.

Until we hear otherwise.

Watch this space or contact esteiner@strtrade.com  for more CPSIA news.

Since coming into force in April 2009, the Lacey Act declaration has proved a challenge to importers. It might seem straightforward on the outside – tell us what kind of wood your importing and where it comes from – but extended global supply chains make it difficult to pin down the exact information.

Moreover, the declaration has proved cumbersome and rather unwieldy. Brokers spend time filling out line after line of information for each wood component of a product. CBP won’t even touch the declaration; they make it very clear that if you present a paper declaration to them upon entry they will hand it back and instruct that you send it snail mail to USDA. (It’s on their website!) Meanwhile, back at APHIS HQ, a small, dedicated team swims through mountains of paper declarations, half of which contain incomplete or inaccurate information. (I’m being generous).

So, what is to be done? How to make the declaration do what it’s supposed to – provide the US government intelligence about whether or not imported wood (and other plant) products are tainted with illegality?

APHIS proposes four ways to simplify the declaration, in order to better target suspicious goods and lessen the burden on legitimate commerce:

1) Create a de minimis exemption

2) Simplify the declaration for composite wood products

3) Establish a manufacturing cut-off date

4) Allow species grouping

If these proposals look familiar don’t be surprised. A working group of industry and environmental groups have been working on similar proposals since the declaration came into force. Both sides recognize that intelligence is only as good as the data you put into it. Garbage in, garbage out. So now, APHIS is trying to take out the garbage.

It remains to be seen whether the proposals will fly with the larger public. It is unclear how many people are paying attention to the Lacey Act amendments, three years after their passage. We shall soon see how many respond to the request for comments – due August 29, 2011 – and demonstrate whether anyone heard this tree falling in the forest.

For more information, or assistance with drafting your comments, please contact Ned Steiner (esteiner@strtrade.com)