Is ‘Buy American’ Good for U.S. Small Business?

(Wall Street Journal Online – Kelly Spors)

A controversial piece of the economic-stimulus package being debated in the Senate is a measure that would force the U.S. government to “buy American” – or basically purchase all material goods used in public-works projects from U.S. suppliers. On the surface, it sounds like a blessing for the millions of U.S. small companies that could really use some sales right now. But is it really?

Todd McCracken, president of the National Small Business Association, says the measure could very well threaten small businesses more than help. Surely some small manufacturers will benefit from government dollars purchasing their wares. But there’s expected to be strong backlash from foreigners upset at the U.S.’s self-serving stance on trade – and that could hurt the throngs of small businesses that have benefited from a surge in U.S. exporting in recent years due to the weak dollar.

“If you look at 2008, the one bright spot in the economy has been exporting,” Mr. McCracken said in a phone interview. “We don’t want to create any retribution against U.S. companies.” Small and midsize businesses account for about 30% of all U.S. exporting, but many small companies have begun exporting in recent years to take advantage of a growth in consumer spending in other countries.

What’s more, it’s unclear at this point how much of all that “buy American” purchasing would come from small businesses anyway. It’s more likely to benefit larger manufacturers than smaller ones, Mr. McCracken adds.

President Obama has recently said he thinks the U.S. needs to be careful about not taking too much of a protectionist stance when the entire world economy is suffering, and a new study (11 pages, PDF) shows it would cost more U.S. jobs than create them. But still, labor groups and many Democrats are pushing to keep it in the stimulus plan.

Lawmakers Want Shared-Border Deal

(Business First of Buffalo – James Fink)

Two upstate members of Congress have asked President Obama to restart shared-border management discussions with the Canadian government. Rep. Louise Slaughter, D-Fairport, and Rep. John McHugh, R-Watertown, have written to Obama and requested he re-open shared border management talks with his Canadian counterpart when the newly-inaugurated president travels to Ottawa on February 19.

The impact of shared-border management could be a major boost to the Buffalo Niagara region’s economy and may push the construction of a second Peace Bridge span. Under the shared-border management guidelines, pre-customs clearance and other factors relating to goods and travelers entering the U.S. from Canada would take place on the Canadian side of the border, even though it would be run by U.S. Customs and border patrol agents.

The plan would be instituted at both the Peace Bridge that links Buffalo with Fort Erie and at the Thousand Island Bridge in Alexandria Bay. “Canada and the United States have the largest bilateral trade relationship in the world,” Slaughter said. “Key pillars in this relationship are the Peace Bridge and the Thousand Island Bridge.”

A preliminary agreement was announced in late 2004 but was later reneged by the Bush administration, specifically by Michael Chertoff, who headed the Department of Homeland Security in the previous administration. Chertoff cited a demand by the U.S. that it could collect biometric fingerprints from those who decided, for whatever reason, that they wanted to turn around on one of the bridges and not enter the United States. Canadian officials felt that was an unconstitutional demand.

Last September, Homeland Security issued a new report that noted five issues that stalled talks between the two countries, including arrest authority, finger printing and information shared between the two countries respective law and border enforcement agencies. Read more here.

Auto Industry Protectionism Could Do More Harm Than Good: Analysts

(The Canadian Press)

Industry watchers say the Canadian Auto Workers union needs to be careful to avoid causing more damage than it corrects by pushing for a national strategy to deal with Asian and European imports.

The CAW said last week it would negotiate with the Detroit Three automakers as they seek cost savings amid a historic drop in vehicle sales, but only if certain conditions are met, including the development of what the union calls a “comprehensive national auto strategy.”

The union has argued for years that manufacturers in South Korea and Japan, among others, have an unfair advantage because they keep out North American competitors while the U.S. and Canadian markets are largely open.

CAW economist Jim Stanford said he would expect any auto strategy to address this “incredible trade imbalance.” “The imports from offshore ... took almost 30% of Canada’s market last year and there’s been a huge surge in imports from Japan, Korea and Europe, soon from China,” Stanford said in an interview.

“We do not export any significant volume of automotive products back to those countries and us trying to help out the companies, whether it’s with government assistance or cost savings from the workers, will do nothing if we allow that imbalance to carry on.”

Stanford said he believes the Canadian industry has three options in this respect: working to open trade so it can export more vehicles overseas, encouraging foreign manufacturers to invest in Canada, or imposing trade restrictions on foreign countries to protect the domestic industry. Read more here.

Update Regarding Implementation of Lacey Act Amendments

(Canadian Embassy via IE Canada)

A notice was published in the Federal Register earlier this week with the revised implementation plan for the Lacey Act amendments. A copy of the notice is available here.

Below is a further update provided by the Canadian Embassy regarding a recent meeting with the United States Trade Representative (USTR) with respect to the revised Lacey Act implementation plan. We were asked not to distribute this update until the revised implementation plan was published.

The information provided in this update should be verified against the Federal Register notice.

Canadian Embassy Update

On Thursday, January 15, Kevin Thompson, Counsellor (Trade Policy), Canadian Embassy and a representative from the European Commission Mission in Washington (EC) met with USTR to discuss the respective comments filed by Canada and the EC to the APHIS Lacey Act Implementation Plan Federal Register Notice of October 8. We wanted to use the opportunity to underscore key points in our respective submissions and to seek additional information on the next steps in the Administration’s implementation plan for the import declaration. The following are the key points coming out the meeting:

1. APHIS anticipates issuing a revised implementation plan and schedule early next week. There will be substantial changes to the schedule as it appeared in the October 8 Notice. The USG has revised its approach to identify a positive list of products for which the declaration will be required (as opposed to an all encompassing requirement, subject to exceptions).

From what we were able to gleam, the implementation plan will be broken into three six month phases:

Phase I – April to September 30, 2009, covering
• 4401, 4403, 4404, 4407, 4408, 4409, 4417, 4418

Phase II – October 1 to March 31, 2010, covering
• 4402, 4405, 4410 to 4416, 4419, 4420 and 4701 to 4705

Phase III – April 1 to September 30, 2010
• 4421, 4801 to 4811 and 940169, 9403.03 to 9403.07

You will note the following:

• The 3 phases only apply to wood and wood products. Chapter 44 is divided into Phase I and II.

• Chapter 6 has been dropped off the implementation schedule (will not apply to horticultural plants or Christmas Trees)

• the implementation plan takes the USG to the end of the 2 year period before which a review can taken place under the legislation. Thus, product categories not on this list will likely not be subject to import declaration before the completion of the review. USG intends to conduct studies of whether to include other products beyond what is identified in this revised schedule.

• Chap 4706 and 4707 will not be included because this encompasses recovered (waste and scrap) material. Intention is not to collect information if the answer is already known.

• Import Declaration will only be required for the good that is being imported and that is identified on the implementation schedule (for instance, it will not be required for any manuals or labels that accompany the good being imported).

2. Phase I of the schedule is fixed. However, USG will be eliciting comments on Phases II and III. The USG encourages comments on an ongoing basis describing the process as very fluid.

3. In terms of the electronic entry system, CBP is currently working on modifications to the Automated Commercial System (ACS). Thus, in order to avoid duplication of information, the intention is not to have a completely separate system, but to integrate additional information requirements into existing ACS environment.

4. Ideally, USG would like to have electronic system operational for several weeks (possibly a month) before the declaration requirement becomes enforceable, to enable trade to practice. That’s the plan, although it may not be realistic.

5. Paper Declarations – no declarations have been filed to date. Apparently, APHIS has set up a mailbox for imports to send voluntary declarations.

6. Time of submission – the rules for when the import declaration will have to be submitted will likely be the same as existing rules for other types of customs documentation (time of entry, time of release)

7. Import declaration information will likely be governed by same confidentiality requirements as other types of customs documentation. However, it is anticipated that some form of aggregate information will be publicly released (ENGOs are pushing for this)

8. Database of internationally recognized scientific names. Currently, CBP is contemplating a drop-down menu for specifying scientific names.

9. Use of commercial short-form nomenclature (e.g. SPF). Unlikely at this stage. Statute requires genus and species.

10. Blanket or Simplified Declaration – Discussions are underway regarding the use of a simplified declaration such as that suggested by Canada. However, it appears unlikely that they will be able to implement by April 1. USTR would welcome any additional suggestions we would have to operationalize the simplified declaration.

11. Wood Packaging – Chapter 4415. USTR encourages us to raise this issue again in order to highlight difficulties.

Trade Issues 2009: A Roundup

(Tom Travis — Entrepreneur.com)

With a new administration, there’s sure to be more changes to U.S. trade policy. Here are eight areas you should be paying particular attention to.

With President Barack Obama’s administration now in place, there will be inevitable changes to U.S. trade policy. While we don’t know the exact scope of these changes, it’s clear the U.S. trade agenda will increasingly focus on the growing responsibilities of all players in the global supply chain. Longstanding concerns such as trade enforcement, food and product safety, labor rights, environmental issues, transfer pricing, and cargo security are expected to see close scrutiny.

Importers, exporters, customs brokers, retailers, transportation and logistics companies — everyone involved in international trade — should get ready now by paying particular attention to the following issues… FTAs/preference programs; Product safety; Food safety; Trade remedies; Intellectual property rights (IPR); Corruption; Transfer pricing; and Exports.

Read the complete article here. More information about the advisory services of Sandler, Travis & Rosenberg, P.A. (ST&R) can be found here.

WTO Top Court Again Condemns U.S. Dumping Measure

(Reuters)

The World Trade Organisation’s top court backed the European Union on Wednesday in its challenge of a U.S. method for dealing with unfairly priced imports, confirming a series of previous rulings.

The European Union launched the appeal even though it won the original case in October, because the original panel refused to rule on some instances challenged by Brussels. The United States subsequently also appealed.

The case had attracted attention as an example of a growing rift between the WTO’s dispute panels and its Appellate Body over the extent to which zeroing can be permitted under international trade rules.

And with the economic crisis fuelling fears of protectionism which could deepen the world’s recession, trade remedies such as anti-dumping measures to tackle cheap imports are coming under added scrutiny by both governments and trade lawyers.

In a 166-page report, the Appellate Body overturned many reservations of the original dispute panel, and recommended that the United States bring the measures into line with trade law. Read more here.

Lawmakers Push for Food Safety Reforms

(Associated Press)

Lawmakers vowed Wednesday to press for stronger food safety laws and more money for inspections as the list of recalled peanut products surpassed 1,000 in an ongoing national salmonella outbreak.

“There is an openness to putting together the strongest legislation possible,” said Rep. Rosa DeLauro, D-Conn., who introduced a bill to reorganize federal food safety enforcement and make it more accountable.

Meanwhile, the number of recalled peanut products approached 1,100 in what independent experts said appears to be a record for foods consumed by humans.

The 2007 recall of melamine-tainted pet food eventually grew to 1,179 products but “this is human food,” said Caroline Smith DeWaal, food safety director for the Center for Science in the Public Interest. “I’m certainly not aware of any recall where so many individual branded products had to be called back, which makes it really complicated for consumers.”

The salmonella outbreak has sickened at least 550 people, eight of whom have died. A Georgia peanut-processing plant that produces just 1 percent of U.S. peanut products is being blamed. Authorities say Peanut Corp. of America shipped peanut butter, paste and other products that had tested positive for salmonella. The company denies any wrongdoing. Read more here.

CBP Testing Program to Police Bond Insufficiency Statuses

(CSCB)

The following is excerpted from a news release from the National Customs Brokers and Forwarders Association of America, Inc. (NCBFAA).

Under current policy, CBP’s Revenue Division renders continuous bonds insufficient for a variety of reasons. When rendered insufficient, entries are not accepted against that bond. The bond insufficiency status is only discovered when an entry is transmitted using the insufficient bond and the entry is not accepted with an “insufficient bond” message.

This methodology creates a sudden and unexpected disruption to import clearances. Depending on the reason for the insufficiency, an importer may be without a continuous bond for days, requiring the use of single transaction bonds to continue importing until the sufficiency problem is sorted out. Delays in entry processing, additional costs and exposure due to the use of single entry bonds, and storage charges are often the result.

The Revenue Division has set up a test program to help resolve the problem. The Bond Team will post information on continuous bonds scheduled to be rendered insufficient to surety accounts in ACE on the surety’s Business Activity Log (BAL). The posting will give the trade at least ten (10) business days to resolve issues before the bond is rendered insufficient. The BAL posting will explain why the bond may be subject to being rendered insufficient.

[NCBFAA] members should contact their surety bond providers to request that they be notified immediately when the surety receives a posting for a bond that they have placed. Brokers and sureties should review their processes to make sure that the Revenue Division receives a timely reply.

The Revenue Division will accept responses directly from brokers or brokers may elect to work through their surety representatives. The Bond Team has asked that brokers also copy the surety in their responses to the Revenue Division so that the surety does not duplicate the responses. This will also help the surety track responses. Our members should review the instructions on the CBP website for address corrections for this test.

The test will begin on February 3, 2009. The Revenue Division will not commit to permanently adopting this process unless this test yields significant results and a substantial majority of these problems are corrected timely. It is important that [NCBFAA] members participate and respond timely to have this test advance to a regular program and resolve a major problem.

Obama Facing Dilemma Over Protectionism in Bill

(The Associated Press)

Less than two weeks into office, President Barack Obama faces a dilemma over protectionist provisions in a massive economic stimulus bill: Backing the measures could set off a trade war, while opposing them could trigger a backlash from his supporters.

The choice involves “buy American” provisions attached to White House-backed stimulus legislation moving through Congress. They would require major public works projects to favor U.S. steel, iron and manufacturing over imports.

Some Democratic lawmakers and interest groups allied to the president support the measures, but international allies and trading partners are warning that favoring U.S. companies would breach U.S. trade commitments and could set off tit-for-tat countermeasures around the world.

The two largest U.S. trading partners already have spoken out against the measures. On Thursday, Canadian Prime Minister Stephen Harper expressed concern and the European Union warned that it would not “stand idly by” if such measures were passed. On Friday, Brazil’s president Luiz Inacio Lula da Silva also criticized the measures.

In November, world leaders, who gathered in Washington for the G-20 summit to consider how to right the global economy, pledged to avoid protectionism. But since taking office Jan. 20, Obama has said little on trade and has yet to nominate a trade representative. While campaigning, he argued that the Bush administration's strong support of free trade agreements should be moderated by including environmental and labor protections. Read more here.