News from TAHOCO: Weekly Updates

An updated list of recently published US government memorandums, notices, regulations and decisions for the week ending August 6, 2010 is now available on our website here.

CBP Commissioner Addresses Trade Community Concerns

(World Trade Interactive)

In an undated letter to various trade groups, U.S. Customs and Border Protection Commissioner Alan Bersin responded to a number of issues raised by the trade community at an April 7 roundtable meeting, as follows.

• CBP expects to soon publish in the Federal Register a notice formally withdrawing its 2008 proposal to revoke the First Sale Rule.

• CBP also expects to soon publish in the Federal Register a notice addressing its July 2008 proposal to establish uniform rules governing determinations of the country of origin of imported merchandise.

• CBP is working to determine whether it could disclose, prior to seizure, information that could be used to identify intellectual property infringement and whether any legislative or regulatory changes would be needed to accomplish this task.

• CBP has drafted a proposed rule that would increase the values for de minimis and informal entry shipments and expects to conclude within the next two months an economic analysis of this proposal. Following that, the rule will have to be reviewed by the Treasury Department.

• CBP hopes to publish by the end of 2010 a proposed rule that will make “substantial” regulatory changes in order to revise and modernize the in-bond process. These changes are expected to include a transition from a paper-dependent entry process to an automated/paperless process as well as tools for CBP to better track in-bond merchandise.

• The assistant commissioner, Office of International Trade, does not review every ruling CBP issues but, in response to complaints from the trade community and Congress about policy changes being made without proper consultation, does review those rulings that result in a change of position. CBP is also developing an internal process to highlight to management any substantive regulatory initiatives, major proposed rulings and modifications of existing rulings prior to their publication.

• CBP is developing a plan to add data elements required by government agencies participating in the International Trade Data System to the data currently received in the Automated Commercial System using the ABI message layout. This data will be transferred to the Automated Commercial Environment and stored and made available to those agencies via the ACE Portal.

• CBP does have a backlog of protests and internal advice requests at headquarters, intends to add additional personnel to the branches responsible for these cases and is piloting a project to make increased use of the National Commodity Specialist Division in the analysis of these cases.

• In response to a request for Free And Secure Trade lanes to begin further back on roads leading to border crossings, Bersin indicated that CBP itself cannot make this change but “would be favorably disposed to approaching the relevant authorities with the trade community to seek solutions in specific locations.”

• On June 9 CBP’s Office of Field Operations reissued internal policy guidance directing that non-security and trade compliance inspections be conducted at ports of entry or unlading instead of ports of arrival.

• CBP will begin to offer two annual C-TPAT conferences a year, one on the West Coast and one on the East Coast or in the Midwest. Each seminar will accommodate approximately 1,200 attendees. CBP is exploring the possibility of webcasting these events.

• A task force created to develop initiatives to allow CBP to manage by account is reviewing the role of account managers, CBP’s account-based risk management efforts, simplified entry and financial processing, and ACE’s role in managing by account.

• The Office of Trade has piloted a two-week advance training session on free trade agreements, other preference programs and textiles that will be rolled out this summer for import specialists and others charged with enforcing such provisions.

• Bersin declined to allow foreign drivers to reposition in the U.S. foreign-based trailers that did not enter and/or will not leave with the same driver. The trade community argued that this flexibility would improve driver and equipment efficiency and reduce truck emissions.

DOT Proposes Rule Incorporating Cargo Tank Permits into HAZMAT Regulations

(Lexology – Shook Hardy & Bacon LLP)

The U.S. Department of Transportation’s (DOT’s) Pipeline and Hazardous Materials Safety Administration (PHMSA) has published a notice of proposed rulemaking (NPRM) that would amend hazardous materials regulations to incorporate provisions contained in six cargo tank special permits. 75 Fed. Reg. 42,364 (7/21/10). According to PHMSA, these permits “allow a company or individual to package or ship a hazardous material in a manner that varies from the regulations provided an equivalent level of safety is maintained.” Read more here.

100% Air Cargo Screening Requirement Met, TSA Says

(World Trade Interactive)

The Transportation Security Administration announced this week that it met the Aug. 1 deadline for screening 100% of air cargo carried on domestic passenger aircraft, as required by the 9/11 Act. TSA is also continuing its work to improve cargo security on passenger flights originating in other countries, requiring 100% of high-risk cargo to undergo security screening and having increased the requirements for overall cargo screening. A TSA press release notes that these steps are part of the agency’s continuing utilization of a multi-layered approach to air cargo security, including procedures for known and established shippers to ship cargo on domestic passenger aircraft, deploying explosive detection canine teams and conducting covert tests and no-notice inspections of cargo operations.

TSA notes that to meet the 100% screening mandate it created the Certified Cargo Screening Program, which allows certified facilities across the country to screen cargo before it reaches the airport. CCSP facilities must be approved by TSA and adhere to strict security standards, including physical access controls, personnel security and screening of prospective employees and contractors. A secure chain of custody must also be established from the screening facility to the aircraft.

TSA states that prior to the Aug. 1 deadline over 900 facilities became CCSP certified. As a result, over half of the more than nine million pounds of cargo loaded onboard passenger-carrying planes each day is prescreened, thus helping to avoid potential bottlenecks at airports.

FMCSA to Allow Canadian Domiciled Motor Carriers/Freight Forwarders to Obtain Required Insurance from Canadian Insurance Companies

(Logistics Blog – Kenneth E. Siegel, Strasburger & Price LLP)

In response to a petition filed by the Canadian government, the Federal Motor Carrier Safety Administration (“FMCSA”) has amended its liability insurance regulations for motor carriers. In another long-overdue step toward full reciprocity, it will now allow Canada-domiciled motor carriers and freight forwarders to maintain – as acceptable evidence of their required financial responsibility for accident liability – insurance policies issued by Canadian insurers legally authorized to issue such policies in the Canadian province or territory where the motor carrier or freight forwarder has its principal place of business.

The change to the regulations will eliminate the need for Canadian insurance companies to link with a “fronting” U.S. insurance company in order to legally insure Canada-domiciled motor carriers operating in the United States. Notice of the final rule was published by the FMCSA in the Federal Register on July 2, 2010 and becomes effective on August 2, 2010; 75 F.R. 38423. Read more here.

CBP: Discontinuation of the Unknown MIDs

(CBP)

CBP is discontinuing the use of the unknown Manufacturer Identification Number (MID) as data to report the manufacturer (or supplier). The discontinuation will take effect September 15, 2010; after this date, entries reporting unknown MIDs will be rejected by the Automated Broker Interface (ABI).

Any questions regarding this notice should be directed to remote.filing@dhs.gov.

BIS Clarifies Country Scope of Direct Product Rule

(World Trade Interactive)

The Bureau of Industry and Security has issued a final rule that, effective July 30, clarifies the scope of the “direct product rule” set forth in the Export Administration Regulations. BIS is also making parallel revisions or clarifications to written assurances required under license exception TSR (Technology and Software Restricted), information required on the license application for national security controlled technology, and the instructional steps in the EAR that provide guidance on how to apply the direct product rule.

Under the direct product rule, foreign-made items are subject to the EAR and require an export license or license exception if they are (a) located outside of the U.S., (b) subject to national security controls under the EAR, (c) the direct product of U.S.-origin software or technology that requires a written assurance as a supporting document for a license or as a pre-condition for the use of license exception TSR, and (d) being re-exported to a destination in a country of national security concern or a terrorist supporting country. Read more here.

Material Handling and Logistics Getting High-Level Attention

(Material Handling Management)

Companies are now more likely to have executive-level supply chain leaders, according to a recent Tompkins Supply Chain Consortium survey of leading retail and manufacturing companies. The executive briefing – The Structure of Today’s Supply Chain Organizations, based on the survey – notes that throughout the past five years, the organizational level of the senior-most supply chain executive has gradually moved higher. Today, nearly half the retail and manufacturing companies surveyed have a supply chain leader at or above the executive vice president level. This has major implications for material handling managers, says Bruce Tompkins, Executive Director of the Consortium and author of the briefing.

“Now people with a general supply chain background are finding themselves in the C suite reporting to a president and that will make opportunities for people to move up into those levels where there weren’t such levels before,” he told MHM. “As organizations become more matrixed they have multiple hats on and that means there will be an opportunity for material handling people to branch into other areas of supply chain as well.” Read more here.

New Law Sets Formaldehyde Emission Standards for Composite Wood Products

(Lexology – Gary Long et al., Shook Hardy & Bacon LLP)

President Barack Obama has signed into law an amendment to the Toxic Substances Control Act that sets formaldehyde emission standards for composite wood products sold in the United States as of January 1, 2013. Sponsored by Senators Amy Klobuchar (D-Minn.) and Mike Crapo (R-Idaho), the legislation requires manufacturers to ensure via third-party testing and certification that both raw and finished products emit fewer than approximately 0.09 parts per million of formaldehyde. It also directs the Environmental Protection Agency (EPA) “to work with Customs and Border Protection and other relevant federal agencies to enforce the standards for imported wood products,” according to Klobuchar’s July 7, 2010, press release. Read more here.

Imports Slow Second-Quarter Growth in U.S.

(Reuters – Lucia Mutikani)

Economic growth slowed in the second quarter as companies invested heavily in equipment from abroad and the pace of consumer spending eased, raising concerns about the recovery in the rest of 2010. Gross domestic product expanded at a 2.4% annual rate, the Commerce Department said in its first estimate on Friday, after an upwardly revised 3.7% growth pace in the January-March quarter. Financial markets had forecast GDP, which measures total goods and services output within U.S. borders, growing at a 2.5% rate in the second quarter from a previously estimated a 2.7% rate for the first three months of this year.

"The anticipated slowdown in the economy is happening. Will business investment fall off a cliff next quarter if domestic consumer spending continues to flag?" said Lee Olver, managing director of financial strategies at Madison Williams & Co. in Houston.

A second report showed business activity in the nation's Midwest region expanded more than expected this month on strong orders. The Institute for Supply Management-Chicago business barometer rose to 62.3 from 59.1 in June and above market forecasts for reading of 56.5.

Separately, consumer sentiment dropped this month to a nine-month low, according to Thomson Reuters/University of Michigan's Surveys of Consumers. Read more here.