Monday, April 22, 2019

CPSC Request for Information about Possible Exemptions from Testing and Other Changes to the Standard for the Flammability of Clothing Textiles

The U.S. Consumer Product Safety Commission (CPSC) requests information about possible changes to the Commission’s Standard for the Flammability of Clothing Textiles to expand the list of fabrics that are exempt from testing under the standard. CPSC is particularly interested in receiving information about the possibility of adding spandex to the list of fabrics that are exempt from the testing requirements. CPSC also would like information about the equipment and procedures specified in the standard and possible ways to update those provisions to reduce the burdens associated with the testing requirements ... READ MORE

Thursday, April 18, 2019

U.S. Court of International Trade Rules Pet Carriers Are Textile Articles

In QUAKER PET GROUP, LLC, Plaintiff, v. UNITED STATES, Defendant, before: Gary S. Katzmann (Slip Op. 19–40) --
The court returns to the question of the tariff classification under the Harmonized Tariff Schedule of the United States (2012) ("HTSUS") of Plaintiff Quaker Pet Group, LLC’s ("Quaker Pet") pet carrier products. Previously, the court held that, as a matter of law, Quaker Pet’s carriers could not be classified under HTSUS heading 4202, which comprises containers that organize, store, protect, and carry various items, because pets are living beings and not items. Quaker Pet Group, LLC v. United States, 42 CIT__, 287 F. Supp. 3d 1348 (2018). However, the undisputed facts available to the court at that time were insufficient to determine whether the pet carriers could be covered by HTSUS 6307 — a provision containing made up articles of textile that are not included under another tariff category — or some other HTSUS heading. Id. at 1359–60. The parties have undertaken discovery and provided the court with additional, undisputed facts, which now permit the court to conclude that Quaker Pet’s carriers should be classified under HTSUS 6307.

USITC Releases Report on Likely Effects of USMCA

On April 18, 2019, the USITC released (News Release 19-032 Inv. No. TPA-105-003) U.S.-Mexico-Canada Trade Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors.

Full Report: Publication Number: 4889

Main Findings:

  • The Commission used a combination of detailed quantitative and qualitative industry analyses and an economy-wide computable general equilibrium model to assess the likely impact of USMCA on the U.S. economy and industry sectors. The model estimates that, if fully implemented and enforced, USMCA would have a positive impact on U.S. real GDP and employment.
  • The elements of the agreement that would have the most significant effects on the U.S. economy are (1) provisions that reduce policy uncertainty about digital trade and (2) certain new rules of origin applicable to the automotive sector. Of interest to stakeholders in many sectors, particularly services industries, are USMCA’s new international data transfer provisions, including provisions that largely prohibit forced localization of computing facilities and restrictions on cross-border data flows. Industry representatives consider these provisions to be a crucial aspect of this agreement in terms of changing certain rules of trade across industry sectors, especially given the lack of similar provisions in the North American Free Trade Agreement (NAFTA).
     
  • Because NAFTA has already eliminated duties on most qualifying goods and significantly reduced nontariff measures, USMCA’s emphasis is on reducing remaining nontariff measures on trade and the U.S. economy; addressing other issues that affect trade, such as workers’ rights; harmonizing regulations from country to country; and deterring certain potential future trade and investment barriers.
     
  • USMCA would strengthen and add complexity to the rules of origin requirements in the automotive sector by increasing regional value content (RVC) requirements and adding other requirements. USMCA’s requirements are estimated to increase U.S. production of automotive parts and employment in the sector, but also to lead to a small increase in the prices and small decrease in the consumption of vehicles in the United States.
     
  • The agreement would establish commitments to open flows of data, which would positively impact a wide range of industries that rely on international data transfers. USMCA would reduce the scope of the investor-state dispute settlement (ISDS) mechanism, a change that, based on modeling results, would reduce U.S. investment in Mexico and would lead to a small increase in U.S. domestic investment and output in the manufacturing and mining sectors. The agreement, if enforced, would strengthen labor standards and rights, including those related to collective bargaining in Mexico, which would promote higher wages and better labor conditions in that country. New intellectual property rights provisions would increase protections for U.S. firms that rely on intellectual property. These changes are estimated to increase U.S. trade in certain industries.
     
  • The Commission’s model estimates that USMCA would raise U.S. real GDP by $68.2 billion (0.35 percent) and U.S. employment by 176,000 jobs (0.12 percent). The model estimates that USMCA would likely have a positive impact on U.S. trade, both with USMCA partners and with the rest of the world. U.S. exports to Canada and Mexico would increase by $19.1 billion (5.9 percent) and $14.2 billion (6.7 percent), respectively. U.S. imports from Canada and Mexico would increase by $19.1 billion (4.8 percent) and $12.4 billion (3.8 percent), respectively. The model estimates that the agreement would likely have a positive impact on all broad industry sectors within the U.S. economy. Manufacturing would experience the largest percentage gains in output, exports, wages, and employment, while in absolute terms, services would experience the largest gains in output and employment.

Textiles and Apparel

The USMCA's modifications to the NAFTA textile and apparel ROOs ease the requirements for duty-free treatment for certain products, but tighten the requirements for other products. Overall, the anticipated shifts in qualifying products are not likely to affect the aggregate volume of trade in textile and apparel. The USMCA modifies some "fiber-forward" and "yarn-forward" tariff shift rules, meaning that finished goods qualify for origination so long as the yarn and fabric are formed and finished in one of the partner countries. The tariff shift rules for goods classified under chapters 61 and 62 (knit and woven apparel) of the Harmonized Tariff Schedule of the United States (HTS) are also modified. The NAFTA requirement that visible linings be sourced from one of the parties is eliminated, but new requirements specify that sewing thread, narrow elastic fabrics, and pocket bag fabrics must be sourced from one of the parties. The agreement has new rules for certain made-up goods described in HTS chapter 63, which are made from fabric coated with plastic.

Additionally, USMCA maintains tariff preference levels for bilateral imports in all directions, with modifications to scope of coverage and quantitative limits in some cases. USMCA would also add textile-specific enforcement language comparable to that found in other U.S. free trade agreements; the language provides guidance for on-site verification visits to producers in the exporting party.

Go Couture Recalls Children’s Loungewear Due to Violation of Federal Flammability Standard

Description: This recall involves Go Couture children’s loungewear sets. The sets are made of 47% polyester, 47% rayon and 6% spandex blended knit with a long-sleeve top and pant set. The long-sleeve top has a Henley neckline. The pants have an elastic waist band and a ribbed cuff at the ankle. The loungewear sets were available in pink and blue and sold in children’s sizes 12 months to 12 years. “GoCotureKids” is printed inside the garment on the neck label.

Remedy: Consumers should immediately stop using the recalled loungewear and contact Go Couture for a full refund.

Incidents/Injuries: None reported

Sold At: Uname it, Pajama Mama, Blew Boutique and other children’s stores nationwide and online at gocouturekids.com from August 2016 through November 2018 for $38.

Distributor(s): Go Couture, of Vernon, Calif.

Manufactured In: United States

Recall number: 19-106

Violating Made in USA order lands filtration seller in hot water

The FTC just announced a proposed settlement with Georgia-based iSpring Water Systems for violating a 2017 order related to the company’s Made in USA claims. The case offers a reminder to other companies to make sure their own Made in USA representations are water-tight.

iSpring sells filtration systems on its own site and through major online retailers. In 2017, the FTC alleged the company’s “Proudly Built in the USA” claims were false. “Proudly Built”? Maybe so, but not in the USA. According to the complaint, many of iSpring’s products were either wholly imported or made with a significant number of parts from overseas.

To settle the 2017 case, the company agreed not to make unqualified Made in USA claims unless it could show the product’s final assembly or processing – and all significant processing – takes place in the United States, and that all or virtually all components are made and sourced here.

Fast forward a year and the company started to promote the filtration systems it sells as “designed and crafted in USA.” But according to the FTC, that claim was false, too, and in violation of the order because many of the products iSpring advertised with that designation were wholly imported. To settle that order enforcement action, iSpring and two corporate officers will pay a $110,000 civil penalty and will have to notify affected consumers about their deceptive Made in USA representations.

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FTC Approves Final Consents Settling Charges that Hockey Puck Seller, Companies Selling Recreational and Outdoor Equipment Made False ‘Made in USA’ Claims

Under the terms of the final orders, Statler and the four Patriot Puck companies, as well as Sandpiper and PiperGear, are prohibited from making unqualified U.S.-origin claims for their products, unless they can show that the products’ final assembly or processing—and all significant processing—takes place in the United States, and that all or virtually all ingredients or components of the product are made and sourced in the United States.

Under the orders, any qualified Made in USA claim must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients, and/or processing. To claim that a product is assembled in the United States, the respondents in both cases must ensure that it is last substantially transformed in the United States, its principal assembly takes place in the United States, and United States assembly operations are substantial.

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USTR Published List of Exclusions from China 301 List 1

On April 18, 2019, the Office of the United States Trade Representative published in the Federal Register Notice of Product Exclusions: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. This LIST relates entirely to exclusion requests from the FIRST LIST of articles subject to the 25% additional tariff.

...and there's a glitch ... CBP is aware of the issues with the Product Exclusions on goods from China added to ACE effective today. These Exclusions are causing a reject. CBP is actively working to resolve the issue and will send out an update when it is completed.