Request for Comments To Compile the National Trade Estimate Report on Foreign Trade Barriers

On August 24 2018, the Office of the United States Trade Representative published in the Federal Register (83 FR 42966) Request for Comments To Compile the National Trade Estimate Report on Foreign Trade Barriers.

Topics on Which the TPSC Seeks Information: To assist USTR in preparing the NTE Report, commenters should submit information related to one or more of the following categories of foreign trade barriers:

• Import policies (e.g., tariffs and other import charges, quantitative restrictions, import licensing, customs barriers, and other market access barriers).
• Trade restrictions implemented through unwarranted standards, conformity assessment procedures, or technical regulations (technical barriers to trade) that may have as their objective protecting national security requirements, preventing deceptive practices, or protecting human health or safety, animal or plant life or health, or the environment, but that can be formulated or implemented in ways that create significant barriers to trade (including unnecessary or discriminatory technical regulations or standards for telecommunications products).
• Trade restrictions implemented through unwarranted sanitary and phytosanitary (SPS) measures that the country claims to impose for purposes of protecting human, animal, and plant life or health (e.g., SPS measures not based on scientific evidence).
• Subsidies, including export subsidies (e.g., export financing on preferential terms, subsidies provided to equipment manufacturers contingent on export, and agricultural export subsidies that displace U.S. exports in third country markets) and local content subsidies (e.g., subsidies contingent on the purchase or use of domestic rather than imported goods).
• Government procurement restrictions (e.g., ``buy national policies'' and closed bidding).
• Lack of intellectual property protection and enforcement (e.g., inadequate patent, copyright, and trademark regimes).
• Barriers to trade in services (e.g., prohibitions or restrictions on foreign participation in the market, discriminatory licensing requirements or regulatory standards, local-presence requirements, and unreasonable restrictions on what services may be offered).
• Barriers to digital trade (e.g., barriers to cross-border data flows including data localization requirements, discriminatory practices affecting trade in digital products, restrictions on the provision of internet-enabled services, and other restrictive technology requirements).
• Investment barriers (e.g., limitations on foreign equity participation and on access to foreign government-funded research and development programs, local content requirements, technology transfer requirements and export performance requirements, and restrictions on repatriation of earnings, capital, fees, and royalties).
• Government-tolerated anticompetitive conduct of state-owned or private firms that restrict the sale or purchase of U.S. goods or services in the foreign country's markets.
• Other barriers (e.g., barriers that encompass more than one category, such as bribery and corruption, or that affect a single sector).

Commenters should submit information related to one or more of the following export markets to be covered in the report: Algeria, Angola, the Arab League, Argentina, Australia, Bahrain, Bangladesh, Bolivia, Brazil, Brunei, Burma, Cambodia, Canada, Chile, China, Colombia, Costa Rica, Cote d'Ivoire, Dominican Republic, Ecuador, Egypt, El Salvador, Ethiopia, the European Union, Ghana, Guatemala, Honduras, Hong Kong, India, Indonesia, Israel, Japan, Jordan, Kazakhstan, Kenya, Korea, Kuwait, Laos, Malaysia, Mexico, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Pakistan, Panama, Paraguay, Peru, the Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Sri Lanka, Switzerland, Taiwan, Thailand, Tunisia, Turkey, United Arab Emirates, Ukraine, and Vietnam.

Request for Comments and Notice of Public Hearing Concerning China's Compliance With WTO Commitments

On August 24, 2018, the Office of the United States Trade Representative published in the Federal Register (83 FR 42968) Request for Comments and Notice of Public Hearing Concerning China's Compliance With WTO Commitments.

Topics on Which the TPSC Seeks Information. The TPSC invites written comments and/or oral testimony of interested persons on China's compliance with commitments made in connection with its accession to the WTO, including, but not limited to, commitments in the following areas:

• Trading rights.
• Import regulation (e.g., tariffs, tariff-rate quotas, quotas, import licenses).
• Export regulation.
• Internal policies affecting trade (e.g., subsidies, standards and technical regulations, sanitary and phytosanitary measures, government procurement, trade-related investment measures, taxes and charges levied on imports and exports).
• Intellectual property rights (including intellectual property rights enforcement).
• Services.
• Rule of law issues (e.g., transparency, judicial review, uniform administration of laws and regulations) and status of legal reform.
• Other WTO commitments.

In addition, given the United States' view that China should be held accountable as a full participant in, and beneficiary of, the international trading system, USTR requests that interested persons specifically identify unresolved compliance issues that warrant review and evaluation by USTR's China Enforcement Task Force.

CPSC to Meet with BIFMA on Flammability Issues

On Wednesday, September 5, 2018, Andrew Lock, Consumer Product Safety Commission Directorate for Laboratory Sciences, and other CPSC staff will attend the Business and Institutional Furniture Manufacturers Association ("BIFMA") Flammability Subcommittee meeting in Grand Rapids, Michigan, to listen to the status of ongoing upholstered furniture flammability issues.

UNITED STATES–MEXICO TRADE FACT SHEET: Rebalancing NAFTA to Support Manufacturing

On August 27, 2018, the United States Trade Representative announced that the United States and Mexico have reached a preliminary agreement in principle, subject to finalization and implementation, that supports North American manufacturing and mutually beneficial trade. The new agreement will create more balanced, reciprocal trade that supports high-paying jobs for Americans and grows the United States and Mexican economies. The new rules for textile products are an improvement, will contribute to the regional textile industry, and parallel the rules of U.S. trade agreements negotiated after the original NAFTA, and, so, in that regard, represent a needed updating of the agreement. NOTE that for now the original NAFTA rules are still in effect and implementing the new rules many take considerable time.

GOODS MARKET ACCESS

New commitments have been included in the Market Access chapter to reflect developments in United States trade agreements that address non-tariff barriers related to trade in remanufactured goods, import licensing, and export licensing.

Key Achievement: Exceeding NAFTA 1.0 and TPP Standards to More Effectively Support Trade in Manufactured Goods

The new Market Access chapter will more effectively support trade in manufactured goods between the United States and Mexico by removing provisions that are no longer relevant, updating key references, and affirming commitments that have phased in from the original agreement.

Specifically, the Market Access chapter:

• Maintains duty-free treatment for originating goods.
• Maintains the prohibition on export duties, taxes, and other charges and the waiver of specific customs processing fees.
• Adds new provisions for transparency in import licensing and export licensing procedures.
• Prohibits Parties from applying: (a) requirements to use local distributors for importation; (b) restrictions on the importation of commercial goods that contain cryptography; (c) import restrictions on used goods to remanufactured goods; and (d) requirements for consular transactions and their associated fees and charges.
• Updates provisions for duty-free temporary admission of goods to cover shipping containers or other substantial holders used in the shipment of goods.

TEXTILES

The new provisions on textiles incentivize greater United States and Mexican production in textiles and apparel trade, strengthen customs enforcement, and facilitate broader consultation and cooperation among the Parties on issues related to textiles and apparel trade.

Key Achievement: Strengthening Supply Chains to Provide New Market Opportunities for the Textile and Apparel Sector

The provisions will:

• Promote greater use of Made-in-the-USA fibers, yarns, and fabrics by:
  
  • Limiting rules that allow for some use of non-NAFTA inputs in textile and apparel trade.
  • Requiring that sewing thread, pocketing fabric, narrow elastic bands, and coated fabric, when incorporated in apparel and other finished products, be made in the region for those finished products to qualify for trade benefits.
• Establish a Textiles chapter for United States–Mexico trade, including textile-specific verification and customs cooperation provisions that provide new tools for strengthening customs enforcement and preventing fraud and circumvention in this important sector.

The new Textiles chapter provisions are stronger than those in NAFTA 1.0 with respect to both enforcement and incentivizing North American production of textiles.

Another FTZ Denied When U.S. Textile Industry Offers to Supply the Articles

On August 22, 2018, the Foreign Trade Zone Board published in the Federal Register (83 FR 42461) Additional Production Authority Not Approved; The Coleman Company, Inc.; Subzone 119I (Textile-Based Personal Flotation Devices); Sauk Rapids, Minnesota

The Board adopts the findings and recommendations of the examiner's report, and finds that the requirements of the FTZ Act and the Board's regulations have not been satisfied.

EXAMINER'S REPORT EXECUTIVE SUMMARY

• Currently pending before the Foreign-Trade Zones (FTZ) Board (the Board) is an application requesting authority for The Coleman Company, Inc. (Coleman) to produce personal flotation devices (PFDs) at Coleman’s plant in Sauk Rapids, Minnesota. Under the Board’s regulations, the Board may only approve an application requesting production authority if the activity is not inconsistent with the "threshold" (trade policy) evaluation factors and if approval would result in a net positive economic effect and a significant public benefit(s) – with the burden of proof on the applicant.
• The primary FTZ benefit that Coleman seeks through the pending application pertains to imported textile fabrics used to produce PFDs for the U.S. market. For such production, Coleman seeks to pay the finished PFD duty rate (4.5% to 7.0%) on the value of the imported fabrics (otherwise dutiable at up to 17.2%). Coleman’s application is supported by certain U.S. suppliers, the Outdoor Industry Association and certain elected officials, and is opposed by certain U.S. textile producers and textile industry associations and certain elected officials. Coleman and supporters of the application express that approval would improve the competitiveness of its Minnesota plant relative to offshore alternatives. The parties opposing the application express that approval would result in negative effects on U.S. textile producers that are capable of producing the types of fabrics for which Coleman seeks FTZ benefits on imports.
• The case record indicates that Coleman's requested FTZ authority would reduce the cost to produce PFDs at its Sauk Rapids plant, but that production of PFDs at the plant fundamentally depends on other factors unrelated to FTZ authority. As such, there does not appear to be a significant potential positive impact on activity or related employment at the plant attributable to FTZ authority (and therefore no significant resulting secondary effects on domestic suppliers attributable to FTZ authority). Further, the record contains evidence of a potential negative impact from FTZ authority on U.S. textile producers (which would extend to potential negative secondary effects on those textile producers' suppliers). Overall, analysis of the case record does not indicate that Coleman has met the burden of proof to demonstrate that approval would result in a net positive economic effect (i.e., that potential positive effects attributable to FTZ approval would outweigh potential negative effects). Without the regulatory standards for approval being met, the examiner is unable to recommend approval.
• Recent presidential actions stress the importance of supporting the U.S. manufacturing base – which would include domestic producers of the types of textile materials which Coleman seeks to import under its requested FTZ authority. For example, Presidential Proclamation (PP) 9627 (July 17, 2017) states, in part, that '[m]y Administration recognizes the critical connection between a strong manufacturing base and a thriving economy,' and Executive Order (EO) 13806 (July 21, 2017) states, in part, that "the ability of the United States to maintain readiness, and to surge in response to an emergency, directly relates to the capacity, capabilities, and resiliency of our manufacturing and defense industrial base and supply chains." The recommendation not to approve the Coleman application is consistent with these policies.

The Board adopts the findings and recommendations of the examiner's report, and finds that the requirements of the FTZ Act and the Board's regulations have not been satisfied.

EXAMINER'S REPORT EXECUTIVE SUMMARY

• Currently pending before the Foreign-Trade Zones (FTZ) Board (the Board) is an application requesting authority for The Coleman Company, Inc. (Coleman) to produce personal flotation devices (PFDs) at Coleman’s plant in Sauk Rapids, Minnesota. Under the Board’s regulations, the Board may only approve an application requesting production authority if the activity is not inconsistent with the "threshold" (trade policy) evaluation factors and if approval would result in a net positive economic effect and a significant public benefit(s) – with the burden of proof on the applicant.

• The primary FTZ benefit that Coleman seeks through the pending application pertains to imported textile fabrics used to produce PFDs for the U.S. market. For such production, Coleman seeks to pay the finished PFD duty rate (4.5% to 7.0%) on the value of the imported fabrics (otherwise dutiable at up to 17.2%). Coleman’s application is supported by certain U.S. suppliers, the Outdoor Industry Association and certain elected officials, and is opposed by certain U.S. textile producers and textile industry associations and certain elected officials. Coleman and supporters of the application express that approval would improve the competitiveness of its Minnesota plant relative to offshore alternatives. The parties opposing the application express that approval would result in negative effects on U.S. textile producers that are capable of producing the types of fabrics for which Coleman seeks FTZ benefits on imports.

• The case record indicates that Coleman's requested FTZ authority would reduce the cost to produce PFDs at its Sauk Rapids plant, but that production of PFDs at the plant fundamentally depends on other factors unrelated to FTZ authority. As such, there does not appear to be a significant potential positive impact on activity or related employment at the plant attributable to FTZ authority (and therefore no significant resulting secondary effects on domestic suppliers attributable to FTZ authority). Further, the record contains evidence of a potential negative impact from FTZ authority on U.S. textile producers (which would extend to potential negative secondary effects on those textile producers' suppliers). Overall, analysis of the case record does not indicate that Coleman has met the burden of proof to demonstrate that approval would result in a net positive economic effect (i.e., that potential positive effects attributable to FTZ approval would outweigh potential negative effects). Without the regulatory standards for approval being met, the examiner is unable to recommend approval.

• Recent presidential actions stress the importance of supporting the U.S. manufacturing base – which would include domestic producers of the types of textile materials which Coleman seeks to import under its requested FTZ authority. For example, Presidential Proclamation (PP) 9627 (July 17, 2017) states, in part, that '[m]y Administration recognizes the critical connection between a strong manufacturing base and a thriving economy,' and Executive Order (EO) 13806 (July 21, 2017) states, in part, that "the ability of the United States to maintain readiness, and to surge in response to an emergency, directly relates to the capacity, capabilities, and resiliency of our manufacturing and defense industrial base and supply chains." The recommendation not to approve the Coleman application is consistent with these policies.

SELECTED POINTS FROM THE EXAMINERE'S REPORT

• The record of this proceeding indicates the potential for approval of expanded FTZ production authority to play a positive, contributory role for Coleman’s Sauk Rapids plant. However, the record does not demonstrate that such a potential positive effect on Coleman’s activity/employment attributable to FTZ authority – as opposed to resulting from other factors cited above – would outweigh potential negative effects for U.S. fabric suppliers or other U.S. PFD producers. Taking into account the final recommendation of OTEXA – as well as all other information, evidence and argument on the record of this proceeding – the examiner’s finding is that the applicant has not met its burden of proof to demonstrate that approval would result in a net positive economic effect and significant public benefit(s).

• [T]he types of textile materials that Coleman seeks to import under its requested FTZ authority are also produced by one or more remaining domestic manufacturers. Such U.S. manufacturers have been the focus of a range of recent presidential actions explaining the Administration’s trade policy. One example is PP 9627, which states in part:

  My Administration recognizes the critical connection between a strong manufacturing base and a thriving economy. I am committed to promoting American manufacturing, opening markets around the world for our producers, and protecting our businesses from unfair trade practices.

• Another example is EO Order 13806, which states in part:

  A healthy manufacturing and defense industrial base and resilient supply chains are essential to the economic strength and national security of the United States. The ability of the United States to maintain readiness, and to surge in response to an emergency, directly relates to the capacity, capabilities, and resiliency of our manufacturing and defense industrial base and supply chains. Modern supply chains, however, are often long and the ability of the United States to manufacture or obtain goods critical to national security could be hampered by an inability to obtain various essential components, which themselves may not be directly related to national security. Thus, the United States must maintain a manufacturing and defense industrial base and supply chains capable of manufacturing or supplying those items.

• The recommendation not to approve the Coleman application is consistent with the policy set out in PP 9627 and EO 13806, and with other recent presidential actions intended to support the U.S. manufacturing base.

Air Force Trouser Contract Awarded

Bremen Bowdon Investment Co., Bowdon, Georgia, has been awarded a maximum $7,810,621 modification (P00003) exercising the first one-year option period of a one-year base contract (SPM1C1-17-D-1085) with four one-year option periods for men’s trousers. The modification brings the total cumulative face value of the contract to $15,467,393. This is a firm-fixed-price, indefinite-delivery/indefinite-quantity contract. Location of performance is Georgia, with an Aug. 22, 2019, performance completion date. Using military service is Air Force. Type of appropriation is fiscal 2018 through 2019 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania.

Public Hearings on Proposed Section 301 Tariff List

Agathon Associates Boston office will be closed Thursday, August 26, through Monday, August 27, while David Trumbull assists clients who are testifying at the hearings on proposed Section 301 tariffs.

The Office of the U.S. Trade Representative (USTR) will hold public hearings from August 20 to August 24, 2018, and the following week, on August 27, 2018, regarding proposed tariffs on approximately $200 billion worth of Chinese products.

The hearings will take place at the U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.

The proposed tariffs are a supplemental action in response to China’s unfair trade practices related to technology transfer, intellectual property, and innovation, based on the findings in USTR’s investigation of China under Section 301 of the Trade Act of 1974. Tariffs on $34 billion in goods from China are currently in effect, and tariffs on an additional $16 billion will take effect on August 23, 2018.

The Federal Register notice publishing the proposed tariff list and soliciting public comment can be viewed here.

The public hearings will be held at the following times:

• Monday, August 20, 2018 from 9:30 AM – 6:00 PM EDT
• Tuesday, August 21, 2018 from 9:30 AM – 6:00 PM EDT
• Wednesday, August 22, 2018 from 9:30 AM – 6:00 PM EDT
• Thursday, August 23, 2018 from 9:30 AM – 6:00 PM EDT
• Friday, August 24, 2018 from 9:30 AM – 6:00 PM EDT
• Monday, August 27, 2018 from 9:30 AM – 4:00 PM EDT

Click here to view a schedule of witnesses.

NOTE: Media and attendees should note that the hearing is on the record but off-camera; no cameras or video or audio recording will be allowed in the hearing room. A full transcript of the hearing will be posted on USTR.gov and the public docket

2018 Special 301 Out-of-Cycle Review of Notorious Markets: Comment Request

The Office of the United States Trade Representative (USTR) requests written comments that identify online and physical markets based outside the United States that should be included in the 2018 Notorious Markets List (List). Conducted under the auspices of the Special 301 program, the List identifies online and physical marketplaces that reportedly engage in and facilitate substantial copyright piracy and trademark counterfeiting. In 2010, USTR began publishing the Notorious Markets List separately from the annual Special 301 Report as an ``Out-of-Cycle Review.''

DATES: October 1, 2018 at midnight EST: Deadline for submission of written comments. October 15, 2018 at midnight EST: Deadline for submission of rebuttal comments and other information USTR should consider during the review.

USTR invites written comments concerning examples of online and physical notorious markets, including foreign trade zones that allegedly facilitate substantial trademark counterfeiting and copyright piracy. To facilitate the review, written comments should be as detailed as possible. Comments must clearly identify the market and the reasons why the commenter believes that the market should be included in the List. Commenters should include the following information, as applicable:

• If a physical market, the market's name and location, e.g., common name, street address, neighborhood, shopping district, city, etc., and the identity of the principal owners/operators.
• If an online market:
  • The domain name(s) past and present, available registration information, and name(s) and location(s) of the hosting provider(s) and operator(s).
  • Information on the volume of internet traffic associated with the website, including number of visitors and page views, average time spent on the site, estimate of the number of infringing goods offered, sold, or traded and number of infringing files streamed, shared, seeded, leeched, downloaded, uploaded, or otherwise distributed or reproduced, and global or country popularity rating (e.g., Alexa rank).
  • Revenue sources such as sales, subscriptions, donations, upload incentives, or advertising and the methods by which that revenue is collected.
• Whether the market is owned, operated, or otherwise affiliated with a government entity.
• Types of counterfeit or pirated products or services sold, traded, distributed, or otherwise made available at that market.
• Volume of counterfeit or pirated goods or services or other indicia of a market's scale, reach, or relative significance in a given geographic area or with respect to a category of goods or services.
• Estimates of economic harm to right holders resulting from the piracy or counterfeiting and a description of the methodology used to calculate the harm.
• Whether the volume of counterfeit or pirated goods or estimates of harm has increased or decreased from previous years, and an approximate calculation of that increase or decrease for each year.
• Whether the infringing goods or services sold, traded, distributed, or made available pose a risk to public health or safety.
• Any known contractual, civil, administrative, or criminal enforcement activity against the market and the outcome of that enforcement activity.
• Additional actions taken by right holders against the market such as takedown notices, requests to sites to remove URLs or infringing content, cease and desist letters, warning letters to landlords and requests to enforce the terms of their leases, requests to providers to enforce their terms of service or terms of use, and the outcome of these actions.
• Additional actions taken by the market owners or operators to remove, limit, or discourage the availability of counterfeit or pirated goods or services, including policies to prevent or remove access to such goods or services, or to disable seller or user accounts, the effectiveness of market policies and guidelines in addressing counterfeiting and piracy, and the level of cooperation with right holders and law enforcement.
• Any other additional information relevant to the review.

CPSC Commissioner Baiocco and Staff Meeting with Representatives from American Apparel and Footwear Association

On August 22, 2018, Consumer Product Safety Commissioner Dana Baiocco, Chris Hudgins, Director, CPSC Office of Legislative Affairs, and Dottie Yahr, CPSC Policy Advisor, are schedule to meet with representatives from American Apparel and Footwear Association: Rick Helfenbein, CEO and Kristen Kern, Government Relations Representative, for introductory meeting with representatives from the American Apparel and Footwear Association and to discuss their issues related to CPSC. The meeting was requested by Kristen Kern.

Today is the Last Day to Request to Speak at Hearing on Latest China Tariffs

The U.S. recently announced proposed additional import tariffs on thousands of classifications of goods of Chinese origin. The list appears to include all, are nearly all of the classifications for fiber, yarn, fabric, and carpet (Harmonized Tariff Schedule Chapters 50 through 60).

The Office of the U.S. Trade Representative is accepting public comments on the proposal and request to speak on hearings to be held the week of August 20th. the deadline to request to speak at the heading is TODAY.

Department of Defense Sandbag Contract Awarded

Huntsville Rehabilitation Foundation doing business as Phoenix* Huntsville, Alabama, has been awarded a maximum $32,500,000 firm-fixed price contract for polypropylene and cotton duck sandbags. This is a two-year base contract with three one-year option periods. Maximum dollar amount is for the life of the contract, including options. Location of performance is Alabama with an Aug. 9, 2023, performance completion date. Using military services are Army, Navy, Air Force, and Marine Corps. Type of appropriation is fiscal 2018 through 2023 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE8E6-18-D-0006).

Military Clothing Contracts Awarded

M&M Manufacturing LLC, Lajas, Puerto Rico, has been awarded a maximum $37,733,400 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for female coats and trousers for the Army Combat Uniform. This was a competitive acquisition with nine responses received. This is a one-year base contract with four one-year option periods. Maximum dollar amount is for the life of the contract, including options. Location of performance is Puerto Rico, with a Feb. 8, 2024, estimated performance completion date. Using military service is Army. Type of appropriation is fiscal 2018 through 2023 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE1C1-18-D-1077).

Crown Clothing Inc., Vineland, New Jersey, has been awarded a maximum $12,268,595 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for men’s Marine Corps dress blues coats. This was a competitive acquisition with two responses received. This is a one-year base contract with four one-year option periods. Location of performance is New Jersey, with an Aug. 9, 2019, performance completion date. Using customers are Marine Corps and Defense Logistics Agency. Type of appropriation is fiscal 2018 through 2019 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE1C1-18-D-1079).

Cashmere and Camel Hair Institute Announces New Staff to Support Global Mission

The Cashmere and Camel Hair Manufacturers Institute (CCMI), the organization for the world's leading processors of luxury animal hair fiber, announces Fabio Garzena as President, the second person to hold this position in the 34 year history of the organization. Mr. Garzena first joined the Institute in 2015 as European Representative. Before that he was with Australian Wool Innovation and the Woolmark Company. Mr. Garzena will operate from Graglia, Italy.

Karl Spilhaus, who organized the Boston based Institute in 1984 and served as President until now, will continue to counsel the Institute as President Emeritus, drawing on his four decades' plus experience in the global textile industry. Concurrent with these changes, the Institute announces that David Trumbull has been named USA Representative and will manage the Institute's US affairs from an office in Boston, Massachusetts. Kenneth Shimizu, Japan Representative, will continue to manage the Institutes' activities in Asia from an office in Tokyo. About CCMI. The Cashmere and Camel Hair Manufacturers Institute was founded to protect the consumers, serious manufacturers and retailers from fraud on cashmere and superfine wool. CCMI also protects the good name of cashmere and other luxury animal fiber products through the encouragement of sustainable grazing practices and responsible business practices generally.

Update on China's Additional Tariffs on U.S. Goods

On June 17, 2018, China announced it would impose a tariff rate of 25% on the U.S. imports of farm and fishery products and automobiles. The list of 545 tariff lines included one textile-related commodity, cotton, not carded or combed (5201.00.00).

On July 6, China filed a case against the US’ tariffs measures under Section 301 investigation at the WTO.

On July 16, China made an additional charge to the WTO against the US for its section 301 investigation and its suggestions to levy tax on China’s products valued 200 billion exported to the US.

On August 3, 2018, China announced it would impose additional tariffs on U.S. goods. There are four lists, one for 25%, one for 20%, one of 10%, and one for 5%.

• The 25% list includes 531 textile and apparel classifications,
• An additional 104 textile and apparel classifications are on the 20% list,
• The 10% list includes 89 textile and apparel classifications, and
• Only the 5% list has no textiles or apparel.

The final measure and effective time will be announced separately.

Sorting out the Various China Tariff Lists

Today the Office of the United States Trade Representative announced that USTR had finalized the second tranche of tariffs on Chinese products in response to China’s unfair trade practices.

With some much tariff activity directed toward China, perhaps a walk through of what has been done and where we stand will be of help.

There have been three tranches, or lists, of proposed additional tariffs on China.

TRANCHE ONE

On April 6, 2018, USTR posted in the Federal Register (83 FR 14906) a proposal to place an additional 25% import duty on products covered by 1,333 tariff classifications.

Interested persons filed approximately 3,200 written submissions. In addition, USTR and the Section 301 Committee convened a three-day public hearing from May 15-17, 2018, during which 121 witnesses provided testimony and responded to questions. 515 items were removed from the list

On June 20, 2018, USTR posted in the Federal Register (83 FR 28710) a list of products covering 818 separate U.S. tariff lines.

On July 6, 2018, additional tariffs of 25% began to be applied to those 818 lines.

On July 11, 2018, USTR posted in the Federal Register (83 FR 32181) procedures to apply for exclusions from the 25% tariff on items covered by Tranche 1. The deadline to apply for an exclusion is October 9, 2018. If an exclusion is granted it will be retroactive to July 6th.

TRANCHE TWO

On June 20, 2018, USTR posted in the Federal Register (83 FR 28710) a proposal to place an additional 25% import duty on products covered by 284 tariff classifications.

On August 8, 2018 USTR announced a list containing 279 of the original 284 tariff lines that were on a proposed list that will be subject to 25% additional tariffs. These have not yet gone into effect.

TRANCHE THREE

On July 17 USTR posted a third list, this one with over 6,000 items. Comments are due September 6.

Scheduled Expiration of the Dominican Republic Earned Import Allowance Program

The Dominican Republic Earned Import Allowance Program (DR 2-for-1) was established as an amendment to the CAFTA-DR, under the Andean Trade Preference Extension Act of 2008 and became effective on December 1, 2008, for a 10-year period. The 10-year period is set to expire on December 1, 2018.

Entries of qualifying apparel under the DR 2-for-1 program may only qualify for duty-free treatment under the CAFTA-DR prior to the date of expiration. Entries on or after December 1, 2018, may no longer use allowances to qualify for duty free treatment under the DR 2-for-1 program.

5 charged in multimillion dollar counterfeiting scheme following ICE HSI investigation

Five Queens, New York, residents were August 7, 2018, pursuant to an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in New York’s Border Enforcement Task Force (BEST). This investigation, worked by HSI special agents and taskforce members from the New York City Police Department (NYPD) and U.S. Customs and Border Protection (CBP) resulted in the arrest of five individuals conspiring to traffic in more than $70 million worth of counterfeit Nike Air Jordans. Miyuki Suen, Jian Min Huang, Songhua Qu, Kin Lui Chen, and Fangrang Qu are charged with importing hundreds-of-thousands of athletic shoes from China into the United States. Once those shoes arrived, the defendants and other co-conspirators affixed counterfeit Nike-trademarked logos to those shoes in New York, and sold the now-counterfeit Air Jordans in the United States.

“These five individuals are alleged to have been a part of a large scale counterfeiting scheme, importing nearly a half million pairs of knock-off Nike sneakers,” said Angel M. Melendez, special agent in charge for HSI New York. “These counterfeiting networks can be both detrimental to our economy and threaten our national security, and HSI will continue to take every measure in investigating and dismantling these organizations.”

“The five defendants in this case allegedly counterfeited over $70 million in fake Nike shoes and sold them to buyers on the U.S. market. I commend our law enforcement partners for helping to bring today’s charges, which send a clear message to would-be counterfeiters: ‘Just don’t do it,’” said Geoffrey S. Berman, the United States Attorney for the Southern District of New York,

As alleged in the complaint, from at least in or about January 2016 up to and including in or about July 2018, Suen, Huang, Songhua Qu, Kin Lui Chen, and Fangrang Qu, imported at least 42 shipping containers holding an estimated more than 380,000 pairs of sneakers from China. These sneakers were manufactured to resemble Nike Air Jordans. Once these shoes arrived, Suen, Huang, Songhua Qu, Chen, and Fangrang Qu, added trademarked logos to the shoes, rendering them counterfeit. Suen, Huang, Songhua Qu, Kin Lui Chen, and Fangrang Qu then stored the counterfeit Nike Air Jordans in multiple storage units and warehouses in New York City and elsewhere.

On August 7, 2018, pursuant to court-authorized search warrants, federal law enforcement agents conducted searches of a warehouse, storage units, and a residence related to this scheme, and found thousands of counterfeit shoes, counterfeit trademarks, and machinery to finish counterfeit shoes. The estimated loss attributable to the defendants’ efforts amounts to more than $70 million.

Suen, 43, Huang, 42, and Chen, 53, of New York, New York and Songhua Qu, 54, and Fangrang Qu, 31, of Hicksville, New York, are each charged with one count of conspiring to traffic in counterfeit goods, and one count of trafficking in counterfeit goods. Each defendant faces a maximum potential sentence of 20 years in prison.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. This case is being handled by the SDNY’s General Crimes Unit. The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Textiles on Agenda as The United States and Colombia Meet to Review Implementation of the United States - Colombia Trade Promotion Agreement

On Thursday, August 2, 2018, officials from the United States and Colombia held the second meeting of the United States – Colombia Free Trade Commission. The Commission is responsible for overseeing implementation and further elaboration of the United States – Colombia Trade Promotion Agreement.

At this second FTC meeting, the officials reviewed the trade and economic impact of the Agreement on both countries since the previous Commission meeting held in November 2012, in Washington, D.C. Both sides noted that the bilateral trade relationship has continued to strengthen during the six years the Agreement has been in force, that both sides have worked together constructively to resolve issues when they arise, and that implementation is proceeding well and smoothly.

A discussion of bilateral issues of concern included Intellectual Property, digital trade and telecommunications, services, agriculture-related issues, textile and apparel concerns, truck scrappage, and how better use can be made of the CTPA by certain sectors.

In the case of textiles and apparel, the Agreement, has, in eyes of many, not delivered its full potential. Attempts have been made to address this, and in December, 2015, Agathon Associates' David Trumbull was a panelist at the ProColombia U.S.-Colombia Trade Promotion Agreement Sourcing Seminar in Bogata, Colombia.

The two governments reviewed the important ongoing engagement on labor issues, an area in which the Colombian government has made progress addressing the issues identified in the 2017 Public Report of Review of U.S. Submission 2016-02 (Colombia). Officials noted that work remains and that both sides will continue to work together on the pending issues identified in the 2017 Report.

MTB Update

On July 26, 2018, the US Senate unanimously passed the Miscellaneous Tariff Bill Act of 2018 (MTB; H.R. 4318) with amendments. The MTB provides duty suspensions and reductions that will remain in place until December 31, 2020. The MTB must now go back to the US House of Representatives, which had passed a similar, but not identical, version of the MTB on Jan. 16, 2018 by a vote of 402-0. The Senate removed Sec. 324 (propargyl butylcarbamate), Sec. 372 (the pesticide esfenvalerate), Sec. 1389 (rotary cutting hand tools), Sec. 1564 (electric commercial vehicles), Sec. 1118 (collapsible insulated bags) and Sec. 1399 (full-tang knives) from the MTB. The Senate amendment also made changes to Sections 1274, 1275, and 1305, all relating to certain boots.

No product added to the House MTB at the request of Agathon Associates' clients are among those removed or modified in the Senate bill.

If passed by the House and signed by the President, it will take effect in 30 days.

Extension of Public Comment Period Concerning Proposed Modification of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation

In a notice published on July 17, 2018 (83 FR 33608), the U.S. Trade Representative (Trade Representative) proposed a modification of the action taken in this investigation in the form of an additional 10 percent ad valorem duty on products of China with an annual trade value of approximately $200 billion. The July 17th notice sought public comment and provided notice of a public hearing regarding this proposed modification of the action in the investigation. On August 1, 2018, the Trade Representative announced that the President had directed the Trade Representative to consider raising the level of the additional duty in the proposed supplemental action from 10 percent to 25 percent. In light of this possible increase in the rate of additional duty, the Trade Representative is extending certain comment periods set out in the July 17th notice.

August 13, 2018: The due date for filing requests to appear and a summary of expected testimony at the public hearing and for filing pre-hearing submissions is extended from July 27 to August 13, 2018.

September 6, 2018: The due date for submission of written comments is extended from August 17 to September 6, 2018.

August 20-23, 2018: The scheduled start date of the Section 301 hearing (August 20) has not changed. The Section 301 Committee may extend the length of the hearing depending on the number of additional interested persons who request to appear. The Section 301 Committee will convene the public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW Washington DC 20436 beginning at 9:30 am on August 20, 2018.

September 6, 2018: The due date for submission of post-hearing rebuttal comments is extended from August 30 to September 6, 2018.

USITC Reports on DR 2-for-1 Program

On October 16, 2008, H.R. 7222, the Andean Trade Preference Extension Act of 2008, Became Public Law No: 110-436. Sec. 2 of the Act created the Dominican Republic-Central America-United States Free Trade Agreement ("CAFTA-DR") Earned Import Program–a 2-for-1 matching program for trousers assembled in the Dominican Republic. Under this program the D.R. may ship, duty-free, one square meter equivalent of trousers of third-country fabric for every two sme of trousers of U.S.-made fabric.

On August 3, 2018, the U.S. International Trade Commission ("USITC") published Investigation No. 332-503 USITC Publication 4809 Earned Import Allowance Program: Evaluation of the Effectiveness of the Program for Certain Apparel from the Dominican Republic.

The EIAP allows apparel manufacturers in the Dominican Republic who use U.S. fabric to produce certain apparel to earn a credit that can be used to ship eligible apparel made with non-U.S.-produced fabric into the United States duty free. The Dominican Republic-Central America-United States Free Trade Agreement Implementation Act, as amended, requires the USITC, an independent, nonpartisan, factfinding federal agency, to evaluate annually the effectiveness of the EIAP program and make recommendations for improvements.

The USITC's ninth annual review was submitted to the U.S. House of Representatives Committee on Ways and Means and the U.S. Senate Committee on Finance on August 3, 2018.  Highlights of the report follow.

• Of the 13 registered firms, only 4 firms are currently using the program – one less than was reported in the last three annual reviews.

• In 2017, U.S. imports of woven cotton bottoms from the Dominican Republic fell 57 percent by value (from $3.5 million in 2016 to $1.5 million) and 80 percent by quantity (from 745,000 SMEs in 2016 to 154,000 SMEs). U.S. government sources and a former user of the program in the Dominican Republic attributed the decline in U.S. imports under the EIAP to increased imports from Haiti and increased competition from other Western Hemisphere suppliers. Haiti offers lower labor costs and trade preferences under the HOPE/HELP programs, which provide more sourcing flexibility and coverage for a wider range of products than the EIAP, as well as a tariff preference level (TPL) for woven apparel from Haiti that allows the use of third-country fabric up to a specified level.  Also, the decline in U.S. imports under the EIAP likely reflects a significant decline in woven trouser manufacturing capacity in the Dominican Republic, along with a simultaneous shift by U.S. importers to Asian suppliers during the life of the program. Finally, uncertainty surrounding the program's renewal after its expiration on December 1, 2018, may also explain why U.S. imports of woven cotton bottoms under the program reached their lowest level in 2017.

• The recommendations offered during the ninth annual review of the EIAP were virtually the same as those received by the Commission during the previous eighth annual reviews:  1) lowering the 2-for-1 ratio of U.S. to foreign fabric to a 1-for-1 ratio; 2) expanding the program coverage to enable other types of fabrics and apparel items to be included in the EIAP; and 3) changing the requirement that dyeing and finishing of eligible fabrics occur in the United States. 

Customs Modernized Drawback

On August 2, 2018, U.S. Customs and Border Protection published in the Federal Register (83 FR 37886) Modernized Drawback

SUMMARY: This document proposes to amend U.S. Customs and Border Protection (CBP) regulations to implement changes to the drawback regulations as directed by the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). These proposed regulations establish a new process for drawback pursuant to TFTEA which liberalizes the merchandise substitution standard, simplifies recordkeeping requirements, extends and standardizes timelines for filing drawback claims, and requires the electronic filing of drawback claims. TFTEA allows a transition period wherein drawback claimants will have the choice between filing claims under the existing process detailed in the current regulations or filing claims under the proposed new process. This document explains how filings during the transition period will work, discusses the interim policy guidance procedures for filing claims prior to these regulations becoming final, and proposes to make TFTEA-related changes, dealing with bonds, regarding joint and several liability for the importer of the goods and the drawback claimant, and technical corrections and conforming changes to CBP regulations. This document also proposes to clarify the prohibition on the filing of a substitution drawback claim for internal revenue excise tax paid on imported merchandise in situations where no excise tax was paid upon the substituted merchandise; or the substituted merchandise is the subject of a different claim for refund or drawback of tax under any provision of the Internal Revenue Code. CBP is proposing these amendments regarding excise taxes to protect the revenue by clarifying the relationship between drawback claims and Federal excise tax liability. Further, CBP proposes to add a basic importation and entry bond condition to foster compliance.

US Zipper Company Supplying to Military Not in Compliance with Berry Amendment, Loses Contract.

Thanks for Steve Warner at the BeaverLake6 Report for alerting us that Dunlap Industries, a 100-employee manufacturer of zippers located in Dunlap, Tenn., USA, has lost its US military contract because another zipper manufacturer successfully filed a complaint that Dunlap was not making all of its zipper parts used in uniforms in the US as required by the Berry Amendment. Read the original article HERE.

Rwanda's AGOA Apparel Benefit Suspended Due to Used Clothing Ban

The President, on July 30, 2018, issued a proclamation suspending the application of duty-free treatment for all AGOA-eligible goods in the apparel sector from Rwanda.

An AGOA issue relating to new barriers to United States trade and investment first arose in 2015 when the East African Community (EAC) established a plan to ban imports of used clothing and footwear. The USTR’s engagement on this issue intensified in 2016 when the EAC announced it would phase in the ban by 2019. Thereafter, three EAC AGOA beneficiaries—Kenya, Tanzania, and Uganda—worked with the United States and took actions to revise their policies. As a result, they continue to receive full benefits under AGOA. Unfortunately, Rwanda has insisted on keeping in place a policy that has raised tariffs on imports of used apparel and footwear by more than one thousand percent, effectively banning imports of these products.