Few days ago Russia became 77th member of World Trade Organization (WTO) to ratify Trade Facilitation Agreement (TFA). The United States also ratified TFA. The U.S. ratification was easy because many of TFA’s terms are already applied in practice (e.g. use of customs brokers, ruling procedure, administrative review, regulatory publications, ACE’s single window, etc.). The major TFA’s benefit for the U.S. would be prosecutorial and investigative power that may increase revelations such as the one that took place with Lumber Liquidators. TFA’s Article 8 titled “Border Agency Cooperation” would allow Customs and Border Protection (CBP) develop “joint controls.” TFA’s Article 12 titled “Customs Cooperation” ¶ 2.1 states: Upon request and subject to the provisions of this Article, Members shall exchange the information set out in subparagraphs 6.1(b) and/or (c) for the purpose of verifying an import or export declaration in identified cases where there are reasonable grounds to doubt the truth or accuracy of the declaration. TFA’s Article 6 titled “Provision of Information” requires members to promptly: 6.1(b) provide the specific information as set out in the import or export declaration, or the declaration, to the extent it is available, along with a description of the level of protection and…
Last week entities associated with “Cotton Campaign” filed a petition alleging that entities such as Ikea sell products from Turkmenistan that are made through use of forced labor. The complaint is based on CBP regulation under 19 C.F.R. § 12.42, stating in relevant part: (b) Any person outside the Customs Service who has reason to believe that merchandise produced * * * is likely to be, imported into the United States and, if the production is with the use of forced labor * * * that merchandise of the same class is being produced in the United States in such quantities as to meet the consumptive demands of the United States may communicate his belief to any port director or the Commissioner of Customs. Every such communication shall contain, or be accompanied by, (1) a full statement of the reasons for the belief, (2) a detailed description or sample of the merchandise, and (3) all pertinent facts obtainable as to the production of the merchandise abroad. If the foreign merchandise is believed to be mined, produced, or manufactured with the use of forced labor or indentured labor under penal sanctions, such communication shall also contain (4) detailed information as to the…
Read More 19 C.F.R. 12.42 Hammer: Battle of Ideas, Exploitation, Elimination of Competition
On April 23, 2014 CBP’s Virginia McPherson advised international trade community that products from Crimea, marked as “Product of Russia,” “Made in Russia,” “Contents Made in Russia” can be subject to additional 10% marking duties due to violation of 19 U.S.C. § 1304. See CSMS #14-000236 (stating “[g]rowth, production, or manufacture of a good in Crimea is growth, production, or manufacture of a good in Ukraine.”). With CSMS #14-000236 CBP joined OFAC’s critique circle that expresses the discontent of our (U.S.) executive branch views over political situation in Crimea. My colleagues done a good analysis on OFAC’s expression of unhappiness with Russia. See e.g. Steptoe’s publication here, or Mr. Burns article here. Here, CBP’s Virginia McPherson statements invite review of the administrative precedent and analysis, as Ms. McPherson’s address offers only conclusive words with very little reasoning. In T.D. 97-16, CBP (then called Customs Service) offered a better reasoning of country of origin marking for products that were made in places of political uncertainties. Case study concerned West Bank and Gaza. Following were the major principles that CBP used for guidance in T.D. 97-16 and 95-25: CBP gives a great deal of deference to the State Department, which “requests” CBP…
Some multinational importers used the convention to justify classification of goods at the subheading level by adopting “global” tariff. In 1989, as part of an international effort to adopt a common nomenclature across nations, see Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1378 n.1 (Fed. Cir. 1999), the United States agreed to adopt the headings and subheadings (up to the six digit level) established under the international Harmonized Schedule, but reserved the right to create further subdivisions beyond the six digit level. See International Convention on the Harmonized Commodity Description and Coding System Article 3(3). Witex, U.S.A., Inc. v. United States, 28 C.I.T. 1907, 1918 (Ct. Int’l Trade 2004), reversed on other grounds in Witex, U.S.A., Inc. v. United States, 333 Fed. Appx. 569 (Fed. Cir. 2009). Article 3, International Convention on the Harmonized System, to which the United States is a signatory, obliges parties to “use all the headings and subheadings of the Harmonized System without addition or modification, together with their related numerical codes.” While “global” tariff may comport to the spirit of the convention, there still remains a possibility of disagreement about the correct heading application and interpretation between the Untied States and other signatories.
United Nations Code for Trade and Transport Locations (UN/LOCODE)
A quick comment on the article that appeared in the Caribbean 360 post. The on-line gambling trade dispute, which the United States lost in the WTO forum, is one of the few cases of continued lack of compliance by the United States (other major one is the zeroing practice in the antidumping duty calculation by the Department of Commerce). What makes the case interesting, and it is not mentioned in the article, is that this case is the testing ground for WTO permission in granting sanctions that would legalize intellectual property rights (IPR) violation (in a form of reciprocal sanctions). Imposing trade barriers, in the case of Antigua, will not more harm to Antigua than the United States. Therefore, the traditional remedy or reciprocal sanctions normally granted by WTO (e.g. raising the tariff for selected goods), will not work in the case of Antigua. The Antigua knows that, and petitions hard for WTO approval of IPR violations. Of course, the United States has traditionally been very proactive in the IPR enforcement, and legalization of IPR violations would set a troubling precedent for the current world’s hegemon. How this show plays out remains to be seen. For the official dispute settlement…
Much of international trade literature is devoted to decisions of World Trade Organization pertaining to trade disputes. Indeed, WTO serves as an important forum for resolutions on issues ranging from intellectual property rights to antidumping duties. However, once WTO publishes its decision, the next step is for the country to implement it. In the United States, the role of compliance with WTO decisions has been devoted to administrative apparatus (i.e. executive branch), which includes Department of Justice. However, the system of checks and balances, a backbone of the U.S. political system, has no place in the international trade arena. The U.S. trade lawyers made attempts to introduce checks on executive branch concerning international trade matters through resurrection of Charming Betsy doctrine and other means, but with limited success. Recent attempts and struggle for a more predominant role of the judiciary branch in fulfilling its function as a “check” on the executive is accessed in my recent paper “Enforcement of World Trade Decisions Through Private Cause of Action in the U.S. Courts,” which concludes that for time being, the WTO decision implementation is the exclusive domain of the executive branch.
The WTO has launched a new database on regional trade agreements. Its’ utility is questionable and subject to time test. However, one may find it useful in preliminary planning. It is interesting to see this coming from WTO, as it has been an institution that traditionally opposes regional agreements. Institution’s philosophy has been a global trade barrier reduction on multi-lateral basis (as opposed to bi-lateral).
The World Trade Organization has posted its World Trade Report 2008: Trade in a Globalized World. It is an annual publication that aims to deepen understanding about trends in trade, trade policy issues and the multilateral trading system.