US Passes Trade Facilitation and Enforcement Act

Francisco A. Laguna

 This week, we continue our summary of the changes to US trade law to be implemented by Trade Facilitation and Enforcement Act of 2015 (2015 Trade Enforcement Act) which passed earlier this month by the Senate.

Small Business and State Trade Promotion Programs (Title V)

Title V contains various provisions aimed at aiding small businesses in export promotion activities. For example, it requires further outreach to small businesses on the potential impact of new trade agreements. It also establishes a grant program to states to carry out programs such as foreign trade missions, trade shows, and other forms of marketing and training for small businesses. States will undoubtedly take advantage of this program, and smaller companies should look into it if interested in international sales.

Other Enforcement Measures (Title VI)

Title VI establishes a Trade Enforcement Trust Fund to be used by the United States Trade Representative (USTR) and other agencies to enforce US trade agreements and trade rights under the World Trade Organization (WTO) and US free trade agreements (FTAs). The trust fund could also be used for trade capacity building efforts.

By Kevin McCoy, CC BY-SA 2.0

By Kevin McCoy, CC BY-SA 2.0

Title VI also requires US Customs and Border Protection (CBP) and Immigration and Citizenship Enforcement (ICE) to institute certain measures to stop illegal honey transshipment; and requires that the two agencies train and employ sufficient personnel to detect, identify, and seize cultural property, archeological or ethnological materials, and other fish, wildlife or plants that violate US laws. Title VI also codifies the establishment of the Interagency Trade Enforcement Center (ITEC).

Currency Manipulation (Title VII)

Title VII addresses issues regarding currency undervaluation, a main thorn in the recent trade promotion efforts. Among other things, Title VII:

  • requires the International Trade Administration (ITA) to investigate alleged currency undervaluation in countervailing and antidumping duty investigations and provides a method for calculating the amount of undervaluation;
  • requires the administration to actively engage with those countries found to manipulate exchange rates in order to urge implementation of monetary policies that would address the issue;
  • sets criteria on what constitutes currency manipulation similar to existing International Monetary Fund standards;
  • creates an advisory committee for the US Treasury Department on currency issues; and
  • directs Treasury to take certain steps if it believes currency manipulation has occurred.
By Project Manhattan - Own work, CC BY-SA 3.0,

By Project Manhattan – Own work, CC BY-SA 3.0

The most contentious dispute involved competing proposals on currency manipulation that were not enacted in the final legislation, with the original Senate bill including a strict provision that would have enabled the US Department of Commerce to treat undervalued foreign currency as a prohibited government subsidy in countervailing duty investigations.

 

 

Renewal and Expansion of CBP Operations/Programs (Title VIII)

Title VIII of the Act consists of two parts. First is the US Customs and Border Protection Authorization Act, which formally establishes the US Customs and Border Protection, along with operational offices within CBP and the positions of the Commissioner and Deputy Commissioner. Although the Act provides for a number of name changes to the internal offices within CBP and structure of their leadership, it is largely a formal codification of the existing structure and role of the agency. In fact, Section 802 specifically affirms that CBP shall continue to carry out the functions, missions, duties, and authorities previously vested within CBP prior to the passage of this legislation, and all rules regulations and policies issued by CBP remain in effect.

The second part of Title VIII is the Preclearance Authorization Act of 2015, which authorizes CBP to operate preclearance locations in foreign countries, provided an aviation security preclearance agreement is in effect. The provisions of Preclearance Authorization Act of 2015:

  • set forth various reporting requirements to Congress prior to entering into a preclearance agreement with a foreign country to enable Congress to comprehensively assess the appropriateness of commencing the preclearance operations and monitor the resources allocated to preclearance locations;
  • incorporate certain security measures, including requiring Transportation Safety Administration (TSA) to prescreen passengers and their baggage if the foreign government has not maintained security standards comparable to the US, and prohibiting preclearance locations in foreign countries that do not routinely provide stolen passport information to INTERPOL or the United States; and
  • allow CBP to enter into cost-sharing agreements with the airport authorities (where preclearance locations are established) in foreign countries for preclearance operations costs, immigration services, and agricultural inspection services, enabling CBP to receive payments in advance of the incurrence of the costs or on a reimbursable basis.

Miscellaneous (Title IX)

Title IX covers a broad array of miscellaneous provisions, though “miscellaneous” may be a misleading description as some of the provisions were the most sought after changes advocated by the trade community. Among the changes provided for in this Title are the following:

  • By Henryvb at German Wikipedia, CC BY-SA 3.0

    By Henryvb at German Wikipedia, CC BY-SA 3.0

    raises the amount allowed to be entered on a “manifest entry” as de minimis from $200 – $800 (Sec. 901);

  • increases the time required for consultations with Congress on certain administrative actions involving international trade and requiring certain minimum time periods for consulting with business on such actions (Sec. 902);
  • enhances certain provisions of Chapter 98 regarding goods returned to the United States to both enlarge the scope and make them more user friendly (Sec. 904);
  • removes the entry requirement for certain bulk cargo residue returning to the United States in Instruments of International Traffic after export from the US (Sec. 905);
  • provides for numerous changes to the current duty drawback statute, including requiring certain substitution drawback determinations to be based on classification in the same 8-digit tariff heading, amending the requirements for establishing “proof of export” and certain time periods for filing claims, and providing for joint liability for the claimant and the importer (Sec. 906);
  • makes technical corrections to certain tariff classifications for recreational performance outerwear and to Additional US Note for Chapter 64 relating to certain protective active footwear (Sec. 912 and 913);
  • creates a trade preference for Nepal similar to African Growth and Opportunity Act (Sec. 915);
  • Allows for the implementation of Aisa-Pacific Economic Cooperation Agreement providing for duty reductions on certain environmental goods (Sec. 916);
  • adopts specific country of origin marking requirement for certain steel castings (Sec. 917);
  • extends the period for which certain customs fees may be charged and the rate charged (Sec. 920);
  • increases the penalty for the failure to file certain tax returns (Sec. 921); and
  • imposes a moratorium on certain internet taxes being imposed by the States or other localities (Sec. 922).

Contact TransLegal with your questions concerning the Trade Facilitation and Enforcement Act of 2015.

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Benefits of BRICS New Development Bank for Brazil

Francisco A. Laguna & Annapurna Nandyal

This week, we conclude our 4-part series on the BRICS’ New Development Bank (NDB), focusing on the potential benefits the NDB could offer Brazil, the only BRICS country in the Western Hemisphere.

The closest BRICS to Brazil is South Africa

The closest BRICS to Brazil is South Africa

Brazil is one of the world’s largest growing economies. In comparison to other BRICS, Brazil is seen as soft rising power rising, and it tends to be underrated: the country’s growth rate was just 3% in 2013, while China and India had 8% and 6%, respectively. Notwithstanding, Brazil is hot on the international stage: it held this year’s World Cup; it will soon be the home of the 2016 Olympics; and it hosted the 2014 Sixth Annual BRICS Summit this year. Heads of other South American states participated in the Summit for the first time, and the event turned out to be one of the region’s most significant geopolitical summits in recent history. Continue reading

Suggestions for Improving Myanmar’s Current Investment Environment

This week, we conclude our series by TransLegal’s correspondent in Myanmar, Oliver Massmann.  Oliver was invited by His Excellence Minister Soe Thane to the President’s office on 22 January 2014 to present on current investment and trade issues faced by foreign investors in Myanmar.  Here are Oliver’s suggestions to improve the investment climate in Myanmar.

Contact TransLegal and Oliver to learn more about investment opportunities and challenges in Myanmar.

Oliver Massmann 

The Future – Recommendations for Myanmar

Myanmar Landscape Photo Credit: Colegota via Wikimedia Commons

Myanmar Landscape
Photo Credit: Colegota via Wikimedia Commons

Following our discussion last week of the challenges facing foreign investors in Myanman, we turn to specific recommendations for how the country can improve its current investment climate to attract foreign direct investment (FDI).

In general, we recommend that Myanmar align standards with international best practices to enhance the country’s competitiveness, pave the way for regional integration and improve the quality of products/level of services for the people of Myanmar. Continue reading

Key Challenges Facing Investors in Myanmar’s Current Investment Environment

This week, we are featuring a two-part guest blog prepared by TransLegal’s correspondent in Myanmar, Oliver Massmann.  Oliver was invited by His Excellence, Minister Soe Thane, to the President’s office on 22 January 2014 to discuss current investment and trade issues faced by foreign investors in Myanmar.  Below is the position paper Oliver drafted after the meeting.

This week, Oliver focuses on the issues facing foreign investors in Myanmar.  Next week’s blog will discuss possible solutions.

Contact TransLegal and Oliver to learn more about investment opportunities and challenges in Myanmar.

Oliver Massmann 

I           The Vision for Myanmar:

Map of Myanmar

Map of Myanmar

Historically, Myanmar was the wealthiest country in Southeast Asia and also once the world’s

largest exporter of rice. It produced 75% of the world’s teak and had a highly literate population.

After such a long time being closed off, however, it is now one of the poorest countries in Asia.

Everything has changed since Myanmar embarked on a major policy of reforms in 2011, and

Myanmar is now a new Asian emerging market.

Myanmar has all the elements required to create another Asian economic miracle, and it has strong potential.  Before realizing that potential, Myanmar has to solve the challenges and impediments hindering its development.

Myanmar must seize the opportunity to become what it once was: a country with a transparent and responsible investment and trade policy.  Continue reading

Australia and the Great Economic Powers: India

Francisco A. Laguna & Jennie Linder Cunningham

This week we conclude our series on Australia, focusing on the country’s trade relations with India.

Maps of Australia and India  Photo Credit: newstonight.net

Maps of Australia and India
Photo Credit: newstonight.net

Trade between Australia and India has increased rapidly over the past decade.  It may prove to become a positive alternative to China, particularly if the Australia – China Free Trade Agreement stalls. With a market nearly the size of China’s and a population and economy that is increasingly modernizing, bilateral trade between India and Australia has increased to $17.4 billion in 2012, up from just $3.3 in 2000. In discussing the trade relationship, the Australian Department of Foreign Affairs and Trade stresses the fact that India is the world’s largest democracy.

Continue reading

Australia and the Great Economic Powers: Japan and the United States

Francisco A. Laguna & Jennie Linder Cunningham

This week we continue our series on Australia, focusing on the country’s trade relations with Japan and the United States.

 Japan

Map of Australia Photo Credit: Addicted04 via Wikimedia Commons

Map of Australia
Photo Credit: Addicted04 via Wikimedia Commons

Australia-Japan trade dates to the mid-19th century, and, with the exception of World War II, Japan has been Australia’s most significant trading partner. The first trade agreement Japan sought with Australia sought dates to 1915.  Australia primarily exports coal and iron ore/iron ore concentrates, along with copper ores and beef to Japan, while importing mainly vehicles and some refined petroleum.

As a result of the global recession, Australia’s Free Trade Agreement talks with Japan stalled; however, the current administration of Prime Minister Tony Abbott has expressed that the successful negotiation of the FTA is a high priority.  Trade experts note that one of Abbott’s two foreign affairs advisers, Andrew Shearer, is a Japan specialist who was instrumental in crafting the 2007 defense and security pact between the two countries known as the Japan-Australia Joint Declaration on Security Cooperation (JDSC).

 Japan has also expressed a renewed interest in concluding the FTA talks, mainly in order to get a jump on its Asian competitors, including China. In particular, the high-tech manufacturing sector has been petitioning the Japanese administration to conclude the talks, to give them the best chance of increasing market share in everything from Japanese cars to cameras and televisions. This is highly prescient and could be a matter of timing, as China moves to diversify its economy beyond low-tech manufacturing into the sectors that Japan has historically dominated.

 United States

 

Melbourne Photo Credit: Diliff via Wikimedia Commons

Melbourne
Photo Credit: Diliff via Wikimedia Commons

Australia and the United States have long regarded each other as political and economic allies, despite the significant physical distance between the two countries. The United States has also historically been a major presence in Southeast Asia, and remains the focus of nations like Australia, South Korea, Japan, and even the Philippines, as China continues to assert a greater presence in the region and as it recently surpassed Japan as the world’s second-largest economy.

 Through its Pivot to Asia policy, the US has indicated that it intends to increase its presence in the region. However, the US is currently in initial stages of implementing a “pivot” (from the Middle East), as it remains wary of overextension in Asia while still involved in the Middle East. Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell recently stated that the countries of the Asia-Pacific recognize that the United States still had pressing situations in Afghanistan and Iraq, and a premature withdrawal would not be positively indicative of Washington’s commitment to the region.

Great Barrier Reef

Great Barrier Reef

The US is Australia’s fourth largest export market and second largest import market. Overall, it is Australia’s third largest trading partner (after China and Japan). Exports to the US account for A$14.6 billion, a 4.9% share, with imports totalling $41.6 billion, a 13% share. Two-way trade is estimated at $56.2 billion, after China with $125.2 billion and Japan with $71.1 billion. From these numbers alone, and by referencing the trade table in last week’s blog, we can determine that the US-Australia connection goes beyond the economic. A 9% trade share is not insignificant, but it pales in comparison to China’s 20.3%.

 The 2005 US-Australia Free Trade Agreement is a fairly new development, and one that bears watching. According to the Office of the US Trade Representative, the FTA established working groups in 2009 to examine several issues and potentially foster cooperation on the agricultural, sanitary, and phytosanitary fronts. Recall that food exports, agriculture, and farmland remain major hurdles to resolving the China-Australia FTA.

 TransLegal has two correspondent offices in Australia in Sydney and Perth.  We are available to answer your questions concerning doing business in the country.

Australia and the Great Economic Powers

Francisco A. Laguna & Jennie Linder Cunningham

Map of Australia

Map of Australia

To launch our 2014 blog, TransLegal is beginning a 3-week series on Australia.  Australia occupies a unique position in the international community: geographically, its location allows for immediate trading partners in Asia, particularly Southeast Asia. However, culturally, linguistically and politically, it resembles a Western capitalist democracy – to some extent.  Observers of Australia frequently note the historic and current peculiarities of the country’s politics. Of particular interest, as a new administration sets its agenda, is Prime Minister Tony Abbott’s indications that he fully intends to (finally) complete ongoing, but stalled, Free Trade Agreements with China, Japan and South Korea. These announcements met with some skepticism: negotiation of all the FTAs have dragged on for at least four years. Today, we begin our analysis of Australian relations with China, followed in the next weeks by a look at Japan, the US and India.  Continue reading