DOC's Trade Law Enforcement Initiative Could Lead To College Football Playoffs

On November 23, 2010, DOC announced the Trade Law Enforcement Initiative (TLEI) in support of President Obama's call for a college football playoff system.  I bet you never thought about the link between US trade remedy laws and college football.  Honestly, I didn't either until I heard this week that Texas Christian University (TCU) is joining the Big East.  For those of you that don't follow college athletics, the Big East is a sports conference that traditionally included college basketball powerhouses located on/near the East Coast - hence the name Big East.  For the geographically challenged, TCU is located in Fort Worth, Texas approximately 1,500 miles from the East Coast.  It makes about as much sense for TCU to be in a conference called the Big East as it does to say that exports will increase if laws targeting unfairly traded imports are strengthened.  But I digress. 

The link between trade remedies and college football is simple.  Stronger trade remedy laws will help US industries improve their performance, which will mean their management and employees will have more cash to support their almae matres alma maters.  Colleges will then have more resources to give to their football programs, which in turn will lead to greater parity, and thus more pressure for a playoff system so more schools can compete, on the field, for a national championship.  Makes perfect sense, right?

I'm kidding of course.  What DOC actually said is that it is launching the TLEI in support of the President's National Export Initiative (NEI) to double US exports over the next five years.  The "rationale" is that implementing a package of policy and regulatory changes to improve the administration of laws meant to offset the injurious effect of unfairly traded imports will help US exports.  Hmm.  How exactly does that work?  As far as I can tell there is no correlation between the TLEI package and NEI.  The TLEI may strengthen the administration of US trade remedy laws, which would be a good thing for the domestic industries that are injured or threatened with injury by unfairly traded imports.  However, it is extremely doubtful that that will lead to increased US exports.  The more likely outcome is increased trade friction with our trading partners and higher costs (even if justifiably so to level the playing field) for US companies that use imports subject to trade remedies as inputs.  Neither of which should result in more exports.  I just don't see the connection between the TLEI and NEI. 

Speaking of college football, congratulations to the the University of Maryland's head coach (Ralph Friedgen) and starting quarterback (Danny O'Brien) on wining ACC Coach of the Year and Rookie of the Year.  Fear the Turtle!!!

The "State of Play" of Antidumping Cases in the EU

On November 24, 2010, Karel De Gucht, EU Trade Commissioner, delivered remarks to the European Parliament on antidumping (AD) issues.  Mr. De Gucht is not my favorite trade official, but I respect his straightforward remarks on the "state of play" of AD matters in the EU.  Here are some highlights:

• "defence of EU production against international trade distortions should be considered as a necessary component of an open and fair trade strategy."
  
  Translation - EU will continue to use AD/CVD investigations to protect EU industries.
• "Trade defence instruments are there for good reasons. In the absence of

  international competition rules and of other rules associated with well functioning

  markets trade defence instruments are the only possible means of protecting our

  industry against unfairly traded goods. We seek to use these rules in the most

  efficient way for our industries."
  
  Translation - As long as WTO norms allow countries to use AD/CVD investigations to protect domestic industries the EU will continue to use these types of measures.
• "The international rules on trade defence are being renegotiated in the World Trade

  Organisation. The EU position there is clear: we want to maintain the effectiveness

  of our instruments while protecting our business against protectionist actions by

  others."
  
  Translation - When the EU imposes AD/CVD measures it is a permissible exercise of its rights under applicable WTO norms.  When other countries impose such measures against EU industries it may be protectionist.
• "regarding the use of trade defence instruments by third countries, we have
  
  
  As I noted here, exporters in developed countries are likely to face more AD/CVD measures in the short to medium term.
• "I would like to assure you that we closely follow trade defence actions by third countries and take action when necessary. Such action includes intense monitoring, effective support of affected EU exporters or even starting a dispute settlement procedure at the WTO.  In many cases the Commission's actions lead to the termination of the investigation without the imposition of measures. In other cases, these interventions often result in a lower measure for the EU exporters concerned."
  
  Translation -- EU exporters, we have your back.

Basically, his remarks boil down to - the EU will protect its domestic industries through continued use of AD/CVD measures and active engagement with third countries that seek to impose such measures against EU exporters. 

Around The World In One Click

I've noticed a couple of "interesting" items the last few days which I lump together below:

The Republic of Mauritius -- held a two-day workshop on Trade Remedies "to ensure capacity-building of the private sector" regarding their brand new (passed June 2010), now ready for prime time Antidumping and Countervailing Measures Act.  The workshop appears to be sponsored, at least in part, by the EU's TradeCom Facility.  The TradeCom Facility is financed by the European Development Fund and provides trade-related technical assistance to ACP countries.  It's not my money, but I'm not sure assisting an island nation of 1.2 million people establish AD/CVD laws is the best use of EU funds right now.

EU -- speaking of the EU, it recently released its five-year blueprint for an "assertive" trade policy.  The blueprint is available here.  According to the accompanying press release, the five-year plan proposes:

1. to complete its ambitious negotiating agenda at the WTO and with major trading partners such as India and Mercosur. Completing this agenda would increase European GDP by more than one percent per year;
2. to deepen trade relations with other strategic partners, such as the US, China, Russia and Japan, where the main focus will be on tackling non-tariff barriers to trade;
3. to help European businesses access global markets by setting up a mechanism to redress the balance between open markets in the EU (for example in public procurement) and more closed markets with our trading partners;
4. to start negotiating comprehensive investment provisions with some of our key trading partners;
5. to make sure trade is fair, and our rights are properly enforced, translating promise on paper into concrete benefits;
6. to ensure trade remains inclusive so that the benefits go to the many, not the few. We will spell out how trade can continue to support development as we set up a new framework of rules for trade preferences for developing countries.

Argentina -- imposed antidumping duties of 295% against malleable iron pipe fittings from China.  Brave.  Argentina only recently resumed selling soybean oil to China, which had imposed a ban in April 2010 in response to Argentine antidumping duties against various Chinese products.  Vamos, vamos, Argentina!

Happy Thanksgiving!       

Google's Free Trade Manifesto

On November 15, 2010, Google posted an interesting white paper that outlines its trade agenda.  "Enabling Trade in the Era of Information Technologies:  Breaking Down Barriers to the Free Flow of Information" describes the importance of the Internet to economic growth, the dramatic increase in governmental interference with the Internet, how these restrictions conflict with existing international trade rules (e.g., GATS), and Google's vision for "free trade" in Internet-related services. 

Google candidly acknowledges that this is "pretty wonky stuff."  (I'd say that is an understatement.)  If you strip out the wonky alphabet soup of trade acronyms (WTO, GATS, APEC, KORUS, etc.) and trade lingo (market access, national treatment, transparency, etc.) the message boils down to:  the Internet is unique so instead of interfering with it, governments should ensure that international trade rules promote free trade in Internet-related services. 

What I find particularly refreshing is that Google acknowledges that existing trade agreements do not necessarily address all of the issues it raises so it asks policy makers to: 

ensure that rules in the next generation of trade agreements reflect new challenges of Internet trade. In this new era, addressing the trade-related problems posed by government censorship and disruption of the Internet will be critical. Fresh, creative thinking will be required in order to properly address the unprecedented problems and opportunities that arise every day.

ZP55S99HFEQS

What Congress Giveth, Commerce Can Taketh Away?

The US Department of Commerce (DOC) announced this week that it will continue to issue liquidation instructions to US Customs and Border Protection (CBP) 15 days after publication in the Federal Register of final results of antidumping and/or countervailing duty administrative reviews.  DOC's announcement is available here.  Not exactly riveting stuff but still important because it affects whether DOC decisions are subject to judicial review.

The US Court of International Trade has previously ruled that DOC's so-called 15-day policy is contrary to law because:   

the record does not disclose any consideration of the need for an orderly administration of the statutory scheme for judicial review or the need for Commerce to achieve its regulatory objectives without imposing the unnecessary costs and burdens on affected parties that result from the Department's policy, rule, or practice.

This week's announcement appears to be DOC's attempt to sort of address those concerns.  DOC took a second look at its existing policy and determined that it was reasonable (who needs judicial review when an agency can determine the reasonableness of its own decisions?):

Commerce has determined that the issuance of liquidation instructions 15 days after publication is reasonable because it balances the factors which Commerce must consider in the effective administration of the antidumping and countervailing duty laws. 

These factors include:  (1) taking into account the time for alleging ministerial errors, (2) the amount of time CBP needs to liquidate the covered entries, and (3) ensuring the US Treasury receives the correct amount of duties.

DOC did not address the first consideration identified by the court - "an orderly administration of the statutory scheme for judicial review."  The court's concern is that the 15-day policy short-circuits the statutory scheme that allows parties 30 days to file a summons and then another 30 days to file a complaint (followed by an additional period to move for a preliminary injunction that enjoins liquidation of the covered entries).  Instead of grappling with the competing interests, DOC says while the 15-day policy is reasonable, 

Commerce will continue not to issue liquidation instructions if a party provides the Department of Justice with a draft summons, complaint, and motion for preliminary injunction prior to Day 15.

Translation - hey trade bar, Congress may have given you 60 days to file a summons and complaint, but that doesn't mean we have to.

Look, I get that there are competing interests here -- DOC's concern that CBP only has 6 months from publication of the final results to liquidate the entries or they are deemed liquidated at the cash deposit rate claimed at the time of importation v. parties having the full amount of time granted by Congress to decide whether to appeal (by filing the summons) and how to frame the issues (by filing the complaint) -- and that DOC is trying to find a middle ground by saying "we won't issue the instructions if you give our lawyers a draft."  Still, strictly from a separation of powers perspective, it does not seem correct that an administrative agency can effectively shorten the time granted by Congress to seek judicial review.

Thiopental Sodium - Reflux

Last week, I wrote about the US Supreme Court's order that essentially allowed Arizona to use thiopental sodium produced in a non-FDA approved facility located abroad.  Other states such as California, are also reported to be relying on imported thiopental sodium.  According to The Guardian:

The British producer, Archimedes Pharma, denies knowingly selling the drug for use in lethal injections.  As far as the company is concerned, it lawfully injected the drug into the stream of commerce in the UK and it has no control over what happens next.

"The company supplies the product in the UK, in accordance with regulations, through the recognised pharmaceutical supply chain, primarily to wholesalers and hospital pharmacies," it said.

Archimedes said that once the drug entered the complex chain of medical supplies it would not have known where it was eventually sold. "Consistent with applicable regulations, the company does not have information on specific end purchasers or users of its products. The company neither exports the product to the US for any purpose, nor is it aware of any exports of the product," it said.

A London-based human rights group - Repreive - has filed suit in England to bar the export of thiopental sodium for use in executions in the United States.  I wonder if the UK tribunal will consider whether an export ban violates Article XI(1) of the GATT:

No prohibitions or restrictions other than duties, taxes or other charges, . . . shall be instituted or maintained by any contracting party . . . on the exportation or sale for export of any product destined for the territory of any other contracting party. 

or meets one of the general exceptions found in Article XX.  I seriously doubt it. 

Putting aside the potential WTO issues, what I really want to know is how was the thiopental sodium imported into the United States.  Perscription drugs (and controlled substances) such as thiopental sodium can only be imported into the United States if they are produced at FDA-approved facilities.  There are no foreign FDA-approved facilities for thiopental sodium.  Therefore, it's unclear how someone could have formally declared the drugs and imported them into the United States.  Did someone "informally" import the thiopental sodium in their carry-on luggage and make it available for sale to states?  I sure hope not. 

California is also planning to use a batch of sodium thiopental apparently imported from the UK in an execution that was put on hold last month, it has emerged.

"Buying Medicine From Outside The U.S. Is Risky Business" Especially For Death Row Inmates

On Monday, October 25, 2010 a federal judge in Arizona issued a temporary restraining order to delay an execution because of questions surrounding the origin of one of the drugs - sodium thiopental - that Arizona (and other states) administers during the execution.  The Supreme Court issued an order on Tuesday, October 26, 2010 vacating the lower court's order.  

Death penalty cases rarely (never?) raise customs issues, but this one might.  In its order, the Supreme Court noted: 

There was no showing that the drug was unlawfully obtained, nor was there an offer of proof to that effect.

Hmmm.  Section 801 of the Federal Food, Drug, and Cosmetic Act generally prohibits the importation of non-FDA approved prescription drugs.  Sodium thiopental is a "controlled substance" aka prescription drug.  The lower court found that the drug in question was "non-FDA approved."  

So the obvious questions are who imported the drug, how was it declared, and is there some general exception for prescription drugs imported for (by?) states for use in executions?  I'm not aware of any such exception but I suppose there could be one.  Seems to me that the public policy justifications (e.g. concerns about safety and efficacy) for prohibiting the importation of non-FDA approved drugs should apply whether the drugs are taken voluntarily by senior citizens or administered (involuntarily) to death row inmates. 

Enhanced Customs Bonds, It May Be Time To Cut Bait

In 2006, US Customs and Border Protection (CBP) adopted the so-called "Enhanced Bonding Requirements" (EBR) to require higher continuous entry bonds for importers of shrimp subject to antidumping orders.  Instead of protecting the US Treasury (which was its claimed purpose), the EBR cost USTR and DOJ time, money, and effort to defend an initiative that has been found to violate US law and its WTO commitments (a rare feat).   

On October 21, 2010, the US Court of International Trade (CIT) took a decisive step to grant relief to the importers. In National Fisheries, the CIT ordered CBP to cancel the plaintiffs' bonds issued using the EBR. The CIT issued the order even though it recognized that by doing so:

likely would moot any appeal by the United States in the particular circumstances of this case

Wow.  It's not often that a court orders a party, let alone the Federal Government, to take actions that would deprive them of the right to appeal the court's decision.  The Court gave CBP a sliver of hope by giving it 60 days to convince the Court to modify the injunction it just issued (good luck with that) or get a stay from the Federal Circuit.  It may be time to cut bait and let CBP's hope to be able to (maybe) one day collect under the EBR bonds swim away.

Are Trade Remedies Dead? Maybe in the US, but not against the US.

On October 21 2010, US manufacturers of multilayered wood flooring filed a petition seeking antidumping (AD) and countervailing (CVD) duties against imports from China.  This was the first trade remedy petition filed since March, 2010 and only the third petition filed this year (15 petitions were filed in 2009).  The "Great Recession" clearly hasn't created a surge in new trade remedy cases in the United States.  (My thoughts on that will have to wait for another time.)

While trade remedy filings are at an all time low in the US, US industries are increasingly the target of AD/CVD cases in other countries.  In 2010, there have been 13 AD cases initiated against the US exports along with several CVD cases.  These cases have targeted important industries such as poultry, biodiesel, optical fiber, and various chemicals.  So, while trade remedies are dying (dead?) in the US, they are alive and "well" in other countries and are increasingly targeting US exports.  That attention will only grow if the National Export Initiative is successful.