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Update:  USTR Adds to List of EU Products Being Considered for Sec. 301 Tariffs - Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP

On July 2, 2019, the U.S. Trade Representative (“USTR”) announced that additional products of the European Union (“EU”) are being considered for inclusion in the list of products that may be subject to additional, Sec. 301, tariffs of up to 100%. The list of 89 additional tariff subheadings are valued at approximately $4 billion in import trade value, and includes products such as cheeses, pasta, meats, olives, fruit, waffles, certain condiments and seasonings, whiskies and certain metals.

If the USTR ultimately concludes that some, or all, of these 89 tariff provisions should be included in the possible Sec. 301 action, these tariff provisions would be added to the earlier list that was published on April 12, 2019, in connection with the enforcement of U.S. rights in its World Trade Organization (“WTO”) dispute against the EU concerning EU subsidies of large civil aircraft. A link to the earlier list is available here. The USTR has advised that “the final list will take into account the report of the WTO Arbitrator on the appropriate level of countermeasures to be authorized by the WTO” in the large civil aircraft case.

The USTR has invited interested persons to participate in the decision-making process concerning the proposed 89 tariff subheadings as follows:

  • July 24, 2019: deadline for requesting to appear at a public hearing concerning imposition of additional tariffs on the 89 tariff subheadings;
  • August 5, 2019: due date for submission of written comments;
  • August 5, 2019: public hearing in Washington, DC begins at 9:30AM;
  • August 12, 2019: due date for submission of post-hearing rebuttal comments.

Significantly, the USTR noted that if “the Arbitrator issues its decision prior to completion of the public comment process on the supplemental list [of 89 tariff subheadings], the USTR may immediately impose increased duties on the products included in the initial [April 12, 2019] list, and take further possible actions with respect to products on the supplemental list.”

If you are interested in participating in these proceedings, please contact our office to speak with one of our attorneys.

The list of 89 tariff subheadings that are being considered by the USTR for inclusion in the proposed Sec. 301 list is as follows:  See List Here

TMF at Ports of LA and Long Beach to Increase 1.9% on August 1, 2019 - PierPass

LONG BEACH, Calif., June 28, 2019– The West Coast MTO Agreement (WCMTOA) today announced that on August 1, 2019, the Traffic Mitigation Fee (TMF) at the Ports of Los Angeles and Long Beach will increase by 1.9 percent. The adjustment matches the combined 1.9 percent increase in longshore wage and assessment rates that take effect June 29.

Beginning August 1, the TMF will be $32.12 per TEU (twenty-foot equivalent unit) or $64.24 per forty-foot container. The TMF is charged on non-exempt containers. Containers exempt from the TMF include empty containers; import cargo or export cargo that transits the Alameda Corridor in a container and is subject to a fee imposed by the Alameda Corridor Transportation Authority; and transshipment cargo. Empty chassis and bobtail trucks are also exempt.

The OffPeak program provides regularly scheduled night or Saturday shifts to handle trucks delivering and picking up containers at the 12 container terminals in the two adjacent ports. PierPass launched the OffPeak program in 2005 to reduce severe cargo-related congestion and air pollution on local streets and highways around the Los Angeles and Long Beach ports. Nearly half of all port truck trips now take place during the off-peak shifts. The container terminal operators mitigate truck traffic at their gates with appointment systems.

The TMF helps offset the cost of operating extended gate hours. Labor costs are the largest single component of extended gate costs.

According to an analysis by maritime industry consultants SC Analytics, the net costs incurred by the terminals to operate the off-peak shifts in 2018 totaled $288 million. During that year, the terminals received $217.5 million from the TMF, offsetting about 76 percent of the OffPeak program’s costs.

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Federal Register Notices:

The U.S. International Trade Commission (USITC) today released its annual compilation of reports published every two weeks on textile and apparel imports from China.

The report, Textile and Apparel Imports from China: Statistical Reports, Annual Compilation 2018, was requested by the U.S. House of Representatives' Committee on Ways and Means.

As requested, the USITC, an independent, nonpartisan, factfinding federal agency, produced an annual compilation of data that has been posted on a bi-weekly basis on the USITC website. The data in the report are shown on an annual and quarterly basis, by category and by Harmonized Tariff Schedule 10-digit statistical reporting number (HTS10).

By category, annual data are provided from 2012 through 2018, and quarterly data are provided from first quarter 2017 through fourth quarter 2018. By HTS10, annual data are provided from 2016 through 2018, and quarterly data are provided from first quarter 2017 through fourth quarter 2018.

The report will be available on the USITC Internet site at here.

USITC general factfinding investigations, such as this one, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate Committee on Finance. The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the USITC submits its findings and analyses to the requester. General factfinding investigation reports are subsequently released to the public unless they are classified by the requester for national security reasons.

U.S. Department of Commerce Announces Three Affirmative Preliminary Circumvention Rulings on Exports of Steel Products from Vietnam - U.S. Department of Commerce

Today (July 2, 2019), the U.S. Department of Commerce announced three preliminary affirmative circumvention rulings involving exports of steel products from Vietnam. The circumvention rulings cover certain steel products that are first produced in Korea and Taiwan, which are then shipped to Vietnam for minor processing, and finally exported to the United States as corrosion-resistant steel products (CORE) and cold-rolled steel (CRS).

As a result of today’s affirmative circumvention determinations, Commerce will instruct Customs and Border Protection to begin collecting cash deposits on imports of corrosion-resistant steel products and cold-rolled steel produced in Vietnam using Korean- or Taiwanese-origin substrate. These duties will be imposed on future imports, and also on any unliquidated entries since August 2, 2018 (the date on which Commerce initiated these circumvention inquiries). The applicable cash deposit rates will be as high as 456.23 percent, depending on the origin of the substrate and the type of steel product exported to the United States.

U.S. law provides that Commerce may find circumvention of antidumping duty (AD) or countervailing duty (CVD) orders when merchandise that is the same class or kind as merchandise subject to existing orders is completed or assembled in a third country prior to importation into the United States.

Shipments of CORE from Vietnam to the United States increased from $220 million (in the 40-month period of September 2013 until preliminary duties imposed on South Korean and Taiwanese products in December 2015) to $950 million (40-month period from imposition of preliminary duties in December 2015 until April 2019), which is an increase of 331.9 percent. Additionally, shipments of CRS from Vietnam to the United States increased from $49 million (in the 38-month period of January 2013 until preliminary duties imposed on South Korean and Taiwanese products in February 2016) to $498 million (38-month period from imposition of preliminary duties in March 2016 until April 2019), which is an increase of 916.4 percent.

These inquiries were conducted pursuant to requests from U.S. domestic producers of CORE and CRS: Steel Dynamics, Inc. (IN), California Steel Industries (CA), AK Steel Corporation (OH), ArcelorMittal USA LLC (IN), Nucor Corporation (NC), and United States Steel Corporation (PA).

The strict enforcement of U.S. trade law is a primary focus on the Trump Administration. To date, the Trump Administration has issued 31 preliminary and/or final anti-circumvention determinations – this is a 417 percent increase from the number of preliminary and/or final circumvention determinations made during the comparable period in the previous administration.

The U.S. Department of Commerce’s Enforcement and Compliance unit within the International Trade Administration is responsible for vigorously enforcing U.S. trade law and does so through an impartial, transparent process that abides by international law and is based on factual evidence provided on the record.

FDA Warns Repackers Distributing Pharmaceutical Ingredients, including Opioids, for Putting Consumers at Risk with Significant Violations of Manufacturing Quality Standards - Food & Drug Administration

The U.S. Food and Drug Administration has issued warning letters to three repackers of active pharmaceutical ingredients (API), B&B Pharmaceuticals, Inc., Asclemed USA, Inc., doing business as Enovachem and Spectrum Laboratory Products, Inc., for significant violations of current good manufacturing practice (CGMP) requirements.

“Repackers play a role in the pharmaceutical supply chain, and some distribute bulk API to drug manufacturers and pharmacy compounders. The U.S. drug supply chain remains one of the safest in the world, yet because of the various players and increased globalization, it has become increasingly complex. The FDA remains vigilant in our inspections and oversight of the supply chain and as part of this effort, we inspect API repackers to help identify and prevent any weaknesses in the legitimate supply chain – this is especially important within the context of the opioid crisis for those who handle opioids,” said Janet Woodcock, M.D., director of the FDA’s Center for Drug Evaluation and Research. “The supply chain issues we have found in the API repacking industry broadly pose a real threat to the public health and we’re calling on them to address these issues as quickly as possible. For patient safety and supply chain transparency, repackers must follow all quality standards pertaining to them – including clearly identifying the original manufacturer of the drugs, such as opioids, to their customers who use them to make the finished drugs patients take every day. This information is vitally important to ensure the drugs patients take meet high quality standards that patients deserve.”

Generally, API repackers take bulk API (usually in powder form) from the container in which it was distributed by the original manufacturer and place it into a different container without further manipulation of the drug and distribute it to drug manufacturers, compounding pharmacies or outsourcing facilities. Improper repackaging or lack of supply chain oversight of API can cause serious vulnerabilities in the supply chain and may lead to adverse events in patients.

The warning letter issued to B&B Pharmaceuticals describes failures to conform to CGMPs, including failure to thoroughly investigate complaints regarding sub-potent API. The repacker also failed to conduct cleaning validation studies to demonstrate that their cleaning procedures for non-dedicated production equipment are adequate to prevent potential cross-contamination between repackaged API, including highly potent drugs such as testosterone, progesterone, estrogen and opioids. The repacker also failed to provide adequate certificates of analysis for API, by not including critical information about the quality and sourcing of drugs and their components. Omitting this vital information from a certificate of analysis compromises supply chain accountability and traceability and may put consumers at risk.

The warning letter issued to Enovachem notes, among other violations, failure to maintain traceability of the API throughout the supply chain, specifically warning that the company failed to obtain and retain documents with the identity of the original manufacturer and certificates of analysis from the original manufacturer. The company also distributed API, including opioids, to its customers with incomplete certificates of analysis, which compromises supply chain accountability and traceability and may put consumers at risk. The customers included compounding pharmacies which use the API for prescription compounding.

The FDA issued a warning letter to Spectrum for significant deviations from CGMPs. Spectrum repackages various opioid APIs but did not provide complete information in its certificates of analysis provided to its customers, including compounding pharmacies. Spectrum failed to properly investigate and resolve critical CGMP deviations, including cracked bottles of repackaged opioids, among other violations.

The Spectrum and Enovachem warning letters also state these companies list glycerin among the products they repackage. In 2007, the FDA issued final guidance intended to alert pharmaceutical manufacturers, pharmacy compounders, repackers, and suppliers to the potential public health hazard of glycerin contaminated with diethylene glycol (DEG), a poison which may be deadly to patients. Lapses in supply chain oversight, including incomplete information on certificates of analysis, was one of the factors that allowed contaminated drugs to enter the supply chain in the past.

The FDA has requested responses from each repacker within 15 working days. The warning letters also state that failure to correct violations may result in legal action without further notice, including, without limitation, seizure, and injunction.

Additionally, the FDA has issued separate warning letters to other API repackers for similar violations, including Vipor Chemicals Private Ltd., Lumis Global Pharmaceuticals Co. Ltd., Sal Pharma, Huron Pharmaceuticals, Inc. and Fagron, Inc., and added Lumis Global Pharmaceuticals Co. Ltd. and Sal Pharma to import alerts, including 66-40 for failure to meeting CGMPs, to keep their API from ultimately reaching U.S. patients. The agency has also issued alerts about safety issues with repackaged porcine thyroid API and baclofen API.

The FDA will continue to inspect and take action as appropriate against repackers, particularly those in the opioid API supply chain.

The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency also is responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.

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