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CBP Rules that Certain Molded Plastic Hangers are Reuseable / Eligible for Low Duty Hanger Tariff Provision
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP

In a ruling published in the Customs Bulletin of August 17, 2016, CBP held that certain hangers made of plastic with an integral plastic top hook met the “clearly suitable for repetitive use” standard, such that they may be classified separately from their accompanying garments at the hanger rate of duty of 3% (under HTS 3923.90.00), rather than as ordinary apparel packing at the significantly higher garment rates of duty.

In doing so, CBP revoked an earlier ruling concluding otherwise.  The specific articles included certain 15” and 17” top hangers, and a 12” bottom hanger with metal spring clips.

While not a hard and fast rule, CBP has tended to treat plastic hangers with metal swivel hooks as meeting the test for separate classification while treating molded all-plastic hangers as ordinary packing (in the absence of evidence that the hangers are suitable for reuse in the commercial shipment of garments).

Factors impacting CBP’s reconsideration included the following:

1.     the  hangers were made entirely of durable molded plastic and were specially designed for multiple international reuse cycles;

2.     the importer (Sears) had previously received a favorable ruling on a comparable hanger;

3.     the hangers met and exceeded the VICS (Voluntary Interindustry Commerce Solutions) hanger guidelines; and

4.     the hangers were found to exceed the strength and durability on another comparable hanger held to be substantial, suitable for and capable of repeated use.

While the recent ruling does not necessarily reflect a wholesale change in practice, it does suggest that importers should review their GOH programs to determine whether there may exist additional reusable hangers for which separate classification may be appropriate.  In addition, refund opportunities may exist for past shipments where appropriate claims were not made under the hanger duty-savings program.


USITC Makes Determinations in Five-Year (Sunset) Reviews Concerning Narrow Woven Ribbons with Woven Selvedge from China and Taiwan - U.S. International Trade Commission

The U.S. International Trade Commission (USITC) today determined that revoking the existing antidumping and countervailing duty orders on narrow woven ribbons with woven selvedge from China and Taiwan would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.

As a result of the Commission’s affirmative determinations, the existing antidumping and countervailing duty orders on imports of these products from China and Taiwan will remain in place.

All six Commissioners voted in the affirmative.

Today’s action comes under the five-year (sunset) review process required by the Uruguay Round Agreements Act.  See the attached page for background on these five-year (sunset) reviews.

The Commission’s public report Narrow Woven Ribbons with Woven Selvedge from China and Taiwan (Inv. Nos. 701-TA-467 and 731-TA-1164-1165 (Review), USITC Publication 4634, September 2016) will contain the views of the Commission and information developed during the reviews.

The report will be available by September 30, 2016; when available, it may be accessed on the USITC website at: http://pubapps.usitc.gov/applications/publogs/qry_publication_loglist.asp.
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BACKGROUND

The Uruguay Round Agreements Act requires the Department of Commerce to revoke an antidumping or countervailing duty order, or terminate a suspension agreement, after five years unless the Department of Commerce and the USITC determine that revoking the order or terminating the suspension agreement would be likely to lead to continuation or recurrence of dumping or subsidies (Commerce) and of material injury (USITC) within a reasonably foreseeable time.

The Commission’s institution notice in five-year reviews requests that interested parties file responses with the Commission concerning the likely effects of revoking the order under review as well as other information.  Generally within 95 days from institution, the Commission will determine whether the responses it has received reflect an adequate or inadequate level of interest in a full review.  If responses to the USITC’s notice of institution are adequate, or if other circumstances warrant a full review, the Commission conducts a full review, which includes a public hearing and issuance of questionnaires.

The Commission generally does not hold a hearing or conduct further investigative activities in expedited reviews.  Commissioners base their injury determination in expedited reviews on the facts available, including the Commission’s prior injury and review determinations, responses received to its notice of institution, data collected by staff in connection with the review, and information provided by the Department of Commerce.

The five-year (sunset) reviews concerning Narrow Woven Ribbons with Woven Selvedge from China and Taiwan were instituted on August 3, 2015.

On November 6, 2015, the Commission voted to conduct full reviews.  With regard to China, Then-Chairman Meredith M. Broadbent and Commissioners David S. Johanson, F. Scott Kieff, and Rhonda K. Schmidtlein concluded that the domestic group response for these reviews was adequate and the respondent group response was inadequate, but that circumstances warranted full reviews; Then-Vice Chairman Dean A. Pinkert and Commissioner Irving A. Williamson determined that both the domestic and the respondent group responses were adequate and voted for full reviews.

With regard to Taiwan, all six Commissioners concluded that both the domestic and the respondent group responses for this review were adequate and voted for full reviews.

A record of the Commission’s vote to conduct full reviews is available from the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.  Requests may be made by telephone by calling 202-205-1802.


CAFC Affirms Otter Decision on Phone Covers - Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP

On August 24, 2016, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued an important opinion affirming the U.S. Court of International Trade’s (CIT) decision in Otter Products, LLC v. United States, 70 F.Supp. 3d 1281 (Ct. Int’l Trade 2015).  The CIT had held that two styles of smartphone covers were classifiable as other articles of plastic under subheading 3926.90.99, HTSUS, dutiable at 5.3%, and had rejected Customs’ claim that the covers were classifiable as “similar containers” under subheading 4202.99.00, HTSUS, dutiable at 20%.

The two styles of covers at issue, OtterBox’s Commuter and Defender Series, are representative of many styles of smartphone covers imported into the United States.  The Commuter consists of a silicon mid-layer and a rigid outer plastic shell.  It does not cover the screen.  The Defender consists of four pieces: a clear protective membrane to cover the screen, a polycarbonate shell, a plastic belt clip holster, and an outer silicon cover.

In affirming the CIT decision, the CAFC noted that because the phone covers are not specifically named in the list of “containers” set out in heading 4202, the phone covers could only be classified under heading 4202 if they qualified as “similar containers.”  To be similar containers, the covers must share the same essential characteristics and purposes as those containers specifically listed in heading 4202.  The CAFC found that because the phone covers neither store, organize, nor help carry smartphones, they do not sufficiently share the essential characteristics of heading 4202 containers.  Notably, in reaching its decision, the CAFC also relied on the fact that the phone covers are designed to allow a smartphone to remain fully usable inside the cover.  The CAFC found this essential purpose to be inconsistent with the exemplars of heading 4202, which generally do not permit the use of their contents.

The effects of the CAFC decision will likely be far reaching and may offer significant opportunities for duty savings or refunds on covers for smartphones, tablets, and other media devices.  If you would like a copy of the CAFC opinion, have any questions regarding the impact of this case, or if you wish to discuss obtaining duty refunds, please contact Joseph Spraragen ( JSpraragen@GDLSK.com) in our New York Office or Erik Smithweiss ( ESmithweiss@GDLSK.com) or Heather Litman ( HLitman@GDLSK.com) in our Los Angeles Office.


CBP Establishes New Procedures to Investigate Trade Related Allegations - U.S. Customs & Border Protection

WASHINGTON— U.S. Customs and Border Protection (CBP) published an Interim Final Rule (IFR) in the Federal Register today providing guidance for filing allegations of evasion of Antidumping and Countervailing Duty (AD/CVD) orders under the Trade Facilitation and Trade Enforcement Act.  The IFR provides for a 60-day comment period to allow individuals to submit feedback, views or arguments on all aspects of the interim rule.

Title IV, Section 421 of the Enforce and Protect Act of 2015, commonly referred to as EAPA, establishes a formal process for CBP to investigate allegations of evasion of AD/CVD orders. Specifically, it provides for a transparent administrative proceeding where parties can both participate in and learn the outcome of the investigation.  It also provides an option for both administrative and judicial appeals of the investigation.

Currently, any EAPA-related allegations as described in the IFR may be submitted to CBP via the following email address: eapallegations@cbp.dhs.gov. CBP is also developing a web-based portal through which individuals can submit EAPA-related allegations by the end of the calendar year, pending programming updates.


U.S. Timber Committee Reacts to Peru's Timber Verification - Office of the U.S. Trade Representative 

Washington, D.C. - Today, the Office of the United States Trade Representative, on behalf of the United States Timber Committee, issued a statement reviewing the overall findings of the Government of Peru’s verification report regarding a 2015 timber shipment from Peru to the United States, and identifying areas for additional work by Peru.  This first-ever verification was conducted pursuant to a February 2016 request made by the Timber Committee under the United States-Peru Trade Promotion Agreement (PTPA).  In this context, the timber verification provision has served as an important tool to assess the application of Peruvian forestry laws throughout the timber supply chain and to pinpoint areas requiring strengthening so that U.S. timber importers and consumers can be confident that the timber they buy from Peru is legally harvested and exported.

“The Committee's verification request has highlighted both the progress and the challenges that remain in Peru's forestry sector. I recently traveled to Peru and met with President Kuczynski, Prime Minister Lombardi and other incoming ministers with responsibilities in this area. I urged the new Administration to engage quickly with the United States on a focused set of actions to combat illegal logging, including maximizing the use of new technologies to address the challenges – including, for example, full and immediate deployment of the electronic timber tracking system we have been working together to develop,” said Ambassador Michael Froman.

The Forest Annex has catalyzed important reforms in Peru’s forestry sector since its entry into force, including:

  • establishment of key forest sector institutions, such as an independent forestry oversight body - Organismo de Supervisión de los Recursos Forestales y de Fauna Silvestre (OSINFOR) -which has performed over 4000 inspections of 1.7 million hectares from 2009 to June 2016, resulting in thousands of resolutions to sanction illegal activity or mandate corrective actions to improve forest management;
     
  • amendment of Peru’s criminal code in 2008 to include substantial penalties for illegal logging and wildlife trafficking;
     
  • adoption in 2010 of laws and other measures necessary to comply with the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES); and
     
  • enactment of a new Forestry and Wildlife Law in 2011 and implementing regulations in 2015 that improve forest sector governance.

The United States has supported Peru’s efforts to improve forest sector governance by providing nearly $90 million in technical assistance and capacity building since the PTPA entered into force, including development of an electronic timber tracking system that will allow Peruvian authorities to trace every log from stump to port in order to better detect and address illegal logging. While there has been significant progress in addressing illegal logging, including recent public reports of seizures of illegal timber, challenges remain. We are engaging the Government of Peru, as well as non-governmental organizations and businesses operating in Peru to address these challenges.

Background

The PTPA contains a landmark Environment Chapter and Forest Annex, which includes a requirement for Peru to conduct audits and verifications of particular timber producers and exporters upon request from the United States and provides for the United States’ participation in the verification process.


FMCSA Launches New Safety Campaign to Raise Awareness about Sharing the Road with Large Trucks and Buses - Federal Motor Carrier Safety Administration

The U.S. Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) today announced the launch of its new safety-focused campaign, "Our Roads, Our Responsibility," to raise public awareness about how to operate safely around large trucks and buses, or commercial motor vehicles (CMVs).

"Trucks and buses move people and goods around the country, contributing to our economic wellbeing and our way of life," said U.S. Transportation Secretary Anthony Foxx.  "These commercial vehicles also carry additional safety risks, so it’s critical that all road users understand how to safely share the road."

Nearly 12 million CMVs are registered to operate in the United States, and in 2014, drivers logged around 300 billion miles on the nation’s roads.  Large trucks and buses have significant size and weight differences, large blind spots, longer stopping distances, and limited maneuverability, which present serious safety challenges for bicyclists, pedestrians, and drivers of passenger vehicles.

"Our Roads, Our Responsibility supports our agency’s core mission of reducing crashes, injuries, and fatalities involving commercial motor vehicles on our roadways," said FMCSA Administrator Scott Darling.  "Roadway safety is a shared responsibility, and this initiative encourages everyone who uses our roads to be champions for safety.  We look forward to working with all our partners to raise awareness around this issue."

Under the Our Roads, Our Responsibility campaign, FMCSA suggests the following tips while sharing the road with CMVs:

  • Stay out of the "no zones" or blind spots around the front, back and sides of the vehicle
  • Pass safely and make sure you can see the driver in the mirror before passing
  • Don’t cut it close while merging in front of a CMV
  • Anticipate wide turns and consider larger vehicles may require extra turning room
  • Stay focused on the road around you and avoid distraction
  • Be patient driving around large trucks and buses

Visit ShareTheRoadSafely.gov for additional information, including safety tips, statistics, infographics, and more.


FDA Statement on Medical Device User Fee Agreement (MDUFA)
U.S. Food & Drug Administration 

The FDA and representatives from the medical device industry and laboratory community have reached an agreement in principle on proposed recommendations for the fourth reauthorization of a medical device user fee program. Under the new draft agreement, the FDA would be authorized to collect $999.5 million in user fees plus adjustments for inflation over five years starting in October 2017. This funding would provide critical resources to the FDA medical device review program. Details of the draft agreement will be published for public comment in the coming weeks, and the final recommendations are scheduled to be delivered to Congress in January 2017.

“MDUFA IV is the result of more than a year of public input and negotiations with industry, laboratory, patient, and consumer representatives,” said Jeffrey Shuren, M.D., director of the FDA’s Center for Devices and Radiological Health. “This draft agreement represents a substantial investment in the future of the agency’s medical device program and reflects the efforts the FDA has made to meet or exceed its performance goals and to help speed patient access to safe and effective medical devices. This funding will also improve the collection of real-world evidence from different sources across the medical device lifecycle, such as registries, electronic health records, and other digital sources.”

 
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