GLOBAL TRADE PRACTICE GROUP

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1 GLOBAL TRADE PRACTICE GROUP NEWSLETTER JUNE 2007 ALBANY AMSTERDAM ATLANTA BOCA RATON BOSTON CHICAGO DALLAS DELAWARE DENVER FORT LAUDERDALE HOUSTON LAS VEGAS LOS ANGELES MIAMI NEW JERSEY NEW YORK ORANGE COUNTY ORLANDO PHILADELPHIA PHOENIX SACRAMENTO SILICON VALLEY TALLAHASSEE TAMPA TOKYO TYSONS CORNER WASHINGTON, D.C. WEST PALM BEACH ZURICH CONTENTS International Supply Chain Security Measures 2 By Erik de Bie debiee@eu.gtlaw.com Cross Border Trucking: Stuck in the Slow Lane 4 By David Amerine amerined@gtlaw.com Free Trade Agreement Updates 6 By Daniel Schneiderman schneidermand@gtlaw.com Miscellaneous Trade Notes 7 By Daniel Schneiderman schneidermand@gtlaw.com Strategic Alliances with Independent Law Firms* BRUSSELS LONDON MILAN ROME TOKYO

2 INTERNATIONAL SUPPLY CHAIN SECURITY MEASURES Erik de Bie As mentioned in previous newsletters, the European Union (EU) is busy with the implementation of a Customs Security Program (CSI). One of the most important aspects of CSI is the so-called Authorized Economic Operator (AEO) concept. Companies designated as AEOs can benefit from simplified customs compliance procedures and facilitation regarding safety and security related controls. It is expected that many international operating companies will need AEO certification to ensure a fast and efficient supply chain. Developments in the EU have had a major impact not only on supply chains and customs compliance within the EU, but also on trade outside of the EU. Below you will find a brief overview of the developments in the supply chain security initiatives in the trade between the EU and the U.S. and between the EU and China. The EU is also discussing similar measures with other countries. It is recommended that international operating companies review the ongoing developments and, if applicable, benefit from the expected trade facilitations. EU U.S. The AEO concept is comparable with the C-TPAT programs in the U.S. In principle, U.S. companies that already qualify as C-TPAT members should be able to meet the EU AEO standards and vice versa. Until now, the U.S. and the EU didn t agree on automatic recognition of the respective trade partnership programs. This means that a C-TPAT member should go through the AEO application process before obtaining the AEO certification in the EU. There are, however, opportunities to benefit from the C-TPAT status when applying for AEO status in the EU. The goal is that the U.S. and the EU achieve mutual recognition of the C-TPAT and AEO programs as soon as possible. At the beginning of this year a decision was made to create a working group of U.S. and EU customs specialists. This working group will draft a road map towards mutual recognition. Furthermore, the working group will provide recommendations for an U.S. EU agreement on mutual recognition. It is important to know the definition of mutual recognition as agreed upon by the U.S. and the EU: Mutual recognition is an important element in securing the transatlantic supply chain on an end-to-end basis. A detailed comparison of the U.S. C-TPAT programme and the EU AEO programme will enable the U.S. and EU to work ambitiously towards mutual recognition of those economic operators which are authorized as secure economic operators on the basis of the standards and requirements outlined in their respective trade partnership programmes and to provide equivalent benefits to each other s mutually recognized operators. This opens the possibility for importers to rely on that part of the transatlantic supply chain that is covered by their suppliers or vendors which are authorized as AEO or C-TPAT member. 2

3 EU China The EU is also strengthening cooperation on supply chain security between itself and China. The European Commission and China have agreed to strengthen the cooperation to both increase security and to facilitate trade throughout the supply chain. As a first step, they will run a pilot project with the aim of creating smart and secure trade lanes between the EU and China. The cooperation should in the long term lead to reciprocity and mutual recognition of security standards, control results and AEO concepts. China and the EU want to use the latest technology to secure supply chains. They intend to improve information flows, improve risk assessments and targeting of controls. Furthermore, the aim is to ensure quicker release of goods upon arrival, better predictability of delivery times and reduced control efforts for AEOs. If you need more information regarding the EU supply chain security measures and AEO concept, or if you want to receive regular updates on the security developments, please contact Erik de Bie in the Amsterdam office (tel or by debiee@eu.gtlaw.com). 3

4 CROSS BORDER TRUCKING: STUCK IN THE SLOW LANE David Amerine On February 23, 2007, Transportation Secretary Peters announced that the United States would finally begin to implement the cross border trucking provisions of NAFTA. (See GT Newsletter from April 2007) Secretary Peters announced a year long pilot program to allow 100 pre-selected Mexican domiciled trucking companies to operate beyond the limited border commercial zones. However, the Administration s plan to at long last implement the NAFTA trucking obligations has run into a significant political road block. Responding to objections from environmentalist and labor unions, in March the Senate refused to appropriate funds needed to take steps necessary to launch the pilot program. Section 4001 of the Senate s supplemental appropriation bill would have restricted DOT from spending any money on allowing Mexican trucks to operate beyond the border commercial zones. The Senate s ban on funding the pilot program was included in the Supplemental Appropriations bill that would have provided the Defense Department funds for Iraq, which became the second piece of legislation vetoed by President Bush. In March, Congresswoman Boyda introduced legislation limiting the authority of the Secretary of Transportation to grant authority to motor carriers domiciled in Mexico to operate beyond the commercial zones of the United States - Mexico border (H.R. 1773, the Safe American roads Act of 2007). On May 15, 2007, the House passed H.R by a vote of 411 to 3. The Safe American Roads Act limits the authority of Secretary to grant long haul operating authority to carriers domiciled in Mexico under a statutory pilot program. Congress pilot program would be limited to 100 carriers with a maximum of 1,000 vehicles and would be limited to three years, provided that the Secretary complies with all of the provisions of the Act. Before the pilot program can begin the Inspector General (IG) of the Department of Transportation (DOT) must verify that all requirements of Section 305 of Public Law have been met and determine that DOT has sufficient mechanisms in place to apply and enforce the safety laws. The DOT would be required to report to Congress and respond to the findings of the inspector general. DOT must also determine that U.S. carriers are able to begin comparable operations in Mexico. In addition, DOT would be required to publish a detailed description of the pilot program and provide for public comment on issues relating to: Safety audits of Mexican carriers The process by which DOT will revoke Mexican carriers operating authority Specific measures to protect the health and safety of the public Measures to enforce the English language requirement for drivers Various other safety requirements 4

5 According to the Act, before DOT could implement the pilot program it must establish an independent panel to monitor and evaluate the program. Within five days of receiving the independent panel s report the DOT would have to act within five days to address the panel s recommendations. The IG would review the program and submit reports to Congress and DOC on the pilot program. The reports must include a determination of whether DOT has sufficient mechanisms in place to ensure that participants are in full compliance with all motor carrier safety rules. Finally, the Secretary would be required to submit interim and final reports to Congress on the pilot program. The interim report must include actions DOT has taken to address any safety problems raised in the IG reports and address any changes to laws and regulations that may be needed. Faced with mounting public and Congressional opposition to the DOT s proposed pilot program, on May 1 DOT s Federal Motor Carrier Safety Administration (FMCSA) published a notice in the Federal Register soliciting public comments on the Administration s proposed one year pilot program (72 FR ). FMCSA s request for comments set forth, for the first time, a detailed description of the Administration s proposed pilot program. Among other requirements, drivers for participating motor carriers must comply with the entry requirement of the Department of Homeland Security (DHS). Also, participating carriers will be required to comply with all state and federal environmental and emission regulations and all United States safety standards, including: Hours of service Driver medical standards Financial responsibility Drug and alcohol testing Size and weight limits Ability to communicate in English In light of Congressional action to require DOT to implement a pilot program subject to conditions specified by Congress, it is certain that the day Mexican trucks will be permitted to deliver cargo between Mexico and the United States is still far over the horizon. 5

6 FREE TRADE AGREEMENT UPDATES Daniel Schneiderman Andean Community Again Faces Collapse After Internal Discord Over Talks With EU The possibility of negotiations for an association agreement with Europe could be the final undoing of the Andean Community (CAN) comprising Bolivia, Colombia, Ecuador and Peru. CAN s four nations have been unable to agree on conditions to start official talks with the European Union for an accord. Talks for the CAN-EU negotiations collapsed in the beginning of June, when the Bolivian Government objected to four topics: intellectual property rights, government acquisitions, agriculture and the use of international venues to resolve conflicts. USTR Schwab Urges Congress to Approve Colombia FTA Despite Continuing Violence USTR Susan C. Schwab called on members of Congress to set aside their concerns over continuing widespread violence in Colombia, particularly against trade unions, and approve the U.S.-Colombia Free Trade Agreement. Schwab said that the Bush administration shares congressional concerns and will press President Alvaro Uribe to take further steps to curb violence in the country, saying that the Colombian government has already done a lot to address the issue. Five Democratic Lawmakers Blast Proposed FTA with Colombia Five Democratic House lawmakers said that the high rate of violence against trade unionists in Colombia makes it an unfit FTA partner for the United States. The lawmakers Representatives Jan Schakowsky (D- Illinois), Jim McGovern (D-Massachusetts), Linda Sanchez (D-California), Betty Sutton (D-Ohio) and Phil Hare (D-Illinois) spoke at a Capitol Hill press conference joined by labor and human rights leaders. The press conference coincided with Colombian President Alvaro Uribe s visit to Washington to try to breathe new life into the pending U.S.-Colombia FTA and to push for more military and counter-narcotics aide from Congress. 6

7 MISCELLANEOUS TRADE NOTES Daniel Schneiderman China Singles Out U.S. Products That Do Not Meet Sanitary Standards Turning the tables on the United States amid growing worries over dangerous Chinese products, Chinese government officials said some health supplements and raisins imported from the U.S. failed to meet China s safety standards and have been returned or destroyed. In Washington, a top U.S. food safety official said the FDA was seeking more information from its Chinese counterparts, including whether they are factual or in retaliation for U.S. actions. The announcement said Chinese inspectors in the ports of Ningbo and Shenzen found bacteria and sulfur dioxide in products shipped by three American companies. Indian Minister Rejects EU Claims Of G-4 Backsliding in Doha Talks Indian Commerce Minister Kamal Nath rejected charges from the EU s trade chief that Brazil, India and the United States were backsliding in the Doha Round trade talks by seeking a less ambitious deal. Nath also expressed confidence that the G-4 would achieve a successful outcome in their intensified negotiations by the end of June. Nath, USTR Susan Schwab, EU Trade Commissioner Peter Mandelson and Brazilian Foreign Minister Celso Amorim are due to meet in Potsdam, Germany, for what the Indian commerce minister admitted would be a crucial round of talks. It s a very important meeting, Nath declared. It s a meeting which must produce substantive results. Canada Requests WTO Panel to Rule On U.S. Agriculture Subsidies, Export Credit Program Canada requested the establishment of a WTO dispute panel to rule whether the United States violated global trade rules by providing excessive subsidies to its farmers and by paying illegal agricultural export subsidies. The Canadian request will be considered at a June 20 meeting of the WTO s DSB. The U.S. can block the Canadian request, but any subsequent request from Ottawa would automatically be accepted by the DSB. Canadian officials said their action was designed to influence the ongoing Doha Round talks on agricultural trade, where the United States is under pressure to reduce its spending limit on trade-distorting farm subsidies, as well as influence the drafting of the next U.S. farm bill, which will determine U.S. spending over the next five years. Newsletter edited by: Daniel Schneiderman schneidermand@gtlaw.com This Greenberg Traurig Newsletter is issued for informational purposes only and is not intended to be construed or used as general legal advice. The hiring of a lawyer is an important decision. Before you decide, ask us to send you free written information about our qualifications and our experience. Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Greenberg Traurig has entered into Strategic Alliances with the following independent law firms: Olswang in London and Brussels; Studio Santa Maria in Milan and Rome; and the Hayabusa Asuka Law Offices in Tokyo. Greenberg Traurig is not responsible for any legal or other services rendered by attorneys employed by the Strategic Alliance firms NAT-GLB 7