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06
USTR Announces Outcome of Generalized System of Preferences Review

Office of the United States Trade Representative / www.ustr.gov

Washington, D.C. – United States Trade Representative Ron Kirk announced today the outcome of the Obama Administration’s 2010 Annual Review under the Generalized System of Preferences (GSP) program. Congress created the GSP program in the Trade Act of 1974 to help developing countries expand their economies by allowing certain goods to be imported to the United States duty-free.

Ambassador Kirk said, “GSP is an important element both of this Administration’s trade agenda and of its efforts to help developing countries grow their economies through increased trade. The annual review of GSP helps us to ensure that the program is working as it should and that developments affecting country and product eligibility are taken into account, consistent with the GSP statute. A well-functioning GSP program also helps U.S. businesses, workers, and consumers by lowering the costs of imported goods, including those used as inputs for U.S. manufacturing.”

Based on the Administration’s review of product petitions accepted for the 2010 GSP Annual Review, President Obama determined that one product – certain non-down sleeping bags – should be removed from eligibility for duty-free treatment under GSP because it is import-sensitive in the context of GSP. A petition to remove GSP duty-free treatment for two types of self-adhesive plastic tape was denied.

The Administration continues to review several country practices petitions that seek to withdraw or limit a country’s GSP benefits based on that country’s non-compliance with certain statutory eligibility criteria. As previously announced in the Federal Register, a public hearing will be held at USTR on January 24, 2012 to receive testimony on country practices petitions related to worker rights issues in Bangladesh, Georgia, Niger, Philippines, Sri Lanka and Uzbekistan.

The full results of the 2010 GSP Annual Review are available here and will also be announced in the Federal Register.

BACKGROUND

On October 21, 2011, President Obama signed legislation authorizing the GSP program through July 31, 2013 and retroactively applying GSP trade benefits for eligible products that entered the United States on or after January 1, 2011. Under the GSP program, 129 beneficiary developing countries, including 42 least-developed countries, are eligible to export up to 4,881 types of products to the United States duty-free. In 2010, the total value of imports that entered the United States duty-free under GSP was $22.6 billion.

As part of the annual GSP review, an interagency U.S. Government committee led by USTR receives and considers petitions seeking 1) to add or remove products from the list of those eligible for duty-free treatment under GSP, 2) to waive product exclusions for certain countries based on statutory requirements related to competitiveness (“competitive need limitations”), and 3) to withdraw or limit a country’s eligibility for GSP trade benefits based on statutory eligibility criteria, including whether a country is taking steps to afford internationally recognized standards for worker rights, whether it provides important investor protections including enforcement of arbitral awards, and the extent to which a country adequately and effectively protects intellectual property rights. For those petitions accepted for review, the USTR-led committee holds public hearings, solicits public comments, and – in the case of product petitions – reviews analyses prepared by the U.S. International Trade Commission of the economic impact of product eligibility decisions on domestic industries and consumers. Any change to the lists of products or countries eligible for GSP benefits requires a presidential determination.

The 2010 GSP Annual Review was suspended during the lapse in GSP authorization in 2011. The review of product and country practices petitions accepted as part of the 2010 GSP Annual Review resumed following the reauthorization of the program in October 2011. However, petitions seeking waivers of competitive need limitations (CNLs) were dismissed, as announced in a Federal Register notice on November 1, 2011. In that notice, USTR announced that, in view of the ten-month lapse in authorization of the GSP program, it would not be taking any actions with respect to CNL-related product exclusions based on 2010 trade.

For more information on the GSP program, visit the GSP page on the USTR web site here.


CPSC Reinforces Children’s Sleepwear and Loungewear Enforcement Policy to Apparel Industry

Agency standards designed to prevent burn injuries to children

Consumer Product Safety Commission / www.cpsc.gov

WASHINGTON, D.C. - In an effort to remind the industry of their obligations associated with children’s sleepwear and loungewear, the U.S. Consumer Product Safety Commission’s (CPSC’s) Director of Compliance and Field Operations sent a letter (pdf) to manufacturers, distributors, importers and retailers today reinforcing CPSC staff’s enforcement policy on children’s sleepwear and loungewear.

Highlights in the letter to industry review the definition of children’s sleepwear including loungewear as a type of children’s sleepwear. The Commission’s regulations define the term “children’s sleepwear” to include any product of wearing apparel (in sizes 0–14), such as nightgowns, pajamas, or similar or related items, such as robes, intended to be worn primarily for sleeping or activities related to sleeping. This definition exempts: (1) diapers and underwear; (2) “infant garments,” sized for a child nine months of age or younger; and (3) “tight-fitting garments” that meet specific maximum dimensions.

In the 1990s, a category of products called “loungewear” was introduced into the children’s market. CPSC staff views children’s “loungewear,” or other similar garments marketed as comfort wear, as garments worn primarily for sleep-related activities. Therefore, “loungewear” must comply with the children’s sleepwear standards.

The letter includes a summary of the Consumer Product Safety Improvement Act of 2008 (CPSIA) requirements for manufacturers and importers of children’s sleepwear sold online or in stores. These requirements include tracking labels, a certificate of compliance and testing requirements for phthalates, lead content and lead in surface coatings on snaps, zipper pulls and elsewhere on the product.

The CPSC is the federal safety agency responsible for the enforcement of the Flammable Fabrics Act (FFA), which includes protecting the public from the hazards of flammable fabrics, interior furnishings and wearing apparel, including children’s sleepwear.

The children’s sleepwear standards were developed to prevent children’s sleepwear from igniting due to exposure to ignition sources, such as matches/lighters, candles, ranges, stoves, space heaters and fireplaces. Most of the ignition incidents occurred while children were wearing sleepwear or sleep-related items during the evening before bedtime or in the morning around breakfast time.

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The U.S. Consumer Product Safety Commission (CPSC) is charged with protecting the public from unreasonable risks of injury or death associated with the use of the thousands of consumer products under the agency's jurisdiction. Deaths, injuries, and property damage from consumer product incidents cost the nation more than $900 billion annually. CPSC is committed to protecting consumers and families from products that pose a fire, electrical, chemical, or mechanical hazard. CPSC's work to ensure the safety of consumer products - such as toys, cribs, power tools, cigarette lighters and household chemicals - contributed to a decline in the rate of deaths and injuries associated with consumer products over the past 30 years.

To report a dangerous product or a product-related injury, go online to: www.saferproducts.gov, call CPSC's Hotline at (800) 638-2772 or teletypewriter at (800) 638-8270 for the hearing impaired. Consumers can obtain this news release and product safety information at www.cpsc.gov. To join a free e-mail subscription list, please go to https://www.cpsc.gov/cpsclist.aspx.


Overview of Textiles: A Priority Trade Issue (PTI)

U.S. Customs & Border Protection / www.cbp.gov

The textile industry represents more than $94 billion in annual imports and about 47% of all duties collected by U.S. Customs and Border Protection (CBP). There are approximately 68,000 importers of textile products. The textile industry is a key component of the U.S. manufacturing base. With over 600,000 workers, the overall textile sector is one of the largest manufacturing employers in the United States.

CBP facilitates the legitimate importation of textiles and apparel, while combating the rising number of textile imports that are undervalued, misclassified, or illegally transshipped or entered. The enforcement of Free Trade Agreements (FTA) and legislative mandates continues to make textiles a politically sensitive industry. The average duty rate for textiles is 16% and more than $17 billion of entered textiles and wearing apparel claim preferential tariff treatment, placing textiles and apparel at a high risk for non-compliance.

In fiscal year 2011, CBP seized over $14 million worth of textiles for Quota/Visa and Intellectual Property Rights violations. In addition, CBP issued 48 penalty actions valued at $27 million. More than 10,000 physical exams were performed, over 1,300 textile samples were examined by the laboratories, and 36 audits were initiated.

On-Site Verification

CBP utilizes Textile Production Verification teams (TPVTs) to conduct on-site verification of foreign textile and wearing apparel manufacturers. These teams review and verify production capability and compliance with the terms of FTAs and trade preference programs. The TPVT visits help deter circumvention of the preference program requirements, as well as educate foreign governments and manufacturers.

In 2011, CBP visited 165 factories in 9 countries. 27% of the reviews showed a violation of the trade preference program claimed on the entry and 22% showed a discrepancy related to illegal transshipment.

Areas of Risk

In addition to non-compliance with trade preference programs, CBP is also combating the undervaluation of textile and wearing apparel by entities with no legal right to make entry. Goods are being imported under false identities and addresses, hindering CBP’s efforts to collect additional duties or penalties.

Another area of risk is the misclassification of wearing apparel, often to circumvent high rates of duty. In 2011, 48% of textiles sampled by the laboratories were found to be misclassified.

CBP is also looking closely at the illegal transshipment of goods through the United States into Mexico. These goods, falsely claiming U.S. origin, are exported to Mexico under false NAFTA claims. The exports can range from completed apparel that is using a U.S. origin claim to circumvent Mexico’s dumping duties against China, to fabric. Subsequently, the fabric exports are used in production of apparel imported back to the United States, under false NAFTA claims.


CBP Information Collections on Prior Disclosure, Simplified Entry Under Review

Sandler Travis & Rosenberg PA / www.strtrade.com

U.S. Customs and Border Protection is extending through Jan. 30 the period for public comment on the proposed extension of information collections associated with the following.

Prior Disclosure. The prior disclosure program establishes a method for a potential violator to disclose to CBP that they have committed an error or a violation with respect to the legal requirements of entering merchandise into the United States, such as underpaid tariffs or duties or misclassified merchandise. The procedure for making a prior disclosure is set forth in 19 CFR 162.74, which requires that respondents submit information about the merchandise involved, a specification of the false statements or omissions and what the true and accurate information should be. A valid prior disclosure will entitle the disclosing party to reduced penalties pursuant to 19 USC 1592(c)(4).

Entry/Immediate Delivery Application and Simplified Entry. There are two procedures available to effect the release of imported merchandise, including entry pursuant to 19 USC1484 and immediate delivery pursuant to 19 USC 1448(b). Under both procedures, CBP forms 3461 and 3461 ALT are the source documents in the packages presented to CBP. The information collected on these forms allows CBP officers to verify that the information regarding the consignee and shipment is correct and that a bond is on file. CBP also uses these forms to close out the manifest and establish the obligation to pay estimated duties in the time period prescribed by law or regulation. CBP Form 3461 is also a delivery authorization document and is given to the importing carrier to authorize the release of the merchandise.

CBP notes that under its upcoming pilot test of simplified entry importers or customs brokers may file 12 data elements in lieu of CBP Form 3461, which contains 27 data elements.

Source Document 1... Source Document 2...


DOT Fines AirTran Airways for Violating Price Advertising Rules

Department of Transportation / www.dot.gov

The U.S. Department of Transportation (DOT) today fined AirTran Airways $60,000 for violating federal aviation laws and the Department’s rules prohibiting deceptive price advertising in air travel.

“Consumers have a right to know the full price they will be paying when they buy an airline ticket,” said U.S. Transportation Secretary Ray LaHood. “We will continue to take enforcement action when our airline price advertising rules are violated.”

DOT rules require any advertising that includes a price for air transportation to state the full price to be paid by the consumer, including all carrier-imposed surcharges. The only exceptions currently allowed are government-imposed taxes and fees that are assessed on a per-passenger basis, such as passenger facility charges, which may be stated separately from the advertised fare but must be clearly disclosed in the advertisement so that passengers can easily determine the full price they must pay. Internet fare listings may disclose these separate taxes and fees through a prominent link next to the fare stating that government taxes and fees are extra, and the link must take the viewer directly to information where the type and amount of taxes and fees are displayed.

For a period of time in the fall of 2011, AirTran displayed an advertisement on a number of websites advertising $59 one-way fares. The advertisement noted that additional taxes, fees and exclusions would apply, but with no information on the type or amount of taxes or fees. A consumer clicking on the advertisement was taken to a page on AirTran’s website where a list of routes and prices were displayed. Consumers were not provided details about the taxes and fees until they scrolled to the bottom of the page where the information appeared in fine print.

Under DOT’s recently adopted consumer rule that enhances protections for air travelers, carriers will be required, among other things, to include all government taxes and fees in every advertised fare beginning Jan. 26, 2012.

The consent order is available on the Internet at www.regulations.gov, docket DOT-OST-2012-0002.



FTC Action Bans Payment Processor from Using a Novel Payment Method to Debit Accounts

Federal Trade Commission / www.ftc.gov

Allegedly Debited Millions of Dollars from Consumers' Bank Accounts Without Their Consent

A payment processor and two of its principals are now banned from using a new payment method to process electronic payments under a settlement with the Federal Trade Commission, which resolves charges that they debited consumers' bank accounts without their consent. The settlement furthers the FTC's ongoing efforts to protect financially-strapped consumers during the economic downturn by scrutinizing not only merchants, but all parties who participate in defrauding consumers.

Payment processors provide merchants with the ability to obtain customer payments for products and services via electronic banking. According to the FTC's complaint against Landmark Clearing, Inc., Larry Wubbena, and Eric Loehr, the defendants used a relatively new payment method called "remotely created payment orders" to give merchants access to consumer bank accounts. From the fall of 2008 until the spring of 2011, Landmark allegedly used remotely created payment orders to debit, or attempt to debit, millions of dollars from consumers' accounts without their consent. The FTC charged that in many instances Landmark debited consumers who had never heard of Landmark or its client merchants, had never gone to any of the merchants' websites, and had never knowingly agreed to purchase products or services from the merchants.

According to the FTC's complaint, Landmark's payment processing activities caused substantial injury to thousands of consumers, often those who could least afford to have funds unexpectedly taken from their accounts without authorization. The FTC alleged that as a result of the unauthorized debits, many consumers suffered significant costs from overdraft and bounced check fees, plus the time and expense of closing bank accounts, opening new ones, and ordering new checks. An example is John Chagoya, a consumer in California who was living on a fixed income when money was taken from his account. While checking his bank statement, he noticed a debit from Landmark payable to Direct Benefits Group (DBG), one of Landmark's client merchants. "They never contacted me at all, and I never authorized anyone to debit money from my account." As a result of the debit, Chagoya's account became overdrawn, and he had to pay bounced check fees.

The FTC's complaint alleged that Landmark's clients routinely failed to obtain consumers' authorization for the debits. By continuing to process these debits, Landmark played a critical role in its clients' unlawful business practices.

According to the FTC, remotely created payment orders are created by entering a consumer's name and bank account information into an electronic form and are processed like an ordinary paper check. When printed, remotely created payment orders look like regular bank checks, but instead of having the account holder's signature, they bear a statement such as "Authorized by Account Holder" or "Signature on File." Federal banking regulations require the creator of a remotely created payment order to have the express authorization of a consumer to process the debit. Unlike some payment mechanisms, such as credit cards, remotely created payment orders are not subject to significant oversight and monitoring, making them vulnerable to abuse. As a result, the FTC alleges, they have become a particularly attractive payment method for merchants and processors engaged in fraud and unauthorized debiting.

A red flag indicating unlawful debiting is a high rate of consumers and their banks rejecting and returning transactions submitted for debiting. According to the FTC's complaint, some of Landmark's clients generated astronomical return rates, sometimes higher than 80 percent, which gave Landmark compelling evidence that its client merchants had not obtained valid consumer authorizations for their debits.

"The return rates posted by Landmark's clients provided obvious signs that they were engaged in dubious practices," said David Vladeck, Director of the FTC's Bureau of Consumer Protection. "But the defendants looked the other way. Payment processors who reach into consumer accounts on behalf of clients engaged in fraud will be held accountable."

  • Permanently prohibits the defendants from processing payments for any client they know, or should know, is violating the FTC Act or the Telemarketing Sales Rule (TSR);
  • Requires them to screen and monitor prospective and existing clients to determine whether their business practices violate the FTC Act or the TSR;
  • Requires them to monitor clients' total return rates, reasons for returned transactions, and unusual transaction patterns, values, and volume;
  • Prohibits them from failing to investigate a total return rate exceeding 2.5 percent, and requires them to stop payment processing for a client unless the investigation shows its business practices did not violate the FTC Act; and
  • Bars them from referring any past remote payment clients to third parties for a fee, and from selling or otherwise benefitting from consumers' personal information.

As part of the settlement, Landmark, Wubbena and Loehr have agreed to a $1.5 million judgment that will be suspended upon payment of $126,000 and the surrender of a parcel of land. The full judgment will become due immediately if the defe.ndants are found to have misrepresented their financial condition or fail to meet the terms of the order.

The Commission vote to authorize staff to file the settlement was 4-0. The complaint and consent order were filed in the U.S. District Court for the Eastern District of Texas, Sherman Division, on December 15, 2011. The order was entered by the court on December 29, 2011.

NOTE: The Commission authorizes the filing of a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The consent order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Consent orders have the force of law when signed by the District Court judge


Heroin in Bottles of Scotch Found By CBP at Newark Liberty Airport

U.S. Customs & Border Protection / www.cbp.gov

Newark, N.J. — U. S. Customs and Border Protection (CBP) officers at Newark Liberty International Airport had another interesting find this past week: heroin concealed in bottles of scotch.

On Saturday, December 31, 2011, CBP officers at Newark Liberty Airport intercepted and arrested a Colombian national who was attempting to smuggle nearly 25 pounds of heroin into the United States. Wilfer Bohorquez Rojo, 53, arrived on Saturday afternoon, his flight originating from Medellin, Colombia.

Bohorquez Rojo, a resident of Miami, Florida, was selected for a baggage examination and admitted to the ownership of two pieces of checked luggage. During a search of that luggage, a brown powdery substance was discovered concealed in packages of plastic flags and between glued photographs. Those substances tested positive for heroin. After further scrutiny, four bottles of Royal Salute Scotch were found to contain packages of a substance that also tested positive for heroin. The total amount of the narcotic seized was nearly 25 pounds.

“Heroin is a dangerous narcotic and CBP does its part in keeping these drugs off the streets,” said Robert E. Perez, Director of CBP’s New York Field Operations. “Our officers are determined to protect the American people from these illicit substances.”

The approximate street value of the seized narcotic is nearly $700,000.

Bohorquez Rojo was turned over to agents from Immigration and Customs Enforcement’s Homeland Security Investigations. He now faces federal narcotics smuggling charges and will be prosecuted by the U.S. Attorney’s Office, District of New Jersey.

U.S. Customs and Border Protection is the unified border agency within the Department of Homeland Security charged with the management, control and protection of our nation's borders at and between the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the country while enforcing hundreds of U.S. laws.

 
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