C-AIR TIMES ISSUE #596 - Friday, September 20, 2019 08:02

Program Provided Too Few Incentives to Help Boost Competitiveness of Dominican Apparel Exports, Concludes USITC in Its Final Report - U.S. International Trade Commission

Ten years after its implementation, the Earned Import Allowance Program (EIAP) did not provide enough incentives to significantly boost Dominican apparel exports to the U.S. market, reports the U.S. International Trade Commission (USITC) in its publication Earned Import Allowance Program: Evaluation of the Effectiveness of the Program for Certain Apparel from the Dominican Republic; Tenth Annual Review.

The program terminated by statute on December 1, 2018.

The EIAP allowed apparel manufacturers in the Dominican Republic who used U.S. fabric to produce certain apparel to earn a credit that could be used to ship eligible apparel made with non-U.S.-produced fabric into the United States duty free. The Dominican Republic-Central America-United States Free Trade Agreement Implementation Act, as amended, required the USITC, an independent, nonpartisan, factfinding federal agency, to evaluate annually the effectiveness of the EIAP program and make recommendations for improvements.

The USITC's 10th and final annual review was submitted to the U.S. House of Representatives Committee on Ways and Means and the U.S. Senate Committee on Finance on September 17, 2019. Highlights of the report follow.

Of the 13 registered firms, only four used the program in its final year, the same as the prior year.
In 2018, U.S. imports of woven cotton bottoms from the Dominican Republic fell 4 percent by value to just under $1.4 million in 2018, down from $1.5 million in 2017, and fell 2 percent by quantity to 150,716 SMEs in 2018 from 153,679 SMEs in 2017. The continued decline in U.S. imports under the EIAP in its final year likely reflects a significant decline in woven trouser manufacturing capacity in the Dominican Republic, a simultaneous shift by U.S. importers to Asian suppliers during the life of the program, and anticipation of the expiration of the program on December 1, 2018. The general decline in the program’s usage after U.S. imports under the EIAP peaked in 2010 may also reflect the lack of changes made to the program despite the recommendations put forth since the first annual review.
No new recommendations to improve the program were received during the 10th annual review of the EIAP, nor were there any known requests or efforts to extend the program beyond its expiration date. During the previous nine annual reviews, the government of the Dominican Republic, industry representatives, and users of the program consistently made three principal recommendations to improve the EIAP: 1) lower the 2-for-1 ratio of U.S. to foreign fabric to a 1-for-1 ratio; 2) expand the program coverage to enable other types of fabrics and apparel items to be included in the EIAP; and 3) change the requirement that dyeing and finishing of eligible fabrics occur in the United States.

Earned Import Allowance Program: Evaluation of the Effectiveness of the Program for Certain Apparel from the Dominican Republic; Tenth Annual Review (Inv. No. 332-503, USITC Publication 4950, September 2019) is available on the USITC's Internet site at http://www.usitc.gov/publications/332/pub4950.pdf

USITC general factfinding investigations, such as this, 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, and the Senate Committee on Finance. The resulting reports convey the Commission's objective findings and independent analyses on the subject 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 investigations reports are subsequently released to the public, unless they are classified by the requester for national security reasons.

Glycine from Thailand Injures U.S. Industry, Says USITC - U.S. International Trade Commission

The United States International Trade Commission (USITC) today determined that a U.S. Industry is materially injured by reason of imports of glycine from Thailand that the U.S. Department of Commerce (Commerce) has determined are sold in the United States at less than fair value.

Chairman David S. Johanson and Commissioners Rhonda K. Schmidtlein and Jason E. Kearns voted in the affirmative. Commissioners Randolph J. Stayin and Amy A. Karpel did not participate in these votes.

As a result of the USITC’s affirmative determination, Commerce will issue an antidumping duty order on imports of this product from Thailand. The Commission’s public report Glycine from Thailand (Inv. No. 731-TA-1415 (Final), USITC Publication 4977, October 2019) will contain the views of the Commission and information developed during the investigation. The report will be available by October 23, 2019; when available, it may be accessed on the USITC website at: https://www.usitc.gov/commission_publications_library

Refillable Stainless Steel Kegs from Mexico Retards U.S. Industry, says USITC - U.S. International Trade Commission

The United States International Trade Commission (USITC) today determined that the establishment of a U.S. industry is materially retarded by reason of imports of refillable stainless steel kegs from Mexico that the U.S. Department of Commerce (Commerce) has determined are sold in the United States at less than fair value.

Chairman David S. Johanson and Commissioners Rhonda K. Schmidtlein and Jason E. Kearns voted in the affirmative. Commissioners Randolph J. Stayin and Amy A. Karpel did not participate in this vote.

As a result of the USITC’s affirmative determination, Commerce will issue an antidumping duty order on imports of this product from Mexico.

The Commission also made a negative finding concerning critical circumstances with regard to imports of this product from Mexico. As a result, imports of refillable stainless steel kegs from Mexico will not be subject to retroactive antidumping duties.

The Commission’s public report Refillable Stainless Steel Kegs from Mexico (Inv. No. 731-TA-1427 (Final), USITC Publication 4976, October 2019) will contain the views of the Commission and information developed during the investigation.

The report will be available by October 23, 2019; when available, it may be accessed on the USITC website at: https://www.usitc.gov/commission_publications_library.

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UNITED STATES INTERNATIONAL TRADE COMMISSION
Washington, DC 20436
FACTUAL HIGHLIGHTS
Refillable Stainless Steel Kegs from Mexico
Investigation No. 731-TA-1427 (Final)

Product Description: Refillable stainless steel kegs are approximately cylindrically shaped containers made from stainless steel (regardless of finish, gauge, thickness, or grade, and whether or not covered by or encased in other materials) and designed to hold, transport, and dispense beer, wine, and other liquids. These kegs are compatible with a ''D Sankey'' extractor (spear) for dispensing, cleaning, and refilling, and have a nominal liquid volume capacity of 10 liters or more. They may be imported either assembled or unassembled, with or without all components (including spears, couplers or taps, necks, collars, and valves), and filled or unfilled. Specifically excluded are: (1) vessels or containers that are not approximately cylindrically shaped; (2) stainless steel kegs, vessels, or containers that have either a ''ball lock'' or a ''pin lock'' valve system; (3) spears, couplers or taps, necks, collars, and valves that are not imported with the subject merchandise; and (4) filled stainless steel kegs designated by the Commissioner of Customs as "Instruments of International Traffic" within the meaning of Section 332(a) of the Tariff Act of 1930, as amended.

Status of Proceedings:

Type of investigation: Final phase antidumping duty investigation.
Petitioners: American Keg Company LLC, Pottstown, PA.
USITC Institution Date: September 20, 2018.
USITC Hearing Date: August 14, 2019.
USITC Vote Date: September 16, 2019.
USITC Notification to Commerce Date: October 3, 2019.

U.S. Industry in 2018:

Number of U.S. producers: One.
Location of producer’s plants: Pennsylvania.
Production and related workers: 1
U.S. producer’s U.S. shipments: 1
Apparent U.S. consumption: 1
Ratio of subject imports to apparent U.S. consumption: 1

U.S. Imports in 2018:

Subject imports: $93.7 million.
Nonsubject imports: 1
Leading import sources: China, Germany, and Mexico.

____________________________

1 Withheld to avoid disclosure of business proprietary information.

Proposed Interpretive Rule on Demurrage and Detention Issued - Federal Maritime Commission

The Commission is seeking public comment on a proposed interpretive rule on demurrage and detention under the Shipping Act.

This interpretive rule would provide the public with guidance about how the Commission assesses the reasonableness of demurrage and detention practices and regulations under the Shipping Act. The interpretive rule describes a non-exclusive list of factors the Commission may consider in evaluating claims and complaints that come before the agency under 46 U.S.C. 41102(c) and 46 C.F.R. 545.4(d).

The Commission voted last week to adopt Commissioner Rebecca Dye’s recommendations on Fact Finding 28. Her first recommendation was that the Commission issue guidance in the form of an interpretive rule.

Interested parties have until Thursday, October 17, 2019, to provide comments in response to the NPRM. The proposed rule contains specific guidance on how to submit comments. While the Commission will provide confidential treatment for identified confidential information to the extent allowed by law, comments are considered to be part of the public record.

Federal Register Notices:

Treasury Sanctions North Korean State-Sponsored Malicious Cyber Groups - U.S. Department of Treasury

WASHINGTON – Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions targeting three North Korean state-sponsored malicious cyber groups responsible for North Korea’s malicious cyber activity on critical infrastructure. Today’s actions identify North Korean hacking groups commonly known within the global cyber security private industry as “Lazarus Group,” “Bluenoroff,” and “Andariel” as agencies, instrumentalities, or controlled entities of the Government of North Korea pursuant to Executive Order (E.O.) 13722, based on their relationship to the Reconnaissance General Bureau (RGB). Lazarus Group, Bluenoroff, and Andariel are controlled by the U.S.- and United Nations (UN)-designated RGB, which is North Korea’s primary intelligence bureau.

“Treasury is taking action against North Korean hacking groups that have been perpetrating cyber attacks to support illicit weapon and missile programs,” said Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence. “We will continue to enforce existing U.S. and UN sanctions against North Korea and work with the international community to improve cybersecurity of financial networks.”

Malicious Cyber Activity by Lazarus Group, Bluenoroff, and Andariel

Lazarus Group targets institutions such as government, military, financial, manufacturing, publishing, media, entertainment, and international shipping companies, as well as critical infrastructure, using tactics such as cyber espionage, data theft, monetary heists, and destructive malware operations. Created by the North Korean Government as early as 2007, this malicious cyber group is subordinate to the 110th Research Center, 3rd Bureau of the RGB. The 3rd Bureau is also known as the 3rd Technical Surveillance Bureau and is responsible for North Korea’s cyber operations. In addition to the RGB’s role as the main entity responsible for North Korea’s malicious cyber activities, the RGB is also the principal North Korean intelligence agency and is involved in the trade of North Korean arms. The RGB was designated by OFAC on January 2, 2015 pursuant to E.O. 13687 for being a controlled entity of the Government of North Korea.

The RGB was also listed in the annex to E.O. 13551 on August 30, 2010. The UN also designated the RGB on March 2, 2016.

Lazarus Group was involved in the destructive WannaCry 2.0 ransomware attack which the United States, Australia, Canada, New Zealand and the United Kingdom publicly attributed to North Korea in December 2017. Denmark and Japan issued supporting statements and several U.S. companies took independent actions to disrupt the North Korean cyber activity. WannaCry affected at least 150 countries around the world and shut down approximately three hundred thousand computers. Among the publicly identified victims was the United Kingdom’s (UK) National Health Service (NHS). Approximately one third of the UK’s secondary care hospitals — hospitals that provide intensive care units and other emergency services — and eight percent of general medical practices in the UK were crippled by the ransomware attack, leading to the cancellation of more than 19,000 appointments and ultimately costing the NHS over $112 million, making it the biggest known ransomware outbreak in history. Lazarus Group was also directly responsible for the well-known 2014 cyber-attacks of Sony Pictures Entertainment (SPE).

Also designated today are two sub-groups of Lazarus Group, the first of which is referred to as Bluenoroff by many private security firms. Bluenoroff was formed by the North Korean government to earn revenue illicitly in response to increased global sanctions. Bluenoroff conducts malicious cyber activity in the form of cyber-enabled heists against foreign financial institutions on behalf of the North Korean regime to generate revenue, in part, for its growing nuclear weapons and ballistic missile programs. Cybersecurity firms first noticed this group as early as 2014, when North Korea’s cyber efforts began to focus on financial gain in addition to obtaining military information, destabilizing networks, or intimidating adversaries. According to industry and press reporting, by 2018, Bluenoroff had attempted to steal over $1.1 billion dollars from financial institutions and, according to press reports, had successfully carried out such operations against banks in Bangladesh, India, Mexico, Pakistan, Philippines, South Korea, Taiwan, Turkey, Chile, and Vietnam.

According to cyber security firms, typically through phishing and backdoor intrusions, Bluenoroff conducted successful operations targeting more than 16 organizations across 11 countries, including the SWIFT messaging system, financial institutions, and cryptocurrency exchanges. In one of Bluenoroff’s most notorious cyber activities, the hacking group worked jointly with Lazarus Group to steal approximately $80 million dollars from the Central Bank of Bangladesh’s New York Federal Reserve account. By leveraging malware similar to that seen in the SPE cyber attack, Bluenoroff and Lazarus Group made over 36 large fund transfer requests using stolen SWIFT credentials in an attempt to steal a total of $851 million before a typographical error alerted personnel to prevent the additional funds from being stolen.

The second Lazarus Group sub-group designated today is Andariel. It focuses on conducting malicious cyber operations on foreign businesses, government agencies, financial services infrastructure, private corporations, and businesses, as well as the defense industry. Cybersecurity firms first noticed Andariel around 2015, and reported that Andariel consistently executes cybercrime to generate revenue and targets South Korea’s government and infrastructure in order to collect information and to create disorder.

Specifically, Andariel was observed by cyber security firms attempting to steal bank card information by hacking into ATMs to withdraw cash or steal customer information to later sell on the black market. Andariel is also responsible for developing and creating unique malware to hack into online poker and gambling sites to steal cash.

According to industry and press reporting, beyond its criminal efforts, Andariel continues to conduct malicious cyber activity against South Korea government personnel and the South Korean military in an effort to gather intelligence. One case spotted in September 2016 was a cyber intrusion into the personal computer of the South Korean Defense Minister in office at that time and the Defense Ministry’s intranet in order to extract military operations intelligence.

In addition to malicious cyber activities on conventional financial institutions, foreign governments, major companies, and infrastructure, North Korea’s cyber operations also target Virtual Asset Providers and cryptocurrency exchanges to possibly assist in obfuscating revenue streams and cyber-enabled thefts that also potentially fund North Korea’s WMD and ballistic missile programs. According to industry and press reporting, these three state-sponsored hacking groups likely stole around $571 million in cryptocurrency alone, from five exchanges in Asia between January 2017 and September 2018.

U.S. Government Efforts to Combat North Korean Cyber Threats

Separately, the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) and U.S. Cyber Command (USCYBERCOM) have in recent months worked in tandem to disclose malware samples to the private cybersecurity industry, several of which were later attributed to North Korean cyber actors, as part of an ongoing effort to protect the U.S. financial system and other critical infrastructure as well as to have the greatest impact on improving global security. This, along with today’s OFAC action, is an example of a government-wide approach to defending and protecting against an increasing North Korean cyber threat and is one more step in the persistent engagement vision set forth by USCYBERCOM.

As a result of today’s action, all property and interests in property of these entities, and of any entities that are owned, directly or indirectly, 50 percent or more by the designated entities, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.

In addition, persons that engage in certain transactions with the entities designated today may themselves be exposed to designation. Furthermore, any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the entities designated today could be subject to U.S. correspondent account or payable-through sanctions.