It has long been understood that achieving 100% trade compliance with textile and wearing apparel imports has been challenging for both Customs and the trade community. In a recent presentation, Janet Labuda, the U.S. Customs and Border Protection (CBP) Director of Textile Enforcement, reminded the audience just how daunting that challenge remains…

… Under Ms. Labuda’s direction, CBP has assembled a cross-functional team to review textile and wearing apparel imports from China. Over a relatively short period of time, the team visited 60 companies in Los Angeles, another 60 in Manhattan, and another 61 throughout the rest of the country. The result confirmed CBP’s worst fears.

Interesting Stats:

• Textiles (including wearing apparel) still account for approximately 40% of all duties collected and about 22% of all import entries filed
• More than half of the importers interviewed by CBP did not have the right to make entry

Two additional examples highlighted in Labuda’s presentation, summarized by Trade Lawyers Blog:

In one example, goods worth $33 million were imported by one company, but the person acting as importer was getting paid just 1¢ per garment. In other words, this person did not qualify to act as importer of record, and the value being declared at time of entry was significantly underreported. In other examples, a shipment was originally offered for entry with a value of $200,000. When Customs refused the entry, the corrected entry reflected a value of $1.7 million.

Another entry originally submitted at $250,000 was ultimately revised to $1.5 million.  They had no knowledge about the goods and also had no interest in those goods.

For more info, read on at Trade Lawyers Blog, it is an excellent post!

As a result the council, along with the National Milk Producers Federation, has filed a list of trade barrier measures with the office of the US Trade Representative (USTR.) The council hopes these measures will be included in the annual “2009 National Trade Estimate Report on Foreign Trade Barriers,” a companion piece to the president’s Trade Policy Agenda.

Among their complaints:

Image by Cathy, Sam, Max and Mai

“The China wall: Barriers erected against U.S. exports include the country’s new standards for whey permeate, whey protein concentrate and whey protein isolate. The USDEC says they aren’t based on sound scientific principles and may not be in compliance with China’s obligations under the World Trade Organization.

Mexican milk: Mexico has restrictive levels of Vitamin D fortification for milk which are far lower than those of Australia, Canada, New Zealand and the United States. “These unnecessarily restrictive limits pose a challenge to those wishing to export milk to Mexico.

Changing Canadian cheese: Canada recently changed the composition standards for cheese. Since going into effect at end of 2008, these new measures have significantly dampened demand among Canadian dairy processors for U.S. ingredients that had previously been used to manufacture cheese in the country. USDEC contends Canada’s actions “are clearly in violation of its international trade obligations under the WTO and the North American Free Trade Agreement.”

Other trade barriers cited include unwarranted health certificate requirements in Algeria, unfounded sanitary requirements in India, and requiring companies exporting animal-derived products to Indonesia to divulge proprietary information.”

Read their complete complaints at the American Agriculturalist.

On the Flipside…

The CATO institute’s Downsizing Government reports that the US subsidizes dairy export and imposes import barriers, in the form of tariff rate quotas, limiting access to the US by foreign dairy producers.

Specifically:

“4. Trade Barriers. Imports of dairy products to the United States are limited by “tariff rate quotas,” which are complex tariffs that vary by product and import volume. From the government’s perspective, trade barriers are a logical complement to dairy price supports and marketing orders, which are intended to keep domestic prices artificially high. Without import barriers, U.S. consumers could simply purchase lower-priced foreign dairy products. Thus, to reform dairy markets, both domestic controls and import barriers need to be removed.

5. Export Subsidies. The Dairy Export Incentive program was introduced in 1985 to provide cash subsidies to U.S. dairy producers who sell in foreign markets. Because U.S. dairy policies keep domestic prices above world prices, producers would otherwise have little interest in selling abroad. Thus, the rationale for dairy export subsidies is that they compensate for disincentives caused by other dairy programs.”

What do you think? Does the USDEC have a case, or is it just a case of the pot calling the kettle black?

From “Chinese Export Boom in Evidence at Trade Show”:

By keeping China’s currency, the renminbi, tightly yoked to the weak and weakening dollar, Beijing had made Chinese exports increasingly competitive around the world.

“We are very confident,” said Liu En Tian, the marketing manager of the Huasheng Jiangquan Group, a manufacturer of ceramic tiles in Linyi City. “Already the buyers who are coming this morning are more than last year.”

Like those of many Chinese manufacturers, his company’s exports fell by nearly half last winter because of the global economic slowdown, but they are now down only 20 percent from their peak more than a year ago because of a surge in sales to South America and the Middle East. “The economy will get better very soon” around the world, Mr. Liu said.

But the atmosphere was markedly different in two halls reserved for non-Chinese exporters, amid a mishmash of emblematic exports from 35 countries: designer housewares from Italy, rugs from India, bird’s nest soup from Malaysia and lawyers from the United States.

European exporters were despondent that their products were being priced out of Asian markets because of the relatively dear euro. Americans were witnessing firsthand the changing hierarchy of the global economy.

China is no longer content to put its exports in containers and ship them to foreign ports, leaving the distribution and other moneymaking activities to others.

David J. Yang, a lawyer from San Francisco at the Canton fair, said his law firm had been receiving more and more questions from Chinese companies on how to buy American real estate and how to comply with American laws on imports, immigration and employment.

“Now they are changing the mode — they are looking around and they can expand,” he said.

Wholesalers and distributors from dozens of countries snapped up brochures and business cards, as Chinese exporters said they were convinced that sales were finally rebounding. But the rising demand was from Europe and, especially, from emerging markets, with relatively modest gains from the United States.

As exporters here reviewed their orders for the coming months, they described a consistent pattern: Sales to emerging markets were recovering rapidly, demand from Europe was starting to rebound as the Chinese currency fell against the euro, and buying interest from the United States remained fairly weak.

Read the complete article, “Chinese Export Boom in Evidence at Trade Show” at the New York Times.

The World Trade Organization announced the appeal in a statement to its members. Chinese officials said it was filed Tuesday, but documents were not immediately made public.

A ruling on the appeal is expected early next year.

Read the previous post: “WTO Rules against Chinese Import Restrictions on Foreign Media”

Read the Associated Press article announcing the appeal: “China appeals US win in WTO music, films dispute“

The New BRIC (Sorry but I cannot embed the video directly.)

Disclaimer: They start talking about investing near the end. Please do not consider this financial or legal advice, especially not from myself and Trade-Compliance.org

Indonesia is certainly an up-and-coming economy with a lot of resources – but will it be able to match the growth of the BRIC countries?

What do you think – is Indonesia an import or export market to keep your eye on? What other countries do you think will come out ahead during the coming global recovery?

A WTO spokesperson said the two countries remain in very close competition, and it’s too soon to tell if China or Germany will be the largest exporter for the entire year of 2009 – it depends on exchange rates and the rate of economic recovery in each country.

For more information visit the Journal of Commerce or the World Trade Organization.

(So that’s why magnesium carbonate has been so expensive lately!)

China defended its position on the raw materials, saying they are compliant with WTO regulations and the rules are in place to limit pollution, over expansion of the industry, and to stabilize the world market.

To top it all off, China is also complaining that the US-based search engine Google is contributing to obscene content, violating China’s laws, after the US voiced concern over China’s “green dam” – a filter to prevent “illegal images”.

“Critics have said the program, sold by Jinhui Computer System Engineering Co, is technically flawed and could be used to spy on users and block sites Beijing considers politically offensive.

The proposed new rules raised fundamental questions regarding the transparency of China’s regulatory practices and concerns about compliance with WTO rules, the U.S. officials said.”

The Economist has a good article about duties & exports in relation to this ongoing dispute too: Friction in World Trade: Duties Call.