blaw test 3

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Explain Tariff Engineering and how it can be helpful to an importer. Describe a few examples from Class or Textbook

An importer is free to engineer his product in order to take advantage of tariff laws, unless fraud (ie added molasses to sugar, crossed border, then removed it)

___________ provides information on International standards for the protection of plants animals and foodstuffs.

Codex Alimentarius

Describe the characteristics of the International Organization for Standardization (ISO):

In Geneva, non-profit, non-binding. International standardization makes designing and building products cheaper and trade easier.

Describe the purpose of Multilateral Trade Negotiations and its affect on tariffs and nontariff barriers.

Reduce tariffs and nontariff barriers (NTB); nondiscrimination and unconditional MFN; national treatment; eliminate quotas and NTB (convert NTB to tariffs and then reduce), transparency critical

Describe Special 301.

US uses this law to assure that American-owned intellectual property rights (IPRs) are adequately protected in foreign countries. Each year USTR identifies countries. Worst offenders are tagged "priority foreign countries" which requires an investigation. USTR also maintains a "watch list"

What is the purpose of the World Trade Organization?

an umbrella organization that sets rules on international trade and dispute resolution. Major functions: Facilitate cooperation on trade issues Administer WTC agreements Forum for future trade negotiations Monitor national trade policies Assist developing countries (technical assistance) Forum for settlement of trade disputes

What are License Requirements based on?

ask first if need a license (small %) based on: ITEM (technical characteristics), DESTINATION, END USER and END USE. Must also know reason for control (nat'l sec'y, foreign policy, short supply

What two things do Export Controls attempt to balance?

balance national security with economic competitiveness (trade)

Potential changes in Rules of Origin would move more towards a _______ ________

maybe moving to 'tariff shift.' If change results in different tariff rate, then same as 'substantial transformation.' (Maybe WTO change also.)

Why is the principle of Transparency important when learning about a countries trade regulation?

need to be able to know or determine what a country's requirements are; what tariff rate, licensing requirements, etc? Also, if country changes without notice then causes problems for importers.

Are International Transportation charges included in the transaction value?

no

Do you have a right to export or travel across international borders?

no it's a privilege

What is a Global Safeguard?

not restricted to a particular country but to a product or an industry. Ex. if increased imports of non-rubber footwear are causing serious injury to a domestic industry, the safeguards must be applied globally to all imports of non-rubber footwear.

What are the 3 things that are looked at when determining an items Dutiable Status?

- the classification and coding of the article (what it is) - the customs value of the article (transaction value) -the country of origin of the article

How are GATS principles similar to the GATT principles

"market access," MFN, national treatment/nondiscrimination

For Safeguard measures, the standard is whether the market disruption caused or threatened to cause serious injury. For dumping cases, what type of injury must have occurred?

"material injury requirement"

What are the criticisms of Section 301?

Criticized bc allows unilateral action by US rather than use WTO, but law permits WTO dispute resolution process to occur prior to using sec 301.

Describe the difference between Non-tariff barriers and Indirect Non-tariff barriers.

Direct non-tariff barriers: limit imports or deny access to markets such as embargoes, quotas, licensing schemes Indirect non-tariff barriers: laws, regulations, rules that make it difficult/costly to import. Import licensing schemes and customs procedures can be trade barriers.

What are the EC measures concerning Meat and Meat products (Hormones) (1997)?

EC's ban on sale of beef containing residual growth hormones violated agreement on sanitary and phytosanitary measures.

Describe the difference between a General License and a Validated license.

General License -- not required for individual exporters; automatic Shipper's Export Declaration - provides detailed info on export Destination Control Stmt - alerts recipient that diversion of goods not allowed. Validated License--specific license for specific exporter for specific destination

Define the WTO Antidumping Agreement- GATT 1994 and its effects. What are the 3 factors that are considered?

Has "material injury" requirement. Antidumping duties are only applied after finding of a "material injury" or when threat of material injury. Material injury is "not inconsequential, immaterial, or unimportant." Standar is less than "serious injury" standard for safeguard actions. Factors: 1. Volume of the dumped imports 2. effect of the imports on prices in the domestic market for like products and 3. impact on domestic injury

What do Product Testing, Inspections, and Certifications help ensure?

Insure compliance with product safety, quality, and technical standards and regulations

According to GATT 1994, Describe the purposes for the following Principle of Trade Law: National Treatment

Intended to ensure that imported products will not be subject to discriminatory treatment under the laws of the importing nation. Applies AFTER goods enter country. Ex: Japan taxes on alcoholic beverages (1996 WTO.) Japan's tax policy violated GATT provisions regarding national treatment

What are the three limits on safeguards?

Limits on use of safeguards: must not exceed 4 yrs (unless extended to 8), no more restrictive than necessary, tariffs preferred over quotas

What qualifies as making a "Materially False Statement"?

Material: if it refers to identity, quality, value, source or country of origin of the merchandise, or affects duty, or right to be imported.

What can a company do to help with their business strategy to ensure they are following the rules of Customs?

Self report violations - Can reduce penalties. 'Enforced compliance" - Customs investigates and finds; 'informed compliance' - importer does. Responsibility on importer to comply with laws - no ignorance excuses. Binding Rulings from Customs -- their official position on specific item or transaction. Requesting one (in writing) can help plan business strategy.

Describe the outcome of the Home Plastics Corp. v. United States (1996) case and how it relates to the concept of defining a good by its Essential Character.

Shower curtain set essential character, not relative specificity applies; goods are classified by shower liner not curtain. -- Only consider classifications at the Subheading Level after determine the heading

What are Tariffs? What is the difference between an Ad-valorem Tariff and a Specific of Flat Tariff?

Tariffs: most common barrier to trade, same as duty on goods. $, tax levied on goods by country of importation. Ad Valorem: based on value of goods Specific or flat: based on # of units

What are Trade Barriers and Import Trade Barriers? How can these barriers affect the decisions a business makes?

Trade barrier: any impediment to trade in services or goods. Import trade barrier: any impediment, indirect, to the entrance or sale of imported goods or services. Impact: may make decisions based on current tariffs/rules

What does the WTO have to say regarding Intellectual Property Rights (TRIPS)?

WTO countries agree to abide by intellectual property conventions. Domestic and foreign IPR (intellectual property rights) treated the same, and enforcement strengthened. members are bringing their laws into compliance with TRIPS. (US had to change our patent law to comply with time frame in TRIPS)

Can a country still require licenses for the services that are provided?

Yes, they cannot be overly burdensome just to restrict trade though. Must be based on objective criteria such as education, experience, or ability.

What is the primary purpose of the Export Administration Act?

to balance need to facilitate growth in export trade with national security interests; expired in 1994 but annually extended by EO since national security reasons.

What qualifies as a "Prohibited Subsidiary"?

"export subsidies" or "import substitution subsidy." If funds available specifically for products to be exported then prohibited. If govt makes payment contingent upon recipient using or purchasing domestically made goods over imported goods, then it is "import substitution subsidy"

According to GATT 1994, Describe the purposes for the following Principle of Trade Law: Licenses, and other non-trade barriers

-Licenses for legitimate purposes are ok, but not for protectionism. Should not be discretionary by government but based on requirements that can be determined and followed. -GATT permits tariffs to regulate imports but not quotas or other quantitative restrictions. EX: for public morals, health, animal or plant life or health, national treasures, conservation (maybe), etc -Tariffication - process in which quotas, licenses, other non-tariff barriers converted to tariffs, which can then gradually be decreased -Quantitative restrictions: balance of payments exception and developing countries. See the India- Quantitative Restrictions on Imports of Agricultural, Textile, & Industrial Products (1999) case. US challenged india's restrictions and WTO panel found they were not necessary

what are the Chinese Standards and Technical Regulations?

-enormous complex bureaucratic regulatory framework -laws are administered by General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) -Compulsory testing, inspections, certifications, accreditation of testing labs -Chinese inspectors visit foreign plants to see if meet quality and safety requirements -Product imports must have China Compulsory Certification Mark (CCC)

What are the 2 exceptions to normal WTO Trade Rules?

1. Trade preferences for developing countries - US Generalized System of Preferences - allows beneficiary developing countries to have goods enter US either duty-free or reduced tariff. 129 countries have GSP status. Can 'graduate' out if economy improves sufficiently. If a "least developed beneficiary country" have even better benefits. US has rqmts on countries to get GSP status, and a president can deny for political/economic reasons Caribbean basin initiative: trade preference to goods imported from carribean. Same criteria as GSP but not annual review and don't graduate out. About 17 countries. Africa growth and opportunity act: 48 sub-saharan africa countries. Eligible products duty-free. 2. Free trade areas and customs unions: a. free trade area- 2 or more countries enter into agreement that reduces or eliminates tariffs, removes trade barriers. Ex: NAFTA b. customs unions - similar to above, but also removes restrictions on free movement of money, labor, other factors of productions.

GATT has an escape clause so countries can temporarily avoid their previous tariff concessions where the market disruption:

1) as a result of unforeseen developments 2) due to effect of tariff concession or obligation under trade agreement 3) increased quantities of imported product 4) are causing or threaten to cause serious injury to domestic producers of directly competitive products

What are the WTO Agreements on Technical Trade Barriers? What does it contain and not contain?

1. One of the uruguay round agreements 1994 governing use of technical regulations, product standards, testing and certifications by WTO member countries. 2. Agreement does not contain standards, nor mandate product performance, design or safety 3. Agreement prohibits use of regs or standards to discriminate against foreign goods imports 4. Methods to minimize barriers -- Harmonization, equivalence, & mutual recognition

If there is a dispute between GATT and WTO, what are the steps for resolution?

1. have quasi-judicial process for resolving disputes when deadlocked. Trade consultations, then dispute resolution body. 2. only a government can bring a "complaint" against another government 3. See the European Communities-Regime for the Importation, Sale, and Distribution of Bananas case. US could call for the convening of a WTO panel to question European Community import barriers. -steps: The WTO-DSB appoints panels, adopts panel decisions, and authorizes the withdrawal or suspension of concessions. A government requests consultations to seek a solution. If no solution is found within 60 days, the complaining party may request that a panel hear the case. (Historically, most disputes are resolved in the consultation stage, which in some cases can last for years.) The panel consists of three to five individuals nominated by the WTO Secretariat. Other member nations with a "substantial interest" in the case often join in a complaint, make written submissions, and appear at the oral argument before the panel. A panel determines the facts of the case and whether there have been violations of the terms of a WTO agreement. It may call on experts for advice on scientific and technical matters. All panel deliberations are confidential. The panel must submit a written report to the parties and to other members within six months (three months in urgent cases). Unless the parties file for an appeal to the Appellate Body, the panel's report goes to the WTO-DSB where it will automatically be upheld unless there is a consensus of all member countries to reject the decision. A WTO-DSB vote to reject must be by consensus. Thus the "losing" nation in a dispute settlement case cannot block the decision of a panel without a unanimous vote of all members (including getting the "winning" party in the dispute to agree to block a decision it just won). The process takes about one year, from the beginning of consultations to adoption of a report by the WTO-DSB. Panel decisions may be appealed to the WTO Appellate Body on issues of law related to interpretation of the relevant provisions of the WTO agreement in question. Each case is heard by three judges (out of a permanent body of seven judges). They may uphold, modify, or reverse a panel decision. Judges serving on the Appellate Body will be chosen on the basis of their expertise in international trade law to serve for four-year terms. They usually come from government, universities, or international law practices. Appeals are limited to issues of law covered in the panel report and legal interpretations considered by the panel. The appellate report is final unless the WTO-DSB rejects it by consensus vote within 30 days. If the panel report finds that the offending party has violated a WTO agreement, the WTO-DSB can recommend ways for the offending party to come into compliance. The offending party has 30 days in which to respond how it plans to comply with the panel's ruling. Compliance must be within a reasonable time. If no immediate solution is available, the offending party can voluntarily make compensatory adjustments to the complaining party as a temporary measure. If no settlement is reached or if the trade violation is not removed, the panel may recommend that the General Council authorize the withdrawal or suspension of a concession by the complaining party. This is the equivalent of a trade sanction. Sanctions should be in an amount equal to the impact that the breach of agreement had on the complaining party. Sanctions are to be temporary and remain in force only until the offending party's violation is removed.

What was the scope of the Uruguay round of GATT? What Organization was created as a result of this round?

123 countries; cut tariffs; bound or capped rates on most products to current rate; eliminated many non-tariff barriers. Expanded to trade-in services. Created WTO; creating binding dispute settlement process

See Argentina Safeguard Measures on Imports of Footwear (WTO 1999) for an example of GATT escape clause. What was the ultimate ruling?

Argentina failed to show that increased imports were the cause of serious harm to domestic footwear so their tariff increase from 35% to 200% was improper. Appellate body did not address whether the increased imports were caused by "unforeseen developments"

What are the 4 requirements goods must meet to have officially "entered" the US?

Arrived at U.S. port of entry. Goods are permitted (ie no embargoes). Delivery is authorized by Customs after inspection and release. Estimated duties have been paid or customs bond posted.

According to GATT 1994, Describe the purposes for the following Principle of Trade Law: Tariff Concessions, Bound Rates and Tariff Schedules

Article II of GATT calls for member nations to cooperate in lowering tariffs. Tariff bindings are capped at agreed rate (bound rate) and published in country's schedule of concessions. Concession example: country A lowers tariffs on one product if country B lowers on another product. If country wants to modify/withdraw concession, must negotiate directly with county most affected and offset. (generally must lower tariff on something else)

What is included in an Electronic filing to the Automated Export System?

BEFORE your export shipment, must electronically file with U.S. Census Bureau an Electronic Export Information (EEI). Required if export license was required or shipment over $2500. (unless Canada). Includes item description, weight, selling price, US state of origin, foreign consignee, port and transport info, tariff classification, licensing info from BIS and other data.

Define Boycott. Why are Antiboycott laws important?

Boycott - organized refusal or one or more nations to trade with one or more nations Antiboycott laws - make it unlawful for their citizens or companies to participate in a boycott. US law makes it illegal to support a boycott of a country that is friendly with the US. Ex: Arab countries vs. Israel. In US must notify Office of Antiboycott Compliance (part of BIS) if requested to participate in boycott.

According to the Harmonized Commodity Descriptions and Coding System, What is the breakdown of the Tariff #?

Chapter: First 2 digits Heading: First 4 digits Subheading: First 6 digits Tariff item: First 8 digits Statistical break: First 10 digits

What are some reasons that Imports would need to be regulated?

Collection of revenue Protection or safeguarding of domestic industry and employment Prohibition of unfair trade (trade distorting subsidies, dumping, and others) Retaliation against foreign government trade barriers Implementation of foreign policy (to aid friends and punish enemies—prohibition on import of goods from a country that violates international norms or is a military adversary) Implementation of national economic policies (preservation of foreign exchange; implementation of industrial policy) Protection of the national defense (erection of barriers to foreign firms selling defense-related equipment or essential products such as machine tools; protection of strategic national industries such as aerospace or telecommunications) Protection of natural resources or of the environment (ban on export of scarce minerals, requirement that imported cars be equipped with antipollution devices, ban on import of tuna caught in fishing nets that trap dolphins) Protection of public health, safety, and morals (to stop the spread of human disease; to ensure safety in consumer goods, pharmaceuticals, construction equipment, etc., or to prevent the import of banned obscene materials) Protection of plant and animal life (ban on import of disease carrying fruit or foreign species of wildlife) To ensure uniform compliance with common standards and standard-setting codes (compliance with electrical codes, fire codes, standards for automotive transportation or aviation; and other technical codes) Protection of local cultural, religious, or ethnic values (limitations on foreign television programming, prohibition of import of religiously offensive materials in Islamic countries, ban on export of artifacts or antiques) To aid in the economic development of poorer, developing countries by encouraging imports of their products through tariff preferences

How long must importers keep their records? Whose Responsibility is it to comply with laws?

Must keep books and records for five years—expensive fines if don't! importer is responsible

What is the required documentation? How long do you have to file the documents?

Documents must be filed within 10 days: (1) An entry manifest or merchandise release form. (2) U.S. Customs Entry Summary Form. (3) Proof of the right to make entry (a bill of lading, air waybill, or carrier's certificate) (4) The commercial invoice obtained from the seller; is required if goods for resale or commercial use; in English; signed by Seller + other rqmts. (5) Packing slips to identify the contents of cartons. (6) Other documents required by special regulations (e.g., certificate of origin, quota visa, textile declaration).

What are the efforts that the EU is making to increase the standardization in their products? Why is this important for other countries?

EU is attempting to increase its standardization through the "CE Mark" - requires testing by independent lab and then can sell product in EU EU efforts to reduce technical barriers to trade is critical because of the national brands and the consolidation of the euro

What are the differences between ISO 9000 and ISO 14000?

ISO 9000: product QUALITY standard, ISO certification makes selling in Europe much easier ISO 14000: environmental standards; requires firm to establish management system for setting environmental objectives, complying with laws, improve environmental performance

What is the Rule of Relative Specificity See Carl Zeiss case- for microscopes

If 2 or more classifications fit, then use more specific description

Can ignorance be used as a viable excuse for not having a license? Can you still be liable?

If failure to get license or did not know needed, still liable. If license is required can request online.

Define Importing. How is a tariff calculated?

Importing: entering goods into customs territory of a country, go through entry process and "clear customs" (in US, Bureau of Customs and Border Protection.) Value x Rate = tariff

According to GATT 1994, Describe the purposes for the following Principle of Trade Law: Nondiscrimination and MFN Status

Most favored nation (MFN) trade: agreement to treat products (or services) from that country with lowest tariff rates that it gives to similar products imported from its other MFN trading partners. In US, MFN status granted my congress (NTR). According to WTO, all member nations are entitled to MFN status. In US called Normal Trade Relations or NTR. Unconditional MFN: if a member extends privilege to another member then that privilege automatically is extended to all members.

According to GATT 1994, Describe the purposes for the following Principle of Trade Law: Multilateral Trade Negotiations

Nations meet periodically to review, reduce tariffs and non-tariff barriers to trade. Ex: Kennedy Round, Tokyo Round, Uruguay Round, Doha Round (not too successful)

What are the 4 ways of providing international service?

One country to another (cross-border supply), consumption abroad, commercial presence, and presence of natural persons

Equivalence:

One of the methods to minimize barriers from TBT agreement, nations agree to accept foreign standards that are functionally equivalent

Mutual Recognition:

One of the methods to minimize barriers from TBT agreement, nations encouraged to make agreements recognizing certifications or conformity assessments of foreign inspection firms

Harmonization:

One of the methods to minimize barriers from TBT agreement, nations will attempt to bring their standards and technical harmony with internationally accepted standards

What are the Available Remedies available under U.S. Law?

President's options: can make temporary "positive adjustment" if greater economic and social benefits than costs. Usually 4 yrs, can be extended to 8 yrs. Can impose tariff increases, tariff-rate quotas, absolute quotas, auctioned quotas, or grant Trade Adjustment Assistance.

What was the main purpose of GATT 1947

Primarily lowering tariffs on goods, product-by-product. US Congress never ratified GATT 1947 but still treated as if it had.

What is the difference between prior approval and prior certification

Prior approval: prior to sale, products must be tested, inspected by approved lab, get certification of compliance, and then regulatory approval Prior certification: don't need regulatory approval before sale. Have labs test product and keep results available for review so still have inspection and certification requirement

How are product standards in Japan designed?

Product standards in Japan are usually based on design characteristics. US, in contrast, has standards of performance.

What is the GATT Framework and how does it work with U.S. Law?

Rules created by international agreement, become guiding principles of international trade law. US law - GATT does not provide individual rights and remedies to private parties, but GATT agreements are used as basis for interpreting US trade statutes. If US business thinks foreign company or govt acting unfairly, can seek redress through admin agency or courts, but not WTO.

What are the main provisions of the Technical Barriers to Trade Agreement?

TBT applies to all products, agricultural, industrial, and consumer goods. Nondiscrimination, no unnecessary barriers to trade, consider scientific and technical info in making standards, use performance abilities of products rather than design requirements, use initially accepted standards if exist, harmonization, equivalence, publish proposed standards and allow written comments; give time before adopting; testing and inspection not discriminatory; mutual recognition of conformity assessments; ensure state/local govt complies w agreement; use WTO dispute resolution process. See Clove cigarette case (US prohibited flavored cigarettes except for menthol, which was preferred in US)

What is the difference between the a standard and a technical regulation? What are their purposes?

Technical: mandatory law/regulation affecting a product's characteristics, such as performance, design, construction, chemical composition Standard: usually a voluntary guideline established by a private or administrative body but consumers look for compliance with them (sometimes mandatory also) (organic is a good example)

See the "Restrictions on Importation of Cigarettes case (WTO 1990)" to see the balancing test in action.

Thailand's restrictions on imports of cigarettes contravened GATT. Required license for US cigarettes, but could not get. Said US had additives that made more addictive.

What two ideas does the WTO balance when creating policies on Trade?

Weigh protecting public against restrictions on trade Restrictions should be no more onerous than necessary. Can protect citizens to extent deem necessary but by methods that do not unduly burden international trade or unfair or discriminatory.

In the United States, who determines if and to what extent dumping has occurred? Who determines whether the dumping has caused Material Injury to US producers?

The US itl Trade Administration determines if and to extent dumping occurred. Intl Trade Commission determines whether dumping has caused, or threatens to cause, a material injury to US producers of like products.

What are extraordinary trade remedies?

There are two extraordinary, seldom-used remedies that a president and the executive branch can use to protect domestic industry from foreign competition. They are seldom used because it's been widely thought that they are economically unnecessary and difficult to employ in today's global trading system based on rules and international agreements. There are two extraordinary trade remedies that go "beyond" unfair trade: (1) A president has statutory authority to assure that the nation does not become overly dependent on foreign sources of supply for raw materials and articles essential to national security and defense; (2) A president can declare a "balance-of-payments emergency" and temporarily restrict imports.

Describe the 3 different Trade Preferences in place for developing countries

Trade preferences for developing countries - US Generalized System of Preferences - allows beneficiary developing countries to have goods enter US either duty-free or reduced tariff. 129 countries have GSP status. Can 'graduate' out if economy improves sufficiently. If a "least developed beneficiary country" have even better benefits. US has rqmts on countries to get GSP status, and a president can deny for political/economic reasons Caribbean basin initiative: trade preference to goods imported from carribean. Same criteria as GSP but not annual review and don't graduate out. About 17 countries. Africa growth and opportunity act: 48 sub-saharan africa countries. Eligible products duty-free.

Who administers and enforces the Rules of Origins?

US customs and border protection

Describe Section 301 Trade Act of 1974.What parts are discretionary and what parts are mandatory? What are the steps for Section 301 Action?

USTR retaliates against foreign country. Discretionary: may be imposed when USTR finds foreign actions regarding trade are unreasonable or discriminatory and burden or restricts the US commerce. Might not actually be a violation of an international agreement. Mandatory: USTR determines that foreign country has denied US rights under a trade agreement or that its actions or policies are unjustifiable and burden or restrict US commerce. (ex. tariffs over agreed rate, quotas.) Sec 301 action can begin by private company filing complaint with USTR or USTR can initiate. Purpose of action is to end illegal practice, not compensate private company.

What are the different rights that countries have when it comes to Sanitary and Phytosanitary Measures?

a country has the right to protect human, animal, and plant life from infestations, contaminants, pesticides, toxins, harmful chemicals, or disease carrying organisms. Ex: medflies in papaya. Cannot be used to justify otherwise discriminatory conduct. No more trade restrictive than required based on risk assessment, fair and reasonable inspections (ex. if require short shelf life for dairy products, could be discriminating against imports whose shelf-life expires during time to import) Codex Alimentarius: international standards for the protection of plants, animals, and foodstuffs (ex radiation used to preserve food, hormones in beef, labeling forumula) EC measures concerning meat and meat products: EC's ban on sale of beef containing residual growth hormones violated agreement on sanitary and phytosanitary measures.

Per the WTO Agreement on Safeguards, after a country conducts an administrative investigation and hearing the country must find that the increased imports are the _________ ___________ of the industry's decline

actual cause

What was the result of the WTO Agreement on Agriculture (1995)?

began removing government intervention in farming sector. Cutting domestic subsidies and other direct payments to farmers or payment as agricultral export subsidies; convert non-tariff barriers (quotas) into tariffs.

he classification and Coding of goods looks at the goods based on ________ or ________or _______

categorizing goods based on description or characteristics or use. each nation has its own tariff schedule w/ tariff rate based on where goods originated

What qualifies as gross negligence

clear and convincing evidence that act or omission done with actual knowledge or reckless disregard of facts. About 2x's negligence violation penalty

Define Civil Fraud.

clear and convincing evidence that importer knowingly made materially false stmts or omission (phony descriptions; understating values; altering origin, etc.) Penalty up to 100% value of goods; can reduce to 5-8 times loss of duty

The Classification of Goods starts with the "_______ _________"

common meaning

What can be included on the Red Flag Checklist. Look at Ex 13.1.

common sense generally but gives rise to 'reason to know' that goods possibly going to a prohibited location. See Ex 13.1. Gov't Agencies Relevant to Exporting - may review export requests Department of Energy-nuclear technology and Gas Department of Justice-Drugs Munitions- Department of State Environmental Protection Agency-Pesticides Patent and Trademark-Intellectual Property

What are "Deemed Exports"?

communication, release or other transfer by an American citizen of technology, technical data, software, and source code, encryption technology, or any other controlled information to a foreign national. (companies, research universities, etc.) Includes release in the US or in foreign country

What is a Safeguard against injury?

countries take legal action to protect domestic industry by granting import relief or adjusting imports. normally can't just raise tariffs - violate GATT, but emergency measures okay.

What are the purposes of the Rules of Origin of Goods?

determine tariff rate, preferential tariffs or increased rates if any antidumping or countervailing duties apply if any quota, embargo, or other trade restriction any applicable government procurement rules must affix proper country or origin to product for labeling laws to collect statistical infor

Define Actionable Subsidies.

domestic subsidies which give unfair competitive industry OR cause nullification and impairment of rights OR cause "serious prejudice" (presumed if subsidy exceeds 5% value)

What is the purpose of the International Emergency Economic Powers Act?

gives the president authority to impose economic, trade or financial controls during international emergency. (seize assets, cancel contracts, export control, etc.) Amended by Patriot Act for additional powers against terrorist groups. Dept of Treasury, Office of Foreign Assets Control. Criminal violation if willfully violate IEEPA or commit unlawful conduct.

What is the Dutiable Value? And how is it calculated?

equals transaction value or price actually paid for goods when sold for export plus packing costs, selling commission paid by buyer, value of an assist, royalty buyer is responsible to pay, proceeds of any resale that accrues to buyer. International transportation charges NOT included in value.

What qualifies as a Negligent Violation? See U.S. v. Golden Ship Trading case for example.

failure to use rzble care, skill and competence; If duty was lost, then lesser of value of the goods or 2 x's loss of duty. 2x's duty or 20% value of goods. If no duty lost, then up to 20% the value of goods. Case: *** U.S. v. Golden Ship Trading (2001) case, page 331. Relying on assurances from the broker can still make the importer liable.

What is the definition of a Subsidy? Provide an Example

financial contribution from government that confers a benefit on a domestic firm and provides income, price support or financial contribution (not collecting a tax, providing grant or loan at favorable rate) in order to achieve a social or economic objective.

How are Free Trade Areas different from Customs Unions?

free trade area- 2 or more countries enter into agreement that reduces or eliminates tariffs, removes trade barriers. Ex: NAFTA b. customs unions - similar to above, but also removes restrictions on free movement of money, labor, other factors of productions.

What is the General Rule in the United States for the Country of Origin?

if an item is wholly obtained (grown, produced, or manufactured) in one country, then that is the country of origin If it is not wholly obtained, then generally use substantial transformation test - where did product undergo last substantial transformation? look/test to see if product changed in name/character/use value-added rule - look to see if significant value added to product due to process

If a country imposes Safeguard tariffs on an item, then what does the concept of 'trade compensation' require them to also do?

if impose safeguard tariffs on an item, then reduce tariffs on something else to offset the amount

What does FTC mean?

if label states, "Made in USA" it means, "all or virtually all of the materials, processing or component parts are made in the U.S. and that their final assembly or processing took place there".

What are Preferential Rules?

if made in US or Mexico or Canada (NAFTA), usually see if change caused a 'tariff-shift' or if certain percent of value added (regional trade agmts)

Who is normally liable for the payment of duties?

importer is ultimately liable for payment of duties. • 90% of time Customs Brokers are used, but importer still liable for information.

See Heavyweight Motorcycles & Engines & Power-Train Subassemblies (ITC, 1983) case; what was the ultimate outcome of the case?

incremental duties were imposed also with tariff-rate quotas to give Harley Davidson time to adjust to be competitive with Japanese imports

In regard to the marketing and labeling of imports, what are the Customs Marketing Rules?

indelibly and permanently marked in English to show ultimate purchaser the name of country of origin. Some items can't be marked and are exempted (veggies, small items) but packaging must be labeled

Describe the outcome of the Nissan Motor Mfg. Corp. V. United States case. Why were the products not considered to be merchandise? What was the effect of this decision?

machinery entering a foreign trade zone for assembly is not merchandise (not duty free).

According to GATT 1994, Describe the purposes for the following Principle of Trade Law: Transparency and Predictability of Trade Opportunities

nation's laws, rates, court decisions, regulations, etc. affecting trade must be publicly available and easy to find

US controls the export and re-export of all goods whether they have which 3 applications?

national security - would contribute to military potential of other country and detrimental to US achieve foreign policy goals - terrorism, crime control, etc., and short supply controls (and wildlife, environment, public safety, antiquities) (BUT will hinder economic competitiveness)

What are the 3 primary reason to control exports?

national security - would contribute to military potential of other country and detrimental to US achieve foreign policy goals - terrorism, crime control, etc., and short supply controls (and wildlife, environment, public safety, antiquities) (BUT will hinder economic competitiveness)

Can a company bring a complaint against government?

no, only a government can do that

Can WTO reports be used as binding legal precedent?

not intended to be definitive interpretation. Create "legitimate expectations" but not binding. They look at specific facts of each case so it's not really a legal precedent.

what is meant by the term "assist" when calculating Dutiable Value?

not international transportation charges

What are the requirements needed for a Country to be able to rely on the Agreement on Government Procurement (AGP)? What Which WTO rule does this general reverse?

only countries that signed, applies to large-scale goods/services worth 130,000 SDR's (US 200,000) and construction contracts over 5 million SDRs (US 7.7 million). Requires fair, open, and nondiscrimatory procurement practices, uniform procedures. AGP reverses general WTO rules that allow government agencies to favor domestic products.

What was the result of the WTO agreement on Trade in Financial Services?

opened commercial banking, securities, insurance industries to foreign competition

What was the result of the WTO Agreement on Basic Telecommunications?

opened telecommunication markets to foreign competitors

Define Informal Entries.

personal smaller shipments valued at $2,500 or less; U.S. Letter Carrier acts as Customs Agent in collecting duties

Define a sanction and why they can be beneficial to the United States?

prohibit US citizens or companies from doing business with certain foreign governments, organizations or individuals who support international terrorism, nuclear weapons, illegal drugs.

What restrictions are implemented by the Trade Related Investment Measurements?

reduces restrictions on foreign investment that might restrict cross-border trade in goods and services. Also restricts local content requirement since would be quantitative restriction in violation of GATT.

Define Drawbacks. List some different types and describe them. What is the MOST common type of drawback?

refund of duties already paid if goods are re-exported or destroyed. Most common is the manufacturing drawback. Goods imported, then used for manufacture or production, then exported. Up to 99% of tariffs can be refunded. Same-condition drawbacks are utilized when the imported goods are not processed or manufactured, but are re-exported in the "same condition" as they were imported.

What is the Buy American Act?

requires many federal agencies to buy goods of US origin. President can waive requirements of AGP for suppliers of foreign countries that are parties to AGP.

What are Foreign Trade Zones? What are the advantages? In the US, how many miles must the zone be from the Port of Entry?

special customs areas - Goods may be imported without being subjected to tariffs until goods are released into the stream of commerce. For US, zone must be within 60 miles of port of entry. Many advantages: can transport, store, package then re-export without taxes. Warehousing, manufacturing, cleaning, exhibiting, mixing, repackaging, testing, etc. NO retail sales. Can destroy damaged goods without paying tariffs on them. Cash flow benefits also (don't pay tariff until moved out of zone)

WTO Rule apply to ________ Subsidies.

specific subsidies! subsidy benefits particular industry or company. if neutral objective requirements, then not violation (ie tax reduction for equipment purchases)

What are the benefits of Electronic Entry Processing?

started Automated Commercial System; speeds up entry; Now large importers can file remotely if not at entry port.

Describe the Ferrostaal Metals Corp case. Which rule was used to prove the actual Country of Origin?

substantial transformation test. stell sheets were from Japan but character change in NZ

Define Dumping. What are some of the Economic issues involved with Dumping?

the unfair trade practice of selling products in a foreign country for less than the price charged for the same or comparable goods in the producer's home market. Sales below cost not automatically dumping but suggests could be happening. Price discrimination and purpose to drive out competition. Remedy is usually antidumping duties to offset unfairly low price of dumped goods.

Define Diversion. Can you be penalized for it?

unlawful transfer, transshipment, rerouting or re-exporting of controlled goods or technology from one destination to another. Serious penalties!!

Describe the purpose of the General Rules of Interpretation.

used to classify goods under HTS (harmonized tariff schedule)

Are countries allowed to implement quotes on agricultural imports? If so, why?

yes because they recognize countries do not want to be dependent on imports for nation's food supply. loophole allows quotas when necessary to protect government price support programs

Is the government allowed to favor domestic suppliers? What principle of Trade Law is this an exception to?

yes, it's an exception to the principle of national treatment


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