Tenaris S.A., global manufacturer of steel pipe products in the oil and gas industry, entered into a Deferred Prosecution Agreement (DPA) with the Securities and Exchange Commission (SEC), whose terms include payment of $5.4 million in disgorgement and prejudgment interest for violations of the Foreign Corrupt Practice Act (FCPA). The SEC alleges that Tenaris’ employees located in Uzbekistan bribed Uzbekistan government officials during a bidding process in 2006 and 2007 to supply pipelines for transporting oil and natural gas. According to the DPA, the SEC alleges that the company used confidential information gained from the bribed officials to revise its own bids to ensure that Tenaris made the best bid, thereby guaranteeing that the Uzbekistan government awarded the contracts to Tenaris. According to the DPA, Tenaris earned close to $5 million in profits for these contracts.
Tenaris discovered the FCPA violations by Uzbekistan personnel during an in-house worldwide review of its operations and controls. The company immediately self-reported to SEC, permitting the company to participate in the first Deferred Prosecution Agreement. Robert Khuzami, Director of the SEC’s Enforcement Division stated:
The Tenaris foreign bribery scheme was unacceptable and unlawful, but the company’s response demonstrated high levels of corporate accountability and cooperation. . . . Effective enforcement of the securities laws includes acknowledging and providing credit to those who fully and completely support our investigation and who display an exemplary commitment to compliance, cooperation, and remediation.
Under the terms of the DPA, the SEC will not prosecute the company for FCPA violations provided that Tenaris enhances its FCPA and anti-corruption policies and procedures. Specifically, the company must:
• implement due diligence requirements when retaining and paying agents;
• train employees on FCPA and anti-corruption laws
• require certification of compliance; and
• report any complaints, charges or convictions against Tenaris or its employees for any anti-bribery or SEC violations.
Tenaris is incorporated in Luxembourg and its American Depositary Receipts (TS) are listed on the New York Stock Exchange. This is another example of how a non-U.S. company must ensure that it has procedures in place to comply with the U.S.’s FCPA.
Monday, May 23, 2011
Tuesday, May 17, 2011
The U.S. GAO Recommends Changes to FDA’s Handling of Imported Seafood
The U.S. Government Accountability Office has concluded in Report GAO-11-286 that the Federal Drug Administration (FDA) must improve its oversight of imported seafood. The GAO study was conducted at the request of several members of Congress because of concerns that the FDA was not doing enough to ensure the safety of imported seafood against residues of unapproved drugs used by foreign seafood farmers.
Farmed fish (aquaculture) account for about half of the seafood imported into the U.S. Fish grown in confined aquacultured areas can have bacterial infections, which may require foreign farmers to treat the fish with antibiotics not approved by the U.S. The concern is that the residues of some drugs in the imported seafood can cause cancer and antibiotic resistance when eaten by U.S. consumers. Specifically, the GAO was tasked with assessing whether (1) the FDA’s current program could prevent imports of seafood containing residues from unapproved drugs and (2) whether the Memoranda of Understanding (MOU) between the FDA and the National Marine Fisheries Service (NMFS) intended to enhance seafood oversight and leverage inspection resources was functioning.
The GAO concluded that the FDA did not provide enough oversight of imported seafood and that the agency was unable to ensure that seafood did not contain harmful residue from antibiotics and other drugs. The GAO also concluded that the FDA and NMFS did not implement any guidance for staff or create standard operating procedures, as required under the MOU between the agencies. Finally, the GAO concluded that the agencies did not conduct enough inspections of foreign seafood suppliers.
Based on the findings of the GAO, it recommended that the Secretary of the Health and Human Services direct the FDA to:
1. Study the feasibility of adopting other practices used by other entities, such as requiring foreign countries that want to export seafood to the United States to develop a national residues monitoring plan to control the use of aquaculture drugs;
2. Develop a more comprehensive import sampling program for seafood by more effectively using its laboratory resources and taking into account the imported seafood sampling programs of other entities and countries; and
3. Develop a strategic approach with specific time frames for enhancing collaborative efforts with NMFS and better leveraging NMFS inspection resources.
Importers of seafood should monitor closely the progress of these recommendations because they could lead to new regulations for seafood imports.
The report can be found here.
Farmed fish (aquaculture) account for about half of the seafood imported into the U.S. Fish grown in confined aquacultured areas can have bacterial infections, which may require foreign farmers to treat the fish with antibiotics not approved by the U.S. The concern is that the residues of some drugs in the imported seafood can cause cancer and antibiotic resistance when eaten by U.S. consumers. Specifically, the GAO was tasked with assessing whether (1) the FDA’s current program could prevent imports of seafood containing residues from unapproved drugs and (2) whether the Memoranda of Understanding (MOU) between the FDA and the National Marine Fisheries Service (NMFS) intended to enhance seafood oversight and leverage inspection resources was functioning.
The GAO concluded that the FDA did not provide enough oversight of imported seafood and that the agency was unable to ensure that seafood did not contain harmful residue from antibiotics and other drugs. The GAO also concluded that the FDA and NMFS did not implement any guidance for staff or create standard operating procedures, as required under the MOU between the agencies. Finally, the GAO concluded that the agencies did not conduct enough inspections of foreign seafood suppliers.
Based on the findings of the GAO, it recommended that the Secretary of the Health and Human Services direct the FDA to:
1. Study the feasibility of adopting other practices used by other entities, such as requiring foreign countries that want to export seafood to the United States to develop a national residues monitoring plan to control the use of aquaculture drugs;
2. Develop a more comprehensive import sampling program for seafood by more effectively using its laboratory resources and taking into account the imported seafood sampling programs of other entities and countries; and
3. Develop a strategic approach with specific time frames for enhancing collaborative efforts with NMFS and better leveraging NMFS inspection resources.
Importers of seafood should monitor closely the progress of these recommendations because they could lead to new regulations for seafood imports.
The report can be found here.
Friday, May 13, 2011
European Union Proposes Changes to GSP
The European Commission (EC) announced its plan to modify its Generalised System of Preferences (GSP), which would limit specific tariff preferences to the poorest of developing countries. The EC’s proposal would cut GSP benefits, currently provided to 176 countries and territories, to approximately 80 countries considered the most in need. Under GSP, eligible goods manufactured in a GSP country and imported into the European Union (EU) (and other developed countries) are given a reduced or duty-free rate of duty. Under the proposal, countries considered an advanced developing country, which are now competitive, would no longer be eligible for tariff preferences under GSP.
The EC will take into account a number of factors when determining which countries will lose its GSP eligibility. Specifically, countries falling into the following categories will no longer be eligible for GSP:
1. Countries classified by the World Bank that have a high or upper middle income per capita for the past three years. The EC has indicated that countries such as Kuwait, Russia, Saudi Arabia and Qatar fall into this category.
2. Countries that are members of a Free Trade Agreement with the EU, or have autonomous arrangements that provide equal or better tariff preferences than those provided under GSP. The Market Access Regulation for countries with an Economic Partnership Agreement or the special regime for Balkan countries are examples in this category.
3. Countries that enjoy an alternative market access arrangement for developed markets. The EC has indicated that countries such as Antarctica and American Samoa fall into this category.
The EC points to changes in the marketplace over the past twenty-five years to justify its proposed changes. Such changes include the emergence of more advanced developing countries that are globally competitive; the fact that the poorer countries are lagging behind the rest and the overall downturn in the global economy. The EC also acknowledged that the most advanced emerging economies accounted for approximately 40% of GSP imports into the EU, further hurting the lesser developed countries.
The EU has not yet completed its analysis of which countries will lose or keep GSP benefits. If the EC’s proposal is adopted by the EU, such changes to GSP will take effect by 2014. See http://trade.ec.europa.eu/doclib/docs/2011/may/tradoc_147893.pdf to read the official proposal.
The EC will take into account a number of factors when determining which countries will lose its GSP eligibility. Specifically, countries falling into the following categories will no longer be eligible for GSP:
1. Countries classified by the World Bank that have a high or upper middle income per capita for the past three years. The EC has indicated that countries such as Kuwait, Russia, Saudi Arabia and Qatar fall into this category.
2. Countries that are members of a Free Trade Agreement with the EU, or have autonomous arrangements that provide equal or better tariff preferences than those provided under GSP. The Market Access Regulation for countries with an Economic Partnership Agreement or the special regime for Balkan countries are examples in this category.
3. Countries that enjoy an alternative market access arrangement for developed markets. The EC has indicated that countries such as Antarctica and American Samoa fall into this category.
The EC points to changes in the marketplace over the past twenty-five years to justify its proposed changes. Such changes include the emergence of more advanced developing countries that are globally competitive; the fact that the poorer countries are lagging behind the rest and the overall downturn in the global economy. The EC also acknowledged that the most advanced emerging economies accounted for approximately 40% of GSP imports into the EU, further hurting the lesser developed countries.
The EU has not yet completed its analysis of which countries will lose or keep GSP benefits. If the EC’s proposal is adopted by the EU, such changes to GSP will take effect by 2014. See http://trade.ec.europa.eu/doclib/docs/2011/may/tradoc_147893.pdf to read the official proposal.
Tuesday, May 10, 2011
Changes to CAFTA-DR in the Works
In an attempt to promote U.S and regional jobs in the textile and apparel industry, the U.S. Trade Representative announced several changes to the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR). During the Free Trade Commission meeting earlier this year, the signatories to CAFTA-DR discussed ways to encourage regional trade and economic integration by competing with the established textile and apparel supply chains in Asia. The signatories seek to encourage a growing textile and apparel supply chain within the Western Hemisphere that will rival China and other Asian countries.
Among the significant changes proposed are the following:
1. Certain monofilament sewing thread will be required to originate or be produced in the United States or the CAFTA-DR region for goods to qualify for preferential tariff treatment. The sewing thread industry still exists in the United States, primarily in plants located in North and South Carolina. The hope is that the industry will increase with this new requirement.
2. There will be an increase to the cumulation limits to encourage greater integration of regional production through limited reciprocal duty-free access with Mexico, and potentially Canada, to be used in Central American and Dominican Republic apparel. This increase to the annual limits will account for the addition of the Dominican Republic. These limits permit importers to enter specific quantities of designated apparel products into the United States from Central America and the Dominican Republic that contain inputs from Mexico and possibly, Canada.
3. There will be changes to the “short supply” list, including how elastomeric yarns, knit waistbands and knit-to-shape components are treated on that list. Short supply, which is formally known as the Commercial Availability Provision under CAFTA-DR, provides a list of fabrics, yarns and fibers that the signatories have determined are not available in commercial quantities in a timely manner from suppliers in the United States or other member countries. In those cases, components from non-participating countries may be used in apparel, and the end product will be eligible for duty-free treatment.
According to the USTR, U.S. exports to the CAFTA-DR region comprised 16% of the total U.S. textile and apparel exports in 2010. In fact, U.S. textile and apparel exports to CAFTA-DR countries grew by 25% in 2010, exceeding the growth to the rest of the world by 6%. Conversely, U.S. imports of CAFTA-DR textile and apparel products increased by 14% in value in 2010.
Among the significant changes proposed are the following:
1. Certain monofilament sewing thread will be required to originate or be produced in the United States or the CAFTA-DR region for goods to qualify for preferential tariff treatment. The sewing thread industry still exists in the United States, primarily in plants located in North and South Carolina. The hope is that the industry will increase with this new requirement.
2. There will be an increase to the cumulation limits to encourage greater integration of regional production through limited reciprocal duty-free access with Mexico, and potentially Canada, to be used in Central American and Dominican Republic apparel. This increase to the annual limits will account for the addition of the Dominican Republic. These limits permit importers to enter specific quantities of designated apparel products into the United States from Central America and the Dominican Republic that contain inputs from Mexico and possibly, Canada.
3. There will be changes to the “short supply” list, including how elastomeric yarns, knit waistbands and knit-to-shape components are treated on that list. Short supply, which is formally known as the Commercial Availability Provision under CAFTA-DR, provides a list of fabrics, yarns and fibers that the signatories have determined are not available in commercial quantities in a timely manner from suppliers in the United States or other member countries. In those cases, components from non-participating countries may be used in apparel, and the end product will be eligible for duty-free treatment.
According to the USTR, U.S. exports to the CAFTA-DR region comprised 16% of the total U.S. textile and apparel exports in 2010. In fact, U.S. textile and apparel exports to CAFTA-DR countries grew by 25% in 2010, exceeding the growth to the rest of the world by 6%. Conversely, U.S. imports of CAFTA-DR textile and apparel products increased by 14% in value in 2010.
Thursday, May 5, 2011
FDA Issues Interim Final Rule for Importers of Food
Pursuant to the Food Safety Modernization Act (Pub. L. 111-353), the Food and Drug Administration (FDA) amended its regulations, requiring importers of food for both people and animals to report the name of any country to which the food has been refused entry. The Act directed the FDA to shift its focus to preventing contaminated and adulterated food from entering the U.S. market, rather than on reacting to food safety issues after they occur. The FDA believes that receiving information on whether another country has refused entry to the food will assist the FDA to identify imported food that may pose health and security risks to U.S. consumers.
Section 304 of the Act, which requires a report of “any country to which the article has been refused entry,” amends section 801(m) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 381(m)). Section 801(m) was originally added by the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism Act). Under the Bioterrorism Act, food importers were required to submit certain information about the food in advance of the shipment into the United States. The FDA was permitted to refuse entry of the imported food if it did not receive adequate prior notice from the importers. Advance notice is to be submitted electronically to FDA/Customs. The Food Safety Modernization Act adds the additional requirement of providing whether another country refused admission to the food.
This interim final rule is effective July 3, 2011. Comments from the industry on the interim rule are due no later than June 6, 2011.
A copy of the Federal Register Notice can be found at: http://www.gpo.gov/fdsys/pkg/FR-2011-05-05/html/2011-10955.htm
Section 304 of the Act, which requires a report of “any country to which the article has been refused entry,” amends section 801(m) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 381(m)). Section 801(m) was originally added by the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism Act). Under the Bioterrorism Act, food importers were required to submit certain information about the food in advance of the shipment into the United States. The FDA was permitted to refuse entry of the imported food if it did not receive adequate prior notice from the importers. Advance notice is to be submitted electronically to FDA/Customs. The Food Safety Modernization Act adds the additional requirement of providing whether another country refused admission to the food.
This interim final rule is effective July 3, 2011. Comments from the industry on the interim rule are due no later than June 6, 2011.
A copy of the Federal Register Notice can be found at: http://www.gpo.gov/fdsys/pkg/FR-2011-05-05/html/2011-10955.htm
Tuesday, May 3, 2011
Commerce Department Seeks Industry Help on Regulatory Cooperation between U.S. and EU
As part of the U.S.-EU High Level Regulatory Cooperation Forum (“U.S.-EU Forum”), the Commerce Department has asked the exporting industry to provide comments on ways for the United States and European Union to reduce or eliminate regulatory differences that impact international trade of goods between their borders.
The International Trade Administration (ITA) of the Commerce Department has concluded that the greatest impediment to more open foreign markets for U.S. exporters and investors is not customs duties or quota, but rather the differences in regulatory measures within the U.S. and EU. The ITA has recognized that such differences in regulations may not be warranted as they increase costs for U.S. producers and consumers without much benefit. The ITA has defined such regulatory measure differences as:
• Standards developed by a government and used in regulation;
• Standards developed by other bodies at request of government and used in regulation; and
• Proposals to provide a presumption of compliance to technical requirements developed by a government.
The Obama administration has set goal of doubling U.S. exports in the next five years. A large part of that strategy is to increase exports to the 27 EU member countries, which currently account for 19% of total U.S. exports. Although bilateral trade between the U.S. and EU was over $500 billion in 2010, U.S. exporters continue to complain that regulatory differences between the U.S. and EU hinder trade. For example, U.S. exporters commonly encounter divergent standards or technical requirements for certain products. A U.S.-origin product may meet strict U.S. standards, but not meet EU standards, making it more difficult and costly for U.S. companies to enter the EU market.
The U.S.-EU Forum and ITA recognize that cooperation between the trading partners will not only lessen the burden on U.S. exporters and thus on consumers, but it will also help governments. The ITA has suggested that when regulators in different countries are permitted to share information on specific regulatory issues, they are more likely to promulgate similar rules and “realize common public policy objectives.”
To meet these goals, the ITA is requesting that U.S. exporters submit comments describing how they believe there is an opportunity to facilitate trade without compromising health, safety or environmental concerns of the trading partners. Because of the large volume of trade between the U.S and the EU, the ITA would like to receive comments from all product sectors. Comments are due electronically to http://www.regulations.gov no later than June 2, 2011 and should be submitted under ITA-2001-0006.
See http://edocket.access.gpo.gov/2011/pdf/2011-10713.pdf for Federal Register notice and http://www.whitehouse.gov/omb/oira_irc_europe for information on the U.S.-EU regulatory cooperation initiative.
The International Trade Administration (ITA) of the Commerce Department has concluded that the greatest impediment to more open foreign markets for U.S. exporters and investors is not customs duties or quota, but rather the differences in regulatory measures within the U.S. and EU. The ITA has recognized that such differences in regulations may not be warranted as they increase costs for U.S. producers and consumers without much benefit. The ITA has defined such regulatory measure differences as:
• Standards developed by a government and used in regulation;
• Standards developed by other bodies at request of government and used in regulation; and
• Proposals to provide a presumption of compliance to technical requirements developed by a government.
The Obama administration has set goal of doubling U.S. exports in the next five years. A large part of that strategy is to increase exports to the 27 EU member countries, which currently account for 19% of total U.S. exports. Although bilateral trade between the U.S. and EU was over $500 billion in 2010, U.S. exporters continue to complain that regulatory differences between the U.S. and EU hinder trade. For example, U.S. exporters commonly encounter divergent standards or technical requirements for certain products. A U.S.-origin product may meet strict U.S. standards, but not meet EU standards, making it more difficult and costly for U.S. companies to enter the EU market.
The U.S.-EU Forum and ITA recognize that cooperation between the trading partners will not only lessen the burden on U.S. exporters and thus on consumers, but it will also help governments. The ITA has suggested that when regulators in different countries are permitted to share information on specific regulatory issues, they are more likely to promulgate similar rules and “realize common public policy objectives.”
To meet these goals, the ITA is requesting that U.S. exporters submit comments describing how they believe there is an opportunity to facilitate trade without compromising health, safety or environmental concerns of the trading partners. Because of the large volume of trade between the U.S and the EU, the ITA would like to receive comments from all product sectors. Comments are due electronically to http://www.regulations.gov no later than June 2, 2011 and should be submitted under ITA-2001-0006.
See http://edocket.access.gpo.gov/2011/pdf/2011-10713.pdf for Federal Register notice and http://www.whitehouse.gov/omb/oira_irc_europe for information on the U.S.-EU regulatory cooperation initiative.
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