International Trade News Summary

GSP Extended
On December 28, 2009, the President signed H.R. 4284 , which extends duty-free treatment under the Generalized System of Preferences (GSP) Program and Andean Trade Preference (ATPA) Program for one year through December 31, 2010. In addition, several countries will be added and removed from the Generalized System of Preferences.

• Maldives has been re-designated as a beneficiary country under GSP.
• Trinidad and Tobago’s designation as a beneficiary country under GSP will terminate January 1, 2010.
• Cape Verde will be removed from the list of least-developed beneficiary countries under GSP effective Jan. 1, 2010.
• Croatia and Equatorial Guinea will lose their designation as beneficiary developing countries under effective Jan. 1, 2011.


First Sale Rule Not Heavily Used
The U.S. International Trade Commission (USITC) reports that approximately 2.4% of U.S. imports were valued using the "first sale rule" to determine transaction value of the goods. Because of CBP’s proposal to change the way import calculations are made to determine transaction value from the first sale to the last sale, the USITC was charged with conducting a review of the use of the first sale methodology. Although some of the most frequent users include textile, apparel, and footwear importers, some importers used "first sale" when no duties would be paid.

Use of the "First Sale Rule" for Customs Valuation of U.S. Import is available for review on the ITC’s web site. The ITC conducts investigations and independent analyses on specific issues, but makes no recommendations concerning policy.


CPSC – Give and Take
While some children’s products were temporarily postponed from the independent testing requirements and companies were given a little flexibility to meet the new lead requirements, the CPSC also fined a company $1.25 Million for violating the lead paint ban. Click HERE to read more about the requirements of the Consumer Product Safety Improvement Act.

Tracking Your Toys

On August 14, 2009, the CPSIA tracking label requirement becomes effective on all children’s products. After several high profile toy recalls The Consumer Products Safety Improvement Act (CPSIA) was enacted in August of 2008 to “establish consumer product safety standards and other safety requirements for children’s products.” Implemented in stages, the next part requires manufacturers to have a tracking label or other distinguishing permanent mark on any consumer product primarily intended for children twelve and younger. Recognizing that it may not be practical for permanent distinguishing marks to be printed on small toys and other small products that are manufactured and shipped without individual packaging, Congress modified the requirement for tracking labels with the phrase “to the extent practicable.” The law requires that markings with the specified information be permanent; therefore, hangtags and adhesive labels are not permanent. Note the term “consumer product” is broad and will require compliance for items such as clothing and shoes, not just toys. All goods in this category, domestic and imported, manufactured after that date must bear the required tracking label.

Although the tracking labels are required effective on Aug. 14, the CPSC has provided very little guidance for implementation.

The tracking label must contain certain basic information, including the
· source of the product,
· date of manufacture and
· detailed information on the manufacturing process, such as a batch or run number.

With less than 6 weeks remaining until the new requirements take effect, let’s hope the CPSC provides some guidance soon!

CBP Announces ISA-Product Safety Program

If you are a current ISA participant thinking about ways to improve compliance, now might be a good time to consider the Importer Self-Assessment Product Safety Pilot. In addition to receiving time on the agenda at the U.S. Customs and Border Protection Trade Symposium October 29 – 31, CBP announced in the Federal Register that they would begin a trial program to expand the Importer Self-Assessment Program to include product safety. The trial is designed to encourage companies to maintain a high-level of compliance with product safety laws and standards.

The ISA-Product Safety pilot will be conducted by CBP, CPSC and volunteer importers. Existing ISA members can apply for the product safety program and the two agencies will select a limited number of the applicants to participate. In order to participate in ISA–PS, an importer must:

· Be an active member in ISA and comply with all ISA requirements and obligations.
· Complete an ISA–PS/CPSC Questionnaire and sign an ISA–PS/CPSC Addendum.
· Agree to comply with all laws and regulations administered by CBP, as well as the CPSC
· Maintain an internal control system that ensures the integrity of product safety.
· Notify CBP of any major organizational changes that may affect the importer’s product safety controls.
· Submit an annual written notification to CBP that sets forth the importer’s ISA–PS point of contact and acknowledges that the importer continues to meet the requirements of ISA–PS.

Companies selected for the pilot program will be expected to follow a set of best practices compiled by the government. Through domestic site visits, CBP and the CPSC will verify that companies have adequate procedures and processes in place to ensure product safety throughout the supply chain.

As an incentive, the CPSC will offer increased benefits to companies that join the program. Some of these benefits include:
· Assigning a product-specific point of contact that can assist in providing product codes of recalled products for inclusion on customs entries.
· Training on product safety compliance, internal controls and agency audit procedures.
· Allowing companies to extend ISA coverage to multiple business units.
· Fewer product safety tests on goods.
· Granting "front of the line" privileges at CPSC laboratories to ISA-PS participants when product safety testing is necessary.
· Allowing products to be destroyed instead of requesting redelivery of faulty goods to CBP.
· Automatic enrollment in CPSC's Fast-Track Product Safety Recall Program.

The pilot program will be reviewed after two years to determine whether it should become permanent.

President Signs New Consumer Product Safety Improvement Act of 2008

On August 14, 2008, the President signed into law Public Law No. 110-314, the Consumer Product Safety Improvement Act of 2008 (H.R. 4040). Because of the widely-publicized recalls of imported toys, the new law establishes stringent safety provisions for children's products. However, the new provisions include a broad scope of products other than toys and are projected to affect manufacturers, importers and other distributors and retailers of consumer products.

The new law also contains provisions relating to the administrative functions that have been delegated to the United States Consumer Product Safety Commission ("CPSC"), enhances the authority of the CPSC to order recalls, increases the amount of the civil penalties that the CPSC may impose, and has other miscellaneous provisions.

In addition to the new safety requirements, the civil penalties for non-compliance have increased to $100,000 for each violation with a maximum cap of $15 million for a related series of violations. The criminal penalties permit larger fines, up to five years' imprisonment, and forfeiture of assets associated with a violation. Additionally, directors, officers and agents may be criminally charged even if they were not aware of the violations. To promote compliance, employees who report violations, testify or otherwise provide assistance in CPSC enforcement proceedings, or who refuse to participate in an employer's illegal conduct will receive whistleblower protection.

The provisions that are most important to importers and exporters include:

• Requirements for self-certification and testing for imported products that are subject to the CPSC rule, effective on November 12, 2008, and third-party testing and certification of certain imported children’s products with requirements for:

- Certificates furnished by the manufacturer for every imported consumer product subject to CPSC.

- Certificates from third-party testing for toys and children’s products.

- Certificates accompanying the product.

- Procedures for filing certificates electronically may be implemented.


• Prohibition of most exports of recalled, banned, hazardous or non-conforming products to other countries.

• Policies to utilize the ITDS and increase cooperation with U.S. Customs and Border Protection to prevent non-compliant products from entering the United States.

• Procedures to destroy non-conforming products that have been denied admission into the United States.


Provisions of general interest include:


• New definitions for toys and children's products.

- The definiition of "Children's toys" now includes consumer products "designed or intended by the manufacturer for a child 12 years of age or younger for use by the child when the child plays."

- "Child care articles" are now defined as "a consumer product designed or intended by the manufacturer to facilitate sleep or the feeding of children age 3 and younger, or to help such children with sucking or teething."

• Phased-in ban on lead all children’s products.

• Additional safety rules affecting toys and children's products, including permanent tracking labels, expanded warning requirements for choking hazards, and new rules for durable infant and toddler products to facilitate owner registration.

• More stringent recall procedures have been created by eliminating the right of a party recalling a product to elect whether they will offer a refund, repair or replacement for recalled products, and by permitting the CPSC to require a refund, repair and/or replacement as the CPSC determines to be in the public interest.

Since the provisions are likely to affect a vast majority of manufacturers, distributors and retailers, all parties are urged to read the new law and consult their attorneys and other experts to ensure compliance with the extensive changes.