TPCC Interagency Trade Officer Training Market Access & Trade Agreement Enforcement

1. TPCC Interagency Trade Officer Training Market Access & Trade Agreement Enforcement John Liuzzi Office of Trade Agreements and Compliance / Trade Compliance Center September 27, 2012

2. An Example How a Tariff Re-classification by the EU Threatened U.S. exports of Jojoba Esters BCIU/Interagency Trade Officer 27Sept12

3. The Scenario • In March 2007, the International Jojoba Export Council approached the Department of Commerce, through the USEAC, and Customs and Border Protection (CBP) looking for assistance with the European Union’s re-classification of Jojoba esters from a 0% tariff line (HS 3404.9090) to a 7.7% tariff line (HS 1518.0099). • Jojoba and its by-products are used in the manufacture of makeup and skincare products. This new classification would increase costs and result in significant damage to U.S. as well as other countries’ exports to the EU. BCIU/Interagency Trade Officer 27Sept12

4. Some Questions • What is the scientific basis for the EU’s re-classification? • Are there third countries that have the same concerns? • What possible avenues are available to address this issue? BCIU/Interagency Trade Officer 27Sept12

5. Key Players • DOC/ITA: • Arizona USEAC • MAC’s Trade Compliance Center • MAC’s Office of the European Union • MAS Industry Analyst • U.S. Mission to the European Union • Office of General Counsel • Customs and Border Protection • Industry Representative BCIU/Interagency Trade Officer 27Sept12

6. Key Factors • U.S. argued that the EU’s reclassification was incorrect because the science underpinned the classification of jojoba esters in HS 3404 as having the chemical and physical properties of wax, not HS 1518 as an animal fat or oil. • The Harmonized System (HS) Code is harmonized up to the six-digit level. The WCO’s Harmonized System Committee can rule on HS Code classification disputes to ensure uniform classification. • Because the WCO decision would be based on a vote, CBP and ITA undertook outreach to third countries who were possible allies for the U.S. position, such as Argentina, Australia, Chile, Egypt, Mexico, and Peru. BCIU/Interagency Trade Officer 27Sept12

7. What is our Goal for Success? • Make a sale – we help a company now (Good) • Reduce or eliminate the barrier – help an industry now and in the future (Better) BCIU/Interagency Trade Officer 27Sept12

8. Action! USG concerns raised in various fora: • European Commission • World Customs Organization Harmonized System Committee • Third country outreach to build support for U.S. position BCIU/Interagency Trade Officer 27Sept12

9. Successful Resolution • After failing to resolve this issue bilaterally, the USG raised the classification dispute at the World Customs Organization Harmonized System Committee for a vote. • In the March 2008 meeting, the U.S. position was supported with a vote of 18-16. The EU appealed the vote in May 2008. • On March 11, 2009, the issue was debated and voted on again. This time the U.S. position was upheld by a vote of 24-12. • In June 2010, at ITA’s urging, the EU took the final step for compliance by updating its customs classification database, thus enabling U.S. suppliers to export using the appropriate duty-free classification. • The success was a result of a coordinated third country outreach effort by Commerce, CBP and the IJEC. BCIU/Interagency Trade Officer 27Sept12

10. DOC/ITA International Trade Administration Market Access and Compliance Import Administration Commercial Service Manufacturing and Services Office of Standards Liaison Office of Trade Agreements and Compliance USEACs and Overseas Posts Advocacy Center BCIU/Interagency Trade Officer 27Sept12

11. ITA/MAC A/S for Market Access and Compliance Trade Agreements and Compliance Western Hemisphere Africa, the Middle East, and South Asia Europe Asia Trade Compliance Center Office of Intellectual Property Rights Office of Multilateral Affairs BCIU/Interagency Trade Officer 27Sept12

12. Trade Agreements Monitoring and Compliance at Commerce • State of the Union Address  National Export Initiative (NEI) • Special trade barrier emphasis areas • NEI Priority Countries • Next Tier Markets • Mature Markets • Bilateral Trade Agreements BCIU/Interagency Trade Officer 27Sept12

13. What is Trade Agreements Compliance and why is it important? • Ensures foreign trading partners honor their obligations under trade agreements they have signed with the United States. • Promotes U.S. exports and supports U.S. jobs by eliminating horizontal barriers to trade in order to increase exports. • Creates confidence and support among stakeholders for future trade agreements to open other markets. BCIU/Interagency Trade Officer 27Sept12

14. The Trade Compliance Center • Coordinates Commerce’s monitoring of and ensuring compliance with U.S. trade agreements – The ITA Trade Agreements Compliance Program • 3 Elements: • Pro-active Monitoring • Barrier Investigation • Outreach BCIU/Interagency Trade Officer 27Sept12

15. Compliance, Trade Enforcement and ITA “Trade enforcement is a spectrum of activities” - USTR GC Tim Reif • Informaltrade enforcement =Compliance • USG uses diplomatic engagement to get partners to voluntarily honor their trade agreement obligations. • Formal trade enforcement = binding dispute settlement under WTO or FTA dispute settlement provisions. BCIU/Interagency Trade Officer 27Sept12

16. The Program’s Contribution to Trade Enforcement in Perspective…or the Iceberg From 2009 to August 15, 2012… Formal Dispute Settlement Proceedings initiated by USG under multilateral, bilateral, and regional trade agreements: 12 Cases opened by DOC under the ITA Trade Agreements Compliance Program: 825 BCIU/Interagency Trade Officer 27Sept12

17. Outreach, Training, & Monitoring to Identify Cases ITA Trade Agreements Compliance Program ITA Trade Agreement Specialists Congress MAC Country Desk Officers District Export Councils MAC Compliance Liaison Program Proactive Monitoring Trade Associations MAS Industry Specialists State Organizations Other Agencies and Officers at Posts Outreach and Training U.S. Export Assistance Centers Stop Fakes Websitewww.stopfakes.gov TCC Complaint Hotlinewww.export.gov/tcc Foreign Service Officers MAC Officers and Trade Compliance Center Direct Contact from Company BCIU/Interagency Trade Officer 27Sept12

18. The Most Common Trade Barriers • Excessive tariff and customs barriers • Discriminatory rules of origin, certificates of origin, or import licensing requirements • Burdensome standards, testing, labeling, or certification requirements • Lack of Intellectual Property Rights protection • Non-transparent government procurement contracts BCIU/Interagency Trade Officer 27Sept12

19. The ITA Case Team Country Desk Officer Trade Agreement Specialist Industry Specialist Market Access and Compliance Team General Counsel Other Agencies Trade Specialist at U.S. Export Assistance Center Officers at Embassies/Consulates BCIU/Interagency Trade Officer 27Sept12

20. Examining the Issue Identifies issue as unfair treatment or potential violation Determines specific trade agreement obligation, if any Gathers additional facts and verifies information Analyzes evidence and investigates BCIU/Interagency Trade Officer 27Sept12

21. Working to Resolve Crafts Action Plan, outlining general strategy to successfully resolve issue Sets success goal identifying company’s desired outcome(s) Involves other interagency resources, as appropriate Initiates Case Presses for resolution as quickly as possible, short of dispute settlement BCIU/Interagency Trade Officer 27Sept12

22. The Process Team escalates the issue as appropriate and employs the full weight of the U.S Government to resolve the issue Implementation of Action Plan Trade Agreement Tools: • Bilateral discussions • Multilateral/ WTO fora • FTA negotiations • Diplomatic/Advocacy Tools: • Meetings with foreign officials • Phone calls and letters • Non-papers • Demarches • Visits by Washington officials Team may recommend referral to the USTR and the interagency for WTO Dispute Settlement Body as appropriate BCIU/Interagency Trade Officer 27Sept12

23. Company agrees that no further USG action is possible or desirable. Company withdraws active support or resolves case some other way. Team determines and informs company that no further USG action is possible Resolution Success! Goal is reached and company is satisfied with USG assistance. BCIU/Interagency Trade Officer 27Sept12

24. Inter-Agency Coordination • TPCC • Outreach Opportunities • Interagency Compliance Task Force BCIU/Interagency Trade Officer 27Sept12

25. Colombia – Import Restrictions on Textiles, Apparel and Footwear • U.S. industry expressed concern over a new Colombian decree restricting imports according to the importer’s net worth and limits the number of different textile products a single importer can import. • The WTO generally prohibits import restrictions other than duties, taxes or other charges. • After U.S. officials raised the decree in FTA negotiations, Colombia agreed to modify the decree to make it significantly less trade restrictive. BCIU/Interagency Trade Officer 27Sept12

26. Kazakhstan - SEDs • In 2007, the Government of Kazakhstan amended its customs code to require importers to provide confidential Shipper’s Export Declaration information, which caused $70 million in U.S. goods to be held up at the border. • DOC (both FCS and HQ), State (both Post and Main) and CBP worked together to engage GOK. • Kazakhstan first exempted U.S. goods, then amended the code to delete the problematic requirement. BCIU/Interagency Trade Officer 27Sept12

27. Monitoring – Issues Which May Indicate Trade Barriers • Rules and practices not transparent. • Treatment not predictable. • Access to information, opportunity not equal. • Anything discriminatory or more favorable to locals or other nationalities. • Decisions based on nationality. BCIU/Interagency Trade Officer 27Sept12

28. Resources www.export.gov/tcc • ITA’s “Trade Complaint Hotline” • Checklist of common trade concerns • 270+ trade and related agreements • Exporter Guides: quick, concise explanations of individual trade agreements • Market Access News • WTO Standards Notifications—Notify U.S. • Mailing List: Subscribers receive weekly “What’s New” e-mail update on trade-related news BCIU/Interagency Trade Officer 27Sept12

29. Your Role? • Be on the lookout for unfair trade barriers and let us know what you find. • Refer clients to ITA’s Market Access and Compliance Online Hotline at www.export.gov/tcc. • Help us get out the word out on USG assistance on market access problems and trade agreements compliance issues. BCIU/Interagency Trade Officer 27Sept12

30. TCC Contact Information • Main Line: 202-482-1191 • Fax: 202-482-6097 • TCC@trade.gov • www.export.gov/tcc • Cables slugged for USDOC/TCC/4110 John Liuzzi (202) 482-0539 john.liuzzi@trade.gov BCIU/Interagency Trade Officer 27Sept12