TPCC I NTERAGENCY T RADE O FFICER T RAINING M ARKET A CCESS & T RADE A GREEMENT E NFORCEMENT John Liuzzi Office of Trade Agreements and Compliance / Trade Compliance Center September 27, 2012

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

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 ) to a 7.7% tariff line (HS ). 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

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

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

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

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

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

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 The EU appealed the vote in May On March 11, 2009, the issue was debated and voted on again. This time the U.S. position was upheld by a vote of 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

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

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

BCIU/Interagency Trade Officer 27Sept12 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 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 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

Compliance, Trade Enforcement and ITA “Trade enforcement is a spectrum of activities” - USTR GC Tim Reif Informal trade 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

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

Outreach, Training, & Monitoring to Identify Cases Proactive Monitoring MAC Compliance Liaison Program Outreach and Training Congress State Organizations Foreign Service Officers U.S. Export Assistance Centers ITA Trade Agreement Specialists Other Agencies and Officers at Posts District Export Councils Direct Contact from Company MAC Officers and Trade Compliance Center Stop Fakes Website TCC Complaint Hotline ITA Trade Agreements Compliance Program MAC Country Desk Officers Trade Associations MAS Industry Specialists

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

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

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

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

BCIU/Interagency Trade Officer 27Sept12 Resolution Success! Goal is reached and company is satisfied with USG assistance. 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

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

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.

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

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 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 Resources

BCIU/Interagency Trade Officer 27Sept12 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 Help us get out the word out on USG assistance on market access problems and trade agreements compliance issues.

BCIU/Interagency Trade Officer 27Sept12 TCC Contact Information Main Line: Fax: Cables slugged for USDOC/TCC/4110 John Liuzzi (202)