Update on New Reporting Requirements for Imported Wood Products

Click here to view the Farm Bill Lacey Amendment

Don’t expect a lot of relief on the scope issues.” This is what CBP told us about a provision (Sec. 8204) that was included in the recently passed Farm Bill and that broadens the definition of "plant" under the Lacey Act to include trees and products that come from trees, and that requires additional reporting for imports of these products, beginning December 15. The provision, which could cover a wide variety of wood and wood products, is attached.

While CBP and USDA-APHIS are currently working on issues relating to implementation, according to CBP, there are no hard and fast rules about what is covered or not. We have been told that the rule will cover a significant amount of the HTS, and while CBP is trying to carve out some exemptions working with APHIS, that effort is still being formulated, and CBP says the law does not provide much wiggle room.

It is worth noting that CBP seems to be concerned that the December 15^th implementation date could be problematic since the vast majority of traders do not understand that this rule applies to them, and that they will have to chase the source(s) of all impacted merchandise back up their supply and manufacturing chains.

CBP says that once they develop some guidance that they can publish that “will answer more questions than it generates”, they will put it out there.

We will continue tracking progress on this issue.

In the meantime, I am interested to know what questions, concerns or other thoughts you have about this issue.

Ray Bucheger
Friedmann I Beaubien I Bucheger Federal Relations
1120 G Street, NW Suite 1020 Washington, DC 20005
tel: 202-783-3333 fax: 202-783-4422
ray@federalrelations.com

Update on Additional Reporting Requirements for Imported Wood Products

I am following up on my email from yesterday about the Farm Bill provision (Sec. 8204) that broadens the definition of "plant" under the Lacey Act to include trees and products that come from trees, and that requires additional reporting for imports of these products, which could cover a wide variety of wood and wood products, beginning December 15.

We have learned today that USDA has officially appointed APHIS as the lead agency for administering the new requirements for the wood and paper product import declaration. APHIS has recently formed a working group of agencies that have specific experience with Lacey Act issues, and that includes CBP due to its expertise with the border and implementation issues. APHIS will apparently be issuing a position paper on this particular subject in the very near future. Since CBP is part of this deliberative process, they are not at liberty to share certain materials right now, but as soon as they can, they will.

Ray Bucheger
Friedmann I Beaubien I Bucheger Federal Relations
1120 G Street, NW Suite 1020 Washington, DC 20005
tel: 202-783-3333 fax: 202-783-4422
ray@federalrelations.com

Federal Update: Additional Reporting Requirements for Imported Wood Products

I am writing to bring to your attention an issue that many people in the trade community are just learning about.

In addition to the myriad other issues included in the 600+ page Farm Bill that was recently signed into law, there is a provision (Sec. 8204) that broadens the definition of "plant" under the Lacey Act to include trees and products that come from trees, and that requires additional reporting for imports of these products, beginning December 15. The provision, which could cover a wide variety of wood and wood products, is attached. Farm Bill Lacey Amendment

We have been talking about this provision with CBP and USDA-APHIS, which have been meeting to discuss how this provision will be implemented. We will keep in close contact with these agencies and keep you updated along the way.

Ray Bucheger
Friedmann I Beaubien I Bucheger Federal Relations
1120 G Street, NW Suite 1020 Washington, DC 20005
tel: 202-783-3333 fax: 202-783-4422
ray@federalrelations.com

In a joint statement issued late last night, the International Longshore and Warehouse Union and the Pacific Maritime Association announced that they have reached a preliminary agreement on terms for a new six year contract covering more than 25,000 dockworkers at 29 West Coast ports. The agreement is subject to ratification by the ILWU and PMA membership.

Here is the announcement posted on the ILWU’s Contract2008.org web site:

Tentative Agreement Reached Covering 25,000 workers at 29 West Coast Ports

Port Operations to Return to Normal

A joint statement from the International Longshore and Warehouse Union and the Pacific Maritime Association

San Francisco (July 28, 2008) – After a marathon weekend bargaining session, leaders from the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) announced a preliminary agreement on terms for a new six year contract covering more than 25,000 dockworkers at 29 West Coast ports. The leaders shook hands in San Francisco over the proposed agreement on Monday.

The agreement is subject to ratification by the ILWU and PMA membership. The ILWU and PMA have agreed to extend the previous agreement and resume normal port operations.

ILWU President Bob McEllrath and PMA President Jim McKenna said the proposed agreement meets the needs of both workers and the industry. It allows West Coast ports to be competitive and provides the good jobs that workers and communities need.

The parties have agreed not to discuss details of the agreement until the ILWU and PMA leadership teams have communicated with their respective membership.

Members of Congress Urge CBP to Conduct 10+2 Pilot Program

Attached is the letter that Congressman Earl Blumenauer (D-OR) spearheaded and that was signed by 20 members of the House of Representatives urging CBP to conduct a pilot program before implementing 10+2 on a wide scale.

Customs 10+2 Letter From Capitol Hill.pdf

As of this morning, CBP had still not submitted its 10+2 rule to the Office of Management and Budget (OMB) for interagency review. CBP had anticipated submitting the rule to OMB by August 1 but has apparently held off due to increasing concern coming from Capitol Hill.

Ray Bucheger
Friedmann I Beaubien I Bucheger Federal Relations
1120 G Street, NW Suite 1020 Washington, DC 20005
tel: 202-783-3333 fax: 202-783-4422
ray@federalrelations.com

10+2 Update: Ways and Means Committee Meeting

I have talked with a number of Congressional staff who attended today’s closed-door meeting with CBP and they have all described the meeting as being somewhat combative. I am still tracking down answers to some of the specific questions that were asked during this meeting, but in the meantime I am writing to report that my staff contacts tell me that CBP seems to be intent on moving forward with 10+2 (without a pilot program), and they are aiming to publish the final rule by November.

When Congressional staff suggested that the agency should conduct a pilot program, CBP pushed back very hard saying that a pilot is unnecessary and that the ongoing Advance Trade Data Initiative (ATDI) “test bed” has been sufficient. Further, CBP told Congressional staff that the one-year “informed compliance” period, will be used to work out any kinks in the program. CBP also told Congressional staff that the agency thinks that the proposed pilot program is simply the trade community’s way of trying to kill 10+2. While the Congressional staff I talked with understands this is not the case, I don’t get the sense that they pushed back very hard in the meeting.

We will continue to push Congress to lean on CBP to conduct a pilot program and keep you updated on these efforts.

CBP Meeting with House Ways and Means Committee Staff Tomorrow AM: Input Requested

Richard Dinucci from CBP’s office of field operations is scheduled to brief House Ways and Means Committee staff tomorrow (Wednesday) at 10am on 10+2. CBP has not told staff what Richard plans to talk about. We will report back to you after tomorrow’s meeting.

Also, I have been telling you about Congressman Earl Blumenauer’s (D-OR) efforts to get CBP to conduct a 10+2 pilot program before implementing 10+2 on a wide scale. CBP has so far resisted calls from the industry to conduct a pilot. And while we have been encouraging Members of Congress to sign onto Blumenauer’s letter, most Members are waiting to see what CBP has to say tomorrow AM until they decide on the letter.

In the meantime, I have had several different Ways and Means staffers ask me for input as they prepare for tomorrow’s meeting so I am interested to know if you have any questions or comments that you would like Congressional staff to ask Dinucci.

US House of Representatives Passes GSP Extension

The US House of Representatives has passed an omnibus trade bill that extends the Generalized System of Preference (GSP) program for one year and includes the following provisions:

1. Extend GSP one year: GSP now expires on December 31, 2009.

2. Enact the DR 2:1: This is the so-called Earned Import Allowance Program (EIAP) is the final piece of the CAFTA-DR pocketing negotiations. The EIAP will provide for duty free access for third country fabric trousers from the Dominican Republic under the following condition: Essentially, for every two pairs of originating trousers imported from the DR, an importer will be able to import duty free a pair of non-originating trousers.

3. Repeal African abundant supply provisions: Note: The primary impact will be to make sure that producers of denim apparel in AGOA can continue to ship that apparel to the US duty free using third country fabric provisions past September 30, 2008. The so-called Abundant Supply provision in AGOA is a very elaborate and complicated program that prevents a company from using third country fabric provisions if an insufficient amount of regional fabric is used during a set period. Because of prior determinations by the International Trade Commission (ITC) that not enough regional denim fabric was used over the past few years, there was a mathematical certainty that denim would have been removed from the list of fabrics that can get third country treatment. This provision would repeal that mechanism, avoiding the whole issue altogether.

4. Add Mauritius to the AGOA third country fabric provisions: Beginning 15 days after the bill is enacted, and lasting for the length of the AGOA third country fabric program, this provision will add Mauritius to the list of countries eligible to use third country fabric.

This legislation does not extend the Andean trade preferences program, which expires on December 31, 2008. The bill must now be considered by the Senate before it can be sent to the President for his signature, but it is not clear if and when the Senate will consider the legislation

China Increasing Export Tax Rates for Certain Textile and Garment Exports

China announced today that it is increasing its export tax rebate by two percentage points to 13 percent on certain textile and apparel. There are some additional details in the attached ChinaDaily Article http://www.chinadaily.com.cn/china/2008-07/31/content_6894070.htm.

Ray

Export tax rebates for textile, garment raised

BEIJING - China is to raise tax rebates for certain textile and garment exports to help producers cope with the paper-thin profit margins squeezed by the yuan's appreciation and higher costs.

Export tax rebates for some textile and garment items would be increased by two percentage points to 13 percent from August 1, the State Administration of Taxation said in a statement on Thursday.

These items included silk, wool yarn, chemical fibre and cotton products.

However, export rebates for certain products, including pesticides, medicine, silver, paint, zinc and battery would be scrapped, it said.

The textile and garment industries had been plagued by the stronger Chinese currency, tight monetary policy that has made financing more expensive, higher labor costs and rising raw material prices, market analysts said.

The tax rebate increase would ease pressure and help boost exports, said Bai Jingming, deputy director of the Research Institute for Fiscal Science under Ministry of Finance.

The country's textile and clothing exports rose 11.1 percent to US$81.7 billion in the first half, but the growth rate was 6.4 percentage points less than the same period last year.

Investments in large projects (5 million yuan or more) totaled 126.7 billion yuan in the first half, up 14.24 percent from the same period last year. But the growth rate was 11.5 percentage points lower, according to the China National Textile and Apparel Council.

Rather than feel bad that they mandated 100% deployment of screening technology that hasn't been proven to work, the New York and New Jersey Senators have now introduced yet another bill to mandate additional layers of security procedures and certifications. If you can get by the opening paragraphs blaming the Bush administration for failure to screen 100% of imports, you will find a description of the additional burdens they wish to place upon the Coast Guard, DHS, CBP, vessel operators, terminals, and shippers, as well as customs brokers and freight forwarders.

Fortunately, it is doubtful that there is time to enact this bill this year. But it gives us a peek into the good times that we'll be having next year!

http://lautenberg.senate.gov/newsroom/record.cfm?id=299585

Peter Friedmann
Of Counsel, Lindsay, Hart, Neil & Weigler, LLP

Senators Gauge Support For Reinstatement Of Byrd Amendment

Tue. Jul 8, 2008

Senators from manufacturing states, led by Sen. Sherrod Brown, D-Ohio, are quietly leading an effort to reinstate a law Congress repealed in 2006 that distributes anti-dumping subsidies to the affected U.S. companies that lodged complaints in the first place.
Brown and Senate Appropriations Chairman Robert Byrd, whom the law was named for after his amendment to a 2000 spending bill created the program, are circulating a letter to colleagues asking for their support. Repeal of the Byrd Amendment “was never seriously contemplated by the Senate and was a terrible mistake. We believe that this mistake must now be corrected,” the draft letter states.
Republican leaders negotiated a phased-in repeal of the Byrd Amendment as part of the 2005 Deficit Reduction Act, which was signed into law in early 2006. Repealing the Byrd Amendment, which fully took effect on Oct. 1, 2007, contributed to the $39.7 billion in overall savings the law produced. The measure passed by one vote in the Senate, over the objections of Democrats.
Aides to Brown and Byrd said the letter has not been finalized and the wording could change, but that the intent was clear on “educating” colleagues about the law’s importance and the need to reinstate it.
A Brown aide noted that 70 senators in 2003 wrote to President Bush in support of the law, demonstrating the strong bipartisan support for directing relief to companies and workers affected by the dumping of cheap imports.
According to its final report released last week, Customs and Border Protection said that in FY07, disbursements to affected manufacturers totaled $264.4 million. The largest number of disbursements were in response to claims filed against dumped imports of “certain frozen warm-water shrimp and prawns” from Vietnam, China, Thailand, Brazil and India.
But they run the gamut, benefiting producers of “candles, catfish, cement, crawfish, furniture, bearings, garlic, hand tools, honey, mushrooms, pasta, raspberries, semiconductor chips, shrimp, steel, pipe producers, various chemicals, fertilizers, enriched uranium and others,” as the senators note in their draft letter.
In fact, $7.7 million went to companies like New World Pasta Co. and Philadelphia Macaroni Co., who filed petitions claiming injury from illegally dumped pasta from Italy.
Brown’s state is home to The Timken Co., a bearings maker that has historically been among the top recipients of aid through the Byrd Amendment. Timken and its subsidiaries received about $11.6 million in FY07, according to Customs’ latest numbers.
Brown and Byrd are likely to gain bipartisan support for their effort, even if it is opposed by the Bush administration and GOP leaders. For example, wooden bedroom furniture and steel are big business in North Carolina, home of Republican Sen. Elizabeth Dole. A spokesman said Dole has been contacted by local companies urging her to endorse reinstatement of the Byrd Amendment, which she said she supports.
“American manufacturers and workers who bear the brunt of unfair trade practices and the expense of pursuing these cases should be compensated with funds collected from penalty payments,” Dole said in a statement.
Aides said they were not contemplating a legislative vehicle to reinstate the law at this time. But just like Byrd’s 2000 effort, opponents fear he will use his powerful perch as chairman of the Appropriations Committee to force through language this year putting the law back into effect.
Last week, 27 mainstream industry trade associations wrote to Senate leaders urging them to oppose the effort, noting the World Trade Organization has ruled the Byrd Amendment illegal.
They noted that U.S. trading partners could end up retaliating, as they did in 2005 when the European Union and Canada slapped additional tariffs of up to 15 percent on U.S. exports such as crane trucks, wire spectacle frames, live swine and oysters.

by Peter Cohn

Ray Bucheger
Friedmann I Beaubien I Bucheger Federal Relations

ILWU-PMA Negotiations

ILWU-PMA Update

Just as the ILWU told reporters earlier this week that negotiations with the PMA may soon be coming to a close, the ILWU’s “job actions” continue in LA and LB and appear to be migrating north to Oakland.

As had been previously reported, the ILWU has ended the standard practice of staggering their morning and afternoon coffee breaks at LA and LB and instead all dock workers at individual terminals have been taking their breaks at the same time. There have been conflicting reports about what impact this has had on container movements, and it is unclear what this will mean at the Port of Oakland. Also unclear is whether these actions will also move to other West Coast ports.

**I am interested to hear your perspective on this situation, both about the talks themselves and about the impact of the ILWU’s activities.**

In the meantime, we will continue to monitor this situation and keep you posted on any new developments.

Ray Bucheger

ILWU talks nearing end

July 23, 2008

By Stephanie Nall

Contributed by Pacific Shipper

Negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association for a new multi-year waterfront contract are “getting close to the end,” according to a labor spokesman.

“Pensions and other issues are now being discussed, which means we’re getting close to the end," said ILWU spokesman Craig Merrilees.

Merrilees would not specify other issues that been either finalized or remained on the table, except to say that salary levels are still to be decided. He said there had been ongoing comments and ideas about productivity measures sought by the employers' group.

“I wouldn’t be surprised if a number of issues are addressed in a package” Merrilees said. “It’s often the way negotiations proceed at this point.”

He refused to speculate on when the negotiations might end. “Sometimes getting over the last few little bumps can present a little difficulty, but we gotten through a lot.”

Kevin Elliott, a spokesman for the PMA, said he was not authorized to discuss the progress of the talks. “We’re encouraged by the progress at the table and continue to be frustrated by the ILWU-coordinated job actions," he said, noting that ongoing unit breaks by union workers were continuing to slow operations at the ports of Los Angeles and Long Beach, in addition to other slowdown tactics.

Asked why union members are still engaging in slowdown tactics if the talks are going well, Merrilees said, “Members in Los Angeles and Long Beach are still drinking coffee. Together. But there is a lot of cargo moving and companies are still making a lot of money.”

The International Longshore and Warehouse Union reps and the Pacific Maritime Association reps are meeting separately today and plan to resume direct negotiations tomorrow (Wednesday) morning. While the ILWU is scheduled to hold a general caucus July 14 (this caucus was scheduled months ago as a venue for ILWU negotiators to present a tentative contract agreement to the membership), it is still difficult to say when the two sides will come to an agreement.

Ray Bucheger
Friedmann I Beaubien I Bucheger Federal Relations

10+2 Update: Congressman Blumenauer is Seeking a Pilot Program

CBP is aiming to submit their 10+2 rule to the Office of Management and Budget (OMB) for a final review by August 1 (although this is not a hard deadline). In the meantime, we have been talking with Congressman Earl Blumenauer’s office and have learned from his staff today that Congressman Blumenauer (D-OR) is taking the lead on a letter that he and (hopefully) many of his colleagues in the House of Representatives will be sending to CBP asking that they move forward with a limited pilot project before implementing 10+2 on a wide scale.

We are contacting all of the Ways and Means Committee members in the Northeast on behalf of CONECT to ask them to sign on to Blumenauer’s letter, and if/when Blumenauer’s office expands their outreach to the entire House, we will expand our outreach as well. We will keep you updated as that letter is circulated around Capitol Hill.

In the meantime, and to put things into perspective, it now appears that there are three ways that the 10+2 issue could play out.

Scenario 1: CBP agrees to conduct a pilot program. This would push back final implementation of 10+2 for quite some time as the pilot is conducted and then the results are reviewed by the Hill, DHS, et al. It will be a few weeks before we know the likelihood of this scenario.
Scenario 2: OMB reviews the 10+2 rule and asks for changes. This would push back final implementation into next year. It will be a month or more before we know the likelihood of this scenario.
Scenario 3: OMB reviews the 10+2 review and does not seek any changes. If this happens, and CBP does not agree to conduct a pilot program, most people agree that the final rule could be issued as early as November 1. Similar to scenario 2, it will be a month or more before we know the likelihood of this scenario.

Update on Timing of 10+2:

After the Ways and Means Committee met with Commissioner Basham behind closed doors a few weeks ago, Congressional staff told us that Basham agreed to consult with Congress as the agency continues to develop its final rule, and that this would likely delay CBP’s publishing of the final rule past the end of summer. Congressional staff who attended this meeting also said that it is likely that the rule would be published by December, which is the deadline the White House has given all Executive Branch agencies for finalizing rules during this Administration. A few days later, Commissioner Basham appeared in front of the Senate Finance Committee (during a public hearing) and indicated that CBP would publish the final rule by the end of the summer.

The bottom line is this: While CBP says they are going full-speed-ahead, it is unclear at the moment what role, if any, Congress will play in this and what that will do to CBP’s timeline. We understand that a large Washington trade association has drafted a letter that they are asking Members of the Ways and Means Committee to send to CBP (we are guessing a big part of that letter is to push a trial run of the program), but it is difficult to say if they are getting any traction with Members.

As you know, things can change very quickly. We will continue to monitor this issue and keep you updated as events warrant.

West Coast Labor Update

While both the terminal operators and ILWU say that negotiations are moving smoothly, the LA Local is taking matters into its own hands, with coordinated coffee breaks, bringing operations to a halt periodically, and significantly slower container loading/unloading on random ships, the net effect being about a 25% overall productivity loss (according to the terminal operators).

So far this seems confined to LA/LB, and not evident at other west coast ports. How long will it last? Until the contract is finalized. Common wisdom is that this will happen soon, but then again, common wisdom has been that we would have a new contract by now, without any disruptions. We'll see.

Let's really hope that this is all resolved long before the CONECT Trade & Transportation briefing in Washington, DC on September 9 and 10.

Peter Friedmann
Of Counsel, Lindsay, Hart, Neil & Weigler, LLP

Update on West Coast Waterfront Labor Negotiations:

As you probably know, the West Coast waterfront labor agreement has expired; and while the two sides will not likely reach an agreement before the July 4th holiday, the ILWU says its members will continue working as normal while the ILWU Negotiating Committee keeps meeting.

Friday, July 4 is a holiday for the ILWU. The celebration of "Bloody Thursday" will be observed on Saturday July 5. July 3rd will have a regular day shift and PierPass gates.

For additional information, here are today's press releases from the PMA and the ILWU:

Pacific Maritime Association Update On West Coast Waterfront Labor Negotiations

SAN FRANCISCO (July 2, 2008) -- The Pacific Maritime Association, whose 71 member companies include cargo carriers, terminal operators and stevedores on the West Coast, issued the following statement today regarding the ongoing negotiations on a new waterfront labor agreement:

The six-year West Coast waterfront labor agreement expired Tuesday, but negotiations between the Pacific Maritime Association and the International Longshore and Warehouse Union (ILWU) on a new contract will continue beyond the deadline.

While the ILWU has stated that work will continue as normal as we negotiate, we regret that it did not agree to a formal extension of the contract and its no strike clause and arbitration procedures for resolving workplace disputes, including the tactic of slowdowns. An extension would have sent a much stronger message to the shippers and the public that the West Coast Ports will continue to operate without disruption.

As it has since negotiations began March 17, PMA remains focused on reaching a new agreement that is fair and reasonable to both sides, while at the same time keeping the ports running smoothly and safely. We will continue to work as hard and as quickly as possible to resolve remaining issues.

The West Coast ports are a critical economic engine for the U.S., generating almost $1.3 trillion in domestic business impacts – which represents 11 percent of total U.S. gross domestic product – and supporting more than 8 million direct and indirect U.S. jobs. With a weakened economy, the country can’t afford uncertainty or disruption at the ports.

GSP: Will it be renewed on time?

We have been getting inquiries about the status of efforts in Congress to renew the Generalized System of Preferences (GSP) program (which expires on December 31, 2008), so I asked a majority staffer on the Ways and Means Committee what they thought about GSP (and specifically if it would be addressed before or after the election), and this was his response:

"Well since it expires after the election and I expect a lame duck, I would say after. That being said it is fairly non-controversial and therefore I could see it being done with a larger package because I think AGOA expires September 30th."

Clear as a mud puddle, right? It just goes to show that nobody on the Hill really knows how the next few months will play out on trade, or really on any other issue.

Another Update on 10+1

There is a bit more clarity on the 10+2 issue after Ways and Means Committee staff met Friday morning to sort out the issue. NOTE of interest: Ways and Means Committee staff meets every other Friday to discuss the issues that are “hot” at that time. Today they also talked about the status of the pending free trade agreements with Panama, Colombia and South Korea, which are unlikely to be considered by Congress any time soon, if at all.

Congressional Oversight on 10+2:

It appears that instead of the Committee sending a letter to CBP with a list of things to fix, there will be a series of meetings between Congressional staff and CBP over the next several months to try to come up with a program that is satisfactory to everyone on the Hill and the industry.

Timing: The bottom line is essentially the same: How 10+2 will be implemented appears to be very much up in the air. And while it is unclear when exactly CBP will publish its final rule (it depends on how well the consultations between CBP and Congress go), they are facing an unofficial deadline of December, since December is the deadline for the Bush Administration to finalize any outstanding rules before the next President comes into office.

At this point it appears that Congress intends to work with CBP to get the new 10+2 rule issued by the end of the year.

Federal Update: Trade Preferences

Congress passed a massive Farm Bill that includes an expansion of duty-free preferences for textile and apparel imports from Haiti as well as an extension of trade preferences for other Caribbean nations that expire Sept. 30. This bill, which also covers a broad range of agriculture policy, including agriculture subsidies, environmental preservation, food safety, and policies impacting rural communities, has been subject to intense negotiations between House and Senate Leaders for the past several months.

Please let me know if you have any questions. I will keep you updated on the trade provisions.

WSJ: Container Shortage puts U.S. Export Boom in a Box:

While a weak dollar is increasing demand for US exports, that demand is often going unmet because US exporters can’t find containers. Here is an article that appeared in today’s Wall Street Journal that does a good job describing the problem. Unfortunately, the article does not offer any solutions, but says this will be a problem until at least the end of this year.

Container Shortage Puts U.S. Export Boom in a Box

By TIMOTHY AEPPEL
April 10, 2008; Page B1

Many U.S. companies hoping to profit from surging exports created by the weak dollar are facing an unexpected hurdle: There aren't enough of the big, metal shipping containers that help form the backbone of the global economy.

The shortage is threatening to limit the benefits U.S. producers can reap from one of the few bright spots in an otherwise troubled economy. While housing and financial markets have slumped, many companies have seen a rise in their export business, helping offset the domestic slump and lessening what would have already been a far more painful downturn.

Finding enough of the big metal boxes used to be a cinch, because the nation's massive hunger for imports meant they were constantly arriving and stacking up from Long Beach, Calif., to Long Island, N.Y. Shipping companies typically scoured the country for anyone willing to fill outgoing boxes. But with the slump in the value of the dollar making U.S. goods more attractive to foreign buyers and many overseas economies continuing to hum, the tide has shifted in recent months. Trade figures being released Thursday are expected by many economists to show further growth in exports.

Shipping containers -- and the way they're handled -- reflect how the U.S. interacts with the global economy, which is one reason the problem has emerged now. For years, the U.S. crafted a trading system that was designed to pull in masses of imported consumers goods such as sneakers and VCRs as efficiently as possible from countries like China. Far less was expected to flow the other way.

What has happened now has thrown a wrench into the works. Cutbacks by U.S. consumers have slowed the growth of imports, while the weak dollar is making the U.S. into an export machine. Meanwhile, the places where most of these exports are originating are far from where boxes are being unpacked and soaring energy costs make it too costly to just load them on trucks and move them around.

"There are some places, particularly in the Midwest, where there's a complete lack of containers," says Philip Damas, the head of container research at Drewry Shipping Consultants in London.

And it's not just boxes that are in short supply. Maersk Inc., the U.S. subsidiary of A.P. Moller-Maersk Group, the Danish container shipping company, notes a shortage of chassis, which are sets of wheels and frames on container-carrying trucks. Without enough chassis to deliver containers, it doesn't matter how many are piled up in a port, says a company spokeswoman. Yet another problem: Many shipping lines, including Maersk, have shifted container capacity away from the U.S., just when U.S. producers need them most.

This has meant lost orders, delays, or a scramble for alternatives, such as costlier air freight. A Wisconsin producer of riding lawn mowers expects fewer "opportunistic sales" to European customers in coming months, because he can't book containers on a few days' notice -- three weeks are needed -- while a South Carolina construction-machine maker says the shortage has delayed shipments to Australia and Europe. McCain International, the big french-fry company with operations in the U.S. and Canada, says it can't get enough refrigerated containers. Among the hardest hit are companies that shippers counted on to fill otherwise empty outbound ships: scrap metal and paper concerns.

"This is a huge problem for us and it keeps getting worse," says Shailesh Vyas, president of Bay Bridge Enterprises LLC, a scrap-metal processor in Chesapeake, Va. Mr. Vyas said shipping lines used to call on him to fill outbound 40-foot containers with scrap metal. But shippers no longer want low-value scrap when they can fill ships with higher-value goods, such as grain, chemicals and machinery.

As recently as August, Mr. Vyas was sending up to 1,000 containers a month to customers in India, Bangladesh and Pakistan, which melt scrap to make new steel products. Now, he's lucky to get 300 or 400 boxes, he says. "What's really frustrating is that, today, I could be moving 2,000 boxes a month without any problem, but I can't get the boxes."

Analysts say shipping costs are rising, too. Mr. Damas, the London-based consultant, says the cost of shipping a 40-foot container from the West Coast to China is now $1,500, up at least 20% in the past year. In many cases, boxes that previously would be sent to inland locations never leave the coast.

The problem surfaced about six months ago and can be traced to a confluence of factors, beyond the slump in the dollar. For one, the global commodity boom has increased the cost of shipping items by bulk, which in turn has pushed more goods into containers.

It doesn't help that containers don't tend to flow to places that make most U.S. exports. More imports to the U.S. are consumer goods, which are often unloaded near retailers and warehouses in large cities, including Los Angeles, Chicago, and New York. In the case of Chicago, many containers come off ships from Asia and onto trains destined for "inland" destinations. But U.S. commodity exports, such as cotton and corn, are grown far from those hubs.

The shortage of boxes is forcing some businesses to rethink how they structure operations. Dan Ariens, chief executive of Ariens Co., a Brillion, Wis., maker of lawn mowers and snowblowers, spent the last few years perfecting just-in-time production, which allowed him to sharply reduce inventories in warehouses.

"We've had to adapt to work with longer lead times, which means trying to get better vision from customers," says Mr. Ariens. Even then, he figures he'll lose some business because of the dearth of containers. For instance, an early spring in Europe might prompt a surge of lawn-mower orders, but he won't be able to get his products there quickly enough. Air freight is too expensive to even consider, he notes.

Manufacturers like Ariens work closely with freight forwarders, which help companies move goods around the world. But Tim Schwerzler, vice president of sales at Harbour Freight, the Batavia, Ill.-based forwarder who works with Ariens, says many manufacturers, even huge companies with long-standing relationships with the shipping lines, are facing similar problems.

"A lot of companies have product sold, but can't get the product out -- it's tying up a lot of inventory," says Mr. Schwerzler. "Even if you get containers, you find more people fighting for space on the ships."

Sometimes, the shortage can torpedo an entire transaction. One of his customers wanted to buy ice-cream sandwiches from a company with factories in the upper Midwest to ship to the Caribbean, but couldn't get a steady flow of refrigerated containers to the factory. Shipping ice cream by truck to a distant port was too costly and fraught with risk of spoilage.

Analysts say that barring a global slowdown that put the brakes on U.S. exports, the problem will dog exporters at least through the end of next year.

Write to Timothy Aeppel at timothy.aeppel@wsj.com¹

Federal Update: U.S.-Columbia FTA to be Delayed Indefinitely:

House Speaker Nancy Pelosi plans to schedule a vote tomorrow to change Trade Promotion Authority (TPA) rules and delay consideration of the US-Colombia free trade agreement indefinitely. While there is speculation that Congress will consider the US-Colombia agreement after the November elections, the fate of this agreement is unknown.

This action is in response to President Bush officially sending the US-Colombia free trade agreement to Capitol Hill yesterday in efforts to force a vote on the agreement. Under Trade Promotion Authority (TPA) rules, the House of Representatives has 60 days to act, and the Senate has 30 days after that. Pelosi’s decision to change TPA rules will do away with that clock.

Here are two articles from today’s CongressDaily that provides a bit more detail on the politics and speculation.

Pelosi Move To Delay Colombia Vote Angers White House ...
     House Democrats will vote Thursday to remove the 90-day timetable for considering a free trade agreement with Colombia, Speaker Pelosi announced today, infuriating the White House and House Republican leaders. The move would indefinitely delay a final vote on the controversial package. "I can't believe they would change the rules in the middle of the game," Trade Representative Schwab said. Pelosi was upset by President Bush's decision to send up the Colombia deal Tuesday, which started the clock running under fast-track rules. "The president took his action. I will take mine," Pelosi said, adding that the additional time would allow for continued discussions on "how we bring some balance to this issue."
     Democrats are under pressure from U.S. labor unions over the deal because of the record of violence against Colombian labor leaders. In addition, the lack of movement on a trade adjustment assistance package remains a key issue. Pelosi said Bush's move to send the agreement to Congress signaled his unwillingness to continue conversations and that the deal would fail if brought to the floor now.
     A handful of Cabinet secretaries hastily gathered at the White House to criticize Pelosi's plan, and President Bush will be able to voice his objections this afternoon in a previously scheduled White House meeting with congressional leaders from both parties. "The U.S. Trade Representative, under trade promotion authority, is empowered to negotiate on behalf of the United States," White House Press Secretary Dana Perino said. "What country, after this action, will look to the trade representative ... and think that they'll be able to count on their word?" Perino brushed aside suggestions that postponing the vote until after Election Day could help the deal's prospects by easing political pressures, noting the Democrats might refuse to bring it up in November and asserting the legislation would pass if considered earlier. House Republican leaders accused the Democrats of ducking the issue. Pelosi's action is "a statement that we don't like this process and we don't want to take a position on these issues," said Minority Whip Blunt. Minority Leader Boehner said the move "would violate the spirit of the law ... It would be cheating."
     Pelosi's gambit took some Democrats by surprise when it was presented to Democratic lawmakers at a closed-door caucus meeting this morning. Sources said some Democratic leaders argued for bringing up the bill but delaying the final vote until a specific date after the election, both to provide more time to negotiate and to give political cover to vulnerable Democrats. While that move was more acceptable to business interests, leadership and lobbying sources said Pelosi was more amenable to removing the fast-track timetable, a position that had the backing of labor unions.
    -- by Christian Bourge, with Keith Koffler and Peter Cohn contributing

... As Schwab Blasts Decision To Delay Colombia FTA Vote
     Trade Representative Schwab said today's decision by House leaders to indefinitely delay a vote on the Colombia Free Trade Agreement could have broader implications for the United States trade agenda as well as deal a blow to a strong ally in Latin America. "This could be devastating not just to the Colombia FTA but to broader U.S. trade policy going forward, on our ability to negotiate and implement agreements that are of benefit to U.S. workers, that are of benefit to U.S. farmers and entrepreneurs," Schwab said just after the news broke. "The Colombia FTA deserves a vote. Colombia is an important country in a critical region for the United States and deserves to be treated with respect."
     Labor groups who have thrown down the gantlet against the Colombia pact cheered House Speaker Pelosi's move. "I think the speaker made the right decision. Now is the time to focus on the economy, and Colombia is not ready for a free trade agreement," said AFL-CIO legislative director Bill Samuel. "We need to see sustained progress on the ground in Colombia in reducing violence against workers and improvements in the right to organize." Democrats who support the Colombia FTA backed the speaker's decision. "She was elected to lead the Congress. And I learned many years ago that it's the speaker who determines what comes to the floor and when it comes to the floor," said Rep. James Moran, D-Va. "And the speaker is going to confirm what some people have apparently forgotten, that the speaker controls the schedule."
     Moran was confident that House leaders would schedule a vote on the trade pact in a post-election session, when wavering members would be more willing to support it. "I think there'll be a vote in the latter part of November, or early December," he said, adding it would likely be approved in those circumstances. Samuel disagreed with Moran's assertion. "That's wishful thinking," he said. Democratic Congressional Campaign Committee Chairman Chris Van Hollen of Maryland said no decisions have been made on scheduling a vote later. "All we're focused on is the immediate situation," he said.
     Even if House leaders schedule a vote, the Senate might not be constrained to take up the agreement at all. Changing the rules of trade negotiating authority in the House means that the 90-day clock for consideration could be considered null and void for Senate purposes, despite the requirement that the Senate act within 30 days after the House. Senate Finance Chairman Max Baucus said both sides needed to come back to the negotiating table once the dust settles. "This decision by the House on the Colombia trade agreement is not at all surprising, given the President's unprecedented effort to force Congress into a vote. I'm concerned that the President's hasty action will not only throw the Colombia deal off track, but may make the larger trade debate a lot more contentious," Baucus said in a statement. "Congress and the White House are going to need to take a step back from the brink, focus on renewing an agreement on Trade Adjustment Assistance for American workers, and then consider the Colombia deal on its merits."
    -- by Peter Cohn

West Coast port fees have become a huge issue.

But the bigger question is, how do we as a nation generate the revenue to pay for port infrastructure without crippling and complicating international trade flowing through the ports?

Towards this end, I have floated an approach which I think makes more sense than the numerous and varied flat container fees being imposed by Ports of LA and Long Beach, and other fees considered by other ports and states. Should each port or state be left to impose their own fee? I revised my proposal based on some good input from the CONECT Board.

The American Shipper this month did an extensive article on the subject. It is attached.

Port Clerks and Shipping Lines Continue to Negotiate

BY ALEX VEIGA Associated Press Writer

Article Launched: 07/16/2007 03:12:17 AM PDT

LOS ANGELES—Negotiators for a waterfront clerical union and some of the world's largest shipping lines and terminal operators worked early Monday to reach a deal on a new contract, as the possibility of a strike that could cripple the nation's largest port complex loomed.

A strike deadline passed at 12:01 a.m. Monday, with union and shipping lines at the ports of Los Angeles and Long Beach far apart on wages and benefits.

About an hour after the deadline, John Fageaux Jr., president of the office clerical unit of Local 63, a division of the International Longshore and Warehouse Union, emerged from the closed-door session firm that if talks collapsed, the union would strike. "We're in the process of presenting our last, best and final offer," he said then. The parties emerged about an hour later for a break with no end in sight and representatives on both sides refusing to comment on the discussions.

A work stoppage could create ripple effects throughout many industries that depend on timely movement of cargo. It would also come as the ports enter their busy pre-holiday season, when shippers depend on the facilities to handle imports. The 15,000-member ILWU has indicated it will honor Local 63 picket lines, which would effectively shut down the port complex. The neighboring ports of Los Angeles and Long Beach account for 40 percent of all the cargo container traffic coming into the United States. The roughly 750 clerks who work at marine terminals at the ports handle bookings for the export of cargo and other transport documents.

Under their most recent contract, full-time, port clerical workers earned about $37.50 an hour, or $78,000 a year. They also receive a pension, health care benefits free of premiums and 20 paid holidays a year. Steve Berry, lead negotiator for the 14 marine terminal operators and other firms who employ the office clerks, said late last week that employers' latest offer included raises that over the life of a three-year contract would bump the employees' hourly pay to $39.20, while the union is seeking increases that would equal $53 per hour by the last year of the contract. Messages left for him early Monday were not immediately returned.

In 2002, longshore workers across the West Coast were locked out for 10 days. The shutdown cost the nation's economy an estimated $1 billion to $2 billion a day

Update from Washington, DC

By Ray Bucheger, Office of Peter Friedmann

Despite that fact that Congressional Democrats and administration trade officials reached an agreement in principle on issues relating to labor and the environment over a month ago, they are still working on specific language that would be added to free trade agreements with Peru, Panama, Colombia and South Korea. Only after the two sides have agreed-upon language will Congress schedule a hearing and an informal "mock mark-up" for the US-Peru free trade agreement. Supporters of the US-Peru FTA are hopeful Congress will vote on this deal before the month-long August recess but it is more likely the vote will be pushed September or later. Congress hopes to pass the US-Panama FTA after they pass the agreement with Peru. Passage of the FTA with South Korea hinges on a number of other issues related to beef and autos.

The US-Colombia FTA is a whole different story. While US exports to Colombia were $5.4 billion in 2005, more than 2005 exports to Peru and Panama combined, most members of Congress remain concerned about violence against labor leaders in that country, making passage of this FTA doubtful this year. Here is an article from CongressDaily that describes the politics surrounding passage of the US-Colombia FTA.

Please let me know if you have any questions.

Ray

Human Rights Define Colombia Debate
     Lobbying for a trade agreement used to be about touting the number of tractors that U.S. firms will be able to export, or explaining how U.S. pork farmers need more overseas customers. But lobbyists and supporters of the U.S.-Colombia trade pact are regularly fielding questions about the safety of labor activists, and the progress of the government in prosecuting death squads that have targeted politicians, activists, journalists and others.
     "In every meeting, we need to be prepared to discuss the human rights stuff," said Sarah Thorn, international trade director for Wal-Mart Stores and a co-chairman of the U.S.-Colombia Trade Coalition. "That is always a part of every discussion. But really the business role is to demonstrate the economics of the agreement."
     In a briefing for congressional staff last Thursday, lobbyist Laura Lane of Citigroup, also a co-chairman of the Colombia business coalition, talked about her experience in Colombia as a foreign service officer in the 1990s, and the strides the country has made since then, according to sources present.
     The history of violence against union organizers in Colombia, along with allegations about the present government's ties to paramilitary groups, has so far ensured that congressional Democratic leaders are keeping a safe distance from embracing the trade pact.
     Rep. Gregory Meeks, D-N.Y., is one of a mere handful of House Democrats who have spoken openly in favor of it. Meeks traveled to Colombia over the Memorial Day recess and met with Colombian President Alvaro Uribe when Uribe addressed the Congressional Black Caucus Thursday.
     "After going down there, talking to [Uribe], talking to people on both sides, and the poorest of the poor -- the Afro-Colombians, I came to the conclusion that they have earned the right to have a free trade agreement," Meeks told CongressDaily in an interview. Meeks co-hosted the staff briefing along with House Ways and Means Trade Subcommittee ranking member Wally Herger, R-Calif., and Reps. James Moran, D-Va., and Gerald Weller, R-Ill.
     It is not as if human rights or labor issues have not been present in trade debates before. Concerns about those issues roiled, the waters notably in debates over free trade pacts with Central American countries and Singapore.
     But in no case have human rights issues been so central, or the opposition so visceral and fierce, as with the Colombia trade agreement. More than 2,000 labor organizers are alleged to have been murdered in Colombia since the early 1990s.
     "In Colombia, my fight for higher wages, better working conditions and a secure pension could have cost me my life," Rep. Phil Hare, D-Ill., a former textile worker and union organizer said at a rally against the Colombia agreement Thursday.
     "Now, President Uribe, President Bush, and some members of Congress want to reward Colombia with a free trade agreement. Let me say -- with an obvious dose of irony -- over my dead body."
     Of the three Latin American trade deals that are pending before the Congress, the Colombia deal is the highest priority for the Bush White House, according to Republican sources. U.S. exports to Colombia were $5.4 billion in 2005, a total that exceeds 2005 exports to Peru and Panama combined. More importantly, President Bush has made drug eradication efforts in Colombia and support for the Uribe administration's reconciliation efforts a key part of his Latin America policy.
     House Ways and Means Chairman Rangel and Trade Subcommittee Chairman Sander Levin, D-Mich., are working with the administration to pass the Peru and Panama deals by this fall. But they have said the Colombia pact will have to wait until Uribe can demonstrate he is making progress on labor and human rights abuses. Both lawmakers met with Uribe Thursday.
     But House Democrats have not, at least publicly, been specific about what steps Uribe will need to take to assuage their concerns.
     "It's up to the Colombians to show that there is a path, that they've paved a path to get there," said Rep. Xavier Becerra, D-Calif.
     Becerra noted that Democrats have for years been warning the Colombian government that human rights issues could stall the trade pact. "It's nothing new, and so it's tough for them to try to address all these things in the eleventh hour."
     Meeks said he believes it is unfair for Democrats to issue vague demands for progress without outlining specific steps the government could take to reassure skeptical lawmakers. "My view is, members should be able to say specifically what they think needs to be done. You can't leave it open-ended. If you do that, you can't rectify the matter," he said.
     The congressional delegation to Colombia, Meeks said, convinced him of a vast improvement in the safety and lives of ordinary people in urban centers like Bogota, Cartagena and Medellin.
     He noted that, while he hopes to see more, Uribe's attorney general is currently working on prosecuting 200 of the labor activist deaths.
     The Colombian government and its allies are quick to point out that the pace of killings has slowed -- to fewer than 60 last year. But 60 assassinations is, as U.S. labor leaders here point out, no cause for celebration.
     And labor and human rights groups charge that the pace of investigation and prosecution of those implicated in the violence is far too slow.
     Meeks has bucked his leadership on trade votes before, backing the Central America Free Trade Agreement in 2005 and helping to round up Democratic support last year for the U.S.-Oman trade deal.
     Meanwhile, supporters of the trade deal are prepared to argue emphatically that Colombia should be considered this fall, and not left to languish as agreements with Peru and Panama move forward.
     "The three Latin American FTAs are tied," said Nicole Venable, director for international trade at the U.S. Chamber of Commerce. "They're tied in that, if you give an FTA to Peru and Panama but not Colombia, you are facilitating a full-on destabilization of Colombia's government."
     Some Republican sources expressed concern that key centrist Democrats will feel less pressure to support Colombia if they have already been given opportunities to vote for the Peru and Panama deals. Those agreements are expected to draw substantial Democratic votes, if not a majority of Democrats.
     "One of the concerns is that Democrats will give us one or two but rail against Colombia. We don't want Colombia to be the sacrificial lamb," said Rep. Kevin Brady, R-Texas.
     Under trade negotiating authority rules, the White House has control over when to send up the various trade deals it is working to complete. But most sources said it is doubtful the administration would try to move Colombia ahead of the Panama deal, since to do so could put a damper on sunny relations with Democrats on trade.
     The best hope for Colombia supporters, sources said, is that strong bipartisan votes on Peru and Panama will serve as confidence-builders for working towards passage of the Colombia pact.
     But the inverse is also true: If labor critics of the Peru and Panama deals are able to gin up enough opposition on those votes, hopes for a Colombia deal diminish significantly. "If what should be easy becomes excruciating, that's bad news for Colombia," said a senior aide to a centrist House Democrat.

Ray Bucheger

Office of Peter Friedmann
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CONECT’s recent Mission to Washington, DC was conducted only days after Congressional leaders reached a deal in principle with the US Trade Representative (USTR) on labor and other issues intended to pave the way for passage of outstanding free trade agreements (FTAs) with Peru, Panama, Colombia and South Korea. Members of the New England Congressional delegation were eager to gain CONECT’s perspective on this important deal, and those who made the trip to Washington on behalf of CONECT gained valuable insight into the lawmaking process and learned the real scoop about the Congressional trade agenda.

While CONECT was in Washington, the House Ways and Means Committee and the Senate Finance Committee were starting the process of taking the deal they negotiated with the USTR and putting it into legal language that can be inserted into the FTAs. Assuming the Committees are able to come up with language that can be supported by a majority of the House and Senate, it will have to be added to the FTAs before those deals can be considered by Congress.

Because the US-Panama FTA has not been officially closed yet, these changes will be relatively easier to make. Congressional leadership is hopeful Congress will pass the Peru deal this summer. Optimism is due in part to assurances by the President of Panama that he is commitment to get this deal done in an expeditious manner. Also helping the cause is the fact that many earth moving and heavy equipment manufacturers in the US are eager to sell their equipment to those responsible for widening the Panama Canal.

The US-Peru FTA is a bit more complicated due to the fact that the agreement has already been passed by that country’s legislature. The deal reached by Congress and the USTR on labor and other issues will require Peru’s legislature to re-approve the FTA with the new language included. This will likely take several months due to political considerations in Peru.

Congress and the USTR were focused on the Panama and Peru FTAs when they negotiated the labor deal, it will also be applied to the FTAs with Colombia and South Korea. Unfortunately, those FTAs face a number of other hurdles unrelated to issues included in the labor deal. The Colombia agreement continues to face an uphill climb in Congress because Members are increasingly concerned about violence toward labor groups in that country. Congressional passage of the South Korea deal will be contingent upon a number of factors, not the least of which is better access for US beef and autos. US beef has been restricted by the South Korean government ever since mad cow disease was discovered in the US several years ago. US auto makers are specifically concerned about non-tariff barriers in South Korea.

While this year’s CONECT Mission to Washington, DC is over, CONECT will continue to advise Congress on these FTAs and other important trade issues throughout the year.

The new Congress wasted no time to become engaged in trade policy, something we can expect to continue right up to the November 2008 Presidential and Congressional elections. Unfortunately, Congress continues to engage in a frenzy of protectionism, unlike any we have seen in over 15 years, and perhaps longer. CONECT members and all in New England who depend upon international trade, should continue to watch the Congress closely.

First, the new Democratic Senator from Ohio, Sherrod Brown, credited his bold criticism of trade as the key to his victory over his Republican incumbent last November. He has promised an aggressive legislative campaign against trade expansion, and is certainly following through.

Second, even before Congress reconvened in January, Senator Brown paired up with Democratic Senator Byron Dorgan of North Dakota to fire a first shot across the bow – an opinion published in the Washington Post entitled: “Why Free Trade Hurts”.

Third, three Free Trade Agreements already negotiated with Peru, Colombia, and Panama and awaiting Congressional approval were rejected by the House, sent back to the President. It is possible that USTR might be able to get Peru back to the table to negotiate new labor standards acceptable to the new House Majority; but it’s a tall order. And the other two FTA’s are certainly dead.

Fourth, sensing Congressional rejection of the Normal Trade relations with Vietnam, the Administration initiated a program to monitor apparel imports from Vietnam. Further, it promised to use this data to determine whether a dumping case against such imports.

Fifth, Senators Dorgan and Brown held a hearing on the need to impose sanctions on imports from developing countries, designed to assure that US consumers are not supporting, and US retailers are not profiting from “sweatshop” working conditions in foreign factories. Particularly troublesome are proposals to allow a US retailer to sue another retailer it suspects of importing goods manufactured under sweatshop conditions. But do wages and conditions have to be equal to US standards? Who defines what is a sweatshop? Could factories that pay a fair wage and provide reasonable working conditions relative to what is otherwise available in the rest of that country fail the test? Does the uncertainty this bill would create discourage imports? That Senator Dorgan and Brown are leading “anti-trade” forces on Capitol Hill suggests that their proposed “sweatshop” legislation may be more about stemming the flow of imports than on improving foreign working conditions.

Sixth, Senators Dorgan and Brown have something possibly even more dangerous up their sleeves. Together with a South Carolina Republican Senator, they have now introduced a bill to repeal China’s Permanent Normal Trade Relations status. Under their bill, Congress would debate our trade relationship with China, and NTR would lapse if the President failed to renew it, or if Congress rejected it.

NTR simply establishes the rules of trade relationship between the US and our trading partners. Virtually every country with whom we trade has NTR status. It means that we pledge to follow our normal rules for dealing with problems as they arise (such as anti-dumping rules) and they promise to do the same. Otherwise, sanctions, safeguards, quotas can be imposed with little notice. It creates an uncertain environment for US companies who wish to source from that country.

Will we really revoke PNTR for China? Would we really violate our WTO obligations? Right now it doesn’t seem likely, but once a frenzy begins, it’s hard to control.

When Congress passed its comprehensive port security legislation last year, all 100% scanning amendments that were offered were defeated, save for a compromise that created a radiation scanning pilot program at three foreign seaports. Scanning refers to running a container through an inspection device, such as a radiation portal monitor.

But that does not mean the threat of 100% scanning has been eliminated. In fact, the US House of Representatives opened the 110^th Congress by passing legislation that would require all cargo being put on domestic passenger planes to be inspected within three years, and all containers shipped by sea to the United States from foreign ports to be scanned for radiation and density within three to five years.

But the debate is far from over. A more measured approach in the Senate and industry opposition is likely to keep a bill mandating 100% scanning off the President’s desk.

Free trade agreements (FTAs) can be bilateral (between two countries) or multilateral (between several countries). Each FTA dramatically changes the rules and procedures which customs brokers and freight forwarders must apply to imports and exports to and from those countries. In the past decade the United States has entered into several trade agreements that liberalize the trade of goods between the participating countries. The US has completed a number of FTAs, including Australia, Bahrain, Central America, Chile, Colombia, Israel, Jordan, Morocco, NAFTA, Oman, Panama, Peru and Singapore. Congress has not yet approved the agreements with Colombia, Panama or Peru. Negotiations with Ecuador, Malaysia, South Korea, Thailand and the United Arab Emirates are ongoing.

The preferential approach to global trade enhancement is multilateral. There are two multilateral opportunities currently available – the DOHA round under the auspices of the World Trade Organization, and the President’s own “Free Trade Area of the Americas”. Both appear to be stalled. The DOHA round suffers from the inability of the European Union to overcome French objections to elimination of agriculture subsidies, as well as grandstanding by lesser developed countries who seek improved market access to the developed economies, without apparently any willingness to improve their own intellectual property, phytosanitary, and other requirements for joining the global trading economy. The FTAA is stymied by Brazil’s opposition to what its current leader perceives to be a “Yankee dominated” region.

This leaves the President, who is truly eager to reduce trade barriers with as many countries as he can, with two options: either a bilateral negotiation with individual countries or the negotiation with a smaller region of countries. The US Trade Representative continues to pursue both with vigor. Unfortunately, in my view, the enthusiasm for these trade agreements is not shared by organized labor and many in the environmental community. Thus, while the Administration can negotiate Free Trade Agreements, it has proven to be incredibly difficult to secure their approval by Congress.

Here is a summary of all agreements in force; waiting for a Congressional vote; or currently being negotiated:

These free trade agreements can dramatically alter the volumes and types of imports and exports between the US and the countries involved. They are part of a continuing global trend which will result in additional free trade agreements, some including the United States, and many which will not. For example, the European Union continues its aggressive pursuit of FTAs. There already exists an EU-Mexico FTA, and the EU is getting close to an FTA with the Mercosur countries (Brazil, Argentina, Uruguay, Paraguay) – an objective which has eluded both Presidents Clinton and Bush. Mexico has negotiated a trade agreement with Japan. Southeast Asian countries are negotiating a free trade agreement amongst themselves; and Japan and Thailand have completed negotiations on a bilateral agreement.

These rapid changes in the global trading structure will increase trade volumes, and while reducing import duties, if NAFTA is any guide, these FTAs will certainly not reduce the need for import compliance and the services of customs brokers.

In one of its final acts of 2006, Congress passed a comprehensive trade bill that extends a number of trade preference programs. Here is a summary of those provisions:

2. After a six-month delay, tightens rules on competitive need limit waivers to tailor the program for use by lesser developed countries that need help exporting to the United States. President is given discretion to end waivers on products that constitute 150 percent of the competitive need limit or 75 percent of U.S. imports of that product.

1. Extends current provision allowing benefits for apparel made with fabric from third countries until 2012, with a 3.5 percent cap.

2. Provides an exception to the third country fabric benefit for apparel goods made from components that are in “abundant supply” in Africa. The purpose is to remove current disincentives for the investment in fabric production in Africa. In particular, denim is deemed to be in abundant supply because of known production in Lesotho.

3. Allows duty free treatment for lesser developed countries for certain textiles (non-apparel) of wholly made African fabric.

Haitian Hemispheric Opportunity through Partnership Encouragement (“HOPE”) Act

1. Applies the same political, economic, and labor criteria, and the same textile and apparel transshipment requirements as the African Growth and Opportunity Act (AGOA).

2. In addition to current Caribbean Basin Initiative (CBI) benefits, provides new rules of origin for apparel:

WASHINGTON UPDATE

Tentative Agreement Reached Covering 25,000 workers at 29 West Coast Ports

Port Operations to Return to Normal

Senators Gauge Support For Reinstatement Of Byrd Amendment

Container Shortage Puts U.S. Export Boom in a Box