How will the international regulatory and trade environment look in 2011?
The upward trends in enforcement of export controls, economic sanctions, and the FCPA that set records in 2010 will likely continue in the coming year. Implementation of new U.S. legislative provisions likely to lead to additional disclosures, coming international developments, and a steadfast commitment to aggressive enforcement by U.S. agencies will likely produce some new statistical high-water marks in 2011.
Notwithstanding a world economy that remains sluggish, compliance expectations will rise in such areas as the FCPA, export controls, sanctions, customs, and intellectual property ("IP"). Driven in part by continuing concerns about national security and corporate fraud, as well as the appearance of new international norms, compliance "best practices" in 2011 will be ratcheted up a notch from 2010.
In 2011, China will remain prominent in both international trade and trade regulation. Sino-American trade disputes figure to play a dominant role, with disputes that may be centered in either Geneva, under WTO rules, or in Washington or Beijing, as unfair trade disputes in the form of Section 337 litigation or anti-dumping and countervailing duty investigations. Because of extensive state control of enterprises in China and the FCPA's broad definition of "foreign official," China will continue to be an FCPA compliance challenge and enforcement hot spot.
The arrival of the 112th Congress and a Republican majority in the House will most likely increase House oversight of Administration enforcement of trade laws and regulations and will generate debate that could affect the international trade and regulatory environment. The new Republican majority in the House may well seek to reshape U.S. trade policy, the Obama Administration will continue its efforts to reform export controls, and the Securities and Exchange Commission ("SEC") will implement the Dodd-Frank Act. With its sweeping terms and unprecedented extraterritorial reach, the new U.K. Bribery Act may have extraterritorial ripples that affect U.S. multinationals as much as U.S. laws.
Before all of this happens, and as we prepare to address these and other issues of concern to our clients, all of us at Miller & Chevalier's International Department extend our best wishes for the New Year to our valued clients and friends.
FCPA Enforcement and Compliance
New UK Bribery Law Will Introduce New Practical and Tactical Issues
In 2010, a profusion of commentary appeared on how the new UK Bribery Act compares to the FCPA -- even broader jurisdictional reach, a corporate affirmative defense for demonstrating "adequate procedures," the absence of an exception for facilitating payments, and no affirmative defense for reasonable business hospitality. However, fewer commentators noted the absence in the new UK law of prohibitions against corrupt contributions to political candidates or parties and the absence of accounting requirements corresponding to the internal controls and books and records provisions of the FCPA.
Whatever refinements may be forthcoming in administrative guidance from the Ministry of Justice or the Serious Fraud Office, the new UK law will make FCPA matters more complicated and more costly where concurrent UK and U.S. jurisdiction exists. Not only will the number of enforcement agencies involved multiply, but implementation will also surface differences with respect to adequate investigations, waiver of privilege, voluntary disclosures, compliance best practices, and plea bargaining. Corporate investigations will become more complicated and will frequently require companies to obtain expert legal advice under both national laws. Coping with these changes cost-effectively will become a client priority.
Already, having two sets of lawyers and facing dual enforcement authorities are requiring new approaches and changes in strategy for corporations. Only gradually will it become clear when UK and U.S. enforcement agencies will cooperate, when they may compete, when one will defer to the other, and when they may collaborate on complementary investigations. New risks in investigations will include cross-border waivers of privilege, whistle-blowers emboldened by possible Dodd-Frank bounties (see below), larger aggregate penalties, and greater challenges in getting coordinated "global settlements." Those caught in the middle may long for the days when a coordinated disposition involved only coordination between the Department of Justice and the SEC.
SEC Whistleblower Program Will Pose Challenges for Internal Compliance Programs
In 2011, the SEC will implement a program that may pay multi-million-dollar bounties to whistleblowers who report violations of securities laws (such as the FCPA) directly to the SEC. Specifically, the whistleblower program, enacted by Section 922 of the Dodd-Frank Act, authorizes the SEC to pay rewards to individuals who provide the SEC with original information about securities violations that leads to a successful enforcement action with sanctions of at least $1 million. As the SEC predicts it will receive 30,000 tips a year, the program is likely to change significantly the FCPA enforcement and corporate compliance landscapes.
The SEC released proposed rules for implementation of the whistleblower program on November 3, 2010. Much to the chagrin of corporate compliance officials, the SEC decided not to require whistleblowers to report allegations of wrongdoing internally before reporting such allegations to the SEC. In its defense, the SEC has stated that the specificity of the Dodd-Frank Act has limited its flexibility in implementing the program. However, in deference to corporate compliance programs, the proposed guidance does allow for a 90-day grace period for a whistleblower to report the issue internally before reporting to the SEC, as well as potentially higher bounty awards for whistleblowers who report internally first. The Dodd-Frank Act requires the SEC to issue final regulations implementing the program no later than April 21, 2011.
Companies coping with the changing landscape in 2011 will be forced to reassess the adequacy of internal efforts to uncover potential FCPA violations, in order to increase incentives for employees to continue to report issues internally (rather than to seek the SEC's bounty). Moreover, companies will similarly be forced to reassess the calculus for what rises to a reportable offense and how quickly a decision must be made on whether to self-disclose potential FCPA violations. If a whistleblower beats a company to the SEC's door to report a potential violation, the company may lose the benefits of self-disclosing. Thus, companies must decide in 2011 whether and how to engage in a race with a potential whistleblower as issues emerge.
ITC Section 337 Litigation
Recent Developments Expected to Maintain Section 337 Investigations as Preferred IP Enforcement Tool
In 2011, Section 337 investigations at the U.S. International Trade Commission ("Commission") will continue to be a preferred remedy for resolving allegations of unfair acts in the importation of goods into the United States (e.g., the importation of patent-infringing goods). In 2010, Section 337's popularity soared, as the Commission instituted a record-number 51 cases in fiscal year 2010, which was nearly double the preceding ten-year average of 26 investigations per year and far above the prior record of 43 investigations in 2008. We expect this trend to continue into 2011, as two recent developments will make Section 337 an even more desirable vehicle for litigating IP infringement cases.
The first development occurred only weeks ago, when the U.S. Court of Appeals for the Federal Circuit ("Federal Circuit"), the Commission's reviewing court, issued its decision in Spansion Inc. v. Int'l Trade Comm'n (Dec. 21, 2010). In that case, the appellants argued that the "eBay standard" should apply to the Commission in IP disputes, just as it does in federal district courts. Specifically, in district court, based on the Supreme Court's 2006 ruling in eBay Inc. v. MercExchange, LLC, a patent holder must prove irreparable harm in order to obtain an injunction. In contrast, the Commission normally must issue an exclusion order (an injunction against importation) if a violation is found, without regard to irreparable harm. The Federal Circuit rejected the appellant's claim, holding that "eBay does not apply to Commission remedy determinations under Section 337." The Federal Circuit explained that Section 337 investigations are conducted under a different statutory mandate from patent infringement litigation and that the Commission is required to issue an exclusion order unless, after consideration of enumerated statutory public interest factors, the Commission determines it should not issue such relief. This distinction between Section 337 investigations and district court IP litigation may encourage more litigants to choose the Commission to resolve its IP disputes.
A second development is the Commission's recent guidance on the domestic industry requirement, which parties must satisfy in order to file a Section 337 case, as it applies to licensors of patent rights. Historically, most complainants satisfied the domestic industry requirement through actual U.S. manufacturing operations. Recently, several companies have brought cases solely as licensors of U.S. patent rights, which qualifies them as "non-practicing entities" or "NPEs." In Coaxial Cable Connectors, Inv. No. 337-TA-650, the Commission set a relatively low standard for establishing the standing needed to seek relief from the Commission. Specifically, the Commission confirmed that licensing activities whose sole purpose is to derive revenue from existing production can establish a domestic industry for purposes of Section 337. The Commission did state that a nexus must still be proven, i.e., the complainant must demonstrate that the relevant activities are related to licensing and that those licensing activities pertain to the patents being asserted, which will be assessed on a fact-specific basis in the context of a particular industry. This decision should prove to be an even bigger incentive for those NPEs that may have difficulty obtaining district court injunctions because of the eBay decision. Thus, we anticipate that domestic and foreign-based companies licensing U.S. patents will form a larger percentage of the companies bringing Section 337 investigations, helping to maintain the Commission's heavy caseload going into 2011.
Export Controls and Sanctions
Comments Are Invited on the Export Control Reform Initiative
In 2011, exporters will have a rare opportunity to reshape the United States Munitions List (USML) and the Commerce Control List (CCL) as the Obama Administration develops a single control list. The Administration promises a fundamental change by redrafting the control language to use measurable performance criteria, granular descriptions of capabilities, and specificity to describe controlled items. The Executive Branch refers to this as a "positive" list. The drafters will reduce the use of ambiguous phrases such as the "specifically designed" standard of the ITAR and the "specially designed" standard found in many entries on the CCL, thereby substantially reducing the burden of the current commodity jurisdiction process. Another major benefit is illustrated by the proposed draft of Category VII of the USML, which eliminates broad language that currently captures all parts and components for military vehicles and replaces that language with explicit text defining selected parts and components. Throughout the next 6 to 7 months, the State Department will release drafts of the other categories of the USML.
Industry has important roles to play in 2011, including the submission of information regarding foreign availability, suggestions for clearer control text, and comments on the proposals the Executive Branch will publish. On December 9, 2010, the Bureau of Industry and Security ("BIS") invited information regarding foreign availability. These submissions will be important to the Administration in shaping the groups of countries that require a license for a particular item. This opportunity is not likely to be available again soon because Congress is not likely to mandate foreign availability relief in legislation. See our website for developments on the reform initiative, including a template for submitting foreign availability information for an item that is at a competitive disadvantage because non-U.S. competitors are not subject to export control requirements similar to current U.S. controls.
The Administration's job of creating a positive single control list will not be done until it develops procedures to apply it to specific items and to change the list only with clear public notice. Exporters and reexporters should urge the Executive Branch to create a right of appeal to an independent body to challenge classification and commodity jurisdiction decisions, draft clear indications of control language that is multilateral versus unilateral, draft rules of interpretation of the single control list, develop concordance tables to aid in the implementation of a new list, and publish the rationale of commodity jurisdiction determinations and classifications. In drafting comments, the best arguments support national security -- i.e., the Administration's goal. The private sector can benefit from a reduced burden in making classification and jurisdiction determinations.
Iran Sanctions and Embargo Controls Continue as Administration Priority
In 2011, Iran will continue to be a focus of U.S. sanctions, export controls and embargo rules. Exporters and reexporters will see a continuation of a trend toward more aggressive enforcement of the Iranian Transactions Regulations and the Export Administration Regulations regarding Iran. Exports and reexports to Iran and China are the preferred choices of the U.S. Department of Justice for criminal enforcement. The new Iran rules of the European Union will also be important to watch in 2011.
Under the 2010 amendments to the Iran Sanctions Act, the State Department has convinced many non-U.S. firms to pull out of Iran under the threat of denial of access to the U.S. banking system. The question remains whether the threat of U.S. sanctions will prevent Chinese firms and small firms throughout the world from backfilling these investments and service contracts in Iran. The U.S. Treasury Department has convinced many non-U.S. banks and non-U.S. bank regulators to refrain from taking or permitting payments to or from Iran. It is increasingly problematic to get paid for trade with Iran--even lawful trade under licenses issued by Treasury's Office of Foreign Assets Control ("OFAC") and lawful third country trade, much of which is beyond the scope of U.S. export control rules and the OFAC prohibitions against U.S. persons facilitating, approving, or referring third country trade opportunities with Iran.
The second question is whether the combination of threats of denial of access to the U.S. banking system and the increasing unwillingness of non-U.S. banks to deal with Iran will cause the regime in Iran to change its behavior sufficiently for the world community to trust Iran and its intentions to refrain from using its nuclear capabilities in the future to make weapons. If this does not happen, we can expect a continuation of tough sanctions on Iran with the private sector caught in the middle for a long time to come.
2011 promises to be an active year as Congressional and regulatory initiatives are likely to impose new import compliance obligations on importers and freight forwarders.
Two key customs-related legislative initiatives are likely in 2011. First, Congress is expected to address customs legislation that clarifies and rebalances the mission and priorities of U.S. Customs and Border Protection ("CBP") to focus more on trade facilitation and border enforcement of infringing intellectual property. Second, Congress is likely to pass at least one Miscellaneous Tariff Bill ("MTB") in addition to the MTB bill that Congress passed in 2010 (H.R. 4380, The United States Manufacturing Enhancement Act).
Congress began 2010 on a positive note with the passage of a MTB, leading some to believe that Congress might also enact comprehensive customs reform legislation, perhaps based on S. 1631, the Customs Facilitation and Trade Enforcement Act of 2009. Regrettably, Congressional action on customs reform legislation stalled because of other legislative priorities. However, incoming House Ways and Means Trade Subcommittee Chairman Rep. Kevin Brady (R-TX) has indicated that customs reform legislation is a priority, as has Senate Finance Committee Sen. Chairman Max Baucus (D-MT). Since customs reauthorization enjoys bipartisan support in the House and Senate, Congress will likely pass this much needed legislation in 2011, either based on S. 1631, or a new bill.
The Lacey Act Amendments re: Illegally-Logged Timber and Related Products
The fourth and final phase-in period for the Lacey Act declarations began on April 1, 2010, for wood products including certain types of furniture, tools and musical instruments. This phase-in period is most likely the last expansion of the certification requirement for the foreseeable future, as APHIS announced that it does not anticipate expanding the scope of products subject to the declaration requirement to include, for example, all types of wooden furniture. However, the absence of a declaration requirement does not relieve importers of their Lacey Act obligations. Importers, suppliers and manufacturers must safeguard the security of their supply chains by satisfying the Lacey Act's obligation of "due care," for example by maintaining transparent and well-documented chain of custody records, reviewing and updating compliance plans and conducting periodic inspections. Following the 2010 raid on Gibson Guitars, we expect increased Lacey Act enforcement efforts focused on particularly vulnerable sector like wooden furniture from Southeast Asia which has been known to use CITES-protected timber.
Additionally, the Obama Administration is preparing to submit a report to Congress on the implementation of the Lacey Act, as amended, which is required under the statute. It is likely that the Administration will propose revisions to the statute in order to allow more flexible and targeted enforcement. Then Congress - weighing the interests from the importing sector, domestic manufacturers and unions, and environmental NGOs - will likely amend the law once again, although inaction is also a possibility given that the Lacey Act is not expected to be a Congressional priority.
Consumer Product Safety
The Consumer Product Safety Improvement Act of 2008 ("CPSIA") introduced sweeping changes to U.S. consumer product safety laws and has important implications on import compliance. Importantly, the CPSIA requires importers of products regulated by the Consumer Products Safety Commission ("CPSC") to certify that their products comply with all rules, bans, standards, or regulations applicable to the product under the CPSIA or any other law enforced by the CPSC, including lead content in the substrates of some children's products.
On February 20, 2010, the certification requirement became effective for child-resistant portable gas containers, special packaging required under the Poison Prevention Packaging Act and refrigerator door latches. However, the CPSC issued a stay of the certification requirement for other products, which remains in effect through February 10, 2011. The stay affects imports of a variety of products, including, toys and child-care articles, toys subject to the ASTM F963 safety standard, caps and toy guns, clacker ball, baby walkers, bath seats, electronically operated toys, youth all-terrain vehicles, youth mattresses, children's bicycles and children's sleepwear. As of February 11, 2011, imports of certain children's products including, bicycle helmets, bunk beds, rattles and drive sticks, lead content on metal children's products, lead in paint and on furniture will require third party laboratory testing and the manufacturer's certification based on the results of the tests of a recognized third party laboratory.
Implementation of Heightened Food Safety Legislation
Domestic and foreign food processors will confront new food safety compliance obligations in 2011 and beyond as a result of Congress' recent passage of S. 510, The FDA Food Modernization Act. This legislation contains provisions on enhanced inspection of high-risk foreign facilities according to known safety risks, requires heightened interagency cooperation to improve seafood safety, and requires USDA to inspect at least 600 foreign facilities in 2012, and more in subsequent years.
The legislation also requires USDA to work with CBP to inspect food imports based on their risk profile, compliance history, compliance record of suppliers and whether the importer participates in a voluntary qualified importer program.
Increased Enforcement of Antidumping and Countervailing Duty Orders
2011 will almost certainly see a continued increase in CBP's enforcement of antidumping ("ADD") and countervailing duty ("CVD") orders. Importers have seen this increased enforcement take several different forms. CBP includes compliance with ADD and CVD orders as a core subject of nearly every Focused Assessment it conducts. Moreover, it appears that CBP is conducting an increasing number of smaller audits focused exclusively on compliance with ADD/CVD orders. Additionally, import specialists in ports have evidenced a greater concern with ADD/CVD compliance by rejecting entries, issuing requests for information (CF-28s) and notices of action (CF-29s). Also, Fines and Penalties Officers have shown little hesitation to issue penalty notices when importers have made relatively modest errors with respect to ADD and CVD compliance. As a result, importers should review their internal controls with respect to ADD and CVD compliance to prepare for any increased scrutiny that may arise in 2011.
Obama Administration Priorities: Trade Liberalization and Enforcement
We expect the Obama Administration's trade agenda in the coming year or two to be a mix of trade liberalization and enforcement, based in part on the heavy influence of the House Republicans. On trade liberalization, we expect the Obama Administration to focus on the following priorities: (1) passage of implementing bills for the FTAs with Korea and Panama (at this point, Colombia looks like a long-shot); (2) concluding and implementing the Anti-Counterfeiting Trade Agreement ("ACTA"); (3) advancing and possibly concluding the Trans-Pacific Partnership ("TPP") negotiations; (4) hosting this year's APEC Ministerial and Leaders Meeting; (5) trying to advance the languishing Doha Round negotiations, (6) concluding Russia's WTO accession process, which made significant progress in 2010; and (7) perhaps restarting the Bilateral Investment Treaty negotiations with China, India and other countries. As mentioned, these liberalization efforts will be spurred, in part, by the Republican-led House, but they may also lessen somewhat during the 2012 general election campaign.
Also, the Administration will continue to pursue an aggressive trade enforcement strategy. China's trade practices and policies will continue to dominate USTR's enforcement efforts, and 2011 may see cases filed challenging China's undervalued currency (as an export-contingent prohibited subsidy), its Indigenous Innovation programs, and an expansion of the recently announced WTO case challenging China's subsidies to its domestic wind power industry, stemming from the Section 301 petition by the Steelworkers Union challenging China's alleged subsidization of its "green technologies" industry. In addition, the Boeing-Airbus Appellate Body proceedings will continue, and the Appellate Body report could prompt the U.S. and E.U. to reach a negotiated settlement.
Other trade enforcement disputes and compliance issues that may arise in the coming years include, U.S. adherence to the compromise between Brazil and the United States limiting the use of the GSM-102 agricultural export credit guarantee program (which averted the implementation of Brazil's WTO-authorized retaliation in the cotton case); Administration proposals to address the ongoing trucking dispute with Mexico; disputes arising out of the Softwood Lumber Agreement between the United States and Canada; and compliance with WTO Appellate Body decisions invalidating zeroing in antidumping cases, a process which has already begun with the December 28 Commerce Department announcement to abandon zeroing in administrative reviews.
One significant consequence of Republican control of the House related to enforcement is that Congress is far less likely to pass legislation targeting China's currency manipulation. New House Ways and Means Chairman Rep. Dave Camp (R-MI) and Ways and Means Trade Subcommittee Chairman Rep. Kevin Brady (R-TX) favor addressing China's currency practices through means other than legislation, including consultations in multilateral fora, including the Strategic Economic Dialogue, Joint Commission on Commerce and Trade and the G-20. Consequently, a CVD case challenging China's currency manipulation seems less likely in the absence of legislation similar to what the 111th Congress had passed (i.e., H.R. 2378).
Major Votes on Trade Liberalization in the 112th Congress
Will the Obama Administration and the 112th Congress allow any major trade-liberalizing initiatives to come to a vote this year? The first true test of the bipartisanship between the White House and the 112th Congress will be measured by the depth of support for and passage of the implementing bill for the U.S -Korea FTA. House Ways and Means Chairman Camp and Trade Subcommittee Chairman Brady have already signaled that passage of an implementing bill for the U.S.-Korea FTA is a top legislative trade priority, on what could be a busy agenda that also includes preference program reform and reauthorization of GSP, customs reform legislation, passage of a Miscellaneous Tariff Bill and possibly passage of the implementing bills for the Panama and Colombia FTAs (although the latter are less certain at this point). Given these legislative priorities and a willing Democratic minority in the House and largely pro-trade Senate, 2011 could develop into a busy and productive year for trade votes.
Blue and Green Trade Agendas
The Republican takeover of the House will not alter the Obama Administration's support for blue (labor) and green (environmental) commitments in bilateral and regional trade agreements. Having concluded over a dozen FTAs with rigorous blue and green commitments, these provisions will remain a fixture in U.S. FTAs for the foreseeable future. In fact, all indications are that in the TPP negotiations, labor and environmental issues have been upgraded in importance, especially because of Vietnam's labor practices, which could be one of the most challenging and politically delicate aspects of the negotiations. Thus, while Congressional Republicans may pay less attention to these areas of U.S. trade policy, Congressional Democrats or the Obama Administration most likely will not dampen their support for a blue and green trade agenda.
However, the Obama Administration's pursuit of a multilateral green trade agenda has a far less favorable outlook, given the failures in 2009 at the Copenhagen Conference to conclude post-Kyoto Protocol multilateral binding reductions of greenhouse gas ("GHG") emissions and in 2010 to enact either a "cap and trade" regime or carbon tax. While the Obama Administration signaled that it will not pursue comprehensive climate change legislation, it has begun to regulate through EPA regulation GHG emissions (through new performance standards for power plants and oil refineries), to achieve through regulation what it failed to achieve through legislation.
Trade Policy Wild Cards in 2011
What trade issues will become unblocked, explode onto the scene, and/or evolve with unexpected speed? A key question-mark is whether the new Tea Party members of Congress will vote as populist free-trade skeptics, or forceful proponents of trade liberalization; we suspect the latter, but it is too early to know for certain. Other wild-cards include Russia's WTO accession, which seems to be headed for conclusion sometime in 2011, but always seems to have unexpected wrinkles, and whether other countries will join the TPP negotiations in the first tranche. The longstanding impasse preventing Mexican trucking in the US, as agreed to in NAFTA -- and the resulting retaliation imposed on U.S. exports to Mexico -- may finally get resolved this year with the help of House Republicans and ramped-up business lobbying. Finally, efforts to relax existing U.S. trade and commercial policies toward Cuba seen over the past couple of years will likely be thwarted in the House by Republican leaders.
Zeroing To Be Ended In Reviews as Well as Investigations
In late December 2010, the U.S. Department of Commerce ("Commerce") published proposed changes to the ADD calculation methodology in reviews (administrative, new shipper, and sunset) to remove the "zeroing" practice which has been found to be WTO-inconsistent. Commerce already ceased using the methodology in investigations. The new calculation approach, if adopted, will compare a foreign exporter's monthly weighted average export prices with monthly weighted average normal values, with non-dumped sales reducing the effect of dumped sales when the overall ADD rate is calculated. Interested parties may comment on the proposed change by January 27, 2011.
Higher ADD and CVD Duty Rates for Goods from China and Vietnam Expected
In August 2010, Commerce announced the "Trade Law Enforcement Package," a collection of measures designed to strengthen enforcement of the U.S. trade remedy laws. Specifically, Commerce issued a list of 14 proposed "clarifications" to ADD and CVD methodologies, which have the overall impact of raising the rates of ADD and CVD collected from importers, especially -- as discussed below -- when goods are imported from Non-Market Economies ("NMEs") such as China and Vietnam.
The first two measures listed in the Trade Law Enforcement Package became effective in November 2010. The first clarification provides that in CVD actions, state-owned enterprises ("SOE") are to be considered a specific group; therefore subsidies provided only or predominantly to SOEs are specific and, as such, countervailable. The second clarification provides that in NME ADD proceedings, when import prices (rather than domestic prices) in a comparable market economy are used to value factors of production, these prices shall include international freight costs, which will raise the likelihood that foreign firms are selling below fair value (i.e., dumping). Both of these policies have already been used in ADD/CVD cases involving Chinese products.
Additionally, Commerce issued another two proposals for public comment in December 2010, with responses due January 10, 2011. One of the two changes proposed in December would expand the use of random sampling to select companies as individual respondents in ADD investigations and reviews. Randomly selecting mandatory respondents could result in the selection of small companies that do not have the financial resources to deal effectively with Commerce's questionnaires and verification, thus resulting in higher average ADD/CVD rates. Also, smaller companies often have fewer sales to review, and there is in general more volatility in how an ADD or CVD rate would be calculated over a specific twelve-month period (as one abnormal transaction has a greater likelihood of having a material impact on the overall rate calculation).
The other change proposed in December would enlarge the list of criteria an NME producer must meet in order to qualify for a "separate rate" in an ADD case. The separate rate criteria are used to determine whether a company in an NME market is both de jure and de facto independent (or "separate") from the government to have sufficient control over how it conducts its business. Expanding the criteria an NME company must meet in order to qualify for a separate rate should presumably reduce the number of companies receiving such rates and thereby increase the number of companies subject to the rate for government-controlled entities (e.g., the "PRC-wide rate" in Chinese cases), which is often cost-prohibitive, thereby effectively terminating future imports.
No Prospect for the United States to Change to a Prospective ADD/CVD System
Commerce released a report in November 2010 comparing the U.S. retrospective ADD/CVD collection system to prospective ADD/CVD collection systems used elsewhere in the world. Although many importers prefer the predictability of a prospective system, Commerce's report gave no indication that the U.S. Government is considering changing to such a system, and we do not believe such a change will occur in 2011, given the Obama Administration's current emphasis on increased enforcement of ADD and CVD laws (as a prospective system sacrifices accuracy of the calculation of ADD and CVD rates for administrative ease and commercial predictability).
International Department News
We continued to welcome new colleagues in 2010. Lauren Torbett joined us at the beginning of the year out of law school, following an internship in the Middle East. Saskia Zandieh arrived just after mid-year from a stint as an attorney-advisor with U.S. Customs and Border Protection. And finally, Annie Wartanian Reisinger recently joined us from another firm, bringing experience in both the export controls and FCPA areas.
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