C U S T O M S / S E C U R I T Y 

CBP's Automated Trade Processing System Tops $1 Billion in Monthly Duty Collection During September
Monday, October 22, 2007

Washington —A record $1.04 billion in duties and fees was collected in September by U.S. Customs and Border Protection through the Automated Commercial Environment monthly statement and payment feature. Since the inception of the ACE monthly statement process in July 2004, CBP has collected $17 billion in duties and fees.

“It took 14 months to collect the first $1 billion,” said Louis Samenfink, executive director for the CBP cargo systems program office. “Now, ACE has collected the same amount during one month. The growing popularity of this feature among the trade community confirms that an automated, account-based approach to doing business with the government is proving successful.”

Currently, 42 percent of duties and fees are collected via ACE. The ACE monthly statement feature simplifies the payment of duties and fees for importers and brokers, streamlines accounting procedures, and provides reporting and trend analysis capabilities.

ACE is the commercial trade processing system being developed by CBP to enhance border security and expedite legitimate trade. Benefits of the ACE monthly statement process include:

      Monthly payment of duties and fees instead of payment on a daily or transaction-per-transaction basis

      Duty payments on the 15th working day of the month for eligible entry summaries, providing the potential for significant cash flow benefits

      Online tracking of trade activities via customized account views

      Access to more than 100 downloadable reports for monitoring daily operations

For more information on ACE and monthly payment processing, please visit the CBP Modernization website or send an e-mail to CBP.CSPO@dhs.gov 

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U.S. Government Partners with Disney to Welcome International Visitors

Multimedia ‘Portraits of America’ to be Featured in International Arrivals Areas, U.S. Embassies and Other Venues to Welcome Visitors to the United States
Monday, October 22, 2007

Washington – The U.S. Department of Homeland Security and the U.S. Department of State in partnership with Walt Disney Parks and Resorts premiered “Welcome: Portraits of America,” a multi-media initiative to welcome international visitors to the United States. The donation from Disney included a seven-minute film and hundreds of still images, featuring American people from all regions and walks of life. Disney commissioned the project as part of the Rice-Chertoff Initiative, which seeks to secure America’s borders while welcoming legitimate visitors to the United States.

"We greatly appreciate Disney’s significant contributions to our efforts to make America’s embassies and airports more welcoming to our international guests. Disney’s creativity and excellence wonderfully capture the essence of America, which is embodied in the diversity and values of our people,” said Karen Hughes, undersecretary of public diplomacy and public affairs, Department of State.

“Travelers form their first impressions of America when they arrive at our borders,” said Stewart Baker, assistant secretary for policy, Department of Homeland Security. “Our global reputation therefore depends on making visitors feel every bit as welcome as they feel secure.”

“We are proud to partner with the U.S. government to extend a world-class welcome to America’s guests,” said Jay Rasulo, chairman of Walt Disney Parks and Resorts. “This project showcases America’s greatest asset: the ordinary people who make this nation extraordinary.”

The film and still portraits showcase the diversity, friendliness and optimism of the American people. The film will be shown in the federal inspection areas of U.S. airports, and in U.S. embassies and consulates overseas, while the still portraits will be incorporated in posters, banners and other imagery welcoming visitors to the U.S. The video and images will not feature or promote any commercial entities.

The first airports to feature the images will be Washington Dulles International Airport and Bush Intercontinental Airport in Houston, to be followed by the nation’s other international airports.

For the project, Disney attracted a world-class creative team including producer Federico Tió, a highly regarded marketer of some of America’s best-known motion pictures. Born in Havana, Cuba on May 1, 1962, Tió came to the United States on one of the first "Freedom Flights" in 1965. Tió’s crew embarked on a cross-country odyssey to capture the content for the video, including images of ordinary Americans at work, play, with family and at moments of introspection.

Secretary of State Condoleezza Rice and Secretary of Homeland Security Michael Chertoff announced a joint vision to enhance border security while streamlining security processes and facilitating travel for legitimate visitors in January 2006. As part of this initiative, the Secure Borders, Open Doors Advisory Committee was established with participation from the business, travel and tourism and academic communities. One of the goals of the Advisory Committee is to help the departments establish a friendlier, more welcoming process for visitors from the time they apply for a visa to their entry into the United States.

 Welcome: Portraits of America Video

The Making of the Portraits of America Video

Welcome: Portraits of America Photography 

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CBP Seizes More than $1 Million in Wearing Apparel Illegally Shipped
from China
Monday, October 22, 2007

Washington – U.S. Customs and Border Protection officers seized three shipments of more than 2,500 cartons of wearing apparel valued at approximately $1 million at the Port of Newark, N.J. for being in violation of a U.S.-China memorandum of understanding.

The goods were illegally transshipped in an effort to circumvent textile trade laws and regulations. CBP plays a crucial role in enforcing trade laws including the enforcement of quota violations.

The seizure was a result of targeting by the Office of International Trade which was created by the SAFE Ports Act of 2006. The sophisticated targeting technologies CBP uses for border security also has proved effective for trade compliance.

CBP Assistant Commissioner Dan Baldwin said, “While seizures are just one of several tools available to combat illegal shipments of wearing apparel, this action demonstrates the ability of the CBP trade office to identify these shipments and coordinate with the Office of Field Operations to protect the American economy from contraband.”

“This is just one example of the benefits of creating this new office of trade. By consolidating the trade functions of CBP in one office, we have been able to increase the quality and quantity of enforcement activities,” Baldwin said.

The number of factory visits in foreign countries has doubled from fiscal year 2006 to fiscal year 2007. The number of audits has increased by 60 percent with an almost seven-fold increase in recommended revenue recovery. Penalties assessed have increased by more than three times.

New US Box Import Rules

Stricter security measures on containerized imports to the US under so-called 10+2 requirements of the Safe Port Act could be introduced as early as the new year, according to a former senior US customs agent.  Robert Pisani, now a partner in US law firm Pisani & Roll, said publication of the detailed rules was expected next month and they were currently with the US Office of Management and Budget.  He said the requirements had caused concern among the maritime industry, especially shippers, because much of the information that will have to be provided was business and commercially sensitive.  Mr. Pisani said introduction of the new requirements “will entail major changes to software” in shippers’ and importers’ operating systems.  Under the 10+2 rule, importers or shippers will have to provide 10 additional pieces of shipment information to US Customs and Border Protection before boxes are loaded on to vessels.  These include the names and addresses of the manufacturer, seller, buyer, consolidator and final destination, together with the container stuffing location, the consignee number and country of origin of the goods.  Lloyd’s List, 9/19/2007 

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Federal Agencies Tighten Grip on Export Violators
15 Oct 2007, "The American Shipper Magazine"

Six federal agencies, led by the U.S. Justice Department, will work together to crack down more efficiently on violators of the country's export control regulations. The National Counter-Proliferation Initiative, announced Thursday, is specifically targeted at rooting out exporters who illegally ship restricted U.S. military and so-called "dual-use" items, or technologies with both commercial and military applications, to countries and terrorist organizations. The Justice Department said in a statement that the illegal overseas transactions in U.S. technologies are "substantial and growing." The department noted that in the past week there have been federal cases involving the illegal export of items with nuclear and missile applications to Pakistan and the illegal export of U.S. jet fighter parts sought by Iran. 

Secure Freight Initiative Becomes Fully Operational in United Kingdom, Pakistan, Honduras
Friday, October 12, 2007

Washington - Southampton Container Terminals, United Kingdom, Port Qasim, Pakistan (both managed by DP World) and Puerto Cortez, Honduras will become the first seaports to implement the Secure Freight Initiative (SFI) beginning October 12 by scanning all maritime containers destined for the United States for nuclear or other radiological materials. These ports fulfill the requirements set out in the Security and Accountability For Every (SAFE) Port Act of 2006, which establishes a program that couples Non-Intrusive Inspection (NII) and radiation detection technology. Data from these systems is then provided to U.S. officials at U.S. Customs and Border Protection’s National Targeting Center for analysis.

"As fellow members of the global trade community, preventing a nuclear weapon or dirty bomb attack has to be one of our highest priorities. This initiative advances a comprehensive strategy to secure the global supply chain and substantially limits the potential for terrorist threats," said Jayson P. Ahern, Deputy Commissioner, U.S. Customs and Border Protection.

"Trade and cooperation on security issues are important aspects of the special relationship that exists between the United Kingdom and the United States.

In 2006 alone, the total volume of trade between our countries surpassed $165 billion. The United States appreciates the British Government’s participation in the Secure Freight Initiative pilot program. We believe this pilot program is an important step toward a trade model that secures the global supply chain without negatively impacting port and shipping operations," said Ambassador Robert H. Tuttle.

Four additional ports are also scheduled to become operational for Phase I of the project and will provide scanning on a limited capacity basis: Singapore’s Brani terminal; Busan, Korea’s Gamman terminal; Hong Kong’s Modern Terminal and Salalah, Oman. DHS and the Department of Energy’s National Nuclear Security Administration (NNSA) partnered with these ports because they pose different challenges and provide diverse environments in which to evaluate various options.

SFI builds upon a risk-based approach to securing the international supply chain by leveraging off of existing programs like NNSA’s Megaports Initiative and the DHS’ Container Security Initiative (CSI). To support SFI in the selected ports, NNSA’s Megaports Initiative provided specialized equipment that indicates the presence of special nuclear and other radioactive materials in containerized cargo, thereby enhancing those countries’ capability to deter, detect and interdict illicit shipments of special nuclear and other radioactive materials at its ports. Around the world, the Megaports Initiative is currently operational in eleven ports; operational testing is underway in one additional port; and another 12 ports in Asia, Latin America and the Caribbean, Europe and the Middle East are scheduled to be operational in 2008.

The United States contributed roughly $60 million to the Secure Freight Initiative for the installation of scanning systems and communications infrastructure that transmit data back to the United States. Additionally, the U.S. Department of State provided diplomatic assistance in securing the necessary bi-lateral agreements to conduct the program. Furthermore, the U.S. Government is committed to working with our foreign partners, to include trade and industry, to implement 100% scanning in a logical and practical manner that does not adversely affect global trade. 

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S H I P P I N G 

Robot Boats Hunt High-Tech Pirates on the High-Speed Seas

As maritime crime heats up, will the U.S. Navy follow Israel and Singapore’s lead to stock up on new unmanned surface vessels? And could they stop Al Qaeda?
By Erik Sofge   October 31, 2007

Robots versus pirates—it’s not as stupid, or unlikely, as it sounds. Piracy has exploded in the waters near Somalia, where this past week United States warships have fired on two pirate skiffs, and are currently in pursuit of a hijacked Japanese-owned vessel. At least four other ships in the region remain under pirate control, and the problem appears to be going global: The International Maritime Bureau is tracking a 14-percent increase in worldwide pirate attacks this year.

And although modern-day pirates enjoy collecting their fare share of booty—they have a soft spot for communications gear—they’re just as likely to ransom an entire ship. In one particularly sobering case, hijackers killed one crew member of a Taiwan-owned vessel each month until their demands were met.

For years now, law enforcement agencies across the high seas have proposed robotic boats, or unmanned surface vessels (USVs), as a way to help deal with 21st-Century techno Black Beards. The Navy has tested at least two small, armed USV demonstrators designed to patrol harbors and defend vessels. And both the Navy and the Coast Guard have expressed interest in the Protector, a 30-ft.-long USV built by BAE Systems, Lockheed Martin and Israeli defense firm RAFAEL.

The Protector, which comes mounted with a 7.62mm machine gun, wasn’t originally intended for anti-piracy operations. But according to BAE Systems spokesperson Stephanie Moncada, the robot could easily fill that role. “Down the line, it could potentially be modified for commercial use as well,” she says. Instead of being deployed by a warship to intercept and possibly fire on an incoming vessel, a non-lethal variant of the Protector could be used to simply investigate a potential threat.

A favorite tactic of modern-day pirates is to put out a distress call, then ambush any ships that respond. The unmanned Protector could be remote-operated from around 10 miles away, with enough on-board sensors, speakers and microphones to make contact with a vessel before it’s too late. “Even without the machine gun, it could alert the crew, give them some time to escape,” Moncada says.

This past summer, Florida-based Marine Robotic Vessels International (MRVI) unveiled a USV that emphasizes reconnaissance over firepower. The 21-ft.-long Interceptor can travel at up to 55 mph, and is designed to be piloted both remotely and autonomously.

For a patrol boat, autonomous control would be a huge advantage, allowing it to traverse huge stretches of open sea, instead of having to remain within radio range of a given vessel. While the Interceptor could be fitted with a water cannon or other non-lethal offensive system, its primary mission is to serve as a sentry.

According to MRVI President Dan Murphy, the Interceptor is available now. But the USV market is just getting started: Two months ago, British defense firm Qinetiq debuted its own robotic vessel, the jetski-size Sentry. Among its potential duties is intruder investigation, which could include scouting out unidentified boats, along the lines of the raft that detonated alongside the USS Cole in Yemen, as well as offering a first look at a possible pirate-controlled vessel. The Sentry, however, can only operate for up to six hours at a time, severely limiting its ability to operate at sea.

Although the Protector is currently deployed by the Israeli and Singaporean Navies, the U.S. Navy has yet to field a full-production USV, much less a pirate-hunting one. But if piracy continues to escalate around the world, it may only a matter of time before the private sector gets fed up and buys a few unmanned boats to act as scouts. After all, one of the best things a robot can do is get blown to pieces ... so you don’t have to.

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 Cargo fraud warning

SHIP agents are increasingly faced with attempts to obtain delivery of cargo using forged emails, according to the International Transport Intermediaries Club (ITIC). Writing in the latest edition of its annual publication, The Intermediary, ITIC says, “Fraud in shipping is endemic, cargoes are valuable, and it has never been easier to forge documents, electronic communications, bills of lading, etc. Carriers and their agents must continuously be aware of this fact and take whatever steps are necessary to avoid becoming unnecessarily involved in costly claims for damages which have resulted from a failure to be careful and vigilant.”

ITIC notes that misrelease of valuable cargo is a major factor in claims by principals against their agents, and explains that carelessness in dealing with telex releases has contributed to these losses. ‘Telex release’ is the industry term for the release of cargo at one port when the original bill of lading has been surrendered at another. Today, despite its name, the telex release is almost always made by email.

There are two main problems with telex releases, says ITIC. Firstly, they are often worded – and dealt with – in a careless manner. ITIC notes, “Considering the value of some of the cargoes which are released in this way, the release instructions which are sent between agents are often extremely casual. There have been several claims reported to ITIC where the releasing agent has taken an ambiguously worded message from a third-country receiving agent to be a release, when it was not.”

The second problem with telex releases, says ITIC, results from email fraud. In its Guidelines for the Release of Cargo, ITIC recommends that agents check the authenticity of messages from other agents to release cargo. ITIC has recently been notified of several claims involving telex release by faked emails. These are emails received by discharge port agents which have been manipulated to appear as though they have originated from the load port agent, and authorize release of cargoes and confirm that freight has been received when it has not.

Bush draws veto pen
02 November 2007

US President George Bush vetoes a massive water resources bill that includes inland waterway projects sought by the shipping industry.

US President George Bush checked the veto box today on a water resources bill that authorizes $23bn in Army Corps of Engineers projects, including inland waterway projects sought by the shipping industry.

“This bill lacks fiscal discipline,” Bush said in a note to Congress released by the White House.

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BIS PREVENTS ILLEGAL EXPORTS TO DUBAI; COMPANY SETTLES ALLEGATIONS OF GENERAL ORDER VIOLATIONS

WASHINGTON - The Commerce Department’s Bureau of Industry and Security (BIS) today announced that Ace Systems Inc. (Ace) has agreed to pay a civil penalty to settle allegations that the company violated General Order No. 3 of the Export Administration Regulations (EAR) by attempting to export items to Mayrow General Trading in Dubai, UAE.

On June 5, 2006, BIS issued a General Order Concerning Mayrow General Trading and Related Entities. This Order imposes a license requirement for the export or reexport of any item subject to the EAR to Mayrow and other named entities.  The Order, which does not permit the use of license exceptions, applies to any transaction involving Mayrow or any other named entity.  The Order was amended in September 2006 and June 2007 to apply to additional persons. 

BIS alleged that Ace, located in Gainesville, Ga., attempted to violate the General Order by acting to export dialogic voice cards to Mayrow in Dubai, UAE without the required license.  Ace tendered ten cards to its freight forwarder with instructions to export them to Mayrow.  The BIS special agents intervened and the cards never reached their destination.

“We have reason to believe that Mayrow General Trading and its affiliates have been acquiring U.S.-made components for use in improvised explosive devices (IED) in Iraq and Afghanistan,” said Mario Mancuso, under secretary of commerce for industry and security.  “We will do everything in our power to protect our forces in the field by prosecuting those who illegally export sensitive U.S. technology.”

Assistant Secretary for Export Enforcement Darryl W. Jackson commended special agents in the Office of Export Enforcement’s Miami Field Office for their diligence, which prevented these components from falling into the wrong hands.  He also noted Ace’s cooperation during the investigation.

BIS controls exports and re-exports under the EAR, and both criminal penalties and administrative sanctions can be imposed for violations.  The maximum civil penalty in this case was $50,000 pursuant to the USA PATRIOT Act Improvement and Reauthorization Act of 2005.

Ship Shortage

The cost of shipping raw materials across the world's oceans has reached an all-time high, pushing up prices of grain, iron ore, coal and other commodities.  The average price of renting a ship to carry raw materials from Brazil to China has nearly tripled to $180,000 a day from $65,000 a year ago. In some cases, ocean shipping can be more expensive than the cargo itself. Iron ore, for example, costs about $60 a ton, but ship owners typically are charging about $88 a ton to transport it from Brazil to Asia.  The trend may force manufacturers to pay more for the basic ingredients they need to make their products. And those higher costs could be passed on to consumers, affecting the price of everything from automobiles and washing machines to bread.  The main reason commodity shipping rates are escalating: not enough bulk ships.  The shortage stems from the surging volume of global trade as growth explodes in China, India and other developing nations.  The Baltic Exchange Dry Index, the most important and widely used indicator of world-wide ocean freight rates for bulk commodities, hit a record after rising 169% over the past year.  "All of the ship owners are making a lot of money because these are numbers that the market has never seen," said John P. Dragnis, commercial director of Athens-based Goldenport Inc., one of the largest providers of ships to commodity sellers.  The Wall Street Journal, 10/22/2007.

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Panama Canal Dimensions

Lloyd’s Register and Ocean Shipping Consultants have again called on the Panama Canal Authority to rethink the maximum dimensions of the expanded canal, to allow the new generation of panamax vessels that will fit through the enlarged locks to be built.  Allowing a beam of 51 m, instead of the 49 m currently planned, would mean 20 rows of containers could be carried, instead of 19. Lloyd’s List, 10/17/2007

Piracy Attacks on the Rise

Somalia and Nigeria remained the top piracy blackspots in the third quarter of 2007, with attacks up 14% in the first nine months of the year, according to watchdog the International Maritime Bureau.  The first nine months of 2007 saw 198 attacks worldwide reported to the IMB’s piracy reporting centre in Kuala Lumpur, compared with 174 with 2006. Lloyd’s List, 10/17/2007

When California Sneezes

Container shipping conditions on the Pacific have taken a distinct turn for the worse in recent months as the US economy falters, casting a shadow over market prospects.  The giant Los Angeles/Long Beach port complex saw inbound container volumes take a sharp drop over the course of the summer, with local business leaders expressing shock at the latest numbers. For the year to date, both ports are showing flat numbers compared with 2006, although in August volumes fell by 6%-7%.  Growth in total US imports from Asia through all port gateways is now expected to be considerably slower in 2007 than forecasters had been predicting a few months ago.  The outlook for 2008 has also been revised downwards.  A report in the LA Times this week on the decline in container imports through the ports of Los Angeles and Long Beach in August, compared with a year ago, said local retailers were cutting orders as consumer spending tails off, while warehouses remain full of unsold goods.  For the full year, Piers Maritime expects eastbound volumes from Asia to the US to top 15.4m teu, with that number rising to 16.9m teu in 2008, if the anticipated 9.7% growth is achieved.  The latest forecast has been trimmed from the previous figure of 9.9%, but the research team is confident that the continuing structural shift in production capacity to Asia will ensure US containerized imports from that part of the world “remain solid.”  Looking further ahead, Piers is predicting 9.2% growth in 2009.  Lloyd’s List, 10/11/2007.

US Shipping Law Making Waves Overseas
October 26, 2007

A U.S. law that will require foreign ports to scan every container they ship stateside looks set to create big winners and losers and force consolidation at ports around the world, the Wall Street Journal reports.

Designed to ensure freight containers aren't used by terrorists to smuggle weapons or bomb materials into the U.S., the Law on Maritime Cargo Scanning Requirements is shaping up to have a dramatic impact on the global shipping industry, port officials and operators in Europe and Asia say.

Companies that make the giant $5 million X-ray or gamma-ray machines needed to scan shipping containers are anticipating a boom in orders as roughly 700 ports around the world gear up for the U.S. rules, which were signed into law in August but take effect in 2012. Industry analysts say each will have to buy one to 10 of the scanners or stop exporting to the world's richest market.

Large modern ports, mostly in Asia, also expect to win new business as smaller and older ports struggle to meet the U.S. requirements. The European Union estimates the average start-up cost for a port to buy and support the scanners will be around $100 million, too much to make business sense for some minor ports to go on shipping to the U.S.

Big, older river ports like Antwerp in Belgium are also at a disadvantage. Antwerp would need to build new roads and bridges to get all containers to scanners from its scattered docks and may not be ready in time. "We're looking at billions [of euros] in extra spending," says Lieven Muylaert, a Belgian customs official.

The EU has led opposition from around the world to the new U.S. requirements, worrying the relative lack of flexibility at many European ports will add to cost advantages Asian exporters already hold over European companies. Asia's newer ports tend to be bigger, but more compact, than their European counterparts. They will have less trouble meeting the requirements, port operators and analysts say. The EU has threatened to impose reciprocal constraints on all containers landing in the EU from the U.S.  Source: LA Biz Journal

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Trans-Pacific lines plan rate hikes, floating bunker charges
November 5, 2007 William Armbruster / The JOURNAL of COMMERCE ONLINE

The Transpacific Stabilization Agreement representing 14 container lines serving the trade from Asia to the United States on Thursday announced a five-point plan designed to increase their revenue amid rising operating costs, including record fuel prices.

Key elements of the proposed plan:
 
-- Freight rate increases of $400 per 40-foot container for U.S. West Coast port-to-port and door cargo, and $600 per FEU for all other traffic, including intermodal and U.S. East Coast all-water shipments.

-- Restoration of a floating bunker fuel surcharge -- broken out from base rates and adjusted on a regular basis to reflect bunker fuel price fluctuations -- in all contracts that have had bunker surcharges mitigated, capped or folded into base rates.

-- A $400 per FEU peak-season surcharge on all shipments during the period from June 1 through Oct. 31, 2008. The surcharge would be subject to adjustments relating to the timing, duration and strength of the peak season.

The lines also intend to modify the timing of service contracts, extending 2008-09 contracts by an additional two months, to expire on June 30, 2009. The TSA intends that all future 12-month contracts will have July 1 start dates.

Finally, carriers plan to include provisions in upcoming contracts that will enable them to recover increased West Coast trucking costs which may arise from legislative and/or regulatory changes, such as implementation of the Transportation Worker Identification Credential and the proposed Los Angeles-Long Beach clean-truck plan.

The plan, announced by the TSA on Nov. 1, is voluntary. The group is a discussion agreement, and can recommend changes in rates and surcharges, but implementation is up to the individual carriers. The TSA represents almost all of the major carriers in the trans-Pacific trade. The exceptions are Maersk Line, the world’s biggest container carrier, and China Shipping Container Lines.

Hanjin Shipping Senior Executive Vice President, J.S. Lee, a member of the group's executive committee, said the container lines still anticipate a 7-8 percent increase in basic operating costs apart from fuel. These include inland rail and truck charges, container handling at destination U.S. ports, and repositioning of empty containers to Asia after cargo has been delivered at U.S. interior points. Lee added that carriers also must address increased costs that were not recovered in current contracts. Looking further ahead, Lee said the market should be prepared for further increases in 2009-10 contracts.

The group said a survey of member lines’ operating costs relative to freight rates shows current rate levels well below break-even costs for nearly all carriers on most route segments.

At the same time, bunker fuel prices rose by 34 percent during the first nine months of 2007, from an average of $295 per ton in January to $395 per ton during September.

Increases in TSA's bunker surcharge, from $455 per FEU in January to $680 per FEU in October, only partially addressed these rising costs. And in a number of contracts, caps and other restrictions prevented meaningful cost recovery as fuel prices spiked throughout the year.

“Lines will, of necessity, be pressing the issue of a full, floating bunker charge very seriously in upcoming contract negotiations,” said TSA Chairman and APL Chief Executive Ron Widdows. “We understand that this is a major item in the overall rate structure and that shippers are looking for pricing stability over the 12-month contract term. But the market must understand that fuel prices are far too volatile, and ocean carriers are far too exposed to fuel cost fluctuations over a 7,000 to 10,000-mile, 12- to 18-day one-way sailing, to lock in a single price for a year.”

Noting that airlines, railroads and truckers apply floating fuel surcharges, Widdows said container lines are particularly vulnerable to fuel cost increases.

“At current price levels, fuel is no longer just another cost component,” Widdows stressed. “We’re at a point where service levels at minimum and, for some carriers, financial viability are threatened if we are not able to share these costs more equitably with the customer base. It’s not a sustainable situation.”

The TSA said service levels and operating flexibility will be particularly important in the coming contract year. It said independent industry analysts are forecasting a 7- to 9-percent increase in demand for trans-Pacific container space during the coming year, the same or slightly higher than predicted for 2007.

That exceeds the anticipated 5.2-percent increase in TSA members’ trans-Pacific vessel capacity, and the expected 6.3-increase among all carriers serving the trade. But those capacity increases may turn out to be lower if there is not sufficient improvement in the economics, the TSA said. It pointed out that allocations of new capacity are being driven by the high-growth Asia-Europe and intra-Asia trade lanes, with smaller ships cascaded out of those trades accounting for much of the new capacity scheduled for the trans-Pacific.

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W O R L D   T R A D E  

Ambassador Schwab Announces U.S. Will Seek New Trade Agreement to Fight Fakes
10/23/2007

Anti-Counterfeiting Trade Agreement will boost the fight against counterfeiting and piracy

WASHINGTON DC - In a major step in the fight against intellectual property rights (IPR) counterfeiting and piracy, U.S. Trade Representative Susan C. Schwab today announced the United States and some of its key trading partners will seek to negotiate an Anti-Counterfeiting Trade Agreement (ACTA).

“Global counterfeiting and piracy steal billions of dollars from workers, artists and entrepreneurs each year and jeopardize the health and safety of citizens across the world,” said Ambassador Schwab.  “The United States looks forward to partnering with many of our key trading partners to combat this global problem. Today launches our joint efforts to confront counterfeiters and pirates across the global marketplace.”

In a press conference on Capitol Hill with Members of Congress and Ambassadors from countries who will be part of the new initiative, Schwab explained that ACTA is a bold leadership effort among countries that support high standards of enforcement against piracy and counterfeiting. 

The participants in this effort will elaborate on a vision, developed over the past year, for a new agreement addressing three main areas: cooperation, best practices, and a strong legal framework for IPR enforcement. 

Trading partners engaged in discussions so far include Canada, the European Union (with its 27 Member States), Japan, Korea, Mexico, New Zealand, and Switzerland.

The ACTA would complement the Administration’s work to encourage other countries to meet the enforcement standards of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) under the World Trade Organization, and to comply with other international IPR agreements.  It will not involve any changes to the TRIPS Agreement.  Rather, the goal is to set a new, higher benchmark for enforcement that countries can join on a voluntary basis.  The negotiations represent a cooperative effort by the governments involved, and will not be conducted as part of any international organization.

Schwab said the United States and its ACTA partners will work closely to complete the new agreement as quickly as possible.  She added that she expects other trading partners to join in the emerging consensus for stronger IPR enforcement and stressed that all countries, including developing countries, have a major stake in fighting counterfeiting and piracy.

Background

Counterfeiting and piracy threaten U.S. jobs and economic growth, striking at the reputation of U.S. brands and stealing the products of U.S. creativity and innovation.  Industry loss estimates run into hundreds of billions of dollars.  It poses a similar threat to U.S. trading partners around the world.  Developing countries are among the biggest victims, as counterfeiters passing off shoddy and unsafe goods undermine emerging local economies.

The envisioned ACTA will include commitments in three areas: (1) strengthening international cooperation, (2) improving enforcement practices, and (3) providing a strong legal framework for IPR enforcement.  No precise deadline has been agreed for conclusion of negotiations, but the concepts have been vetted with multiple countries and the U.S. Government is eager to move ahead as quickly as possible.

The ACTA will complement a wide range of other trade policy tools that USTR and other agencies use as part of our long-standing and enduring efforts to help protect U.S. intellectual property overseas, working in cooperation with our foreign trading partners and with U.S. right holders.  These tools include U.S. free trade agreements, negotiation of Trade and Investment Framework Agreements (TIFAs), WTO accession negotiations, bilateral discussions of IP issues, the Special 301 process, U.S. preference programs, and dispute settlement.

The ACTA will complement the Administration’s on-going work to address IPR piracy.  Under the STOP! initiative, announced in October 2004, the Administration has been working to step up the fight against this illegal activity, including strengthening cooperation with trading partners.  STOP! is a comprehensive initiative to fight global piracy by systematically dismantling piracy networks, blocking counterfeits at our borders, helping American businesses secure and enforce their rights around the world, and collaborating with our trading partners to ensure the fight against fakes is global.  A key goal of STOP! is to aggressively engage U.S. trading partners to join our efforts against counterfeiting and piracy.

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Made In USA

Frank Vargo. vice president for international economic affairs at the National Association of Manufacturers, said U.S. manufacturing exports have been making a strong comeback, abetted by growing industrial productivity at home, the weaker dollar and rising demand for high-value U.S. products in the "emerging" nations of eastern Europe, Latin America and Asia.  You'd never guess it, but the U.S. is still the world's largest manufacturer, producing about 20 percent of the world's manufacturing output measured in value, and U.S. industrial output is at an all-time high.  The U.S. also produces more than twice the output of China, and exports more manufactured goods than any country except Germany. "Fourteen million U.S. workers produce twice as much as 60 or 70 million Chinese workers.” Vargo said.  Despite some hard times, since 1994 U.S. manufacturing output has grown slightly faster than overall U.S. gross domestic product, said Jaime Estrada, deputy assistant secretary for manufacturing at the International Trade Administration of the U.S. Department of Commerce.  Critics of free trade often blame the North American Free Trade Agreement and other agreements for the U.S. deficit.  Ironically, the opposite is true.  While the countries that have free-trade agreements with the U.S. comprise only 7.5 percent of global GDP, those countries accounted for more than 42 percent of U.S. exports in 2006, according to Estrada.  U.S. merchandise exports to free-trade agreement countries grew 11 percent last year and rose 40 percent from 2001 to 2006, he added.  The Journal of Commerce, 10/29/2007

US trade gap shrinks as exports grow; China, oil deficit still high

WASHINGTON (AFP) — The US trade deficit shrunk to 57.6 billion dollars in August, as a jump in exports helped by a weak dollar offset higher costs for imported oil, government data showed Thursday.

The lion's share of the deficit came from oil imports and from China, but excluding those factors, the trade balance showed improvement.

Adjusted for inflation, the deficit was the lowest since February 2004, and in absolute terms the lowest since January, Commerce Department figures showed.

The trade gap was also better than the average analyst expectation of a deficit of 59.5 billion dollars, and marked a 2.4 percent drop from July's revised figure of 59 billion dollars.

The improvement in the trade deficit is generally positive for the US economy since it means more economic output is coming from domestic sources. It also eases pressure on the dollar by reducing outflows of the US currency.

Avery Shenfeld, economist at CIBC World Markets, said the report shows "we're finally seeing the impact of a more competitive US dollar exchange rate coupled with a drag on imports from a slower US growth pace."

Shenfeld said the lower level of imports "is a signpost of a slower US economy but it also helps cushion that economy."

The analyst said it may be hard to make further progress on the deficit without lower oil prices and a shift in the trade balance with China.

"This isn't a cure-all for the US dollar because the oil import bill is starting to rise again and its going to be hard to make much progress on that front," Shenfeld said.

"We're not likely to cure the imbalance with China until the Chinese consumer is a much more aggressive spender and the Chinese currency is adjusted to a more competitive rate."

Sal Guatieri, economist at BMO Capital Markets, said that the trade improvement will mean a higher level of US economic output or gross domestic product (GDP).

"It looks like trade will add significantly to third quarter GDP, it could be on the order of a full percentage point," he said.

The US economy grew at a 3.9 percent pace in the second quarter but most economists see a softer pace in the second half of the year.

Robert Brusca at FAO Economics said the report appears positive for the economy.

"It is surging exports that are narrowing the deficit more than 'weak' imports," he said.

Exports rose 0.4 percent in August to a record 138.3 billion dollars, helped by the weak dollar. Imports meanwhile fell 0.4 percent to 195.9 billion dollars.

The figures showed the US deficit in goods decreased 1.2 billion dollars from July to 66.6 billion, and the services surplus increased 200 million dollars to nine billion.

Over the first eight months of the year the cumulative US trade deficit is 471.9 billion dollars, down from 517.5 billion in the same period in 2006. If the trend continues, 2007 would see the first drop in the trade defcit in six years.

Oil prices remained a big factor in the deficit, accounting for 24.3 billion dollars of the August deficit, with the average price of an imported barrel hitting a record 69.09 dollars.

The other big factor in the deficit was China, which accounted for 22.5 billion dollars of the deficit even though the figure was down 5.4 percent for the month.

The massive imbalance with China has prompted calls in Congress for US sanctions, but administration officials have opted for negotiations and in some cases complaints at the World Trade Organization.

On Thursday, Washington filed its fourth WTO complaint agains China, challenging Biejing's restrictions on imports of products of copyright-intensive industries such as films, music and books.

US Trade Representative Susan Schwab said the trade balance improvement shows Washington's free-trade agenda is working.

"Strong export expansion is lending critical support to the US economy right now," Schwab said in a statement.

"Exports have accounted for 40 percent of US economic growth over the last four quarters ... Removing barriers and expanding trade supports productivity and income growth, and better paying jobs in America."

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President Bush Signs Bill Raising Civil and Criminal Penalties for EAR Violations

President Bush signed into law on Tuesday the International Emergency Economic Powers Enhancement Act (S. 1612) that increase civil penalties for violations of the U.S. Department of Commerce’s Export Administration Regulations from $50,000 per violation to the greater of $250,000 or twice the amount of the transaction.  The new laws increases criminal penalties for individuals from $50,000 and 10 years imprisonment to $1 million and 20 years imprisonment.

A S I A

Second busiest port: Shanghai may replace HK
October 25, 2007

(SHANGHAI) Chinese city Shanghai is expected to overtake Hong Kong as the world's second-busiest container port this year, helped by rising throughput at the multibillion-dollar Yangshan deep-water port, a senior port official said yesterday.

The city port's container volume is expected to top 25.5 million TEUs (twenty- foot equivalent units) this year, lagging only Singapore, whose volume is estimated to be 27.6 million TEUs this year, Xu Peixing, director-general of Shanghai Port Administration, told Reuters on the sidelines of an industry event.

He did not give a full-year estimation for Hong Kong, which moved 17.7 million TEUs of goods in the first nine months, according to statistics provided by the Hong Kong Port Development Council.

Shanghai International Port (Group) Co, China's biggest port operator, controls the city port's major assets.

'Yangshan port has played a big role in boosting Shanghai's container volume,' Mr Xu said. 'Its full-year container volume is estimated at 5.8 million TEUs.'

Yangshan's capacity was at 4.3 million TEUs as of the end of 2006 when the first two phases were completed. Construction of Phase 3 of the deep-water port is going smoothly, with four additional berths to be in place by the end of this year and three more by the end of 2008, increasing its total number of berths to 16, Mr Xu said.

He added that Phase 3, which would push up the port's handling capacity to 15 million TEUs by 2012, remained open to outside capital but the name list of foreign investors has yet to be finalised.

He declined to name the potential investors. But local media has named Singapore's PSA International and French shipping company CMA CGMere as potential candidates, along with local players China Ocean Shipping Group and China Shipping (Group). – Reuters

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China ‘Distorting World Markets’

The world’s developed nations, spearheaded by the US, have locked horns with China again over subsidies, amid claims that Beijing has provided $52bn of support for the steel industry alone.  The US, backed by the European Union, Canada and Japan, accused China in a heated World Trade Organization session of flouting international agreements over subsidies for sectors ranging from steel making to banking.  The WTO clash follows a study sponsored by the American Iron and Steel Institute, which claims that Chinese support measures violating global trade rules include $17bn in preferential loans and direct credit and $19bn in equity infusion and or debt-to-equity swaps.  “China’s government-controlled steel production is distorting the world marketplace, and the problem is only getting worse,” said AISI president Andrew Sharkey in the report, Money for Metal, on Chinese steel industry subsidies.  Lloyd’s List, 10/30/2007.

 E V E N T S / S E M I N A R S

Public Holiday in Singapore

Thursday, 08 November 2007   Deepavali Celebration

Resume work on Friday, 09 November 2007

http://www.icewi.org

MWTA & ICE November Meeting

November 13, 2007   8:30 am - 3:00 pm

“Incoterms 2000:” A Must-Session for Exporters

INCOTERMS are shorthand definitions of the respective responsibilities of sellers and buyers in international sales contract. Examples are:

INCOTERMS 2000 are the official ICC rules for the interpretation of trade terms that must be explicitly incorporated into international sales contracts.

8:30am Registration & Visit Auction
9:00am PROGRAM “Incoterms 2000”
Led by: Frank Reynolds
LUNCH (Included)