GHY Tradelines

(Bloomberg – Isaac Arnsdorf and Michelle Wiese Bockmann)

Container rates on the world’s biggest international trade route are rallying after U.S. imports of manufactured goods rebounded from the first decline in two years.

U.S. container imports gained 1.6% in the fourth quarter from a year earlier, compared with a drop of the same amount in the previous three months, data from Newark, New Jersey-based PIERS show. Volumes from northern Europe and the Mediterranean rose 12%. Rates to carry 40-foot boxes to the West Coast from China rose 29% since Dec. 16, according to Clarkson Plc (CKN), the world’s largest shipbroker.

Shipping lines will make money again this year after “deep losses” at the end of 2011, said Jon Windham, an analyst at Barclays Capital in Hong Kong. Investors should buy shares of A.P. Moeller-Maersk A/S and Neptune Orient Lines Ltd., according to Morgan Stanley, which expects charter rates to more than double this year. U.S. cargo volumes will rise as much as 3.5% to a five-year high in 2012, UBM Global Trade predicts. Read more here.
 

(Bloomberg BusinessWeek)

A United Nations panel is calling for tougher inspections and detailed labeling of air shipments of lithium batteries following two incidents in which aircraft were destroyed when freight shipments burst into flames.  The Dangerous Goods Panel at the UN’s International Civil Aviation Organization agreed Friday to the new standards, said Mark Rogers, who heads hazardous-materials handling issues for the Air Line Pilots Association union.

The action may lead to more stringent U.S. rules for battery shipments. Congress earlier this month passed an aviation bill restricting U.S. regulators from imposing rules stricter than those set by the ICAO. Tighter rules proposed by the Department of Transportation stalled following industry objections that they would lead to higher consumer costs.

“I’ve been working on lithium batteries for 10 years and this is the biggest development to date,” said Rogers, who serves on the 19-member ICAO panel.

Without new safety standards, lithium batteries that can spontaneously combust were projected to destroy one U.S.- registered cargo jet every other year, according to a study commissioned by U.S. and Canadian aviation regulators. Shipments of lithium batteries that include those used in mobile phones, tablets and laptop computers have been suspected of contributing to two U.S. cargo-jet accidents since 2006. Read more here.
 

(ST&R Trade Report)

The congressional trade agenda for 2012 is beginning to take shape and a number of longstanding issues are on the radar screen. As always, prospects for these measures will depend on a variety of factors, not the least of which is this fall’s presidential and congressional elections.

Countervailing Duties
Observers believe the trade legislation most likely to advance, at least in the near term, is a bill to explicitly allow the federal government to impose countervailing duties on goods imported from non-market economy countries like China. Such a bill, which has yet to be introduced, would effectively reverse a recent court ruling against this practice and allow the U.S. to continue the 24 CV duty orders it currently has in place against Chinese goods. The Obama administration and key lawmakers oppose that ruling and are working to overturn it legislatively as well as through the courts. Click here for more information.

China 
As has often been the case in recent election years, lawmakers will make noise about passing legislation to address the alleged undervaluation of China’s currency. There is always a possibility that such a measure could make it through to the White House, given that one or another version has been approved by the House and/or Senate at different times in recent years, that the U.S. economy continues to struggle and that “unfair foreign competition” from China is frequently cited as a direct cause, and that the annual U.S. trade deficit with China hit an all-time high in 2011. However, any such action would have a significant symbolic effect that goes beyond any actual economic impact and thus it remains an unlikely scenario.

Russia
A topic that is anticipated to be taken up this year is extending permanent normal trade relations status to products imported from Russia. Russian goods already have NTR status, meaning they are subject to normal tariffs when imported into the U.S., but that status must be approved each year through a waiver of the so-called Jackson-Vanik Amendment. Permanent NTR must be granted to allow U.S. companies to fully take advantage of the trade liberalization measures Russia will implement as part of its accession to the World Trade Organization, which is expected to take effect in the next few months. Lawmakers do not have an interest in disadvantaging domestic businesses seeking improved access to the Russian market, but the expected debate over PNTR will involve politically sensitive topics such as rule of law and human rights.

Customs Reauthorization 
Sources indicate that Senate staff have finished a draft of a long-delayed customs reauthorization bill and are working to finalize a few details. Similar legislation is still being crafted in the House. Topics likely to be addressed in these bills are listed in this article.

Other 
Other trade-related legislation, such a miscellaneous trade bill to suspend or reduce duties on imported manufacturing inputs and other goods or a measure to provide limited relief from the Lacey Act Amendments of 2008, are only likely to advance to the extent that they can engender bipartisan support.

Recent Legislation
Finally, below is a list of trade-related bills that have been introduced recently. The texts of these bills are or will be shortly available on the Library of Congress’ Web site.

• S. 2091 – to reform the international tax system of the United States

• H.R. 4005 – to direct the Secretary of Homeland Security to conduct a study and report to Congress on gaps in U.S. port security and a plan to address them

• H.R. 3976 – to provide exporting assistance to small business concerns

• H.R. 3979 – to amend the Harmonized Tariff Schedule of the United States to extend to 2025 the production certificate program that allows refunds of duties on certain articles produced in U.S. insular possessions

• H.R. 3984 – to limit the quantity of arsenic and lead in beverages containing fruit juice pursuant to tolerances under section 406 of the Federal Food, Drug and Cosmetic Act

• H.R. 3914 – to amend the Export Apple Act to permit the export of apples to Canada in bulk bins without certification by the Department of Agriculture

• S. 2063 – to prohibit the transfer of technology developed using funding provided by the United States government to entities of certain countries

• S. 2067 – to amend the Federal Food, Drug and Cosmetic Act with respect to medical device regulation

• H.R. 3880 – to require the imposition of sanctions on foreign financial institutions that are members of an entity that provides services relating to secure communications, electronic funds transfers or cable transfers to the Central Bank of Iran or sanctioned financial institutions

• H.R. 3889 – to amend title 35, United States Code, to provide for an exception from infringement for certain component parts of motor vehicles
 

(MarketWatch – Adam Johnston)

Soft ocean freight rates, which hit 25-year lows in early February, are helping cut into Canada’s grain freight disadvantage with some of its competitors, said industry participants.  The Baltic Dry Index, which is used as a guide for global shipping rates, is sitting at 715 points, up from a twenty-five year low of 647 points Feb. 3. However, that’s still well below the 2011 high of 2,173 points in mid-October and the 2008 peak of 11,793 points.

David Przednowek, manager of marine logistics with the Canadian Wheat Board, said the softening of ocean freight rates has been beneficial for Canadian grain shippers.   Transporting grain from Canada to many global areas, including Asia, takes more time, in comparison to moving it from Australia. However, softer shipping rates have narrowed the freight disadvantage, making it more competitive for Canadian grain distributors, he said.

Trevor Lavender, president of the Summit Maritime Corporation in Montreal, said much of the dramatic downward trend seen in ocean freight values is due to the large supply of ships. The lack of seasonal demand due to the Chinese new-year holiday, has also weighed on freight rates recently. Read more here.
 

(CSCB)

The Export Controls Division of Foreign Affairs and International Trade Canada is organizing an Export Controls Seminar in Montréal March 6, 2012.

This seminar will review the responsibilities of Canadian industry with regards to export controls of military, strategic, and sensitive commercial goods and technology.

Details are available on the DFAIT website here.
 

(Aamer Madhani — USA Today)

In what was billed as a major policy speech, Chinese Vice President Xi Jinping told U.S. business leaders [Wednesday] that Washington and Beijing must respect each others’ “core interests and concerns.”

A day after hearing from President Obama and other top administration officials that China must do more to level the playing field for U.S. businesses competing against Chinese firms, Xi made the case that China has already made significant strides in balancing trade policy. Earlier Wednesday, House Speaker John Boehner and Majority Leader Eric Cantor met with Xi and complained of “deficiencies” in China’s enforcement of intellectual property laws. Read more here
 

(Scott Meiner — Hawaii News Daily)

U.S. Customs and Border Protection is seeking authority to eliminate requirements that it post notice of seizures in local and port newspapers. Current regulations require “administrative seizure and forfeiture notices for at least three successive weeks in a newspaper circulated at the customs port and in the judicial district where CBP seized the property.”

Additionally, CBP is required to attempt to notify all known parties-in-interest in advance of publication. However, attempting to notify known parties doesn’t require that the parties actually be notified. Dusenbery v US – 534 U.S. 161 (2002) It requires taking steps “reasonably calculated” to achieve notification.

Under CBP’s proposal, public notice would be satisfied by posting forfeiture updates on the Department of Justice’s forfeiture web site, www.forfeiture.gov, in lieu of newspapers. Read more here.