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TradeInFocus   Our compilation of news to keep you in focus on key trade matters

APEC Moves Toward Tariff Cuts for Green Power Products
The 21 Asian Pacific Economic Cooperation nations have published details on their implementation of tariff cuts on a list of 54 environmentally friendly goods, making it easier to trade products needed to combat climate change.

The first multilateral tariff-cutting arrangement in 20 years will help lower the cost of solar panels, wind turbines, air pollution control equipment and other goods and help the region meet its target of doubling renewable energy by 2030, while reducing energy intensity by 45 percent by 2035.

The tariff reductions are expected to promote trade worth about $300 billion within the region and $500 billion worldwide, APEC said.

Each APEC country has delivered an implementation plan for cutting tariffs on the 54 environmental goods. Half of the top 10 global exporters of environmental goods and 12 of the top 30 are APEC economies, according to the International Trade Center. The total market for environmental goods and services is expected to double to $2 trillion within five years, as demand for energy increases during a time of stricter environmental regulation.

Progress on implementing the tariff reductions will be reviewed when officials meet in Lima, Peru, beginning February 20th.


US Opens Greater Channels For Trade, Air Links With Cuba
Washington Post - January 26, 2016
The United States took another step Tuesday to roll back restrictions on Cuba, opening financial channels for greater trade and clearing some obstacles to air travel. The measures are the latest toward easing Cold War-era sanctions after the two former foes restored diplomatic ties last year. It also seeks to reopen commercial and transport routes as U.S. companies study options for investment on the island. The new codes, announced by the Treasury and Commerce departments, will remove blocks on payments and financing rules aimed at opening greater direct trade in areas such as telecommunications and civil aviation.


US Further Loosens Export Controls for Cuba
The Commerce Department?s Bureau of Industry and Security and the Treasury Department?s Office of Foreign Assets Control have announced further regulatory amendments to expand the types of US goods allowed for export to Cuba.

The Commerce Department?s Bureau of Industry and Security and the Treasury Department?s Office of Foreign Assets Control have announced further regulatory amendments to expand the types of US goods allowed for export to Cuba.
Commerce said the changes that it has proposed to the Export Administration Regulations will authorize additional exports for disaster preparedness, education, agricultural production, artistic endeavors, food processing, and public transportation to the Caribbean island nation.

These amendments will remove existing restrictions on payment and financing terms for authorized exports and re-exports to Cuba of items other than agricultural goods, and establish a "case-by-case licensing policy for exports and re-exports of items to meet the needs of the Cuban people, including those made to Cuban state-owned enterprises," the departments said.

However, a general policy of denial will be maintained for U.S. exports and re-exports of items for use by state-owned enterprises and Cuban government agencies that primarily generate revenue for the state, including those in the tourism industry and the mining or production of minerals and other raw materials. In addition, applications to export or re-export items destined to the Cuban military, police, intelligence and security services remain subject to a general policy of denial, Commerce and Treasury said.

The departments noted additional amendments will help facilitate carrier service by air and with Cuban airlines, including approvals for blocked space, code-sharing and leasing arrangements. ?These regulatory changes will also facilitate exports that will help strengthen civil society in Cuba and enhance communications to, from and among the Cuban people,? said Commerce Secretary Penny Pritzker in a statement. ?Looking ahead, we will continue to support greater economic independence and increased prosperity for the Cuban people, as we take another step toward building a more open and mutually beneficial relationship between our two nations.?

For more details about the Treasury regulations, see the 31 Code of Federal Regulations (CFR), part 515. The Commerce regulations can be found at 15 CFR part 746.

Concern rising about how SOLAS weight rule can actually be implemented
Peter Tirschwell, Jan 26, 2016
When a container without a signed weight declaration shows up at a marine terminal as of July 1, when a new
SOLAS rule takes effect, what happens next? Will the terminal allow the container in, hoping that the weight?
Will arrive in time for the container to be handled and loaded without having to be pulled aside? Or does the
Terminal avoid the risk, telling the carrier and its customer that containers without the Verified Gross Mass
Won?t be allowed in under any circumstances?

That and many other unresolved issues are raising anxiety levels among shippers, carriers and terminals as the implementation date is just a few months away. US exporters say the amendment to the SOLAS convention requiring shippers to provide a signed, certified weight to the ocean carrier and terminal is unworkable. They are asking how a shipper can be held responsible for the weight of a container whose tare weight, or unloaded weight, may be inaccurate, especially if the shipper never sees the container in cases where it?s loaded at a transload facility, possibly thousands of miles away from the exporter?s point of origin.

?It?s a fiasco,? said Peter Friedmann, executive director of the Agriculture Transportation Coalition, a group
Representing roughly 2,000 shippers. ?Everyone who knows about how cargo moves from the origin and onto a
Ship knows that this thing is absolutely unworkable and will create unbelievable congestion unless minds who
are familiar with how cargo moves are allowed to intercede.? Friedmann said the SOLAS issue was a bigger issue than merging container lines and shipping alliances, noting that virtually all agricultural exports ? 75 percent to 80 percent of all US outbound container shipments ? would be affected.

Key to the discussion of how the SOLAS rule will be implemented involves what will happen at the terminal gate when containers arrive. If terminals bar entry to containers for which a VGM hasn?t been provided, there could be significant disruption to trade flows. All parties appear to be waiting on the US Coast Guard to issue guidelines, which are expected to be published in February.

Eleven US terminals have told one of the large container lines that they will refuse to admit containers that arrive at the gate unaccompanied by a signed VGM provided by the shipper. Thus it would appear that a number of terminals are adapting, or at least hoping to adapt, the position stated by Maher Terminals at New
York-New Jersey in December, which was that after July 1 it won?t admit any container for which a VGM has not already been received via electronic means. That position puts the onus on the carrier to obtain the VGM from the shipper earlier in the process, which could create difficulties for carriers in facilitating the flow of its customers? cargo and amounted to a stake in the ground that one carrier executive said ?doesn?t appear to be consultative.?

The story is likely far from over, as the carrier that was told by the 11 terminals that containers would get turned away said, ?we as a carrier will probably ask? the terminals to be flexible. Flexibility in essence means allowing containers into the terminal without the VGM. And given that the carriers are the main customers of the terminals, it remains an open question whether those terminals will be uncompromising in sticking to the position of no-VGM, no entry. Indeed, three other US terminals told the carrier that they would accept containers without the VGM with the understanding that such containers can?t be loaded as that would be a violation of US law under the SOLAS rule.

?What does a terminal operator do when a box shows up and doesn?t have the right information in order to validate the weight? That is where a lot of the discussion takes place,? Ron Widdows, the former APL CEO who is now a consultant and chairman of the World Shipping Council, the trade group representing container lines, told JOC.com in an interview this month. ?Is a terminal going to take the box and then seek to get the information? Or are they going to reject the box at the gate for the lack of the information?

There seem to be different views on how the terminal operators are going to behave in that regard.? The terminals? position stems in part from their fear of congestion stemming from having to pull out and sequester containers for which a VGM has not been received, which would require additional storage space and handling
costs that the terminal might have to absorb, and perhaps more importantly, interfere with the increasingly difficult task of handling the surges of containers coming moving on and off mega-ships. Anything that could create exceptions, that is, situations where containers can?t be loaded and where documentation or other issues need to get resolved, is a red flag for terminals. One senior carrier executive suggested that some terminals will take a wait and see approach, possibly allowing in some containers without the VGM, but watching carefully to see the number of exceptions and additional handling that is created.

Also, few terminals so far seem to believe there is a viable business model in conducting weighing on behalf of shippers and charging them a fee, given the requirement to invest in weighing equipment and find space for the weighing process and associated storage. In its announcement in December, Maher said it would not offer weighing services and one senior carrier executive told JOC.com this week that he ?is not seeing terminals lining up? to provide weighing services even if it would create an additional revenue steam. One senior terminal executive said his company fears that what starts as a revenue generating service could end up creating no revenue gains as a result of tough negotiations with carriers that could end up with terminals swallowing the associated costs.

A terminal?s refusal to admit a container arriving without a VGM places the burden on the carrier to ensure that its shipper provides the VGM sufficiently in advance to avoid the container being turned away at the gate. The burden is especially heavy given that only some shippers submit documentation electronically, while many others submit documentation via fax or in hard copy form. According to the ocean container portal Inttra,
approximately 300,000 container weights will need to be certified each day globally, and roughly half of all booking requests and shipping instruction submissions each day are non-digital currently. Indeed, sensing an impending disruption to trade once the rule takes effect, some are saying that implementation of the VGM rule needs to serve as a catalyst globally to convert more documentation to electronic form.

?The carriers themselves, and their IT linkages, their EDI connections to their customers, becomes the most efficient means? of conveying the VGM information, Widdows said. ?Not all customers interact electronically, you still have customers that send information by fax or a variety of different ways, but the most efficient system is getting that electronic, EDI connectivity to be a much more significant percentage of the business. That is going to ensure a more timely movement of the information and provide some consistency.? One carrier serving the US market said that all VGMs will need to be sent by shippers to the carrier electronically, thus indicating ? if that carrier and others hold to that in practice ? that the rule may already be having an effect on converting shipper-carrier interactions to electronic means.

Under the SOLAS rule, the VGM needs to be used for stowage planning and the carrier and terminal operator are barred from loading a container for which a VGM hasn?t been received. Normally there is a two to three day cutoff in advance of vessel loading for containers to arrive at the terminal. But the ocean carrier compiles the load list one day after the cargo in-gate cutoff, so that theoretically leaves a day after a container arrives at the terminal for the VGM to be received. If it?s not received by the time of loading, one carrier said, the terminals
would have the ability to assess fees for any re-handling and storage of the container until the VGM is received, thus creating an additional revenue stream.

But for agriculture shippers, the issues in some cases go back further into the supply chain. For example, given that the shipper is legally responsible for providing the verified gross mass, how can the shipper know what the weight is if its cargo is loaded at a transload facility near the port by a third party? Exporters are asking, for example, what variances to the declared VGM will the US Coast Guard, the agency implementing the rule in the US, accept for inspections? Exporters say that the tare weight, or unloaded weight of the container, which is stenciled on the side of every container, can vary significantly from the actual weight of the container.

Thus shippers should not have to be responsible for certifying the tare weight of the container under Method 2 of SOLAS, which allows the VGM to be calculated from the contents of the container weighed separately, and added to the tare weight of the container. Export transload facilities, which take cotton, soybeans, grain, or other agricultural commodities that arrive by rail or truck and transfer them to containers, are high volume operations where the containers are picked, packed and sent to the marine terminal in rapid succession. Agricultural shipper representatives said this makes it almost impossible for the VGM to be provided soon enough in the process to avoid disruption at the ports.

Friedmann said the AgTC has raised the issue with the Federal Maritime Commission and with members of Congress, describing why it feels the rule is unworkable but also expressing the fear that other exporting nations may not enforce the rule to the degree the US does, creating a competitive disadvantage for US exporters. ?If you want to see ports gummed up as they were two years ago, with the West Coast labor issue, just wait until the end of June when this new container weight certification goes into place and carriers begin to reject cargo.?

Contact Peter Tirschwell at peter.tirschwell@ihs.com

tradeinfocus is a summary of news and events on the trade policy front for clients, trade & legislative colleagues, and professional friends of W.J. Byrnes & Co.