World Trader | March and April 2018

Midwest Global Trade Association

From the President

2018 Annual Meeting Recap

Committee Chair Update

Scholarship Recipients

Upcoming Events

New Aluminum and Steel Tariffs: Is a Trade War Imminent?

Blockchain

Agility is First Forwarder to Work with Maersk, IBM on Blockchain Solution

2017’s Importer/Exporter of the Year Award

Thank You, Newsletter Sponsor: Port of Seattle

From the President


By Amanda McDonald — MGTA President

Amanda McDonald

I am honored and excited to serve as the 2018 MGTA President. It was wonderful having a chance to meet many of you at the annual dinner a couple weeks ago.

As the President of MGTA, I am surrounded by an amazing board of directors and committee members. We have set up an amazing vision for the year, and are off to a great start with some amazing seminars. None of these seminars or activities would be possible without all of us working together.

I also want to stress again the importance of speaking up. If there is a topic or area you want to see in our seminar series, please send me an email or give me a call.

I look forward to see you at the upcoming events and hearing what topics interest you.

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2018 Annual Meeting Recap

On February 15, over 130 people attended MGTA’s annual meeting. Jeff Kauffmann, Jakub Kowalczyk, John Novak and Susan Senger were elected to the board of directors. The following will be serving as your 2018 board of directors.

  • Ania Adamczyk — Ecolab
  • Danae Helgeson — Vista Outdoor
  • Jeffrey Kauffmann — Agility Logistics
  • Jakub Kowalczyk — LiteSentry
  • Amanda McDonald — Smith Medical
  • John Novak — Bremer Bank
  • Adam Palmer — Trade Compliant
  • Kent Runksmeier
  • Susan Senger — Saint Paul College
  • Chad Smith — Livingston International
  • Mark McNeil (non-voting legal counsel)

One of our traditions is to use our annual meeting’s silent auction proceeds to award a scholarship to a student engaged in post-secondary global trade studies. Vincent Lee and Dustin Elder were award this year’s MGTA Scholarship recipients . Vincent Lee attends the Metropolitan State University and is pursuing a Bachelors of Science Degree in International Business. Dustin Elder is attending Rasmussen College where he is studying Business Management with a concentration in international business.

The event ended with the announcement of 2017’s Importer/Exporter of the Year Award—Ecolab Inc.

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Committee Chair Update

  • Membership — Amanda McDonald
  • Education — Adam Palmer, Matt Rivard
  • Communications — Jakub Kowalczyk
  • Special Events/Forums — John Novak

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Scholarship Recipients

Vincent Lee

Vincent Q. Lee
Metropolitan State University

I am currently attending Metropolitan State University full time, and am studying International Business B.S. I only have four more classes until I can graduate, and my current GPA is 3.83 out of 4.0. With my degree, I plan to obtain a job in supply chain or international trades. I also want utilize my language skills to work in Asian countries, and help Minnesota businesses expand internally.

 

Dustin Elder

 

Elder J. Dustin
Rasmussen College

My goal is to achieve my master’s in Business with a concentration on international business. The impact this will have is will enhance my degree giving me the understanding of how and why international business relationships are important as well as drive success within the organization by which I work.


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Upcoming Events

Classification & NAFTA

  • Date: Wednesday April 11, 2018
  • Time: 8:30am - 4:00pm
  • Location: Smiths Medical, 6000 Nathan Lane North, Plymouth, MN 55442
  • Registration

Agenda

7:30 am    Registration
8:30 am    Program
10:30 am  Break
12:00 pm  Lunch
1:30 pm    Program
2:30 am    Break
4:00 pm    Adjourn

Program

Reporting the correct Harmonized Tariff Schedule classification is a requirement for nearly all import and export transactions. Since the HTS comprises over 3,700 pages, finding the provision that covers particular merchandise can be a daunting task.

Our program will cover the rules for determining the tariff classification for your goods, including:

  • Structure of the HTS
  • General Rules of Interpretation and the Explanatory Notes
  • “Tiebreakers” to decide among competing provisions
  • “Eo nomine” provisions, parts and accessories and common meaning
  • The roles of Customs rulings and judicial review
  • Issues for particular industries (information technology, machinery, motor vehicles)
  • Practical steps for effective classification

Audience/Who Should Attend?

  • Trade Compliance Professionals
  • Import / Export document Specialists

Learning Objectives

Classification:

  1. Structure of the HTS
  2. General Rules of Interpretation and the Explanatory Notes
  3. “Tiebreakers” to decide among competing provisions
  4. “Eo nomine” provisions, parts and accessories and common meaning
  5. The roles of Customs rulings and judicial review
  6. Issues for particular industries (information technology, machinery, motor vehicles)
  7. Practical steps for effective classification

NAFTA:

  1. “Tariff shift” rules
  2. Regional value content
  3. The de minimis exclusion
  4. Customs procedures for claiming and verifying duty-free claims
  5. Preference criteria
  6. NAFTA Marking rules

Presenters

George W. Thompson — International Trade Attorney, Thompson & Associates, PLLC

My firm represents domestic, foreign, and importing interests in trade remedy cases before the United States Commerce Department and International Trade Commission, as well as in judicial appeals of administrative determinations, and has assisted numerous importers and exporters in evaluating scope coverage of antidumping and countervailing duty orders. My practice further provides representation in all aspects of customs laws and regulations, including classification, country of origin, free trade agreement and tariff preference qualification, valuation, intellectual property, penalty, entry, drawback, cargo security, and foreign customs matters.

I specialize in export and import regulation and international business counseling, to include antidumping, countervailing duty and other trade remedies, Customs compliance, export controls, international sales contracts, and administrative and judicial litigation relating to these matters; advising domestic and foreign corporations in myriad industries, including food and agriculture, automotive, furniture, software, chemicals, electronics, office and telecommunications products, aerospace, and consumer goods.

Also, I represent domestic, foreign and importing interests in trade remedy cases before the United States Commerce Department and International Trade Commission, as well as in judicial appeals of administrative determinations. Assisting numerous importers and exporters in evaluating scope coverage of antidumping and countervailing duty orders. Representation in all aspects of customs laws and regulations, including classification, country of origin, free trade agreement and tariff preference qualification, valuation, intellectual property, penalty, entry, drawback, cargo security, and foreign customs matters. I have represented clients for all manner of product origin matters relating to government procurement, including Buy American Act, Buy America, Trade Agreements Act and Foreign Military Financing issues, as well as for Federal Trade Commission origin labeling requirements. I also provide client counseling on international trade contract and commercial issues.

Additionally, my practice provides a full range of export control representation to exporters and re-exporters of merchandise concerning regulations administered by the Departments of State, Commerce, and Treasury as well as enforcement activities by U.S. Customs. I have assisted companies of various sizes, from Fortune 500 listed to sole proprietorships, to establish, maintain, and review their export compliance with U.S. and foreign government export controls.

I have a Wikipedia entry which you may also read.

Adjunct Professor

George Mason University’s Schar School of Policy and Government I have been an adjunct professor at George Mason since 1995 and I teach courses entitled ABCs of Importing and Exporting, International Contract Negotiation, and Export Controls and Compliance.

Past Experience

Partner/Of Counsel
Washington, DC and New York Based Law Firm I was Partner in a law firm that focused on international trade matters.

Attorney Advisor U.S. International Trade Commission
During my tenure at the USITC, I participated in numerous unfair import investigations and represented the Commission in judicial proceedings throughout the United States. While in the government, I was selected to provide legal assistance to the United States Trade Representative, and represented the United States before the General Agreement on Tariffs and Trade.

Education

  • Cornell University Law School, Juris Doctor 1981
  • State University of New York (Oneonta), Bachelor of Science with High Honors, 1978

Bar Admissions

  • State of New York
  • District of Columbia
  • United States Court of International Trade
  • Court of Appeals for the Federal Circuit

Registration Fees

Member: $120
Non-Member: $150


Building and Sustaining Compliance Management into the Organization

  • Date: Wednesday May 8, 2018
  • Time
    • Half Day: 8:00 am - 12:30 pm or 11:30 am - 4:30 pm
    • Full Day: 8:00 am - 4:30 pm
  • Location: CHS, 5500 Cenex Drive, Inver Grove Heights, MN 55077
  • Registration

Agenda

Half Day Morning Seminar Program Schedule

8:00 a.m. Registration
8:30 a.m. Program Begins
11:30 a.m. Adjourn
12:00 p.m. Lunch

Half Day Afternoon Seminar Program Schedule

11:30 a.m. Registration
12:00 p.m. Lunch
1:00 p.m. Program Begins
4:30 p.m. Adjourn

Program

Regulatory Compliance, for Importers and Exporters If you’re an exporter or importer, you need a clear understanding of the rules that govern international trade in your sector. This is important for avoiding risk, since failing to comply with these trade rules, even accidentally, can lead to serious consequences. Depending on the transgression, you can be subject to fines, audits, seizures, inspections, investigations, loss of market access and even imprisonment.

Morning Session: EXPORTS

  • BenLivingston International
    • Brief overview of Export Regulatory Compliance, some topics but not exclusive to:
      • BIS
      • Schedule B
      • Record Keeping
      • License
  • Pierre3M
    • Building and Managing an Export Compliance Program, Procedures, examples, not limited to:
      • Getting started
      • Tools
      • Materials, Manuals

Afternoon Session: IMPORTS

  • BenLivingston International
    • Import Regulatory Compliance Overview, but not limited to;
      • HTS Codes
      • Country of Origin
      • Record Keeping
  • AmandaSmith Medical
    • Building and Managing an Import Compliance Program, Procedures, examples not limited to;
      • Getting started
      • Who is involved
      • Materials, Manuals

Audience/Who Should Attend?

  • Compliance Managers
  • Documentation Specialists
  • Export Managers
  • Import Managers
  • Buyers
  • Sales
  • Finance Managers

Learning Objectives

Classification:

  1. Knowing and Understanding the Rules of International Trade
  2. Assessing your company’s at-risk potential
  3. Developing a Regulatory Compliance Procedure

Presenters

Pierre LaMere — Global Trade Compliance manager, 3M

Ben Child— Livingston International

Amanda McDonald — Trade Compliance Manager, LCB, Smiths Medical

Registration

Member:
Half Day: $70 | Full Day:$120

Non-Member:
Half Day: $100 | Full Day:$150

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New Aluminum and Steel Tariffs: Is a Trade War Imminent?


By George Thompson

Well, this should get real ugly real fast. The Trump administration has announced the forthcoming imposition of tariffs on imports of steel and aluminum, with rates of 25 percent and 10 percent, respectively. Canada and Mexico are exempted, for now, and other countries may receive such favorable treatment as well. Otherwise, the new duties will take hold on March 23, 2018.

National Security Rationale

The ostensible reason for the tariffs is national security. Section 232 of the Expansion Act of 1962 authorizes the President to “adjust” imports that “threaten to impair the national security” following an investigation by the Commerce Department.[1] Commerce initiated Section 232 investigations of steel (primarily, flat, long, pipe and tube, semi-finished, and stainless) and aluminum imports in April 2017, and duly reported its findings on January 11, 2018.

Commerce’s steel report determined that steel, and domestic steel production, is essential to national security, including “defense requirements” and “U.S. critical infrastructure sectors including transportation systems, the electric power grid, water systems, and energy generation systems.” The domestic steel industry has been “adversely affected” by lower-priced steel imports, Commerce concluded, losing market share and closing production facilities. The agency provided several recommended remedies.

The aluminum report sets forth a similar analysis, likewise concluding that “present quantities and circumstance of aluminum imports are “weakening our internal economy” and threaten to impair the national security as defined in Section 232.”

“Trade Wars Are Good, and Easy to Win”

Not surprisingly, President Trump accepted the findings in the Commerce reports and ordered the imposition of additional tariffs through two Presidential Proclamations issued on March 8, 2018. The one concerning steel establishes a 25 percent ad valorem tariff on articles classified in Harmonized Tariff Schedule subheadings 7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90 from all countries except Canada and Mexico. It also holds open the possibility that other countries will be removed from coverage if “a satisfactory alternative means to address the threat to the national security” can be negotiated with them.

The Proclamation on aluminum imports imposes a 10 percent tariff on products covered in specified HTS subheadings: “(a) unwrought aluminum (HTS 7601); (b) aluminum bars, rods, and profiles (HTS 7604); (c) aluminum wire (HTS 7605); (d) aluminum plate, sheet, strip, and foil (flat rolled products) (HTS 7606 and 7607); (e) aluminum tubes and pipes and tube and pipe fitting (HTS 7608 and 7609); and (f) aluminum castings and forgings (HTS 7616.99.51.60 and 7616.99.51.70).” Here, too, Canada and Mexico are exempted, and other countries can negotiate carve-outs as well.

Both Proclamations further provide for product-specific exclusions for covered articles “determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality” as well as “based upon specific national security considerations.” The exclusion process entails the filing of a request “by a directly affected party located in the United States”, along with publication of successful applications in the Federal Register. Commerce is directed to publish procedures for exclusion requests within ten days of the Proclamations.

“Everybody Has a Plan until They Get Punched in the Mouth”

The mere prospect of the additional quotas brought forth promises of retaliation from the European Union and China. If other countries follow through on their rhetoric, U.S. exporters may face restrictions on their market access abroad. Coupled with the higher costs of imports due to the tariffs, domestic producers could face a double whammy. A plan designed to save American jobs could well have the opposite effect.

The steel and aluminum tariffs are clear breaches of the United States’ “Most Favored Nation” and “bound tariff” obligations, two of the bedrock principles of the WTO. The former holds that differential tariffs applied to WTO members are impermissible except in defined circumstances (such as free trade agreements); by letting Canada and Mexico and, possibly, other countries escape, the Proclamations establish discriminatory treatment that is inconsistent with the MFN requirement. The bound tariffs principle holds that WTO members cannot raise tariff rates above agreed-upon limits, with narrow exceptions that are not satisfied by the Proclamations.

Therefore, other countries may, with some justification, consider the new tariffs to be improper and move to impose their own measures in response. But here’s the thing about retaliation. Under World Trade Organization rules, member countries are required to bring dispute resolution proceedings to challenge alleged violations by others. Withdrawal of their own tariff concessions, which is what retaliation really means, must follow a lengthy process to establish that a violation has occurred. Immediate, unilateral actions outside the WTO process would be as violative as the steel and aluminum duties themselves.

Moreover, there is a real question of whether the tariffs, based as they are on documented national security concerns, really do qualify as violations of U.S. commitments. The WTO agreements set out “Security Exceptions”, that exclude “any action which [a member state] considers necessary for the protection of its essential security interests . . . relating . . . to such traffic in other goods and materials as is carried on directly or indirectly for the purpose of supplying a military establishment.” The Section 232 proceedings arguably suffice to shoehorn the tariffs into this exception.

Wouldn’t it be ironic if retaliatory duties were inconsistent with WTO requirements, while the initial U.S. steel and aluminum tariffs were not?

In the meanwhile, United States importers and exporters have to plan for the financial and legal blowback that will surely follow once these tariffs take effect.


[1] The statute requires consideration of “domestic production needed for projected national defense requirements, the capacity of domestic industries to meet such requirements, existing and anticipated availabilities of the human resources, products, raw materials, and other supplies and services essential to the national defense, the requirements of growth of such industries and such supplies and services including the investment, exploration, and development necessary to assure such growth, and the importation of goods in terms of their quantities, availabilities, character, and use as those affect such industries and the capacity of the United States to meet national security requirements.” This list is not exclusive, so Commerce may take other factors into account.

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Blockchain


By Jeffrey Kauffmann

Blockchain in Logistics

Accenture have produced a report regarding the potential of blockchain technology in logistics – including initial findings on a working prototype the companies have developed together, which tracks pharmaceuticals from point of origin to consumer and prevents tampering or errors. Blockchain maintains, records and authenticates data and transactions. In supply chains, it enables users to track products using a unique identifier. Information is validated in real time – and attempts to alter, erase or otherwise tamper with records are also logged.

“The experiments with blockchain in finance are well known, but we believe logistics is an area where the new technology will have a truly profound impact. We believes there is “especially exciting potential” for blockchain in pharmaceuticals, hence the work with Accenture on tracking healthcare shipments using a blockchain ledger accessible to all stakeholders, including manufacturers, warehouses, distributors, pharmacies, hospitals, and doctors.

“By utilising the inherent irrefutability within blockchain technologies, we can make great strides in highlighting tampering, reducing the risk of counterfeits and actually saving lives,” he said.

Lab-simulations show how blockchain could handle more than 7bn unique serial numbers and 1,500 transactions per second.

The technology could also be used for asset management, to improve transparency and traceability, and to automate commercial processes with ‘smart contracts’, which facilitate and verify the performance of contracts without involving third parties. “Implementing productive solutions, however, will require further technological development and, critically, collaboration between all stakeholders,”

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Agility is First Forwarder to Work with Maersk, IBM on Blockchain Solution


By Jeffrey Kauffmann

Agility, a leading global logistics provider, is the first freight forwarder to collaborate on a Maersk-IBM solution to provide more efficient and secure methods for conducting global trade by using blockchain technology to manage and track container shipments.

Agility has agreed to identify events associated with individual shipments and to share and receive information about them via the distributed ledger blockchain technology developed by IBM and Maersk.

Agility's goal is to reduce costs and increase shipping efficiency by integrating information about shipments onto a secure platform accessible to shippers, carriers, freight forwarders and others in the supply chain.

"Blockchain technology is going to make shipping cheaper, safer and more reliable. As early adopters, companies like Agility can help Maersk and IBM understand the needs of shippers and develop standards that will make trade more efficient," said Essa Al-Saleh, CEO of Agility Global Integrated Logistics. "We can help customers understand how to use blockchain to improve shipment visibility, eliminate paperwork, reduce errors, and shorten transit and clearance times."

Blockchain is a secure, immutable and tamper-resistant ledger that can be used to track shipments, documentation and payment transactions. Its digital infrastructure can connect parties in the supply chain, giving them access to information and real-time visibility based on their level of permission.

Documentation and administration are estimated to be one-fifth of the $1.8 trillion spent annually to move goods across borders. In addition to showing the location of containers in transit, blockchain can show the status of customs documents, bills of lading and other documentation. It can improve workflow, cut processing costs and enhance visibility by integrating shipping processes and partners.

Customs and border authorities can use the technology to improve the information available for risk analysis, leading to increased safety and security as well as greater efficiency in border inspection clearance.

"For Agility, it's important to be involved early in blockchain and to work with forward-thinking companies like Maersk and IBM," Al-Saleh said. "Together, we have a lot to learn and share in order to bring the benefits of this technology to shippers and consumers as quickly as possible."

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2017’s Importer/Exporter of the Year Award


ECOLAB

Ecolab is the global leader in water, hygiene and energy technologies and services. Around the world, businesses in foodservice, food processing, hospitality, healthcare, industrial, and oil and gas markets choose Ecolab products and services to keep their environment clean and safe, operate efficiently and achieve sustainability goals.

Its’ 48,000 associates help make the world cleaner, safer and healthier by delivering comprehensive solutions and on-site service to promote safe food, maintain clean environments, optimize water and energy use, and improve operational efficiencies for customers at more than 1.3 million locations in more than 170 countries.

Ecolab’s global supply chain leverages import and export to move large volumes of raw materials and finished goods across countries around the world using various transportation modes (ocean/ships/barges, air and intermodal). Its dynamic and complex distribution network includes its own manufacturing facilities, warehouses and even “moving customers”- cruise lines.”

Ecolab has developed global functions required to facilitate their Supply Chain including Customer Service, Finance, Law, Regulatory, and IT. Ecolab understands that a Supply Chain able to support high volumes of imports and exports goes beyond transportation. To support a corporate policy of complying with all import and export rules in all of the countries in which Ecolab does business, Ecolab must know the material they move through international trade. The company also understands the origin of material, the technical properties used to properly classify it under international standards, and whether any applicable import or export controls must be addressed. Another layer of complexity is that numerous products fall within the “dangerous goods” category and require special handling.

Ecolab solves and is committed to continue to solve global challenges through service and product offerings. To deliver on this commitment, they established an international Supply Chain that supports import and export globally and are in the process of deploying a technology platform that will allow the company to continue to be successful in the future.

In addition, Ecolab is a quintessential St. Paul company that is deeply rooted in the community through its’s strong presence and financial support.

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Do you know an MGTA member who was recently promoted or hired to an import/export company? Do you know of a member who recently got married or had a new addition to the family? Share the good news with your industry colleagues.

Thank You, Annual Sponsors!

Gold
Bremer Bank


Gold
KPMG Logo


Gold
Neville Peterson, LLP






Silver
HMM


Silver
SBS Group of Companies





Bronze
Bennett Jones


Bronze
Trade Compliant