5th August 2013

Did You Know? Issue 163


1. OECD Report Cites Portugal’s Lax Anti-Bribery Enforcement: 2. USA – Australia Defense Trade Cooperation Treaty:: 3. The recast Union Customs Code (UCC):  4. New Minister of Trade & Investment Announced: 5. Modernising EU trade defence instruments:  6. Increased UK Defence exports:7. Policy changes will be affected by the fast pace of global trade:
1. OECD Report Cites Portugal’s Lax Anti-Bribery Enforcement: The Organisation for Economic Co-operation and Development issued a report this week detailing a lack of appropriate enforcement efforts on anti-bribery laws by Portugal. The 72-page report by OECD's Working Group on Bribery details many instances of Portugal failing to investigate allegations of foreign bribery or giving only a cursory look into allegations of wrongdoing. The report said given Portugal's deep economic ties to countries with high corruption risks, it raises eyebrows that only 15 allegations have surfaced since 2001. And of those 15 allegations, no prosecutions have resulted. Read More
2. USA – Australia Defense Trade Cooperation Treaty: The U.S. Department of Defense has adopted as final, with changes, the interim rule amending the Defense Federal Acquisition Regulation Supplement, which will implement requirements of the U.S.-U.K. Defense Trade Cooperation Treaty and the U.S.-Australia DTC Treaty, as well as the Security Cooperation Act of 2010, regarding bilateral export control regulations.  Read it Here
The final rule streamlines the export control regulations between the U.S. and Australia and the U.S. and the U.K. under specified circumstances.  The U.S. controls exports of defense articles, technical data and defense services under the Arms Export Control Act and International Traffic in Arms Regulations. Under the ITAR, the U.S. Department of State manages an export licensing system in which numerous government approvals are often necessary for companies to hold discussions about potential projects, pursue joint activities, ship hardware or transfer know-how to one another, and sometimes to transfer engineers and other company employees from one country to another. This process can be challenging and time consuming for U.S. exporters and for foreign firms in their supply chains.
The rule is expected to result in reduced paperwork requirements overall under the processes set forth in the DTC treaties as implemented by the ITAR by no longer requiring individual export licenses within the “approved community,” which includes the U.S. government, U.S. entities that are registered and eligible exporters and certain government and industry facilities in Australia or the U.K. that are approved and listed by the U.S. government.
3. The recast Union Customs Code (UCC):  It has been agreed by the European Council and European Parliament. The European Council and European Parliament have examined the text and agreement has now been reached on essentially the final text.  This text is available on the European Parliament website entitled Proposal for a Regulation of the European Parliament and Council laying down the UCC (this is 255 pages long).  So we await the final UCC in November 2013 which will then, once Implementation Provisions are agreed, become workable and the new EU Regulations in March 2016. 
Most of it is what we expect but it appears that there will no longer be 3 types of AEO just 2 – Customs Simplification (C) and Safety & Security (S) – covered by their own conditions and benefits.  The information on the introduction of guarantees is still vague but it appears there will be an option for a reduction in the deferment guarantee for AEO (C) approved companies.  The UK will also have to introduce transit guarantees to cover goods moving to and from ports/airports to warehouses and customer’s premises if they are T1 controlled – quite a shock of us – this will be in addition to the guarantee required to operate Inward Processing Relief (IP) or a Customs Warehouse (CW), Of course, AEO (C) businesses can apply for a waiver for both guaranteed.  The use of the earlier or first sales price seems to be staying but probably only for businesses with AEO who receive specific approvals.
4. New Minister of Trade & Investment Announced:  In June 2013 the Queen approved the appointment of Ian Livingston as a Minister of State jointly at the Department for Business, Innovation and Skills and at the Foreign and Commonwealth Office as of December 2013 on the retirement from government of Lord Green of Hurstpierpoint. Click here for statement
5. Modernising EU trade defence instruments: The EU rules on tackling unfair competition arising from subsidised or dumped imports are to be adapted to take account of current trade challenges. The Commission’s proposals, released in early April, follow a public consultation and an independent study on the existing trade defence system and current experience.
The main changes proposed are that:
  • businesses will be informed about any provisional anti-dumping or anti-subsidy measures two weeks before they are imposed
  • the Commission will be able to initiate investigations on its own without an official request from industry, when a threat of retaliation exists
  • higher duties will be imposed on other trading partners that use unfair subsidies and create structural distortions in their raw material markets; in such cases, the EU would deviate from its general rule that keeps the additional tariff within what is strictly necessary to prevent an injury for an EU industry.
Accompanying the proposals are draft guidelines on the expiry review of trade defence measures, determination of EU economic interest, calculation of an “injury margin” and choice of an “analogue country”, which is used to establish the occurrence of dumping. These guidelines will be made available for public consultation. Further information is availablehere.
6. Increased UK Defence exports: New figures published in June 2013 by UK Trade & Investment’s Defence and Security Organisation (UKTI DSO) show that UK defence exports totalled £8.8 billion over the past year, a rise of 62% from 2011 in a global market that grew by 45%.
These results mean the UK maintains its position as the second most successful defence exporter after the United States. As in 2011, the UK continues to benefit from a strong defence supply chain, which contributed to the success in 2012.
Orders contributing to the strong results included Typhoon and Hawk aircraft. The Typhoon programme alone supports an estimated 8,600 jobs in the UK, across companies including BAE Systems, Rolls-Royce and SELEX Galileo and their supply chains – with an estimated further 1,500 jobs dependent on export opportunities.
The UK continues to capture 20% of the global defence export market. Maintaining this level and growing security exports to 5% by 2015 are the key targets for UKTI Defence & Security Organisation. Last year’s expansion in the defence sector was supported by UK export growth of 4% to £2.7 billion in the security sector, in a global market that grew by 3%.  Combined defence and security exports rose to £11.5 billion in 2012, up from £8 billion in 2011.
7. Policy changes will be affected by the fast pace of global trade: The future of world trade, and the global trading system, will be shaped by a range of economic, political and social factors, including technological innovation, shifts in production and consumption patterns, and demographic change, according to the 2013 World Trade Report published by the WTO on 18 July 2013. Director-General Pascal Lamy said: “One element clearly stands out in the Report, and that is the importance of trade for development”.
> Press release:http://www.wto.org/english/news_e/pres13_e/pr692_e.htm
> DG Lamy’s remarks at launch of World Trade Report :
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