Trade Facilitation And Trade Enforcement Act:
A Primer On Issues Of Interest To USIBC
February 25, 2016
J. Michael Taylor
Jeffrey M. Telep
Joseph A. Laroski Jr.
Patrick J. Togni
+1 202 626 2385
[email protected]
+1 202 626 2390
[email protected]
+1 202 626 2647
[email protected]
+1 202 626 2958
[email protected]
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The Trade Facilitation And Trade Enforcement Act of 2015 (the Act) was passed by the
U.S. Senate by a 75-20 vote on February 11, 2016 and signed into law by President
Obama on February 25, 2016. This primer provides a high-level summary of certain
provisions in the Act that are of interest to USIBC members.
Extraterritorial IP Provisions
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Section 609 of the Act provides for the appointment of a Chief Innovation and
Intellectual Property Negotiator to conduct trade negotiations and to enforce trade
agreements with respect to U.S. intellectual property. The Chief Innovation and
Intellectual Property Negotiator will take appropriate actions to address foreign acts,
policies, and practices with a significant adverse impact on the value of U.S.
innovation.
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Commentary: The United States Trade Representative (USTR) currently
has sector-specific negotiators in the Agriculture and Textiles sectors. The
creation of a Chief Innovation and Intellectual Property Negotiator position
raises the profile of, and adds a political veneer to, the existing intellectual
property office structure within USTR, which often facilitates the resolution
of trade concerns when negotiating with certain economies.
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Commentary: Practically speaking, the authority to formally “enforce”
trade agreements (i.e., through dispute settlement) will remain in USTR’s
Office of General Counsel.
Section 610 of the Act requires USTR, not later than 90 days after submission of the
National Trade Estimate (which is released annually in March), to develop “an
action plan of certain benchmarks for achieving adequate protection of intellectual
property rights” for each foreign country on the Special Section 301 priority watch
list for at least one year.
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Commentary: The Act contemplates that “benchmarks” will include
legislative, institutional, enforcement, and other actions required to address
(or make progress in addressing) U.S. intellectual property concerns.
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Commentary: Action plans are a common part of the Special Section 301
Process. Most action plans, however, generally are the result of
negotiations between the United States and the trading partner concerned.
The Act does not prevent such negotiated plans, but it implies that unilateral
action plans may be appropriate. A unilateral IP action plan could be
similar to the recommendations that the U.S. Department of Labor issues in
its reports on alleged violations under the labor provisions of U.S. free trade
agreements.
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Commentary: This requirement seeks to impose accountability on USTR
in its efforts to resolve intellectual property concerns. A side effect of this
provision is that the benchmarks will limit USTR’s flexibility to reach
solutions that fall short of the benchmarks.
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Section 610 of the Act also authorizes the President to “take appropriate action”
where the foreign country fails substantially to comply with the benchmarks
contained in the action plan.
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Commentary: Existing tools for enforcing IP rights include enforcement
of WTO and free trade agreement (FTA) obligations, actions taken pursuant
to Section 301 investigations, and capacity-building projects. Other
possible actions would include removal from eligibility under U.S. dutypreference programs.
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Commentary: The Act creates no new tools for enforcing intellectual
property rights. Section 611, which provides funding for USTR’s
intellectual property enforcement efforts, contemplates the use of existing
tools.
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Commentary: Which actions are taken by the President will be case
specific and will depend on the severity of the intellectual property concerns
and whether any binding trade obligations are involved. Any action taken
by the President remains subject to the disciplines of WTO agreements and
FTA obligations.
De Minimis Exemption On Imported Items Increased To $800
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Section 901 of the Act amends current law by raising the existing de minimis duty
exemption level on imported items to $800 (an increase from the $200 threshold set
by Congress in 1993).
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The provision allows for duty- and tax-free imports of items whose fair retail value
(in the country of shipment) does not exceed the de minimis level.
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The Act maintains the current rule that the $800 de minimis exemption will not
apply to merchandise covered by a single order or contract which is forwarded in
separate lots in an attempt to qualify for the exemption.
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The Act also contains a “Sense of Congress” that USTR should work with other
countries “to establish commercially meaningful de minimis values for express and
postal shipments that are exempt from customs duties and taxes and from certain
entry documentation requirements.”
Import-Related Protection Of IP Rights
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Title III of the Act includes new provisions designed to provide enhanced
protections for copyrights, trademarks, and other intellectual property rights that are
enforced by U.S. Customs and Border Protection (CBP) or U.S. Immigration and
Customs Enforcement (ICE). The legislation calls for CBP to investigate
merchandise suspected of infringing trademarks or copyrights by permitting rights
holders to conduct examination and testing of the merchandise.
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Commentary: These provisions codify and expand upon interim CBP
regulations that took effect in 2012.
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Commentary: This new tool only is available with respect to trademarks
and copyrights that are recorded with CBP.
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Commentary: USTR’s 2015 Special 301 Report expressed “concerns
about counterfeit and pirated goods produced in India and shipped to the
United States.” See 2015 Special 301 Report at 51. USTR identified
counterfeit pharmaceuticals as an example that poses “serious risks to
American consumers.” Id.
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Commentary: The U.S. Food and Drug Administration (FDA) also
maintains border enforcement authority, which now includes the power to
destroy certain drugs refused admission to the United States.
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Commentary: A new rule took effect on October 15, 2015. The rule
implements FDA’s authority to destroy a drug valued at $2,500 or less (“or
such higher amount as the Secretary of the Treasury may set by regulation”)
that has been refused admission into the United States under the Federal
Food, Drug & Cosmetic Act. The rule provides the owner or consignee of
the drugs with an opportunity to present testimony to FDA before
administrative destruction. FDA may refuse admission where the drug
“appears to be” an adulterated, misbranded, or unapproved drug, but FDA
will destroy the drug only when it affirmatively determines such is the case.
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