Funding issues dog Nicaragua and Panama canals

HONG KONG — The Central American canal projects continue to generate questions over funding — where it will come from in the case of the proposed Nicaraguan plan, and where it is going in the Panama Canal upgrade.

The investment required is no small potatoes, either. Cost estimates of digging the the 172-mile canal across Nicaragua have been put at $50 billion, and the $5.25 billion Panama Canal upgrade has already overrun costs by $1.6 billion.

Work officially began on the Nicaragua project last week, but there remains no clear indication of where the funding will come from. The mysterious telecoms entrepreneur Wang Jing runs the company behind the canal project, Hong Kong Nicaragua Canal Development Co., or HKND, and according to news reports only $200 million in funding has so far been sourced.

At an event to mark the start of the project, Reuters reported that Wang and Nicaraguan officials dodged questions about financial backers and mounting delays that will continually push up the cost of construction, already four times Nicaragua’s GDP.

Even though the “ground breaking” ceremony was held last week, key feasibility studies have been postponed to April and excavation work is not scheduled to begin until the second half of next year. Yet despite the delays, HKND is standing behind its five-year completion schedule.

The Panama Canal is a third of the distance of the proposed northern waterway and was completed by the U.S. 34 years after French engineers started the project. Admittedly, it is 100 years old and the technology at the time was rudimentary, but the five-year timetable set for the completion of the Nicaragua canal is leading many to surmise that China will be bankrolling its construction.

“If the canal goes ahead, it will be because the Chinese government wants it to, and the financing will come from China’s various state firms,” according to Arturo Cruz of the INCAE business school, a former U.S. ambassador to Nicaragua, reported Reuters.

China’s state owned enterprises have seemingly bottomless coffers when it comes to mega infrastructure construction, and no project is too grand. Yangshan container port was constructed between two islands 20 miles off Shanghai and connected to the mainland by a six-lane highway bridge that took 6,000 workers two-and-a-half years to construct. Once all port phases have been completed in 2020 it will have cost almost $20 billion. The Three Gorges Dam officially cost $37 billion but observers believe it was almost double that.

But the most recent example of mega spending on infrastructure could be seen on Saturday when Beijing opened the gates on its $32 billion South-North Water Diversion Project. It will channel more than a billion cubic meters of water from the southern provinces to the parched north via a 720-mile network of pipes and channels, but critics are already saying it will only be a short-term solution.

Then there is also a political element to consider. A Chinese-funded canal across Nicaragua will give the country a strategic foothold in Central America, which some see as a direct challenge to the U.S. and its Panama connections.

Yet many in the industry continue to view the plans skeptically. While the Nicaragua canal will be longer, deeper and wider than the Panama waterway, Panama Canal officials have questioned the economics of the project, and dismissed the canal’s competitive threat to its own canal, which is set to debut a third set of locks in early 2016.

That deadline is under threat as funding continues to be a problem for the Panama Canal upgrade. The consortium involved in the expansion project is making fresh claims for cost overruns totalling $737 million, according to Agence France-Presse.

The news agency reported that canal administrator Jorge Quijano confirmed the Panama Canal Authority had received two claims that will be evaluated, but he warned that they would “be difficult to justify.”

Is is the latest setback for the above-budget, behind-schedule project that will expand the canal by adding a third set of locks to allow the handling of container ships of up to 10,000 TEUs. Work began in 2007 but regular labor disputes and cost-overruns have delayed construction.

Excavation work is on hold after negotiations broke down between the consortium and its workers, who have been on strike since Dec. 23. About 1,000 workers are still on strike demanding better treatment and safety, and talks are set to resume Monday.

Shippers of goods between Asia and the Americas will benefit from strong competition between two canals through Central America, but there is no need to start revising supply chain strategies any time soon. The Panama Canal will eventually be expanded a day late and a few dollars short, but huge question marks remain over the viability of the Nicaragua project — questions it seems only Beijing can answer.

Contact Greg Knowler at gknowler@joc.com and follow him on Twitter: @greg_knowler.

http://www.joc.com/international-trade-news/funding-issues-dog-nicaragua-and-panama-canals_20141227.html

UPS buys Polish healthcare logistics firm

United Parcel Service has agreed to the acquisition of Polish pharmaceutical logistics firm Poltraf from Poland-based investment fund Ortie Capital Investment.

The U.S. delivery giant did not release financial details of the transaction, which it expects to complete in the first half of 2015.

The acquisition will add three warehouses and 170 temperature-controlled trucks to UPS’ European network that now totals 14 healthcare facilities.

“Poltraf complements our mainland European expansion plan and we are now able to provide healthcare companies access to a single source for logistics solutions across the continent, helping to achieve greater supply chain efficiencies and compliance with relevant guidelines,” said Cindy Miller, president of UPS Europe.

UPS’ earlier European healthcare logistics acquisitions include the UK’s Polar Speed in February 2014, Cemelog of Hungary in 2013 and Italy-based Pieffe in 2011.

UPS plans to invest $1 billion in its European operations in the next to three to five years, mainly on expanding its logistics centres, particularly in the healthcare sector, chief financial officer Kurt Kuehn said earlier in the year.

Another $1 billion will go into international infrastructure in Asia and the Americas. The world’s largest package delivery company delivers around 4.3 billion packages a year across the world, with its U.S. division bringing in 61 percent of its $46.5 billion turnover.

Contact Bruce Barnard at brucebarnard47@hotmail.com.

http://www.joc.com/international-logistics/ups-buys-polish-healthcare-logistics-firm_20141223.html

Asia Development Bank loans $100 million for Myanmar projects

HONG KONG — Singapore-listed Yoma Strategic Holdings will receive a $100 million loan from the Asian Development Bank (ADB) to build up Myanmar’s transport and logistics infrastructure urgently needed to create sustainable economic growth.

“Investment in connectivity infrastructure is a key factor in creating better access to economic opportunities, reducing costs, promoting trade, and attracting private investment into diverse geographic areas and sectors,” said Christopher Thieme, director of ADB’s private sector operations department.

Myanmar is one of the least-connected countries in the world in terms of telecommunication, transportation, and logistics. In 2012, the fixed line penetration rate stood at less than 1 percent of the population, with just 7 percent for mobile phones. Years of isolation and underinvestment have left the road density at less than one fifth of the average in ASEAN countries. Myanmar’s inland waterways network, which is important for freight traffic, is also underutilized by an ageing fleet of vessels and neglected ports facilities.

The Southeast Asian nation has been experiencing an influx of investors in recent years as trade barriers have fallen. While investments have been concentrated in the oil, gas, and other mineral sectors, and in light manufacturing, private sector financing for much-needed infrastructure projects to boost connectivity remains a challenge. An underdeveloped banking sector and capital market, and a lack of alternative funding sources, is holding back projects, the ADB said in a statement.

Yoma Strategic’s $100 million ADB loan is intended to help address this gap for long-term commercial debt needed to finance infrastructure projects. It will be disbursed in two tranches, with Yoma engaging partner companies to work with it on individual infrastructure sub-projects. The first tranche will be used to build telecommunication towers, develop cold storage logistics, and modernize vehicle fleet leasing, and the second will fund sub-projects in transportation, distribution, logistics and other sectors.

“ADB’s loan will help support our goal of improving the country’s connectivity, which in turn will strengthen local markets, boost productivity and create jobs,” said Serge Pun, executive chairman of Yoma Strategic.

For transportation and logistics companies, the potential rewards of establishing early bridgeheads are huge. Myanmar boasts rich natural resources, and its low-wage economy and population of 60 million already is attracting textile firms. In terms of consumption and development, large parts of the economy are untapped, and rapid GDP growth is predicted over the next decade.

New port and trading zones are being established at Kyaukpyu, Sittwe and Dawei, and new road links to Thailand, India and China are promoting further growth.

The large infrastructure projects are creating their own logistics requirements, and FPS Logistics Thailand (FPST), a subsidiary of Leo Global Logistics, has expanded its operation in Myanmar. Leo Myanmar Logistics Company hung out its shingle on Dec. 1 and in the next two years, the new company’s main focus will be major project and heavylift cargoes employed in the development of infrastructure and manufacturing, as well as handling inbound consumer goods. It will provide a complete logistics solution spanning international multi-modal transport, customs formalities, warehousing and inland transport.

A Leo Myanmar statement said the company expected to see significant growth in exports by air and ocean once new industrial developments had begun operations. The company anticipates growing interest in Myanmar from multi-nationals, creating significant demand for international-standard 3PL services.

“FPST has a vast global network of connections with overseas agents through its FPS membership, and these companies will be eager to support the new venture in Myanmar and so share in the massive opportunities in this exciting new market,” said FPST-Leo Global Logistics president and CEO Kettivit Sittisoontornwong.

The opportunities are not confined to Myanmar. Cross-border trade between Southeast Asian neighbors Thailand and Myanmar is expected to hit $6 billion in 2014, a growth of 10 percent year-over-year.

According to Isara Vongkusolkit, chairman of the Thai Chamber of Commerce, trade between the two countries is slated to continue expanding in the coming years, thanks partly to the development of a special economic zone in the Mae Sot, a district in western Thailand bordering Myanmar.

Cross-border trade in the district jumped 30 percent this year to nearly $1.4 billion compared to last year.

Isara said cross-border trade could grow even faster if a second Thai-Myanmar Friendship bridge was built and roads were improved on the Myanmar side. The new SEZ is aimed at attracting small and midsize shippers to the region.

Contact Greg Knowler at gknowler@joc.com and follow him on Twitter: @greg_knowler.

http://www.joc.com/international-logistics/asia-development-bank-gives-100-million-loan-myanmar-projects_20141222.html

FBI Says North Korea Was Behind Sony Hack

The FBI on Friday formally accused the North Korean government of the hacking attack that led Sony Pictures Entertainment to cancel the movie “The Interview.”

Sony also received a message saying that it was “very wise” to cancel the movie and warning the studio to prevent its release in any form, including “DVD or piracy,” a source close to the studio told CNBC. NBC News could not immediately authenticate the message.

U.S. officials had said privately earlier in the week that they suspected North Korea. The FBI said Friday that technical analysis had revealed links to North Korean-developed malware, including lines of code and encryption algorithms.

“North Korea’s actions were intended to inflict significant harm on a U.S. business and suppress the right of American citizens to express themselves,” the bureau said in a statement. “Such acts of intimidation fall outside the bounds of acceptable state behavior.”

President Barack Obama said there was no evidence another country was involved.

Sony took the unprecedented step on Wednesday of canceling the Christmas Day release of the film, a Seth Rogen-James Franco comedy about a plot to kill the North Korean dictator, after the hackers threatened violence against theaters that showed it.

Obama said he believed Sony had made a mistake.

“Imagine what they start doing when they see a documentary that they don’t like or news reports that they don’t like,” he said at a year-end press conference, referring to the hackers. “Or even worse, imagine if producers and distributors and others start engaging in self-censorship because they don’t want to offend the sensibilities of somebody whose sensibilities probably need to be offended. That’s not who we are.”

A White House spokesman said on Thursday that the United States would consider a “proportional response” if it determined that North Korea was behind the hacking. He did not rule out an attack on North Korean computer systems.

Obama said: “We will respond in a place and time and manner that we choose.”

The FBI statement credited Sony for its cooperation in the investigation.

“Identifying those responsible for these attacks is only the first step, and we will continue to do our part to protect and defend our nation from the asymmetric threats posed through cyberspace,” said John Carlin, the assistant attorney general for national security.

The massive hacking attack also captured personal information about Sony employees and embarrassing emails sent by top Sony executives.

Some Celebrities voiced outrage about the canceling of the movie, arguing that Sony had capitulated to terrorists and dealt a blow to free expression.

IN-DEPTH

— Pete Williams

http://www.nbcnews.com/storyline/sony-hack/fbi-says-north-korea-was-behind-sony-hack-n271686

Fastest Asia-U.S. Shipping Route? Canada’s Ports

Prince Rupert, British Columbia, is a 1,000-mile drive from Seattle and far from major manufacturing centers. But last year, the port in the northwestern Canadian province was a key North American entry point for Asian-made products, and nearly all of the goods it received went to the U.S.

Cargo traffic bound for the U.S. has risen 11% so far this year at Prince Rupert, the smaller of Canada’s two West Coast ports. To take advantage of growing demand, the port is moving ahead with plans to boost its container-handling capacity.

Shipping companies are seeking the fastest route to move Asian goods to the U.S. Midwest, with a growing share of U.S.-bound cargo arriving first in Canada. The increased business suggests Canada’s efforts to exploit some natural geographic advantages by spending billions of dollars on its West Coast trade infrastructure are paying off.

Congestion, labor tensions and tax concerns at U.S. ports have also spurred some shippers to look north.

Canada’s efforts underscore how some countries can take advantage of pressures in theglobal supply chain to create key trade logistics hubs, and reap the economic benefits.

Canada was the entry point for 2.6% of U.S.-bound Asian cargo in 2010, and has likely grown to a “new record high” since then, said Richard Lidinsky Jr. , commissioner for the Federal Maritime Commission, the agency tasked with regulating the U.S.’s international ocean transportation system. Roughly 87% of the containers received in Prince Rupert were hauled by rail to the U.S., the agency said.

Northwest U.S. ports have seen a nearly 11% drop in cargo from Asia over the past year, according to the FMC.

“It’s a wake-up call for us,” said Mr. Lidinsky. “It almost becomes a self-fulfilling prophecy. If you have problems in California and the Pacific Northwest, there’s a natural alternative to go to Canada.” Once a port loses that business, he added, “it’s very, very difficult to win it back.”

Canada’s two big Pacific ports have a natural geographic advantage: relative proximity. Prince Rupert, for instance, is the closest North American port to Asia due to the curvature of the Earth, and is more than 68 hours closer to Shanghai by boat than Los Angeles, according to its port authority. It also boasts one of the world’s deepest natural ice-free harbors.

Building on that advantage, Canada’s government has spent 1.4 billion Canadian dollars (US$1.22 billion) over the past decade to improve rail and road access and boost inspection capacity at West Coast ports. An additional C$2.1 billion in funding has come from provincial and private-sector sources to create a “gateway” to the Asia-Pacific corridor.

Canadian railroad companies have also moved to capitalize on those infrastructure investments. Canadian National Railway Co. , the only railway that serves Prince Rupert and one of three major railroads serving Port Metro Vancouver, has spent C$3 billion since 2010 to cut travel times along its western corridor, and has added new container terminals in Joliet, Ill., and Chippewa Falls, Wis., to receive Midwest-bound goods. Canadian National’s container business “has grown quietly and steadily” since 2010, said JJ Ruest, the railroad’s chief marketing officer.

Total volume at British Columbia’s ports has jumped 46% since 2006, helped by the 2007 construction of the Prince Rupert container port, outpacing North American West Coast traffic growth of 3.8%, according to the American Association of Port Authorities.

U.S. West Coast labor issues this summer diverted “significant” volumes of U.S. cargo through Prince Rupert and Vancouver, said Adam Hill, vice president of operations at Scarbrough International Ltd., a logistics provider in Kansas City, Mo.

Both Canadian ports are viewed as reliable alternative ports that could see further boost in container volumes when shipping contracts are settled early next year, but neither port can completely handle the amount of volumes that U.S. shippers would prefer to transport through Canada, Mr. Hill said.

“We started to see delays quickly when everyone started to divert,” he said.

In one example of that surge in demand, a container terminal operator at Port Metro Vancouver in August told its customers it didn’t have enough railcars to ship Asian goods to the U.S. Midwest and suspended service for a week. “With the terminal currently operating over its designed operating capacity, we are left with this hard decision to make,” DP World Vancouver told its customers in an email at the time.

Another obstacle is the federal harbor-maintenance tax. Removing the tax—which shippers say costs anywhere from $25 to $500 per container—would likely allow U.S. ports to win back as much as half of the business now going to Canada, the FMC said.

“The U.S., in some ways, has taxed themselves out of competition,” said Greg Timm, president of Pacific Custom Brokers Ltd., a Vancouver-based customs brokerage firm, just as Canada has made major investments in port infrastructure.

Some shippers said coming changes to U.S. and Canadian customs inspections, such as streamlining border inspections, will make it even easier for U.S.-bound goods to enter Canada, further expanding Canadian port business.

Prince Rupert’s sprawling 60-acre facility handled 537,426 containers last year. Plans are under way to increase the port’s capacity to 2 million containers. By comparison, Seattle handled nearly 1.5 million containers last year, below its capacity of about 3 million containers, according to the Port of Seattle.

Trade into Washington from Canada grew by 6.4% last year, the biggest annual increase for any U.S. state, to $23.5 billion, according to the Transportation Department. “We’re not trying to actively market ourselves to customers, but it’s something that is organically happening,” said Robin Silvester, chief executive of Port Metro Vancouver.

Write to David George-Cosh at david.george-cosh@wsj.com

http://www.wsj.com/articles/fastest-asia-u-s-shipping-route-canadas-ports-1418335017

Obama to Announce Easing in U.S.-Cuba Relations

President Barack Obama will end the U.S. isolation of Cuba that has persisted for more than a half century, initiating talks to resume diplomatic relations, opening a U.S. embassy in Havana and loosening trade and travel restrictions on the nation.

The steps effectively end an embargo that has been one of the most durable elements of U.S. foreign policy. Travelers will be able to use credit cards in Cuba and Americans will be able to legally bring home up to $100 in previously illegal Cuban cigars treasured by aficionados.

Obama is scheduled to deliver remarks from the White House at 12:01 p.m. Washington time, about the same time that Raul Castro is set to speak in Cuba. The two spoke yesterday about the deal, an administration official said.

“Decades of U.S. isolation of Cuba have failed to accomplish our enduring objective of promoting the emergence of a democratic, prosperous, and stable Cuba,” the White House said in a fact sheet e-mailed to reporters. “We know from hard-learned experience that it is better to encourage and support reform than to impose policies that will render a country a failed state.”

The embargo is one of the last remnants of the Cold War, sacrosanct in U.S. domestic politics because of the influence of the Cuban-American exile community in Florida. Generational shifts have reduced support for the embargo, though Obama’s moves drew criticism from some Cuban-American lawmakers.

The White House announced the steps after Cuba released American Alan Gross on humanitarian grounds. Following high-level talks between the governments since the spring, the U.S. and Cuba also made a parallel prisoner exchange of three Cuban intelligence agents for a U.S. intelligence asset who has been imprisoned for more than 20 years, according to administration officials who briefed reporters on condition of anonymity before Obama speaks.

Cuba also agreed to release 53 people the U.S. considers political prisoners, some of whom have already been released, the officials said.

Find full story from source here:

http://www.bloomberg.com/news/2014-12-17/obama-to-announce-u-s-cuba-relations-shift-as-gross-is-released.html

Trans-Atlantic Partnership Seeks to Crush Illegal Trade of Unsafe Vehicles

NEWARK, New Jersey—U.S. Customs and Border Protection (CBP) destroyed an illegally imported and unsafe Mini Cooper Thursday at a salvage yard in New Jersey following a recent seizure at the Newark Seaport. CBP captured photos,b-roll and principal sound bites for use by news media.

This Mini is just one of dozens of vehicles intercepted at ports of entry across the U.S, including ports in Baltimore, Philadelphia, Norfolk, Virginia, Charleston, South Carolina, Savannah, Georgia, Jacksonville, Florida, Houston and Tacoma, Washington.

Over the past year, CBP has increased targeting and inspections of suspect imported vehicles, specifically Minis and Land Rover Defenders, as part of Operation Atlantic, a new trans-Atlantic partnership between U.S. and U.K. regulatory and law enforcement officials.

“Intercepting illegal and unsafe imports is a top priority for CBP,” said Brenda Smith, CBP’s assistant commissioner for International Trade. “Through Operation Atlantic, we are stopping illegally imported, unsafe vehicles from driving on our roadways, and at the same time, partnering with our colleagues in the UK to stop this criminal activity at its source.”

Launched in March 2014 by CBP’s Commercial Targeting and Analysis Center, U.S. and U.K. officials are working together to identify illegal shipments of vehicles at ports of entry across the U.S. and U.K. Following inspections of more than 500 vehicles, the operation has led to several criminal investigations in both countries.

CBP officials hosted their U.K. law enforcement counterparts at headquarters in Washington, D.C., and in Baltimore and Newark to discuss expanding the operation.  Gordon Roberts, detective chief inspector of the U.K. Vehicle Crime Intelligence Service, stated that “Operation Atlantic is one of the more important initiatives for our office, as it clearly demonstrates the significance and benefits of multilateral information exchanges in the enforcement of the laws of both our countries.”

These illegal vehicles are represented on import entry documents as being 25 years or older, but may be newer, illegally reconfigured vehicles, or even reconstructed from stolen vehicle parts. The vehicle identification numbers (VIN) have been fraudulently altered.  These fraudulent actions attempt to use as cover exemptions within the statutes and regulations administered by the National Highway Traffic Safety Administration and the Environmental Protection Agency that allow older vehicles to be imported without restriction.

“Safety is the U.S. Department of Transportation’s top priority and we are committed to preventing the illegal importation of vehicles and exposing their potential safety risks,” said Nancy Lewis, National Highway Traffic Safety Administration associate administrator for enforcement. “Along with our partners at CBP and CTAC, we’ll remain diligent in our enforcement efforts to protect the driving public.”

CBP officers from the New York Field Office working at the Newark Seaport seized the Mini Cooper June 9 because the VIN on the vehicle was fraudulent. “We will continue to work with our partners at the National Highway Traffic Safety Administration and in the United Kingdom to prevent the illegal import of vehicles that place the health and safety of the American public at risk, “said Leon Hayward, assistant director of field operations for trade cargo security at CBP’s New York Field Office.

CBP encourages buyers who suspect fraudulent activity to report the suspected trade violations via CBP’s e-Allegations website. All information submitted is voluntary and confidential.

Still and video images along with sound bites from the principal officials is available via CBP’s Flickr page and on CBP’s video imagery page on DVIDs, a DoD hosted video distribution site.

  • Video: B-roll of the destruction of the Mini Cooper at the salvage yard
  • Video: Sound bites from CBP’s Assistant Commissioner for the Office of International Trade
  • Video: Sound bites from the United Kingdom’s Gordon Roberts, detective chief inspector
  • Video: Sounds bites from a CBP officer about the inspection process

In 2013, CBP seized and destroyed an illegally imported Land Rover Defender that did not meet federal safety standards and had a fraudulent VIN, which increased the public’s awareness about illegal vehicle imports and served as a catalyst for Operation Atlantic.

http://www.cbp.gov/newsroom/local-media-release/2014-12-12-000000/trans-atlantic-partnership-seeks-crush-illegal-trade

Dallas Airmotive Inc. Admits Foreign Corrupt Practices Act Violations and Agrees to Pay $14 Million Criminal Penalty

Dallas Airmotive Inc. Admits Foreign Corrupt Practices Act Violations and Agrees to Pay $14 Million Criminal Penalty

Dallas Airmotive Inc., a provider of aircraft engine maintenance, repair and overhaul services based in Grapevine, Texas, has admitted to violations of the Foreign Corrupt Practices Act (FCPA) and agreed to pay a $14 million criminal penalty to resolve charges that it bribed Latin American government officials in order to secure lucrative government contracts.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge Diego Rodriguez of the FBI’s Dallas Division made the announcement.

A criminal information, filed today in federal court in the Northern District of Texas as part of the deferred prosecution agreement, charges Dallas Airmotive with one count of conspiring to violate the FCPA and one count of violating the FCPA’s anti-bribery provisions.

According to Dallas Airmotive’s detailed admissions in the statement of facts accompanying the deferred prosecution agreement, between 2008 and 2012, the company bribed officials of the Brazilian Air Force, the Peruvian Air Force, the Office of the Governor of the Brazilian State of Roraima, and the Office of the Governor of the San Juan Province in Argentina.  Dallas Airmotive used various methods to convey the bribe payments, including by entering into agreements with front companies affiliated with foreign officials, making payments to third-party representatives with the understanding that funds would be directed to foreign officials, and directly providing things of value, such as paid vacations, to foreign officials.

This case is being investigated by the FBI’s Dallas Field Office and is being prosecuted by Trial Attorney David M. Fuhr of the Criminal Division’s Fraud Section.  Assistant U.S. Attorney Michael C. Elliott from the U.S. Attorney’s Office for the Northern District of Texas has provided assistance in the case.  The department acknowledges the assistance of law enforcement counterparts in Brazil.  The Criminal Division’s Office of International Affairs also provided significant assistance.

Additional information about the Justice Department’s FCPA enforcement efforts can be found atwww.justice.gov/criminal/fraud/fcpa.

http://www.justice.gov/opa/pr/dallas-airmotive-inc-admits-foreign-corrupt-practices-act-violations-and-agrees-pay-14

Obama proposes expanding solar duties

The Obama administration is considering an expansion of duties on Chinese solar products that has triggered complaints from a South Korean parts supplier that says it would be hurt.

The plan calls for the United States Commerce Department to impose tariffs on all solarpanels assembled in China, regardless of the source of their component cells. Currently, $1.5 billion worth of panels with cells made in China are subject to a duty, and many companies shifted production of the cells to other nations in response.

The proposal highlights the challenge of applying US trade penalties on products in a far-flung, global supply chain.

“It is bizarre, and we think it is unprecedented,” said Carolyn Byun, US head of legal for Hanwha Solar, a South Korean company with factories in Malaysia and China. “This really has no justification. We need to know ahead of time how things are going to play out.”

SolarWorld AG, a Bonn-based company with a plant in Hillsboro, Oregon, got the US Commerce Department in 2012 to apply tariffs on imports of solar cells from the Chinese mainland. After the tariffs kicked in, imports of panels with cells made in Taiwan boomed, and SolarWorld said in a complaint a year ago that Chinese mainland makers had shifted production to skirt the US tariffs.

Earlier this year, President Barack Obama’s Commerce Department issued a preliminary decision that proposed expanding the tariffs to imports of cells from Taiwan. A final decision is due by Dec 16.

Companies such as Hanwha and Suniva Inc, a Norcross, Georgia-based solar-cell maker, had avoided taking a position on the US tariffs, while tracking the cases closely.

Hanwha ended its neutrality when the Commerce Department issued a memorandum on Oct 3 saying all solar panels assembled in China would face US tariffs, no matter the source of the cells. The change is necessary to prevent another manufacturing center from becoming abase of production, supplying cells for the low-cost solar panels assembled in China and shipped to the US, according to lawyers for SolarWorld.

“We did not make a specific filing asking for it, but we strongly supported this,” Tim Brightbill, a Washington lawyer for the company, said. It will ensure these duties on the Chinese mainland and Taiwan “are enforceable”, he said in an e-mail.

The change would target Hanwha, which makes cells in Malaysia that are assembled into solar panels in China and shipped to its distribution and installation business in the US.

Hanwha Solar Holdings Co, based in Seoul, said on Tuesday it will merge its US-listed photovoltaic make Hanwha SolarOne Co, which has plants in China, with Thalheim, Germany-based Hanwha Q Cells, which it acquired in 2012 and has plants in Germany and Malaysia. The combined operations will be the world’s largest maker of solar power cells. Hanwha Solar owns Q Cells and holds 45.7 percent of Hanwha SolarOne.

The company will use a Q Cells factory in Malaysia to avoid US and European import duties. “The anti-dumping issue creates significant opportunities for a geographically diverse company,” said D.K. Kim, SolarOne’s chief commercial officer.

Under the US proposal, Hanwha’s Malaysian-made cells may face a 43 percent tariff, more than many cells made in China, Byun said. The company has started a last-minute effort to get the decision reversed, she said.

http://www.chinadaily.com.cn/business/2014-12/10/content_19056907.htm

The Bureau of Industry and Security’s Export Control Reform FAQs

The Bureau of Industry and Security’s  U.S. Department of Commerce’s website has a FAQ section covering Export Control Reform questions. These questions are categorized as follows: Transition Issues, 600 Series Items, License Exception Strategic Trade Authorization (STA), License Exception GOV, CCL Order of Review, Specially Designed and Self-determination of an item’s jurisdictional and classification status by a foreign person.

The link to this resourceful BIS FAQ page is below:

http://www.bis.doc.gov/index.php/2012-03-30-17-54-11/ecr-faqs#subcat112