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Scopelitis International eNewsletter: October 2018

by Braden K. Core, Jacob R. Fisher, John  N. Hove, Nathaniel G. Saylor

October 2018

 

Scopelitis International eNews – October 2018

NAFTA-2. The U.S., Mexico and Canada agreed on September 30, 2018 to a new North America free trade agreement which will be known as the U.S.-Mexico-Canada Agreement or USMCA. The Agreement still has to be ratified by the countries’ legislatures and many of its provisions won’t take effect until 2020. USMCA is generally considered to be favorable to the transportation industry, especially in respect of increased Canadian-U.S. cross-border transportation of dairy, poultry, eggs and peanut products. Increased automobile part trucking is also expected. More details below (FCPA UPDATE) and in subsequent newsletters.

AIR CARGO ADVANCE SCREENING PROGRAM. The FAA Reauthorization Act of 2018 (the “Act”), signed October 5, 2018, contains several provisions affecting the air cargo industry. Section 1951 formally establishes the Air Cargo Advance Screening Program (“ACAS”). ACAS existed previously as a “pilot program” which was implemented under interim rules promulgated by U.S. Customs and Border Protection (“CBP”) and jointly administered with the Transportation Security Administration. ACAS requires that certain air cargo data (roughly equivalent to “house” air waybill data) be electronically submitted to the CBP “at the earliest point practicable prior to loading onto an aircraft destined to or transiting through the United States.” Such submission is the primary responsibility of the air carrier, but others, including air freight forwarders, may participate. CBP must issue a final rule implementing the ACAS program within 180 days of the Act becoming law.

FCPA UPDATE. In the third quarter of 2018, seven corporate FCPA enforcement resolutions resulted in total disgorgement and fines of just under US$2 billion. Also, three individual FCPA defendants received prison sentences ranging from 6 to 36 months. It’s worth noting that the cost of an FCPA investigation frequently exceeds the amount paid in fines and disgorgements. It would be unusual for insurance to cover even a small part of those costs. The USMCA (see NAFTA-2 above) now includes an entire Chapter on Anticorruption (Chapter 27). The parties each agree to implement specific measures to combat corruption in trade and investment, to emphasize the importance of compliance programs and to cooperate in the enforcement of anticorruption measures. Of particular interest, is the provision which states that the parties will encourage enterprises to prohibit or discourage the use of facilitation payments. As noted above, the Agreement still must be ratified.

SULFUR CAP. The International Maritime Organization (“IMO”) is a specialized agency of the United Nations that is responsible for measures to improve the safety and security of international shipping and to prevent marine pollution from ships. Our colleagues at the London-based global shipping law firm, Ince & Co., remind us that new IMO sulfur regulations are scheduled to come into force on 1 January 2020 and when implemented will apply to all vessels trading outside existing emission controlled areas. Under the regulations, the maximum sulfur content permitted in fuel is to be reduced from the current limit of 3.5% down to 0.5%. Some ship owners, operators, bunker suppliers and refiners are already compliant while others have yet to implement the necessary measures. It’s unclear whether scrubber manufacturers will be able to meet the anticipated increased demand for their products. Also, the Trump Administration has very recently begun efforts to slow down full implementation of the restrictions in favor of a phase-in approach.

For more information on the latest in international transportation law, contact a member of Scopelitis’ International Transportation & Logistics Law team - Nathaniel Saylor, Braden Core, John Hove, or Jake Fisher, or your Scopelitis contact.

 

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Scopelitis practice area newsletters are intended as reports to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.

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