Blog/News

Iranian Crude Oil Surges

Sadie Keljikian, Top Billion Finance

At least twenty-six Asian and European tankers are shipping Iranian oil, according to Reuters.

International sanctions on Iran were lifted in January, allowing foreign importers to once again take advantage of the country’s vast supply of crude oil. “Charterers are buying cargo from Iran and the rest of the world is OK with that,” said Odysseus Valatsas on the matter. Valatsas is the chartering manager at Dynacom Tankers Management, which has fixed three of its supertankers to carry Iranian oil.

While the 26+ tankers already in service have the capacity to carry more than 25 million barrels of oil, traders still face regulatory obstacles. Many carriers are still quite reluctant to handle Iranian oil, largely due to remaining US restrictions on Tehran, which tightly restrict trade in dollars or involvement of US firms, including re-insurers and banks.

Despite this relative freedom, Iran was still struggling to find partners to ship its oil until a recent temporary insurance fix, known as “fall-back” reinsurance protection, was established to allow foreign carriers to handle Iranian oil. The fix is designed to offset any shortfall in payments from U.S. re-insurers and work around remaining restrictions.  As a result, nearly a third of Iran’s shipments of crude oil are being handled by foreign vessels.

The fall-back protection does not, however, account for larger accidents such as collision and cargo liabilities, meaning that shippers must undertake a risk that, should there be an oil spill, could potentially cost billions of dollars. Reports earlier this month confirm that exports of Iranian oil have nearly reached pre-sanction levels, with about 2.5 million barrels shipping out daily.

Despite the complicated nature of the recently lifted sanctions, it appears that Iranian oil may once again be a massive contributor to international energy markets.

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US Customs Roundup

ACE Mandatory Usage Effective July 23rd
US Customs and Border Protection (CBP) announced that effective July 23rd, 2016 Automated Commercial Environment (ACE) will be the sole CBP authorized EDI system for the electronic entry and entry summary filings for all entry types.

All filers and all electronic filings must be formatted for submission in ACE and will no longer be accepted in Automated Commercial System (ACS).

For more details including Participating Government Agencies (PGA) timeline, please click here.

Drawback Claims and Document Requirements for Exportations
On August 7th, 2015 the final rule was published regarding the regulations of 19 CFR parts 181 and 191. These parts were amended to remove the requirement for actual pen and ink signature when documents are issued electronically.

This applies to drawback claims not liquidated as of August 7th, 2015 and does not apply to claims liquidated prior to August 7th, 2015 but protested. For more information, please click here.

CBP Posts Fact Sheet on De Minimis Exemption
U.S. Customs and Border Protection has posted a fact sheet that provides additional information on the increase in the de minimis value exemption from $200 to $800 that went into effect on March 10th, 2016.

The procedures and restrictions for release, which are outlined in the fact sheet, remain the same as those that applied under the previous $200 limit. Click here for the fact sheet.

AMS Removes Cotton Import De Minimis Provisions
Agricultural Marketing Service (AMS) amended the Cotton Board Rules and Regulations to remove the cotton import de minimis provision.

This will be effective July 15th, 2016. For the Federal Register notice, click here.

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East Africa’s Used Clothing Ban

Sadie Keljikian, Top Billion Finance

Clothing donations may be banned in East Africa in the next few years.

Recently, it has become clear that clothing donations sent to Africa from the US or Europe may actually be hurting local manufacturers. The manufacturing industry in East Africa has gained a head of steam in the last few years, recovering from the massive hit factories took during the debt crisis in the 1980s and ’90s. With technological advances and a rapidly growing workforce, a local supply chain could be an important step for the region’s developing economy. Progress, however, has been so remarkable that given the right circumstances and leadership, the East African manufacturing district could compete with Southeast Asia in quantities exported to Europe and the US. This progress is being dampened, however, because clothing donations from the US and Europe are sent to East Africa in massive quantities and sold for very little money in local markets. The prices are so low, in fact, that domestic manufacturers cannot compete.

While clothing donations are obviously given with the best of intentions, they are sent to East Africa in such staggering quantities that the donated garments make up nearly 80% of the clothing sold in markets. Of course, impoverished people from Kenya, Uganda and surrounding countries want to spend as little as possible on clothing, but the region’s economic future depends largely on employment and economic stimulation provided by the manufacturing companies. As a result, donations actually keep the local economy from improving and blocks progress in East African manufacturing development. The effect has been so devastating, in fact, that Kenya alone has gone from a manufacturing workforce of approximately 500,000 people to only about 20,000 workers today.

In response to the continuous stunting of the local manufacturing industry, officials are considering a ban on charitable clothing donations in Burundi, Kenya, Rwanda, Tanzania, and Uganda.

New clothing will still be imported to supplement locally fabricated goods, but hordes of used clothing will no longer trample the potential of East African manufactured garments, should the ban go forward as planned.

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