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In his last days in office, President Trump has taken a swipe against companies identified by the Department of Defence as Communist Chinese military companies by prohibiting US persons from investing in such companies. According to the applicable executive order, the national security concerns stem from China exploiting US investors to finance the development and modernisation of its military through its military-civil fusion policy.
The US Department of Commerce, Bureau of Industry and Security (BIS) has proposed a new Export Control Classification Number to control software that is capable of being used to operate nucleic acid assemblers and synthesisers due to concerns that such software could be used to create pathogens and toxins as biological weapons. If adopted, this will be the fifth set of emerging technology controls that BIS has published and the second set of unilateral emerging technology controls.
The US Department of Commerce, Bureau of Industry and Security (BIS) recently issued a final rule amending the licence review policy for items on the Commerce Control List that are controlled for national security reasons and destined for China, Venezuela or Russia. The amended Export Administration Regulations trigger a presumption of denial in a more expansive way and specify new and expansive factors which BIS will use in its case-by-case licence application assessment.
The Committee on Foreign Investment in the United States (CFIUS) is now following new rules on mandatory filings for certain foreign investments in critical technology companies. On behalf of CFIUS, the US Department of the Treasury's Office of Investment Security initially issued proposed regulations in May 2020. After considering public comments, the treasury made minor revisions to the proposed regulations and published a final rule in September 2020, which took effect on 15 October 2020.
The government has recently stepped up its enforcement against forced labour. As particular regions come under increased media scrutiny, this issue has seen renewed interest in Congress, which is considering several bills to enhance forced labour enforcement. Moreover, with the United States taking a whole-of-government approach against goods made from forced labour, companies must act now to mitigate risk in their supply chains. This article discusses these actions in further detail.
The US Department of Commerce, Bureau of Industry and Security (BIS) recently released a final rule revising its licensing policy for crime control and detection (CC) items, which is designed to promote respect for human rights throughout the world. On the same day, BIS made another CC-related move, issuing a final rule regarding new controls on water cannon systems and related parts and components, with the preamble specifically describing riot and crowd control in Hong Kong.
The US Department of Treasury's Office of Foreign Assets Control recently issued an advisory highlighting sanctions risks associated with facilitating ransomware payments on behalf of victims targeted by malicious cyberattacks. Relatedly, the US Department of Treasury's Financial Crimes Enforcement Network issued guidance alerting financial institutions to their role in processing ransomware and associated payments, red flags and reporting information.
The Department of Homeland Security through US Customs and Border Protection (CBP) recently issued new withhold release orders (WROs) aimed at entities involved in the import, downstream manufacturing or sale of certain apparel, cotton, hair products and computer parts. As the WROs were backdated, they may adversely affect merchandise that is currently being shipped to the United States or which is already in CBP's custody.
Fashion and luxury goods companies should be concerned about the recent sanctioning of Chinese companies in Xinjiang province by the US Departments of Treasury and Commerce and other US Customs and Border Protection (CBP) developments relating to importing products that contain fabric made with prison or forced labour. Notably, there is a risk that garments made from cotton produced by Xinjiang Production and Construction Corps could be subject to a CBP withhold release order.
BIS launches rulemaking process for foundational technologies and hints at potential areas of controlUSA | 18 September 2020
The Bureau of Industry and Security (BIS) has published the advance notice of proposed rulemaking (ANPRM) on foundational technologies, which seeks public comment on criteria for identifying and defining 'foundational technologies' essential to US national security. Although the ANPRM is vague, the potential for stronger control of items currently controlled as Export Administration Regulation 99 or for anti-terrorism, crime control, short supply or UN reasons should prompt comments.
US Customs and Border Protection recently issued new guidance providing an additional 45-day transition period for compliance with new marking requirements for goods produced in Hong Kong that are imported into the United States. This extends the transition period for companies to comply with the requirements from 25 September 2020 to 9 November 2020.
US Customs and Border Protection recently announced that it had collected $575,000 in penalties resulting from a civil enforcement action against importer Pure Circle USA for imports made with forced labour. This action indicates that CBP is following through with its mandate to prevent goods produced using forced labour from entering the stream of commerce and penalise importers when such goods do enter.
The Department of Commerce, Bureau of Industry and Security (BIS) recently issued a final rule adding additional Huawei non-US affiliates to the Entity List, confirming the expiration of the temporary general licence and amending the so-called 'Foreign Direct Product Rule'. BIS also issued another final rule clarifying that prohibitions on Entity List entities apply regardless of the role that the entities play in a transaction.
Driven by national security concerns, over the past three years the government has taken a much more aggressive position on an array of technology issues involving China. These policy and regulatory changes range from significant new export controls and new supply chain screening of Chinese technology to efforts to jumpstart US research and development and 'reshore' manufacturing in strategic technology areas.
The Federal Acquisition Regulation Council recently published a long-awaited interim rule implementing Section 889(a)(1)(B) of the National Defence Authorisation Act 2019. Essentially, the new rule prohibits government agencies from entering into, extending or renewing a contract with contractors if they use any equipment, system or service that uses certain Chinese telecoms equipment or services as a substantial or essential component of any system or as critical technology as part of any system.
In July 2020 President Trump issued an executive order concerning certain import and export trade requirements between the United States and China. Subsequently, US Customs and Border Protection published a notice in the Federal Register providing an effective date for the new marking and the penalties for incorrect marking and released further guidance on the origin of goods from Hong Kong for Section 301 China tariff purposes through the issuance of FAQs.
As a result of the growing tensions between the United States and China, President Trump recently issued an executive order concerning certain import and export trade requirements between the two countries. Among these changes, it was mandated that goods produced in Hong Kong be marked with China as their country of origin. Because of the time needed to mark, pack and ship goods from Hong Kong to the United States, importers must act quickly to ensure compliance with this new requirement.
President Trump recently signed an executive order (EO) banning 'transactions' – which have yet to be identified by the US Department of Commerce – relating to TikTok and its parent, ByteDance Ltd. The EO states that the spread of the Chinese mobile app continues to threaten the national security, foreign policy and economy of the United States. In addition to concerns relating to sensitive personal data, the EO points to concerns pertaining to influence operations.
The US Department of Defence recently published a list of 20 Chinese companies that have been identified as 'Communist Chinese military companies', complying with a two-decade-old mandate that Congress issued during the Clinton administration. The takeaway for companies, universities and individuals is that they should proceed with caution and carefully conduct due diligence when dealing with China.
The Federal Trade Commission (FTC) has published a proposed rule for Made in the USA (MUSA) claims which would codify its current standard that unqualified MUSA claims for a product should have a reasonable basis for asserting that all or virtually all of the product is made in the United States and authorise it to assess monetary penalties on unsubstantiated claims. Controversially, the proposed rule would also extend the FTC's enforcement authority to labels, mail-order catalogues and online advertising.
United States farewells Hong Kong's separate customs territory status – what's the impact on importers?USA | 31 July 2020
In view of the recent action taken by President Trump in an executive order regarding Hong Kong's status, US importers should prepare for increased risk exposure in US-Hong Kong trade. Although Hong Kong technically continues to be treated as its own separate customs territory by multilateral agreements, the commitments undertaken by the United States with regard to the original 2047 timeline for Hong Kong's full reintegration into China are being rapidly accelerated.
The US Court of International Trade recently granted judgment in favour of an importer of steel from Turkey, ruling that there are limits on the president's power to impose tariffs for national security purposes. The importer had argued that the president's proclamation of a 50% tariff on Turkish steel failed to follow the procedures required by the animating statute and violated the importer's constitutional rights.
Certain products from France, including leather handbags and certain beauty preparations and soaps, will soon become pricier. Following a disagreement over how to tax US tech companies in France, the US Trade Representative has imposed additional duties of 25% on French goods, effective 6 January 2021 – a cost that importers and retailers will have to absorb or pass on to their customers.
On 1 July 2020 the US-Mexico-Canada Agreement (USMCA) entered into force. These are still early days and much remains to be clarified by pending rulemaking. To help reduce the risk of making costly mistakes, this article provides a checklist of recommendations to guide readers through these first weeks and months of the USMCA.
The Department of Commerce and the Department of State recently announced that they were following through with changes to treat Hong Kong like China for exports of military and dual-use goods. The impetus for these measures was China's proposal to pass a controversial national security law affecting Hong Kong, which Beijing's top legislative body finally passed on 30 June 2020.
The Organisation for Economic Cooperation and Development's Inclusive Framework aims to reach an agreement on a multilateral taxation framework for the digitised economy by the end of 2020. However, US Trade Representative Robert Lighthizer recently confirmed that the United States has withdrawn its participation from the digital tax talks. The United States' withdrawal is a step towards new tariffs on imports from countries that apply their own digital services tax.
In four new FAQs, the Office of Foreign Assets Control has provided a few surprises in its clarifications of the sector-based sanctions contained in Iran-Related Executive Order (EO) 13902. The new FAQs confirm earlier guidance and provide detailed but mostly unremarkable definitions of the four sectors of the Iranian economy, as well as the goods and services used in connection with those sectors, that are targeted by EO 13902 and the meanings of the terms 'knowingly' and 'significant'.
The Department of Commerce and the Bureau of Industry and Security recently revised an arcane export control rule that imposes US export controls on foreign-origin products that are a direct product of certain US technologies. Although the two new categories of foreign direct product are far broader than the old one, new foreign direct products require a licence only when they are exported or re-exported to entities on a new special subset of the Entity List, which includes Huawei, HiSilicon and other Huawei affiliates.
A new executive order has formalised Team Telecom, a previously ad hoc committee which for many years has reviewed applications for Federal Communications Commission (FCC) authorisations involving non-US parties, typically for US-international telecoms service or submarine cable landings. The committee has the primary responsibility of reviewing applications for FCC authorisations which involve foreign ownership to identify national security or law enforcement risks.
Through an array of legislative and administrative measures, the government has made significant strides in recent years to limit, and perhaps end altogether, the proliferation of Chinese-origin telecoms technology in US infrastructure. While some of the legislation is company agnostic, Chinese telecoms giant Huawei, which remains on the Department of Commerce, Bureau of Industry and Security's Entity List, is a primary target.
The Commerce Department recently took significant steps to revise the Export Administration Regulations to address military-civil fusion. Specifically, the Bureau of Industry and Security issued two final rules regarding licence exception civil end users and military end-use and end-user controls, as well as a proposed rule which would eliminate a provision of the licence exception additional permissive re-exports that currently authorises certain re-exports to China and other countries.
OFAC's COVID-19 response: existing exceptions, filing and compliance flexibility and some relief for IranUSA | 15 May 2020
Recognising that COVID-19 is further straining humanitarian needs in sanctioned countries and complicating compliance with economic sanctions, the Department of the Treasury Office of Foreign Assets Control recently issued web-based guidance to remind the public of the many ways in which medical exports and other humanitarian services, supplies and donations can legally flow to sanctioned countries, offer reporting and compliance flexibility and provide some Iran secondary sanctions relief.
US Customs and Border Protection (CBP) recently released the long-awaited United States-Mexico-Canada Agreement (USMCA) Interim Implementing Instructions, which signal the transition from the North American Free Trade Agreement to the USMCA. For companies operating in the United States, selling into the United States or buying from the US marketplace, these instructions should be viewed as an indication that the USMCA is on track for a possible Summer 2020 entry into force.
Like many other US government agencies, the State Department, Directorate of Defence Trade Controls (DDTC) has announced certain measures, effective immediately, to alleviate burdens caused by COVID-19 in relation to compliance with the International Traffic in Arms Regulations. The changes affect registration, compliance, licensing and outreach to the DDTC.
Effective 20 April 2020, the government has introduced a temporary 90-day postponement of certain import payment deadlines for companies and individuals experiencing significant financial hardship due to the economic fallout from the COVID-19 pandemic. This announcement follows a previously abandoned US Customs and Border Protection action to provide relief, intense lobbying on both sides of the issue and mixed signals from the Trump administration.
In a notification of exemptions action recently published for public inspection, the Federal Emergency Management Agency (FEMA) set out a list of exemptions to its requirement for prior approval to export previously identified scarce medical personal protective equipment. However, despite its attempt to clarify previous rules and guidance, FEMA's notice has raised nearly as many questions as it answers.
In this video, International Trade Partners Kay C Georgi and Marwa M Hassoun explain how the Federal Emergency Management Agency's new rule restricting the export of face masks, respirators and other medical personal protective equipment works, as well as how to get a licence and what the penalties are.
The Federal Emergency Management Agency has exercised its delegated authority under the Defence Production Act to issue a temporary final rule (Prioritisation and Allocation of Certain Scarce or Threatened Health and Medical Resources for Domestic Use) to prohibit the export of five types of medical personal protective equipment that the government previously identified as scarce and threatened materials during the COVID-19 pandemic.
To facilitate the import of personal protective equipment and other medical supplies in response to the COVID-19 pandemic, the government continues to waive some tariffs, but balks at broad relief. Among the recent developments in this respect are the launch of a new US Customs and Border Protection (CBP) COVID-19 website. In addition, CBP and the Food and Drug Administration have issued updated guidance for importing COVID-19 supplies and new Section 301 tariff exclusions have been published.
In response to the COVID-19 crisis, the US Food and Drug Administration has expanded its Enforcement Discretion Policy for the import, distribution and use of certain masks and other personal protective equipment (PPE) intended for medical use. In addition, US Customs and Border Protection has updated some previous guidance for importing PPE and other medical devices during the pandemic.
The Defence Production Act (DPA) allows the president to shape the domestic industrial base for national defence preparedness, which includes emergency preparedness activities. This article addresses a number of DPA-related questions that have arisen in light of the COVID-19 pandemic, including how the administration has used the DPA in response to the crisis, what the impact of the administration's DPA-related orders and memoranda will be and what this means for exporters.
As individuals and businesses face the growing health and economic crisis stemming from the global COVID-19 outbreak, the government has searched for balanced ways to provide relief to those struggling, and trade measures are no exception. However, after initially accepting requests from importers in light of the COVID-19 pandemic to defer payment of duties, US Customs and Border Protection recently issued guidance withdrawing this option.
The US Trade Representative recently requested comments on the removal of Section 301 tariffs from Chinese medical care, including those that have previously been denied an exclusion, which are needed to respond to the COVID-19 outbreak. As manufacturers of medical care products increase production and unrelated supply chains shift to aid the global fight against COVID-19, parties should consider whether Section 301 tariffs are impeding their ability to contribute to the cause.
Due to the COVID-19 pandemic, medical items such as masks, ventilators and gowns are difficult to find. With people looking overseas to source these items, this article provides some basic guidance for importing them in a way which satisfies US import requirements and facilitates quick processing through clearance. Many of these items are regulated by the Food and Drug Administration as medical devices and are also subject to US Customs and Border Protection regulations.
The coronavirus (COVID-19) is affecting all elements of society, including the import, trade and transport sectors. The Department of Homeland Security and US Customs and Border Protection (CBP) have recently announced that the US-Canada and US-Mexico borders have been closed to 'non-essential' traffic for 30 days and that duty payments may be deferred. CBP has also announced the impact of COVID-19 on operations. For now, cargo shipments remain unaffected.
The Office of Foreign Assets Control recently issued two new FAQs clarifying that it was serious when it expanded the scope of the Reporting, Procedures and Penalties Regulations with regard to reporting blocked, unblocked or rejected transactions to include any US person (or person subject to US jurisdiction) instead of just financial institutions, as previously required. In this video, Marwa M Hassoun and Kay C Georgi discuss the ramifications of the change and suggest possible clarifications.
The US Department of Homeland Security recently released a department-wide strategy to combat human trafficking, child exploitation and forced labour in the supply chain. The strategy will build on current efforts to interdict imports of goods made with forced labour that US Customs and Border Protection has been enforcing since the passage of the Trade Facilitation and Trade Enforcement Act in 2016.
The Trump administration recently took the first step to implement its plan to crack down on counterfeit goods online when it issued an executive order allocating more federal resources to the inspection and oversight of imports that are at risk for counterfeits and other illicit goods. The executive order was issued one week after the US Department of Homeland Security issued a plan setting out steps to combat counterfeit goods.
An importer of Giorgio Armani apparel recently secured a victory in the Court of International Trade in its dispute with US Customs and Border Protection (CBP). The case considered whether the importer was required under US customs laws to pay duties on advertising fees and trademark royalty fees as part of the value of the goods declared to CBP.
President Trump recently issued Executive Order 13902, which places additional large swaths of the Iranian economy – and those outside Iran which support it – in the crosshairs of US sanctions. Third-country companies doing business with Iran's construction, mining, manufacturing or textiles sectors are now at greater risk of being sanctioned.
After a more than one-year wait, the Department of Commerce Bureau of Industry and Security (BIS) has imposed controls on its first 'emerging technology' – software specially designed to automate the analysis of geospatial imagery. This software now requires a BIS authorisation to be exported or re-exported to any country other than Canada. Companies that develop or use AI to solve geospatial problems or in geospatial applications must review the new rules closely.
The United States and China recently signed a long-awaited trade agreement after nearly two years of a trade war that has resulted in crippling tariffs. This preliminary agreement requests China to purchase approximately $200 billion in certain US goods and services and provide better protection to US intellectual property and trade secrets. In exchange, President Trump has agreed to reduce the List 4A tariffs on $120 billion worth of goods and indefinitely suspend the imposition of a 15% tariff on List 4B products.
The State Department has finally brought the International Traffic in Arms Regulations (ITAR) into the 21st century by releasing an interim final rule adopting the cloud computing encryption standards that the Commerce Department adopted in 2015. The good news is that, for the most part, the State Department resisted the temptation to do something different in the ITAR, so the joint Commerce-State solution works.
In the Foreign Investment Risk Review Modernisation Act and the Export Control Reform Act, Congress essentially gave the Department of Commerce the authority to decide how narrowly or widely to set the jurisdiction for the Committee on Foreign Investment in the United States over non-passive minority investments involving emerging and foundational technologies. Yet, at times, the department has seemed almost paralysed by this question.
Section 301 of the Trade Act authorises the president to take retaliatory action if it is determined that a trade act, policy or practice of a foreign government is unreasonable or discriminatory and burdens or restricts US commerce. December 2019 saw significant end-of-year developments on the Section 301 tariff front. US importers should take stock of these as they plan for 2020.
House Democrats and the Trump administration recently reached an agreement on the final text of the US-Mexico-Canada Agreement (USMCA). Once Canada and the United States have completed their ratification process, all three countries will move quickly to publish the critical uniform regulations. Company leaders must carefully follow these regulations, as they spell out new rules regarding USMCA compliance and preferential tariff treatment.
The US Trade Representative recently announced that it has determined that France's digital services tax is unreasonable or discriminatory and burdens or restricts US commerce, and that it is proposing additional ad valorem duties of up to 100% on products from France under Section 301 of the Trade Act 1974. Parties seeking changes to the proposed list of tariff subheadings or lower duties should take advantage of the comment period.
Administration tests waters for unprecedented government review of international technology transactionsUSA | 13 December 2019
Providers of telecoms, internet and digital services, as well as IT vendors and equipment manufacturers, will soon find doing deals with foreign entities a little more risky and complicated. A new review process soon to be underway at the Department of Commerce is designed to ferret out transactions that pose a threat to US national security, but provides parties whose deals are being evaluated little time to comment.
The US Court of International Trade recently denied the Trump administration's motion to dismiss a lawsuit brought by an importer challenging the government's use of a Cold War-era trade law to double national security tariffs on steel imports from Turkey. Transpacific Steel LLC had filed the lawsuit before the trade court in January 2019, arguing that the increase in tariffs was unlawful under the statute and violated the due process and equal protection requirements under the Constitution.
The US International Trade Commission (ITC) recently began accepting petitions as part of the 2019 Miscellaneous Tariff Bill process. Under this process, a member of the public may request that Congress temporarily eliminate or reduce duty on an imported article for three years. Petitions are due no later than 10 December 2019 at 5:15pm Eastern Standard Time via the ITC online portal.
The Bureau of Industry and Security (BIS) announced another major policy change towards Cuba by further restricting the Cuban government's access to items subject to BIS's Export Administration Regulations. This new rule will have a significant impact on exporters and re-exporters currently using certain licence exceptions to export to Cuba that export non-US origin products with US-origin content to Cuba and lease commercial aircraft to Cuban state-owned airlines.
The Treasury Department, on behalf of the full Committee on Foreign Investment in the United States (CFIUS), recently released the long-awaited comprehensive draft regulations to implement the Foreign Investment Risk Review Modernisation Act. The regulations will significantly expand CFIUS's jurisdiction to cover a wider range of transactions, likely resulting in a dramatic spike in CFIUS reviews in 2020 and beyond.
The US State Department recently solicited feedback on its draft US Government Guidance for the Export of Hardware, Software and Technology with Surveillance Capabilities and/or Parts/Know-How. The draft guidance aims to provide insight to exporters on the considerations to weigh prior to exporting items with intended and unintended surveillance capabilities and could foreshadow new export controls and a US State Department review.
The Committee on Foreign Investment in the United States (CFIUS) is finalising its draft regulations to implement the Foreign Investment Risk Review Modernisation Act 2018 (FIRRMA). FIRRMA overhauled the operations and jurisdiction of CFIUS, but one aspect of the new law that has received little attention is the expansion of CFIUS's jurisdiction to cover a broader range of real estate transactions.
List 4A goes into effect, all Section 301 tariffs are to increase by 5%, the US Trade Representative deadlines loom and the president has ordered US companies to "search for alternatives" to China sourcing. This is your end-of-summer Section 301 China tariffs round-up.
Throughout the past few months, the United States and China have levied new tariffs, increased existing tariffs and imposed ever-higher retaliatory tariffs. Now, nearly all of the two countries' enormous bilateral trade is subject to double-digit tariffs. In this era of uncertainty, company executives understand that due diligence must be based on a fulsome understanding of the threat that lies ahead. As such, corporate leaders must take proper pre-emptive action and enlist expert legal advice.
Among other recent blows to Huawei, the Department of Defence, the General Services Administration and the National Aeronautics and Space Administration have issued an interim rule amending the Federal Acquisition Regulation to implement a key provision of the John S McCain National Defence Authorisation Act for Fiscal Year 2019. In light of this, US companies should carefully review their transactions with Chinese tech companies to ensure that they do not fall foul of any prohibitions.
President Trump recently signed an executive order, freezing all assets in which the Venezuelan government has an interest that are in US hands and prohibiting US persons from conducting transactions with the Venezuelan government, unless specifically exempted or authorised. Although this is not an embargo on all trade with Venezuela, the executive order goes substantially further than the previous sanctions.
President Trump recently tweeted that, beginning on 1 September 2019, importers can expect a 10% tariff on $300 billion of Chinese goods. While the Office of the US Trade Representative (USTR) has yet to issue specific coverage for this new 10% tariff, importers should expect to see the goods subject to it on the proposed Section 301 List 4. The USTR has also indicated that a List 4 exclusion request process could come on the heels of the current List 3 exclusion request timetable.
The US State Department recently announced the issuance of another round of sanctions on the Russian government in relation to the Chemical and Biological Weapons Control and Warfare Elimination Act 1991, which will come into effect on 19 August 2019. While this second round of sanctions is unlikely to affect most US companies, it may affect US banks, but only with respect to transactions involving non-ruble bonds and funds from the Russian sovereign issued after 26 August 2019.
US secondary sanctions are sanctions that the United States can apply to wholly non-US actors in wholly non-US transactions of which the US administration disapproves. A sanctioned individual or entity can be put on the Specially Designated Nationals list, but there is no well-defined numerical threshold for imposing sanctions. This article identifies some of the problems with the application of secondary sanctions and offers some potential solutions.
At a recent G20 Summit press conference, President Trump said that he would not lift the existing Section 301 tariffs on China, but would also not add tariffs on any additional Chinese imports "for at least the time being" as part of an agreement to resume negotiations with China. This article summarises the current status of the Section 301 List 4 goods and the List 3 product exclusion process which commenced on 30 June 2019.
A company recently entered into a $400,000, 18-month consent agreement with the Department of State, Directorate of Defence Trade Controls (DDTC) to settle six alleged violations of the International Traffic in Arms Regulations (ITAR). The key issue was the company's ITAR empowered official, who was neither empowered nor an expert. Through this consent agreement, the DDTC is sending a message to the industry: an empowered official must have (among other things) sufficient authority to stop a transaction.
Because of the length of time since Section 301 duties were first imposed on Chinese imports, many 2018 entries first covered by the duties are approaching their liquidation date (if they have not liquidated already). As such, this article compiles US Customs and Border Protection guidance regarding how importers can preserve their rights to have product exclusions applied to merchandise that is close to liquidation or is still within the period before liquidation becomes final.
Post-quantum cryptographic algorithms and air launch platforms: BIS adds five new technologies to CCLUSA | 28 June 2019
The Department of Commerce, Bureau of Industry and Security (BIS) has issued a final rule which added five recently developed or developing technologies to the Export Administration Regulations' Commerce Control List that are essential to US national security. In particular, BIS amended four export control classification numbers and added a new one. These changes came into force on 23 May 2019 and have an immediate impact on parties exporting the newly controlled goods.
The Committee on Foreign Investment in the United States (CFIUS) is drafting the implementing regulations for the Foreign Investment Risk Review Modernisation Act. Foreign investors are closely following how CFIUS will exercise its new 'country specification' authority – specifically, whether it will create a negative or positive list of specific countries whose transactions are, respectively, either required to undergo or exempt from CFIUS review.
The US Trade Representative recently published a Federal Register notice requesting comments on the proposed exclusion process for List 3 of the Section 301 tariffs on Chinese imports. As part of various changes to the exclusion process, the proposal does not appear to include a mechanism for applicants to designate specific information requested as being business confidential on the current form.
The US Court of Appeals for the Federal Circuit recently ruled that where the scope of an anti-dumping/countervailing duty order is ambiguous, US Customs and Border Protection has no independent authority to suspend liquidation without explicit instructions from the US Department of Commerce.
Between the addition of Huawei Technologies Co Ltd – the world's largest telecoms equipment maker – to the Entity List and a new executive order declaring a national emergency relating to information and communications technology and services, May 2019 has proved to be a period of non-stop excitement for the export control world. This article discusses what these changes mean for US companies.
Mirroring President Trump's recent threats – which came just days after the Section 301 tariff on List 3 products was increased from 10% to 25% following a breakdown in trade negotiations between the United States and China – the administration has released a fourth list of Chinese-origin products that will be subject to additional duties. For these tariffs to become effective, the Office of the United States Trade Representative will need to publish a final notice after a public comment period and hearing.
Earlier in May 2019, President Donald Trump announced that the Section 301 tariffs on List 3 products would be increased from 10% to 25%, effective from 10 May 2019. He also stated that a fourth list of $325 billion in Chinese imports would be taxed at 25%. Meanwhile, US Trade Representative Robert Lighthizer has stated that his office has "begun preparations to launch a process" for interested parties to seek an exclusion from the List 3 tariffs.
New sanctions on non-US companies doing business in Iran's iron, steel, aluminium and copper sectorsUSA | 31 May 2019
President Donald Trump recently issued an executive order authorising broad new sanctions with respect to the steel, aluminium, iron and copper sectors of Iran. The announcement came hours after Iran announced that it would no longer fully comply with elements of the Joint Comprehensive Plan of Action. The executive order is a major expansion of existing statutory secondary sanctions which relate to steel and aluminium and also addresses two new sectors – copper and iron.
Fashion accessory and luxury goods importers of fine and costume jewellery containing gemstones or precious metals should be aware of a proposal being considered by Department of State (DOS) officials. According to the DOS, providing US consumers with information regarding the origin of raw materials used in jewellery is important in the fight against abusive regimes. In light of these developments, importers should begin to review their supply chains to understand how their goods could be affected.
After years of waiting, the new 22 CFR 126.4 International Traffic in Arms Regulations licence exemption for transfers of defence articles and services by or for the US government has come into effect. While the introduction of the revised exemption is largely positive for exporters, there are a few new boxes to check.
Companies have been on high alert since hearing about a potential shutdown of the US-Mexico border. Although President Trump does not appear to be actively taking steps to close the border, the administration has taken actions to address the migrant situation on the southern border that is disrupting global supply chains. To avoid delays, importers should, among other things, have accurate documentation and check with local port directors for any developments.
The Office of the United States Trade Representative recently announced that it is initiating an investigation under Section 301 of the Trade Act 1974 to enforce the United States' rights in the World Trade Organisation dispute involving subsidies provided to the large civil aircraft industry by the European Union. The investigation may result in tariffs of up to 100% on certain imports from the 28 EU member states as soon as 1 June 2019.
Following a meeting with Chinese Vice Premier Liu He, President Trump announced plans for an "epic" trade deal with China. However, to date, Trump has declined to set a date for a signing summit with President Xi Jinping to hammer out a final trade agreement, for which the Section 301 tariffs have emerged as a sticking point. China has demanded that the tariffs be removed as part of any final deal, while the White House hopes to use the tariffs as leverage to ensure compliance.
While various news accounts have now indicated that President Trump will not close the US-Mexico border, the administration will take further actions. As such, there will likely be a slowdown in border processing and longer wait times at all land ports of entry on the Mexican border for an extended period. Among other things, importers are advised to factor in that wait times will markedly increase or even double.
As part of its response to the changes regarding forced labour enforcement brought about by the Trade Facilitation and Trade Enforcement Act 2015, US Customs and Border Protection is proposing to compel members of the Customs Trade Partnership Against Terrorism to maintain a social compliance programme to help to combat forced labour in supply chains.
The Trump administration recently announced the termination of India and Turkey as recipients of the Generalised System of Preferences on the grounds that neither country has been adhering to the programme's statutory eligibility criteria. According to the press release, Turkey is 'graduating' from this programme, while India is being removed, as it has failed to assure the United States that it will provide "equitable and reasonable access to its markets in numerous sectors".
The Department of Commerce recently announced that it had formally submitted to President Donald Trump the results of its investigation into the effect of imports of automobiles and automobile parts on the national security of the United States. With this announcement, the global automotive industry was put on high alert of a potential new US import tariff aimed directly at the products that they sell.
In a strike against Nicolás Maduro and his supporters, the Trump administration recently announced a new executive order. Pursuant to Executive Order 13850, US persons are now broadly prohibited from engaging in transactions with Petróleos de Venezuela, SA (PDVSA), including its majority-owned subsidiaries. However, the Office of Foreign Assets Control has rolled out a slew of general licences authorising US persons to engage in certain transactions involving PDVSA and its majority-owned subsidiaries.
Section 301 update: List 3 exclusion process halted, while delays expected on List 1 and 2 exclusion reviewsUSA | 25 January 2019
US Trade Representative Robert Lighthizer recently announced the Trump administration's intention to leave companies subject to the 10% tariff rate under Section 301 List 3 of the Trade Act 1974 without an exclusion process. In addition, due to the ongoing federal government shutdown, further delays are anticipated with the review of exclusion requests relating to Section 301 List 1 and Section 301 List 2.
In 2017 the United States agreed that it was time to modernise the 24-year-old North American Free Trade Agreement pact, launching months of negotiations that recently ended. When it comes into force, the United States-Mexico-Canada Agreement (USMCA) will strengthen national treatment protections for the covered financial services industry in the United States. This is set to take place throughout 2019, with the USMCA possibly coming into force in early 2020.
President Trump recently announced the United States' intention to withdraw from the Joint Comprehensive Plan of Action and re-impose secondary sanctions on Iran. The announcement was accompanied by wind-down periods during which non-US persons could wrap up transactions entered into prior to 8 May 2018. The final wind-down period recently expired and secondary sanctions were re-imposed on a broad swathe of Iranian persons and sectors of Iran's economy.
If the turbulence of 2018 caused business executives grief, 2019 is unlikely to provide much relief – particularly in light of the United States-Mexico-Canada Agreement. Further, Section 232 tariffs on many steel and aluminium imports are likely to continue throughout 2019, as will Section 301 tariffs on more than $200 billion worth of Chinese imports. Finally, the administration has announced its intent to start talks on new trade pacts with the European Union, the United Kingdom and Japan.
The United States and Mexico recently announced an agreement regarding key issues that have been the focus of trilateral discussions between the United States, Mexico and Canada for over one year. Although no text is yet available, the Office of the United States Trade Representative has released fact sheets addressing certain aspects of the preliminary agreement in principle.
The US State Department recently explained the waivers of the chemical and biological weapon sanctions against the Russian government, confirming that many exports – even of national security-controlled items – can still be exported to Russia. In short, unless the Trump administration imposes additional sanctions in three months' time, the effects on commercial business with Russia should be limited. However, these measures must still be implemented by the various government agencies.
The US administration recently announced that it will be imposing sanctions on the Russian government under the Chemical and Biological Weapons Control and Warfare Elimination Act 1991 over the use of a novichok nerve agent in an attempt to assassinate UK citizen Sergei Skripal and his daughter Yulia Skripal. Of the five sanctions to be imposed, the fifth – the prohibition on the export of national security-controlled items to the Russian government – is likely the most significant.
A US trade representative recently issued a statement advising that President Trump had directed him to consider raising the previously proposed 10% additional duty to be applied to $200 billion worth of Chinese goods (referred to as the List 3 products) to 25%. Importers are urged to review their imports from China and, if they are importing any of the products on List 3, to consider, at a minimum, filing written comments and possibly appearing at the scheduled public hearing.