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22 January 2021
The last four years have been turbulent, to say the least, with more changes to come under the Biden administration. This article aims to help businesses anticipate and prepare for these changes.
Clearly, some issues from 2020 will remain in focus: the changes brought about by the US-Mexico-Canada Agreement (USMCA) marked an increased application of trade remedies such as anti-dumping and the aggressive use of Section 201, 232 and 301 tariffs will push onshoring and regionalisation of supply chains. Added to these are changes to export control rules that will complicate trade relations with China and restrict tech transfers and foreign investment. New issues will emerge as President Biden's focus on Buy America accelerates these trends.
These issues are tempered by the Biden administration's need to repair the damage done to US relations with key trading partners.
Below are six hot-button trade issues that could affect businesses in 2021.
President Biden was inaugurated on 20 January 2021. His transition includes the introduction of Katherine Tai, nominee for the next US Trade Representative (further information is available here).
Since trade policy almost always involves the application of tariffs, what to expect from the Biden administration with respect to China tariffs is a key issue for many executives who have business interests in China and the United States (further information is available here).
US tariffs are applied at the time of import and so the elevated role played by US Customs and Border Protection (CBP) should not be underestimated.
While the Phase I Implementation of the USMCA came to an end on 31 December 2020, marking the end of CBP's self-imposed restraint from enforcing the new USMCA, CBP has proposed requiring new data sets from deeper in the international supply chain. This broader reach by the administration is also demonstrated in the United States' decision to ban certain imports (further information is available here).
When imports are suspected of violating US trade law or threaten US economic interests, trade litigation (ie, trade investigation cases) kicks in. Businesses should be aware of third-country trans-shipment concerns, as well as the administration's intent to expand the scope of US trade investigations. For example, blueberries and strawberries are two agricultural commodities which recently became the focus of US trade remedy law (further details are available here).
The Trump administration used export controls as part of its aggressive anti-China policy, notably by:
This prohibits most exports and re-exports to those entities without a licence. While a dramatic policy change is not expected, the Biden administration is likely to work more closely with allies to pursue its foreign policy goals with respect to China (further information is available here).
With respect to trade policy, other important issues include the United States' renewal of Generalised System of Preferences benefits and the tension between the Biden administration's promise to protect US workers while achieving climate goals. Finally, Biden's plan to ensure that future US government purchases are 'Made in all of America' presents new considerations for companies selling to the federal government, particularly those procured from foreign countries. While short on specifics, the plan does present important clues. Ultimately, US international trade policy is set to reflect the priorities of an administration taking office in a time of domestic economic turmoil (further information is available here).
For further information on this topic please contact David R Hamill, Jessica DiPietro, Antonio J Rivera or Birgit Matthiesen at Arent Fox LLP by telephone (+1 202 857 6000) or email (firstname.lastname@example.org, email@example.com, firstname.lastname@example.org or email@example.com). The Arent Fox LLP website can be accessed at www.arentfox.com.
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