U.S. Targets Chinese and Russians for North Korea Dealings

The Office of Foreign Assets Control (OFAC) designated 16 parties as Specially Designated Nationals (SDNs) today, effectively seizing their assets in the United States, blocking them from doing business with U.S. parties, and denying them access to the U.S. financial system.  The designations mark the latest escalation of sanctions on North Korea and an increasing willingness to target Chinese and Russian parties for violating UN and U.S. sanctions on the country.

The firms and individuals involved were targeted because they were involved in the development of North Korea’s nuclear and missile programs, the North Korean energy sector, the export of North Korean laborers, and enabling North Korean entities to access the global financial system.

Russia Under Scrutiny

Earlier this month, the Office of the U.S. Trade Representative (“USTR”) published a notice seeking public comment and participation in a hearing on Russia’s implementation of its obligations under the World Trade Organization (“WTO”). Public comments, summaries of hearing testimony, and requests to appear at the hearing are due on September 22, 2017.  The hearing will be held at USTR on September 28, 2017.

Written comments and testimony at the hearing will assist USTR in preparing its annual report to Congress on how Russia has done in meetings its WTO commitments. This will be USTR’s fifth such report to Congress pursuant to the Russia and Moldova Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012, known as the Magnitsky Act.  The Magnitsky Act marked the extension of permanent normal trade relations to goods and services from Russia and allowed the United States to recognize Russia as a new member of the WTO, which it had joined several months prior to the law’s enactment.

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Trump Administration Takes Steps to Identify Chinese Violations of U.S. Intellectual Property Rights

On Monday, August 14, 2017, President Trump signed a memorandum directing the U.S. Trade Representative (“USTR”) to determine whether to initiate a Section 301 investigation of Chinese laws, policies, practices, or actions that may be harming the intellectual property rights of U.S. persons.

In a Section 301 investigation, if the USTR determines that a Chinese act, policy, or practice, (i) violates, or is inconsistent with, the provisions of, or otherwise denies benefits to the United States under, any trade agreement, or (ii) is unjustifiable and burdens or restricts United States commerce, it may take a broad range of actions to address and correct the harm.

Notably, the memorandum signed by the President does not direct the USTR to investigate any specific law, policy, or practice.  Rather, it instructs the USTR to determine “whether to investigate” any Chinese laws, policies, practices, or actions.  As such, there is no current timeline for the initiation of an investigation or imposition of any remedial actions. USTR Lighthizer has indicated, however, that determining whether to initiate an investigation will be one of his “highest priorities,” and he will “report back to the President as soon as possible.”

Commerce Announces Preliminary Subsidy Margins on Certain Aluminum Foil from China  

On August 14, the Commerce Department published a notice in the Federal Register announcing preliminary subsidy margins ranging from 16.56 to 80.97 percent in its countervailing duty investigation of certain aluminum foil from China.  The aluminum foil covered by Commerce’s investigation has a thickness of 0.2 mm or less, and is coiled in reels that exceed 25 pounds.  As a result of Commerce’s preliminary determination, imports of covered aluminum foil from China that enter the United States on or after August 14 will be subject to cash deposits consistent with the preliminary margins.

Commerce is scheduled to announce its preliminary determination in the companion antidumping investigation on October 4th.

Food Standard Controversies Looms Large in Potential U.S.–UK Trade Deal

With Brexit on the horizon, UK representatives are reinvigorating relationships with key trading partners on every continent.  On 24 July, UK International Trade Secretary Liam Fox and U.S. Trade Representative Robert Lighthizer and U.S. Commerce Secretary Wilbur Ross launched a Trade and Investment Working Group to lay the groundwork for a trade deal to be negotiated after the UK exits the EU.  Fox reportedly arrived in Washington with a list of “confidence building” measures outside the EU’s purview that could be undertaken without violating the prohibition on negotiations with third countries while still an EU Member State. Initial talks are said to focus on “commercial continuity” and increasing bilateral trade.

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Potential Drawback Opportunity for Distilled Spirits

“Drawback” is U.S. Customs program that allows importers to get their duty payments refunded by Customs if they export the same or a similar product.  There are lots of permutations and it’s quite a bit of “paperwork” to qualify, but the upside is significant.

Under the recently enacted Trade Facilitation and Trade Enforcement Act (TFTEA), drawback is being simplified and will be effective Feb 24, 2018.  The importing community is still waiting for certain Customs regulations on this, including whether distilled spirits will be eligible for “substitution” drawback.  Customs has historically denied substitution drawback to distilled spirits. Continue Reading

Get Your Duty-Free Here….The USTR initiates 2017 Annual GSP Review

On August 10th, the Office of the U.S. Trade Representative (“USTR”) initiated its annual review of a program that extends duty-free treatment to producers in 120 designated developing countries and examines whether certain countries are doing enough to maintain their GSP eligibility because of country practices.  More specifically, the USTR announced its initiation of the 2017 Annual Generalized System of Preferences (“GSP”) Product and Country Practices Review in the August 11th Federal Register; see link here. Continue Reading

Senate Democrats Propose a “Better Deal” for American Jobs

Last week, Senate Democrats released their “Better Deal on Trade and Jobs” trade policy statement. The seven point platform is aimed at preventing outsourcing of American jobs and increasing American exports.

The white paper describes the policy as putting “workers and small businesses first, ahead of corporate special interests.” It aims to “fundamentally transform” American trade policies to “combat those countries that try to cheat on trade,” singling out both China and Russia.

The plan would greatly increase federal scrutiny of foreign trade and investment by American corporations. Perhaps most significantly, it proposes the creation of an American Jobs Security Council, which would review any potential purchase of an American company by a foreign entity, and would have the authority to stop the deal if it determined that it would have a detrimental economic impact, such as the loss of American jobs. Continue Reading

Schumer Urges Trump to Suspend All China-Related Mergers Pending Before CFIUS to Exact Tougher Approach on North Korea

Senate Minority Leader Charles Schumer wants President Trump to take a stand against China for its kids-gloves response to North Korea’s nuclear missile activity by using the Committee on Foreign Investment in the United States (CFIUS) to deny all pending requests involving Chinese acquisition of U.S. companies.  President Trump has been critical of China for not using leverage within its means to pressure North Korea, and Schumer’s request, which would block Chinese company efforts to establish control of U.S. companies presently being reviewed by the Committee, aims to drive Beijing to take stronger action by wielding its perceived influence over North Korea. Continue Reading

Ross Op-Ed Defends U.S. Trade Policy as Response to Unfair Trade Practices of Others – Not Protectionism

In a Wall Street Journal opinion piece, U.S. Secretary of Commerce Wilbur Ross reminds U.S. trading partners with sizeable surpluses that trade flows in not one, but two directions.

Pushing back against assessments that U.S. trade policy is turning inward, Ross shifts the protectionist spotlight toward the policies, tariffs and regulations of key trade partners have put American workers, goods and services at a disadvantage – unfairly so.  Free and fair trade, he argues, must address such non-tariff barriers that likely contribute to trade deficits.  He further maintains that U.S. demands for a level playing field under these circumstances are driven by equity, not protectionism.  Continue Reading

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