Trump Signs Executive Order to Strengthen Buy American Preferences for Infrastructure Projects

On January 31, President Donald J. Trump signed Executive Order 13858 entitled Strengthening Buy American Preferences for Infrastructure Projects. The Order is designed to strengthen the “Buy American principle” for Federal infrastructure spending by encouraging Federal funding recipients to use more American-made products in their infrastructure projects. “By signing this order today, we renew our commitment to an essential truth: It matters where something is made, and it matters very greatly,” said President Trump.

Specifically, the order directs the head of each executive department and agency administering a covered infrastructure program to “encourage recipients of new Federal financial assistance awards to use, to the greatest extent practicable, iron and aluminum as well as, steel, cement, and other manufactured products produced in the United States in every contract, subcontract, purchase order, or sub award that is chargeable against such Federal financial assistance award.” Covered programs include Federal financial assistance for a wide variety of U.S. infrastructure projects, from surface transportation and water infrastructure to broadband and cyber-security.

In addition to encouraging funding recipients to use domestic products in their projects, the new order also requires the head of each agency administering a covered program to identify in a report to the President opportunities to maximize the use of Buy American principles. The reports are due no later than May 31, 2019.

Thursday’s action is an attempt to close potential coverage gaps by extending Buy American principles to more taxpayer-financed federal infrastructure assistance programs. The executive order similarly seeks to expand the application of the Buy America procurement preferences to items not typically subject to existing Buy America laws, which are often limited to iron and steel products and materials. The “manufactured products” specifically identified in the executive order include non-ferrous metals, plastic and polymer materials like pipe, aggregates, glass and lumber.

The White House indicated this strengthened focus could result in billions of U.S. taxpayer dollars being redirected to American manufacturers. Continue Reading

USTR Announces List of Changes Required to U.S. Law in Order to Implement USCMA

On January 29, USTR Ambassador Lighthizer delivered to Congress a list describing changes to U.S. laws that would be required to fulfill obligations agreed to under the United States Mexico Canada Agreement (USMCA).  This action, taken in accordance with procedures set forth in the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (also known as Trade Promotion Authority or TPA), brings the agreement one step closer to Congressional consideration by identifying the legal changes that must be included in an implementing bill to be voted on by legislators to approve the underlying agreement.

The changes in existing law are largely customs related, the bulk of which involve implementing market access commitments, including lowering tariffs and creating new tariff rate quotas, as well as updating provisions related to duty drawback, merchandise processing fees and customs enforcement.  For example, while USMCA preserves duty free treatment for industrial goods and textiles under NAFTA, the United States and Canada negotiated additional access on certain agricultural products.  Accordingly, modifications must be made to eliminate U.S. tariffs on such products from Canada, including dairy, sugar, sugar-containing products, peanuts and peanut products and cotton.

Changes are also required to implement rules of origin, origin procedures and customs measures to provide preferential tariff treatment for eligible goods.  The most significant and notable changes involve automotive goods.  Necessary legal revisions will end NAFTA’s tracing and “deemed originating” requirements and increase the required regional value content for vehicles and vehicle parts.  Changes are also needed to implement a new “Labor Value Content” rule, which for the first time requires that a minimum amount of car content Continue Reading

US-EU Trade Agreement: Negotiating Objectives Released

Introduction

On 11 January 2019 and 18 January 2019, the United States Trade Representative (“USTR”) and the European Commission (“Commission”) released their respective negotiating objectives for a U.S.-EU trade agreement, potentially marking a new phase in the transatlantic trade relationship.  The release follows from the joint agenda agreed to in July 2018 by European Commission President Jean-Claude Juncker and U.S. President Donald Trump to work together toward “zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods,” increased cooperation on regulatory issues and standards, and protecting European and U.S. companies from unfair global trade practices.  The release could also signify an important expansion of market opportunities for EU and U.S. companies.

The road ahead is fraught with obstacles, however, as the EU and U.S. negotiating positions differentiate substantially.  The USTR’s summary of specific negotiating objectives seeks a broad free trade agreement with the EU, including on sticky issues such as agriculture, while the Commission aims to limit trade negotiations to reciprocal commitments on conformity assessment and industrial goods. This makes any future transatlantic trade negotiations challenging at best and raises the question of whether the two sides will be able to arrive at an agreement at all. The situation is further complicated by the Trump administration’s ongoing 232 investigations on imports of certain automobiles and parts, as the EU stands ready to suspend any trade talks and retaliate with duties on U.S. exports should the investigation lead to the imposition of tariffs on certain EU automotive products.

EU Perspective

EU Commissioner for Trade, Cecilia Malmström, has clearly stated that the EU is “not proposing to restart a broad free trade agreement negotiation with the US,” referring to the breakdown of negotiations, five years ago, of the Transatlantic Trade and Investment Partnership (TTIP).  On 30 January 2019, the Commission published a progress report concerning the joint agenda agreed to in July 2018.  The report indicates that talks between the parties have so far focused on potential regulatory cooperation initiatives.  The EU has also taken some measures to avoid the escalation of trade tensions with the United States.   Continue Reading

New Sanctions on Venezuela’s National Oil Company, PDVSA

Yesterday, the Office of Foreign Assets Control (“OFAC”) listed Petroleos de Venezuela, S.A. (“PdVSA”) as a Specially Designated National (“SDN”) pursuant to its authority under Executive Order 13850. As a result of the designation, all property and interests in PdVSA property subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with the entity and its 50-percent owned subsidiaries.

Concurrent with the designation, OFAC amended one existing and issued eight new General Licenses (“GLs”).  These GLs authorize activities that would otherwise be prohibited by Executive Order 13850 or other Venezuela-related sanctions, and fall into one of several categories: 1) authorizations regarding maintenance and wind down activities related to contracts with PdVSA or certain of its subsidiaries existing prior to January 28, 2019 (GL 11, GL12).  The most significant authorization allows parties to wind down pre-existing contracts with PdVSA until February 27, 2019; 2) authorizations regarding certain PdVSA subsidiaries, including PDV Holding, Inc. (“PDVH”), CITGO Holding, Inc. (“CITGO”), and Nynas AB (GL 7, GL 13). These GLs include an authorization for the export of certain U.S. items and services until July 27, 2019; 3) the purchase in Venezuela of gas from PdVSA and its subsidiaries for certain uses (GL 10); 4) authorization for certain Venezuela-based operations involving PdVSA (GL 8); and 5) transactions related to certain bonds and debts (GL 3A, GL 9), among others.

The GLs generally have difference scopes, apply to different entities, and have different validity periods. The key aspects of each of the GLs are described below.

Continue Reading

Funding for federal courts could end on February 1st

On January 22nd, the Administrative Office of the U.S. Courts estimated that federal courts can sustain paid operations through January 31, 2019 – but “no further extensions beyond February 1st will be possible.”  See https://www.uscourts.gov/judiciary-news.

This deadline had previously been extended from January 18th to January 25th; see https://www.ustrademonitor.com/2019/01/jan-16-2019-update-on-government-shutdowns-impact-on-federal-court-system/ and https://www.ustrademonitor.com/2019/01/government-shutdown-closes-in-on-the-federal-court-system-including-the-trade-courts/.

If the shutdown continues after the courts’ existing funds expire, it’s difficult to predict what will actually happen, given that all previous shutdowns ended before courts exhausted their reserves.

The judiciary has continued paid operations by deferring non-critical operating costs and utilizing court filing fees.  The Administrative Office points out that these are temporary stopgaps, and the Judiciary will face many deferred payment obligations once the partial government shutdown ends.

The trade courts have recently updated the status of their operations given the partial government shutdown; see below.  It is unclear if these two courts will continue to operate past the Administrative Office’s February 1st cut-off deadline for the federal judiciary.

Court of International Trade

The Court of International Trade posted on January 18th that it will continue to perform its “necessary duties” during the government shutdown (including CM/ECF being fully operational and “all filing deadlines will remain in effect”).

Court of Appeals for Federal Circuit (“CAFC”)

On January 18th, the CAFC issued another order regarding its continued operation during the shutdown.  See

http://www.cafc.uscourts.gov/announcements/updated-order-regarding-continued-court-operations-during-partial-government-shutdown.

`The CAFC continues to be fully staffed; all filing deadlines remain in effect, absent a grant of either a motion for extension of time or a motion for stay in a particular case.

 

 

China’s Vice Premier Liu He to Visit Washington at End of Month to Continue Trade Talks

Chinese Vice Premier Liu He will visit Washington on January 30-31, in connection with further discussions to resolve the ongoing trade dispute between the U.S. and China.

Vice Premier Liu is expected to meet with U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin. Liu is a key economic advisor to President Xi Jinping and is leading the Chinese delegation in talks with the United States.

This next round of talks follows last week’s talks between mid-level officials in Beijing that reportedly focused on increasing Chinese purchases of U.S. exports, intellectual property protection, and forced technology transfers among other issues. Liu made a surprise appearance on the first day, and negotiators from both the U.S. and China expressed optimism that an agreement could be reached.

Last Thursday Trump confirmed that he would not attend the World Economic Forum later this month in Davos, Switzerland, due to the ongoing partial government shutdown. Some argue his cancelation will prevent a potential meeting in Davos between Mr. Trump and Chinese Vice President Wang Qishan, which could jumpstart trade negotiations. But some commentators see this missed meeting as positive, based on their view that a personality clash between the two men could stifle talks.

The upcoming negotiations are a part of a temporary trade truce agreed upon by Trump and Xi during their meeting in Argentina on December 1. Under that agreement, the U.S. temporarily suspended planned tariff increases on $200 billion of Chinese goods until March 2.

McDonald’s Big Loss in Big Mac Case

On January 15, the European Union Intellectual Property Office (EUIPO) revoked McDonald’s registered trademark, “Big Mac.”   The name “Big Mac” had been protected in the EU for more than 20 years under international classes 29, 30, and 42 for foods, sandwiches, and services of franchise restaurants, respectively.  Trademarks, which provide legal protections for names, among other things, can be extremely valuable assets for businesses and protect consumers in their purchasing decisions.  The January 15 decision will likely create some concern, if not confusion, for international businesses in how they might protect their brands in major markets.  McDonald’s quickly announced that it plans to appeal the decision, which is set against a backdrop of US-EU trade negotiations and a recent increased focus on intellectual property in trade negotiations.

In its decision, EUIPO found that the evidence McDonald’s provided to prove the genuine use of the name “Big Mac” in the EU, including websites, posters, packing, and affidavits from company representatives in Germany, France, and the UK, was not sufficient.   EUIPO said about the websites, “it could not be concluded whether, or how, a purchase could be made or an order could be placed.”  In addition, the regulating body took issue with brochures because there had been no evidence provided as to whom the brochures were given or how they were dispersed.  The administrative decision also discussed that although some evidence was provided of use, McDonald’s did not prove the extent of use of its mark.

The case to cancel the international fast food giant’s protection was brought by an Irish fast food chain, Supermac’s.  Patrick McDonagh, the managing director of Supermac’s, stated that the intention of the case was to “shine a light on the use of trademark bullying.”  Continue Reading

Jan. 16, 2019 Update on Government shutdown’s impact on federal court system

On January 16th, the Administrative Office of the U.S. Courts announced that it “now estimates that federal courts can sustain paid operations through Jan. 25, 2019” (extending its previous estimate by one week).  See https://www.uscourts.gov/judiciary-news

See also Jan. 11, 2019 Trade and Manufacturing’s Blog entitled:  “Government shutdown closes in on the federal court system (including the trade courts)” available at:

https://www.ustrademonitor.com/2019/01/government-shutdown-closes-in-on-the-federal-court-system-including-the-trade-courts/

Government shutdown closes in on the federal court system (including the trade courts)

Despite the partial government shutdown since December 22nd, the Supreme Court and lower federal courts have remained open by drawing on non-appropriated funds and court fees.

Federal courts will be able to continue operating with their limited funds during the shutdown until January 18th, as reported on January 7th by the Administrative Office of the U.S. Courts (“Administrative Office”).  See https://www.uscourts.gov/judiciary-news.  This deadline is one week longer than its previous estimate.  To meet this goal, courts have been asked to delay or defer “non-mission critical expenses,” such as new hires and non-case related travel.  According to the Administrative Office, judiciary employees are reporting to work and currently are in full-pay status.  If new appropriation funds do not become available, “essential work” will continue to be allowed under the Anti-Deficiency Act.  Id.  This “essential work” would include “activities to support the exercise of the courts’ constitutional powers under Article III, specifically the resolution of cases and related services.”  Id.  Individual courts and judges will then decide how to fulfill those critical functions according to David Sellers, a spokesman for the Administrative Office.  See http://fortune.com/2019/01/05/government-shutdown-federal-courts/.  “In the past, some courts have suspended civil cases, some have conducted business as usual,” Sellers said.  “It’s really a judge-by-judge, court-by-court determination.”  Id.

Below is an update on how the shutdown is impacting the trade courts and the Supreme Court Continue Reading

United States Seeks Trade Consultations with Peru

On Friday, January 4, 2019, the Office of the U.S. Trade Representative (USTR) announced that the United States has requested consultations with Peru under the auspices of the U.S.-Peru Trade Promotion Agreement (PTPA) to address an alleged violation by Peru of the environmental chapter of the agreement.  According to USTR, Peru’s recent decision to move its previously-independent Agency for the Supervision of Forest Resources and Wildlife (OSINFOR) to a subordinate position within the country’s Ministry of the Environment conflicts with the express commitment under the PTPA that the agency remain independent.

The PTPA entered into force in February 2009, and total trade between the two countries has nearly doubled since that time to $15.9 billion in 2017.  The PTPA was the first U.S. trade agreement – followed by agreements with Panama, Colombia, and Korea – to incorporate the more stringent and enforceable labor and environmental standards established in the May 10, 2007 Bipartisan Agreement on Trade Policy, known as the “May 10th Agreement.”

The United States’ decision to raise this issue in formal consultations with Peru is notable in two contexts.  First, the specific provision of the PTPA’s environmental chapter that guarantees OSINFOR’s independence is found in the Annex on Forest Sector Governance – a unique set of commitments designed to address the environmental and economic consequences of trade associated with illegal logging and illegal trade in wildlife.  Illegal logging in particular was a priority concern for the United States in negotiating the PTPA, and OSINFOR is the Peruvian agency, established in 2008, primarily responsible for detecting and combatting illegal logging.  Thus, ensuring the agency’s ongoing independence and ability to enforce Peru’s forestry commitments is an important policy concern for the United States in the context of the U.S.-Peru trade relationship.

Second, the Trump Administration is in the process of seeking Congressional support for the U.S.-Mexico-Canada Agreement (USMCA), designed to replace NAFTA.  As we previously noted, the USMCA’s labor and environmental provisions are likely to be a sticking point for House Democrats, even though USTR has stated that the USMCA comports with the May 10th Agreement.  USTR’s action to enforce this particularly critical issue arising under the PTPA may be seen as a move to demonstrate the Administration’s commitment to the USMCA’s environmental terms and thereby garner Democratic support for the deal.

With the United States’ request for consultations, the parties have 60 days to resolve the dispute before the United States can request separate consultations or a meeting of the PTPA Commission under the dispute settlement provisions of the agreement.  In a statement, USTR explained that it “will continue to confer with Members of Congress, interested agencies, and stakeholders on the results of these consultations before considering any further actions.”

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