Potential Tariffs on Apparel, Footwear, Electronics, and Home Goods from China

The Trump Administration is planning on dusting off another infrequently used provision of the trade laws, Section 301 of the Trade Act of 1974, to impose additional tariffs on apparel, footwear, electronics, and home goods manufactured in China and imported into the U.S.  The potential tariffs could reach between $30-$60 billion per year.  The Trump Administration announced its proposed Section 301 tariffs as a response to China’s improper transfer of technology and failure to protect U.S. intellectual property rights.  Many industries are concerned about the potential added costs such tariffs represent and are organizing to oppose them.

Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer are expected to testify before Congressional committees Wednesday and Thursday.  Additional information is expected to be released later in the week, including the list of covered products, proposed tariff rates, and the implementation date.  As with the recent Section 232 tariffs on steel and aluminum products, there is speculation that the Administration may include an exclusion process to remove specific products from the list of affected products.  It is also thought that there may be an opportunity for public comment opposing or supporting the proposal.  This blog will be updated as new information is released by the Trump Administration.


Sanctions Penalties Tick Up Again

Penalties for violations of sanctions rules administered by the Office of Foreign Assets Control (OFAC) ticked up again yesterday.  Most violations of OFAC’s rules now face statutory penalties of $295,141 or twice the value of the underlying transaction.  Penalties for violations of OFAC’s narcotics trafficking regulations are now set at $1,466,485, with penalties for violations of other OFAC regulations ranging from $13,333 to $86,976. Continue Reading

Trump makes it official: Venezuelan digital currency is subject to sanctions

The President signed a new Executive Order today making it unlawful to engage in transactions involving digital currency issued by the Venezuelan government.  The Executive Order makes official prior guidance from the Office of Foreign Assets Control (OFAC), which stated that dealings related to Venezuelan digital currency would likely be prohibited under existing sanctions.

Last year Venezuelan President Nicolas Maduro declared that Venezuela would issue a digital currency to help the Venezuelan government and Petroleos de Venezuela, S.A. (PdVSA), the state-owned oil company, avoid U.S. sanctions.  New guidance released by OFAC today confirms that the Venezuelan “petro” and “petro gold” currencies are subject to the new restrictions.

The U.S. sanctions Russian trolls and threatens future measures against Russian officials and oligarchs

Yesterday, the U.S. Office of Foreign Assets Control (OFAC) blacklisted 14 new Russian individuals and the Internet Research Agency as Specially Designated Nationals (SDNs) for their role interfering with the 2016 U.S. presidential election.  While limited in scope, the new designations are the first use of authority under the Countering America’s Adversaries Through Sanctions Act (CAATSA) to sanction Russian parties.

In a press release accompanying the new sanctions, Treasury Secretary Mnuchin indicated that Treasury intends to issue additional sanctions targeting Russian government officials and Russian oligarchs to hold them “accountable for their destabilizing activities by severing their access to the U.S. financial system.”  The press release cites a number of “destabilizing” acts, including cyber-attacks against the U.S. government and critical U.S. infrastructure, election interference, interference in Ukraine, the occupation of Crimea, corruption, and human rights abuses.  It remains unclear how extensively the administration will implement new sanctions on Russia, but companies with exposure to the Russian market will need to continue to carefully monitor developments in this area.

Gil Kaplan Confirmed as Undersecretary of Commerce for International Trade

Yesterday evening, the Senate confirmed Gilbert Kaplan to serve as Undersecretary of Commerce for International Trade, after his April 2017 nomination and September 2017 confirmation hearing.  In this position, Mr. Kaplan will oversee Commerce’s trade remedy functions and export promotion activities.  He arrives at Commerce at a particularly critical period as the Administration tackles a number of significant trade policy work streams and the International Trade Administration, in particular, faces a huge docket of trade remedies cases.

Mr. Kaplan, a trade attorney, brings decades of experience to this role, including as a longtime partner at King & Spalding.  Previously, Mr. Kaplan served as Deputy Assistant Secretary and the first Acting Assistant Secretary of Commerce for Import Administration during the Ronald Reagan administration, at which time he oversaw hundreds of trade remedy cases, acted as a key negotiator of the U.S.-Japan semiconductor and the U.S.-Canada lumber agreements, and supervised the administration’s steel and machine tool programs.  Continue Reading

New North Korea Sanctions Regulations Become Effective Today

The Office of Foreign Assets Control (OFAC)’s new North Korea Sanctions Regulations become effective today.  In addition to making certain technical and conforming changes, the newly updated Part 510 incorporates recent changes to the sanctions program under Executive Orders (E.O.) 13687, 13722, and 13810, the North Korea Sanctions and Policy Enhancement Act of 2016, and the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA).  The new rules incorporate general licenses that were previously exclusively on OFAC’s website and make changes to those general licenses, including a new $5,000 cap on authorized remittances to North Korea and the elimination of the general license authorizing certain educational activities.  OFAC also issued four new general licenses authorizing certain transactions relating to the investment and reinvestment of funds, payments of certain legal fees, and the activities of the U.S. government and international organizations.
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Will the U.S. Re-Join the (CP)TPP?

On February 21, the final version of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”) was released ahead of its official signing, which is scheduled for March 8, 2018.  The CPTPP reduces tariffs between 11 nations: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The economies of these nations together account for more than 13% of the total global GDP, or 10 trillion U.S. dollars.

New Zealand Trade Minister David Parker, in a February 21, 2018 news conference, stressed the importance of the deal “because of the growing threats to the effective operation of the World Trade Organization rules.”  Steven Ciobo, Australia’s Minister for Trade, also praised the deal telling Reuters that, “the TPP-11 will help create new Australian jobs across all sectors – agriculture, manufacturing, mining, services – as it creates new opportunities in a free trade area that spans the Americas and Asia.”

The United States was a member state of the predecessor to the CPTPP – the Trans Pacific Partnership (“TPP”) – which was negotiated under former Continue Reading

Global Trade Flows Are Expanding, But Is There a Reason for Optimism?

Last Friday, the CPB Netherlands Bureau for Economic Policy Analysis, as part of its World Trade Monitor, reported that global trade flows – the volume of export and imports of goods – was 4.5% higher in 2017 than in 2016.  This is an important finding because it marks the biggest rate of year-in-year expansion since the world began recovering from the global financial crisis, exceeding expectations for the year.  According to the CPB World Trade Monitor, global trade flows grew 24% between January 2010 and December 2017.

Experts, however, are cautiously optimistic about the news and what it could mean for 2018.  Last year, significant uncertainties about critical aspects of the global economy made it difficult to predict the track of trade growth.  The WTO cited unpredictability with respect to government action on monetary, fiscal, and trade policy, and whether trade would be restricted in favor of attempts to address domestic wage stagnation and unemployment.  Continue Reading

South Korea Takes Fukushima Seafood Ban to WTO Appellate Body

South Korea announced on Friday that it will appeal to the WTO Appellate Body a panel ruling in favor of Japan’s challenge to South Korea’s ban on imports of Japanese seafood products after the Fukushima nuclear incident, which occurred in 2011.  In 2013, South Korea joined several other countries and placed import restrictions on 28 seafood products from eight Japanese provinces near Fukushima.  Japan challenged South Korea’s import restrictions at the WTO as violating anti-discrimination rules and serving as an unfair trade barrier.  In its report issued Thursday, the WTO panel concluded that the South Korean import ban was more restrictive than necessary and violates South Korea’s WTO obligations.  The panel recommended that South Korea eliminate the overly restrictive import ban.

South Korea Launches WTO Dispute Against the U.S. Challenging Multiple Provisions of U.S. Law and Commerce Department Proceedings

Last week, South Korea requested consultations with the United States at the WTO, launching a significant dispute that challenges both individual investigations and administrative reviews conducted by the Commerce Department, as well as broader aspects of U.S. antidumping and countervailing duty law.  Korea’s broader “as such” challenge targets provisions of U.S. law, including the 2015 “Leveling the Playing Field Act,” that authorize the Commerce Department to rely on adverse facts available in calculating a dumping margin for foreign producers or exporters that do not cooperate during a proceeding.  Korea claims that U.S. law unfairly permits the Commerce Department to disregard information submitted during a proceeding and to instead apply an inappropriately high dumping margin.

Korea also challenges specific Commerce Department’s findings in multiple AD/CVD investigations, including on large power transformers, cold-rolled steel flat products, hot-rolled steel flat products, and corrosion-resistant steel products (“CORE”).  WTO rules provide 60 days for the United States and Korea to discuss settlement of the dispute before Korea may file a more formal complaint to continue the dispute.