BREXIT UPDATE: European Commission Warns Importers and Exporters of Goods with Possible UK Origin

On 4 June, the European Commission advised economic operators to prepare for the consequences of the United Kingdom leaving the European Union on their imports and exports.   Following the UK’s withdrawal, UK inputs, including materials and certain processing operations, will no longer be considered EU origin for purposes of enjoying preferential treatment.   Whether a particular good qualifies depends on the rules of origin specified in each trade agreement between the EU and its trading partners.  The Commission advises EU exporters to treat any UK inputs as “non-originating” when determining the EU’s treatment of their goods post-Brexit and to take appropriate steps to be able to prove the preferential origin of goods without counting UK inputs as EU content.  Economic operators importing goods into the EU also are advised to take steps to ensure that the exporter can demonstrate compliance with EU preferential origin rules given the exclusion of UK inputs after Brexit. Continue Reading

Russia Adopts New Counter-Sanctions Law

On June 4, 2018, Russian President Vladimir Putin signed into law new counter-sanctions in response to U.S. sanctions imposed against Russia on April 6, 2018.  Under the new law, Putin may, among other things, sever ties with unfriendly countries and ban trade of goods with those countries.  The final version of the law stopped short of imposing criminal liability for compliance with U.S. and other foreign sanctions against Russian parties.  Companies are advised to consult with sanctions counsel before undertaking transactions in Russia (and certain other locations) that may be subject to OFAC primary and secondary sanctions.

Commerce Initiates 232 Investigation of Auto Imports

On May 23, 2018, Commerce Secretary Ross initiated an investigation into whether imports into the United States of automobiles and auto parts threaten to impair the national security.  A link to the press release announcing the initiation of the investigation is available here.

As it did during its recent 232 investigations concerning U.S. imports of steel and aluminum, the Commerce Department is seeking participation from the public in the form of written comments and public testimony.  The following are the key dates for interested parties who would like to participate in the investigation:

  • June 22, 2018 – Deadline to submit affirmative comments, request to appear at the public hearing, and submit a summary of expected testimony
  • July 6, 2018 – Deadline to submit rebuttal comments
  • July 19-20, 2018 – Public hearings held at 8:30 a.m. to 5:00 p.m. ET

For additional information concerning the specific issues for which the Commerce Department is seeking comments and information as well as the process for submitting such comments and information interested parties should consult the agency’s May 30, 2018 Federal Register notice.

Commerce To Issue AD Orders on Cold-Drawn Mechanical Tubing from Six Countries After ITC Unanimously Finds Domestic Industry is Materially Injured

On May 17, the ITC voted unanimously that dumped imports of cold-drawn mechanical tubing from China, Germany, India, Italy, Korea, and Switzerland are a cause of material injury to the domestic industry.  This vote follows the Commerce Department’s final determinations that imports from producers and exporters in these six countries are being dumped in the U.S. market at significant levels.  The dumping margins range from: 44.92 percent to 186.89 percent for China;  3.11 percent to 209.06 percent for Germany;  8.26 percent to 33.80 percent for India;  47.87 percent 68.95 percent for Italy;  30.67 percent to 48.00 percent for Korea;  and, 12.05 percent  to 30.48 percent for Switzerland.

The Commerce Department will now issue AD orders on cold-drawn mechanical tubing from these six countries.  The AD orders will complement the CVD orders already in place on imports from China and India, which were issued back in February.

New Venezuela Sanctions Announced; Future Sanctions Against Venezuelan Oil Threatened

Yesterday, the President issued a new Executive Order (E.O.) prohibiting certain financial transactions involving the Venezuelan government, including Petroleos de Venezuela, S.A. (PdVSA), the state-owned oil company.  Under the new rules, persons subject to U.S. jurisdiction are prohibited from engaging in transactions related to:

(i) the purchase of any debt owed to the Government of Venezuela, including accounts receivable;
(ii) any debt owed to the Government of Venezuela that is pledged as collateral after the effective date of the E.O., including accounts receivable; and
(iii) the sale, transfer, assignment, or pledging as collateral by the Government of Venezuela of any equity interest in any entity in which the Government of Venezuela has a 50 percent or greater ownership interest.

The new sanctions were issued the day after President Nicolás Maduro claimed victory in his bid to win a second term in office after a seriously flawed vote. 

According to U.S. Deputy Secretary of State John Sullivan, the United States is also considering issuing new oil sanctions against Venezuela, which would be a substantial escalation in sanctions on that country.


DDTC and BIS Propose New Rules to Continue Export Control Reform Initiative

As part of the ongoing Export Control Reform initiative, the Directorate of Defense Trade Controls (“DDTC”) and Bureau of Industry and Security (“BIS”) has issued proposed rules that would move certain items currently controlled on the International Traffic in Arms Regulations (“ITAR”) to the Export Administration Regulations (“EAR”).  The proposed rules would move some items currently controlled under Categories I, II, and III of the U.S. Munitions List (“USML”), including certain firearms, guns and armament, and ammunition/ordnance to new Export Control Classification Numbers (“ECCNs”) on the EAR.  After their publication in the Federal Register, there will be a 45-day comment period during which the agencies will accept public comments.

Specifically, the proposed rule targets for a move to the EAR products that are not inherently military, or do not possess characteristics that provide a military advantage to the U.S.  These rules, once finalized, would reduce the compliance burden on exporters in the industry.  However, the proposed rules do not represent a wholesale deregulation of the industry, as many items would remain highly controlled under the EAR’s “600-series” and other ECCNs, and would still require licenses to many destinations.  Affected parties should carefully review the proposed rules and take the opportunity to comment on the proposed reforms.

The EU & Russia Move Forward with “Blocking Statutes” in Response to U.S. Exit from Iran Nuclear Deal

Today, the EC announced that it is moving forward with a package of measures to blunt the impact of renewed U.S. sanctions on Iran following the U.S. exit from the Joint Comprehensive Plan of Action (JCPOA).  Included in those measures is the planned activation of the EU blocking statute, which would bar EU companies from complying with the extraterritorial effects of U.S. sanctions requirements on Iran.  The statute is also intended to insulate EU companies from certain U.S. sanctions penalties.  Implementation of blocking statutes can create a situation in which companies must decide which country’s law they are going to violate – if they cannot find an approach that avoids the conflict.       Continue Reading

CIT Overturns CBP: Pets are not “Items or Personal Effects”

The United States Court of International Trade recently overturned a U.S. Customs and Border Protection (CBP) denial of a protest, in which Quaker Pet Group, LLC contested CBP’s classification of its pet carriers.  The five pet carriers at issue in Quaker Pet Group, LLC v. United States, Slip Op. 18-9 (Ct’ Intl. Trade 2018) are used to carry cats, dogs or other pets and are made of mesh and cloth.  CBP classified the carriers under Harmonized Tariff Schedule of the United States (HTSUS) subheading 4202.92.30, a provision which covers “travel, sport and similar bags” made of textile material that are designed for “carrying clothing and other personal effects during travel.”  Continue Reading

U.S.- China Trade Relationship Affects Recycling Practices

The Wall Street Journal reported that the industry for recycled products is collapsing.  Until late last year, China was the largest importer of U.S. recyclables.  At the beginning of 2018, in a decision that many attribute to trade tensions between the U.S. and China, China imposed more stringent quality standards on imports of recycled material and ceased importing U.S. mixed paper and mixed plastic of any quality until June 4, 2018.   As a result of the harsher standards, the prices of scrap paper and plastic have plummeted.  While other countries, such as India and Vietnam, have imported some of the waste that would have been sent to China, there remain large amounts of unsold recycled material. Continue Reading

World Health Organization Encourages Governments to Ban Artificial Trans Fats by 2023

The World Health Organization has announced a new initiative, REPLACE, that seeks the cooperation of governments to ban artificial trans fats by 2023.  Trans fats can either be naturally occurring in foods such as milk products, or artificially produced.  Partially hydrogenated oils account for most artificial trans fats.  These fats are commonly found in baked goods, coffee creamers, fried foods, and processed snack foods.

REPLACE, which is supported by the International Food & Beverage Alliance, was designed to reduce the global occurrence of cardiovascular diseases and resulting deaths.  Artificial trans fats have already been banned or limited in more than twenty countries across the globe, including the U.S., Canada, and several European nations.