Export Compliance Obligations for Transactions between U.S. Companies and India to be Reduced

In the near future, trade between the U.S. and India will likely be simplified.  Late last week, the Wassenaar Arrangement admitted India as a member (India’s membership will be formalized shortly), and the Australia Group is expected to admit India in the coming months.  Both organizations are Multilateral Export Control Regimes that inform U.S. export regulations, including the Export Administration Regulations.  After the Commerce Department publishes a notice of India’s membership in these organizations in the Federal Register, the changes will likely reduce the exports for which a specific authorization will be required, and will increase the availability of certain license exceptions under the EAR, including Additional Permissive Reexports (“APR”).

Congress Proposes Increased Scrutiny on Foreign Investments in the U.S.

A bipartisan group of co-sponsors in both the House and the Senate recently introduced the Foreign Investment Risk Review Modernization Act (“FIRRMA”).  These substantively identical bills demonstrate that Congress is now considering increasing the scrutiny of foreign investment in the U.S., particularly from China.

The Committee on Foreign Investment in the United States (“CFIUS”) is the interagency body is responsible for reviewing incoming foreign investments for national security risks, so long as they are “covered transactions.”  FIRRMA would broaden the scope of “covered transactions” to include, among other things: the purchase or lease by a foreign person of real estate located near U.S. military or national security interests; non-passive investments in critical technologies or critical infrastructure; and the contribution of U.S. critical technology to a foreign person, including through joint ventures, among others.  The bills would also update certain terms and definitions, including “critical technology,” which can include emerging technologies that are not necessarily controlled for export.  Notably, FIRRMA would not extend CFIUS jurisdiction to “greenfield” investments, which the regulations carve out from CFIUS review.  Continue Reading

Say It Ain’t So Santa:  Court of International Trade Decision Increases Import Duties on Santa Claus Costume

The Court of International Trade was not in the holiday spirit when it issued the decision in Rubie’s Costume Co. v. United States, Slip Op 17-147, which held that the imported Santa Claus suit cannot be considered a “festive article,” but must be considered wearing apparel.  Festive articles, imported into the U.S. under heading 9505 of the Harmonized Tariff Schedule, enter the U.S. free of duty.  The Court held that Santa’s man-made fiber jacket and pants would enter as wearing apparel under Chapter 61 and specifically under 6110.30.30 at 32% duty for the jacket and 6103.43.15 at 28.2% duty for the trousers.  Continue Reading

The U.S. Fights Back at the WTO on China’s NME Status

Last week, the United States filed its first legal analysis of the China non-market economy issue in a dispute at the World Trade Organization brought by China against the European Union.

As we have reported here and here, the question of whether the United States would continue to treat China as an non-market economy (“NME”) for purposes of the Department of Commerce’s antidumping duty analysis was recently decided by the Administration.  In a 200-page memorandum issued at the end of October, Commerce announced that it would continue to apply alternative dumping methodologies with respect to China given the substantial evidence that China continues to be an NME.

That has not stopped China from initiating dispute settlement proceedings at the World Trade Organization (“WTO”) against the European Union (DS516) and the United States (DS515).  In each dispute, China is challenging the WTO member’s applied antidumping duty methodology with respect to imports from China, which China believes are prohibited under a provision of its 2001 Protocol of Accession to the WTO and inconsistent with provisions of the WTO Antidumping Duty Agreement and the General Agreement on Trade and Tariffs (“GATT 1994”).  Continue Reading

New Customs Rules for a Post-Brexit United Kingdom

March 2019 is coming and importers and exporters need to be prepared for what lies ahead. The UK is leaving not only the EU but its Customs Union.  No longer will imports into a distribution center in the EU cover sales in the UK.  Companies will need to set up logistics to manage UK imports and exports and be compliant with new UK customs regulations.  It is likely that a two year “standstill” or “transition” period will be agreed for the April 2019 to March 2021 period.  Should the UK leave the EU without an agreed deal on trade and customs, however, the UK would be a third country vis-à-vis the EU (now typically referred to as the “EU27” denoting the 28 EU Member States minus the UK) and all imports and exports between the UK and the EU bloc would be governed by WTO rules.

According to the British Retailers Consortium, with Brexit more than 180,000 companies could be required to make customs declarations for the first time and the UK is expecting more than 200 million additional customs declarations annually.  The most significant impact is feared for goods that are transported by road between the UK and the EU27 due to the lack of infrastructure at port facilities to handle queues of trucks on both sides of the Channel.  The Republic of Ireland faces significant obstacles given its use of the UK as a land-bridge to the EU single market.  While it is unimaginable that a solution will not be found, without an open skies agreement between the UK and the EU27, airplanes carrying everything from people to post, packages and time-sensitive goods will not be able to fly.      Continue Reading

In Rare Move, Trump’s Commerce Secretary Self-Initiates Chinese Aluminum Trade Remedy Cases

 

The U.S. Department of Commerce self-initiated antidumping and countervailing investigations of common alloy aluminum sheet from China on November 28.  An accompanying fact sheet estimates dumping margins on the subject merchandise to be between 56.54 and 59.72 percent, and estimates a subsidy rate above de minimis.  Trade cases are typically initiated in response to petitions filed by a domestic industry alleging that dumped or unfairly subsidized goods are being exported to the U.S. market.  Self-initiation authority, however, can be exercised whenever the Secretary determines that a formal trade remedy investigation is warranted based on available information.

The Department’s use of self-initiation authority has been judicious and rare.  In an agency-issued press release Secretary Wilbur Ross stated, “{w}e are self-initiating the first trade case in over a quarter century, showing once again that we stand in constant vigilance in support of free, fair, and reciprocal trade.”  The Department further noted that it last self-initiated a countervailing duty investigation in 1991 on softwood lumber from Canada, and last self-initiated an antidumping duty investigation in 1985 on semiconductors from Japan.  Continue Reading

U.S. Issues Enhanced Sanctions on Russian Energy Sector

As required under recent sanctions legislation, the U.S. Office of Foreign Assets Control (OFAC) recently issued an updated Directive 4 that will expand sectoral sanctions on the Russian energy industry.

The new rules, which apply to projects initiated on or after January 29, 2018, will bar persons subject to U.S. jurisdiction from providing goods, services, or technology in support of exploration or production for deepwater, Arctic offshore, or shale oil anywhere in the world if a party subject to Directive 4 sectoral sanctions has a 33 percent or more ownership interest or owns a majority of the voting interests in the project. Continue Reading

New Sanctions Placed on Trade with Cuba

On Thursday November 9th,  the Office of Foreign Assets Control (“OFAC”) published new regulations in the Federal Register executing June’s National Security Presidential Memorandum (“NSPM”) regarding U.S. sanctions against Cuba.  (See our previous post on the NSPM here).  The State Department and Bureau of Industry and Security (“BIS”) also published complementary rules giving effect to the changes in the Cuba sanctions.  The rules became effective with their publication in the Federal Register.

The primary purpose of the rule changes is to prevent commerce between the U.S. and Cuba from benefiting the Cuban military.  The State Department’s regulation includes a new Cuba Restricted List, which lists parties deemed to be under control of or acting on behalf of the Cuban military, intelligence, or security services personnel.  Continue Reading

Congress Presses-On for Temporary Tariff Relief on Non-U.S. Made Goods by Year’s End

The House Ways and Means Trade Subcommittee held a hearing on October 25th to discuss the new Miscellaneous Tariff Bill Process – overseen by the U.S. International Trade Commission with input from other federal agencies – to reduce temporarily tariffs on products not made in the United States.  The largely non-controversial hearing was a first step toward paving the way for Congressional consideration of a bill by the end of the year to implement recommendations made by the ITC in its final MTB report issued in August.  Action on the bill in the Senate Finance Committee is anticipated next. Continue Reading

Commerce Continues China’s Status as a Non-Market Economy

On October 26, 2017, the Department of Commerce  announced the results of an investigation concluding that China is a non-market economy (“NME”) country for purposes of Commerce’s antidumping analysis.  Commerce’s decision continues the long-standing practice of the agency with respect to the antidumping methodology it applies to cases involving China.

Commerce was spurred to review its position on China’s NME status, last addressed in 2006, following the December 11, 2016 change in China’s Protocol of Accession to the World Trade Organization (“WTO”).  By way of background, the WTO Antidumping Agreement permits WTO member countries to impose duties on dumped imports.  Those duties are calculated as either the difference between the imported product’s export price and the comparable home market price, or the difference between the export price and a constructed value based on the product’s cost of production.  Sometimes, however, those home market prices or costs of production do not reflect market forces, particularly in NME countries. Continue Reading

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