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Last week, a WTO dispute settlement panel ruled that Australia’s plain packaging rules for tobacco products do not violate WTO rules.  In April 2012, Honduras requested consultations with Australia at the WTO over Australia’s 2011 law banning logos, trademarks, and other distinctive packaging for tobacco products in favor of uniform-color packages with health-related warnings and images across the front of the packages and brand names printed in small, standardized fonts.  Honduras challenged the law under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the WTO Technical Barriers to Trade Agreement, and the national treatment provision of GATT 1994.  Similar challenges later brought by the Dominican Republic, Cuba, and Indonesia to Australia’s plain packaging law were consolidated with Honduras’s dispute and ruled upon at the same time.  The WTO dispute settlement panel was composed in May 2014.

In its report, issued on June 28, 2018, the WTO panel concluded that Honduras, the Dominican Republic, Cuba, and Indonesia did not demonstrate that Australia’s plain packaging law and related regulations were inconsistent with the various WTO agreement provisions cited.  Specifically, the plain packaging measures were not shown to be more restrictive than necessary to achieve a legitimate regulatory objective; to impede the registration, use, or enforcement of trademarks; to mislead with respect to or diminish geographical indications; or to devalue the Cuban Government Warranty Seal otherwise provided on Cuban-origin tobacco products.
Continue Reading WTO Declines to Find Australia’s Tobacco Product Packaging Restrictions Inconsistent with Trade Rules

On Wednesday, President Trump issued a statement in support of restrictions on Chinese investment in the United States in firms with critical technologies, and in greater protection of those technologies through enhanced export controls.  In particular, the President has thrown his support behind the Foreign Investment Risk Review Modernization Act (FIRRMA), bipartisan legislation that passed in the House on Tuesday.  FIRRMA intend to strengthen the existing Committee on Foreign Investment in the United States (CFIUS) by expanding the scope of foreign investment restrictions that the Administration could block for national security reasons.

CFIUS is an inter-agency committee that has jurisdiction to review transactions that could result in control of a U.S. business by a foreign person  If CFIUS determines the transaction presents a national security risk, it can take action to mitigate the risk or refer the case to the President for further action.  The reforms under FIRRMA would expand CFIUS’s jurisdiction to review foreign minority investments in start-ups in key sectors, certain sensitive real estate transactions, and joint ventures – all of which are currently not subject to examination.  The FIRRMA bill passed in the House specifically notes that the “national security risks related to foreign investment, particularly those emanating from countries such as China and Russia, warrant an appropriate modernization of the processes and authorities of {CFIUS}.”  FIRRMA would also expand existing export controls that govern trade in sensitive technologies.
Continue Reading President Trump Targets Chinese Investments in the United States

On April 13, 2018, the Treasury Department released its biannual report to Congress on the Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States, which declined to formally label China a currency manipulator under the Omnibus Trade and Competitiveness Act of 1988 (the “1988 Act”).

This is the third such report issued since President Trump took office.  Like the prior Trump Administration foreign exchange policy reports (April 2017 and October 2017), the latest report also concluded that China’s bilateral trade surplus, material current account surprise, and intervention in the foreign exchange market, together, do not require “enhanced analysis” and “enhanced bilateral engagement” under the Trade Facilitation and Trade Enforcement Act of 2015 (the “2015 Act”).

The latest report, however, continues to place China on Treasury’s foreign exchange “Monitoring List” under the 2015 Act.  The report lists China alongside Japan, Korea, Germany, Switzerland, and India as “major trading partners that merit close attention to their currency practices and macroeconomic policies.”  According to the report,
Continue Reading Treasury Declines to Name China a Currency Manipulator

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 Gil Kaplan Confirmed as Undersecretary of Commerce for International Trade

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

Earlier this week, the remaining 11 parties to the Trans-Pacific Partnership (TPP) negotiations announced the conclusion of negotiations and that an agreement will be signed on March 8, 2018.  The parties to the agreement (rebranded as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.  The United States withdrew from the TPP almost exactly one year ago, as one of President Trump’s first actions in office.  The TPP’s future was in question after the U.S. withdrawal; Japan struggled to keep the agreement alive through a new framework reached in May 2017.  Canada continued to put up roadblocks on cultural product exemptions and market access for autos that were only resolved through bilateral side letters within the last couple of weeks.
Continue Reading Trans-Pacific Partnership: A Final Deal Reached Without the United States

Late last week, the Government of China announced that it would be removing export taxes on many steel products, including wire, rods, bars, billets, and stainless steel plate, as of January 1, 2018.  The move is part of a number of tax changes.  The steel export tax has not prohibited massive volumes of Chinese steel from being shipped to other markets in the face of overwhelming overcapacity at home.  But the absence of the export tax will make it even easier for Chinese steel producers to export steel products around the world.  Notably, China typically adjusts export tax levels on an annual basis as a policy measure to encourage or discourage certain exports.  Thus, this latest decision signals not only the Government of China’s continued active intervention in the market, but its support for even greater exports of Chinese steel, which the world can hardly absorb.
Continue Reading China to Encourage Even More Steel Exports

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

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

A day after South Korean Trade Minister Kim Hyun-chong met with U.S. Trade Representative Robert Lighthizer, the parties have set a special second session of the Korea-U.S. Free Trade Agreement (KORUS) joint committee for October 4, 2017, in Washington.

The first special session of the KORUS joint committee (the first meeting of its kind under the agreement) took place in August, at USTR Lighthizer’s request, and focused on the U.S. goods trade deficit with South Korea.  Trade Minister Kim did not agree to amend KORUS as suggested by the United States, but did propose a joint study on the impact of KORUS and the cause of the U.S. bilateral trade deficit.  
Continue Reading KORUS Special Session to Be Held in October