On February 24, 2022, the Biden Administration announced the release of six executive-branch reports and a White House “capstone” report pursuant to Executive Order (EO) 14017 on America’s Supply Chains (February 24, 2021), which established a policy of pursuing more resilient, diverse, and secure American supply chains. These reports culminated year-long sectoral assessments of the
As discussed earlier this month here, President Biden issued Executive Order 14017 (“EO 14017”) establishing a wide-ranging evaluation of America’s supply chains that will take place over the next twelve months. This post provides updates with respect to two of the 100-day supply-chain specific reviews.
As previously reported, the Commerce Department’s Bureau of Industry…
Last week, the Office of Foreign Assets Control (OFAC) announced a settlement agreement with UniControl, Inc. (UniControl or “the company”) for shipping goods to European trading partners when UniControl knew or should have known that some of its products would ultimately be re-exported to Iran. The enforcement action is a reminder that OFAC expects U.S.…
On March 1, 2021, the U.S. Court of International Trade (CIT) issued a decision with important ramifications for any company that uses “first sale” to reduce customs duty liability for goods imported into the United States. The CIT’s ruling in Meyer Corp., U.S. v. United States calls into question the continued viability of first sale for suppliers located in non-market economies. This development has meaningfully altered the risk profile associated with using first sale for transactions in China and Vietnam. All companies relying on first sale should review their first sale programs to evaluate the impact of this ruling and take adequate precautions.
The First Sale Rule
The first sale rule permits importers to declare a lower customs value—and by extension, to lower the customs duty liability—for certain types of qualifying importations. To be eligible, an importation must involve a multi-tiered transaction (i.e., there must be three or more parties involved in the sequence of sales leading to the importer). Under U.S. law, the earliest sale in such a sequence of transactions may be declared as the customs value provided that the goods are clearly destined for the United States at the time of such sale and the first sale value otherwise satisfies the requirements applicable to any transaction value (i.e., it must be a bona fide sale that has been conducted at arm’s length).
First sale is thus commonly described as having “three elements”: the first sale in a multi-tiered transaction may be used as a customs value provided (1) it is a bona fide sale, (2) the goods are clearly destined for the United States at the time of the transaction, and (3) the value is an arm’s length price.
Meyer v. United States
The CIT’s decision in Meyer hinges on additional language from the seminal 30-year-old case that established first sale as a viable basis for customs valuation—language that has frequently been quoted, but seldom, if ever, scrutinized for meaning. The CIT interpreted that language to impose an overlooked requirement, namely that any legitimate first sale must be (4) absent any distortive non-market influences. While the first three requirements for the use of first sale are frequently assessed and litigated, the fourth requirement, the CIT notes, “has generally been neglected.”…
Continue Reading U.S. Importers Should Reevaluate “First Sale” Customs Programs
On April 22, 2020, President Trump ordered Chevron to “wind down” its business in Venezuela by December 1, 2020. This will have a significant impact on companies that supply Chevron with equipment used for oil and gas projects in Venezuela that were previously licensed.
Effective April 21, 2020, the Department of Treasury’s Office of Foreign…
Even as companies make rapid changes to respond to business challenges posed by the COVID-19 pandemic, executives and compliance team leaders must protect their company and employees by continuing to comply with critical U.S. international trade laws and regulations (including those addressing customs, anti-corruption, export controls, and economic sanctions). Trade regulations are not suspended, and it is important to not make assumptions or conclude that the law does not apply during this difficult time with all of the issues competing for attention, not least family and employee health and company survival. With the need to move so quickly, we have seen clients inadvertently come close to trade compliance violations that would not pose a problem for them in normal times. The following suggestions are intended to help companies reduce the risk of certain significant federal international trade law violations and avoid inbound and outbound shipment delays – while continuing to operate.
Trade rules and surrounding circumstances are changing quickly. For example, the Administration very recently appeared to be seriously considering suspending or lowering certain import tariffs, but backed away from that approach given the complexity of administering a revised system on short notice, among other problems. You are likely also seeing reports about various countries’ restrictions on exports of medicine, medical equipment (including protective equipment and ventilators), and food, among other products. How do you keep up with what is actually happening that may affect your company and what is just rumor that you do not need to react to?
One step companies are taking is to include key personnel from their trade compliance and legal teams in the decision processes related to changing international transactions. You need to move quickly, but including a team member who knows trade rules can help keep things on track and help avoid clear compliance errors.
Here are four substantive areas of U.S. trade regulation that should continue to be part of international transaction diligence: U.S. anti-corruption, export controls, and sanctions laws (that permit most exports of medicines, medical devices, and food to sanctioned locations), and U.S. Customs rules on personal protective equipment and medical devices (among other imported items). …
Continue Reading COVID-19 – Four Key International Trade Compliance Considerations
On Friday, August 23, China announced its plans to impose 5% to 10% tariffs on $75 billion of American products in response to Washington’s recent tariffs on $300 billion of Chinese products. China’s new tariffs will take effect in two stages, the first on September 1, 2019 and second on December 15, 2019. The new…
On Monday, July 15, President Donald J. Trump signed his latest Executive Order aimed at maximizing the use of American-made goods, products, and materials in federal procurement. Executive Order 13881 directs the Federal Acquisition Regulatory (FAR) Council to consider strengthening standards applied to the 1933 Buy American Act (BAA), which covers direct federal…
U.S. Reps. Terri Sewell (D-AL) and Fred Upton (R-MI) on Wednesday introduced legislation (H.R. 1710) that would preclude President Trump from imposing Section 232 tariffs on imported automobiles and automotive parts until the U.S. International Trade Commission (USITC) conducts “a study of the economic well-being, health, and vitality of the United States auto-motive…
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 Trump Signs Executive Order to Strengthen Buy American Preferences for Infrastructure Projects