U.S. Issues New North Korea Sanctions and a Warning to the Global Shipping and Finance Industries

Today the U.S. Office of Foreign Assets Control (OFAC) issued new sanctions targeting the shipping industry for dealings involving North Korea.  The sanctions include the designation of 56 companies and vessels involved in conducting illegal trade with North Korea.

OFAC also issued new guidance for the global shipping and finance industries, describing common methods used by North Korea to evade sanctions, listing due diligence steps companies should use to spot illegal shipping activities, and providing an overview of how U.S. and UN sanctions apply.  OFAC specifically notes that the United States intends to blacklist as a Specially Designated National (SDN) any parties that provide goods or services in support of North Korean vessels, engage in significant exports to or imports from North Korea, or engage in activities related to the transportation industry in North Korea.  OFAC also noted that non-U.S. financial institutions that knowingly facilitate significant transactions involving North Korea may be sanctioned by the U.S. government, including, among other penalties, losing access to U.S. correspondent accounts.

To avoid these substantial possible penalties under U.S. law, the global shipping industry and financial institutions providing maritime-related services need to be on alert for transactions or other dealings that may relate to North Korea, particularly those that violate UN or U.S. sanctions on that country.

The Trade Tool that is the Cherry of Lawmakers’ Eyes

On February 14, Senators Gary Peters (D-MI) and Richard Burr (R-NC) jointly introduced the S. 2427, the Self-Initiations Trade Enforcement Act.  If enacted, the legislation would give the Department of Commerce greater leniency to self-initiate investigations of unfair trade practices that harm U.S.  producers by creating a permanent taskforce at the International Trade Administration  to identify dumping and subsidized trade violations.  The taskforce would focus specifically on trade violations affecting small- and medium-sized business.  Although self-initiated cases occur fairly infrequently, the current administration is no stranger to them.  November 2017 saw the first self-initiated antidumping and countervailing cases since 1985 and 1991, respectively.

Senator Peters is hopeful that an increased focus on smaller business will allow regional farmers, such as cherry farmers in Michigan, to obtain long-sought relief from potentially dumped competitive products.  Both Senators voiced concern that smaller businesses may not be aware of trade violations, or lack adequate resources to investigate suspected violations, which can be both time-consuming and costly.  The President has indicated support for the bill.

21 Russian Companies Added To The U.S. Entity List

The United States imposed new sanctions against 21 Russian companies today by adding them to the Commerce Department’s Entity List.  Among other restrictions, U.S. and non-U.S. companies are now prohibited from transferring any U.S.-origin items to the sanctioned Russian firms.  The parties were added to OFAC’s SDN List last month.

Commerce Secretary Releases Steel and Aluminum 232 Reports, Recommends Remedies

On Friday, February 16, 2018, Secretary Ross released public versions of the U.S. Department of Commerce’s reports concerning the agency’s section 232 investigations into the impact on national security of steel and aluminum imports. As a result of its investigations, the Department of Commerce has determined that imports of steel and aluminum “threaten to impair the national security.”

The Secretary’s press release presents the agency’s key findings and lists the agency’s various recommended remedies.  With respect to steel imports, the Department of Commerce recommends three alternative options to the President:

  1. A global tariff of at least 24% on all steel imports from all countries, or
  2. A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States, or
  3. A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.

With respect to aluminum imports, the Department of Commerce recommends three alternative options to the President: Continue Reading

Wine Wars: Australia takes Canada to WTO Alleging Discriminatory Rules Governing Wine Sales

On January 12, 2018, Australia brought a historical first WTO trade dispute against Canada.  The request for consultations alleges that the Canadian Government and the Canadian provinces of British Columbia (“B.C.”), Ontario, Quebec and Nova Scotia discriminated against imported Australian wine by maintaining discriminatory trade measures governing  the sale of wine.  The alleged discriminatory measures include:  distribution areas, licensing and sales measures (i.e., product mark-ups), market access and listing policies, and duties and taxes applied at the federal and provincial level. Pursuant to WTO rules, the parties have 60 days to settle the dispute after which time Australia may request adjudication before a WTO panel.

Australian exports of bottled wine to Canada declined by nearly  half between 2007 and 2016.  Australia Trade Minister Steven Ciobo discussed the request for consultations and Australian wine Continue Reading

U.S. Customs and Border Protection Gears up for Super Bowl LII

U.S. Customs and Border Protection has been preparing for more than one year for security at this year’s Super Bowl.  In coordination with the Department of Defense, other federal agencies, and local law enforcement, CBP’s mission is to be the “eyes in the sky” and help keep the air space around the stadium safe.

CBP has one hundred fifty agents and officials, sixty five Air and Marine Operations personnel, three UH-60 Black Hawk, and three AStar helicopters working at the big game this year.  We salute CBP’s well-coordinated effort in ensuring the safety of the Super Bowl.

In other Super Bowl-related Customs news, CBP has been busy seizing imported merchandise with intellectual property violations in advance of Super Bowl LII.  Fake Super Bowl rings, team jerseys, bracelets, among other merchandise has been confiscated at U.S. ports.  Smart trademark holders register their marks with CBP enabling the agency to seize counterfeit merchandise before it enters the stream of commerce.

U.S. Issues the Much-Anticipated “Kremlin Report” under New Russia Sanctions Law

As required under Section 241 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), last night the U.S. government released a public, unclassified version of the much-anticipated “Kremlin Report.”  The report was intended to ‘name and shame’ Russian political and business leaders, list their assets outside of Russia, provide an index of corruption with respect to the listed individuals, determine estimated net worth of the listed parties, and analyze the impact of imposing sanctions on listed parties. Continue Reading

Trump Administration Declines to Issue Sanctions Related to Russia’s Military and Intelligence Sectors

Under Section 231 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), the Trump administration was due to issue secondary sanctions on non-U.S. persons that conduct significant transactions with Russia’s defense and intelligence sectors.  The Trump administration declined to issue those new sanctions, claiming that CAATSA was serving as an effective deterrent – discouraging non-U.S. entities from doing business with the Russian defense and intelligence sectors – and that no new sanctions were needed at this time.  Continue Reading

New OFAC designations signal continued U.S. sanctions pressure on Russia

Last week, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) blacklisted 21 individuals and nine entities for various reasons, including involvement in the ongoing conflict in eastern Ukraine, connections to the Crimea region (which is subject to a complete U.S. embargo), and links to the Russian government.  Several of the newly minted Specially Designated Nationals (SDNs), including Russian engineering company Technopromexport, were allegedly involved in diverting Siemens-made gas turbines to Crimea in potential violation of European Union sanctions rules.  OFAC also added twelve subsidiaries of Surgutneftegaz to the Sectoral Sanctions Identification List, clarifying that the entities are subject to the energy-sector sanctions described in Directive 4 to E.O. 13662. Continue Reading

Trans-Pacific Partnership: A Final Deal Reached Without the United States

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