In a January 10th Executive Order, President Trump expanded sanctions on Iran after a ballistic missile attack on two American military bases in Iraq.  Executive Order 13902 expands secondary sanctions on Iran to include “significant” or “material” support transactions between non-U.S. persons and Iran’s construction, mining, manufacturing, and textiles sectors as potentially sanctionable transactions.  Executive Order 13902 also authorizes the U.S. Secretary of the Treasury to extend these secondary sanctions to additional sectors of Iran’s economy in its discretion after consulting with the U.S. Secretary of State.  The Executive Order also gives the U.S. Secretary of the Treasury the authority to impose correspondent and payable-through account sanctions on non-U.S. financial institutions that facilitate significant financial transactions for the sectors of Iran’s economy and any persons or entities that are sanctioned under Executive Order 13902.

OFAC has since published a new FAQ No. 816 which establishes a 90-day period for persons to wind down existing transactions with sanctions exposure under Executive Order 13902.  This wind-down period expires on April 9, 2020 and OFAC has advised that “entering into new business that would be sanctionable under [Executive Order 13902] on or after January 10, 2020 will not be considered wind-down activity and could be sanctioned even during the wind-down period.”Also on January 10, the Office of Foreign Assets Control (OFAC) used authority provided under existing Executive Order 13871 and designated six government officials, twenty entities and one vessel connected to Iran’s iron, steel, aluminum and copper sectors as Specially Designated Nationals (SDNs).  Notably, persons engaged in sanctionable transactions with these SDNs do not receive the benefit of Executive Order 13902’s wind-down period because OFAC did not sanction these SDNs under Executive Order 13902.

Following the expansion of U.S. sanctions on Iran, European Union (EU) member states including the United Kingdom, Germany, and France triggered the dispute mechanism of the Joint Comprehensive Plan of Action (JCPOA), as the Iran Nuclear Deal is officially titled, in response to Iran’s apparent disregard for the terms of the agreement, such as enriching uranium and installing centrifuges beyond the allowed limit.  While the EU member states are trying to save the JCPOA, triggering of the dispute mechanism might ultimately lead to the reimplementation of United Nations (UN) sanctions on Iran if Iran does not comply.

Hush Blackwell’s Export Controls & Sanctions team continues to monitor the developing Iran situation closely and will provide additional information as OFAC makes it available.  Please contact Cortney Morgan or Grant Leach should you have any questions or concerns regarding Iranian sanctions.

Today, the U.S.-Mexico-Canada Agreement (USMCA) passed the U.S. Senate by a vote of 89 to 10.  While some Senators expressed disapproval over the deal for various reasons, passage of the USMCA enjoyed a great deal of bipartisan support after Democrats in the House of Representatives negotiated for more labor enforcement mechanisms that earned the endorsement of the AFL-CIO.  Now that the USMCA has been approved by the Senate, it will be submitted to the President to be signed into public law and thereafter implemented through presidential proclamation. Mexico passed the deal in December, however, the deal will not take full effect until Canada passes the deal. The House of Commons is expected to hold a vote in the next few weeks.

While similar to the North American Free Trade Agreement (“NAFTA”) in many ways, the USMCA makes several key changes to NAFTA.  Among the changes are provisions for digital trade, allowing data to flow more freely across borders.  It also implements new local wage requirements and stricter local content requirements for the automotive sector, in addition to establishing a system to monitor workers’ conditions in Mexico.  Depending on the product in question, the USMCA rules of origin may or may not change from those currently applied under NAFTA.  For certain products, it is possible that the USMCA rules of origin could even provide for more flexibility than those under NAFTA.  As a result, U.S. importers should not assume that NAFTA-eligible products will remain eligible under the USMCA (or vice versa) and should evaluate the new rules of origin carefully for their products.

We continue to monitor the USMCA implementation process closely and will provide future updates as more information becomes available.  Should you have any questions regarding the USMCA or its implementation, please contact Husch Blackwell’s International Trade and Supply Chain team.

White HouseAt a White House ceremony on Wednesday, January 15, 2020, U.S. President Donald Trump and Chinese Vice Premier Liu He met to sign Phase 1 of the Trade Deal that has been negotiated since May 2019 in order to end any further escalation in the trade war between the two countries.  The agreement consists of eight chapters covering intellectual property, technology transfers, financial services, exchange rate practices, and trade in agriculture, energy, and manufactured goods, as well as trade in services.

As part of the agreement, China pledges to increase its U.S. imports by $200 billion over the next two years.  China’s pledge covers imports of U.S.-origin manufactured goods, energy, agriculture, and services.  China also commits to liberalizing its financial sector, strengthening intellectual property protection, and opening its markets without technology transfer requirements that are not based on market principles.  Unlike the May 2019 agreement that Chinese negotiators walked out on upon reviewing the final text, this agreement notably does not require any changes to Chinese law in order to accomplish these commitments.  We encourage clients to review the text of the agreement to fully understand the scope of the commitments.

In return, the U.S. has foregone its planned Section 301 List 4B tariffs and will halve the current 15% Section 301 List 4A tariffs to 7.5%.  The reduction of List 4A tariffs will take effect 30 days from today, on February 14, 2020, according to a Trump Administration official.  The other 25% Section 301 tariffs that consist of Lists 1 through 3 will remain in effect until there is a Phase two deal, negotiations for which likely will not conclude until after the U.S. presidential election in November 2020.

Husch Blackwell is closely monitoring this situation and will provide updates as more information becomes available.  If you or your company has any questions regarding the phase one U.S.-China trade deal, please contact our International Trade and Supply Chain team.

On January 15, 2020, Petitioner Coalition of American Vertical Engine Producers filed a petition for the imposition of antidumping and countervailing duties on imports of vertical shaft engines between 225cc and 999cc, and parts thereof from the People’s Republic of China.

SCOPE OF THE INVESTIGATION

The physical characteristics of the covered products, which define the scope, are as follows:

The merchandise covered by this investigation consist of spark-ignited, non-road, vertical shaft engines, whether finished or unfinished, whether assembled or unassembled, designed primarily for use in riding lawn mowers and zero-turn radius lawn mowers. Engines meeting this physical description may also be designed for use in other non-hand-held outdoor power equipment. The subject engines are spark ignition, single or multiple cylinder, air cooled, internal combustion engines with vertical power take off shafts with a minimum displacement of 225 cubic centimeters (“cc”) and a maximum displacement of 999cc. Typically, engines with displacements of this size generate gross power of between 6.7 kilowatts (“kw”) to 42 kw.

 

Engines covered by this scope normally must comply with and be certified under Environmental Protection Agency (EPA) air pollution controls title 40, chapter I, subchapter U, part 1054 of the Code of Federal Regulations standards for small non-road spark-ignition engines and equipment. Engines that otherwise meet the physical description of the scope but are not certified under 40 CFR part 1054 and are not certified under other parts of subchapter U of the EPA air pollution controls are not excluded from the scope of this proceeding. Engines that may be certified under both 40 CFR part 1054 as well as other parts of subchapter U remain subject to the scope of this proceeding.

For purposes of this investigation, an unfinished engine covers at a minimum a sub-assembly comprised of, but not limited to, the following components: crankcase, crankshaft, camshaft, pistons( s), connecting rode s), and oil pan. Importation of these components together, whether assembled or unassembled, and whether or not accompanied by additional components such as a manifold, cylinder head(s), valve train, or valve cover(s), constitutes an unfinished engine for purposes of this investigation. The inclusion of other products such as spark plugs fitted into the cylinder head or electrical devices (e.g., ignition modules, ignition coils) for synchronizing with the motor to supply tension current does not remove the product from the scope. The inclusion of any other components not identified as comprising the unfinished engine subassembly in a third-country does not remove the engine from the scope.

The engines subject to this investigation are typically classified in the Harmonized Tariff Schedule of the United States (HTSUS) at subheadings: 8407.90.1020, 8407.90.1060, and 8407.90.1080. Engines subject to this investigation may also enter under HTSUS 8407.90.9060 and 8407.90.9080. The engine subassemblies that are subject to this investigation enter under HTSUS 8409.91.5085, and 8409.91.9990. The HTSUS subheadings are provided for convenience and customs purposes only, and the written description of the merchandise under investigation is dispositive.

 

PETITIONER

Kohler Co.

444 Highland Dr,

Kohler, WI 53044

(920)-457-4441

 

Briggs & Stratton Corporation

3300 N 124th St.,

Wauwatosa, WI, 53222

(414) 259-5333

 

COUNSEL FOR PETITIONERS

Daniel B. Pickard Esq.

Wiley Rein LLP

1776 K Street, NW

Washington, DC 20006

(202)-719-7000

 

NAMED PRODUCERS/EXPORTERS

For a list of foreign products/exporters alleged by Petitioner, please see Attachment I.

 

NAMED IMPORTERS

For a list of importers alleged by Petitioner, please see Attachment II.

ESTIMATED SCHEDULE

Event Earliest Date
Petition Filed January 15, 2020
DOC Initiation February 4, 2020
ITC Preliminary Investigation:
Questionnaires Due January 29, 2020
Request to appear at hearing February 3, 2020
Hearing February 5, 2020
Briefs February 10, 2020
ITC Vote March 2, 2020
DOC Preliminary Antidumping Determination June 23, 2020
DOC Preliminary Countervailing Determination April 9, 2020
DOC Final Antidumping Determination September 7, 2020
DOC Final Countervailing Determination June 23, 2020
ITC Final AD Determination October 21, 2020
ITC Final CVD Determination August 7, 2020

 

ALLEGED DUMPING MARGIN

People’s Republic of China: 320.41% – 633.64%%

 

ALLEGED SUBSIDIES

For a list of alleged countervailing duty programs, please see Attachment III.

 

IMPORTS OF SUBJECT MERCHANDISE

 

2016 2017 2018 2018 Jan-Sept. 2019 Jan-Sept.
China
Quantity(Units) 139,693 144,262 247,770 186,253 132,944
Value ($) 23,828,398 23,998,787 52,629,338 38,392,465 30,347,410
AUV ($/Quantity) 170.58 166.36 212.41 206.13 228.27

 

 

CONTACT US

For more information concerning this petition and how it may affect your business, please contact Jeffrey Neeley, Nithya Nagarajan, or Stephen Brophy.

The Office of the U.S. Trade Representative (USTR) issued a joint statement with the trade ministers of Japan and the European Union (EU) following a meeting between the three ministers on January 14, 2020.  The joint statement announces the three economic powers’ frustrations with the World Trade Organization’s (WTO) current countervailable subsidy measures and their desire for reform.  The proposed subsidy reforms aim to close what the three countries consider to be loopholes exploited by China and follow criticism that the U.S.-China trade negotiations have not addressed China’s aggressive use of industrial subsidies.

The U.S., EU, and Japan seek to broaden the WTO’s definition of a countervailable subsidy to include subsidies with unlimited guarantees; subsidies to insolvent/ailing firms without a credible restructuring plan; subsidies to firms unable to obtain long-term financing from independent sources operating in industries with overcapacity; and certain forms of direct debt forgiveness.  They also want members to be transparent about subsidies and want to incentivize transparency by outlawing undisclosed subsidies discovered by another member, regardless of the subsidy’s legality or market effects.  The joint statement also addresses forced technology transfers and includes expanding the definition of the term “public body” to more explicitly cover state-owned enterprises (SOEs), as sometimes subsidies are provided through SOEs.  Members should also prove that their subsidies do not cause oversupply or other harmful effects in the market.  To accomplish these reforms more quickly, the U.S., EU, and Japan want to expand their coalition to other large economies so that the reforms do not require the approval of all 164 WTO members.

Please contact Husch Blackwell’s International Trade and Supply Chain team should you have any questions on how these proposed subsidy reforms might affect your company or suppliers.

On January 9, 2020, the Department of Commerce (“Commerce”) initiated the antidumping duty (AD) and countervailing duty (CVD) investigations of imports of forged steel fluid end blocks from China (CVD only), Germany, India, and Italy.  For more detailed information, please refer to the Department’s Factsheet.

The investigations will now proceed to the next step, where the U.S. International Trade Commission (“ITC”) will make a preliminary determination on injury to a domestic industry on or before February 3, 2020. If the ITC determines that there is a reasonable indication that imports of the subject merchandise materially injure, or threaten material injury, to a domestic industry in the United States, the investigations will continue and Commerce will individually examine exporters of the subject merchandise to determine the extent to which exports were subsidized and/or dumped.  Commerce issued its Quantity and Value questionnaires in the investigations to determine the largest exporters from China, Italy, and Germany on January 9, 2020.

Commerce is tentatively scheduled to announce its preliminary CVD determinations on March 16, 2020, although this will most likely be extended until early May 2020.  The preliminary AD determinations are expected to be issued on or about May 28, 2020, but this will also most likely be extended until the end of July 2020.  If the ITC’s preliminary determinations are negative, the investigations will be terminated.

If you or your company are affected by these new investigations, please contact Husch Blackwell’s International Trade and Supply Chain team.

On January 8, 2020, Petitioner Coalition of American Millwork Producers filed a petition for the imposition of antidumping and countervailing duties on imports of wood mouldings and millwork products from the People’s Republic of China and antidumping duties on imports of the subject merchandise from Brazil.

SCOPE OF THE INVESTIGATION

The physical characteristics of the covered products, which define the scope, are as follows:

The merchandise subject to this investigation consists of wood mouldings and millwork products that are made of wood (regardless of wood species), laminated veneer lumber (LVL), or of wood and composite materials (where the composite materials make up less than 50 percent of the total merchandise), and which are woodwork or building materials that are produced in a mill or otherwise undergo remanufacturing.

The covered products include, but are not limited to, the following: interior and exterior door frames or jambs (including split, flat, stop applied, single- or double-rabbeted), frame or jamb kits, packaged door frame trim or casing sets, mullions, mull posts, mouldings (crowns, beds, coves, quarter rounds, half rounds, base shoes, astragals, shelf edge/screen moulds, glass bead mouldings, base caps, brickmould, panel mouldings, drip caps, corner guards, shingle/panel mouldings, battens, closet rod, hand rails, rounds, squares, screen/”surfaced on 4 sides” (S4S) and/ or “surface 1 side, 2 edges” (S 1 S2E) stock (also called boards) that are finger jointed and/or coated with any surface coating (including primed), lattice, dowels, picture moulding, wainscot/ply cap, back bands, chair rails), stops, sashes, base mouldings, casing, trim, panel strips, shelf cleats, chamfer strips, inside corners, window stools (flat/rabbeted), sills, door stiles, thresholds/saddles, decorative wood mouldings (embossed, dentil, carved rope moulding), rosettes, plinth blocks, interior siding, including nickel gap or shiplap, that is LVL or finger jointed and/or coated with any surface coating (including primed), and finger-jointed or edge-glued moulding or millwork blanks (whether or not resawn).

The covered products may be solid wood, laminated, finger-jointed, edge-glued, or otherwise joined in the production or remanufacturing process and are covered by the scope whether imported raw, coated (e.g., gesso, polymer, or plastic), primed, painted, stained, wrapped (paper or vinyl overlay), any combination of the aforementioned surface coatings, treated, or which incorporate rot-resistant elements (whether wood or composite). The covered products are covered by the scope whether or not any surface coating(s) or covers obscures the grain, textures, or markings of the wood, whether or not they are ready for use or require final machining (e.g. endwork/dado, hinge/strike machining, weatherstrip or application thereof, mitre) or packaging.

All wood mouldings and millwork products are included within the scope even if they are trimmed; cut-to-size; notched; punched; drilled; or have undergone other forms of minor processing.

Subject merchandise also includes wood mouldings and millwork products that have been further processed in a third country, including but not limited to trimming, cutting, notching, punching, drilling, coating, or any other processing that would not otherwise remove the merchandise from the scope of the investigations if performed in the country of manufacture of the in-scope product.

Excluded from the scope of this investigation are exterior fencing, exterior decking and exterior siding products, finished and unfinished doors, flooring, and parts of stair steps.

Excluded from the scope of this investigation are all products covered by the scope of the antidumping and countervailing duty orders on Hardwood Plywood from the People’s Republic of China. See Certain Hardwood Plywood Products from the People’s Republic of China: Amended Final Determination of Sales at Less Than Fair Value, and Antidumping Duty Order, 83 FR 504 (January 4, 2018); Certain Hardwood Plywood Products from the People’s Republic of China: Countervailing Duty Order, 83 FR 513 (January 4,2018).

Excluded from the scope of this investigation are all products covered by the scope of the antidumping and countervailing duty orders on Multilayered Wood Flooring from the People’s Republic of China. Multilayered Wood Flooring From the People’s Republic of China: Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order, 76 FR 76690 (December 8, 2011); Multilayered Wood Flooring from the People’s Republic of China: Countervailing Duty Order, 76 FR 76693 (December 8, 2011).

Imports of wood mouldings and millwork products are primarily entered under the following Harmonized Tariff Schedule of the United States (HTSUS) numbers: 4409.10.4010, 4409.10.4090, 4409.10.4500, 4409.10.5000, 4409.22.4000, 4409.22.5000, 4409.29.4000, 4409.29.4100, 4409.29.5000, and 4409.29.5100. Imports of wood mouldings and millwork products may also enter under HTSUS numbers: 4409.10.6000, 4409.10.6500, 4409.22.6000, 4409.22.6500, 4409.29.6100, 4409.29.6600, 4418.99.9095 and 4421.99.9780. While the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of these investigations is dispositive.

PETITIONER

Bright Wood Corporation

335 NW Hess Rd

Madras, OR 97741

Phone: (541) 475-2234

Contact Person: Dallas Stovall

Email: dallass@brightwood.com

 

Cascade Wood Products, Inc.

8399 14th Street

White City, Oregon 97503

Phone: 800-423-3311 x216

Contact Person: Gary Trapp

Email: GTrapp@cascadewood.com

 

Endura Products, Inc.

8817 W. Market St.

Colfax, NC 27235

Phone: 1-800-334-2006

Contact Person: Kevin MacDonald

Email: kevin@enduraproducts.com

 

Sierra Pacific Industries

11400 Reading Road

Red Bluff, CA 96080

Phone: (530) 529-5108

Contact Person: Jon Gartman

Email: JGartman@spi-ind.com

 

Sunset Moulding

2231 Paseo Avenue

Live Oak, CA 95953

Phone: (530) 790-2727

Contact Person: John Morrison

Email: john@sunsetmoulding.com

 

Woodgrain Millwork Inc.

300 NW 16th Street

Fruitland, ID 83619

Phone: 208-452-3801

Contact Person: Greg Easton

Email: GEaston@woodgrain.com

 

Yuba River Moulding

PO Box 1078

Yuba City, California 95992

Phone: (530) 742-2475

Fax: (530) 742-7140

Contact Person: Thomas C. Williams, Jr

Email: tom@yrmm.com

 

COUNSEL FOR PETITIONERS

Timothy C. Brightbill Esq.

Wiley Rein LLP

1776 K Street, NW

Washington, DC 20006

 

NAMED PRODUCERS/EXPORTERS

For a list of foreign products/exporters alleged by Petitioner, please see Attachment I.

 

NAMED IMPORTERS

For a list of importers alleged by Petitioner, please see Attachment II.

ESTIMATED SCHEDULE

Event Earliest Date
Petition Filed January 8, 2020
DOC Initiation January 28, 2020
ITC Preliminary Investigation:
Questionnaires Due January 22, 2020
Request to appear at hearing January 27, 2020
Hearing January 29, 2020
Briefs February 3, 2020
ITC Vote February 24, 2020
DOC Preliminary Antidumping Determination June 16, 2020
DOC Preliminary Countervailing Determination April 2, 2020
DOC Final Antidumping Determination August 31, 2020
DOC Final Countervailing Determination June 16, 2020
ITC Final Determination October 14, 2020

 

ALLEGED DUMPING MARGIN

Brazil: 268.74%

China: 289.70%-361.83%

 

ALLEGED SUBSIDIES

For a list of alleged countervailing duty programs, please see Attachment III.

 

IMPORTS OF SUBJECT MERCHANDISE

 

2016 2017 2018 2018 Jan-Oct. 2019 Jan-Oct.
Brazil
Quantity (1,000 Meters) 372,705 420,298 434,041 357,021 376,176
Value ($1,000) 265,788 316,186 291,760 238,355 267,589
AUV ($/Quantity) 0.71 0.75 0.67 0.67 0.71
China
Quantity(1000 Meters) 100,543 134,918 190,386 149,238 181,963
Value ($1,000) 105,297 158,402 208,288 168,770 161,705
AUV ($/Quantity) 1.04 1.17 1.09 1.13 0.89

 

 CONTACT US

For more information concerning this petition and how it may affect your business, please contact Jeffrey Neeley, Nithya Nagarajan, or Stephen Brophy.

One of the first changes for this new year is the implementation of new Incoterms® 2020 starting on January 1, 2020.  The Incoterms® rules, published by the International Chamber of Commerce (ICC), are the world’s essential terms of trade for the sale of goods.  Incoterms® provide specific guidance to individuals and entities participating in the import and export of global trade on a daily basis.

Incoterms® were last updated 10 years ago in 2010, so needless to say there have been some changes.  The most important changes include:

  • DAT: Delivered at Terminal is no longer a term of sale in the 2020 revision.  This has been replaced with DPU: Delivered at Place Unloaded
  • Minimum insurance coverage on insurance contracts have been updated
  • Carriage Contracts have been modified to accommodate changes in transport completed by either the buyer or seller
  • EXW and DDP highlight and emphasize the risks of import and export

Husch Blackwell has provided this easy reference chart for clients to quickly identify any changes applicable to its unique situation.  If you believe that these changes impact your existing contracts or future contracts and you have concerns or questions, please contact Husch Blackwell’s International Trade and Supply Chain team.

In a radio interview, French Finance Minister Bruno Le Maire said that France will retaliate against the U.S. if the U.S. imposes Section 301 tariffs on French goods due to the French Digital Services Tax (DST) investigation.  The French DST levies a 3 percent tax on revenues for providing “digital interface” services and “targeted advertising” in France, which the U.S. argues discriminates against U.S. companies.  Late last year, the Office of the United States Trade Representative (‘USTR”) proposed a list of goods valued at $2.4 billion that may be subject to additional Section 301 duties.  The list of proposed goods includes cheeses, Champagne, handbags, cosmetics, and fine dinnerware. The USTR is holding a hearing to determine what products should be covered by the additional duties on Tuesday, January 7, 2020, with a final decision on the list of goods that will be subject to Section 301 duties to be announced later this year.

We will continue to monitor this situation and will provide future updates as additional details become available.  If you have any questions regarding the new tariffs on French goods, please contact Husch Blackwell’s International Trade and Supply Chain team.

As we kick off a new year, Husch Blackwell’s International Trade and Supply Chain team offers an analysis of events that shaped the international trade landscape in 2019 as well as insight into what international trade issues are on the horizon in 2020 in a recently published white paper.

The “International Trade Law: 2019 Year in Review & 2020 Outlook” white paper offers guidance to businesses and includes information on:

  • Section 301 and 232 tariffs
  • Antidumping/ countervailing duties
  • Retaliatory tariffs
  • Trade policy
  • Section 337 litigation
  • Export controls & trade sanctions
  • What to expect in 2020
  • A trade compliance checklist for 2020

We encourage clients and other businesses to review the white paper so that they can be trade ready in 2020.  The white paper is available for download from Husch Blackwell’s website here.

To learn more about Husch Blackwell’s international trade and supply chain capabilities and to keep up to date as developments in trade occur throughout 2020, visit our website and keep reading the International Trade Insights blog.